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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
FORM 20-F
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REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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OR |
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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For the fiscal year ended December 31, 2023 |
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OR |
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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For the transition period from ____________ to ____________ |
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OR |
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SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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Date of event requiring this shell company report ____________ |
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Commission file number 001-37889
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TOP SHIPS INC. |
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(Exact name of Registrant as specified in its charter) |
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(Translation of Registrant’s name into English) |
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Republic of the Marshall Islands |
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(Jurisdiction of incorporation or organization) |
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1 Vasilisis Sofias and Megalou Alexandrou Str, 15124 Maroussi, Greece |
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(Address of principal executive offices) |
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Alexandros Tsirikos, (Tel) + 30 210 812 8107, info@topships.org 1 Vasilisis Sofias and Megalou Alexandrou Str, 15124 Maroussi, Greece |
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(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person) |
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Title of each class
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Trading Symbol(s)
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Name of each exchange
on which registered
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Common Stock, par value $0.01 per share
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TOPS
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Nasdaq Capital Market
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Preferred Stock Purchase Rights
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Nasdaq Capital Market
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NONE
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(Title of class)
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NONE
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(Title of class)
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Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report.
As of December 31, 2023, 4,626,197 shares of common stock, par value $0.01 per share, 100,000 Series D Preferred Shares, par value $0.01 per share, and 3,659,627 Series F Preferred Shares, par value $0.01 per share, were outstanding.
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
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Yes |
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No |
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If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
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Yes |
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No |
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Note – Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 from their obligations under those Sections.
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
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Yes |
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No |
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Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (Sec.232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
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Yes |
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No |
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Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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Large accelerated filer ☐ |
Accelerated filer ☐ |
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Non-accelerated filer ☒ |
Emerging growth company ☐ |
If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange Act. ☐
† The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐
Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:
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U.S. GAAP |
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International Financial Reporting Standards as issued by the International Accounting Standards Board |
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Other |
If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow:
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Item 17 |
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Item 18 |
If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
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Yes |
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No |
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(APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS)
Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. N/A
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Yes |
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No |
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ITEM 1.
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1 |
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ITEM 2.
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1 |
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ITEM 3.
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1 |
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ITEM 4.
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31 |
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ITEM 4A.
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51 |
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ITEM 5.
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51 |
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ITEM 6.
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63 |
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ITEM 7.
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66 |
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ITEM 8.
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69 |
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ITEM 9.
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69 | |
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ITEM 10.
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69 | |
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ITEM 11.
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87 |
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ITEM 12.
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88 |
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ITEM 13.
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88 | |
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ITEM 14.
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89 |
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ITEM 15.
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89 |
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ITEM 16.
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90 |
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ITEM 16A.
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90 |
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ITEM 16B.
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90 |
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ITEM 16C.
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91 | |
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ITEM 16D.
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91 | |
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ITEM 16E.
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91 | |
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ITEM 16F.
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91 | |
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ITEM 16G.
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91 |
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ITEM 16H.
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92 |
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ITEM 16I.
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92 | |
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ITEM 16J.
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92 | |
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ITEM 16K.
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92 | |
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ITEM 17.
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93 |
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ITEM 18.
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93 |
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ITEM 19.
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94 |
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our ability to maintain or develop new and existing customer relationships with major refined product importers and exporters, major crude oil companies and major commodity traders, including our ability to
enter into long-term charters for our vessels;
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our future operating and financial results;
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our future vessel acquisitions, our business strategy and expected and unexpected capital spending or operating expenses, including any dry-docking, crewing, bunker costs and insurance costs;
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our financial condition and liquidity, including our ability to obtain financing in the future to fund capital expenditures, acquisitions and other general corporate activities;
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oil and chemical tanker industry trends, including fluctuations in charter rates and vessel values and factors affecting vessel supply and demand;
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our ability to take delivery of, integrate into our fleet, and employ any newbuildings we may acquire or order in the future and the ability of shipyards to deliver vessels on a timely basis;
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the aging of our vessels and resultant increases in operation and dry-docking costs;
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the ability of our vessels to pass classification inspections and vetting inspections by oil majors and big chemical corporations;
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significant changes in vessel performance, including increased vessel breakdowns;
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the creditworthiness of our charterers and the ability of our contract counterparties to fulfill their obligations to us;
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our ability to repay outstanding indebtedness, to obtain additional financing and to obtain replacement charters for our vessels, in each case, at commercially acceptable rates or at all;
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changes to governmental rules and regulations or actions taken by regulatory authorities and the expected costs thereof;
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our ability to comply with additional costs and risks related to our environmental, social and governance policies;
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potential liability from litigation and our vessel operations, including discharge of pollutants;
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changes in general economic and business conditions;
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general domestic and international political conditions, potential disruption of shipping routes due to accidents, political events, including “trade wars,” piracy, acts by terrorists or other hostilities;
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changes in production of or demand for oil and petroleum products and chemicals, either globally or in particular regions;
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the strength of world economies and currencies, including fluctuations in charterhire rates and vessel values;
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potential liability from future litigation and potential costs due to any environmental damage and vessel collisions;
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the length and severity of public health threats, epidemics and pandemics, including the global outbreak of the novel coronavirus (“COVID-19”) (and various variants that may emerge), and other disease
outbreaks and their impact on the demand for commercial seaborne transportation and the condition of the financial markets and governmental responses thereto; and
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and other important factors discussed “Item 3. Key Information—D. Risk Factors” or described from time to time in the reports filed by us with the U.S. Securities and Exchange Commission, or the SEC.
