CONFORMED COPY
DATED 8th DECEMBER 1998
NELSTAR LEASING COMPANY LIMITED
as lessor
- and -
GLOBAL MARINE LEASING CORPORATION
as lessee
____________________________________________________
HEAD LEASE AGREEMENT
relating to
a Glomar Hull 456 class
Deepwater Drillship to be
constructed by ▇▇▇▇▇▇▇ and ▇▇▇▇▇ with
hull number 1739
(t.b.n. "GLOMAR ▇.▇. ▇▇▇▇▇")
____________________________________________________
TABLE OF CONTENTS
Clause Heading Page
1. DEFINITIONS AND INTERPRETATIONS 1
2. REPRESENTATIONS AND WARRANTIES 28
3. CONDITIONS PRECEDENT 29
4. LEASING AND DELIVERY AND ACCEPTANCE OF THE VESSEL 30
5. DISCLAIMERS AND EXCLUSIONS, LESSOR'S COVENANTS 31
6. LEASE PERIOD 35
7. RENT 36
8. PAYMENTS 37
9. COVENANTS CONCERNING INSURANCES 39
10. TOTAL LOSS AND ▇▇▇▇▇▇ ▇▇
▇▇. GENERAL COVENANTS AND UNDERTAKINGS OF THE LESSEE 48
12. OPERATIONAL COVENANTS IN RELATION TO THE ▇▇▇▇▇▇ ▇▇
▇▇. BENEFIT OF THIRD PARTY WARRANTIES 57
14. INSPECTION 59
15. RISK 59
16. REQUISITION FOR HIRE 60
17. SALVAGE 61
18. TITLE AND LIENS 61
19. RE-DELIVERY AND SALE OF THE ▇▇▇▇▇▇ ▇▇
▇▇. PROCEEDS OF SALE 65
21. TERMINATION PROVISIONS 66
22. SECURITY AND SECURITY REVIEW 72
23. EXCLUDED OBLIGATIONS 75
24. CHANGE OF CIRCUMSTANCES ETC. 77
25. GENERAL INDEMNITY 79
26. GENERAL TAX INDEMNITY AND OTHER TAX PROVISIONS 84
27. PRESERVATION OF INDEMNITIES 90
28. ASSIGNMENT 90
29. LESSOR'S RIGHT OF SET-OFF 92
30. SUB-LEASING 92
31. MISCELLANEOUS 93
32. CONFIDENTIALITY 97
SCHEDULE 1 Financial Schedule 99
SCHEDULE 2 100
SCHEDULE 3 INTENTIONALLY OMITTED 101
SCHEDULE 4 Part 1 - Representations and Warranties
by the Lessee 102
Part 2 - Representations and warranties
by the Lessor 105
SCHEDULE 5 Part 1 - Conditions precedent to the
obligations of the Lessor generally 106
Part 2 - Conditions precedent to Lessor's
payment obligations under the
Shipbuilding Contract 108
Part 3 - Conditions Precedent to Delivery 111
Part 4 - Conditions Precedent to the
obligations of the Lessee generally 113
SCHEDULE 6 Form of Acceptance Certificate 114
SCHEDULE 7 Part I - Form of Hull and Machinery
(Marine and War Risks) Loss Payable Clause 115
SCHEDULE 7 Part II -Form of Protection and Indemnity
Risks Loss Payable Clause 116
THIS AGREEMENT dated 8th December, 1998 is made
BETWEEN:
(1) NELSTAR LEASING COMPANY LIMITED, a company incorporated
under the laws of England and Wales with company
registration number 1581384 whose registered office is at
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇; and
(2) GLOBAL MARINE LEASING CORPORATION, a company incorporated
under the laws of the Commonwealth of the Bahamas whose
registered office is at ▇▇▇▇▇▇ ▇▇▇▇▇, ▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇, the Commonwealth of the Bahamas.
WHEREAS:
The Lessor carries on the trade of leasing and pursuant to the
Shipbuilding Contract and the Construction Supervision Agreement
has agreed to incur capital expenditure on the provision of the
Vessel for leasing to the Lessee on and subject to the terms and
conditions contained in this Agreement.
NOW IT IS AGREED:
1. DEFINITIONS AND INTERPRETATIONS
1.1 DEFINITIONS
In this Agreement the following words and expressions
shall each have the meaning respectively attributed to
them below:
"ACCELERATION NOTICE" means a written notice from the
Lessor to the Lessee given under Clause 6.3;
"ACCELERATION OPTION" means the option on the part of the
Lessor the terms of which are set out in Clause 6.3;
"ACCELERATION RENT" shall have the meaning attributed to
that term in Clause 6.3;
"ACCEPTANCE CERTIFICATE" means the certificate given by
the Lessee to the Lessor pursuant to Clause 4.2, in or
substantially in the form of Schedule 6;
"ACCOUNTING PERIOD" means an accounting period as defined
in section 12 of ICTA 1988;
"Accounts" means, together, the First Account and the
Second Account;
"ADDITIONAL PAYMENT" shall have the meaning attributed to
that term in Clause 26.5;
"ADDITIONAL SECURITY" means additional security for the
obligations of the Lessee under this Agreement in form and
content acceptable to the Lessor, provided in accordance
with Clause 22.3;
"ADDITIONAL SECURITY DOCUMENTS" means all documents under
which Additional Security is constituted or by which such
security is evidenced or pursuant to which the Lessee
obtains or secures the provision of any Additional
Security;
"ADDITIONAL SECURITY PROVIDER" means any person providing
Additional Security;
"ADJUSTMENT DATE" shall have the meaning attributed to
that term in the Financial Schedule;
"APPROVED BROKERS" means ▇▇▇▇▇▇▇, Seibels & ▇▇▇▇▇▇▇▇ of
Texas, Inc. or such other firm or firms of insurance
brokers as may from time to time be approved in writing by
the Lessor for the purposes of this Agreement (such
consent not to be unreasonably withheld);
"ASSUMPTIONS" shall have the meaning attributed to that
term in the Financial Schedule;
"BALANCE" shall have the meaning attributed to that term
in the Financial Schedule;
"BANK" means Lloyds Bank Plc, registered in England with
company registration number 2065 and shall include its
successors but shall not include its assignees or
transferees under clause 11.3 of each of the Deposit
Deeds;
"BANK GUARANTEE" means the guarantee granted or, as the
context may require, to be granted on or about the date of
this Agreement to the Lessee by the Bank in relation to
the obligations of the Lessor under this Agreement;
"BASE RATE" means the base rate from time to time quoted
by the Bank in London as its "BASE RATE" or, if no rate of
interest is quoted as such, the rate of interest from time
to time certified by the Bank in London as being the rate
which the Bank uses as the base for determining rates of
interest charged to corporate customers;
"BROKEN FUNDING COSTS" shall have the meaning attributed
to that term in the Financial Schedule;
"BROKEN FUNDING GAINS" shall have the meaning attributed
to that term in the Financial Schedule;
"BUILDER" means ▇▇▇▇▇▇▇ and ▇▇▇▇▇ Shipbuilding and Heavy
Industries Ltd., a company incorporated under the laws of
Northern Ireland, whose principal office is at Queen's
Island, Belfast, Northern Ireland BT3 9DU;
"BUSINESS DAY" means a day on which dealings in Sterling
deposits are carried on in the London Inter-Bank Market
and (other than a Saturday or Sunday, or holiday scheduled
by law) on which banks are open for business (a) in the
City of London and (b) if on that date any payment falls
to be made under any of the Relevant Lease Documents other
than in Sterling, in the principal financial centre in the
country of the currency concerned and (c) if on that date
no payment falls to be made under any of the Relevant
Lease Documents, in Houston, Texas;
"CAA 1990" means the Capital ▇▇▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇;
"CALCULATION PERIOD" means
(a) in relation to the Instalment Date for the First
Instalment and the Second Instalment, the period
commencing on that Instalment Date and ending on
the next date set out in the column headed "Date"
in Part A of Schedule 2 and thereafter the period
commencing on a date set out in that column and
ending on the next date set out in that column up
to and including the date set out in that column
which is the same date as the Instalment Date for
the Delivery Instalment; or
(b) at any time on or after the Instalment Date for the
Delivery Instalment, each period commencing on a
date set out in the column headed "Date" in Part A
of Schedule 2 and ending on the next date shown in
that column;
"CHANGE OF LAW" means, in each case after the date on
which this Agreement is originally executed:
(a) the implementation, introduction, abolition,
withdrawal or variation of, any applicable law,
regulation, practice or concession or official
directive, ruling, request, notice, guideline,
statement of policy or practice statement by the
Bank of England, the European Union or any central
bank or tax, fiscal, revenue, monetary,
governmental, local, international, national or
other competent authority or agency (whether or not
having the force of law but in respect of which
compliance by banks or other financial institutions
or institutions of a similar nature to the Lessor
in the relevant jurisdiction is generally
customary); or
(b) any change in any interpretation, or the
introduction or making of any new or further
interpretation, or any new or different
interpretation of any applicable law, regulation,
practice or concession or official directive,
ruling, request, notice, guideline, statement of
policy or practice statement by any court,
tribunal, governmental, local, international,
national or other competent authority or agency or
the Bank of England, the European Union or any
central bank or tax, fiscal, revenue or monetary
authority or agency (whether or not having the
force of law but in respect of which compliance by
banks or other financial institutions or
institutions of a similar nature to the Lessor in
the relevant jurisdiction is generally customary);
or
(c) compliance with any new or different request or
direction from the Bank of England, the European
Union or any central bank, tax, fiscal, monetary,
revenue, governmental, local, international,
national or other competent authority or agency
(whether or not having the force of law but in
respect of which compliance by banks or other
financial institutions or institutions of a similar
nature to the Lessor in the relevant jurisdiction
is generally customary);
"CHAPS" means the Clearing Houses Automated Payments
System;
"CIBC" means Canadian Imperial Bank of Commerce acting
through its London branch at ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇ ▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇;
"CIBC PAYMENT AGREEMENT" means the payment agreement
entered into or, as the context may require, to be entered
into on or about the date of this Agreement between CIBC,
the Lessor and the Lessee relating to the undertaking by
CIBC to perform certain payment obligations;
"CLASSIFICATION" means A1-E Mobile Offshore Drilling Unit-
DPS-3 AMS ACCU, R2S (or, as the case may be, its equivalent)
with the Classification Society or such other classification
as the Lessor shall, at the request of the Lessee, have
agreed in writing shall be treated as the Classification for
the purposes of this Agreement;
"CLASSIFICATION SOCIETY" means American Bureau of Shipping
or any other classification society which is a member of
the International Association of Classification Societies
(or equivalent body for the time being);
"COMMENCEMENT DATE" shall have the meaning attributed to
that term in the Financial Schedule;
"COMMERZBANK" means Commerzbank A.G. acting through its
London branch at ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇,
▇▇▇▇▇▇▇;
"COMMERZBANK PAYMENT AGREEMENT" means the payment
agreement entered into or, as the context may require, to
be entered into on or about the date of this Agreement
between Commerzbank, the Lessor and the Lessee relating to
the undertaking by Commerzbank to perform certain payment
obligations;
"COMPULSORY ACQUISITION" means requisition for title or
other compulsory acquisition, requisition, appropriation,
expropriation, deprivation, forfeiture or confiscation for
any reason of the Vessel by any Government Entity or other
competent authority, whether de jure or de facto, but
shall exclude requisition for use or hire not involving
requisition of title;
"CONSTITUTIVE DOCUMENTS" in relation to any English
company means that company's certificate of incorporation
and memorandum and articles of association and, in
relation to any overseas person (whether incorporated,
established or otherwise formed, but excluding natural
persons), means the documents having equivalent status and
effect in the relevant jurisdiction;
"CONSTRUCTION SUPERVISION AGREEMENT" means the agreement
entered or to be entered into between the Lessor and GMIDC
with respect to the supervision by GMIDC of the
construction of the Vessel;
"CONTRIBUTION DEED" means the deed entered into or, as the
context may require, to be entered into between the
Lessor, the Lessor's Agent and the Sub-Lessee providing
for the making by the Sub-Lessee of a capital contribution
to the Lessor's cost of the acquisition of the Vessel from
time to time;
"CORPORATION TAX" means corporation tax chargeable in the
context of the scheme of Taxation applied to United
Kingdom resident companies generally at the rate
applicable to such companies (disregarding the provisions
of section 13 of ICTA 1988 concerning the small companies'
rate) or any Tax of a similar nature enacted in addition
to or substitution for corporation tax;
"COST OF MANAGEMENT TIME" means the cost of the management
time of the Lessor (or any other member of the Lessor's
Group acting on behalf of the Lessor) incurred by any
director or employee of the Lessor or such member of the
Lessor's Group charged at the rate of two hundred Pounds-
Sterling(200) (as such figure shall be increased on an annual
basis by the percentage increase in the RPI since 1st
January 1998) per hour;
"DATE OF TOTAL LOSS" shall have the meaning attributed to
that term in Clause 10.3;
"DEFAULT RATE" in respect of Sterling amounts means the
percentage rate per annum which is two per cent (2%) over
Base Rate and, in respect of other amounts means 2% over
the cost to the Lessor of funding the relevant amount, in
the relevant currency;
"DELIVERY" means delivery of the Vessel by the Lessor to
the Lessee in accordance with Clause 4.2;
"DELIVERY DATE" means the date on which the Vessel is
delivered by the Lessor to the Lessee in accordance with
Clause 4.2;
"DELIVERY INSTALMENT" means the amount paid or, as the
context may require, payable by the Lessor (i) to the
Lessor's Agent on the Delivery Date pursuant to clause 5.1
of the Construction Supervision Agreement and (ii) to the
Builder pursuant to the Shipbuilding Contract;
"DEPOSIT BANK" means Lloyds Bank Plc, acting through its
branch at ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇ as holder of
the Accounts and shall include, where the context
requires, any successors or assignees and/or transferees
pursuant to clause 11.3 of the relevant Deposit Deed of
the then current Deposit Bank;
"DEPOSIT DEEDS" means, together, the First Deposit Deed
and the Second Deposit Deed;
"DETERMINATION" shall have the meaning attributed to that
term in Clause 1.4(a);
"DOCUMENT OF COMPLIANCE" shall have the meaning
attributable to that term in the ISM Code;
"DOLLARS" and "$" each means the lawful currency for the
time being of the United States of America and in respect
of all payments to be made to the Lessor under this
Agreement and any of the other Relevant Lease Documents in
Dollars, each means immediately available, freely
transferable cleared funds in Dollars;
"EARLY TERMINATION FEE" means an amount calculated in
accordance with paragraph 4.4 of the Financial Schedule;
"ENVIRONMENT" means:
(i) any land including, without limitation, surface
land and sub-surface strata, sea bed or river bed
under any water (as defined below) and any natural
or man-made structures;
(ii) water including, without limitation, coastal and
inland waters, surface waters, ground waters and
water in drains and sewers; and
(iii) air, including air within buildings and other
natural and man-made structures above and below
ground;
"ENVIRONMENTAL CLAIM" means any written or oral notice
from any Government Entity or, subject to the proviso
below, any third party, alleging any breach, contravention
or violation of any Environmental Law or the existence of
any liability or potential liability arising from any such
breach, contravention or violation including, without
limitation, in respect of liability to conduct, pay for or
for damages in respect of any investigation or audit,
clean-up, redemption, administrative cost or charge or
expense, damage to the Environment or any natural
resource, property loss or damage, personal injury or any
penalty attaching or relating to the presence, emission,
release or leak of any Hazardous Material in or to the
Environment PROVIDED THAT there shall be excluded from
this defined term any such allegation from a third party
(not being a Government Entity) which the Lessee, acting
reasonably, believes to be spurious or not made in good
faith;
"ENVIRONMENTAL LAW" means any or all applicable law
(whether civil, criminal or administrative), common law,
statute, statutory instrument, treaty, convention,
regulation, directive, by-law, demand, decree, injunction,
resolution, order or judgment (in each case having the
force of law) and codes of practice or conduct (in respect
of which compliance by persons carrying on the same
business as the Lessee is customary), circulars and
guidance notes having legal or judicial import or effect,
in each case of any Government Entity (whether now
existing or hereafter promulgated) in any applicable
jurisdiction relating to or concerning:
(a) pollution or contamination of the Environment;
(b) harm, whether actual or potential, to mankind and
human senses, other living organisms and ecological
systems;
(c) the generation, manufacture, processing,
distribution, use (including abuse), treatment,
storage, disposal, transport or handling of
Hazardous Materials; and
(d) the emission, leak, release, spill or discharge
into the Environment of noise, vibration, dust,
fumes, gas, odours, smoke, steam, effluvia, heat,
light, radiation (of any kind), infection,
electricity or any Hazardous Material and any
matter or thing capable of constituting a nuisance
or an actionable tort or breach of statutory duty
of any kind in respect of such matters,
including, without limitation, the following laws of the
United States of America: the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as
amended, the Hazardous Materials Transportation Act, as
amended, the Oil Pollution Act of 1990, as amended, the
Federal Water Pollution Control Act, as amended, the
Resource Conservation and Recovery Act, as amended and the
Toxic Substance Control Act, as amended, in each case with
the regulations promulgated and the guidance issued
pursuant thereto;
"ENVIRONMENTAL PERMITS" means, in relation to any person,
all or any permits, licences, consents, approvals,
certificates, registrations, and other authorisations and
the filing of all notifications, reports and assessments
required under any Environmental Law in connection with
the conduct of such person's business and the ownership,
use, exploitation or occupation of all of its property and
assets;
"EXCESS RISKS" means the proportion of claims for general
average, salvage and salvage charges not recoverable under
the hull and machinery policies in respect of the Vessel
in consequence of her insured value being less than the
value at which the Vessel is assessed for the purposes of
such claims;
"EXCLUDED OBLIGATIONS" shall have the meaning attributed
to that term in Clause 23.1;
"EXCLUDED PROPERTY" means, in respect of the Vessel, any
items of equipment installed on or attached to the Vessel
but which do not become or are not required to become, by
virtue of any provision of this Agreement, part of the
Vessel;
"FINAL DATE" shall have the meaning attributed to that
term in the Financial Schedule;
"FINANCIAL SCHEDULE" means Schedule 1;
"FINANCE LEASE" shall have the meaning attributed to that
term in the United Kingdom Statement of Standard
Accounting Practice 21;
"FINANCIAL INDEBTEDNESS" in relation to any person means,
without duplication, all indebtedness of such person for
borrowed money (whether or not the recourse of the lender
is to the whole of the assets of such person or only to a
portion thereof);
"FINANCIAL STATEMENTS" means the unaudited accounts of the
Lessee, prepared in accordance with US GAAP;
"FIRST ACCOUNT" means the account number ▇▇▇▇▇▇▇ entitled
"Global Marine Leasing Corporation: Glomar ▇.▇. ▇▇▇▇▇
Number One Account" opened by the Lessee with the Deposit
Bank to which, inter alia, moneys payable by the Payment
Banks under the Payment Agreements are to be credited;
"FIRST ACCOUNT INTEREST ACCRUAL" means, for the Relevant
Date in any Calculation Period, the amount shown for that
Calculation Period in the column headed "First Account
Interest Accrual" in Part [ ] of Schedule 2;
"FIRST ACCOUNT PRINCIPAL BALANCE" means for the Relevant
Date in any Calculation Period, the amount shown for that
Calculation Period in the column headed "First Account" in
Part A of Schedule 2 calculated in accordance with the
provisions of clause 3 of the First Deposit Deed;
"FIRST DEPOSIT DEED" means the deed so entitled entered
into or, as the context may require, to be entered into on
or about the date of this Agreement between the Lessee,
the Lessor and the Deposit Bank in relation to the First
Account;
"FIRST INSTALMENT" means the amount paid or, as the
context may require, payable by the Lessor pursuant to
clause 5.1(a) of the Novation Agreement;
"FLAG STATE" means the Republic of Panama or any other
state or country in which the Vessel is from time to time
registered in accordance with the provisions of Clause
12.20;
"GOVERNMENT ENTITY" means and includes (whether having a
distinct legal personality or not) (i) any national
government, political sub-division thereof or local
jurisdiction therein, (ii) any board, commission,
department, division, organ, instrumentality, court or
agency of any entity referred to in (i) above, however
constituted, and (iii) any association, organisation or
institution (international or otherwise) of which any
entity mentioned in (i) or (ii) above is a member or to
whose jurisdiction any of the foregoing is subject or in
whose activities any of the foregoing is a participant;
"GMIDC" means Global Marine International Drilling
Corporation, a company incorporated under the laws of the
Commonwealth of the Bahamas whose registered office is at
▇/▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, ▇▇▇▇▇▇ House, 4 ▇▇▇▇▇▇
Street, P.O. Box 3937, Nassau, Bahamas;
"GUARANTEE" means the deed of guarantee and indemnity given
or, as the context may require, to be given by the Guarantor
in favour of the Lessor;
"GUARANTOR" means Global Marine Inc., a company
incorporated under the laws of the State of Delaware in
the United States of America whose principal place of
business is at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇ of America;
"GUARANTOR CREDIT CURE EVENT" means an event which shall
occur if, following the occurrence of a Guarantor Credit
Event, the Guarantor's unsecured, unguaranteed and
unsubordinated long term debt is rated BBB- by Standard &
Poor's Ratings Group ("S&P"), a division of McGraw Hill
Corporation and Baa3 by ▇▇▇▇▇'▇ Investors Service Inc.
("MOODY'S") or higher (or any successor to S&P's or, as
the case may be, Moody's ratings business or, if there is
no such successor, such other internationally recognised
credit rating organisation as the Lessor may reasonably
specify (in which case references in this Agreement to S&P
or Moody's credit rating scales and rating terminology
shall be construed as references to the equivalent scales
and terminology of such successor or, as the case may be,
such organisation so specified)) ;
"GUARANTOR CREDIT EVENT" means an event which shall occur
if the Guarantor's unsecured, unguaranteed and
unsubordinated long term debt is rated below BBB- by
Standard & Poor's Ratings Group ("S&P"), a division of
McGraw Hill Corporation or Baa3 by ▇▇▇▇▇'▇ Investors
Service Inc. ("MOODY'S") (or any successor to S&P's or, as
the case may be, Moodys' ratings business or, if there is
no such successor, such other internationally recognised
credit rating organisation as the Lessor may reasonably
specify (in which case references in this Agreement to S&P
or Moody's credit rating scales and rating terminology
shall be construed as references to the equivalent scales
and terminology of such successor or, as the case may be,
such organisation so specified)) or the unsecured,
unguaranteed and unsubordinated long term debt of the
Guarantor shall cease to be rated at all by both such
agencies;
"GUARANTOR CREDIT EVENT CURE DATE" shall have the meaning
attributed to that term in Clause 22.6(B);
"GUARANTOR CREDIT EVENT OCCURRENCE DATE" shall have the
meaning attributed to that term in Clause 22.2(a);
"GUARANTOR'S GROUP" means the Guarantor and its Holding
Company (US) and its Subsidiaries (US) from time to time;
"HAZARDOUS MATERIAL" means any element or substance,
whether natural or artificial, and whether consisting of
gas, liquid, solid or vapour, whether on its own or in any
combination with any other element or substance, which is
listed, identified, defined or determined by any
applicable law to be, to have been, or to be capable of
being or becoming harmful to mankind or any living
organism or damaging to the Environment including without
limitation oil (as defined in the United States Oil
Pollution Act of 1990, as amended) and all hazardous
substances (as defined in the United States Comprehensive
Environmental Response, Compensation and Liability Act of
1980, as amended);
"HOLDING COMPANY" means any holding company within the
meaning of section 736 of the Companies ▇▇▇ ▇▇▇▇;
"HOLDING COMPANY (US)" means a corporation which owns,
directly or indirectly, more than 50% of the voting stock
(as defined in the definition of "SUBSIDIARY (US)") of
another corporation;
"HULL INSURANCES" means the insurances described in Clause
9.1(a)(i);
"ICTA 1988" means the Income and Corporation Taxes ▇▇▇
▇▇▇▇;
"INCREASED COST" shall have the meaning attributed to that
term in Clause 24.4.
"INDEMNIFIED PERSONS" shall have the meaning attributed to
that term in Clause 25.1 (a);
"INITIAL SERVICE CONTRACTOR" means BHP Petroleum
(Americas) Inc., a company incorporated under the laws of
the State of Delaware in the United States of America;
"INSOLVENCY EVENT" means, in relation to any person any of
the following:
(a) that person is unable to pay its debts as they fall
due within the meaning of section 123(1) of the
Insolvency ▇▇▇ ▇▇▇▇ or has a voluntary arrangement
proposed under section 1 of the Insolvency Act 1986
or admits in writing its inability to pay its debts
as they mature or declares a moratorium on the
payment of all or a substantial part of its
indebtedness or makes a general assignment for the
benefit of creditors or is subject to or applies
for winding-up or liquidation proceedings or is
successfully put into forced or voluntary
liquidation (except for the purpose of (i)
voluntary reorganisation of that person previously
agreed in writing by the Lessor not involving the
insolvency of that person and (ii) voluntary
reorganisation of any other person not involving
the insolvency of that person); or
(b) that person or any creditor or shareholder of that
person petitions or applies to any court, tribunal
or authority for the appointment of, or that person
has or suffers to be appointed, any examiner,
administrator, administrative receiver, receiver,
liquidator, trustee or similar officer of it, its
undertaking or any substantial part of its assets
(unless in the case of a petition or application by
a creditor, it is established to the reasonable
satisfaction of the Lessor that such petition or
application is of a frivolous or vexatious nature
or such petition or application is dismissed within
thirty (30) days); or
(c) that person shall suffer a distress, execution,
sequestration, attachment or other process or the
same is being levied or enforced upon or sued out
against, in each case against the whole or a
substantial part of the assets, rights or revenues
of that person or a creditor takes possession of
the whole or a substantial part of the assets,
rights and revenues of that person, and such
distress, execution, attachment, sequestration or
other process is not dismissed or released or that
person does not regain possession in each case
within ten (10) Business Days provided that an
arrest or other detention of the Vessel shall not
of itself be an Insolvency Event if the provisions
of Clause 12.17 are being complied with by the
Lessee; or
(d) that person otherwise enters into any settlement or
takes any corporate action or that person or any
creditor or shareholder of that person takes any
steps in relation to that person under any law,
regulation or decree of any applicable jurisdiction
whether now or hereafter in effect relating to or
which has an equivalent effect to any of (a), (b)
or (c) above;
"INSTALMENT" means each of the First Instalment, the
Second Instalment and the Delivery Instalment;
"INSTALMENT DATE" means:
(a) in respect of the First Instalment, the date during
which the Effective Time (as such term is defined
in the Novation Agreement) falls;
(b) in respect of the Second Instalment, the date
described in the clause 8.3.4 of the Shipbuilding
Contract; and
(d) in respect of the Delivery Instalment, the date
described in clause 8.3.5 of the Shipbuilding
Contract;
or, in each case, such other date or dates as the Lessee
may notify to the Lessor upon giving not less than five
(5) Business Days' notice (a "5 B.D. NOTICE") and, in the
case of the Delivery Instalment, subject to the Lessee
having given the Lessor at least one 5 B.D. Notice, such
other date or dates as the Lessee may notify to the Lessor
upon giving not less than one (1) Business Day's notice;
"INSURANCE ADVISER'S FEE" means the fees, charges and
expenses paid or payable by the Lessor to the Lessor's
insurance adviser in respect of the transactions
contemplated by the Lease Documents, incurred up to and
including the Delivery Date (excluding any VAT thereon);
"INSURANCES" means all policies and contracts of insurance
(which expression includes all entries of the Vessel in a
protection and indemnity or war risks association) which
are from time to time prior to or during the Lease Period
in place or taken out or entered into (a) pursuant to
Clause 9 in respect of any part of the Vessel or (b)
otherwise howsoever in connection with the Vessel and, in
each case, all benefits thereof (including claims of
whatsoever nature and return of premiums);
"IRRECOVERABLE VAT" means any amounts paid or payable by
or on behalf of the Lessor in respect of Value Added Tax
under or as contemplated by any of the Relevant Lease
Documents to the extent the Lessor shall determine that
the Lessor or, if the Lessor is a member of a group for
Value Added Tax purposes, the representative member has
not or will not receive a credit (whether by way of credit
or repayment) for that amount as "INPUT TAX" (as that
expression is defined in sub-section (1) of section 24 of
VATA) under sections 25 and 26 of VATA (nor receive a
credit for it under any similar or equivalent legislation)
PROVIDED THAT in calculating the amount of Irrecoverable
VAT (if any) it shall be assumed that neither the Lessor
nor any representative member has entered into any
transactions other than as contemplated by the Relevant
Lease Documents and that accurate and timely VAT returns
have been made by the Lessor or the representative member;
"ISM CODE" means:
(a) The International Safety Management Code for the
Safe Operation of Ships and for Pollution
Prevention currently known or referred to as the
"ISM Code", adopted by the Assembly of the
International Maritime Organisation by Resolution
A.741(18) on 4th November 1993 and incorporated on
19th May 1994 into chapter IX of the International
Convention for the Safety of Life at Sea 1974
(SOLAS 1974); and
(b) all further resolutions, circulars, codes,
guidelines, regulations and recommendations which
are now or may in the future be issued by or on
behalf of the International Maritime Organisation
or any other entity with responsibility for
implementing the ISM code, including, without
limitation, the "Guidelines on implementation or
administering of the International Safety
Management (ISM) Code by Administrations" produced
by the International Maritime Organisation pursuant
to Resolution A.788(19) adopted on 25th November
1995;
as the same may be amended, supplemented or replaced from
time to time;
"JOINT VENTURE" means (a) with respect to properties
located in the United States of America, any partnership,
corporation or other entity, in which up to and including
50% of the partnership interests, outstanding voting stock
or other equity interests is owned, directly or
indirectly, by the Guarantor and/or one or more
subsidiaries, and (b) with respect to properties located
outside the United States of America, any partnership,
corporation or other entity, in which up to and including
60% of the partnership interests, outstanding voting stock
or other equity interests is owned, directly or
indirectly, by the Guarantor and/or one or more
Subsidiaries (US);
"LEASE DOCUMENTS" means the Relevant Lease Documents, the
Original Shipbuilding Contract, the Sub-Lease, the OFE
Supervision Agreement, any Service Contract and any other
document, notice, letter or instrument designated as a
Lease Document by the Lessor and the Lessee;
"LEASE PERIOD" means the period during which the Lessee
shall be entitled to possession and use of the Vessel in
accordance with this Agreement being the period, if any,
commencing on (and including) the Delivery Date and
terminating on (and including) the Termination Date;
"LEASE PERIOD END DATE" means the later of the Primary
Period End Date and the last day of the final Secondary
Lease Period;
"LESSEE" means Global Marine Leasing Corporation;
"LESSOR" means Nelstar Leasing Company Limited;
"LESSOR ACTION" means any action on the part of the Lessor
required or permitted pursuant to this Agreement,
including, but not limited to, the giving, refusing,
revocation or withdrawal of any consent or approval;
"LESSOR'S AGENT" means GMIDC;
"LESSOR'S ARRANGEMENT FEE" means the amount of the fee
(excluding VAT thereon) paid or payable by the Lessor to
Atlas Oceanic Limited for services rendered to the Lessor
in relation to the arrangement of the transactions
contemplated by this Agreement and the other Lease
Documents;
"LESSOR'S COST" as at any time means the sum equal to the
aggregate of the amounts paid by the Lessor by way of
reimbursement to the Lessor's Agent pursuant to the
Construction Supervision Agreement or paid to the Builder
pursuant to the Shipbuilding Contract, being the aggregate
of the Instalments (to the extent paid up to and including
that time) calculated in each case by reference to the
date on which the Lessor makes payment of the relevant
Instalment under the Construction Supervision Agreement in
reimbursement of expenditure incurred by the Lessor's
Agent on behalf of the Lessor or (as the case may be)
makes payment to the Builder pursuant to the Shipbuilding
Contract;
"LESSOR'S EXPENSES" means the Lessor's Arrangement Fee,
the Lessor's Legal Expenses and the Insurance Adviser's
Fee (if any) together with any "desk-top" valuation fee
incurred by the Lessor in connection with the Vessel prior
to the payment of the Delivery Instalment;
"LESSOR'S GROUP" means the Lessor and its ultimate Holding
Company (if any) from time to time and any company which
is from time to time a Subsidiary of that Holding Company;
"LESSOR'S LEGAL EXPENSES" means the amount of fees,
disbursements and incidentals (excluding VAT thereon) paid
or payable by the Lessor to Wilde Sapte and any relevant
overseas legal advisers for services rendered to the
Lessor in relation to, inter alia, the preparation,
negotiation and completion of the transactions
contemplated by this Agreement and the other Lease
Documents Provided that the amount of Wilde Sapte's fees
(excluding disbursements, incidentals and any VAT thereon)
which shall constitute part of the Lessor's Legal Expenses
shall not exceed a maximum amount separately agreed;
"LESSOR'S LIEN" means a Lien of the type referred to in
Clause 5.2(b) but excluding (other than for the purposes
of any title warranty in respect of the Vessel which the
Lessor has agreed in the Relevant Lease Documents to give
on sale of the Vessel) Liens referred to in the proviso to
that Clause;
"LIABILITY" shall have the meaning attributed to that term
in Clause 25.1(a);
"LIABILITY INSURANCES" means the insurances described in
Clause 9.1(a)(ii);
"LIBID" in relation to a particular amount for a
particular period, means LIBOR for the amount and period
LESS zero point one two five per cent (0.125%);
"LIBOR" means, in relation to a particular period:
(i) the offered rate for deposits of Sterling
for a period equal to such period at or about 11.00 a.m.
(London time) on the first day of such period as displayed
on Telerate page 3750 (British Bankers' Association
Interest Settlement Rates) or such other page as may
replace page 3750 on such system or on any other system of
the information vendor for the time being designated by
the British Bankers' Association to calculate British
Bankers' Association's Interest Settlement Rate (as
defined in the British Bankers' Association's Recommended
Terms and Conditions dated 5th August, 1985); or
(ii) if on such date no such rate as is mentioned in
paragraph (i) above is displayed, LIBOR for such
period shall be the arithmetic mean (rounded
upwards if necessary to five decimal places) of the
rates respectively quoted to the Bank by each of
the Reference Banks at the request of the Bank (or,
if not all the Reference Banks provide a quotation
when requested, the arithmetic mean of the rates
which are quoted) as such Reference Banks' offered
rates for deposits of Sterling in an amount
approximately equal to the amount in relation to
which LIBOR is to be determined for a period
equivalent to such period to prime banks in the
London Inter-bank Market at or about 11.00 a.m.
(London time) on the first day of such period; or
(iii) if on such date no such rate can be ascertained
pursuant to either paragraph (i) or paragraph (ii)
of this definition, LIBOR for such period shall be
the rate, determined by the Lessor at which the
Bank would be able to obtain deposits of Sterling
in an amount approximately equal to the amount in
respect of which LIBOR is to be determined, from
whatever source it may reasonably select for a
period equivalent to such period at or about 11.00
a.m. (London time) on the first day of such period;
"LIEN" means any right of ownership, security, retention
of title, right of possession or detention, mortgage,
charge, lien, pledge, encumbrance, lease or other
bailment, assignment, statutory right in rem,
hypothecation, attachment, levy, claim, detention,
proceeding or set-off (other than any right of set-off
arising in favour of a banker by operation of law which
has not been exercised) or any agreement or arrangement
having the effect of creating a security interest or any
other encumbrance or security interest whatsoever,
howsoever and wheresoever created or arising;
"LONDON BUSINESS DAY" means a day on which dealings in
Sterling deposits are carried on in the London Inter-Bank
Market and (other than a Saturday or Sunday, or holiday
scheduled by law) on which banks are open for business in
the City of London;
"LOSSES" shall have the meaning attributed to that term in
Clause 25.1(a) and "LOSS" shall be construed accordingly;
"LOSS PAYABLE CLAUSE" means the provisions regulating the
recipient of payment of sums recoverable under the Hull
Insurances in respect of the Vessel which are to be
incorporated in the relevant insurance documents, such
Loss Payable Clause to be in the form of Schedule 7 or in
such other forms as may from time to time be required in
writing by the Lessor;
"MATERIAL SUBSIDIARY (US)" means any Subsidiary (US) whose
gross assets or net assets represent 10% or more of the
consolidated gross assets or consolidated net assets
respectively of the Guarantor's Group;
"MONTH" or "MONTH" means a period beginning in one
calendar month and ending in the next succeeding (or
stipulated following) calendar month on the day
numerically corresponding to the day of the calendar month
on which it started, provided that (i) if the period
started on the last Business Day in a calendar month or if
there is no numerically corresponding day, it shall end on
the last Business Day in such next calendar month and (ii)
if such numerically corresponding day is not a Business
Day, the period shall end on the preceding Business Day
and "MONTHS" and "MONTHLY" shall be construed accordingly;
"MORATORIUM" shall have the meaning attributed to that
term in Clause 23.3;
"NEW SCHEDULE 2, PART A" means each new Part A of Schedule
2 substituted for the then existing Part A of Schedule 2
in accordance with Clause 22.5 (Security Provision);
"NON-DEPOSIT BANK CASH ADDITIONAL SECURITY" means any
Additional Security other than the Additional Security
described in Clause 22.3(b);
"NOTICE" shall have the meaning attributed to that term in
Clause 31.6;
"NOVATION AGREEMENT" means the agreement entered or to be
entered into between the Builder, the Lessee and the
Lessor pursuant to which the Original Shipbuilding
Contract is further amended and novated by the Lessee in
favour of the Lessor;
"OFE" shall have the meaning attributed to that term in
the Shipbuilding Contract;
"OFE SUPERVISION AGREEMENT" means the agreement entered or
to be entered into between the Builder and GMIDC with
respect to the supervision by GMIDC of the provision of
the OFE.
"OFE SUPPLIERS" shall have the meaning attributed to that
term in the Novation Agreement;
"ORIGINAL CURRENCY" shall have the meaning attributed to
that term in Clause 31.12;
"ORIGINAL SHIPBUILDING CONTRACT" means the agreement for
the construction of the Vessel dated 27th February 1998
between the Builder and GMIDC as amended and novated
pursuant to a novation agreement of even date to this
Agreement made between the Builder, GMIDC and the Lessee
and including, without limitation, all plans, technical
drawings and specifications relating thereto;
"OTHER CURRENCY" shall have the meaning attributed to that
term in Clause 31.12;
"PAYMENT AGREEMENTS" means, together, the CIBC Payment
Agreement and the Commerzbank Payment Agreement and
"PAYMENT AGREEMENT" means either of them;
"PAYMENT BANK EVENT OF DEFAULT" means, in relation to a
Payment Bank, any of the following:
(i) the failure by such Payment Bank to pay any amount
due under the Payment Agreement to which such
Payment Bank is a party; or
(ii) an Insolvency Event occurs in relation to such
Payment Bank; or
(iii) an event occurs which, with the giving of notice,
the lapse of time, the making of any determination
or any combination of any number of these three
would, in the opinion of the Lessor, constitute an
Insolvency Event in relation to such Payment Bank;
"PAYMENT BANKS" means, together, Commerzbank and CIBC and
"PAYMENT BANK" means either of them or, where the context
requires, shall mean a Replacement Payment Bank (as such
term is defined in either Payment Agreement);
"PAYMENT BANKS INTEREST ACCRUAL" means, for the Relevant
Date in any Calculation Period, the amount shown for that
Calculation Period in the column headed "Payment Banks
Interest Accrual" in Part A of Schedule 2 calculated in
accordance with the provisions of clause 3 of each Payment
Agreement;
"PAYMENT BANKS LIMIT" means, for any Calculation Period,
the highest amount shown in Part A of Schedule 2 against
any date set out in that schedule which falls within that
Calculation Period, Provided that for this purpose the
date on which that Calculation Period ends shall be deemed
not to fall within that Calculation Period;
"PAYMENT BANKS PRINCIPAL BALANCE" means, for the Relevant
Date in any Calculation Period, the amount shown for that
Calculation Period in the column headed "Payment Banks
Principal Balance" in Part A of Schedule 2;
"PERMITTED LIEN" means:
(i) any Lien created by the Lessee in favour of the
Lessor as security for the Lessee's obligations
under this Agreement;
(ii) any Lessor's Lien;
(iii) any Lien for Taxes either not yet assessed or,
if assessed, not yet due and payable or being
contested in good faith by appropriate proceedings
(and for the payment of which adequate reserves
have been provided) so long as any such proceedings
or the continued existence of such Lien do not
involve any reasonable likelihood of the sale,
forfeiture or loss of, or of any interest in, the
Vessel (or any part thereof);
(iv) Liens arising out of claims, judgments or awards
against the Lessee which are being contested in
good faith or which are subject to a pending appeal
and for which there shall have been granted a stay
of execution pending such appeal and for the
payment of which adequate reserves have been
provided so long as any such proceedings do not
involve any reasonable likelihood of the sale,
forfeiture or loss of, or of any interest in, the
Vessel (or any part thereof);
(v) any Lien for salvage and any ship repairer's or
outfitter's possessory lien in each case for a sum
not exceeding an amount equal to ten per cent.
(10%) of the Lessor's Cost or the equivalent in any
other currency or any lien for general average or
for officers' or crew's wages not more than ten
(10) Business Days outstanding in the ordinary
course of trading which in each case is not yet due
and payable or is being contested in good faith by
appropriate proceedings (and for the payment of
which adequate reserves have been provided) so long
as any such proceedings or the continued existence
of such Lien do not involve any reasonable
likelihood of the sale, forfeiture or the loss of,
or of any interest in, the Vessel (or any part
thereof);
(vi) any Lien created by the Lessor or any other
person under and as permitted by any Relevant Lease
Document;
(vii) any other Lien, the creation of which has been
expressly permitted in writing by the Lessor;
(viii) any Lien arising by operation of law or by
any contractual right of set-off, in each case in
the ordinary course of the business of the Lessee
in respect of amounts which are not overdue; and
(ix) any Lien in respect of claims which the Lessee
demonstrates to the Lessor's satisfaction are then
covered by the Insurances, provided that there is
no reasonable likelihood of the sale or forfeiture
or loss of, or of any interest in, the Vessel (or
any part thereof);
"PLA COSTS" means the percentage rate determined in
accordance with Annex A to the Financial Schedule;
"PRE-LEASE PERIOD" means the period from the date of this
Agreement up to the Delivery Date;
"PRIMARY PERIOD" means the period commencing on the
Delivery Date to and including the Primary Period End
Date, or such shorter period as may be determined in
accordance with the provisions of this Agreement;
"PRIMARY PERIOD END DATE" means the twentieth (20th)
anniversary of the Delivery Date;
"PRIMARY PERIOD RENT" means each instalment of Rent in the
amount determined pursuant to paragraph 1.1 of the
Financial Schedule, as adjusted from time to time pursuant
to the provisions of the Financial Schedule;
"PROCEEDS OF SALE" shall have the meaning attributed to
that term in Clause 20.1;
"PROVIDER OF SECURITY" means each of the Payment Banks,
the Deposit Bank or any Additional Security Provider who
the Lessor agrees in writing shall be a "PROVIDER OF
SECURITY" for the purposes of this Agreement and the other
Relevant Lease Documents;
"PUT OPTION DEED" means the put option deed entered into
or, as the context may require, to be entered into in or
about the date of this Agreement between the Lessor, the
Sub-Lessee and the Builder;
"RATE OF EXCHANGE" shall have the meaning attributed to
that term in Clause 31.12;
"REBATE" shall have the meaning attributed to that term in
Clause 26.5(b);
"REDELIVERY LOCATION" means a port acceptable to the
Lessor and, otherwise than on a redelivery following
service of a Termination Notice, agreed by the Lessee;
"REFERENCE BANKS" means the principal London offices of
each of National Westminster Bank Plc, Lloyds Bank Plc,
Barclays Bank PLC and Midland Bank PLC;
"RELEVANT DATE" means any date within a Calculation Period
designated by the Lessor as a "RELEVANT DATE" and set out
in the column headed "RELEVANT DATE" in Part A of
Schedule 2;
"RELEVANT DISPOSAL" shall have the meaning attributed to
that term in Clause 28.1;
"Relevant Event" means any Termination Event or any event
which, after the giving of notice or lapse of time or
both, or the satisfaction of any other condition (or any
combination thereof), would constitute a Termination
Event;
"RELEVANT LEASE DOCUMENTS" means this Agreement, the
Novation Agreement, the Construction Supervision
Agreement, the Put Option Deed, the Contribution Deed, the
Payment Agreements, the Side Letters, the Guarantee, the
First Deposit Deed, the Second Deposit Deed and any
documents creating or constituting any Additional Security
and any other document, notice, letter or instrument
entered into, issued or given pursuant to the terms of any
of the foregoing and any other document, notice, letter or
instrument designated as a Relevant Lease Document by the
Lessor and the Lessee;
"RELEVANT MEMBER" means any member of the Lessor's Group
other than the Lessor;
"REMAINING OBLIGATIONS" means the obligations of the
Lessee or the Guarantor under each Relevant Lease Document
other than Excluded Obligations;
"RENT" means any or all (as the context requires) of the
Primary Period Rent, the Secondary Period Rent and any
other sum (including any Termination Rent or Termination
Payment) payable by the Lessee pursuant to this Agreement
which is expressed to be by way of Rent or additional
Rent;
"RENT DATE" means each Rent Payment Date and, prior to the
Delivery Date, each date which is assumed for the purposes
of the latest Revised Cash Flow Report to be a Rent
Payment Date and each date on which any additional Rent is
payable;
"RENT LIMIT" shall have the meaning attributed to that
term in Clause 23.1(a);
"RENT PAYMENT DATE" shall have the meaning attributed to
that term in the Financial Schedule;
"REPLACEMENT DEPOSIT BANK" means any Deposit Bank other
than the Bank;
"REQUISITION COMPENSATION" means all sums of money or
other compensation from time to time payable in respect of
the Compulsory Acquisition of the Vessel;
"RESTRICTED ACCESS" in relation to any moneys at any time
standing to the credit of an Account, means either:
(a) the security constituted by the relevant Deposit
Deed is found or held to be invalid, illegal or
unenforceable for (subject as provided below) any
reason whatsoever, including by reason of the
occurrence of an Insolvency Event in relation to
the Lessee or any other person; or
(b) immediate access to such moneys is denied for
(subject as provided below) any reason whatsoever
including by reason of the occurrence of an
Insolvency Event in relation to the Lessee or any
other person,
Provided that there shall be deemed to be excluded:
(i) from paragraph (a), any invalidity, illegality or
unenforceability which would not have arisen but
for, and only but for, the occurrence of an
Insolvency Event in relation to the Deposit Bank or
the relevant Payment Bank; and
(ii) from paragraph (a), any invalidity, illegality or
unenforceability which would not have arisen but
for, and only but for, the Deposit Bank being a
Replacement Deposit Bank and such invalidity,
illegality or unenforceability would not have been
caused or would not have arisen had the Deposit
Bank been the Bank; and
(iii) from paragraph (b), any limit on access to such
moneys which would not have arisen but for, and
only but for, (1) the occurrence of an Insolvency
Event in relation to the Deposit Bank or the
relevant Payment Bank, (2) a claim against the
Deposit Bank or the relevant Payment Bank unless
that claim (aa) is made against the Deposit Bank in
its capacity as holder of the First Account or the
Second Account, (bb) relates to any of the Relevant
Lease Documents or the financing arrangements
contemplated thereby or (cc) is brought by the
Lessee or any person associated (within the meaning
of section 839 ICTA 1988) with the Lessee or (3) a
default in payment by the Deposit Bank in
accordance with the terms of the relevant Deposit
Deed where such default would not have arisen but
for, and only but for, the breach by the Deposit
Bank of its express obligations under such relevant
Deposit Deed other than any such breach which is
caused by or arises as a result of (aa) the
circumstances described in paragraph (a) or (b)
(subject to the provisos in paragraphs (i), (ii)
and (iii), or (bb) a breach by any Security Party
of any of its obligations under the Relevant Lease
Documents;
"REVISED CASH FLOW REPORT" shall have the meaning
attributed to that term in the Financial Schedule;
"REVISED STRIP LIMIT" means, with respect to each of the
Guarantor Credit Event Cure Dates referred to in Clause
22.2(c), the Strip Limit which would have applied on such
Guarantor Credit Event Cure Date but for, and only but
for, the occurrence of a Guarantor Credit Event;
"RISK ASSET WEIGHTING" shall have the meaning attributed
to that term in the Financial Schedule;
"RPI" shall have the meaning attributed to that term in
the Financial Schedule;
"SAFETY MANAGEMENT CERTIFICATE" shall have the meaning
attributable to that term in the ISM Code;
"SAFETY MANAGEMENT SYSTEM" shall have the meaning
attributable to that term in the ISM Code;
"SECOND ACCOUNT" means the account number ▇▇▇▇▇▇▇ entitled
"Global Marine Leasing Corporation: Glomar ▇.▇. ▇▇▇▇▇
Number Two Account" opened by the Lessee with the Deposit
Bank to which the Lessee may from time to time be obliged
to credit moneys pursuant to the provisions of this
Agreement and the Second Deposit Deed;
"SECOND ACCOUNT INTEREST ACCRUAL" means, for the Relevant
Date in any Calculation Period, the amount shown for that
Calculation Period in the column headed "Second Account
Interest Accrual" in Part A of Schedule 2 calculated in
accordance with the provisions of clause 3 of the Second
Deposit Deed;
"SECOND DEPOSIT DEED" means the deed so entitled, entered
into or, as the context may require, to be entered into on
or about the date of this Agreement between the Lessee,
the Lessor and the Deposit Bank in relation to the Second
Account;
"SECOND INSTALMENT" means the aggregate amount paid or, as
the context may require, payable by the Lessor (i) to the
Lessor's Agent pursuant to clause 5.1 of the Construction
Supervision Agreement and (ii) to the Builder pursuant to
the Shipbuilding Contract on the date upon which the
instalment of the Total Vessel Cost becomes due under
clause 8.3.4 of the Shipbuilding Contract;
"SECONDARY PERIOD" means each period for which the leasing
of the Vessel under this Agreement is extended in
accordance with Clause 6.2;
"SECONDARY PERIOD RENT" means each instalment of Rent in
the amount determined pursuant to paragraph 1.2 of the
Financial Schedule;
"SECURITY PARTY" means each party to a Lease Document
(other than the Lessor, the Deposit Bank, the Payment
Banks and any Additional Security Provider who is NOT a
member of the Guarantor's Group and who the Lessor agrees
in writing shall be a "SECURITY PARTY" for the purposes of
this Agreement and the other Relevant Lease Documents);
"SERVICE CONTRACT" means the agreement to be entered into
between the Sub-Lessee and the Initial Service Contractor
and any further service contract or contracts for the
Vessel entered into by the Lessee and a Service Contractor
and under which the Service Contractor may direct the
operations of the Vessel;
"SERVICE CONTRACTOR" means the Initial Service Contractor
or any other person who is entitled to direct the
operations of the Vessel under the terms of a Service
Contract;
"SETTLEMENT DATE" means the earlier of:
(i) the first Business Day which falls after the date
which falls one hundred and eighty (180) days after
the Date of Total Loss; and
(ii) the date on which the Total Loss Proceeds in
respect of the Total Loss are received by the
Lessor;
"SHIPBUILDING CONTRACT" means the Original Shipbuilding
Contract as amended and novated by the Novation Agreement;
"SIDE LETTERS" means each of the letters issued or, as the
context may require, to be issued on or about the date of
this Agreement by the Lessor which (i) is entitled rate of
writing down allowances (from the Lessor to the Lessee),
(ii) is entitled indexation letter (from the Lessor to the
Lessee), (iii) is entitled tax consultation (from the
Lessor to the Lessee), (iv) is entitled deemed schedules
(from the Lessor to the Lessee), (v) is entitled insurance
side letters from the Lessor's Agent to the Lessor,
(vi) relates to certain standby purchaser arrangements
(between the Lessor, the Guarantor and the Lessee) and
(vii) is entitled arrangement fee (from the Lessor to
Atlas Oceanic Limited);
"SLV" means, for any Calculation Period, the Termination
Payment calculated for the Relevant Date falling within
that Calculation Period by the Lessor in accordance with
the provisions of paragraph 4 of the Financial Schedule
and which is shown in the column headed "SLV" in Part A of
Schedule 2;
"STERLING" and "POUNDS-STERLING" and "POUNDS" mean the
lawful currency for the time being of the United Kingdom
and in respect of all payments to be made under this
Agreement in Sterling means immediately available, freely
transferable cleared funds in Sterling;
"STERLING EQUIVALENT" of any amount denominated in a
currency other than Sterling on any date means the
equivalent in Sterling of such amount calculated by
converting such amount into Sterling at the rate certified
by the Lessor as being the spot rate of exchange for
purchasing Sterling with such currency quoted by the Bank
at or about 11.00 a.m. (London time) two (2) London
Business Days prior to such date for delivery on such
date;
"STRIP AMOUNT" means, in respect of any date, the SLV for
the Calculation Period in which that date falls less the
aggregate of the Value of all Termination Security
calculated for that date and set out in the column headed
"STRIP AMOUNT" in Part A of Schedule 2;
"STRIP LIMIT" means, for any Calculation Period, the
amount set out in the column headed "STRIP LIMIT" in Part
A of Schedule 2 opposite such Calculation Period;
"SUB-LEASE" means any lease or charter agreement entered
or, as the context may require, to be entered into between
the Lessee and the Sub-Lessee providing for, inter alia,
the leasing or chartering of the Vessel by the Lessee to
the Sub-Lessee and more particularly described in Clause
30(A);
"SUB-LESSEE" means Global Marine ▇.▇. ▇▇▇▇▇ Limited, a
company incorporated under the laws of England whose
registered office is at ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇,
▇▇▇▇▇▇▇ or any other member of the Guarantor's Group or
any other person permitted to sub-lease or sub-charter the
Vessel in accordance with the provisions of Clause 30(A);
"SUBSIDIARY" means any subsidiary within the meaning of
section 736 of the Companies ▇▇▇ ▇▇▇▇;
"SUBSIDIARY (US)" means a corporation more than 50% of the
outstanding voting stock of which is owned, directly or
indirectly, by the Guarantor or by one or more other
Subsidiaries (US), or by the Guarantor and one or more
other Subsidiaries (US). For the purposes of this
definition, "voting stock" means stock that ordinarily has
voting power for the election of directors, whether at all
times or only so long as no senior class of stock has such
voting power by reason of any contingency. A Joint
Venture shall not be a Subsidiary (US);
"SURVIVING PARTS" in the event of a Total Loss of the
Vessel means those spares and other parts comprising part
of the Vessel which survive that Total Loss, whether
through being stored ashore or otherwise;
"TAX" means all present and future taxes, charges,
imposts, duties, levies of any kind whatsoever (whether
levied by deduction, withholding or otherwise), or any
amount payable on account of or as security for any of the
foregoing, payable at the instance of or imposed by any
statutory, governmental, international, state, federal,
provincial, local or municipal authority, agency, body or
department whatsoever or any central bank, monetary agency
or European Union institution, in each case whether in the
United Kingdom or elsewhere, together with any penalties,
additions, fines, surcharges or interest relating thereto
and "TAXES", "TAXATION" and cognate expressions shall be
construed accordingly;
"TAX LIABILITY" means in respect of any person:
(i) any liability or any increase in the liability of
that person to make any payment or payments of or
in respect of Tax;
(ii) the loss or setting off against income, profits or
gains or against any liability to make a payment or
payments of or in respect of Tax of any relief,
allowance, deduction or credit ("RELIEF") which
would otherwise have been available to that person;
and
(iii) the loss or setting off against any liability to
make a payment or payments of or in respect of Tax
of a right to repayment of Tax which would
otherwise have been available to that person;
and in any case falling within (ii) or (iii) above the
amount that is to be treated as a Tax Liability shall be
determined as follows:
(a) in a case which falls within (ii) above and where
the Relief that was the subject of the loss or
setting off was or would have been a deduction from
or offset against Tax, the Tax Liability shall be
the amount of that Relief;
(b) in a case which falls within (ii) above and which
involves the loss of a Relief which would otherwise
have been available as a deduction from or offset
against gross income, profits or gains the Tax
Liability shall be the amount of Tax which would
(on the basis of the Tax rates current at the date
of the loss and assuming that the person has
sufficient gross income, profits or gains to
utilise the Relief) have been saved but for the
loss of the Relief;
(c) in a case which falls within (ii) above and which
involves the setting off of a Relief which would
otherwise have been available as a deduction from
or offset against gross income, profits or gains,
the Tax Liability shall be the amount of Tax which
has been or will be saved in consequence of the
setting off;
(d) in a case which falls within (iii) above, the Tax
Liability shall be the amount of the repayment that
would have been obtained but for the loss or
setting off.
For the purposes of this definition any question of
whether or not any relief, allowance, deduction, credit or
right to repayment of tax has been lost or set off, and if
so, the date on which that loss or set-off took place,
shall be conclusively determined by the Lessor;
"TAX WRITTEN DOWN VALUE" shall have the meaning attributed
to that term in the Financial Schedule;
"TECHNICAL RECORDS" means all technical data, manuals, log
books, records and other materials and documents (kept or
to be kept for the Vessel in compliance with any
applicable law or regulation of the Flag State or of any
regulatory authority, government entity or international
body or treaty organisation from time to time) and all
additions, renewals, revisions and replacements from time
to time made in accordance with this Agreement;
"TERMINATION DATE" means:
(a) the Lease Period End Date; or
(b) where the leasing of the Vessel to the Lessee or,
if Delivery has not occurred, the obligation of the
Lessor to lease the Vessel to the Lessee, pursuant
to this Agreement terminates by virtue of a Total
Loss under Clause 10 of this Agreement, the Date of
Total Loss; or
(c) where the leasing of the Vessel to the Lessee or,
if Delivery has not occurred, the obligation of the
Lessor to lease the Vessel to the Lessee, pursuant
to this Agreement terminates by reason, in either
case, of the delivery by the Lessor of a
Termination Notice pursuant to Clause 21.3
following the occurrence of any Termination Event,
the date of the Termination Notice; or
(d) where the leasing of the Vessel or, if Delivery has
not occurred, the obligation of the Lessor to lease
the Vessel to the Lessee pursuant to this Agreement
terminates by reason of the voluntary termination
of the leasing of the Vessel under this Agreement
pursuant to Clause 6.4 or 21.4 of this Agreement,
the date upon which the notice given by the Lessee
in accordance with Clause 6.4 or, as the case may
be, 21.4 expires;
"TERMINATION EVENT" means any of the events listed in
Clause 21.1;
"TERMINATION LIMIT" shall have the meaning attributed to
that term in Clause 23.1(b);
"TERMINATION NOTICE" has the meaning attributed to that
term in Clause 21.3;
"TERMINATION PAYMENT" shall have the meaning attributed to
that term in paragraph 4.2 of part 4 of the Financial
Schedule;
"TERMINATION PAYMENT DATE" means, (i) in the case of a
termination pursuant to Clause 10, the Settlement Date
and, (ii) in any other case, the relevant Termination
Date;
"TERMINATION RENT" means an amount calculated in
accordance with paragraph 4.3 of the Financial Schedule;
"TERMINATION SECURITY" at any time, means the aggregate
of:
(a) the Payment Banks Principal Balance;
(b) the Payment Banks Interest Accrual;
(c) the First Account Principal Balance;
(d) the First Account Interest Accrual; and
(e) all Additional Security held by the Lessor at that
time;
"TERMINATION SHORTFALL" means, for any date falling within
a Calculation Period, the amount (if any) by which the
Strip Amount for that date exceeds the Strip Limit for
that date;
"TOTAL LOSS" means:
(a) the actual or constructive or agreed or compromised
or arranged total loss of the Vessel; or
(b) the Compulsory Acquisition of the Vessel; or
(c) the hijacking, theft, condemnation, capture,
seizure, arrest, detention, forfeiture or
confiscation of the Vessel (other than where the
same amounts to Compulsory Acquisition of the
Vessel), unless the Vessel be released and restored
to the Lessee from such hijacking, theft,
condemnation, capture, seizure, arrest, detention
or confiscation within one hundred and eighty (180)
days after the occurrence thereof,
"TOTAL LOSS PROCEEDS" in relation to the Vessel means any
compensation or insurance proceeds received by the Lessor
in respect of a Total Loss of the Vessel which the Lessor
is, as against the payer thereof, unconditionally entitled
to retain;
"TOTAL VESSEL COST" shall have the meaning attributed to
that term in the Shipbuilding Contract;
"US GAAP" means generally accepted accounting principles
in the United States of America set forth in the opinions
and pronouncements of the Accounting Principles Board of
the American Institute of Certified Public Accountants and
statements and pronouncements of the Financial Accounting
Standards Board or in such other statements by such other
entity as may be approved by a significant segment of the
accounting profession of the United States of America, as
in effect from time to time;
"VALUE" means, as calculated at any time in relation to a
particular date, the aggregate value of any security then
held by the Lessor being:
(a) in respect of the security constituted by the
undertakings of the Payment Banks under the Payment
Agreement for the purposes of Termination Security,
the amount which would (following a demand under
Clause 5.4 of each of the Payment Agreements) be
payable by the Payment Banks on that date under
Clause 5.7 of each of the Payment Agreements
(ignoring for these purposes the provisions of
clauses 4.1, 4.6 and 5.7 of each of the Payment
Agreements entitling the relevant Payment Bank to
make any deduction or withholding from such amount
which would be payable) being an amount equal to
the aggregate of the Payment Banks Principal
Balance and the Payment Banks Interest Accrual (at
the time of calculation), less, in each such case,
the aggregate of (A) the amount, if any, of any
withholding or deduction which the Payment Banks
are or will be entitled to make from any payment
under the Payment Agreements and (B) any amount
which, by virtue of invalidity, illegality or
unenforceability, either Payment Bank is relieved
from its obligation to make any payment under the
relevant Payment Agreement (other than by virtue of
invalidity, illegality or unenforceability which
would not have arisen but for, and only but for,
the occurrence of an Insolvency Event in relation
to a Payment Bank), Provided that if the value
allocated pursuant to this paragraph (a) would, but
for this proviso, exceed the Payment Bank Limit for
the Calculation Period in which the relevant date
occurs, such value shall instead be deemed to be
the Payment Bank Limit for the Calculation Period
in which that date occurs;
(b) in respect of cash deposited in either Account,
the principal amount originally deposited in that
Account together with all further amounts deposited
in that Account prior to the time of calculation
plus (i) interest at LIBID credited or which (but
for a default on the part of the Deposit Bank in
performance of its obligations under the Second
Deposit Deed) ought to have been so credited for
any period for which LIBID is known being an amount
equal to the aggregate of the First Account
Interest Accrual and the Second Account Interest
Accrual (at the time of calculation) and (ii) for
any future period up to that date for which LIBID
cannot (at the date of valuation) be ascertained,
interest credited or to be credited to the Second
Account in accordance with the Second Deposit Deed
at a reasonable annual market rate less (aa) the
amount of any transfer (prior to that date) from
that Account made in accordance with the provisions
of the relevant Deposit Deed and less (bb) the
amount of any withholding or deduction which the
Deposit Bank is or will be entitled to make from
any payment under the terms of the relevant Deposit
Deed and less (cc) any amounts in respect of which
there is (at the time of calculation) Restricted
Access, provided that (1) all interest calculations
made for the purpose of this definition shall be
made in accordance with the provisions of the
relevant Deposit Deed on the basis of the actual or
assumed future daily balances taking into account
any additional amounts credited to the relevant
Account and any withdrawals from that Account in
accordance with the relevant Deposit Deed, (2) all
payments to be made by the Payment Banks to either
Account shall be deemed to be made when due and (3)
the amount calculated under this paragraph (b)
shall, if negative, be deemed to be zero;
(c) the Strip Limit for that particular date; and
(d) in respect of any Additional Security not falling
within paragraphs (a), (b) and (c) above, such
value as the Lessor shall allocate acting
reasonably given the type of such Additional
Security, the Lessor's access to it and the
provisions of any applicable law (including,
without limitation, in relation to withholdings and
deductions);
"VALUE ADDED TAX" or "VAT" means value added tax as
provided for in VATA and legislation (whether delegated or
otherwise) supplemental thereto or in any primary or
subordinate legislation promulgated by the European Union
or any body or agency thereof and any tax similar or
equivalent to value added tax imposed by any country other
than the United Kingdom and any similar or turnover Tax
replacing or introduced in addition to any of the same;
"VATA" means the Value Added Tax ▇▇▇ ▇▇▇▇; and
"VESSEL" means:
(a) for the period up to the Primary Period Start
Date, the ultra-deepwater drillship with the Builder's
hull number 1739 currently being constructed by the
Builder and more particularly described in the
specification to the Shipbuilding Contract; and
(b) on and after the Primary Period Start Date, the
motor driven ultra-deepwater drillship of 53,000
operating displacement tonnage having hull number
1739 and to be registered under the Panamanian flag
with the name "GLOMAR ▇.▇. ▇▇▇▇▇" and includes any
share or interest therein and all engines,
machinery, boats, tackle, outfit, equipment, spare
gear, belongings and appurtenances relating to that
Vessel which are at the relevant time the property
of the Lessor whether on board or ashore (but
excluding, where the context so requires, all
Excluded Property) together with all substitutions,
replacements and renewals thereof and additions
thereto from time to time made in or to the Vessel
and where the context so permits "Vessel" includes
any part thereof and all Technical Records relating
to the Vessel.
1.2 INTERPRETATION
(a) The expression "THIS AGREEMENT" includes the
recital hereto and each schedule as the same may
from time to time be amended, supplemented or
substituted by agreement of the parties hereto.
(b) In this Agreement references to:
(i) clauses, paragraphs, sub-paragraphs and
schedules are, unless otherwise specified,
references to clauses, paragraphs, sub-
paragraphs of, and schedules to, this
Agreement, or the relevant part thereof, as
from time to time amended, supplemented or
substituted in accordance with the
provisions of this Agreement;
(ii) without prejudice to Clause 1.2(c)(i),
any statute or other legislative provision
shall, unless otherwise specified, be read
to include any statutory or legislative
modification or re-enactment thereof, or
substitution therefor;
(iii) any agreement or instrument shall
include such agreement or instrument as it may from
time to time be extended, amended,
supplemented, novated or substituted with
the agreement of the parties thereto and,
where this Agreement and such agreement
expressly so provides, the parties hereto;
(iv) "PERSON" shall include any individual,
company, corporation, firm, partnership,
joint venture, association, trust,
unincorporated organisation or government or
state (including any agency, department or
political sub-division thereof) whether
having distinct legal personality or not;
(v) "ASSIGNEE" or "ASSIGNEES" of a person
shall include any person who has assumed all or
some of the rights and/or obligations of the
relevant person, whether by assignment,
novation or otherwise;
(vi) reference to any person shall include
its successors and, other than in the case of
the Bank, its permitted assignees and
permitted transferees in accordance with
their respective interests;
(vii) the "ASSETS" of any person shall be
construed as a reference to the whole or any
part of its business, undertaking, property,
assets and revenue (including any right to
receive revenues);
(viii) "INDEBTEDNESS" shall be construed
so as to include any obligation (whether
incurred as principal or as surety) for the
payment or repayment of money, whether
present or future, actual or contingent;
(ix) the "WINDING-UP", "DISSOLUTION" or
"ADMINISTRATION" of a company or corporation
shall be construed so as to include any
equivalent or analogous proceedings under
the law of the jurisdiction in which such
company or corporation is incorporated or
any jurisdiction in which such company or
corporation carries on business including
the seeking of liquidation, winding-up,
reorganisation, dissolution, administration,
arrangement, adjustment, protection or
relief of debtors;
(x) words importing the plural include the
singular and vice versa;
(xi) a "LAW" (1) includes any common law,
statute, decree, constitution, regulation,
order, judgment or directive of any
governmental entity; (2) includes any
treaty, pact, compact or other agreement to
which any government entity is a signatory
or party; (3) includes any judicial or
administrative interpretation or application
thereof and (4) is a reference to that
provision as amended, substituted or
re-enacted; and
(xii) a document being in the "AGREED FORM"
shall be read and construed as referring to such
document in the form thereof which has been
initialled for identification purposes by
the parties hereto or their respective legal
counsel on their behalf.
(c) In the Financial Schedule, references to parts,
paragraph and annexes are, unless otherwise stated,
references to parts and paragraphs of, and annexes
to, the Financial Schedule as from time to time
amended, supplemented or substituted, and:
(i) references to statutory provisions are
to statutory provisions as at the date of this
Agreement and, to that extent, Clause
1.2(b)(ii) shall not apply to the Financial
Schedule; and
(ii) any references to the occurrence of an
event shall include a reference to the failure of
an assumed event to occur.
(d) Clause and other headings are for ease of reference
only and shall not affect the interpretation of
this Agreement.
1.3 CONFLICTS
In the event of any conflict between this Agreement and
any of the other Lease Documents, the provisions of this
Agreement shall prevail.
1.4 DETERMINATIONS
(a) Any reference to the timing or amount of any
payment to be made or received, or assumed to be
made or received, by the Lessor or to the making of
any determination, calculation or quantification
under this Agreement (each a "DETERMINATION" and
"DETERMINE" shall be construed accordingly) shall
be construed as a reference to such Determination
as determined by the Lessor in accordance with this
Agreement.
(b) If requested in writing by the Lessee, the Lessor
shall provide the Lessee with written details
(including any relevant calculations) of any
Determination made in connection with this
Agreement (for the avoidance of doubt Clause 32
(Confidentiality) of this Agreement shall apply to
all information disclosed in accordance with this
paragraph).
(c) Subject to paragraph 3.15 of the Financial
Schedule, the Lessor shall be entitled (but not
obliged) to make a Determination that any
Assumption (including for this purpose any
Termination Assumption) is incorrect if in good
faith it has reasonable grounds for believing that
a change in that Assumption will occur, but shall
be obliged to make a Determination that a change in
that Assumption has occurred as soon as is
reasonably practicable after that change has
actually occurred.
(d) The Lessor shall have reasonable grounds for having
a belief that a legislative change will or is
likely to occur if an official announcement is made
by or on behalf of any body mentioned in the
definition of Tax (including, for the avoidance of
doubt, a statement by the Chancellor of the
Exchequer) or other competent authority to that
effect, and shall have reasonable grounds for
having a belief that any other change will occur if
it has obtained information from any body mentioned
in the definition of Tax (including any challenge
or dispute by the Inland Revenue of anything
assumed in or contemplated by the Financial
Schedule) or other competent authority or
professional advice relating to that information or
any published announcement, any practice,
concession or judicial decision (which shall, in
each case, be appropriate to the change in point)
from which it appears that a change will occur.
(e) If the Lessee considers that:
(i) any Determination of the Lessor is or may
not be accurate or correct, the Lessee may,
within twenty (20) Business Days of being
notified of that Determination, so inform
the Lessor by notice in writing, giving its
reasons for considering it not to be
accurate or correct; or
(ii) the Lessor ought to have made a
Determination but has failed to do so, the
Lessee may so inform the Lessor by notice in
writing within twenty (20) Business Days of
the date the Lessee becomes aware of the
alleged omission, giving its written reasons
why it considers that a Determination ought
to have been made.
(f) As soon as practicable after a notification under
Clause 1.4(e) by the Lessee, if requested in
writing by the Lessee, the Lessor and the Lessee
shall discuss with each other the Determination in
question. If the Lessor and the Lessee cannot
agree to the correctness or otherwise of such
Determination within a further period of twenty
(20) Business Days of the Lessee's notice referred
to in Clause 1.4(e) above, then both the Lessee and
the Lessor shall be at liberty to pursue any legal
action or proceedings;
(g) If the Lessor agrees that the Determination in
question was materially inaccurate or incorrect,
then:
(i) in relation to a Determination in
connection with a Cashflow Report, a revised Cashflow
Report shall be prepared in accordance with
the Financial Schedule, taking account of
the corrected Determination; or
(ii) in any other case, and subject to any
express provision in this Agreement, such
necessary adjustments by way of payment
between the Lessor and the Lessee shall be
made as are required in order to leave the
Lessor in the same after-Tax position as
that in which it would have been if it had
originally made the Determination as
corrected.
(h) The foregoing provisions of this Clause 1.4 shall
be without prejudice to the obligations of the
Lessee to make payment of Rent or any other payment
pursuant to this Agreement on the due date for
payment in the amount demanded by the Lessor in
accordance with the Lessor's original
Determination.
(i) The Lessor shall be entitled to charge for (and the
Lessee shall so pay) for the Cost of Management
Time in respect of any matter undertaken or
anything done at the request of the Lessee under
this Clause 1.4 save and to the extent the Lessor
would have undertaken that matter in any event or
where the Lessor's Determination is subsequently
established to be incorrect to the detriment of the
Lessee by more than five thousand pounds-sterling
(5,000) of the (corrected) Determination referred to in
Clause 1.4(g) above.
2. REPRESENTATIONS AND WARRANTIES
2.1 REPRESENTATIONS AND WARRANTIES BY THE LESSEE
The Lessee acknowledges that the Lessor has entered or, as
the case may be, shall enter into the Relevant Lease
Documents to which it is, or is to be, a party in full
reliance on representations by the Lessee in the terms set
out in Part 1 of Schedule 4 and the Lessee warrants to the
Lessor that the statements made in Part 1 of Schedule 4
are, as at the date of this Agreement, true and accurate.
2.2 REPRESENTATIONS AND WARRANTIES BY THE LESSOR
The Lessor acknowledges that the Lessee has entered or, as
the case may be, shall enter into the Lease Documents to
which it is, or is to be, a party in full reliance on
representations by the Lessor to the Lessee in the terms
set out in Part 2 of Schedule 4 and the Lessor warrants to
the Lessee that the statements made in Part 2 of Schedule
4 are, as at the date of this Agreement, true and
accurate.
2.3 REPETITION OF REPRESENTATIONS AND WARRANTIES
The representations and warranties referred to in Clauses
2.1 and 2.2 shall be deemed to be repeated on, and by
reference to facts and circumstances at, each Instalment
Date and the Delivery Date.
2.4 SURVIVAL OF REPRESENTATIONS AND WARRANTIES
The representations and warranties referred to in Clauses
2.1 and 2.2 and the rights of the respective parties in
respect thereof shall survive the execution and delivery
of this Agreement and Delivery.
2.5 NOT PREJUDICED BY THE LESSOR'S INVESTIGATION
The rights and remedies of the Lessor in relation to any
misrepresentation or breach of warranty on the part of the
Lessee or the Guarantor shall not be prejudiced by any
investigation by or on behalf of the Lessor into the
affairs of any person (other than the Lessor), by the
Lessor being a party to the Relevant Lease Documents, by
the performance of any of the Lease Documents or by any
other act or thing which may be done or omitted to be done
by the Lessor under any of the Relevant Lease Documents
which would or might, but for this Clause 2.5, prejudice
such rights and remedies, other than an express written
waiver of such rights and remedies by the Lessor.
3. CONDITIONS PRECEDENT
3.1 LESSOR'S CONDITIONS PRECEDENT
The obligations of the Lessor under this Agreement and the
other Relevant Lease Documents to which it is a party
shall be subject to the prior satisfaction in full, or
waiver or deferral in writing by the Lessor to the extent
not so satisfied, of the conditions precedent set out in
Part 1 of Schedule 5.
3.2 CONDITIONS PRECEDENT TO LESSOR'S PAYMENT OBLIGATIONS
The obligation of the Lessor to make payment of any
Instalment and to take delivery of the Vessel pursuant to
the terms of the Shipbuilding Contract shall be subject to
the prior satisfaction in full, or waiver in writing by
the Lessor to the extent not so satisfied, of the
conditions precedent set out in Part 2 of Schedule 5.
3.3 CONDITIONS PRECEDENT TO DELIVERY
The obligation of the Lessor to take delivery of the
Vessel pursuant to the terms of the Shipbuilding Contract
and to deliver the Vessel to the Lessee under Clause 4.2
shall be subject to the prior satisfaction in full, or
waiver in writing by the Lessor to the extent not so
satisfied, of the conditions precedent set out in Part 3
of Schedule 5.
3.4 WAIVER OR DEFERRAL OF CONDITIONS PRECEDENT
(a) If any of the conditions precedent referred to in
Clause 3.1, Clause 3.2 or Clause 3.3 are waived or
deferred by the Lessor, the Lessor may attach to
such waiver or deferral such requirements and
further or other conditions as it thinks fit, and
the Lessee shall fulfil, or procure fulfilment of,
all such requirements or further or other
conditions as may be notified by the Lessor to the
Lessee, in accordance with the terms of such
notification.
(b) If the Lessor agrees to make the payment of an
Instalment or, as the case may be, deliver the
Vessel to the Lessee on terms (express or
otherwise) that any condition may be fulfilled
after the relevant Instalment Date or, as the case
may be, the Delivery Date, the Lessee shall (unless
the Lessor shall have expressly otherwise agreed in
writing) procure that such condition is fulfilled
within such period after the relevant Instalment
Date or, as the case may be, the Delivery Date as
the Lessor may stipulate, and the Lessor shall be
entitled to treat any failure by the Lessee so to
procure as an immediate Termination Event.
3.5 LESSEE'S CONDITIONS PRECEDENT
The obligations of the Lessee under this Agreement and the
other Relevant Lease Documents to which it is a party
shall be subject to the prior satisfaction in full, or
waiver or deferral in writing by the Lessee to the extent
not so satisfied, of the conditions precedent set out in
Part 4 of Schedule 5.
4. LEASING AND DELIVERY AND ACCEPTANCE OF THE VESSEL
4.1 LEASING
(a) Subject to the provisions of this Agreement, the
Lessor agrees to lease to the Lessee, and the Lessee agrees
to lease from the Lessor, the Vessel on and subject to the
terms and conditions herein contained.
(b) Upon the commencement of the leasing hereunder, the
Vessel will be sub-leased immediately by the Lessee to
the Sub-Lessee upon and subject to the terms and
conditions contained in the Sub-Lease.
4.2 DELIVERY AND ACCEPTANCE OF THE VESSEL
The Lessor and the Lessee hereby agree that, as between the
Lessor and the Lessee, upon delivery of the Vessel to the
Lessor pursuant to the terms of the Shipbuilding Contract, the
Lessee shall become unconditionally bound to accept delivery
thereof under this Agreement. Simultaneously with the
delivery of the Vessel to the Lessor, the Lessee shall deliver
to the Lessor an Acceptance Certificate duly executed by the
Lessee and dated the date of such delivery. Such Acceptance
Certificate shall, without further act, constitute irrevocable
evidence of delivery of the Vessel to the Lessee hereunder and
acceptance thereof for all purposes of this Agreement.
5. DISCLAIMERS AND EXCLUSIONS, LESSOR'S COVENANTS
5.1 DISCLAIMERS AND EXCLUSIONS
(a) The Lessee acknowledges and agrees that:
(i) the Vessel has been designed, manufactured,
assembled and constructed without reference to
or involvement of the Lessor or any member of
the Lessor's Group and that the Lessee alone
has selected the Vessel for purchase by the
Lessor pursuant to the Shipbuilding Contract
and leasing by the Lessor to the Lessee
hereunder and for sub-leasing by the Lessee to
the Sub-Lessee under the Sub-Lease and for the
purposes described in any Service Contract;
(ii) the Lessor has not made or given nor shall
be deemed to have made or given any term,
condition, representation, warranty or
covenant, express or implied (whether statutory
or otherwise), as to the seaworthiness,
suitability, capacity, age, state, value,
quality, durability, condition, appearance,
safety, design, construction, operation,
performance, description, merchantability,
satisfactory quality, fitness for use or
purpose or any particular use or purpose or
suitability of the Vessel or any part thereof,
as to the absence of latent or other defects,
whether or not discoverable, as to the absence
of any infringement of any patent, trademark or
copyright, as to the ability of the Vessel to
satisfy the requirements of any law, rule,
specification or contract pertaining thereto,
or as to title to the Vessel or any other
representation or warranty whatsoever, express
or implied, with respect to the Vessel, all of
which are hereby excluded; and
(iii) the Lessee is taking the Vessel on lease
and is sub-leasing the Vessel to the Sub-Lessee on an
"as is, where is, and with all faults" basis,
and that the Lessee's acceptance of Delivery
from the Lessor in accordance with Clause 4.2
(Delivery and acceptance of Vessel) shall be
conclusive evidence (except as against the
Builder or the manufacturer of any part of the
Vessel) that the Vessel is complete, in good
order and condition, of satisfactory quality,
fit for any purpose for which it may be
intended or required, seaworthy in all
respects, without defect or inherent vice
whether or not discoverable by the Lessee,
suitable in all respects and in every way
satisfactory and without prejudice to the
foregoing, complies in all respects with the
Shipbuilding Contract.
(b) Save as otherwise expressly and specifically provided
by this Agreement or any other Relevant Lease Document,
the Lessee hereby waives as between itself and the
Lessor and agrees not to seek to enforce, all its
rights, express or implied (whether statutory or
otherwise), whether against the Lessor in respect of
the Vessel (or any part thereof) or against the Vessel
or any part thereof (except rights arising out of any
act or omission of the Lessor which is a breach by the
Lessor of its express and specific obligations to the
Lessee under this Agreement or any other Relevant Lease
Document).
(c) The Lessor shall be under no obligation to provide
to the Lessee or to any other person any replacement for
the Vessel (or any part thereof) during any period when
the Vessel (or any part thereof) is unavailable for use
for any reason whatever nor, except where the
unavailability for use arises solely as a result of the
breach by the Lessor of its express and specific
obligations to the Lessee under Clause 5.2 (Lessor's
covenants) of this Agreement, otherwise to compensate
the Lessee in respect of such unavailability for use.
(d) Save as expressly provided in this Agreement or the
other Relevant Lease Documents, and without prejudice
to the generality of Clauses 5.1 (a) and 5.1(b)
(Disclaimers and exclusions), the Lessor shall be under
no liability to the Lessee or any other person
whatsoever and howsoever arising, and from whatever
cause, and whether in contract, tort or otherwise, in
respect of the satisfactory condition or fitness for
purpose of the Vessel or any loss (consequential or
otherwise), liability or damage of, or to, or in
connection with, the Vessel or any part thereof
(including delay in delivery thereof to the Lessee
under this Agreement, or by the Lessee to any Sub-
Lessee under any Sub-Lease or by the Sub-Lessee to any
Service Contractor under any Service Contract, or
thereafter or delay of any nature whatsoever) or any
person or property whatsoever irrespective of whether
such loss, liability or damage shall arise from any
action or omission of the Lessor and whether or not the
same shall arise from the Lessor's negligence, actual
or imputed (other than any action or omission of the
Lessor which is a breach by the Lessor of its express
and specific obligations to the Lessee under the
Relevant Lease Documents to which the Lessor is party).
5.2 LESSOR'S COVENANTS ETC.
(a) The Lessor covenants to the Lessee that throughout
the Lease Period the Lessor (other than through the acts or
omissions of any Security Party, or any Security
Party's agents or representatives, acting as agent or
representative of the Lessor) will not, otherwise than
pursuant to its rights under any of the Relevant Lease
Documents or which may exist under any applicable law
as a result of the occurrence of any Termination Event
which is continuing and except as may be required by
law or any ruling or recommendation of any Government
Entity compliance of which is customary for the Lessor,
interfere with the quiet use, possession and quiet
enjoyment of the Vessel by the Lessee. The Lessee
acknowledges that the covenant by the Lessor contained
in this Clause 5.2(a) is, as between the Lessor and the
Lessee, the sole covenant by the Lessor in respect of
quiet enjoyment and is in substitution for, and to the
exclusion of, any other covenant for quiet enjoyment
which may have otherwise been given or implied at law
or otherwise, all of which are hereby expressly
excluded and waived by the Lessee. The provisions of
this Clause 5.2(a) are, however, without prejudice to
the Lessor's obligations under Clause 5.2(b).
(b) The Lessor covenants with the Lessee that, subject
to the proviso in this Clause 5.2(b), throughout the Lease
Period the Lessor shall not create or permit to arise
or suffer to exist any Lien on the Vessel which arises
solely from, or solely as a result of:
(i) any claim against or affecting the Lessor
(including any claim in relation to any other
vessel of which the Lessor is the beneficial
owner) and chartered by it otherwise than to
the Lessee or any other member of the
Guarantor's Group that is not related to, or
does not arise directly or indirectly as a
result of, the transactions contemplated by
this Agreement or any of the other Lease
Documents; or
(ii) any act or omission of the Lessor that is
not related to, or does not arise directly or
indirectly as a result of, the transactions
contemplated by this Agreement or any of the
other Lease Documents; or
(iii) any Taxes imposed upon the Lessor, other
than those in respect of which the Lessor is
required to be indemnified against by the
Lessee or by any other person under this
Agreement or under any of the other Lease
Documents; or
(iv) any act or omission of the Lessor (but not
of any Security Party or any Security Party's
agents or representatives acting as agent or
representatives of the Lessor) constituting a
breach by the Lessor of its express and
specific obligations under this Agreement or
the other Relevant Lease Documents; or
(v) any act or omission of the Lessor which
constitutes the wilful misconduct of or
recklessness by the Lessor,
PROVIDED THAT if any of (i),(ii),(iii),(iv)
or (v) above applies to any Lien, the Lessor shall not be
liable to pay or discharge the same, or the amount of
the same or remove the same, if adequate reserves for
the payment of such amount have been provided and such
Lien is being disputed by the Lessor or any other
person on its behalf in good faith and in a manner
effectively staying such Lien and the continued
existence of such Lien does not involve any reasonable
likelihood of the arrest of the Vessel or the sale,
forfeiture or loss of, or any interest in, the Vessel
(or any part thereof) and without prejudice to the
foregoing, if the Vessel is at any time during the
Lease Period:
(i) arrested, seized, taken into custody or
otherwise detained by any court or other
tribunal or by any Government Entity; or
(ii) subjected to distress by reason of any
process, claim, the exercise of any rights conferred by
a Lien or by any other action whatsoever
in either event arising out of the use or
operation of any other vessel for the time being operated by
the Lessor or owned or chartered in by the Lessor which
vessel is not chartered to the Lessee or any other
member of the Guarantor's Group (and if the Lessor
fails in accordance with its aforementioned obligations
to secure the release of the Vessel or fails to
discharge the liability in respect of which the Vessel
has been arrested, seized, taken into custody, detained
or subjected to distress as aforesaid), the Lessee
shall be entitled:
(a) to act as agent for the Lessor for the
purpose of securing the release of the Vessel;
(b) to discharge such liability; and
(c) to be indemnified by the Lessor and held
harmless against all direct losses (including
loss of hire) and expenses so incurred by it.
(c) The Lessor acknowledges that it shall not be entitled
to, and covenants with the Lessee that it shall not,
serve a notice upon a Payment Bank in accordance with
clause 5.4 of the Payment Agreement to which such
Payment Bank is a party (the "RELEVANT PAYMENT
AGREEMENT") unless any of the following shall have
occurred:
(i) a Termination Event; or
(ii) an Acceleration Notice has been given; or
(iii) a Total Loss of the Vessel; or
(iv) the Lessee shall have given a notice to the
Lessor under Clause 6.4, 21.4(A), 21.4(B),
21.4(C) 21.4(D) or 21.4(E); or
(v) the circumstances described in clause 5.5 of
the Relevant Payment Agreement; or
(vi) a Payment Bank Event of Default with
respect to such Payment Bank (which event and any notice
served by the Lessor on a Payment Bank as a
consequence thereof shall, for the avoidance of
doubt, not have any effect on the rights and
obligations of the Lessor or the Lessee under
this Agreement and the other Lessor Documents).
(d) The Lessor covenants with the Lessee that if the
circumstances described in clause 5.1, 5.2 or 5.3 of
either Payment Agreement occur and:
(i) the relevant Payment Bank does not exercise
its rights pursuant to such clause 5.1, 5.2 or, as
the case may be 5.3 to make the payment
described in clause 5.7 of the relevant Payment
Agreement to the Lessor or at the Lessor's
direction; and
(ii) the Lessor does not exercise its rights
pursuant to clause 5.6 of the relevant Payment
Agreement to require the relevant Payment Bank
to make the payment described in such clause
5.7 to the Lessor or at its direction, or to a
Replacement Payment Bank (as such term is
defined in clause 5.4 of the relevant Payment
Agreement), then upon receiving a written
request from the Lessee, the Lessor will
exercise its rights pursuant to such clause 5.6
to require the relevant Payment Bank to make
the payment described in such clause 5.7 either
to the Lessor or at its direction (it being
acknowledged that the Lessor shall be entitled
to decide as to where the payment is to be made
in this regard) or to an entity proposed by the
Lessee to be the "REPLACEMENT PAYMENT BANK".
5.3 UNFAIR CONTRACT TERMS ACT 1977
Without prejudice to the indemnities of the Lessor by the
Lessee contained in any of the Relevant Lease Documents,
nothing in this Clause 5 shall afford to the Lessor any wider
exclusion of any liability of the Lessor to any person for
death or personal injury than the Lessor may effectively
exclude having regard to the provisions of the Unfair Contract
Terms ▇▇▇ ▇▇▇▇.
5.4 QUIET ENJOYMENT WITH RESPECT TO THE SUB-LESSEE AND SERVICE
CONTRACTORS
The Lessee will cause the provisions of Clause 5.1 to be made
known to the Sub-Lessee and will procure that the Sub-Lessee
confirms to the Lessor, prior to the commencement of the sub-
leasing, that it accepts and agrees to be bound by the
provisions of Clause 5.1. The Lessor will, upon being
requested to do so by the Lessee, provide a letter to the
Service Contractor in form and content mutually acceptable to
the Lessor and the Lessee (each acting reasonably).
6. LEASE PERIOD
6.1 PRIMARY PERIOD
The leasing of the Vessel hereunder shall commence on the
Delivery Date and shall, subject to this Clause 6, continue
until the Primary Period End Date unless earlier terminated in
accordance with this Agreement.
6.2 SECONDARY PERIOD
6.2.1 The Lessee may, by written notice to the Lessor to be received
by the Lessor no later than one month prior to the date upon
which the leasing of the Vessel under this Agreement would
otherwise expire by effluxion of time request that the leasing
of the Vessel be extended for a Secondary Period (or, as the
case may be, a further Secondary Period). Any notice once
given by the Lessor pursuant to this Clause 6.2 may only be
withdrawn with the written consent of the Lessor.
6.2.2 The continuation of the leasing under Clause 6.2.1 shall be
subject to:
(i) no Termination Event having occurred and being
continuing; and
(ii) evidence in form and substance satisfactory to the
Lessor of the Vessel not having reached and not being
likely to reach during the relevant Secondary Period,
the end of its useful economic life and remaining,
during such Secondary Period, safe and capable of
performing the function which it is carrying out at the
time of the commencement of the proposed Secondary
Period.
6.3 ACCELERATION
6.3.1 The Lessor shall be entitled, by giving to the Lessee not
less than thirty (30) days' written notice to expire on the first
day of the Lessor's Accounting Period immediately following
the twelfth (12th) anniversary of the Delivery Date, to
require the Lessee to terminate the leasing of the Vessel
under this Agreement and pay to the Lessor a Rental (the
"ACCELERATION RENT") with respect to the Vessel. The
Acceleration Rent shall be of an amount equal to the
Termination Rent (as calculated in accordance with Part 4 of
the Financial Schedule) which would have been payable on the
day the Acceleration Rent is payable, if that date had in fact
been the Termination Payment Date (such that, in particular,
the Termination Assumption set out in paragraph 4.5.2(e) of
the Financial Schedule is applied in calculating such
Termination Rent). The Acceleration Rent shall be subject to
adjustment in accordance with Part 4 of the Financial Schedule
as if it were a Termination Rent.
6.3.2 The Lessee shall be entitled, upon giving notice in writing to
the Lessor seven (7) months prior to the first day of the
Lessor's Accounting Period immediately following the twelfth
(12th) anniversary of the Delivery Date, to request the Lessor
to submit to the Lessor's normal credit approval process
either of the following proposals:
(i) that the Lessor waive its entitlement described in
Clause 6.3.1 or extend the date upon which the Lessor
is entitled to exercise its option described in Clause
6.3.1; or
(ii) to approve one or more banks or financial institutions
to assume the obligations then existing of the Payment
Banks;
and the Lessor agrees that it will make such a submission
PROVIDED THAT the Lessee acknowledges and agrees that the
Lessor shall be entitled to accept or reject either proposal
(including approving or disapproving the identity of any such
bank or financial institution) in its absolute discretion
without giving any reasons for such acceptance or rejection
and that if the Lessor accepts either proposal, such
acceptance shall be conditional upon any requirements (whether
in regard to documentation or otherwise) which the Lessor may,
in its absolute discretion, specify. Furthermore, the Lessee
agrees that the Lessor shall not be obliged to reveal any
details of its internal credit or other procedures or the
reasons for any decision made in any particular case.
6.4 VOLUNTARY TERMINATION
If the Lessee has, pursuant to its rights in Clause 19.2
(Sale of the Vessel), arranged a sale of the Vessel in accordance
with the provisions of Clause 19.2, the Lessee shall have the
right exercisable upon at least fifteen (15) days' written
notice to the Lessor (which notice, once given, shall be
irrevocable) to terminate the leasing of the Vessel hereunder
or, if Delivery has not then occurred, the right of the Lessee
to take the Vessel on lease, on the date specified in such
notice (which shall be the date upon which such sale is to be
completed) PROVIDED THAT the Lessee shall only be entitled to
exercise the right of voluntary termination under this Clause
6.4 if no Termination Notice has been served upon it.
7. RENT
7.1 PRE-LEASE PERIOD RENTAL
During the Pre-Lease Period no rental shall be payable by the
Lessee to the Lessor in respect of the hiring of the Vessel.
7.2 PRIMARY PERIOD RENT
The Lessee shall pay to the Lessor, in respect of the Primary
Period, a Primary Period Rent on each Rent Payment Date
throughout the Primary Period, each such Primary Period Rent
to be calculated in accordance with the provisions of the
Financial Schedule. Each such amount of Primary Period Rent
shall be subject to adjustment and supplement in accordance
with the provisions of the Financial Schedule.
7.3 SECONDARY PERIOD RENT
The Lessee shall pay to the Lessor on the first day of each
Secondary Period a Secondary Period Rent calculated in
accordance with paragraph 1.2 of the Financial Schedule.
7.4 ADDITIONAL RENT
The Lessee shall, on the dates ascertained in accordance with
the Financial Schedule (or, if no such date is specified, upon
written demand by the Lessor), pay all amounts calculated and
due to the Lessor under the Financial Schedule and expressed
to be payable by way of additional Rent.
8. PAYMENTS
8.1 LESSOR'S ACCOUNT
Each payment to be made by the Lessee to the Lessor in
Sterling pursuant to this Agreement shall be made from a bank
account in the United Kingdom in Sterling in cleared funds for
value on the due date by means of CHAPS to the account of the
Lessor with the Bank at its branch at ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, account number ▇▇▇▇▇▇▇, sort code
30-00-02, or to such other bank account in the United Kingdom
as the Lessor may from time to time designate by not less than
ten (10) Business Days' notice to the Lessee. Any payment
which is to be made to the Lessor in a currency other than
Sterling pursuant to this Agreement shall be made to such
account as the Lessor shall notify the Lessee in writing.
8.2 PAYMENTS UNCONDITIONAL
The Lessee's obligation to pay Rent and make other payments,
and perform any obligations, owed to the Lessor pursuant to or
in connection with this Agreement or any of the other Relevant
Lease Documents to which it is a party shall, subject to
Clause 23.1, be absolute and unconditional and shall not be
affected by and shall be irrespective of any contingency
whatsoever including (but not limited to):
(a) any right of set-off, counterclaim, recoupment,
defence, deduction, withholding or other right;
(b) any unavailability of the Vessel for any reason,
including, but not limited to, requisition thereof, or
any prohibition or interruption of or other restriction
against the Lessor's, the Lessee's, the Sub-Lessee's,
any Service Contractor's or any other person's use,
operation or possession of the Vessel, any interference
with such use, operation or possession or failure to
deliver any part of the Vessel or any lack or
invalidity of title or any other defect in the title,
suitability, seaworthiness, satisfactory quality,
merchantability, fitness for any purpose, condition,
appearance, safety, design, or operation of any kind
or nature of the Vessel, or the ineligibility of the
Vessel for any particular use or trade, or for want of
registration or the absence or withdrawal of any
permit, licence, authorisation or other documentation
required under the applicable law of any relevant
jurisdiction for the ownership, leasing, use, operation
or location of the Vessel, or (subject to Clause
10.1(a) (Total Loss)) the Total Loss of, or any damage
to, the Vessel or any part thereof;
(c) any insolvency, bankruptcy, winding-up,
administration, reorganisation, reconstruction, arrangement,
readjustment or rescheduling of debt, dissolution,
liquidation or similar proceedings by or against the
Lessor, the Bank, the Lessee or any other person
(whether a party to any Lease Document or not);
(d) any invalidity or unenforceability or lack of due
authorisation of, or other defect in, this Agreement or
any of the other Lease Documents or any particular
provision hereof or thereof;
(e) any failure or delay on the part of any party, whether
with or without fault on its part, duly to perform or
comply with its obligations under this Agreement or any
of the other Lease Documents; and
(f) any other case which but for this provision would or
might have the effect of terminating or in any way
affecting any obligation of the Lessee hereunder,
(but without prejudice to the rights of the Lessee to damages
or specific performance or any other injunctive relief in
respect of this Agreement or any of the other Relevant Lease
Documents) it being the declared intention of the parties that
the provisions of this Clause 8 and the obligations of the
Lessee to pay Rent and make other payments in accordance with
this Agreement and the other Relevant Lease Documents shall
survive any frustration and that save as expressly and
specifically provided in this Agreement no moneys payable or
paid hereunder by the Lessee to the Lessor shall in any event
or circumstances be repayable to the Lessee.
8.3 INTEREST ON OVERDUE AMOUNTS
(a) If, subject to Clause 23.1, any amount payable by
the Lessee to the Lessor under this Agreement or any of the
other Relevant Lease Documents is not paid in full on
the date such amount becomes due and payable hereunder
or thereunder, the Lessor shall (without prejudice to
the rights of the Lessor under Clause 21 (Termination
provisions)) be entitled, in addition, to demand
interest on the unpaid sum at the Default Rate from and
including such date to and including the date of actual
payment (after as well as before judgment). Such
interest at the Default Rate shall accrue on a day to
day basis and be compounded quarterly.
(b) If any amount payable by the Lessor to the Lessee
under this Agreement or any of the other Relevant Lease
Documents is not paid in full on the date such amount
becomes due and payable hereunder or thereunder, the
Lessee shall be entitled, in addition, to demand
interest on the unpaid sum at LIBOR from and including
such date to and including the date of actual payment
(after as well as before judgment). Such interest
shall accrue on a day to day basis and be compounded
quarterly.
(c) All interest under this Clause 8.3 shall be calculated
on the basis of the actual number of days elapsed and
(i) a three hundred and sixty-five (365) day year in
relation to Sterling amounts (or, where market practice
in the London Inter-Bank Market differs, in accordance
with market practice in the London Inter-Bank Market)
and amounts in other currencies where that is the
normal bank basis for interest calculations under the
relevant currency, or (ii) a three hundred and sixty
(360) day year for amounts in other currencies.
8.4 TIME OF THE ESSENCE
Punctual payment of amounts payable by the Lessee to the
Lessor and performance by the Lessee of each of its
obligations under this Agreement shall, subject to any express
periods of grace set out in Clause 21.1 (Termination
provisions) and as otherwise agreed in writing by the Lessor,
be of the essence and shall be conditions of this Agreement.
8.5 BUSINESS DAYS
If any payment under this Agreement or any other Relevant
Lease Document is due on a day which is not a Business Day, it
shall, unless expressly provided to the contrary in this
Agreement or the relevant other Relevant Lease Document, be
paid on the immediately succeeding Business Day, together with
interest from the due date, on a daily basis at LIBOR for the
relevant period, unless that day falls in the calendar month
succeeding that in which the date on which the payment is due
falls, in which case it shall be due on the immediately
preceding Business Day, but the amount of such payment shall
not be adjusted in consequence thereof.
8.6 APPLICATION OF PAYMENTS
If the Lessee shall pay to the Lessor, or the Lessor shall
otherwise recover, any amount expressed to be payable under
this Agreement or any of the other Relevant Lease Documents in
an amount less than the total amount then due, or due and
outstanding, the sum so paid may be applied by the Lessor
(irrespective of any contrary appropriation by the Lessee) in
or towards satisfaction of such amounts which are due for
payment under this Agreement and the other Relevant Lease
Documents in such manner or order and at such time as the
Lessor may think fit.
9. COVENANTS CONCERNING INSURANCES
9.1 INSURANCES IN RESPECT OF THE VESSEL
The Lessee hereby covenants with the Lessor and undertakes
that, throughout the Lease Period and thereafter until sale of
the Vessel, it will:
(a) insure and keep the Vessel insured free of cost and
expense to the Lessor and in the joint names of the
Lessee and the Lessor, without liability on the part of
the Lessor for premia or calls (each as their interests
may appear) in respect of claims arising in connection
with the ownership or operation of the Vessel:
(i) against fire and usual marine risks (including
Excess Risks to the extent not covered under
the Liability Insurances) and war risks, on an
agreed value basis in accordance with the
practice from time to time of prudent owners of
similar types of vessel as the Vessel, provided
that the amount of such insurances shall be
equal to or greater than the highest Tax
Written Down Value for the Vessel for the
period of such insurances; and
(ii) against protection and indemnity risks
(including oil pollution liability) on terms
and conditions which are the same or
substantially the same as the insurance taken
out with respect to the same risks by other
owners of comparable size and standing
operating similar types of vessel as the Vessel
in the jurisdictions where the Vessel is being
operated at the relevant time and which is
reasonably available to the Lessee (taking into
account the provisions of this Agreement and
the fact that although the Lessor is the owner
of the Vessel it has no operational interest in
the Vessel) and shall be in an amount of two
hundred million Dollars ($200,000,000) any one
occurrence or such greater amount as is either
(x) the general practice from time to time of
owners of equivalent tonnage to and similar
types of vessel as the Vessel to obtain in the
jurisdiction(s) in which the Vessel is being
operated at the time when such general practice
is being determined (provided such greater
amount is reasonably obtainable by the Lessee)
or (y) required by any rules, regulations,
laws, treaties or conventions of the Flag State
from time to time or of the jurisdiction in
which the Vessel is being operated at any
particular time or (z) following a Change of
Law with respect to an Environmental Law in a
jurisdiction in which the Vessel is being
operated at any particular time, and the Lessor
reasonably determining that such a Change of
Law has resulted in the actual or potential
liability of the Lessor with respect to an
Environmental Claim increasing above the
Lessor's liability as at the date of this
Agreement under the Oil Pollution Act of 1990,
as amended, of the United States of America
(the "MEASURED LIABILITY"), the amount of such
increase in liability over the Measured
Liability or, where the Vessel is employed in
the storage of hydrocarbons, for the amount
which is the general practice from time to time
of owners of comparable size and standing
operating similar types of vessels as the
Vessel employed in such use in jurisdictions in
which the Vessel is being operated at any
particular time;
and in each case the Lessor may rely upon the advice of
its legal, insurance and other advisers and the Lessee
further agrees that the Lessor shall be deemed to have
acted reasonably in connection with any Lessor Action
under or in connection with this Clause 9 if the Lessor
has relied upon any such advice of its legal, insurance
or other advisers;
(b) if the Lessor requires an increase in the amount
insured in respect of oil pollution liability risks in
accordance with the provisions of Clause 9.1(a)(ii),
the Lessee shall effect such increase within ten (10)
Business Days of being notified by the Lessor to effect
such increase or, if later, the date upon which such
increase is required pursuant to the rules,
regulations, laws, treaties or conventions referred to
in Clause 9.1(a)(ii)(y) or, as the case may be, the
date upon which the Change of Law referred to in Clause
9.1(a)(ii)(z) comes into effect;
(c) effect the Insurances, including the Liability
Insurances aforesaid in Dollars (where appropriate in
an equivalent amount at the time of each renewal of the
Insurances to the amount required expressed in
Sterling) or such other freely transferable and
convertible currency acceptable to the Lessor and
through the Approved Brokers or such other insurance
companies and/or underwriters or by entry of the Vessel
with a mutual insurance association or club;
(d) punctually pay all premiums, calls, contributions
or other sums payable in respect of all such Insurances
and to produce all relevant receipts or other evidence
of payment when so required by the Lessor and, in the
event that any premium or call is charged to be levied
upon the Lessor, the Lessee shall forthwith reimburse
the Lessor with any amount so paid;
(e) at least ten (10) Business Days (or such shorter
period as the Lessor may from time to time agree) before the
relevant policies, contracts or entries expire, notify
the Lessor of the names of the marine and war risks
brokers and/or the war risks or protection and
indemnity risks associations and/or underwriters
proposed to be employed by the Lessee for the purposes
of the renewal of such Insurances and of the amounts in
which such Insurances are proposed to be renewed and
the risks to be covered and, subject to compliance with
the provisions of this Clause 9.1, procure that
appropriate instructions for the renewal of such
Insurances are given to the Approved Brokers and/or to
the approved war risks and protection and indemnity
risks associations at least ten (10) days (or such
shorter period as the Lessor may from time to time
agree) before the relevant policies, contracts or
entries expire, and that the Approved Brokers and/or
the approved war risks and protection and indemnity
risks associations and/or approved underwriters will at
least seven (7) days before such expiry (or within such
shorter period as the Lessor may from time to time
agree) confirm in writing to the Lessor as and when
such renewals have been effected in accordance with the
instructions so given;
(f) if any of the Insurances referred to in Clause
9.1(a)(i) form part of a fleet cover for the Lessee or
the Guarantor and any Subsidiaries (US), and such
Approved Brokers are or would be entitled to exercise
rights of set-off or cancellation in relation to claims
under such Insurances relating to the Vessel for non-
payment of premiums in respect of other vessels covered
by the same Insurances, the Lessee shall use all
reasonable endeavours (having regard to the then
current market practice including the practice
prescribed by the Lloyd's Insurance Brokers' Committee
and/or any other professional association of which the
Approved Brokers are members) to procure that the
Approved Brokers shall undertake to the Lessor:
(i) not to exercise against the policy or against
any claims in respect of the Vessel any Lien or
right of set-off for unpaid premiums in respect
of vessels other than the Vessel covered under
such fleet cover or for unpaid premiums in
respect of any other such policies of
insurance; and
(ii) not to cancel the Insurances for the Vessel
by reason of the non-payment of premiums for
vessels covered by such fleet cover,
or, in lieu of the undertakings referred to in
paragraphs (i) and (ii), shall instruct the Approved
Brokers to issue a separate policy of insurance in
respect of the Vessel as and when the Lessor may so
require;
(g) promptly arrange for the execution and delivery of
such guarantees or indemnities as may from time to time be
required by any protection and indemnity or war risks
association in accordance with its rules or the terms
of entry of the Vessel;
(h) procure:
(i) that all original slips, cover notes, policies,
certificates of entry and other instruments of
insurance issued from time to time shall
forthwith be deposited with the Approved
Brokers in respect of those of the Insurances
in respect of the Vessel which are effected
through Approved Brokers; and
(ii) that the interest of the Lessor shall be
endorsed on the Insurances referred to in
Clause 9.1(a)(i) and (ii) by noting the
interests of the Lessor on the policies and by
the endorsement of the Loss Payable Clause on
the policies in respect of the Hull Insurances;
(i) procure that the Approved Brokers or the insurers
and any protection and indemnity or war risks association
or the war risks insurers in which the Vessel may from
time to time be entered or with whom cover may be
placed shall deliver to the Lessor a letter or letters
of undertaking in such form as the Lessor may
reasonably require having regard to the then current
market practice and the practices prescribed by the
"International Group" of protection and indemnity
associations or successor association or body and/or
the Lloyd's Insurance Brokers' Committees and/or any
other professional association of which the Approved
Brokers are members;
(j) comply with the terms and conditions of the
Insurances, not do, consent to or permit any act or omission
which might invalidate or render unenforceable the whole or
any part of the Insurances and not (without first
obtaining the consent of the insurers to such
employment and complying with such requirements as to
extra premium or otherwise as the insurers may
prescribe) employ the Vessel or suffer the Vessel to be
employed otherwise than in conformity with the terms of
the Insurances (including any warranties express or
implied therein) and within the geographical limits
thereof; and
(k) supply to the Lessor all necessary information,
documentation and assistance which may be required by
the Lessor from time to time in respect of the
Insurances and in connection with making any claim
under the Insurances,
PROVIDED HOWEVER THAT if, in the event of requisition of the
Vessel for hire, it is proved to the satisfaction of the
Lessor that such requisition is upon terms whereby the
requisitioning authority has assumed the responsibility of the
Lessee to the Lessor to indemnify or recompense it in respect
of or otherwise to make good all losses which would ordinarily
be covered by the insurance required to be effected by the
Lessee under this Agreement, the Lessee shall be relieved from
its insurance obligations under this Agreement in respect of
such period of requisition or in the event that the
requisitioning authority shall have assumed only a partial
responsibility as aforesaid, the insurance obligations of the
Lessee under this Agreement shall be modified in such manner
and to such extent as the Lessor may approve in its absolute
discretion having regard to the insurance provisions contained
in this Agreement.
9.2 If, at the time of any renewal of the Insurances, there is, in
the opinion of the Lessor acting reasonably:
(a) any material adverse change in the credit standing or
claims payment record of the relevant insurer or war
risks or protection and indemnity association; or
(b) any material adverse change in the terms on which the
relevant Insurances are placed; or
(c) any change affecting the insurance market which may
have, or may be likely to have, a material adverse
effect on the Insurances in respect of the Vessel,
then the Lessor may, having consulted with its insurance
advisers, stipulate reasonable requirements for the Insurances
in the light of such changes. If the Lessor has stipulated
such requirements to the Lessee, the Lessor and the Lessee
shall (at the cost of the Lessee) respectively cause their
insurance advisers to meet to consider the Lessor's
requirements and, if such advisers do not agree promptly with
respect to such requirements, the matter shall be referred to
an appropriate independent insurance adviser agreed by the
Lessor and the Lessee. In the absence of agreement as to an
appropriate independent insurance adviser, either the Lessor
or the Lessee may request the President for the time being of
the Law Society to appoint an appropriate independent
insurance adviser who shall act as an expert and not as an
arbitrator and whose assessment with respect to such
requirements shall be final and binding on the Lessor and the
Lessee.
If the insurance advisers of the Lessor and the Lessee agree
with respect to such requirements and on the changes required
to be effected to the then current insurance requirements or
if the independent insurance adviser, appointed by the
President of the Law Society, stipulates changes required to
be effected to the then current insurance requirements then
(a) the Lessee shall, at its own cost, promptly, and in any
event within sixty (60) days of such agreement, or as the case
may be stipulation, effect or procure that there is effected
such requirements and (b) the Lessor shall be entitled, at the
Lessee's cost, to effect contingent third party liability
insurances for the Lessor and members of the Lessor's Group to
cover such requirements.
9.3 COLLECTION OF CLAIMS
The Lessee shall do all things necessary and provide all
documents, evidence and information to enable the Lessor to
collect or recover all moneys which shall at any time become
due to the Lessor in respect of the Insurances.
9.4 APPLICATION OF RECOVERIES
The Lessee shall apply all sums receivable under the
Insurances which are paid to it in accordance with the Loss
Payable Clauses.
9.5 OTHER INSURANCES AND ASSUREDS
The Lessee shall not, without the prior written consent of the
Lessor, during the Lease Period take out additional insurances
for the Lessee's sole benefit, or permit the Lessee or the
Lessor to be named insured in insurances with respect to the
Vessel, other than as required under this Agreement, where
such additional insurances will or may prejudice the
Insurances or recovery thereunder or will exceed the amount
permitted by the warranties or other conditions of the
Insurances (unless the insurers under the Insurances have
consented thereto) and will, upon the Lessor's request,
immediately furnish the Lessor with particulars of any such
additional insurances (including copies of any cover notes or
policies) and of the written consent of the insurers under the
Insurances in any case where such consent is necessary. The
Lessor acknowledges that the provisions of this Clause 9.5 are
without prejudice to the Lessee's right to take out loss of
hire insurances in respect of the Vessel in accordance with
usual market practice.
9.6 ENCUMBRANCES
The Lessee shall not create or permit to exist any Lien over
the Lessee's interest in the Insurances or any Requisition
Compensation save as contemplated by this Agreement.
9.7 BROKER'S REPORT
On the date of this Agreement and on each date when the
Insurances are renewed, the Lessee shall, at its own expense,
furnish or cause to be furnished to the Lessor evidence that
the Insurances have been placed in accordance with this Clause
9 and are in full force and effect together with an opinion
signed by a firm of insurance brokers other than the Approved
Brokers stating that the Insurances then in effect are
consistent with the requirements for the Insurances under this
Agreement and in compliance with the terms of this Clause 9.
9.8 OMISSION TO COMPLY WITH INSURANCE PROVISIONS
If at any time the Lessee shall fail to comply with:
(a) any of the provisions of this Clause 9 in relation to
or in connection with all or any part of the Liability
Insurances and the Vessel; or
(b) any of the material provisions of this Clause 9 in
relation to or in connection with all or any part of
the Hull Insurances and the Vessel,
then the Lessor shall be entitled (at the Lessee's cost and
expense), either (i) to procure such insurance or entries in a
war risks association and/or protection and indemnity
association or associations in accordance with the aforesaid
provisions, or (ii) at any time whilst such failure is
continuing to require the Vessel to remain in port or, as the
case may be, to proceed to and remain in a port designated by
the Lessor until such provisions are fully complied with, or
both, but without prejudice to the right of the Lessor in any
such case to treat such failure as being within Clause 21
(Termination provisions). Rent shall continue to accrue during
such time and any expense incurred by the Lessor in relation
to or in connection with any of the arrangements described
above shall be recoverable from the Lessee on demand.
9.9 LESSOR'S INSURANCE
Any insurance effected by the Lessor which the Lessee is not
obliged to effect under this Clause 9 shall not be brought
into account in relation to any claim under any indemnity in
favour of any Indemnified Person under any of the Lease
Documents.
10. TOTAL LOSS AND DAMAGE
10.1 TOTAL LOSS
In the event of:
(a) a Total Loss occurring prior to Delivery, the
obligation of the Lessor to lease the Vessel to the
Lessee shall terminate on the Date of Total Loss; or
(b) a Total Loss occurring during the Lease Period, the
Lease Period shall end on the Date of Total Loss and
the obligation of the Lessee to pay Rent (other than
any Termination Payment) under Clause 7 (Rent) becoming
due on any Rent Payment Date which falls on or after
the Date of Total Loss shall cease; and
the Lessee shall (without prejudice to the obligations of the
Lessee pursuant to any provision of this Agreement or the
Relevant Lease Documents to pay to the Lessor all sums which
may become due to the Lessor or be ascertained after the Date
of Total Loss) pay to the Lessor, as compensation for the
Lessor's full financial loss consequent upon such termination,
the amounts set out below and on the dates prescribed below
for those amounts (but subject always to its application both
before and after the date on which such payment is made, to
the provisions of the Financial Schedule):
(i) if (during the Lease Period) on or after the Date
of Total Loss but before the Settlement Date there falls a
day which, if the leasing of the Vessel had not
terminated, would have been a Rent Payment Date, the
Lessee shall on that Rent Payment Date pay to the
Lessor an amount equal to the Rent which would have
become payable had the Total Loss not occurred; and
(ii) on the Settlement Date, the Lessee shall pay to the
Lessor an amount equal to the aggregate of:
(A) the Termination Payment calculated for the
Settlement Date;
(B) all instalments of Rent (if any) which have
become due prior to the Date of Total Loss and
remain unpaid; and
(C) all other amounts due and payable from the
Lessee to the Lessor pursuant to any Relevant
Lease Document, including, without limitation,
any Broken Funding Costs (less any Broken
Funding Gains).
10.2 APPLICATION OF TOTAL LOSS PROCEEDS
All moneys received by the Lessor from insurers in respect of
a Total Loss and all Requisition Compensation received by the
Lessor shall be applied by the Lessor as follows:
(a) first, in retention by the Lessor of an amount equal
to one per cent. (1.0%) of the amount by which the Total
Loss Proceeds exceed the applicable Termination Rent;
(b) secondly, any balance remaining shall be paid to the
Lessee by way of rebate of Rent.
10.3 DATE OF TOTAL LOSS
For the purposes of this Agreement, a Total Loss in respect of
the Vessel shall be deemed to have occurred:
(a) in the case of an actual total loss of the Vessel at
noon (London time) on the actual date the Vessel was
lost or, if such date is not known, on the date on
which the Vessel was last reported;
(b) in the case of constructive total loss of the Vessel,
on the date and at the time notice of abandonment of
the Vessel is given to the insurers of the Vessel for
the time being (provided a claim for such constructive
total loss is admitted by the insurers) or, if the
insurers do not admit such a claim, on the date and
time at which a constructive total loss is subsequently
adjudged by a competent court of law to have occurred;
(c) in the case of a compromised or arranged total loss,
on the date upon which a binding agreement as to such
compromised or arranged total loss has been entered
into by the insurers of the Vessel;
(d) in the case of Compulsory Acquisition, on the date
on which the relevant requisition of title or other
compulsory acquisition occurs; and
(e) in the case of hijacking, theft, condemnation,
confiscation, capture, detention or seizure of the
Vessel (other than where the same amounts to Compulsory
Acquisition of the Vessel) which deprives the Lessee
or, as the case may be, any Sub-Lessee of the use of
the Vessel for more than one hundred and eighty (180)
days, upon the expiry of the period of one hundred and
eighty (180) days after the date upon which the
relevant hijacking, theft, condemnation, confiscation,
capture, detention or seizure occurred.
The date on which a Total Loss shall be deemed pursuant to
this Clause 10.3 to have occurred is referred to as the "DATE
OF TOTAL LOSS".
10.4 DAMAGE CLAIMS
In the event of repairable damage occurring to the Vessel any
insurance moneys receivable in respect thereof shall be paid
to the Lessee.
10.5 THIRD PARTY CLAIMS
Any insurance moneys paid under the Liability Insurances shall
be paid to the person to whom the liability (or alleged
liability) covered by such insurances or entry was incurred,
or to the person otherwise entitled to it.
10.6 INSUFFICIENT INSURANCE RECOVERY
In the event of repairable damage to the Vessel or a liability
or alleged liability covered by the Insurances taken out or
entries made referred to in Clause 9.1(a) (Insurance
undertakings) being incurred or alleged, and if the insurance
moneys paid in respect thereof are insufficient to pay the
cost or estimated cost of making good or repairing such damage
or discharging the liability or alleged liability, the Lessee
will pay the deficiency.
10.7 NOTICE OF ABANDONMENT
The Lessee shall, subject to the prior written consent of the
Lessor, be entitled to determine whether or not a case has
arisen for the giving of notice of abandonment to abandon the
Vessel to the insurers and/or claim a constructive total loss
and the Lessee is hereby authorised by the Lessor, following
the Lessor's consent as specified above, to give such notice
of abandonment if the Lessee so determines. Such consent by
the Lessor shall not be unreasonably withheld if the Lessor is
indemnified to its satisfaction against any Loss or exposure
by virtue of the failure of any Assumption which has occurred,
or which the Lessor reasonably considers may occur, in
connection with the giving of such notice of abandonment or
the Total Loss of the Vessel. Furthermore any consent given
by the Lessor shall be deemed to be subject to the condition
that if, after the delivery of a notice of abandonment prior
to a Total Loss of the Vessel, any Assumption fails or, in the
Lessor's reasonable opinion becomes likely to fail in
connection therewith, the Lessee shall indemnify the Lessor to
the Lessor's satisfaction to cover any increased exposure
arising or which may arise by virtue of that failure which
might arise from the giving of such notice of abandonment or
the Total Loss of the Vessel.
10.8 FURTHER ACTION ON PART OF LESSOR
(a) If the Lessee is, pursuant to Clause 10.7 above,
entitled to give a notice of abandonment, the Lessor
shall upon the request and at the cost of the Lessee
promptly execute such documents as may be required to
enable the Lessee to abandon the Vessel to the insurers
and/or claim a constructive total loss of the Vessel
and the Lessor shall, provided that the Lessor is
indemnified to its reasonable satisfaction against its
cost of so doing, give the Lessee all reasonable
assistance in pursuing the said claim, provided that
the Lessor may (taking into account paragraph (b)
below) in its absolute discretion, refuse to permit the
Lessee or any person claiming through the Lessee to
pursue any such claim in the name of the Lessor or any
other member of the Lessor's Group.
(b) The Lessor shall, at the request of the Lessee
consult with the Lessee for a period not exceeding thirty (30)
days in good faith if the Lessee or any person claiming
through the Lessee requests permission to pursue any
claim in the name of the Lessor or any other member of
the Lessor's Group provided that the Lessor shall be
under no obligation and have no liability other than to
the extent of its agreement to hold discussions with
the Lessee as set out above.
10.9 SALE OF VESSEL FOLLOWING TOTAL LOSS
If the insurers of the Vessel have satisfied or admitted in
full their obligations under the Insurances and have expressly
waived any rights they may have, or would or might require, in
the Vessel the Lessee shall pursuant to Clause 19.2 (Sale of
the Vessel) as soon as practicable after the date of Total
Loss of the Vessel endeavour to arrange a sale of the Vessel.
Any such sale shall comply with Clause 19 (Re-delivery and
sale of the Vessel).
11. GENERAL COVENANTS AND UNDERTAKINGS OF THE LESSEE
11.1 NOTIFICATION OF RELEVANT EVENT
The Lessee undertakes with the Lessor that, from the date of
this Agreement and so long as any moneys are owing under this
Agreement or any of the other Relevant Lease Documents to
promptly notify the Lessor of the occurrence of any Relevant
Event promptly upon becoming aware thereof.
11.2 NOTIFICATION OF TERMINATION OF SUB-LEASE
The Lessee undertakes with the Lessor that, from the date of
this Agreement and so long as any moneys are owing under this
Agreement or any of the other Relevant Lease Documents to
promptly notify the Lessor of the termination of the
sub-leasing of the Vessel or the obligation of the Lessee to
sub-lease the Vessel pursuant to the Sub-Lease at any time
during the requisite period (as defined in section 40 CAA
1990).
11.3 SUPPLY OF ACCOUNTS AND FINANCIAL INFORMATION
The Lessee shall provide to the Lessor (or, as the case may
be, shall procure that there is provided to the Lessor) such
reasonably available financial information relating to the
Lessee as the Lessor may reasonably require. In particular
the Lessee shall, from the date of this Agreement and so long
as any moneys are owing under this Agreement or any of the
Relevant Lease Documents, properly prepare or cause to be
properly prepared financial statements for the Lessee in
respect of each financial year and will deliver or cause to be
delivered a copy of the same to the Lessor as soon as
practicable but in any event not later than one hundred and
twenty (120) days after the end of the financial year to which
they relate.
11.4 INFORMATION CONCERNING THE VESSEL
The Lessee undertakes with the Lessor that, from the date of
this Agreement and so long as any moneys are owing under this
Agreement, or any of the other Relevant Lease Documents it
will promptly furnish the Lessor with all such information as
the Lessor may from time to time reasonably request in writing
regarding the Vessel, its insurance, condition, maintenance,
employment, position and engagements, particulars of all
towages and salvages and copies of all charters, leases and
other contracts for the employment of the Vessel, or otherwise
concerning the Vessel.
11.5 NOTIFICATION REQUIREMENTS IN RELATION TO THE VESSEL
The Lessee shall notify the Lessor in writing promptly at the
Lessee's cost and expense of:
(a) any accident to the Vessel involving repairs the cost
whereof will or is, in the reasonable opinion of the
Lessee, likely to exceed an amount equal to ten per
cent. (10%) of the Lessor's Cost (or the equivalent in
any other currency);
(b) any occurrence in consequence whereof the Vessel has
become or is, in the reasonable opinion of the Lessee,
likely to become a Total Loss;
(c) any requirement made by any insurer or any material
requirement made by the Classification Society or by
any competent authority in relation to the Vessel which
is not complied with in accordance with its terms;
(d) any material assistance which has been given to the
Vessel which has resulted or may result in a lien for
salvage being acquired over the Vessel;
(e) any material failure to pay promptly and regularly the
wages and allotments or the insurance and pension
contributions (if any) of the officers and crew of the
Vessel;
(f) the requisition for hire at any time of the Vessel;
(g) any serious or potentially serious injury to an
individual or group of individuals in an amount
exceeding five million Dollars ($5,000,000) in
aggregate (or the equivalent in any other currency)
caused by, or in connection with, the Vessel;
(h) any damage in an amount exceeding five million Dollars
($5,000,000) (or the equivalent in any other currency)
to property caused by, or in connection with, the
Vessel; and
(i) any other event which occurs in connection with the
Vessel which in the reasonable opinion of the Lessee
affects or might affect the rights of the Lessor or
involves or might involve any material loss or
liability to or of the Lessor.
11.6 TAXES
(a) The Lessee shall not and shall procure that each other
party to the Lease Documents shall not (other than the
Lessor and the Deposit Bank) claim any capital
allowances in respect of any expenditure relating to
the Vessel incurred or to be incurred by the Lessor or
otherwise in respect of the Vessel which would
adversely affect the Lessor's claim to capital
allowances.
(b) The Lessee shall pay and discharge from time to time
all outgoings whatsoever lawfully imposed on the Vessel
or any income therefrom (other than Taxes) attributable
to:
(i) any Rent or Termination Payment actually
receivable hereunder; or
(ii) any other amounts payable to and
unconditionally received by the Lessor under
this Agreement or pursuant to or in connection
with any of the other Relevant Lease Documents;
or
(iii) any sales or other proceeds (including,
without limitation, insurance moneys) actually received
and retained by the Lessor in respect of the
Vessel as a result of the use, possession,
control and command of the Vessel.
(c) The Lessee will not use any part of the Vessel or
permit any part of the Vessel to be used and shall
procure that no part of the Vessel is used during the
requisite period (as defined in section 40 CAA 1990) so
as to result in the application of any of sections 42,
43, 44, and 46 CAA 1990 and shall immediately notify
the Lessor if at any time within such requisite period
the Vessel is used for leasing to a non-resident other
than permitted leasing, "non-resident" and "permitted
leasing" bearing for this purpose the meaning set out
in section 50 CAA 1990 and also notify the Lessor of
any event or matter which under section 48 CAA 1990
ought to be notified by the Lessor to the Board of the
Inland Revenue or any Inspector of Taxes in connection
with the Vessel or the leasing thereof and shall
promptly furnish when the Lessor may require such
information as may properly be required to be so
furnished by the Lessor to the Board of the Inland
Revenue and Inspector of Taxes regarding the leasing of
the Vessel or the use to which it is being put or has
been put (including any and all correspondence and
documents which passed between ▇▇▇▇▇▇, ▇▇▇▇▇▇ &
▇▇▇▇▇▇▇▇ and the Oil Taxation Office), in order to
enable the Lessor to comply with the provisions of
section 48 CAA 1990 or to respond to such a request.
11.7 ENVIRONMENTAL LAWS
The Lessee shall comply, or procure compliance with, all
requirements of Environmental Law which are applicable to the
Vessel, (including, without limitation, obtaining and
maintaining in full force and effect all Environmental Permits
required from time to time and all requirements relating to
▇▇▇▇▇▇▇, submission of oil spill response plans, designation
of qualified individuals and establishing financial
responsibility) and promptly notify the Lessor of (i) any
Environmental Claim which has been made or threatened against
the Lessor, the Lessee, the Sub-Lessee or which is in relation
to or is caused by or is in connection with the Vessel and
which the Lessee is obliged (a) in accordance with the terms
of the Insurances to report to the relevant insurers and/or
(b) under any applicable law to report to any Government
Entity (and for the purposes of (a) and (b) above the proviso
to the definition of Environmental Claim shall not apply) and
(ii) any revocation, suspension, amendment, variation,
withdrawal or refusal to grant any Environmental Permit or any
requirement relating to the ▇▇▇▇▇▇▇, submission of oil
response plans, designation of qualified individuals and
establishing financial responsibility.
11.8 OFE
The Lessee will provide to the Lessor from time to time on
request copies of all supporting invoices in respect of any
OFE.
12. OPERATIONAL COVENANTS IN RELATION TO THE VESSEL
12.1 USE OF VESSEL
The Lessee shall, subject to the provisions of this Agreement,
as between itself and the Lessor and to the exclusion of the
Lessor, have full and exclusive use, possession, control and
command of the Vessel during the Lease Period.
12.2 DESIGN REQUIREMENTS
The Lessee shall ensure that the Vessel is operated in a
proper, and safe manner at all times in accordance with its
design requirements and subject to any limitations placed on
such operation by that design or any recommendations of the
Builder or any repairer of the Vessel and in the manner
prescribed by any legislation in force in any applicable
jurisdiction.
12.3 COMPLIANCE WITH LAWS AND REGULATIONS
The Lessee shall not cause nor permit the Vessel to be
operated in any manner which is contrary to international law
or any other law, regulation or contractual requirement that
is applicable to the Vessel or any party to the Lease
Documents relating to the Vessel or to the exploitation or
development of any accumulation of hydrocarbons and the Lessee
shall ensure that the Vessel shall only be utilised in
accordance with the terms of all applicable permits and
consents including, but not limited to, any such permit or
consent from time to time issued by the Classification Society
or any other body.
12.4 OPERATION IN ACCORDANCE WITH INSURANCE ARRANGEMENTS
The Lessee will not use the Vessel nor cause nor permit the
Vessel to be used or operated in any manner or for any purpose
excepted from any insurance policy or policies or certificate
or certificates of entry comprising the whole or part of any
Insurances, or for the purpose of the storage of any goods of
any description excepted from any such insurance policy or
policies or certificate or certificates of entry and shall not
do or permit to be done anything which could be expected to
invalidate any insurance policy or certificate of entry or the
Insurances evidenced thereby.
12.5 ALTERATIONS
The Lessee may at any time alter any items of equipment or fit
any additional equipment required for the purpose of the
operation of the Vessel and may make any alteration to the
type or performance characteristics of the Vessel that it
considers is necessary or desirable without impairing the
safety of operation of the Vessel, provided that:
(a) if any such alteration or fitting when taken on its
own or as a series of changes constitutes a substantial
change to the Vessel (measured by value or by physical
extent), the Lessee shall promptly notify the Lessor
thereof in writing;
(b) such alterations or additional equipment shall not,
without the prior written consent of the Lessor,
materially reduce the value of the Vessel;
(c) the Lessee may remove (or permit the removal of)
additional equipment fitted pursuant to this Clause
12.5 or any other Excluded Property at any time before
the expiration of the Lease Period (subject to
paragraph (b) above) or earlier termination of the
leasing of the Vessel under this Agreement;
(d) subject to the provisions of Clause 19.2, any such
additional equipment and any other Excluded Property
which belongs to any member of the Guarantor's Group
which is not removed pursuant to paragraph (c) above
prior to the expiration of the Lease Period may be sold
or otherwise disposed of by the Lessor without the need
for any further act by the Lessee or any other person.
Where that additional equipment or such other Excluded
Property is in addition to (and not in replacement of)
the equipment forming part of the Vessel as at the
Delivery Date, a sum equal to the proceeds of sale or
other disposal of such additional equipment or such
other Excluded Property which has been sold or disposed
of by the Lessor shall be paid to the Lessee as soon as
practicable after the completion of such sale or other
disposal; and
(e) any equipment (other than the Excluded Property and
additional equipment altered or replaced in accordance
with this Clause 12.5) that is removed during the Lease
Period shall, unless otherwise agreed by the Lessor in
writing, be replaced at the cost and expense of the
Lessee prior to the expiration of the Lease Period in
at least as good a condition as at the time of removal
(fair wear and tear excepted) and shall be in place and
in such condition at the expiration of the Lease
Period.
The cost of fitting or removing any such additional equipment
or such other Excluded Property together with the cost of
making good any damage caused by such fitting or removal shall
be payable by the Lessee. The Lessee shall notify the Lessor
in writing of any material alterations to the Vessel and shall
provide details of all that is fitted to or removed from the
Vessel by the Lessee which, in the Lessee's reasonable
opinion, may have a material adverse impact on the market
value of the Vessel, within a reasonable period of such
alterations being carried out, or the fitting or removal of
such additional equipment or such other Excluded Property.
12.6 ▇▇▇▇▇▇▇
The Lessee shall be responsible for providing or procuring
that there be provided the officers and crew (together the
"CREW") on board the Vessel who shall remain the employees of
the Lessee or the Sub-Lessee, or such other person as the
Lessee or the Sub-Lessee shall engage to provide crewing
services for the Vessel. The Crew shall be responsible for
the ▇▇▇▇▇▇▇ and operation of the Vessel on behalf of the
Lessee and, as between the Lessor and the Lessee, at the risk
of the Lessee.
12.7 EXPENSES INCIDENTAL TO USE AND OPERATION
The Lessee shall, subject to the provisions of this Agreement,
be responsible for all expenses, charges and penalties of
every kind whatsoever incidental to the use and operation of
the Vessel during the Lease Period and shall ensure that the
Vessel is kept and maintained in accordance with any law,
regulation, consent or other requirement from time to time
applicable to the Vessel.
12.8 MAINTENANCE AND REPAIR
The Lessee shall, or shall procure that any Sub-Lessee shall,
throughout the Lease Period and thereafter until sale of the
Vessel:
(a) at no expense to the Lessor, maintain the Vessel
(and each part thereof) in a good state of repair (fair wear
and tear excepted), in efficient and safe operating
condition, and in accordance with the Lessee's
maintenance schedule and practice from time to time and
shall ensure that the Vessel complies at all times with
all applicable requirements of the Classification
Society, the insurers and any applicable law,
regulations and requirements applicable to equipment of
a type similar to the Vessel in force at all times and
shall forward to the Lessor on request subject to
availability, copies of all certificates as may be
required for the proper use and operation of the Vessel
for the time being;
(b) procure all repairs to or replacement of any badly
worn, damaged, broken or lost parts or equipment to be
effected promptly and in such manner (with regard to
both workmanship and quality of materials) as not to
reduce materially the value of the Vessel without the
prior written consent of the Lessor and the Lessee
shall be responsible for all costs and expenses so
incurred; and
(c) procure that (to the extent reasonably practicable)
title to all replacement parts or equipment attached to
or installed on the Vessel under Clause 12.8(b) shall
vest (by such delivery) in the Lessor (and the Lessee
shall, at its cost and expense procure that any
necessary action is taken to ensure that such vesting
is effective).
12.9 OBSTRUCTION
The Lessee shall pay all charges and expenses of every kind
and nature whatsoever incidental to the use and operation of
the Vessel under this Agreement and, if the Vessel or any part
thereof becomes a wreck or an obstruction to navigation, any
costs and expenses arising which may be incurred by or made or
asserted against the Lessor in connection with or as a
consequence of the removal or destruction of the wreck or
obstruction, provided that the Lessee shall have the right to
contest in good faith any such charge or expense (and no
person employed to control or operate the Vessel shall be
deemed to be a servant of the Lessor for any purpose
whatsoever) and to this end the Lessor shall upon receipt of
the written request from the Lessee not unreasonably refuse to
lend to the Lessee, at the Lessee's expense, all necessary
assistance in connection with any litigation, arbitration or
other administrative proceedings to which the Lessee may be a
party or in which the Lessee may be otherwise involved in
connection with the contest of the validity or amount of such
charge or expense provided however that the Lessor may, in its
absolute discretion, refuse to permit its name or the name of
the Bank to be used in any manner in any such litigation,
arbitration or other administrative proceedings.
12.10 INTENTIONALLY OMITTED
12.11 STORAGE AND TRANSPORT OF HYDROCARBONS
The Lessee shall procure that the Vessel shall not transport
hydrocarbons or similar substances and, unless the Lessee has
given the Lessor prior written notice and complied with any
change in the Insurances required under Clause 9 shall not
store hydrocarbons or similar substances.
12.12 SAFETY AND OPERATION
The Lessee shall, or shall procure that the Sub-Lessee shall,
take such steps as are reasonably practicable to ensure that
the Vessel and all constituent parts thereof will be safe and
without risk to health when in use and that the Vessel is not
operated beyond its specified or recommended limits or
capacity. To this end and without prejudice to the generality
of the foregoing, the Lessee shall ensure that any defects in
the Vessel which could be or cause a danger to safety and a
risk to health are repaired and made good so far as is
reasonably practicable in accordance with the Lessee's normal
practices. For this purpose the Lessee shall cause the Vessel
to be inspected regularly and its various systems tested
provided that such inspection and testing will only be carried
out in accordance with and at the interval specified in the
Lessee's maintenance schedule for the Vessel and otherwise at
times and in such manner as a prudent operator of vessels of a
similar type to the Vessel and engaged in a similar trade
would normally expect to carry out such inspection and
testing. The Lessee shall also take all reasonable steps to
ensure that appropriate safety measures are adopted and all
provisions of all applicable laws, codes and regulations
relating to the Vessel are complied with and the Lessee shall
ensure or procure where required by any applicable law that at
all times the Vessel is subject to a Safety Management System
which complies in all respects with the ISM Code and has a
valid Safety Management Certificate and that there is a valid
Document of Compliance which is applicable to the Vessel.
12.13 OPERATIONAL CONTROL
The Lessor acknowledges that, as between itself and the
Lessee, the Lessee shall have the full operational control of
the Vessel, but without prejudice to the right of the Lessor
following the delivery by it of a Termination Notice to
repossess the Vessel in accordance with Clause 21.7.
12.14 CONSENTS
The Lessee shall procure that at all times during the Pre-
Lease Period and the Lease Period there are maintained in full
force and effect all relevant authorisations (governmental and
otherwise) and will promptly obtain any further authorisation
in each case which are or may become necessary for the
operational use of the Vessel or the performance of any of the
transactions contemplated by this Agreement and the other
Lease Documents (other than the performance of the Payment
Agreements by Payment Banks).
12.15 GOOD PRACTICE
The Lessee shall ensure that in all respects the Vessel will
be operated and maintained to comply in all material respects
with all applicable laws in accordance with good oil field and
marine practice.
12.16 SERVICE CONTRACTS AND SERVICE CONTRACTOR'S OIL POLLUTION
INDEMNITY
(A) The Lessee shall provide to the Lessor on or shortly prior to
or, if that is impractical, as soon as practical after, the
Sub-Lessee entering into a Service Contract a certificate
executed by a duly authorised officer of the Lessee certifying
that:
(i) the Sub-Lessee or, if applicable and subject to the
terms of this Agreement, the Lessee is about to enter
into or, as the case may be, has entered into a Service
Contract;
(ii) the Lessee has complied with its obligations under
Clause 12.16(B); and
(iii) either (a) that the relevant extracts of the Service
Contract or other agreement, document or instrument
attached to such certificate are true and complete
extracts of the relevant provisions of the Service
Contact or, as the case may be, such other agreement,
document or instrument containing an indemnity or
indemnities with respect to oil pollution for the
benefit of the Indemnified Persons (either expressly or
by an indemnity or indemnities in favour of a class of
persons within which the Indemnified Persons fall) by
operation of the third party beneficiary doctrine under
the law governing the Service Contract or other
document or instrument or (b) that the Service
Contractor refused to give any such indemnity or
indemnities.
(B) The Lessee shall use all reasonable efforts and endeavours to
procure that each Service Contractor grants an indemnity or
indemnities in compliance with clause 12.16(A)(iii)(a).
12.17 ARREST AND DETENTION
If the Vessel is at any time during the Lease Period:
(a) arrested, seized, taken into custody or otherwise
detained by any court or other tribunal or by any
Government Entity (other than by a Compulsory
Acquisition or any requisition for hire or by reason of
a Lessor's Lien); or
(b) subjected to distress or other legal proceedings by
reason of any process, claim, the exercise of any
rights conferred by a Lien or by any other action
whatsoever (other than by reason of a Lessor's Lien),
the Lessee shall procure the release of the Vessel from such
arrest, seizure or detention within twenty-one (21) days of
receiving notice thereof by providing bail or otherwise as the
circumstances may require. The Lessor acknowledges and
accepts that the Lessee shall, unless and until a Relevant
Event shall have occurred which is continuing, have the sole
right to contest any litigation, arbitration or administrative
proceedings in respect of the foregoing and the Lessor shall,
upon receipt of the written request from the Lessee and being
secured to the Lessor's satisfaction against its costs and
expenses of so doing, not unreasonably refuse to render all
necessary assistance as the Lessee may reasonably require in
connection therewith, provided however that the Lessor may, in
its absolute discretion, refuse to permit its name or the name
of the Bank to be used in any manner in any such litigation,
arbitration or other proceedings.
12.18 REGISTRATION
(a) The Lessee shall not do and shall procure that each
other party to the Lease Documents (other than the
Lessor and the Deposit Bank) shall not do anything or
permit anything to be done whereby the registration of
the Vessel under the laws of the Flag State may be
forfeited or imperilled.
(b) The Lessee shall comply with and procure the
compliance with the provisions of all applicable laws and
regulations necessary to maintain the registration of
the Vessel under the laws of the Flag State.
12.19 NOTICE OF LEASE
(a) The Lessee shall place and keep or procure that there
is placed and kept prominently displayed in the control
room of the Vessel throughout the Lease Period a framed
printed notice in plain type in English of such size
that the paragraph of reading matter shall cover a
space of not less than six (6) inches wide by nine (9)
inches high, reading substantially as follows:
"NOTICE OF LEASE"
"This Vessel is the property of [Lessor] (the "LESSOR")
and is subject to a head lease granted by the Lessor in
favour of [Lessee] (the "LESSEE"). This Vessel is
subject to a sub-lease granted by the Lessee in favour
of [UK lessee] (the "SUB-LESSEE").
Neither the Lessee, the Sub-Lessee and any Service
Contractor, nor any manager, nor any servant or agent
of any thereof has any authority whatsoever to contract
on behalf of the Lessor or to pledge the credit of the
Lessor or the involvement of the Lessor in any
liability whatsoever and none of the Lessee, the Sub-
Lessee, any Service Contractor, any manager of this
vessel and any other person has any right, power or
authority to create, incur or permit to be imposed upon
this vessel any Lien whatsoever except for general
average, crew's wages or salvage."
The Lessee undertakes that it shall not place or permit
to be placed in or on the Vessel any other notice
dealing with the rights of any person without the prior
written consent of the Lessor.
(b) The Lessee undertakes not to remove or cover up the
notice specified in Clause 12.19(a).
(c) The Lessee shall carry a true and complete copy of
this Agreement with the Vessel's papers and on demand
exhibit the same to any person having business with the
Vessel which might reasonably be considered to give
rise to any Lien other than any Permitted Lien.
12.20 TRANSFER OF FLAG OR REGISTRY OF VESSEL
The Lessee may at any time and from time to time during the
Lease Period request the Lessor to transfer the register of
the Vessel to any port and/or to re-document the Vessel under
the laws of any jurisdiction other than the port and/or
jurisdiction at which the Vessel is for the time being
registered and/or under whose laws the Vessel is for the time
being documented. If the Lessor approves of such transfer of
register and/or re-documentation of the Vessel (such approval
not to be unreasonably withheld or delayed, provided always
that it shall be reasonable for the Lessor to withhold its
consent if the Lessor demonstrates to the Lessee (by producing
a legal opinion from legal counsel of the Lessor's choice
qualified and practising in the relevant jurisdiction to which
the registration of the Vessel is to be transferred) that the
Lessor's ownership and/or liability position will be adversely
affected by such transfer of register and/or re-documentation
of the Vessel), the Lessor shall, at the request of the
Lessee, co-operate with and permit the Lessee to take all
necessary steps to comply with such request and thereafter
shall during the Lease Period co-operate with the Lessee to
take such action as the Lessee may reasonably require (but
only in such manner and upon such conditions as the Lessor may
approve (such approval not to be unreasonably withheld or
delayed) and, if such approval is given, subject to such
conditions as the Lessor may reasonably impose and provided
always that it shall be reasonable for the Lessor to withhold
its approval or impose conditions if it demonstrates to the
Lessee (by producing a legal opinion from legal counsel of the
Lessor's choice qualified and practising in the relevant
jurisdiction to which the registration of the Vessel is to be
transferred) that the Lessor's ownership and/or liability
position will be adversely affected if the Lessor gives such
approval and/or does not impose such conditions) to maintain
the documentation of the Vessel at the port to which the
register of the Vessel is so transferred and/or under the laws
of the jurisdiction under whose laws the Vessel is so re-
documented.
If the Lessor demonstrates to the Lessee (by producing a legal
opinion from legal counsel of the Lessor's choice qualified
and practising in the relevant jurisdiction) that it has
become impossible or unlawful for the Lessor to maintain the
documentation of the Vessel under the laws of any jurisdiction
under whose laws the Vessel is for the time being documented
or the Lessor demonstrates to the Lessee (by producing a legal
opinion from legal counsel of the Lessor's choice qualified
and practising in the relevant jurisdiction in which the
registration of the Vessel is currently located) that its
ownership is or is likely to be imperilled or otherwise
adversely affected under such law or that the liabilities to
which it is or is likely to become exposed have increased to
what is, in the opinion of the Lessor, an unacceptably high
level, the Lessor shall give notice thereof to the Lessee and
the Lessee shall forthwith enter into negotiations in good
faith with a view to agreeing upon the Vessel remaining
documented under the laws of the jurisdiction under which it
is documented at that time or an alternative jurisdiction for
the documentation of the Vessel, but if no such agreement
shall be reached within thirty (30) days after the Lessor
shall have given such notice to the Lessee, the Lessor shall
be at liberty to take and/or require the Lessee to take such
action to re-document the Vessel and/or to transfer the
registry of the ship to a port of registry in such registry as
the Lessor, acting reasonably, considers appropriate having
regard to the Lessor's ownership of the Vessel and/or the
Lessor's liability position and the operational requirements
for the Vessel by the Lessee, the Sub-Lessee and the Service
Contractor and in either case the Lessee shall do all that may
be necessary on its part to give effect to such re-
documentation and/or transfer of register.
The Lessee shall indemnify and hold harmless the Lessor
against all losses, costs, expenses and liabilities of
whatsoever nature which the Lessor may suffer or incur and
which arise directly or indirectly out of the documentation of
the Vessel at a different port and/or under the laws of any
jurisdiction following a request by the Lessee or the Lessor
in accordance with the foregoing provisions of this Clause
12.20, including the costs incurred by the Lessor in obtaining
a legal opinion under this Clause (whether the transfer of the
register of the Vessel is requested by the Lessor or the
Lessee and irrespective of whether the registration of the
Vessel is changed).
13. BENEFIT OF THIRD PARTY WARRANTIES
13.1 The Lessor agrees to assign absolutely to the Lessee upon the
request of the Lessee from time to time or at any time after
Delivery:
(a) all or any of the rights and interests in and to all
warranties and indemnities given by the Builder, each
OFE Supplier and each other manufacturer, repairer or
supplier of any part of the Vessel to the extent that
the same are vested in the Lessor and are capable of
assignment; and
(b) all or any of the rights and interests in and to all
claims and rights of action whatsoever of the Lessor
against the Builder under the Shipbuilding Contract and
any OFE Supplier (other than those referred to in sub-
clause (a) above) and all guarantees, letters of credit
or other security for the Builder's, each Supplier's
and each other manufacturer's, repairer's or Supplier's
OFE obligations to the extent that the same have been
vested in the Lessor by or pursuant to the Shipbuilding
Contract and are capable of assignment.
13.2 The Lessee shall be entitled, as assignee of the Lessor by
virtue of Clause 13.1, to take action in its own name against
the Builder, each OFE Supplier, each other manufacturer,
repairer or supplier and such other applicable party referred
to in Clause 13.1.
13.3 The Lessor shall, upon the Lessee's request, promptly give
notice to the Builder, any OFE Supplier or other applicable
party referred to in Clause 13.1 of the assignment contained
in Clause 13.1, each such notice to be in form and substance
mutually agreed by the Lessor and the Lessee.
13.4 Without prejudice to the assignments contained in Clause 13.1,
to the extent that such assignments may not be effective to
vest in the Lessee the full benefit of all rights and claims
purportedly assigned (including the right to be compensated in
the same amount as that to which the Lessor would have been
entitled had the assignment not taken place), the Lessee shall
be entitled, subject to the Lessee first ensuring that the
Lessor is indemnified or secured from time to time and at all
times to its satisfaction by the Lessee against all potential
costs and expenses to be incurred, to take action in the name
of the Lessor in respect of all or any of the matters referred
to in Clause 13.1 to commence or conduct private arbitration
proceedings (that is to say the proceedings themselves are
conducted in private and the arbitrator's award is given and
known only to the parties to the arbitration) against the
Builder, any OFE Supplier and any other manufacturer, repairer
or supplier of any part of the Vessel and any other applicable
party referred to above, provided that:
(a) the Lessee shall in all circumstances keep the Lessor
fully informed and have due regard to the wishes of the
Lessor in relation to the use of the Lessor's name,
acknowledging the Lessor's interest in preserving, in
the UK financial community, the Lessor's and its
immediate or ultimate parent company's reputations as
financial institutions and their respective business
interests and customer relationships to the extent that
such interests and relationships are reasonably likely
to be affected in a materially adverse way as a result
of the commencement and/or conduct of such arbitration
proceedings;
(b) if private arbitration proceedings are commenced the
Lessor shall permit the Lessee to have the conduct of
such proceedings but (i) the Lessor shall be entitled
to join in the conduct of such proceedings at any time
and (ii) the Lessee shall give timely notice to the
Lessor of any meetings with Counsel or attendance at
the arbitration, and the Lessor shall be entitled to
attend any such meetings or attendances PROVIDED THAT
following the service of a Termination Notice the
Lessee shall cease to have, and the Lessor shall have,
sole conduct of such proceedings in the Lessor's name;
(c) the Lessor shall be entitled to charge for, and the
Lessee shall pay for, the Cost of Management Time
incurred in respect of or in connection with any such
private arbitration proceedings; and
(d) if the Lessee notifies the Lessor that it does not
intend to appeal any award made against the Lessor by
the arbitrator or the Lessee does not satisfy the award
within the time allowed by applicable law for an
appeal, the Lessor shall be entitled to satisfy the
award.
13.5 The provisions of Clause 13.5 shall apply mutatis mutandis
with respect to any court proceedings which the Lessee wishes
to commence in the name of the Lessor in respect of all or any
of the matters referred to in Clause 13.1 (whether prior to
the arbitration proceedings referred to in Clause 13.4 or by
way of an appeal from the award of the arbitrator in such
proceedings) on the basis that references in Clause 13.4(a) to
"private arbitration proceedings", "arbitration proceedings",
"arbitration" and "proceedings" shall be construed as
references to court proceedings and (b) to the "arbitrator's
award" or the "award" shall be construed as a reference to an
order of any competent court and the second set of words in
parentheses in the first paragraph of Clause 13.4 shall be
disregarded. In addition, following receipt by the Lessee of
a certificate signed by an officer of the Bank of at least the
level of Managing Director, Corporate and Institutional
Financial Services (or the equivalent of such officer from
time to time) certifying that the Bank is of the opinion that
the continued taking by the Lessee of any action in the name
of the Lessor and/or, as the case may be, the continued use by
the Lessee of the Lessor's name in any court proceedings is
affecting or will affect in any adverse way whatsoever the
Lessor's or its immediate or ultimate parent company's
reputations as financial institutions in the UK financial
community and/or their respective business interests and/or
customer relationships, then, if the Lessor is the plaintiff
in any such proceedings, the Lessee shall no longer be
entitled to, and shall not, take any action or, as the case
may be, any further action in the name of the Lessor or use
the Lessor's name in any such proceedings and if the Lessor is
the defendant in any such proceedings, the Lessee shall cease
to have, and the Lessor shall have, sole conduct of such
proceedings in its own name.
13.6 The Lessor shall, subject to the provisions of Clause 13.4 in
the applicable circumstances and subject to being indemnified
or secured by the Lessee against all potential costs and
expenses to be incurred, take all such further actions as the
Lessee may reasonably require in order to confer on the Lessee
the full benefit of the rights and claims referred to in
Clause 13.1
14. INSPECTION
14.1 Without imposing or implying any obligation on the Lessor, the
Lessor may inspect, and may instruct an agent on its behalf,
at any reasonable time upon reasonable notice, to inspect the
Vessel.
14.2 The costs of such inspection shall be borne by:
(a) the Lessor if, at the time of the inspection, no
Termination Event has occurred which is continuing and
such inspection reveals that all provisions of this
Agreement with regard to the operation and maintenance
of the Vessel are being substantially complied with;
and
(b) the Lessee in each other case.
14.3 Provided no Termination Event has occurred which is
continuing, the Lessor agrees that no such inspection shall
(a) take place more than once a year or (b) interfere with the
operation, maintenance or repair of the Vessel.
14.4 The Lessor also agrees that it or its agent shall comply with
all safety, fire and operational regulations and instructions
which may be given on the occasion of any inspection.
15. RISK
Throughout the Pre-Lease Period and the Lease Period and until
redelivery of the Vessel in accordance with Clause 19.1
(Re-delivery of the Vessel), the Vessel shall, as between the
Lessor and the Lessee, be in every respect at the risk of the
Lessee. The Lessee shall bear all risks howsoever arising
whether of navigation of the Vessel or the operation or
maintenance of the Vessel (or any part thereof) or otherwise.
The Lessee agrees that the Lessor shall not be liable for any
liability, claim, loss, damage or expense of any kind or
nature caused directly or indirectly by the Vessel or any part
thereof or any inadequacy thereof for any purpose or any
deficiency or defect therein or the use or performance thereof
or any repairs or servicing thereto or any delay in providing
or failure to provide any thereof or any interruption or loss
of service or use thereof or any loss of business or other
consequential damage or any damage whatsoever and howsoever
caused or any other matter which but for this provision might
operate to frustrate this Agreement, save for direct losses
and expenses suffered or incurred by the Lessee (including any
losses and expense against which the Lessee is obliged to
indemnify any third party irrespective of any limit on the
right of recourse by that third party to the Lessee or its
assets) which result solely from a breach by the Lessor of its
express and specific obligations under the Relevant Lease
Documents to which it is party.
16. REQUISITION FOR HIRE
16.1 If the Vessel is requisitioned for hire by any Government
Entity during the Lease Period, the leasing of the Vessel
shall continue in full force and effect for the remainder of
the Lease Period and the Lessee shall remain fully responsible
for the due compliance with all its obligations under this
Agreement other than in respect of provisions which the Lessee
is precluded from performing as a result of such requisition.
16.2 The Lessee shall be entitled to all requisition hire paid to
the Lessor or to the Lessee by such Government Entity or other
competent authority on account of such requisition in respect
of the Vessel and shall be entitled to all requisition hire
paid in respect of the Vessel, whether during or following the
expiration or earlier termination of the Lease Period.
16.3 The Lessee shall be under no liability to the Lessor in
respect of any change in the structure, state and condition of
the Vessel in so far as such change is due to the manner in
which the Vessel has been used or treated or to the events
that have occurred during the period of requisition.
Nonetheless the Lessee shall ensure that any compensation
payable by the requisitioning authority in respect of such
change shall, unless the Lessor otherwise agrees in writing:
(a) if received after the occurrence of a Total Loss
which is continuing, be paid to the Lessor and until payment
be held on trust for the Lessor; and
(b) otherwise be retained by the Lessee,
and, in each such case, applied in accordance with
Clause 16.4 or 16.5.
16.4 Any such compensation as is referred to in Clause 16.3 which
is received prior to the end of the Lease Period shall, unless
the Lessor otherwise agrees in writing be applied:
(a) first if received and permitted to be retained by the
Lessee pursuant to Clause 16.3, by the Lessee in or
towards restoring the Vessel (so far as is possible) to
the condition which it is in at the time the
requisition took place;
(b) secondly if received by the Lessor, by the Lessor in
reimbursement of the Lessee of any amounts expended by
the Lessee in or towards restoring the Vessel (so far
as is possible) to the condition which it was in at the
time the requisition took place or, as the case may be,
in making direct payment to any relevant shipyard or
other repairer or supplier; and
(c) thirdly, provided that the Vessel has at such time (so
far as is possible) been restored to the condition
which it was in at the time the requisition took place,
in payment by the Lessor to the Lessee or (as the case
may be) retention by the Lessee for its own account of
any surplus as if it were requisition for hire.
16.5 Any such compensation as is referred to in Clause 16.3 which
relates to any period after the end of the Lease Period shall
be paid by the Lessor to or, as the case may be, retained by
the Lessee.
16.6 In the event that the Vessel shall at the end of the Lease
Period for any reason whatsoever be under requisition for hire
the provisions of this Agreement in respect of re-delivery and
sale of the Vessel shall unless the Lessor otherwise agrees in
writing apply at the end of the period of requisition for hire
regardless that the Lease Period shall have expired before the
end of the requisition period.
17. SALVAGE
All salvage and towage and all proceeds from derelicts shall
be for the Lessee's benefit and the cost of repairing damage
occasioned thereby shall be borne by the Lessee.
18. TITLE AND LIENS
18.1 TITLE
During the Pre-Lease Period, title to the Vessel as it is
constructed shall pass to the Lessor in accordance with the
provisions of the Shipbuilding Contract and during the Lease
Period the Vessel shall at all times be the property of and
belong to the Lessor. Nothing in the Lease Documents shall
have the effect of or be deemed to have the effect of passing
title or beneficial ownership of the Vessel or any part
thereof to the Lessee or any Sub-Lessee or any Service
Contractor. For the avoidance of doubt, it is expressly
agreed that none of the Lessee or any Sub-Lessee or any
Service Contractor shall, as against the Lessor, have an
option or right to acquire title to or any proprietary right
or interest in or to all or any of the Vessel.
18.2 LIENS
(a) The Lessee shall not and shall procure that each
Security Party shall not (save as provided in Clause
19.2(d) (Sale of the Vessel) or pursuant to the
Relevant Lease Documents) sell nor purport to sell the
Vessel or any part thereof.
(b) Subject to Clause 12.17, the Lessee shall not and shall
procure that each Security Party shall not create,
incur or permit to arise or be imposed on the Vessel
any Lien, other than Permitted Liens, and the Lessee
shall pay and discharge (or provide bail in respect of)
all debts, damages and liabilities whatsoever which may
have given or may give rise to any Lien or claim
enforceable against the Vessel (other than those which
may have given or may give rise to Lessor's Liens).
19. RE-DELIVERY AND SALE OF THE VESSEL
19.1 RE-DELIVERY OF THE VESSEL
(a) Except in the event of a Total Loss (other than as
provided in Clause 10.7 (Notice of abandonment), in
which event Clause 19.1(c) shall apply) and except
where a sale of the Vessel has been arranged in
accordance with Clause 19.2 and title to the Vessel is
transferred to the purchaser thereof at the end of the
Lease Period and subject to the provisions of Clauses
16.6 and 21.7, the Lessee shall at the end of the Lease
Period re-deliver the Vessel together with all
certificates relating to the Vessel to the Lessor free
of all Liens (other than Liens falling within
paragraphs (i), (ii), or (vi) of the definition of
Permitted Liens), and the Lessor shall accept such re-
delivery, at the Redelivery Location. Subject to the
provisions of Clause 16.6, the Lessee shall at its
expense before such re-delivery make all such repairs
and do all such work as may be necessary so that the
Vessel at the date of re-delivery shall be:
(i) unless otherwise agreed by the Lessor in
writing, such state of repair and operating
condition as it is required to be maintained in
accordance with the provisions of this
Agreement, fair wear and tear and changes and
alterations properly made by the Lessee as
permitted under this Agreement excepted;
(ii) with all required certificates in full force
and effect; and
(iii) with all equipment, fittings, spare and
replacement parts installed in or on, or which
are attached to, or which are part of the
Vessel in accordance with this Agreement other
than Excluded Property which was entitled to be
(and was) removed prior to re-delivery in
accordance with Clause 12.5 (Alterations).
The cost of satisfying the requirements specified
in paragraphs (i) to (iii) above and remedying any defects
or deficiencies shall be borne by the Lessee or the
Lessee shall pay to the Lessor the cost of effecting
the same.
(b) At or about the time of re-delivery following a
termination of the leasing of the Vessel pursuant to
Clause 21.3 (Termination by Lessor) or following the
end of a period of requisition for hire which ends
after the expiration of the Lease Period and unless a
sale of the Vessel has been arranged in accordance with
Clause 19.2 and title to the Vessel is transferred to
the purchaser thereof on the Termination Date and
subject to Clause 21.7, a survey shall, if the Lessor
so requires, be made to determine the state and
condition of the Vessel. In that event, the Lessee and
the Lessor shall each appoint surveyors to be present
at such survey and the surveyors present shall
determine the condition of the Vessel and shall state
the repairs or work necessary to place the Vessel at
the date of re-delivery in the structure, state and
condition required to demonstrate compliance by the
Lessee with the repair and maintenance covenants
contained in this Agreement. If the said surveyors
disagree they shall refer the matter to a senior
surveyor of the Classification Society whose decision
shall be final and binding on the parties hereto. All
reasonable costs occasioned by any such survey
including the costs of the said surveyors appointed by
the Lessee and the Lessor and, if appointed, the costs
of the senior surveyor of the Classification Society
shall be payable by the Lessee, but if the Vessel is
found by such senior surveyor to be in the condition
provided for in this Agreement, fair wear and tear
alone and changes and alterations properly made by the
Lessee as permitted under this Agreement excepted, such
reasonable costs shall be payable by the Lessor. If
the Lessee fails to appoint a surveyor as specified,
the survey shall be conducted by the Lessor's appointee
alone and references to the "senior surveyor" in this
Clause shall be ignored.
(c) In the event of a Total Loss to which Clause 10.9
applies, the Lessee shall, at the Lessee's cost and
expense, re-deliver the Vessel and all Surviving Parts
to the Lessor at such location and upon such other
terms and conditions as the Lessor and the Lessee may
agree at such time.
19.2 SALE OF THE VESSEL
(a) Upon any termination of the leasing of the Vessel
(or, as the case may be, the right of the Lessee to take the
Vessel on Lease (but subject always to the rights of
the Lessor under clause 3 of the Put Option Deed))
under this Agreement through effluxion of time or
otherwise (but in the case of a Total Loss, only to the
extent that the Lessor is free to dispose of the same)
the Vessel shall be sold in accordance with the
remaining provisions of this Clause 19.2.
(b) To the extent of its entitlement to act as the
Lessor's sales agent in accordance with paragraph (d) below,
the Lessee shall have the right to decide the means, timing
and terms of disposal of the Vessel subject always to
compliance with paragraphs (c) and (d) below.
(c) Any sale pursuant to this Clause 19 shall comply with
the following conditions:
(i) the sale shall be at a cash price payable by
the purchaser in full on completion in Dollars
or such other currency as the Lessor may agree
(such agreement not to be unreasonably
withheld) direct to the Lessor for credit to
the account designated by the Lessor;
(ii) the sale shall be at a price which (excluding
VAT or other similar taxes wheresoever and
howsoever arising) shall be not less than the
higher of the open market value of the Vessel
and the Tax Written Down Value;
(iii) the sale may be to any person other than:
(A) the Lessee; or
(B) the Sub-Lessee; or
(C) any person who is purchasing on behalf
of or in trust for the Lessee or the
Sub-Lessee; or
(D) any person who is purchasing as part of
an arrangement under which title will or
may pass to any of the persons mentioned
in (A) and (B) above;
(iv) the sale shall be made upon terms which do not
expose the Lessor or any member of the Lessor's
Group to any liability, including but not
limited to any Tax Liability (excluding
Corporation Tax chargeable on capital gains and
any Tax Liability arising out of a disposal for
Capital Allowances) which it would not have had
but for execution of the relevant sale
documents (save for liability for breach of the
warranty set out in this Clause 19.2(c)) unless
the Lessor or the relevant member of the
Lessor's Group shall first have been
indemnified and/or secured to its satisfaction
against any such liability, and otherwise
without any representation, recourse or
warranty whatsoever to or on the part of the
Lessor or any member of the Lessor's Group
other than a warranty that the Lessor shall
pass such title to the Vessel as the Lessor has
acquired pursuant to the Shipbuilding Contract
subject to Liens, save for Lessor's Liens
Provided that the Lessee shall be entitled to
make any representation or warranty with
respect to the Vessel strictly on its own
behalf without recourse whatsoever to or on the
part of the Lessor or any member of the
Lessor's Group;
(v) a sale shall be on an "as is, where is and with
all faults" basis and governed by the laws of
England;
(vi) a sale shall exclude, so far as permitted by
the laws of England and any other laws
governing or applicable to the sale of the
Vessel, all liability of the Lessor or any
member of the Lessor's Group, in contract or
tort, in relation to the Vessel to the same
extent as such liabilities are excluded by
Clause 5 (disclaimers and exclusions) but save
for the warranty given by the Lessor under
Clause 19.2(c)(iv); and
(vii) if the Vessel is at the date of entry into
any contract for the sale of the Vessel subject to
any requisition for hire, the sale shall be
subject to such requisition.
The Lessee shall, whether or not the Vessel is
sold through the Lessee as sales agent pursuant to Clause
19.2(d) and whether or not the Vessel is in the
possession of the Lessee, the Sub-Lessee or the Lessor,
indemnify the Lessor on demand and keep the Lessor
indemnified on a full indemnity basis (subject to
Clause 25.2 (exclusions from general indemnity) against
all Losses from time to time suffered or incurred by or
made against the Lessor which are connected with the
repossession, re-delivery, storage, maintenance,
protection, sale or attempted sale of the Vessel.
(d) The Lessee is hereby irrevocably appointed by the
Lessor as its sole and exclusive marketing agent for
the Vessel (but shall not be entitled to any fee or
commission for acting as the Lessor's sales agent) any
sale of the Vessel to be completed only at the time of
or following the expiration or earlier termination of
the leasing of the Vessel pursuant to this Agreement,
PROVIDED THAT:
(i) such agency shall cease to be on a sole and
exclusive basis and shall be instead on a joint
(together with the Lessor) and a non-exclusive
basis if no sale has been completed within one
year of the expiration or earlier termination
of the Lease Period (or such longer period as
the Lessor may agree in writing); and
(ii) the authority of the Lessee is limited to the
extent that the Lessee shall not be authorised
to sell the Vessel or any part thereof or to
approve or execute on behalf of the Lessor any
document (including, but not limited to, any
term sheet or heads of terms) relating to the
sale of the Vessel, but the Lessor agrees that
it shall, at the Lessee's cost and expense upon
reasonable notice, execute such agreement as
may be requested for the sale of the Vessel
provided that the same complies with the
provisions of Clause 19.2(c).
(e) The Lessor shall indemnify and hold the Lessee and
each other member of the Guarantor's Group harmless on a
full indemnity basis from any Losses suffered or
incurred by the Lessee or any other member of the
Guarantor's Group which would not have arisen but for,
and only but for, the following:
(i) the failure of the Lessor to sell the Vessel
following receipt by the Lessor of a request by
the Lessee to sell in compliance with the
provisions of this Clause 19.2; and/or
(ii) any actual or purported revocation of the
marketing agency contained in Clause 19.2(d) by
operation of law,
except, in either case, where the circumstances
referred to in (i) or (ii) above arise by operation of,
or as a result of compliance by the Lessor with,
applicable law (other than where the operation of, or
compliance with, applicable law would not have arisen
but for, and only but for, an Insolvency Event in
relation to the Lessor). The Lessee shall hold the
benefit of the indemnity contained in this
Clause 19.2(e) on trust for the other members of the
Guarantor's Group.
20. PROCEEDS OF SALE
20.1 PROCEEDS OF SALE
The "PROCEEDS OF SALE" of the Vessel shall be (i) the total
proceeds of sale thereof (excluding Value Added Tax and other
similar taxes wheresoever and howsoever arising but including
any non-refundable deposit paid by a person proposing to
acquire the Vessel under a contract or offer to purchase which
has been withdrawn, terminated, cancelled or has lapsed)
unconditionally received by the Lessor; or (ii) any capital
sums unconditionally received by the Lessor, before Delivery,
by way of purchase price for (or compensation for the loss of)
the Lessor's rights under the Shipbuilding Contract. If the
Vessel is sold in a currency other than Sterling the "PROCEEDS
OF SALE" thereof shall be the amount of Sterling which the
Lessor is able to purchase with the foreign currency by
reference to the spot rate of exchange of the Bank for
purchasing Sterling with such currency which it receives for
such sale on the day of receipt of such foreign currency or as
soon thereafter as foreign exchange transactions are able to
be made in the City of London.
20.2 APPLICATION OF PROCEEDS OF SALE
Following the termination or expiration of the leasing of the
Vessel and if the completion of a sale or other disposition of
the Vessel or the rights and obligations of the Lessor under
the Shipbuilding Contract takes place, the Proceeds of Sale
(or any part thereof) shall be applied by the Lessor
immediately (or, if it is not possible for the Lessor to apply
the same immediately, then on the next Business Day) as
follows:
(i) firstly, in retention by the Lessor of an amount equal
to one per cent. (1.0%) of the amount by which such
Proceeds of Sale exceed the applicable Termination
Payment; and
(ii) secondly, the Lessor shall pay an amount equal to the
balance, if any, of such money to the Lessee by way of
rebate of Rent.
21. TERMINATION PROVISIONS
21.1 TERMINATION EVENTS
The Lessor and the Lessee agree that it is a fundamental term
and condition of this Agreement that none of the following
events shall occur at any time after the date of this
Agreement, and that the occurrence of any of the following
events shall constitute a repudiation of this Agreement by the
Lessee:
(a) the Lessee, the Guarantor or any Additional Security
Provider who is a member of the Guarantor's Group fails
to pay any amount due to the Lessor under this
Agreement or any other Relevant Lease Document which
constitutes a Remaining Obligation on the due date and
such default is not remedied within three (3) Business
Days after the Lessee or the Guarantor or such
Additional Security Provider is notified by the Lessor
of such non-payment; or
(b) the Lessee fails to obtain and/or maintain or procure
that there are obtained and maintained the Insurances
or if any insurer in respect of any of such Insurances
cancels any of such Insurances or disclaims liability
by reason, in either case, of mis-statement in any
proposal for any of such Insurances or for any other
failure or default on the part of any person (other
than the Lessor) PROVIDED THAT it shall not be a
Termination Event under this Clause 21.1(b) if such
Insurances are Hull Insurances and the Lessor arranges
for such Hull Insurances to be reinstated within ten
(10) Business Days of the date of such failure or, as
the case may be, the date of such cancellation or
disclaiming of liability; or
(c) the Lessee, the Guarantor or any Additional Security
Provider who is a member of the Guarantor's Group fails
to observe or perform any of its obligations under any
Relevant Lease Document to which it is party (other
than an obligation referred to in paragraph 21.1(a) or
21.1(b) above or Clause 21.1(l) or 21.1(m) or 21.1(n)
or 21.1(o) below or any obligation which is an Excluded
Obligation) and does not remedy the failure within
thirty (30) days of receipt by the Lessee or, as the
case may be, the Guarantor of a notice from the Lessor
notifying the Lessee or, as the case may be, the
Guarantor of the relevant failure and requiring the
failure to be remedied; or
(d) an Insolvency Event occurs in relation to the Lessee
or the Guarantor or any Additional Security Provider which
is a member of the Guarantor's Group; or
(e) the Lessee or the Guarantor suspends or ceases or
makes a public announcement or otherwise threatens in writing
to suspend or cease to carry on its business; or
(f) any Financial Indebtedness of the Guarantor or any
Material Subsidiary (US) of the Guarantor in an amount
of at least twenty-five million Dollars ($25,000,000)
(or its equivalent in another currency) is declared due
and payable before its stated maturity; or
(g) any representation or warranty made by the Lessee or
the Guarantor in any Relevant Lease Document or, in
each case, in any certificate, opinion or statement
delivered or made by the Lessee or the Guarantor (or
any officer of such person in each case) pursuant
thereto proves to have been incorrect or inaccurate in
a material respect when made or when deemed to be
repeated pursuant to the terms of the relevant Relevant
Lease Document and such action as is necessary such
that if the relevant representation or warranty was
made or given thereafter it would then be correct and
accurate has not been taken within thirty (30) days of
receipt by the Lessee or, as the case may be, the
Guarantor of a notice from the Lessor notifying the
Lessee or, as the case may be, the Guarantor of such
incorrection or inaccuracy; or
(h) any obligation of any member of the Guarantor's Group
under a Relevant Lease Document ceases to be a legal,
valid and binding obligation in accordance with its
terms and, where such illegality, invalidity or
unenforceability is capable of cure, the same has not
been cured within fourteen (14) days of receipt by the
Lessee of a notice from the Lessor notifying the Lessee
of such illegality, invalidity or unenforceability and
requiring the same to be cured; or
(i) any licence, authorisation, permit, consent or
approval of, or registration with or declaration to,
governmental or public bodies or authorities or courts
required in connection with the use and operation of
the Vessel or to authorise any member of the
Guarantor's Group to enter into any of the Relevant
Lease Documents or the Sub-Lease or required in
connection with the validity, enforceability or
admissibility in evidence of any of the Relevant Lease
Documents or the Sub-Lease is modified, not granted,
revoked, suspended, terminated or expires or is not
renewed or otherwise ceases to be in full force and
effect in each case the effect of which would be to
have a material adverse effect on the ability of any of
the parties to the Relevant Lease Documents to perform,
or to continue to perform, any of their respective
obligations under the Relevant Lease Documents; or
(j) intentionally omitted; or
(k) the Lessee (other than as the Lessor's sales agent
within the scope of its authority under Clause 19.2),
the Sub-Lessee or a Service Contractor shall sell,
mortgage or execute a ▇▇▇▇ of sale affecting the Vessel
or any interest therein or any part thereof or agree or
endeavour to create any Lien (other than a Permitted
Lien) over the Vessel or any interest therein; or
(l) the Lessee shall fail to comply with its obligations
under Clause 22.3 to provide the Additional Security or
voluntarily to terminate the leasing or, as the case
may be, the obligation to lease the Vessel pursuant to
Clause 21.4; or
(m) the Lessee shall fail to comply with its obligations
under Clause 22.6(C) within the time stated in that
Clause; or
(n) the Vessel is operating in a jurisdiction in respect of
which the circumstances described in Clause
9.1(a)(ii)(z) apply and the Lessee has failed to
increase the amount of oil pollution liability
insurance with respect to the Vessel in the amount
required under Clause 9.1(a)(ii)(z) within the time
required under Clause 9.1(b); or
(o) at any time during the requisite period (as defined
in section 40 CAA 1990) circumstances occur with respect
to the Vessel which result in the application of any of
sections 42, 43, 44 and 46 CAA 1990 (including for the
avoidance of doubt, where the leasing of or, as the
case may be, the obligation to lease the Vessel under
any Sub-Lease shall terminate for any reason whatsoever
(other than after the end of the requisite period (as
defined in section 40 CAA 1990)) in circumstances where
such Sub-Lease is not replaced, prior to such
termination, with a replacement Sub-Lease to a
Sub-Lessee that will not result in the application of
any of sections 42, 43, 44 and 46 CAA 1990).
21.2 INTENTIONALLY OMITTED
21.3 TERMINATION BY LESSOR
The Lessee acknowledges and agrees that the occurrence of a
Termination Event shall go to the root of this Agreement and
accordingly shall be a breach of a condition which the Lessor
shall be entitled to treat as a repudiation by the Lessee of
this Agreement and the Lessor shall be entitled to give a
notice ("TERMINATION NOTICE") to the Lessee to terminate the
leasing of the Vessel and, subject to Clause 21.7, the
Lessor's consent to the Lessee's possession of the Vessel or,
if Delivery has not occurred, to terminate the obligation of
the Lessor to take delivery of and lease the Vessel to the
Lessee.
21.4 MANDATORY VOLUNTARY TERMINATION
(A) If any of the circumstances referred to in clause 3.2
of the Put Option Deed have occurred and notice is
given under clause 3 of the Put Option Deed prior to
Delivery then (a) the Lessor shall promptly notify the
Lessee thereof in writing, (b) the Lessee, upon
receiving such notification, shall serve a notice in
writing upon the Lessor (which notice, subject to item
(c) below, shall be irrevocable once given) to
terminate the Lessor's obligation to deliver and lease
the Vessel to the Lessee hereunder, such notice to
expire ten (10) days after it is given (or if such
tenth day is not a Business Day, on the next succeeding
Business Day) and (c) provided no Termination Notice
shall have been given prior to the expiry of the
Lessee's notice described in item (b) above (in which
event such notice given by the Lessee shall be deemed
to have been withdrawn and cancelled and the provisions
of Clause 21.7 shall apply), on the date of the expiry
of such notice given by the Lessee the obligation of
the Lessor to deliver and to lease the Vessel to the
Lessee shall terminate.
(B) If:
(i) no entity proposed by the Lessor pursuant to
clause 5.5 of either Payment Agreement as the
"Replacement Payment Bank" is acceptable to the
Lessee or the relevant Payment Bank; or
(ii) no entity proposed by the Lessee in exercise of
its rights under Clause 5.2(d) as the
"Replacement Payment Bank" under the relevant
Payment Agreement is acceptable to the Lessor,
and
(x) neither the relevant Payment Bank nor
the Lessor has exercised its rights
pursuant to clause 5.1, 5.2, 5.3, 5.5 or
5.6 of the relevant Payment Agreement to
make the payment described in clause 5.7
of the relevant Payment Agreement to the
Lessor or at its direction; and
(y) the Lessee has not exercised its
rights under Clause 5.2(d) to require the
Lessor to exercise its rights pursuant
to clause 5.6 of the relevant Payment
Agreement to make the payment described
in clause 5.7 of the relevant Payment
Agreement to the Lessor or at its
direction or has not revoked its request
to the Lessor under Clause 5.2(d)(ii)
requiring the Lessor to exercise its
rights pursuant to clause 5.6 of the
relevant Payment Agreement to make the
payment described in clause 5.7 of the
relevant Payment Agreement to a
Replacement Payment Bank.
then (a) the Lessor shall promptly notify the
Lessee thereof in writing, (b) the Lessee, upon receiving such
notification, shall serve a notice in writing upon the
Lessor (which notice, subject to item (c) below, shall
be irrevocable once given) to terminate the Lessor's
obligation to deliver and lease the Vessel to the
Lessee hereunder or, if Delivery has occurred, the
leasing of the Vessel to the Lessee hereunder, such
notice to expire three (3) Business Days after it is
given and (c) provided no Termination Notice shall have
been given prior to the expiry of the Lessee's notice
described in item (b) above (in which event such notice
given by the Lessee shall be deemed to have been
withdrawn and cancelled and the provisions of Clause
21.7 shall apply), on the date of the expiry of such
notice given by the Lessee the obligation of the Lessor
to deliver and lease the Vessel to the Lessee hereunder
or, if Delivery has occurred, to lease the Vessel to
the Lessee, shall terminate.
(C) If the Lessor has served an Acceleration Notice on the
Lessee, then (a) the Lessee, upon receiving the
Acceleration Notice, shall serve a notice in writing
upon the Lessor (which notice, subject to item (b)
below, shall be irrevocable once given) to terminate
the leasing of the Vessel to the Lessee hereunder, such
notice to expire fifteen (15) days after it is given
and (b) provided no Termination Notice shall have been
given prior to the expiry of the Lessee's notice
described in item (a) above (in which event such notice
given by the Lessee shall be deemed to have been
withdrawn and cancelled and the provisions of Clause
21.7 shall apply), on the date of the expiry of such
notice given by the Lessee the obligation of the Lessor
to lease the Vessel to the Lessee shall terminate.
(D) If any obligation of any party to a Relevant Lease
Document ceases to be a legal, valid and binding
obligation in accordance with its terms (except where
the party in question is (a) a member of the
Guarantor's Group, (b) the Deposit Bank or a Payment
Bank or the Lessor and the same would not have arisen
but for, and only but for, the occurrence of an
Insolvency Event in relation to the Deposit Bank or
that Payment Bank or the Lessor or (c) is a Replacement
Deposit Bank and the same would not have arisen but
for, and only but for, the Deposit Bank being a
Replacement Deposit Bank and such illegality,
invalidity or unenforceability would not have been
caused or would not have arisen had the Deposit Bank
been the Bank) and, where such illegality, invalidity
or unenforceability is capable of cure, the same has
not been cured within fourteen (14) days of receipt by
the Lessee of a notice from the Lessor notifying the
Lessee of such illegality, invalidity or
unenforceability and requiring the same to be cured
then (i) the Lessor shall promptly notify the Lessee
thereof in writing, (ii) the Lessee, upon receiving
such notification, shall immediately serve a notice in
writing upon the Lessor (which notice, subject to item
(iii) below, shall be irrevocable once given) to
terminate the Lessor's obligation to deliver and lease
the Vessel to the Lessee hereunder, such notice on the
day it is given and (iii) provided no Termination
Notice shall have been given prior to the expiry of the
Lessee's notice described in item (ii) above (in which
event such notice given by the Lessee shall be deemed
to have been withdrawn and cancelled and the provisions
of Clause 21.7 shall apply), on the date of the expiry
of such notice given by the Lessee the obligation of
the Lessor to deliver and to lease the Vessel to the
Lessee shall terminate.
(E) Any licence, authorisation, permit, consent or
approval of, or registration with or declaration to,
governmental or public bodies or authorities or courts
required in connection with the use and operation of
the Vessel or to authorise any of the parties to the
Relevant Lease Documents (other than the Lessor, the
Deposit Bank and any member of the Guarantor's Group)
or the Sub-Lessee to enter into any of the Relevant
Lease Documents or the Sub-Lease or required in
connection with the validity, enforceability or
admissibility in evidence of any of the Relevant Lease
Documents or the Sub-Lease is modified, not granted,
revoked, suspended, terminated or expires or is not
renewed or otherwise ceases to be in full force and
effect in each case the effect of which would be to
have a material adverse effect on the ability of any of
the parties to the Relevant Lease Documents to perform,
or to continue to perform, any of their respective
obligations under the Relevant Lease Documents, then
(a) the Lessor shall promptly notify the Lessee thereof
in writing, (b) the Lessee, upon receiving such
notification shall immediately serve a notice in
writing upon the Lessor (which notice, subject to item
(c) below, shall be irrevocable once given) to
terminate the Lessor's obligation to deliver and lease
the Vessel to the Lessee hereunder, such notice to
expire on the day it is given and (c) provided no
Termination Notice shall have been given prior to the
expiry of the Lessee's notice described in item (b)
above (in which event such notice given by the Lessee
shall be deemed to have been withdrawn and cancelled
and the provisions of Clause 21.7 shall apply), on the
date of the expiry of such notice given by the Lessee
the obligation of the Lessor to deliver and to lease
the Vessel to the Lessee shall terminate.
(F) Upon any termination of the leasing of the Vessel
pursuant to Clause 6.3, 21.4(B), 21.4(C), 21.4(D) or
21.4(E) the Lessee shall redeliver the Vessel to the
Lessor at the Redelivery Location within ninety (90)
days of the date of such termination (unless or until
the circumstances described in Clause 21.7(a)(ii) (x)
and/or (y) occur, in which case the Lessee shall
redeliver the Vessel to the Lessor forthwith at the
Redelivery Location) and otherwise in accordance with
Clause 19.1 and shall arrange a sale of the Vessel
pursuant to its rights in Clause 19.2 (Sale of the
Vessel) in accordance with the provisions of Clause
19.2 as soon as possible after such termination.
21.5 PAYMENTS ON TERMINATION
(a) On the Termination Payment Date the Lessee shall pay
to the Lessor an amount equal to the Termination Payment,
calculated as at the Termination Payment Date, except
as otherwise specifically provided in the Financial
Schedule.
(b) For the avoidance of doubt, the Lessee shall, except
as expressly otherwise stated in the Relevant Lease
Documents with respect to any Primary Period Rent or
any Secondary Period Rent which falls due on or after
the Termination Payment Date, continue to be liable to
the Lessor to pay all other sums due or to become due
under the Relevant Lease Documents (including, without
limitation, Broken Funding Costs) as and when the same
become due and payable in accordance with the Relevant
Lease Documents.
(c) The payment required from the Lessee pursuant to
Clause 21.5(a) shall, in the case of a notice given by the
Lessor pursuant to Clause 21.3, be by way of agreed
compensation for loss of bargain and, in all other
cases, shall be by way of a liquidated sum or debt.
Such payment shall be the exclusive monetary
compensation payable by the Lessee to the Lessor for
the termination of the leasing of the Vessel but shall
be without prejudice to:
(i) the Lessor's right to recover damages from
the Lessee in an amount up to (but not exceeding)
the Termination Payment in circumstances where
the Termination Payment itself is unenforceable
(in whole or in part) for any reason; and
(ii) the Lessor's right to recover payments from
the Lessee pursuant to other provisions of this
Agreement and the Financial Schedule which
expressly provide for the Lessee to make
payments to the Lessor, whether before or after
the Termination Date.
This Clause 21.5 is, for the avoidance of doubt,
expressly subject to the provisions of Clause 23.
21.6 OTHER OBLIGATIONS AND LIABILITIES
If the leasing of the Vessel or, as the case may be, the right
of the Lessee to take the Vessel on lease, is terminated
(otherwise than following a Total Loss, in which case Clause
10.1 (Total Loss) shall apply), the obligation of the Lessee
to pay Primary Period Rent or Secondary Period Rent which
would otherwise have fallen due on any Rent Payment Dates
which fall on or after the Termination Payment Date shall
cease but without prejudice to the obligations of the Lessee
to make payment of any other moneys then due and unpaid, or
which may become due or be ascertained thereafter (including
under the Financial Schedule and whether by way of additional
Rent or otherwise), or to perform any of its other
obligations, under any other provisions of this Agreement or
the other Relevant Lease Documents.
21.7 RIGHTS OF THE LESSOR
(a) The Lessor shall on and at any time following the
service of a Termination Notice be entitled to:
(i) proceed by appropriate court action or actions
to enforce performance of this Agreement or to
recover damages for the breach of this
Agreement PROVIDED THAT the Lessor shall not be
entitled to recover damages for loss of bargain
if the Termination Payment has been paid in
full to the extent the Termination Payment and
any interest on it constitutes a Remaining
Obligation; and/or
(ii) either:
(A) take possession of the Vessel, for which
purpose the Lessor may enter any
premises belonging to or in the
occupation of or under the control of
the Lessee or the Sub-Lessee or the
Service Contractor where the Vessel may
be located, or cause the Vessel to be
redelivered to the Lessor at the
Redelivery Location; or
(B) by serving notice require the Lessee to
redeliver the Vessel to the Lessor at
the Redelivery Location,
PROVIDED THAT the Lessor shall not be entitled
to exercise its rights under this Clause
21.7(ii) for a period of ninety (90) days
following its service of a Termination Notice
unless or until either:
(x) the Termination Event described
in Clause 21.1(b) has occurred
and is continuing with respect to
the Liability Insurances; and/or
(y) the Termination Event described
in Clause 21.1(d) has occurred
and is continuing with respect to
the Lessee.
For the avoidance of doubt, the Lessor shall not be
obliged to take possession of the Vessel under Clause
21.7(ii)(A) following a termination of the leasing of
the Vessel under this Agreement.
(b) Without prejudice to the obligations of the Lessee to
pay to the Lessor the Termination Payment in accordance
with Clause 21.5, following the service of a
Termination Notice the Lessee shall endeavour to sell
the Vessel as soon as possible in accordance with the
terms of Clause 19.2 (Sale of the Vessel).
22. SECURITY AND SECURITY REVIEW
22.1 THE GUARANTEE
The Lessor shall at all times during the Pre-Lease Period and
the Lease Period and for so long thereafter as the Lessee may
have any actual or contingent obligations or liabilities
hereunder or under any of the other Relevant Lease Documents
have the benefit of the Guarantee from the Guarantor.
22.2 GUARANTOR CREDIT EVENT OCCURRENCE
If a Guarantor Credit Event shall occur:
(a) the Lessee shall promptly notify the Lessor of such
occurrence. Within twenty-one (21) days of the date
(the "GUARANTOR CREDIT EVENT OCCURRENCE DATE"), upon
which a Guarantor Credit Event occurs the Lessee shall
provide Additional Security to the Lessor in accordance
with the provisions of Clause 22.3;
(b) the Strip Limits applying for all Calculation Periods
from and including the Guarantor Credit Event
Occurrence Date up to the subsequent Guarantor Credit
Event Cure Date will be zero PROVIDED THAT following
the occurrence of the third Guarantor Credit Event
Occurrence Date which occurs during the Lease Period,
the Strip Limits applying for all Calculation Periods
from and including such third Guarantor Credit Event
Occurrence Date will be, and will remain, zero; and
(c) on each of the first and second Guarantor Credit Event
Cure Date which occur during the Lease Period the Strip
Limit shall be the Revised Strip Limit and thereafter
the Strip Limits shall be calculated in accordance with
the provisions of this Agreement.
22.3 TERMINATION SHORTFALLS
The Lessee covenants with the Lessor that, prior to the
termination of the leasing of (or the right or obligation to
lease) the Vessel under this Agreement, within twenty-one (21)
days of the delivery by the Lessor to the Lessee of a New
Schedule 2 which shows a Termination Shortfall for any date
(including any Relevant Date), the Lessee shall:
(a) procure the provision to the Lessor of additional
security of a type from a person and upon terms
acceptable to the Lessor in its absolute discretion
such that the value of such additional security for
that date (being the value realised by the Lessor for
payment into the Second Account) will equal that
Termination Shortfall; or
(b) pay or cause to be paid into the Second Account an
amount in Sterling which is, at the date of payment,
the present value of that Termination Shortfall
calculated using a discount rate of LIBID for any
period for which, as at the date of calculation, LIBID
can be ascertained or a discount rate reflecting a
reasonable annual market rate for periods for which no
rate for LIBID can then be ascertained, with rests on
each Adjustment Date.
22.4 CASH SECURITY
If the Lessee has provided cash security under Clause 22.3(b),
the Lessee and the Lessor agree that they shall, without
obligation, discuss in good faith for a period not exceeding
thirty (30) days the possibility of substituting an
alternative form of Additional Security for such cash
security.
22.5 SUBSTITUTION OF NEW SCHEDULE 2 PARTS A, B AND C
The Lessor and the Lessee hereby agree that, subject to Clause
23.3, within twenty-eight (28) days (or such lesser period as
the Lessor shall determine) after any of:
(a) the first day of a Deposit Period (as defined in the
First Deposit Deed); or
(b) the determination by the Lessor that any of the
Assumptions or, as the case may be, the Termination
Assumptions shall not be correct, such that the
schedule 1 which then applies is incorrect; or
(c) a payment by either or both of the Payment Banks to the
Lessor pursuant to any of clause 5.1, 5.2, 5.3, 5.4,
5.5 or 5.6 of either or both of the Payment Agreements;
or
(d) the service by the Lessor of any written notice on
either Payment Bank pursuant to clause 5.5 or 5.6 of
the relevant Payment Agreement, whether or not the
relevant Payment Bank makes the payment required
pursuant to that notice; or
(e) the occurrence of any event which entitles any Provider
of Security to make any withholding or deduction on
account of Taxes or any illegality which relieves that
Provider of Security from making any payment under the
document or documents constituting or evidencing the
relevant security or Additional Security; or
(f) the provision of any Additional Security; or
(g) the occurrence of a Guarantor Credit Event or the
occurrence of the first and second Guarantor Credit
Cure Event to occur during the Lease Period; or
(h) the service by the Lessor of a Lessor Payment Notice
or an Interest Period Notice (as each such term is defined
in each Payment Agreement); or
(i) any other change which would, in the Lessor's opinion,
affect the calculations inherent in Schedule 2,
the Lessor shall produce a New Schedule 2 to this Agreement
which shall (save in the case of manifest error) be
substituted by the Lessor for the Schedule 2 which applied
immediately prior to such substitution. Each New Schedule 2
shall, until itself substituted, constitute Schedule 2 to this
Agreement and references to Schedule 2 in this Agreement shall
be construed accordingly.
22.6 RELEASE AND REPLACEMENT OF ADDITIONAL SECURITY
(A) The Lessor agrees that, prior to the termination of the
leasing of (or the right or obligation to lease) the Vessel
under this Agreement, within five (5) Business Days of the
delivery by the Lessor to the Lessee of a New Schedule 2 which
shows the Strip Limit for the Calculation Period in which the
date upon which such New Schedule 2 was produced by the Lessor
falls exceeding the Strip Amount for such Calculation Period,
then the Lessor shall, provided no Relevant Event has occurred
and is continuing, release and/or discharge all or any part of
the Additional Security selected by the Lessor with a value
(being the Value for such Additional Security if it were paid
into the Second Account) equal to the amount of such excess
and thereafter shall produce a New Schedule 2 to this
Agreement in respect of which the final paragraph of Clause
22.5 shall apply.
(B) If, following the occurrence of a Guarantor Credit Event, a
Guarantor Credit Cure Event occurs (the date upon which such
Guarantor Credit Cure Event occurs being the "GUARANTOR CREDIT
EVENT CURE DATE"), the Lessee shall promptly notify the Lessor
of such occurrence and within five (5) Business Days of such
notification the Lessor shall, provided no Relevant Event has
occurred and is continuing, release and/or discharge the
Additional Security provided by the Lessee under Clause
22.2(a) following the occurrence of such Guarantor Credit
Event PROVIDED THAT:
(i) the Lessor shall only be obliged to release and/or
discharge any Additional Security referred to above
following the occurrence of the first and second
Guarantor Credit Cure Events to occur during the Lease
Period and shall not be so obliged following the
occurrence of the third or any other Guarantor Credit
Cure Event which occurs during the Lease Period; and
(ii) the provisions of this Clause 22.6(B) are
without prejudice to the Lessor's subsequent and continuing
rights under Clause 22.2 to require the Lessee to provide
Additional Security on the dates specified in that Clause.
(C) If any of the following shall occur in relation to any
Additional Security Provider who is not a member of the
Guarantor's Group:
(i) any obligation of such Additional Security Provider
in any of the Additional Security Documents executed by
such Additional Security Provider ceases for any reason
(other than by reason of the occurrence of an
Insolvency Event in relation to such Additional
Security Provider) to constitute the legal, valid,
binding and enforceable obligation of such Additional
Security Provider; or
(ii) if such Additional Security Provider fails to pay
any amount due under any of the Additional Security
Documents executed by it and such failure is not
remedied within three (3) Business Days after such
Additional Security Provider is notified by the Lessor
of such non-payment; or
(iii) if such Additional Security Provider fails to
observe or perform any of its obligations (other than those
referred to in paragraph (ii) above) under any
Additional Security Documents executed by it and does
not remedy the failure within thirty (30) days of
receipt of a notice by the Lessor requiring such
failure to be remedied; or
(iv) if such Additional Security Provider ceases to be a
member of the group of which it was a member at the
time when it executed any Additional Security
Documents; or
(v) an Insolvency Event occurs in relation to any
Additional Security Provider who is not a member of the
Guarantor's Group,
then the Lessee shall, within twenty-one (21) days of being
notified by the Lessor of the occurrence of any of the above
events, provide the Lessor with further additional security to
replace the Additional Security provided by such Additional
Security Provider (the "REPLACED ADDITIONAL SECURITY") in form
and content acceptable to the Lessor and of a value
(calculated on the same basis under this Agreement as the
Value of the Replaced Additional Security) equal to the
Replaced Additional Security.
23. EXCLUDED OBLIGATIONS
23.1 EXCLUDED OBLIGATIONS
The parties hereto agree that the Lessee shall have no
obligation to make payment to the Lessor and accordingly the
Lessor shall have no right of recourse against the Lessee or
its assets (other than to either of the First Account or the
Second Account and any moneys to be released in accordance
with the Deposit Deeds standing to the credit of either of
such accounts) and the Lessee shall have no personal
liability:
(a) in respect of each instalment of Primary Period Rent,
to the extent of an amount (calculated for the due date
for payment of the relevant instalment) equal to the
aggregate of:
(i) the amount payable by each Payment Bank on the
date for payment of the relevant instalment
under clause 4.1 of each of the Payment
Agreements (ignoring for these purposes the
provisions of clauses 4.1, 4.6 and 5.7 of each
of the Payment Agreements entitling the
relevant Payment Bank to make any withholding
or deduction from such instalment) less the
aggregate of (A) the amount, if any, of any
withholding or deduction which the Payment
Banks are or will be entitled to make from such
amount payable under the Payment Agreements and
(B) any amount which, by virtue of invalidity,
illegality or unenforceability, either Payment
Bank is relieved from its obligation to make
payment on such date under the relevant Payment
Agreement (other than by virtue of any
invalidity, illegality or unenforceability
which would not have arisen but for, and only
but for, the occurrence of an Insolvency Event
in relation to the relevant Payment Bank); and
(ii) the amount deposited in the First Account
together with the amount of interest which has
accrued thereon in accordance with the First
Deposit Deed up to the date for payment of the
relevant instalment less the aggregate of (A)
the amount of any withholding or deduction
which the Deposit Bank is or will be entitled
to make from any payment from the First Account
under the terms of the First Deposit Deed and
(B) any amounts in the First Account in respect
of which there is at the date for payment of
the relevant instalment Restricted Access
(the "RENT LIMIT"); and
(b) in respect of the Termination Rent, to the extent
of an amount equal to the Value (calculated for the relevant
Termination Payment Date) of the Termination Security
then held by the Lessor (the "TERMINATION LIMIT"),
the obligations of the Lessee described in (a) and (b) above
being the ("EXCLUDED OBLIGATIONS"), provided that for the
purposes of Clause 23.1(b), (i) the Value of any Non-Deposit
Bank Cash Additional Security delivered to the Lessor shall be
disregarded unless, at the time the relevant Non-Deposit Bank
Cash Additional Security is provided to the Lessor, the Lessor
agrees that the Lessor shall have no right of recourse against
the Lessee or its assets, and the Lessor shall have no
personal liability, to the extent of the Value of that Non-
Deposit Bank Cash Additional Security and (ii) for the
avoidance of doubt, where it is illegal for any Provider of
Security to make payment to the Lessor of amounts which would
otherwise constitute Termination Security or the obligations
of that Provider of Security become unenforceable by the
Lessor by reason of illegality (other than by reason of any
illegality which would not have arisen but for, and only but
for, the occurrence of an Insolvency Event in relation to that
Provider of Security), the Value to be attributed to the
relevant security shall only be the amount of money actually
received and retained by the Lessor.
23.2 REMAINING OBLIGATIONS
Save insofar as the Lessor has agreed to relinquish its rights
against the Lessee or its assets under, or as referred to in,
Clause 23.1, the Lessor shall have full recourse against the
Lessee and its assets for all of the obligations of the Lessee
under the Relevant Lease Documents (but without prejudice to
Clause 29(B)). Accordingly and without limiting the
generality of the foregoing, to the extent that the amount of
any instalment of Primary Period Rent exceeds the Rent Limit
or the amount of any Termination Rent exceeds the Termination
Limit the Lessee shall be obliged to make payment of the
relevant excess in full and the Lessor shall have full
recourse to the Lessee and to its assets to the extent that
such payment is not made.
23.3 NOTICE OF RESTRICTED ACCESS
The Lessor shall, upon becoming aware of the same, give
written notice to the Lessee that there is Restricted Access
to the moneys standing to the credit of either of the First
Account or the Second Account and the Lessor shall take no
action (other than the delivery of any relevant notices or
demands) against the Lessee or its assets (other than the
moneys standing to the credit of the First Account or the
Second Account) for a period (the "MORATORIUM") of ten (10)
Business Days thereafter to recover any amounts which are
subject to such Restricted Access and shall not produce a New
Schedule 2 to this Agreement during the Moratorium. If during
the Moratorium the Lessee (at its own cost and expense)
obtains and delivers to the Lessor a written opinion from
English legal counsel (such counsel being reasonably
acceptable to the Lessor) that there is a reasonable prospect
of successfully obtaining an order of the High Court in London
to effect a release of the moneys which are subject to such
Restricted Access, the Moratorium shall be extended for a
further period of ten (10) Business Days, but, subject to the
further provisions of this Clause 23.3, will then end. If
during the Moratorium there ceases to be Restricted Access to
the relevant moneys, sub-paragraph (cc) of paragraph (b) of
the definition of "VALUE" and sub-paragraph (B) of Clause
23.1(a)(ii) shall cease to apply thereto.
23.4 APPLICATION TO HIGH COURT
If counsel's opinion as specified in Clause 23.3 is obtained
and delivered to the Lessor within the time specified, the
Lessor shall, upon its being indemnified to its satisfaction
against any costs, expenses, losses and liabilities which may
be suffered or incurred by the Lessor so doing, give to the
Lessee such assistance as may be reasonably requested for the
purpose of making an application to the High Court in London
or an order as contemplated in Clause 23.3, including (if the
Lessor so agrees in its absolute discretion) the use of the
Lessor's name in making such application.
24. CHANGE OF CIRCUMSTANCES ETC.
24.1 CHANGE OF CIRCUMSTANCES
This Clause 24.1 applies, otherwise than where a payment is
made in respect of the effect of a Change of Law in accordance
with the provisions of the Financial Schedule, if at any time
the Lessor shall be of the opinion that the effect of a Change
of Law (excluding any introduction or change that relates to
the Taxation of the Lessor or any member of the Lessor's
Group, but including, without limitation, any such change that
relates to the application or modification of any reserve,
deposit, cash ratio, liquidity or similar requirement or to
capital adequacy or that affects the manner in which or the
extent to which the Lessor or any Relevant Member allocates
capital resources to its obligations or to any other form of
banking or monetary controls) is that:
(a) the Lessor or a Relevant Member incurs a cost or an
additional cost as a result of the Lessor having
entered into or assuming, performing, maintaining or
funding its obligations under or pursuant to any of
this Agreement or the other Relevant Lease Documents;
or
(b) the Lessor or a Relevant Member incurs a cost or an
additional cost in making payment of, funding or
maintaining all or any amounts of Balance, or all or
any commitments or obligations under or pursuant to any
of this Agreement or the other Relevant Lease
Documents; or
(c) any amount payable to the Lessor or a Relevant Member
or the effective return to the Lessor or a Relevant
Member under or pursuant to any of this Agreement or
the other Relevant Lease Documents or on all or any of
its capital is reduced; or
(d) the Lessor or a Relevant Member makes any payment or
foregoes any interest or other return on or calculated
by reference to any amount received or receivable by it
under or pursuant to any of this Agreement or the other
Relevant Lease Documents.
24.2 DEMANDS BY LESSOR
If Clause 24.1 applies, then the Lessor may serve one or more
demands on the Lessee, notifying the Lessee of the relevant
event as and when the same shall occur and reasonable details
of the basis of the calculation of the amount referred to in
Clause 24.3 provided that the Lessor shall not be entitled to
serve any demand in respect of a Change of Law which arises as
a consequence of (or of any law or regulation implementing)
(a) the proposals for international convergence of capital
measurement and capital standards published by the Basle
Committee on Banking Regulations and Supervisory Practices in
July 1988 and/or (b) any applicable directive of the European
Union (in each case) unless it results from any change in such
proposals or any such applicable directive (or any law or
regulation implementing the same) occurring or change in the
official interpretation or application thereof after the date
hereof. For the purposes of this Clause 24.2 the term
"APPLICABLE DIRECTIVE" means (exclusively) each of the Own
Funds Directive (89/299/EEC of 17th April 1989) and the
Solvency Ratio Directive (89/647/EEC of 18th December, 1989).
24.3 PAYMENT BY THE LESSEE
Promptly following the service of any demand, the Lessee shall
pay to the Lessor such amount as the Lessor determines and
certifies in the demand will compensate it or a Relevant
Member for the applicable increased cost and in relation to
the period expressed to be covered by such demand.
24.4 MEANING OF "INCREASED COST"
In this Clause 24 "INCREASED COST" means the aggregate of:
(a) the cost or additional cost incurred referred to in
Clause 24.1 (a); and/or
(b) the cost or additional cost incurred referred to in
Clause 24.1 (b) that is attributable to the Lessor or
the Relevant Member in making payment of, funding or
maintaining all or any amounts of Balance, or all or
any commitments or obligations under or pursuant to any
of this Agreement or the other Relevant Lease
Documents; and/or
(c) the reduction in the amount payable or in the return
referred to in Clause 24.1 (c); and/or
(d) the payment or foregone interest or return referred
to in Clause 24.1(d) as appropriate;
PROVIDED THAT an increased cost does not include:
(i) any increased cost compensated for by the
payment of PLA Costs;
(ii) any Tax Liability; and
(iii) any Risk Asset Weighting.
24.5 METHOD OF CALCULATION
When calculating an increased cost, the Lessor may allocate or
spread costs, liabilities and losses to or across the
liabilities or assets of itself or members of the Lessor's
Group, or any class of such liabilities or assets, and on such
basis, as it considers appropriate. A certificate under hand
of an officer of the Lessor specifying the amount of such
compensation shall in the absence of manifest error be
conclusive. Nothing contained in this Clause shall oblige the
Lessor to disclose any information relating to the way in
which it and members of the Lessor's Group employ their
capital or arrange their internal financial affairs.
25. GENERAL INDEMNITY
25.1 GENERAL INDEMNITY
(a) The Lessee hereby agrees at all times to pay promptly or, as
the case may be, indemnify and hold the Lessor and each member
of the Lessor's Group and their respective officers,
directors, secondees, agents and employees (together the
"INDEMNIFIED PERSONS") harmless on a full indemnity basis from
and against each and every liability, loss, charge, claim,
demand, action, proceeding, damage, judgment, order or other
sanction, enforcement, penalty, fine, fee, commission,
interest, Lien, salvage, general average cost and expense of
whatsoever nature suffered or incurred by or imposed on any
Indemnified Person (together "LOSSES"):
(i) arising directly or indirectly out of or in any way
connected with the purchase, manufacture, ownership,
possession, performance, transportation, management,
sale, import to or export from any jurisdiction,
control, use or operation, registration, navigation,
certification, classification, management, ▇▇▇▇▇▇▇,
provisioning, the provision of bunkers and lubricating
oils, testing, design, condition, delivery to or by the
Lessor, acceptance, leasing, sub-leasing, insurance,
maintenance, repair, service, modification,
refurbishment, drydocking, survey (save for survey
costs expressly stated in this Agreement to be payable
by the Lessor), conversion, overhaul, replacement,
removal, repossession, return, redelivery, sale or
disposal by the Lessee or any other person of the
Vessel, whether or not such Liability may be
attributable to any defect in the Vessel or to the
design, construction or use thereof or from any
maintenance, service, repair, drydocking, overhaul,
inspection or to any other reason whatsoever (whether
similar to any of the foregoing or not), and regardless
of when the same shall arise (whether prior to, during
or after termination of the leasing of the Vessel under
this Agreement) and whether or not the Vessel (or any
part thereof) is in the possession or control of the
Lessee or the Sub-Lessee or a Service Contractor or any
other person and whether or not the same is in the
United Kingdom waters or abroad;
(ii) as a consequence of any claim that any design,
article or material in the Vessel or any part thereof or
relating thereto or the operation or use thereof
constitutes an infringement of patent, copyright,
design or other proprietary right;
(iii) in preventing or attempting to prevent the arrest,
seizure, taking in execution, requisition, impounding,
forfeiture or detention of the Vessel or in securing or
attempting to secure the release of the Vessel in each
case following the breach by the Lessee of its
obligations under Clause 12.17 (unless the Lessor was
required to take such action either under any
applicable law or in order to avoid paying any penalty
or fine);
(iv) as a consequence (direct or indirect) of the breach
by any person (other than the Lessor) of any of their
respective obligations under any of the Lease Documents
or of any of the warranties and representations on the
part of any person (other than the Lessor) made in this
Agreement or in any of the other Lease Documents being
untrue or inaccurate in any respect whatsoever (even if
not a Termination Event or a Relevant Event) when made;
(v) any costs and expenses reasonably incurred by the
Lessor or, following the occurrence of a Termination
Event, any costs and expenses incurred by the Lessor,
in each case in connection with the sale or Total Loss
of the Vessel (including, without limitation, broker's
commissions, redelivery costs (if any), marketing
expenses, legal costs, storage, insurance, registration
fees and any other expenses of the Lessor incurred
pending the sale or disposal of the Vessel or otherwise
in connection with the sale or disposal of the Vessel);
(vi) any costs, expenses, damages, liabilities, penalties,
fees and other outgoing expended, incurred or suffered
by the relevant Indemnified Person in connection with:
(A) the arrest, seizure, taking into custody or
other detention by any court or other tribunal
or by any Government Entity (other than by
reason of a Lessor's Lien); or
(B) the subjection to distress by reason of any
process, claim, the exercise of any rights
conferred by a Lien (other than Lessor's Liens)
or by any other action whatsoever,
of any vessel owned or hired or leased by any
member of the Lessor's Group or which any member of the Lessor's
Group has agreed to purchase pursuant to a conditional
sale agreement, which are expended, suffered or
incurred as a result of or in connection with any claim
or alleged claim against, or liability or alleged
liability of, any member of the Guarantor's Group
together with any costs and expenses or other outgoings
which may be paid or incurred by any member of the
Lessor's Group in releasing such vessel from any such
arrest, seizure, custody, detention or distress, which
shall be deemed to include, in the event that such
release is secured by the provision by any member of
the Lessor's Group of any guarantee or bond or other
security (including a cash deposit):
(1) any fee paid to any third party for the issue
of any such guarantee or bond; or
(2) if such guarantee or bond is issued by a member
of the Lessor's Group, an amount equal to the
fee which the Lessor certifies would have been
charged by such member of the Lessor's Group to
the Lessee had the Lessee requested the issue
in favour of a third party of a guarantee or
bond in an equivalent maximum principal amount
of the same currency; or
(3) in the case of a cash deposit, interest on the
amount of such deposit (less any interest
actually received by the Lessor thereon, but
after adding back the amount of any Tax
Liability in respect of such interest) for the
period from (and including the date on which
such deposit is provided to (but excluding) the
earlier of (a) the date upon which the Lessee
either pays to the Lessor or, as the Lessor may
require, ensures that there is credited to an
account with the Deposit Bank and charged in
favour of the Lessor upon terms acceptable to
the Lessor an amount equal to such deposit in
substitution or security therefor and (b) the
date of the release of such deposit at the rate
per annum which is the aggregate of the cost to
the Lessor or the applicable Relevant Member of
funding such deposit in the relevant currency
plus two per cent (2%); or
(4) in the case of any other security, the cost to
the Lessor or the applicable Relevant Member in
providing such security;
(vii) if the Vessel becomes a wreck or obstruction to
navigation, against all losses, costs, damages and
expenses which such Indemnified Person may in
consequence thereof incur, including in respect of the
removal or destruction of the wreck or obstruction
under statutory or other powers,
other than a Tax Liability or any amount in respect of which
the Indemnified Person is entitled to be indemnified pursuant
to Clause 26.1 (General Tax indemnity) or would, but for an
exception contained in Clause 26.2 (Restriction on General Tax
indemnity), be so indemnified (each of the above other than a
Tax Liability being referred to as a "LIABILITY").
(b) Without prejudice to the generality of the provisions of
Clause 25.1(a), Clause 25.1 (a) shall extend to claims of
persons (including governments or other bodies whether
corporate or otherwise) who have incurred expenditure in
taking preventative measures against loss or damage or have
suffered or allege that they have suffered loss, damage or
injury in connection with anything done or omitted to be done
by any person in relation to, in respect of, or in connection
with, 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, the Lessor during
or in respect of the period commencing on the Delivery Date
and terminating on a sale of the Vessel following the
termination or expiration of the leasing of the Vessel
hereunder.
(c) The indemnities contained in Clause 25.1(a) shall extend to
include:
(i) the Sterling cost (including fees and commissions) to
the Indemnified Person in acquiring any currency (other
than Sterling) with Sterling in order to satisfy or
discharge in a currency other than Sterling any
Liability;
(ii) all costs of interest, fees and other amounts
whatsoever suffered or incurred by any Indemnified
Person in order to fund the satisfaction or discharge
of any Liability; and
(iii) each Loss suffered or incurred by the Lessor in
satisfying or discharging, or indemnifying any
Indemnified Person (other than itself) against, any
Liability, or any matter referred to in (i) or (ii)
above, whether or not such Liability is suffered or
incurred by the Lessor under any formal or informal
arrangement, and whether or not any such formal or
informal arrangement existed at the time the Liability
was suffered or incurred by such Indemnified Person.
25.2 EXCLUSIONS FROM GENERAL INDEMNITY
The indemnities contained in Clauses 25.1(a) and 25.1(b) shall
not extend to any Liability:
(a) to the extent that such Liability is caused by any act
of an Indemnified Person which constitutes the wilful
misconduct of or recklessness by such Indemnified
Person;
(b) to the extent that such Liability is caused by any
failure on the part of the Lessor to comply with any of
its express and specific obligations under any of the
Relevant Lease Documents to which the Lessor is party;
(c) to the extent that such Liability constitutes the
Lessor's Cost or any part thereof;
(d) to the extent that such Liability constitutes a cost
which is expressly to be borne by the Lessor under any
other provision of this Agreement, the Shipbuilding
Contract or the Construction Supervision Agreement and
which the Lessee establishes was not intended to be
within the scope of the indemnities granted in favour
of the Lessor or any other member of the Lessor's Group
in any Relevant Lease Document;
(e) in respect of which the Lessor is expressly and
specifically indemnified under any other provision of
this Agreement; and
(f) any Liability which is caused solely by a failure of
any Provider of Security (other than any Additional
Security Provider who is a member of the Guarantor's
Group) to comply with any obligation on its part under
any Relevant Lease Document to which it is party.
25.3 NOTIFICATION OF INDEMNITY CLAIMS
Without prejudice to the provisions of this Clause 25 and
without limiting in any way whatsoever, or being a condition
precedent or subsequent to, the indemnities in favour of any
Indemnified Person hereunder or prompt payment thereunder, the
Lessor shall:
(a) notify the Lessee in writing as soon as practicable
after receipt by the Lessor of notice of a Liability
(provided such notice is in writing). Such
notification to the Lessee from the Lessor shall give
such details as the Lessor then has and which are in
all the circumstances reasonable having regard to the
contents of the notice of a Liability received by the
Lessor; and
(b) where reasonably practicable notify the Lessee of
the Lessor's intention to pay or procure the payment of any
moneys in respect of any such Liability before any such
payment is made, provided that interest on any moneys
payable to the Lessor or any Indemnified Person under
Clause 25.1 in respect of such Liability shall only
accrue at LIBOR (or, in relation to any currency other
than Sterling, the Lessor's funding cost in that other
currency) from the date on which the Lessor or that
Indemnified Person incurs that Liability, until such
time as the Lessor notifies the Lessee of that
Liability, whereafter interest will accrue at the
Default Rate until reimbursed in full under Clause
25.1.
25.4 DEFENCE OF CLAIMS
Without prejudice to the provisions of this Clause 25, the
Lessee shall (subject to having first obtained the consent of
the relevant insurers, if any, and complying in all respects
with its obligations under this Agreement) be entitled to take
(at its own cost) such actions as the Lessee reasonably deems
fit to defend or avoid any liability arising in respect of a
Liability or to take such action against any third party in
respect of a Liability and shall be entitled if so agreed by
the Lessor (which agreement the Lessor shall be at full
liberty to withhold) in writing to take such action in the
name of the Lessor, but subject always to the Lessor first
being indemnified to its satisfaction by the Lessee against
all potential losses, costs, damages and expenses.
25.5 RECOVERIES FROM THIRD PARTIES
If any Indemnified Person shall recover from or be paid by,
any person (other than the Lessee, the Sub-Lessee, a Service
Contractor or out of any security constituted by any of the
Relevant Lease Documents) any amount (other than under Clause
26) in respect of any payments paid or discharged by the
Lessee in accordance with this Clause 25, then provided that
the Lessor has received payment of such amount and is
satisfied that such amount is unconditionally available for
retention by the Lessor, the Lessor shall pay to the Lessee a
sum equal to the value of such recovered or paid amount
together with any interest actually earned on such recovered
or paid amount (less the amount of any Tax Liability thereon),
such payment by the Lessor to be subject always to the
provisions of Clause 26.
25.6 OTHER INDEMNITIES
Each of the indemnities contained in this Clause 25 or
otherwise contained in this Agreement or in any other of the
Lease Documents is in addition to, and not in substitution
for, and shall not be affected or prejudiced by, any other
security, guarantee or indemnity (including the other
indemnities aforesaid) now or hereafter held by the Lessor.
25.7 PASS THROUGH OF INDEMNITY BENEFITS
Where in this Clause 25 or in Clause 26 below an indemnity is
expressed to be for the benefit of any person who is not a
party to this Agreement the Lessor shall be entitled to
indemnify such person on the same terms (and subject in
particular to Clause 25.4) mutatis mutandis as the indemnities
expressed to be for the benefit of such person in this Clause
25 and the Lessee shall indemnify the Lessor and hold the
Lessor harmless on a full indemnity basis from and against
each amount paid or payable by the Lessor to such person under
any such indemnity.
25.8 WAIVER OF RIGHTS
The Lessee further agrees and does hereby agree, without
prejudice to the express provisions of this Agreement, to
waive any rights as against the Lessor that the Lessee may
have under the 1976 Convention on the Limitation of Liability
for Maritime Claims (as most recently enacted in the United
Kingdom pursuant to the Merchant Shipping Act 1995) to limit
or reduce any amount that the Lessee is or may be obliged to
pay.
25.9 MITIGATION
If circumstances arise in respect of the Lessor which would,
or would upon the giving of notice, result in the Lessee being
obliged to pay to the Lessor additional amounts pursuant to
Clause 26.3(b) (Payments and Taxes), then, without in any way
limiting, reducing or otherwise qualifying the obligations of
the Lessee under Clause 26.3(b), the Lessor agrees that it
will, for a period not exceeding thirty (30) days consult with
the Lessee in good faith with the intention of determining
whether it is possible to mitigate the effects of such
circumstances, provided that any costs incurred by the Lessor
in connection with such consultation or mitigation shall be
reimbursed on demand by the Lessee and further that the Lessor
shall be under no obligation to take any action and in
particular, without limiting the generality of the foregoing
words, the Lessor shall be under no obligation to take any
action which might have an adverse effect upon its business,
operations or financial condition or the management of its Tax
affairs.
26. GENERAL TAX INDEMNITY AND OTHER TAX PROVISIONS
26.1 GENERAL TAX INDEMNITY AND PAYMENT OF CERTAIN OUTGOINGS
the Lessee shall pay and discharge or cause to be paid and
discharged, as soon as the same arise or become payable (and
shall, if requested by the Lessor, produce to the Lessor
evidence of the payment and discharge thereof) and indemnify
the Lessor and other members of the Lessor's Group and keep
the Lessor and other members of the Lessor's Group fully
indemnified against:
(a) any Tax Liabilities; and
(b) any licence duties, registration, recording, titling
or filing fees, charges or levies and any interest or
penalties payable in connection with any of the same;
which arise or become payable at any time in respect of, in
consequence of or by reference to:
(i) the Vessel (or any part thereof) or any interest
therein; or
(ii) any document, payment, matter, circumstance or
transaction entered into, made or occurring pursuant
to, contemplated by or in accordance with this
Agreement or by any of the other Lease Documents
including (without limitation) the agreement to
purchase, ownership, delivery to or by the Lessor,
leasing, use, possession, operation, import, export,
return, storage, maintenance, protection, sale,
attempted sale or other disposition of the Vessel (or
any part thereof) or any interest therein;
or which arise or become payable as a result (whether alone or
in connection with any other matter or circumstance) of
anything done in response to any request by the Lessee or any
other member of the Guarantor's Group.
26.2 RESTRICTION ON GENERAL TAX INDEMNITY
The Lessee shall not be obliged to indemnify the Lessor or as
the case may be the applicable Relevant Member pursuant to
Clause 26.1:
(a) against Corporation Tax attributable to any Rent or
Termination Payment or interest actually receivable
hereunder by the Lessor or to any other amounts payable
to and unconditionally received by the Lessor under
this Agreement or pursuant to or in connection with any
of the other Relevant Lease Documents or to any sales
or other proceeds (including, without limitation,
insurance moneys) actually received and retained by the
Lessor in respect of the Vessel;
(b) against any Tax Liability or liability in respect of
any of the matters referred to in Clause 26.1(b) to the
extent it would not have arisen but for the reasonably
avoidable delay or failure by the Lessor or, as the
case may be, the applicable Relevant Member in the
filing of Tax returns or the payment of Taxes or any
duties, fees, charges or levies referred to in Clause
26.1(b) assessed on or payable by the Lessor or, as the
case may be, the applicable Relevant Member which delay
or failure has not been consented to, or requested by
the Lessee or any other member of the Lessee's Group or
unless such failure or delay by the Lessor or, as the
case may be, the applicable Relevant Member arises from
a failure by the Lessee or any other member of the
Lessee's Group promptly to provide the Lessor or, as
the case may be, the applicable Relevant Member with
correct, suitable and adequate information to enable
the Lessor or, as the case may be, the applicable
Relevant Member to file the relevant Tax return or pay
such Taxes or other amounts;
(c) against any Tax Liability to the extent that it is
taken into account in accordance with the provisions of
the Financial Schedule in computing the amount of any
Rent or Termination Payment or any adjustment thereto
or would be so taken into account but for the operation
of paragraph 3.3 of Part 3 of the Financial Schedule;
(d) against any Tax Liability which is imposed by way of
deduction or withholding from any payment due from the
Lessee under this Agreement to the Lessor, whether or
not the Lessee is required to make any payment or
increased payment in respect thereof under Clause 26.3;
(e) against any Tax Liability which is suffered by the
Lessor by reason of the non-deductibility for the
purposes of Taxation of any payment made by the Lessor
to the Lessee, whether or not the Lessor is entitled to
make any withholding in respect thereof under Clause
26.7;
(f) to the extent that such Tax Liability is caused by
any act of the Lessor which constitutes wilful misconduct
of or recklessness by the Lessor or a breach by the
Lessor of its obligations under the Relevant Lease
Documents;
(g) against any Tax Liability in respect of VAT or
Irrecoverable VAT, whether or not the Lessee is
required to make any payment or increased payment in
respect thereof under Clause 26.4.
26.3 PAYMENTS AND TAXES
(a) All the sums payable to the Lessor and/or any member of the
Lessor's Group pursuant to or in connection with this
Agreement or any of the other Relevant Lease Documents shall
be paid in full without any set-off or counterclaim whatsoever
and free and clear of all deductions or withholdings
whatsoever save only as may be required by law.
(b) If any deduction or withholding is required by law in respect
of any payment due to the Lessor and/or any member of the
Lessor's Group pursuant to or in connection with this
Agreement or any of the other Relevant Lease Documents or any
document contemplated by or entered into pursuant hereto or
thereto (including any Service Contract), the Lessee shall:
(i) ensure or procure that the deduction or withholding
is made and that it does not exceed the minimum legal
requirement therefor;
(ii) pay, or procure the payment of, the full amount
deducted or withheld to the relevant Taxation or other
authority in accordance with the applicable law;
(iii) (A) if the payment is to be made by the Lessee,
increase the payment in respect of which the deduction or
withholding is required so that the net amount received by
the Lessor or, as the case may be, the applicable Relevant
Member as aforesaid after the deduction or withholding
(and after taking account of any further deduction or
withholding which is required to be made which arises as a
consequence of the increase) shall be equal to the amount
which the Lessor or, as the case may be, that Member
would have been entitled to receive in the absence of any
requirement to make a deduction or withholding; or (as the
case may be)
(B) if the payment is to be made by any person
other than the Lessee, pay directly to the
Lessor or, as the case may be, that Member such
sum (a "COMPENSATING SUM") as will, after
taking into account any deduction or
withholding which is required to be made in
respect of the compensating sum, enable the
Lessor or, as the case may be, that Member to
receive, on the due date for payment, a net sum
equal to the sum which the Lessor or, as the
case may be, that Member would have received in
the absence of any obligation to make a
deduction or withholding; and
(iv) promptly deliver or procure the delivery to the
Lessor or, as the case may be, that Member of appropriate
receipts evidencing the deduction or withholding which
has been made.
(c) If the Lessor or, as the case may be, the applicable Relevant
Member determines in its absolute discretion that it has
received, realised, utilised and retained a Tax benefit by
reason of any deduction or withholding in respect of which the
Lessee has made an increased payment or paid a compensating
sum under this Clause 26.3 the Lessor or, as the case may be,
that Member shall, provided the Lessor or, as the case may be,
that Member has received all amounts which are then due and
payable under any of the provisions of this Agreement and the
other Relevant Lease Documents, pay to the Lessee (to the
extent that the Lessor or, as the case may be, that Member can
do so without prejudicing, the amount of that benefit and the
right of the Lessor or, as the case may be, that Member to
obtain any other benefit relief or allowance which may be
available to it) as soon as reasonably practicable such
amount, if any, as the Lessor shall determine in its absolute
discretion will leave the Lessor or, as the case may be, that
Member in no better and no worse position than the Lessor or,
as the case may be, that Member would have been in if the
deduction or withholding had not been required,
PROVIDED THAT:
(i) the Lessor or, as the case may be, that Member shall
have an absolute discretion as to the time at which and
the order and manner in which it realises or utilises
any Tax benefit;
(ii) the Lessor or, as the case may be, that Member shall
not be obliged to disclose any information regarding
its business, Tax affairs or Tax computations;
(iii) if the Lessor or, as the case may be, that Member
has made a payment to the Lessee pursuant to Clause 26.3(c)
on account of any Tax benefit and it subsequently
transpires that the Lessor or, as the case may be, that
Member did not receive that Tax benefit, or received a
lesser Tax benefit, the Lessee shall pay on demand to
the Lessor such sum as the Lessor may determine as
being necessary to restore the after-Tax position of
the Lessor or, as the case may be, that Member to that
which it would have been had no adjustment under this
proviso (iii) been necessary. Any sums payable by the
Lessee to the Lessor under this proviso (iii) shall be
subject to the provisions of Clause 26.5;
(iv) the Lessor or, as the case may be, that Member shall
not be obliged to make any payment under this Clause
26.3 if, by doing so, it would contravene the terms of
any applicable law or any notice, direction or
requirement of any governmental or regulatory authority
(whether or not having the force of law but compliance
with which is customary); and
(c) PROVIDED FURTHER THAT if the Lessee requests the Lessor, in
writing, to make an application pursuant to the provisions of
a double tax treaty for relief (whether in whole or in part)
in respect of any deduction or withholding required by law,
the Lessor shall (at the cost of the Lessee) take such action
as the Lessee shall reasonably request to make such
application to an applicable Tax authority. If the Lessor
subsequently obtains a repayment (whether in whole or in part)
of such deduction or withholding from that Tax authority in
circumstances where the Lessee has made an increased payment
or paid a compensating sum under this Clause 26.3 the Lessor
shall, provided that the Lessor has received all amounts which
are then due and payable by the Lessee under any of the
provision of this Agreement and the other Relevant Lease
Documents, pay to the Lessee as great an amount of the
repayment as possible as will leave the Lessor in no worse
position than the Lessor would have been in if the deduction
or withholding had not been required.
26.4 VALUE ADDED TAX
(a) If the Lessor makes any supply for Value Added Tax purposes
pursuant to or in connection with this Agreement or any of the
other Relevant Lease Documents or any transaction or document
contemplated herein or therein, the Lessee shall (save to the
extent that the Lessor is entitled to be indemnified in
respect of that Value Added Tax by an increased payment under
Clause 26.4(b) below) at such time as the Lessor certifies to
the Lessee that any amount of VAT payable in respect of that
supply has not been paid to the Lessor and having duly
accounted for such VAT to Customs and Excise at the correct
time and having duly claimed bad debt relief in respect of
that VAT the Lessor either has or has not received such
relief, pay on demand to the Lessor an amount equal to the
aggregate of any Value Added Tax which is payable in respect
of that supply and has not been the subject of bad debt relief
and interest on an amount equal to any Value Added Tax payable
in respect of the supply at LIBOR ascertained in respect of
the date on which such VAT was accounted for to Customs and
Excise for the period from that date until the date of the
Lessor's certificate or the date upon which bad debt relief is
received.
(b) Save where expressly provided to the contrary, all payments
made under this Agreement and the other Relevant Lease
Documents are calculated without regard to Value Added Tax.
If any such payment constitutes the whole or any part of the
consideration for a taxable or deemed taxable supply (whether
that supply is taxable pursuant to the exercise of an option
or otherwise), the amount of that payment shall be increased
by an amount equal to the amount of Value Added Tax which is
chargeable in respect of the taxable supply in question
PROVIDED THAT the Lessor shall not be liable to pay an amount
in respect of Value Added Tax until such time as, and to the
extent that it receives a credit for such VAT as "INPUT TAX",
as defined in sub-section (1) of section 24 of VATA, under
sections 25 and 26 of VATA, in which case such payment shall
be made as soon as practicable after the credit is received.
(c) If any amount or Value Added Tax paid by the Lessor pursuant
to this Agreement or any of the Relevant Lease Documents shall
be Irrecoverable VAT, the Lessee shall forthwith on demand by
the Lessor indemnify the Lessor and keep the Lessor fully
indemnified at all times against such Irrevocable VAT PROVIDED
THAT if the Lessor determines that such Irrecoverable VAT
subsequently proves to be recoverable, the Lessor shall pay to
the Lessee such amount, if any, as the Lessor in its absolute
discretion shall determine will leave the Lessor in no better
and no worse a position than the Lessor would have been in if
no payment had been made by the Lessee to the Lessor under
this Clause 26.4(c).
26.5 GROSSING-UP OF INDEMNITY PAYMENT
If the Lessor makes a payment or suffers a loss in respect of
which it is entitled to be indemnified or reimbursed or
otherwise kept harmless pursuant to any provision of this
Agreement or any of the other Lease Documents and the Lessor
determines in its absolute discretion that:
(a) (i) the loss or payment is not or will
not be wholly deductible in computing the profits of
the Lessor for the purposes of Tax whilst the
payment to be made by way of indemnity or
reimbursement (for the purpose of this Clause
26.5, the "PAYMENT") will or is likely to give
rise to a Tax Liability for the Lessor; or
(ii) the Payment is likely to give rise to
a Tax Liability for the Lessor in any Accounting
Period of the Lessor earlier than the
Accounting Period in which the loss or payment
is deductible;
then, at the time of the Payment the Lessee shall
pay such an amount (the "ADDITIONAL PAYMENT") as will,
after taking into account any Tax Liability likely to
be suffered or incurred by the Lessor in respect of the
Payment or the Additional Payment, leave the Lessor in
the same after-Tax position as it would have been in
had the Payment not given rise to any Tax Liability and
the loss or payment had not been deductible PROVIDED
THAT if at the time of the Payment the Lessor considers
that no Additional Payment is necessary but
subsequently determines that an Additional Payment is
necessary so to indemnify the Lessor, the Additional
Payment shall be paid by the Lessee to the Lessor
following a demand by the Lessor;
(b) the loss or payment has proved to be
wholly deductible in computing the profits of the Lessor for
the purposes of Tax whilst the Payment by the Lessee has
provided not to give rise to any Tax Liability for the Lessor,
then the Lessor shall pay to the Lessee a rebate of
Rent (for the purposes of this Clause 26.5 the
"REBATE") of such amount as will leave the Lessor in no
better and no worse position than it would have been in
if the Payment had not given rise to a Tax Liability
for the Lessor and the loss or payment had not been
deductible,
PROVIDED THAT if the Lessor subsequently determines that any
payment by the Lessee to the Lessor under this Clause 26.5 by
way of an Additional Payment or, as the case may be, any
Rebate was calculated on an incorrect basis, such adjustment
shall be made between the Lessor and Lessee as the Lessor
determines necessary to restore the after-Tax position of the
Lessor to that which it would have been if no adjustment had
been necessary.
26.6 DOCUMENTARY AND OTHER SIMILAR TAXES
All stamp, documentary, registration or other like duties or
Taxes, including any penalties, additions, fines, surcharges
or interest relating thereto, which are imposed on or
chargeable on or in connection with this Agreement or any of
the other Relevant Lease Documents or the Sub-Lease or any
Service Contract shall be paid by the Lessee PROVIDED THAT the
Lessor shall be entitled but not obliged to pay any such
duties or Taxes, whether or not they are its primary
responsibility, whereupon the Lessee shall on demand indemnify
the Lessor against those duties or Taxes. The Lessor agrees
that if it decides to pay any such duties or Taxes, it shall
give the Lessee not less than five (5) Business Days' notice
before making such payment.
26.7 DEDUCTIBILITY
Notwithstanding anything contained in this Agreement or any
of the other Relevant Lease Documents (other than in relation to
any rebate of Rent under Clause 10.2(b) or 20.2(ii)), if the
Lessor determines that any payment which it is required to
make to the Lessee under this Agreement or under any of the
other Relevant Lease Documents, by way of rebate of Rent or
otherwise, will not or may not be fully deductible in
computing the Lessor's liability to Corporation Tax for the
Accounting Period of the Lessor in which the payment is made,
the Lessor shall, except to the extent that such
non-deductibility has been taken into account in accordance
with the Financial Schedule as a result of Assumption 2.3.13
(d) (iii) proving not to be correct, be entitled to withhold
and retain from that payment such amount as the Lessor
determines to be necessary to enable it to occupy the same
after-Tax position as it would occupy if the payment were
fully deductible as aforesaid;
PROVIDED THAT if:
(a) any such payment is made without withholding and the
Lessor subsequently determines that the payment will
not or may not be fully deductible as aforesaid; or
(b) any such payment is made subject to withholding and
the Lessor subsequently determines that no such withholding
ought to have been made or the basis on which the
withholding was calculated was incorrect;
such adjustment shall be made between the Lessor and the
Lessee as the Lessor determines to be necessary, taking into
account the time value of money, to enable the Lessor to
occupy the same after-Tax position as it would occupy if no
such adjustment were necessary. Any sum payable by the Lessee
to the Lessor under this proviso shall be subject to the
provisions of Clause 26.5.
27. PRESERVATION OF INDEMNITIES
Without prejudice to damages or other claim which either party
may, at any time, have against the other hereunder or under
any of the Relevant Lease Documents it is hereby agreed and
declared that the indemnities given by the Lessee in favour of
the Lessor or any member of the Lessor's Group contained in
this Agreement shall continue in full force and effect
notwithstanding any sale or other disposition of the Vessel, a
Total Loss having occurred or any breach of the terms hereof
or thereof by the Lessor (including fundamental breach), the
repudiation by the Lessor or the Lessee of this Agreement or
any of the Relevant Lease Documents or the expiration of the
Pre-Lease Period or the Lease Period through effluxion of time
or otherwise or the termination of the leasing or sale of the
Vessel hereunder or any other circumstance whatsoever.
28. ASSIGNMENT
28.1 ASSIGNMENT BY LESSOR
The Lessee acknowledges and agrees that the Lessor shall be
entitled at any time and from time to time to assign,
transfer, novate or otherwise dispose of all (but not part
only) of its interest in the Vessel and the Relevant Lease
Documents:
(a) to any person (the "TRANSFEREE") who is not a member
of the Lessor's Group with the prior written consent of
the Lessee (such consent not to be unreasonably
withheld) provided always that without prejudice to the
foregoing:
(i) the assignment, transfer, novation or other
disposal shall be on terms that the Lessee
shall be under no greater obligation or
liability under this Agreement and the other
Relevant Lease Documents to which it is a party
than it would have been under but for such
assignment, transfer, novation or other
disposal;
(ii) the Transferee (or its ultimate parent
company) is a bank or financial institution having a
credit rating equal to or better than that of
the Bank as at the date of the assignment,
transfer, novation or other disposal;
(iii) the rights of the Lessee under the Relevant
Lease Documents shall not be adversely affected
and shall be on equivalent terms to the
Relevant Lease Documents in force prior to the
assignment, transfer, novation or other
disposal (and, without prejudice to the
generality of the foregoing, if the Transferee
itself is not a bank or financial institution
satisfying the requirements of paragraph (ii)
above, the Lessee shall receive a parent
company guarantee from the ultimate holding
company of the Transferee on terms no less
favourable than that granted by the Bank); and
(iv) it shall, without limitation, be reasonable
for the Lessee to withhold its consent if it
certifies that the proposed Transferee (or its
ultimate parent company or a subsidiary of its
ultimate parent company) is a company with
which the Lessee or any other company or the
Guarantor's Group has valid business reasons
for not entering into a relationship; and
(b) to any person who is a member of the Lessor's Group
without the need for the Lessee's consent provided that
the Lessee shall not be required to suffer or incur any
greater cost in the performance of its obligations
under this Agreement or the other Relevant Lease
Documents to which it is a party, or any loss of
benefit, than would have been the case but for such
assignment, transfer, novation or other disposal,
and in each case, and the Lessee hereby agrees and undertakes
that it will upon the request of the Lessor execute such
further documents and give such notices as the Lessor may
reasonably require in order to effect such assignment,
transfer, novation or other disposal, provided that any costs
incurred by the Lessee (including any legal fees and
Irrecoverable VAT thereon) in connection therewith or with any
consequential amendments to the Lease Documents shall be
reimbursed by the Lessor upon presentation of a copy of the
relevant invoice.
28.2 ASSIGNMENT BY THE LESSEE
(A) Except as expressly permitted by Clauses 28.2(B)
and 28.2(D), the Lessee may not assign, transfer or part
with any of its rights or obligations under, or the
benefit or burden of, this Agreement or the other Lease
Documents to which the Lessee is a party without the
prior written consent of the Lessor.
(B) The Lessee shall be entitled at any time and from
time to time to assign and transfer the entire burden and
benefit of this Agreement and the other Lease Documents
to which it is a party to any person who is a member of
the Guarantor's Group without the need for the Lessor's
consent provided that:
(i) the transferee and any other necessary person
shall enter into such documentation as may be
necessary to give effect to such assignment and
transfer (including any amendment that may be
necessary to the terms of the Guarantee to
ensure that the Guarantee extends to the
obligations of the assignee hereunder);
(ii) the Lessor shall not suffer or incur any
greater cost, or any loss of benefit, or any
increased obligation, liability or risk than
would have been the case but for such
assignment and transfer; and
(iii) any costs and expenses (including stamp
duty) in respect of such assignment and transfer
shall be for the Lessee's account.
(C) The Lessor agrees from time to time, and at the
Lessee's expense, to co-operate with the Lessee and do
and perform such acts and execute and deliver such
instruments as the Lessee may reasonably request to
effect such assignment and transfer referred to in
Clause 28.2(B).
(D) The Lessee shall be entitled to and will, on request
of the Lessor or any financier who advances funds to the
Sub-Lessee to enable it to pay the put option price
under Clause 3 of the Put Option Deed, assign its
rights to receive rebate of Rent under Clause 20.2(ii)
to any such financier on such terms as such financier
may reasonably require and do such further acts and
enter into such further documents in order to enable
such funding to take place.
29. LESSOR'S RIGHT OF SET-OFF
(A) The Lessor shall be entitled to set off or withhold
from any sum or sums expressed in this Agreement or any
of the Relevant Lease Documents to be payable by the
Lessor to the Lessee (other than any sum or sums
referred to in Clause 29(B)) any amounts due or
expressed to be due (or would, if demanded, be due)
from the Lessee, to the Lessor under this Agreement or
any of the Relevant Lease Documents, other than amounts
payable in relation to Excluded Obligations. Save as
aforesaid, the Lessee authorises the Lessor to apply
any credit balance to which the Lessee is entitled on
any account of the Lessee with the Lessor in
satisfaction of any sum due and payable from the Lessor
hereunder or under any of the other Relevant Lease
Documents but unpaid; for this purpose, the Lessor is
authorised to purchase with the moneys standing to the
credit of any such account such other currencies as may
be necessary to effect such application. The Lessor
shall not be obliged to exercise any right given to it
by this Clause 29.
(B) Rebates of Rent expressed to be payable by the
Lessor to the Lessee under Clause 10.2(b) or 20.2(ii) shall be
paid by the Lessor without set-off or counterclaim and
are hereby expressly excluded from the Lessor's rights
under Clause 29(A).
30. SUB-LEASING
(A) The Lessee shall not, without the prior written
consent of the Lessor, sub-lease the Vessel (and shall procure
that there is no further sub-leasing of the Vessel by
any Sub-Lessee) other than to the Sub-Lessee under a
charter by way of demise, time charter, voyage charter
or other chartering arrangement upon terms to be agreed
by the Lessee and the Sub-Lessee PROVIDED THAT any such
charter or other chartering arrangement shall always
contain a term that neither the Vessel nor any part
thereof shall be used during the requisite period (as
defined in Section 40 CAA 1990) so as to result in the
application of any of Sections 42, 43, 44 and 46 CAA
1990.
(B) In the event that the Sub-Lessee performs any act
to be performed by the Lessee hereunder which, if it had been
performed by the Lessee, it would fully satisfy an
obligation of the Lessee to the Lessor hereunder, such
obligation of the Lessee shall be deemed satisfied as
between the Lessor and the Lessee to the extent so
performed by the Sub-Lessee.
(C) The Lessee shall procure that the Sub-Lease is in all
respects subordinate to the rights of the Lessor under
this Agreement and shall automatically terminate upon
the service of a Termination Notice hereunder. The
Lessee shall further procure that the Sub-Lease
provides that, following the service of a Termination
Notice but subject to Clause 21.7, the Sub-Lessee shall
surrender possession and control of the Vessel to the
Lessor and shall not exercise or purport to exercise
any Lien which they, either together or individually,
might have over or in respect of the Vessel in respect
of the termination of their right to possession of the
same.
31. MISCELLANEOUS
31.1 GENERAL FEES AND EXPENSES
The Lessee shall on demand:
(a) pay or reimburse to the Lessor all costs and
expenses (including, without limitation, the Lessor's Expenses
and survey costs) of the Lessor properly incurred in
connection with the negotiation, preparation or
execution of the Lease Documents and any amendment,
variation or waiver from time to time hereto or thereto
or any consent from time to time hereunder or
thereunder and in connection with the payment by the
Lessor of each of the Instalments, the delivery to or
by the Lessor, redelivery or sale of the Vessel or any
part thereof, save to the extent that such costs and
expenses have been taken into account in the Financial
Schedule;
(b) pay or reimburse to the Lessor all costs and expenses
(including, without limitation, legal fees and survey
costs and expenses) properly incurred by the Lessor in
connection with or incidental to the breach by any
party (other than the Lessor and any Provider of
Security other than any Additional Security Provider
who is a member of the Guarantor's Group) of any of its
respective obligations under the Lease Documents, the
protection, preservation or enforcement of any right or
remedy conferred upon the Lessor under any of the Lease
Documents or by law, or to any action or act to recover
possession of the Vessel or any part thereof, whether
or not any such action progresses to judgment;
(c) pay or reimburse to the Lessor all costs and
expenses (including, without limitation, fees of legal and
other advisers) incurred in connection with any action or act
brought by the Lessor to recover any Rent or other
payments due from any party (other than the Lessor, the
Bank and any Provider of Security other than any
Additional Security Provider who is a member of the
Guarantor's Group) under this Agreement or any of the
other Lease Documents; and
(d) pay or reimburse to the Lessor all costs and
expenses (including without limitation, legal, insurance and
other advisers) properly incurred by the Lessor in
connection with a Total Loss of the Vessel.
31.2 INTENTIONALLY OMITTED
31.3 DELAY IN ENFORCEMENT, WAIVERS ETC.
All waivers of any right, power or privilege by any of the
Lessor or the Lessee shall be in writing signed by the Lessor
or, as the case may be, the Lessee. No failure or delay on
the part of the Lessor or the Lessee 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. The rights and remedies herein provided are cumulative
and not exclusive of any rights or remedies provided by law or
in equity.
31.4 VARIATION
This Agreement shall only be varied by an instrument in
writing executed by the parties hereto.
31.5 INVALIDITY
If any term or provision of this Agreement or the application
thereof to any person or circumstance shall to any extent be
invalid or unenforceable the remainder of this Agreement 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 Agreement shall be valid and
shall be enforceable to the fullest extent permitted by law.
31.6 NOTICES
(a) Any demand, consent, record, election or notice (a "NOTICE")
required or permitted to be given by either party to the other
under this Agreement shall be in writing and sent by first
class prepaid airmail post or by facsimile transmission or
delivered by hand addressed as follows:
(i) if to the Lessor to:
Nelstar Leasing Company Limited
Great Surrey House
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇
Fax: ▇(▇▇) ▇▇▇ ▇▇▇ ▇▇▇▇
Attention: Managing Director
(ii) if to the Lessee to:
c/o McKinney, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇
▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇
The Bahamas
Fax: ▇(▇) ▇▇▇ ▇▇▇ ▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
with a copy sent to:
Global Marine Inc.
▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇
▇▇▇
Fax: ▇(▇) ▇▇▇ ▇▇▇ ▇▇▇▇
Attention: General Counsel
or in each case to such other person or address or facsimile
number as one party may, by not less that three (3) Business
Days' notice, notify in writing to the other party hereto.
(b) Any Notice shall be deemed to have been given or received to
or by the party to whom it is addressed ten (10) days
following posting, if posted by first class prepaid airmail
post and on receipt, if delivered by hand and in the case of
facsimile transmission, upon receipt by the sender of a
transmission report showing the Notice has been sent in its
entirety. The sender of a Notice by facsimile shall despatch
an original of such Notice in the first class airmail post
with postage prepaid in an envelope addressed to the recipient
of the facsimile at its address stated in Clause 31.6(a), but
the facsimile Notice shall be the definitive Notice for the
purposes of this Agreement.
31.7 APPLICABLE LAW
This Agreement shall be governed by and construed, and
performance thereof shall be determined, in accordance with
the laws of England.
31.8 COUNTERPARTS
This Agreement may be executed in several counterparts and any
single counterpart or set of counterparts, signed in either
case by all of the parties, shall be deemed to be an original,
and all taken together shall constitute one and the same
instrument.
31.9 FURTHER ASSURANCES
The Lessee agrees from time to time, and at the Lessee's
expense, to do and perform such other and further acts and
execute and deliver any and all such other instruments as may
be required by law or reasonably requested by the Lessee to
establish, maintain and protect the rights and remedies of the
Lessor and to carry out and effect the intent and purpose of
this Agreement and the other Relevant Lease Documents.
31.10 ENTIRE AGREEMENT
This Agreement, in conjunction with the other Relevant Lease
Documents and any other letter agreements of even date
herewith or subsequent hereto between the Lessor and any other
party to the Relevant Lease Documents, constitute the entire
agreement between the parties hereto in relation to the
leasing of the Vessel by the Lessor to the Lessee, and
supersede all previous proposals, agreements and other written
and oral communications in relation thereto.
31.11 SUBMISSION TO JURISDICTION
(a) The Lessee (which shall include its successors and permitted
assigns from time to time) hereby submits to the non-exclusive
jurisdiction of the courts of England with regard to this
Agreement and the other Relevant Lease Documents. Any legal
action or proceedings with respect to this Agreement and the
other Relevant Lease Documents may be brought in the courts of
England or such other jurisdiction, as the Lessor may elect.
By its execution and delivery of this Agreement, the Lessee:
(i) hereby accepts for itself and in respect of its
property, generally and unconditionally, the
non-exclusive jurisdiction of the aforesaid courts with
respect to this Agreement and the other Relevant Lease
Documents;
(ii) waives any objections on the grounds of venue or
forum non conveniens or any similar grounds and agrees that
legal proceedings in any one or more jurisdictions
shall not preclude legal proceedings in any other
jurisdiction with respect to this Agreement and the
other Relevant Lease Documents;
(iii) agrees that final judgment against it in any action
or proceedings shall be conclusive and may be enforced in
any other jurisdiction with respect to this Agreement
and the other Relevant Lease Documents within or
outside England by suit on the judgment, a certified
copy of which shall be conclusive evidence of the fact
and of the amount of its indebtedness; and
(iv) hereby consents generally in respect of any legal
action or proceeding arising out of or in connection
with this Agreement and the other Relevant Lease
Documents to the giving of any relief or the issue of
any process in connection with such action or
proceeding including, without limitation, the making,
enforcement or execution against any property
whatsoever (irrespective of its use or intended use) of
any order or judgment which may be made or given in
such action or proceeding.
(b) The Lessee in the case of the courts of England, hereby
designates, appoints and empowers WFW Legal Services Limited
(ref: CALP/DNO 2628.16002), at the address of its registered
office for the time being (presently ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇) to receive, for it and on behalf of it, service of
process in any legal action or proceedings with respect to
this Agreement or the other Relevant Lease Documents. The
Lessee agrees that it will at all times continuously maintain
an agent to receive service of process in England on its
behalf and on behalf of its property with respect to this
Agreement and the other Relevant Lease Documents and if, for
any reason, such agent named above or its successor shall no
longer serve as agent of the Lessee to receive service of
process in England, the Lessee shall promptly appoint a
successor in England and advise the Lessor thereof. It is
understood that a copy of any process served as above will be
promptly forwarded (if necessary) by first class prepaid air
mail post to the Lessee but the failure of the Lessee to
receive such copy shall not affect in any way the service of
such process on the said person as the agent of the Lessee.
31.12 JUDGMENT CURRENCY
If, under any applicable law, whether as a result of a
judgment against any of the parties hereto or the liquidation
of any of the parties hereto for any other reason, any payment
under or in connection with this Agreement or any of the other
Relevant Lease Documents or a Service Contract is made or is
recovered in a currency (the "OTHER CURRENCY") other than that
in which it is required to be paid hereunder or thereunder
(the "ORIGINAL CURRENCY") then, to the extent payment (when
converted at the rate of exchange and after deducting
commission on the date of payment or, in the case of a
liquidation, the latest date for the determination of
liabilities permitted by the applicable law) falls short of
the amount which is required to be paid under or in connection
with this Agreement or any of the other Relevant Lease
Documents or a Service Contract as aforesaid, the payer (or,
in the case of a payment to the Lessor under a Service
Contract, the Lessee) shall as a separate and independent
obligation fully indemnify the payee on demand against the
amount of the shortfall; and for the purposes of this Clause
31.13 "RATE OF EXCHANGE" means the rate at which the payee is
able as at 11.00 a.m. (London time) on the relevant date to
purchase the Original Currency from the Bank in London with
the Other Currency.
32. CONFIDENTIALITY
At all times during the Pre-Lease Period and the Lease Period,
each of the parties hereto shall keep confidential and shall
not, without the prior written consent, in the case of the
Lessee, of the Lessor and, in the case of the Lessor, of the
Lessee issue any press release in relation to the transactions
evidenced by this Agreement and the other Lease Documents, or
disclose to any other person the financial details of this
Agreement or any other Lease Document and the transactions
contemplated hereby or thereby or any other agreement entered
into after the date hereof by the Lessor and the Lessee in
connection with this Agreement or any other Lease Document, or
release copies or drafts of any such document which disclose
or reveal the identity of the parties (or any of them)
provided that (i) the Lessor will not unreasonably withhold or
delay its consent to any proposed press release and (ii) the
parties hereto shall be entitled, without any such consent, to
disclose the same:
(a) in connection with any proceedings arising out of
or in connection with this Agreement or any of the other
Lease Documents; or
(b) if required to do so by an order of a court of
competent jurisdiction whether in pursuance of any
procedure for discovery of documents or otherwise; or
(c) pursuant to any law or regulation having the force
of law; or
(d) to any fiscal, monetary, tax, governmental or other
competent authority; or
(e) to the auditors, legal or other professional advisers,
insurance brokers or underwriters of any member of
either the Guarantor's Group or the Lessor's Group; or
(f) if any of the same is or shall become publicly known
otherwise than as a result of a breach by such party of
this Clause 32; or
(g) in any manner contemplated by any of the Lease
Documents; or
(h) to any other party to the Lease Documents or any
Additional Security Provider to the extent that such
Additional Security Provider has executed a
confidentiality undertaking in favour of the Lessor in
form and content reasonably acceptable to the Lessor.
AS WITNESS this Agreement is executed by each of the parties hereto
as their respective deeds and is intended to be and is hereby
delivered the day and year above written.
SCHEDULE 1
Financial Schedule
SCHEDULE 2
SCHEDULE 3
INTENTIONALLY OMITTED
SCHEDULE 4
Part 1
REPRESENTATIONS AND WARRANTIES BY THE LESSEE
(A) The Lessee is a company duly incorporated and validly existing
under the laws of the Commonwealth of the Bahamas and has the
corporate power and authority to own its assets and carry on
its business as it is being presently conducted and to enter
into and perform its obligations under the Lease Documents to
which it is or is to be a party and to consummate the
transactions contemplated hereby;
(B) the execution, delivery and performance by the Lessee of the
Lease Documents to which it is or is to be a party and the
consummation of the transactions contemplated hereby have been
duly authorised by all necessary or appropriate corporate
action on the part of the Lessee, do not require any
shareholder approval, or approval or consent of any trustee
or holders of any indebtedness or obligations of the Lessee
except such as have been duly obtained and are in full force
and effect, and do not contravene or constitute a default
under (aa) any law, governmental rule, regulation or decree,
directive, convention, treaty, judgment, injunction or any
official or judicial order binding on the Lessee or any of its
assets, (bb) its Constitutive Documents or (cc) any agreement
consent or instruments to which it is a party or is binding
upon it or any of its assets nor result in the creation or
imposition of any Lien on any of its assets pursuant to the
provisions of any such agreement, consent or instrument;
(C) this Agreement and the other Lease Documents to which the
Lessee is or is to be a party constitutes, or when executed
and delivered will constitute, the legal, valid and binding
obligations of the Lessee enforceable in accordance with its
terms subject to general principles of equity and the law
affecting creditors' rights generally;
(D) no authorisation, approval, consent, licence, exemption,
registration, recording, filing or notarisation and no payment
of any duty or tax and no other action whatsoever which has
not been duly and unconditionally obtained, made or taken is
necessary or desirable to ensure the validity, enforceability
or priority of the liabilities and obligations of the Lessee
or the rights of the Lessor under this Agreement and the other
Lease Documents to which the Lessee is or is to be a party;
(E) no event has occurred which constitutes a default under, any
agreement by which the Lessee, its business or any of its
assets is bound or affected, being a contravention or default
which would be likely to either have a material adverse effect
on the business, assets or financial or trading condition of
the Lessee or materially and adversely affect its ability to
observe or perform its obligations under this Agreement and
the other Relevant Lease Documents to which the Lessee is or
is to be a party;
(F) no litigation, arbitration or administrative proceedings or
claim which would be likely to, by itself or together with any
other such proceedings or claims, either have a material
adverse effect on its business, assets or financial or trading
condition or materially and adversely affect its ability to
observe or perform its obligations under this Agreement and
the other Lease Documents to which the Lessee is or is to be a
party is presently in progress or, to the best of the
knowledge, information and belief of the Lessee, pending or
threatened against the Lessee, its business or any of its
assets;
(G) no Termination Event has occurred and is continuing and no
Relevant Event has occurred and is continuing;
(H) the Lessee has not taken any corporate action nor, to the best
of its knowledge and belief, have any other steps been taken
or legal proceedings been started against it for its winding
up, dissolution, administration or re-organisation or for the
appointment of a receiver, administrator, administrative
receiver, trustee or similar officer of it or of any or all of
its assets or revenues;
(I) under applicable laws of the Commonwealth of the Bahamas in
force at the date hereof the Lessee is not required to deduct
any Taxes from any payments that it may be required to make
under this Agreement or any of the other Lease Documents to
which the Lessee is or is to be a party;
(J) the Lessee is conducting its business in all material respects
in compliance with all applicable laws, regulations and
government directives and the Lessee has obtained all material
licences, permissions, authorisations and consents necessary
for the conduct of its business and to the best of its
knowledge and belief after due and proper enquiry all such
licences, permissions, authorisations and consents are in full
force and effect;
(K) intentionally omitted;
(L) all information furnished by the Lessee to the Lessor relating
to the transactions contemplated by the Lease Documents is
true and accurate in all material respects and there are no
omissions of material facts or misleading information
contained in such information;
(M) neither the Lessee nor any of its property or assets is
entitled to immunity on the grounds of sovereignty or
otherwise from any legal action, suit or proceeding,
attachment or other legal process in any jurisdiction;
(N) the Lessee has complied with all Taxation laws in all
jurisdictions in which it is subject to Taxation and has paid
all Taxes due and payable by it and no material claims are
being asserted against it with respect to Taxes which would be
likely either to have a material adverse effect on the
business, assets, operations, prospects or condition
(financial or otherwise) of the Lessee or materially and
adversely affect its ability to observe and perform its
obligations under this Agreement and the other Relevant Lease
Documents to which the Lessee is or is to be a party;
(O) no stamp or registration duty or similar taxes or charges are
payable in the Commonwealth of the Bahamas in respect of this
Agreement or any of the other Lease Documents;
(P) subject to any qualifications contained in the legal opinions
addressed to the Lessor described in paragraph 5 of Part 1 of
Schedule 5, the choice of English law to govern this Agreement
and the other Relevant Lease Documents to which the Lessee is
or is to be a party is a valid choice of law and English law
will accordingly be applied by the courts in the Commonwealth
of the Bahamas if this Agreement or such other Relevant Lease
Documents or any claim hereunder or thereunder comes under
their jurisdiction upon proof of the relevant provisions of
English law. The submission hereunder by the Lessee to the
jurisdiction of the courts of England and the appointment by
the Lessee of process agents in England to accept service of
process in respect of the jurisdiction of such courts is valid
and binding upon the Lessee;
(Q) the Vessel on the Delivery Date will:
(i) be eligible in all respects for registration in the
Flag State;
(ii) maintain the Classification free of all
recommendations, reservations, notations and
requirements of the Classification Society excepting
those which do not have to be complied with prior to
the Delivery Date and will be tight, staunch, strong
and seaworthy and will have placed on board full
classification and other certificates required under
all applicable laws and the rules, regulations and
requirements of the Classification Society including
those to which the Vessel, her Master, officers and
crew are subject at the Delivery Date; and
(iii) be free from Liens (other than Permitted Liens);
(R) the Lessee is in compliance with and has at all times complied
with all applicable Environmental Laws and Environmental
Permits required in connection with the Vessel;
(S) the Lessee will at Delivery comply with all applicable
requirements for operators of vessels of a similar type as the
Vessel of the United States Oil Pollution Act of 1990, as
amended, the regulations promulgated and guidance having the
force of law issued pursuant thereto; and
(T) the Guarantor is a person "connected" (construed in accordance
with section 839 ICTA 1988) with the Lessee.
SCHEDULE 4
Part 2
REPRESENTATIONS AND WARRANTIES BY THE LESSOR
(A) The Lessor is duly incorporated and validly existing under the
laws of England as a limited liability company and has the
corporate power to own its assets and to carry on its business
as it is being presently conducted.
(B) The Lessor has the power to execute, deliver and perform its
obligations under the Relevant Lease Documents to which it is
a party and all necessary corporate, shareholder and other
action has been duly obtained or taken to authorise the
execution, delivery and performance of the same.
(C) To the actual knowledge of the Lessor's directors, there is no
pending or threatened litigation, nor any arbitration or
administrative actions or proceedings against the Lessor or
any of its property or assets before any court, arbitrator or
administrative agency or authority which in the opinion of the
directors of the Lessor would have a material adverse effect
on the ability of the Lessor to perform at all times its
obligations under the Relevant Lease Documents to which it is
a party.
(D) The execution, delivery and performance by the Lessor of its
obligations under the Relevant Lease Documents to which it is
a party does not contravene or constitute a default under (aa)
any United Kingdom law, regulation, decree, convention,
treaty, judgment or any official or judicial order valid and
legally binding on the Lessor or any of its assets, or (bb)
its Constitutive Documents.
(E) This Agreement and the other Relevant Lease Documents to which
the Lessor is or is to be a party constitutes, or when
executed and delivered will constitute, the legal, valid and
binding obligations of the Lessor enforceable in accordance
with its terms subject to general principles of equity and the
law affecting creditors' rights generally.
SCHEDULE 5
Part 1
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE LESSOR GENERALLY
(A) The Lessor shall have received each of the following in form
and substance satisfactory to the Lessor:
1. In respect of each of the Lessee, the Sub-Lessee and the
Guarantor:
(a) a copy certified by a duly authorised officer of the
relevant person to be a true, complete and up-to-date
copy of the Constitutive Documents of that person;
(b) a copy, certified by a duly authorised officer of the
relevant person to be a true copy, and as being in full
force and effect and not amended or rescinded, of
resolutions of the board of directors or governors (or
of a committee of the board of directors or governors)
of that person:
(i) authorising the entering into by that person
of such of this Agreement and the other Lease
Documents to which such person is party; and
(ii) authorising an individual or individuals to
sign and deliver on behalf of that person such
of this Agreement and the other Lease Documents
to which such person is party,
or, in each case such other evidence as the Lessor
may require that all necessary corporate action has been
taken for the authorisations referred to in paragraphs
(i) and (ii) above;
(c) a copy certified by a duly authorised officer of
that person to be a true copy, and as being in full force
and effect and not revoked or withdrawn, of any power
of attorney issued by that person pursuant to the said
resolutions; and
(d) a certificate of incumbency in relation to each of
the Lessee, the Guarantor and the Sub-Lessee together with
a list of authorised signatories with specimen
signatures and, in relation to the Lessee, a
certificate of goodstanding in relation to the Lessee.
2. Evidence that the Novation Agreement and the Put Option Deed
has been approved by the board of directors of the Builder,
and that the signatory for the Builder is authorised to
execute the Novation Agreement, the Put Option Deed and the
other Lease Documents to which the Builder is a party.
3. A power of attorney or a certified true copy extract of the
up-to-date signature book of each Payment Bank, evidencing the
extent of the signing authority of all relevant signatories
and specimen signatures of those signatories or other evidence
reasonably acceptable to the Lessor of the authority of the
relevant signatories to execute each of the Relevant Lease
Documents to which each Payment Bank is party.
4. Evidence that all governmental and other licences, approvals,
consents, registrations and filings necessary for any matter
or thing contemplated by the Lease Documents and for the
legality, validity, enforceability, admissibility and evidence
and effectiveness thereof have been obtained or effected on an
unconditional basis and remain in full force and effect (or,
in the case of effecting any registrations and filings, that
arrangements are satisfactory to the Lessor have been made for
the effecting of the same within any applicable time limit).
5. Legal opinions in form and substance satisfactory to the
Lessor relating to all aspects of the laws of Texas, Delaware
and the Bahamas which the Lessor deems relevant with respect
to the transactions contemplated by this Agreement and the
other Lease Documents.
6. Evidence that any licences, approvals and consents which may
be required for the due execution and performance by any party
to any Relevant Lease Document (other than the Lessor and the
Deposit Bank) to which it is party have been obtained and are
in full force and effect.
7. Evidence from I.H.C. Gusto Engineering B.V. that the Primary
Period does not exceed the useful economic life of the Vessel.
8. Evidence of the acceptance of appointment by each service of
process agent appointed or required to be appointed under the
Relevant Lease Documents.
9. An original counterpart of each Relevant Lease Document to
which the Lessor is a party in each case duly executed and
delivered by party thereto (other than the Lessor) and a
certified true copy of other Lease Documents in each case duly
executed and delivered by the parties thereto.
10. Intentionally omitted.
11. Evidence that the conditions precedent to the Relevant Lease
Documents and the Sub-Lease (other than the conditions
precedent contained in this Agreement to be given in favour of
the Lessor) have been fulfilled or waived in accordance with
the respective terms of the Relevant Lease Documents and the
Sub-Lease.
12. A copy of the signed and audited report and consolidated
accounts for the Guarantor's Group for the financial year
ending 31st December 1997.
13. Evidence that each of the First Account and the Second Account
have been opened and that all necessary bank mandates and
signature forms in form and content acceptable to the Lessor
have been delivered to the Deposit Bank and that Pounds-Sterling 1
has been credited to each such account.
14. An opinion from the insurance advisors to the Lessor as to the
adequacy of the insurances to be taken out under the
Shipbuilding Contract.
(B) No Termination Event or Relevant Event has occurred and is
continuing or would result from the Relevant Lease Documents
or the Sub-Lease coming into full force and effect.
SCHEDULE 5
PART 2
CONDITIONS PRECEDENT TO LESSOR'S PAYMENT OBLIGATIONS UNDER THE
CONSTRUCTION SUPERVISION AGREEMENT
The Lessor shall have received each of the following in form and
substance satisfactory to the Lessor in relation to each Instalment:
1 CORPORATE POWER AND AUTHORITY
1.1 Confirmation from a duly authorised officer of each of the
Lessee, the Sub-Lessee and the Guarantor that there has been
no change in the Constitutive Documents of the relevant person
since the date on which a certified copy thereof was provided
to the Lessor, or, as the case may be a copy certified by a
duly authorised officer of the relevant person of any
amendments thereto and confirmation that the board resolutions
or other corporate authorisation referred to in paragraph 1(b)
of part 1 of this Schedule 5 remain unamended and in force.
1.2 In relation to each Payment Bank, either (i) confirmation that
any document to be executed by such Payment Bank will be
executed by the individuals in respect of which valid and
existing powers of attorney appointing such individuals as
attorneys in fact for the relevant party has already been
received or in respect of which a certified true copy extract
of an up to date signature book has been received and that the
respective powers of attorney or signature books of such
Payment Bank, remain valid, in full force and unamended or
(ii) a further certified copy of the relevant power of
attorney appointing such individual as an attorney in fact
with power to sign such documents on behalf of such Payment
Bank, or signature book of such Payment Bank, as the case may
be.
2 INSURANCES
2.1 Evidence that the Vessel is insured in accordance with the
terms of the Shipbuilding Contract.
3 PAYMENTS, LETTER OF CREDIT, ACCOUNTS AND INVOICES
3.1 Evidence that:
(a) the conditions precedent to the obligations of each
Payment Bank under clause 2 of the relevant Payment
Agreement have been satisfied in full or irrevocably
waived in writing to the extent not so satisfied by the
relevant Payment Bank;
(b) the Lessee has delivered a Lessee Payment Notice (as
such term is defined in each Payment Agreement) to each
Payment Bank in accordance with clause 3.1 of the
relevant Payment Agreement in relation to the
Instalment to be made by the Lessor hereunder; and
(c) each of the Payment Banks has unconditionally and
irrevocably received in full the amount described in
the Lessee Payment Notice (as so defined).
3.2 Evidence that the condition precedent set out in paragraph 13
of Schedule 5, Part 1, has been satisfied.
3.3 Evidence that there has been credited to each of the First
Account and the Second Account the amount required to be
deposited therein pursuant to the First Deposit Deed or (as
the case may be) the Second Deposit Deed as at the relevant
date.
3.4 An invoice or invoices issued in favour of the Lessor duly
executed by the Lessor's Agent or, as the case may be, the
Builder specifying in aggregate the relevant Instalment
payable by the Lessor and complying with the laws and
regulations as to Value Added Tax and in the case of an
invoice from the Lessor's Agent, attaching a copy of the
relevant invoice received by the Lessor's Agent from the
Builder.
3.5 Any costs and expenses required by the terms of this Agreement
to be paid by the Lessee and which are not taken into account
in the Financial Schedule.
3.6 Any amount which the Sub-Lessee is required under the terms of
the Contribution Deed to pay to the Lessor with respect to the
relevant Instalment and the Lessor is satisfied that it is
entitled to retain the same.
4 THE VESSEL AND OFE
4.1 Evidence that amounts, the Sterling Equivalent of which (as at
the respective payment dates under the Shipbuilding Contract
and the Construction Supervision Agreement) equals or exceeds
the amount of the applicable Instalment, have fallen due under
the Shipbuilding Contract and have been paid by the Lessor's
Agent for the Lessor in accordance with the Shipbuilding
Contract and the Construction Supervision Agreement or, as the
case may be, are due and payable to the Builder. Such
evidence shall include (but not be limited to) evidence, for
each payment made by GMIDC as the Lessor's agent, of the date,
amount, currency, spot rate of exchange on that date (in each
case) for purchase of that currency with Sterling and the
resulting Sterling equivalent for each such payment.
4.2 An invoice issued in favour of the Lessor duly executed by the
Lessor's Agent and complying with the laws and regulations as
to Value Added Tax in the amount of the OFE Cost (as such term
is defined in the Novation Agreement) and listing brief
details of the OFE to which it relates.
4.3 Evidence that the expenditure to be incurred by the Lessor in
respect of the Vessel qualifies for capital allowances at the
rate of twenty-five per cent. (25%) per annum on a reducing
balance basis.
4.4 Evidence that the expenditure to be incurred by the Lessor in
respect of the OFE which is to be purchased with the relevant
Instalment qualifies for capital allowances at a rate of
twenty-five per cent. (25%) per annum on a reducing balance
basis.
5 REPRESENTATIONS AND WARRANTIES
Confirmation that each of the representations and warranties
on the part of each Security Party under any Relevant Lease
Document are true and accurate on the date for payment of the
relevant Instalment as if given on that date by reference to
the facts and circumstances then existing.
6 NO RELEVANT EVENT
Confirmation that no Relevant Event has occurred or would
result from the payment of that Instalment.
7. DELIVERY INSTALMENT
In addition to the foregoing, the following shall be further
conditions precedent to the obligations of the Lessor to make
payment of the Delivery Instalment.
The Lessor shall have received each of the following in form
and substance satisfactory to the Lessor:
(a) a certificate from the Lessor's Agent stating that all
the works required pursuant to the Shipbuilding
Contract have been completed in full and advising of
any material changes in the nature or extent of the
works effected in respect of the Vessel and in relation
to any material changes to the specification for the
Vessel;
(b) a valuation report for the Vessel, which shall be
required if the certificate referred to in paragraph
(a) above states that the works effected in respect of
the Vessel differ in any respect considered by the
Lessor to be material from the works required (as at
the date of this Agreement) to be performed pursuant to
the Shipbuilding Contract;
(c) evidence of delivery of the Vessel from the Builder,
a Certificate of Delivery (as such term is defined in the
Shipbuilding Contract) executed by or on behalf of the
Builder and the Lessor and all other documents to be
handed over at delivery of the Vessel by the Builder
pursuant to clause 12 of the Shipbuilding Contract; and
(d) a certificate of the insurance broker of the Lessee
and letter of undertaking from such broker in respect of
the Insurances addressed to the Lessor in each case in
form and substance acceptable to the Lessor and such
other evidence satisfactory to the Lessor that the
Lessee has taken the required steps or, as the case may
be, has procured that the required steps have been
taken, to ensure due compliance with the provisions of
this Agreement as to Insurances with effect on or after
the Delivery Date (including receipts (or other
evidence of payment) for the initial and other premiums
and calls in respect of the Insurances) together with
an opinion from the insurance advisers to the Lessor as
to the adequacy of the Insurances.
SCHEDULE 5
PART 3
CONDITIONS PRECEDENT TO DELIVERY
In addition to the conditions set out in Parts 1 and 2 of this
Schedule 5, the Lessor shall have received each of the following in
form and substance satisfactory to the Lessor:
1. a certificate from the Lessor's Agent stating that all the
works required pursuant to the Shipbuilding Contract have been
completed in full and advising of any material changes in the
nature or extent of the works effected in respect of the
Vessel and in relation to any material changes to the
specification for the Vessel;
2. a valuation report for the Vessel, which shall be required if
the report referred to in paragraph 1 above states that the
works effected in respect of the Vessel differ in any respect
considered by the Lessor to be material from the works
required (as at the date of this Agreement) to be performed
pursuant to the Shipbuilding Contract;
3. evidence of delivery of the Vessel from the Builder, a
Certificate of Delivery (as such term is defined in the
Shipbuilding Contract) executed by or on behalf of the Builder
and the Lessor and all other documents to be handed over at
delivery of the Vessel by the Builder pursuant to clause 12 of
the Shipbuilding Contract;
4. the Acceptance Certificate duly executed by the Lessee;
5. a certificate duly executed by the Sub-Lessee evidencing the
Sub-Lessee's acceptance of the Vessel in accordance with the
terms of the Sub-Lease;
6. a certificate of the insurance broker of the Lessee and letter
of undertaking from such broker in respect of the Insurances
addressed to the Lessor in each case in form and substance
acceptable to the Lessor and such other evidence satisfactory
to the Lessor that the Lessee has taken the required steps or,
as the case may be, has procured that the required steps have
been taken, to ensure due compliance with the provisions of
this Agreement as to Insurances with effect on or after the
Delivery Date (including receipts (or other evidence of
payment) for the initial and other premiums and calls in
respect of the Insurances) together with an opinion from the
insurance advisers to the Lessor as to the adequacy of the
Insurances;
7. a confirmation of the Classification issued by the
Classification Society dated not more than three (3) Business
Days prior to Delivery showing the Classification of the
Vessel free from recommendations and notations affecting class
which are overdue at such date;
8. evidence of the registration of the Vessel in the Flag State
in the name and ownership of the Lessor free from registered
Liens;
9. copies, certified as true copies by an authorised signatory of
the Lessee of the trading certificates for the Vessel and the
Vessel Response Plan and Certificate of Financial
Responsibility, if required, for the operator of the Vessel in
a form approved by the U.S. Coast Guard or other relevant U.S.
governmental authorities and agencies and, if required by any
other countries, a copy of such other certificates, plans or
policies as is required for the Vessel to meet the oil
pollution or other environmental legislation of such other
countries;
10. evidence that on the Delivery Date all of the conditions
precedent required to each party's respective obligations
under the Relevant Lease Documents and the Sub-Lease have been
satisfied or waived including a certificate to that effect
from the Lessee;
11. copies of all consents, authorisations and approvals of any
governmental agency or authority and of any trustee or holder
of any indebtedness or obligations of the Lessee, the
Sub-Lessee or the Guarantor which are required in connection
with the Delivery of the Vessel and the leasing of the Vessel
under this Agreement and the Sub-Lease, duly certified by a
representative or, as the case may be, an officer of the
Lessee, the Sub-Lessee or the Guarantor, as the case may be,
or confirmation in writing by a representative or, as the case
may be, an officer of the Lessee, the Sub-Lessee or the
Guarantor, as the case may be, that no such consents,
authorisations or approvals are required;
12. evidence that on the Delivery Date all filings, registrations,
recordings and other actions required to be taken prior to the
Delivery Date which are necessary or advisable to ensure the
validity and effectiveness of the Relevant Lease Documents and
the Sub-Lease and to protect the property rights of the Lessor
in the Vessel, have been or will be taken;
13. confirmation from each of the providers of the legal opinions
referred to in paragraph 5 of Part 1 of Schedule 5 that the
terms and provisions of such legal opinions provided pursuant
to paragraph 5 of part 1 of Schedule 5 need not be altered or
modified in any way.
14 confirmation that each of the representations and warranties
on the part of each Security Party under each Relevant Lease
Document to which they are respectively party are true and
accurate on the Delivery Date as if given on that date by
reference to the facts and circumstances then existing;
15 evidence that no Termination Event or Relevant Event has
occurred or would result from the Delivery of the Vessel on
the Delivery Date or the leasing of the Vessel to the Lessee
pursuant to this Agreement or the sub-leasing of the Vessel to
the Sub-Lessee pursuant to the Sub-Lease.
SCHEDULE 5
PART 4
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE LESSEE GENERALLY
The Lessee shall have received each of the following in form and
substance satisfactory to the Lessee:
1. In respect of each of the Lessor:
(a) a copy certified by a duly authorised officer of the
Lessor to be a true, complete and up-to-date copy of
the Constitutive Documents of the Lessor;
(b) a copy certified by a duly authorised officer of the
Lessor to be a true copy, and as being in full force
and effect and not amended or rescinded, of resolutions
of the board of directors or governors (or of a
committee of the board of directors or governors) of
the Lessor:
(i) authorising the entering into by that person
of such of this Agreement and the other Relevant
Lease Documents to which the Lessor is party;
and
(ii) authorising an individual or individuals to
sign and deliver on behalf of the Lessor such
of this Agreement and the other Relevant Lease
Documents to which the Lessor is party;
(c) a copy certified by a duly authorised officer of the
Lessor to be a true copy of any power of attorney
issued by the Lessor pursuant to the said resolutions.
2. A guarantee and a support letter from the Bank.
3. In respect of the Bank, a copy certified by a duly authorised
officer of the Bank, to be a true, complete and up-to-date
copy of the relevant extracts of the Bank's signature book.
4. Legal opinions from Canadian, German and English counsel.
SCHEDULE 6
FORM OF ACCEPTANCE CERTIFICATE
Acceptance Certificate dated [ ] pursuant to a Lease
Agreement dated [ ], 1998 (the "HEAD LEASE") between Nelstar
Leasing Company Limited (the "LESSOR") as lessor and Global Marine
Leasing Corporation (the "LESSEE") as lessee.
Terms used herein shall have the meaning given thereto in the Head
Lease.
1. The Lessee confirms that, as between the Lessor and the Lessee
and without prejudice to the rights either party has or may
have against the Builder, the Vessel has been delivered by the
Lessor to the Lessee and accepted by the Lessee from the
Lessor on [ ] in a condition and otherwise all in
accordance with the Head Lease free of all Liens other than
the Permitted Liens.
2. The Lessee confirms that on the aforesaid date of delivery the
Vessel became subject to and governed by the provisions of the
Head Lease.
3. The Lessee confirms that as at the date hereof:
(i) no Relevant Event has occurred and is continuing; and
(ii) the representations set out in Part 1 of Schedule 4
of the Head Lease are true and accurate.
SIGNED )
by )
a [duly authorised attorney-in-fact] )
for and on behalf of )
GLOBAL MARINE LEASING CORPORATION )
SCHEDULE 7
FORM OF HULL AND MACHINERY (MARINE AND WAR RISKS) LOSS PAYABLE CLAUSE
All recoveries under this policy shall be applied as follows:
(a) at any time during the Lease Period, all claims hereunder in
respect of actual or constructive or compromised or arranged
total loss shall be paid in full to such account of the Lessor
as the Lessor may notify to the insurers; and
(b) all other claims hereunder shall be paid in full to the Lessee
or to its order.
EXECUTED as a DEED and DELIVERED )
for and on behalf of )
NELSTAR LEASING COMPANY LIMITED )
by ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ )
its )
in the presence of: ▇▇▇▇ ▇. ▇▇▇▇▇ )
EXECUTED as a DEED, SEALED and )
DELIVERED for and on behalf of )
GLOBAL MARINE LEASING CORPORATION )
by ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ its )
in the presence of: ▇▇▇▇ ▇. ▇▇▇▇▇ )