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| ITEM 1. |
IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS
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| ITEM 2. |
OFFER STATISTICS AND EXPECTED TIMETABLE
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| ITEM 3. |
KEY INFORMATION
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[Reserved]
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| B. |
Capitalization and Indebtedness
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| C. |
Reasons for the Offer and Use of Proceeds
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| D. |
Risk Factors
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The international tanker industry has historically been both cyclical and volatile.
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The current state of the world financial market and current economic conditions could have a material adverse impact on our results of operations, financial condition and cash flows.
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Our financial results may be adversely affected by the outbreak of epidemic and pandemic diseases, such as COVID-19, and the related governmental responses thereto.
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The market value of our vessels, and those we may acquire in the future, may fluctuate significantly, which could cause us to incur losses if we decide to sell them following a decline in their market values
or we may be required to write down their carrying value, which will adversely affect our earnings.
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An over-supply of tanker capacity may lead to reductions in asset prices, charter hire rates and profitability.
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Volatility of SOFR could affect our profitability, earnings and cash flows.
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We are subject to complex laws and regulations, including environmental regulations that can adversely affect the cost, manner or feasibility of doing business.
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Climate change and greenhouse gas restrictions may adversely impact our operations and markets.
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Increasing growth of electric vehicles and renewable fuels could lead to a decrease in trading and the movement of crude oil and petroleum products worldwide.
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Our vessels may suffer damage due to the inherent operational risks of the tanker industry.
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We are subject to international safety regulations and requirements imposed by classification societies and the failure to comply with these regulations may subject us to increased liability, may adversely
affect our insurance coverage and may result in a denial of access to, or detention in, certain ports.
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If our vessels call on ports located in countries or territories that are the subject of sanctions or embargoes imposed by the U.S. government or other governmental authorities, it could lead to monetary
fines or adversely affect our business, reputation and the market for our common shares.
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Political instability, terrorist or other attacks, war, international hostilities and public health threats can affect the tanker industry, which may adversely affect our business.
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Acts of piracy on ocean-going vessels could adversely affect our business.
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Increased inspection procedures and tighter import and export controls could increase costs and disrupt our business.
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We rely on our information systems to conduct our business, and failure to protect these systems against security breaches could adversely affect our business and results of operations. Additionally, if these
systems fail or become unavailable for any significant period of time, our business could be harmed.
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Our financing facilities contain restrictive covenants that may limit our liquidity and corporate activities, and could have an adverse effect on our financial condition and results of operations.
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Servicing current and future debt (including SLBs) will limit funds available for other purposes and could impair our ability to react to changes in our business.
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Our President, Chief Executive Officer and Director has significant influence over us, and a trust established for the benefit of his family may be deemed to beneficially own, directly or indirectly, 100% of
our Series D Preferred Shares, and thereby to control the outcome of matters on which our shareholders are entitled to vote.
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We have been subject to litigation in the past and may be subject to similar or other litigation in the future.
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Any limitation in the availability or operation of our vessels could have a material adverse effect on our business, results of operations and financial condition.
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We expect to be dependent on a limited number of customers for a large part of our revenues, and failure of such counterparties to meet their obligations could cause us to suffer losses or negatively impact
our results of operations and cash flows.
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If we fail to manage our planned growth properly, we may not be able to successfully expand our market share.
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Delays or defaults by the shipyards in the construction of newbuildings could increase our expenses and diminish our net income and cash flows.
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Our ability to obtain additional debt financing may be dependent on our ability to charter our vessels, the performance of our charters and the creditworthiness of our charterers.
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The industry for the operation of tanker vessels and the transportation of oil, petroleum products and chemicals is highly competitive and we may not be able to compete for charters with new entrants or
established companies with greater resources.
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We maintain cash with a limited number of financial institutions, including financial institutions that may be located in Greece, which will subject us to credit risk.
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We may be unable to attract and retain key management personnel and other employees in the international tanker shipping industry, which may negatively impact the effectiveness of our management and our
results of operations.
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If labor interruptions are not resolved in a timely manner, they could have a material adverse effect on our business, results of operations, cash flows, financial condition and available cash.
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A drop in spot charter rates may provide an incentive for some charterers to default on their charters, which could affect our cash flow and financial condition.
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An increase in operating costs could decrease earnings and available cash.
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The aging of our fleet may result in increased operating costs in the future, which could adversely affect our earnings.
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Rising fuel prices may adversely affect our profits.
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Unless we set aside reserves or are able to borrow funds for vessel replacement, our revenue will decline at the end of a vessel’s useful life, which would adversely affect our business, results of operations
and financial condition.
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Purchasing and operating secondhand vessels may result in increased operating costs and vessels off-hire, which could adversely affect our earnings.
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| ● | Our anticipated acquisition of an interest in a megayacht entails certain risks and uncertainties associated with our entry into ownership of a new class of vessels, and we cannot assure you that we will complete the acquisition or manage such risks successfully. |
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We may not have adequate insurance to compensate us if we lose any vessels that we acquire.
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We may be subject to increased premium payments, or calls, as we obtain some of our insurance through protection and indemnity associations.
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Increasing regulation as well as scrutiny and changing expectations from investors, lenders and other market participants with respect to our
Environmental, Social and Governance (“ESG”) policies may impose additional costs on us or expose us to additional risks.
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Technological innovation and quality and efficiency requirements from our customers could reduce our charter hire income and the value of our vessels.
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The smuggling of drugs or other contraband onto our vessels may lead to governmental claims against us.
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Maritime claimants could arrest our vessels or vessels we may acquire, which could interrupt our cash flow.
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Governments could requisition our vessels or vessels we acquire during a period of war or emergency, resulting in loss of earnings.
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U.S. federal tax authorities could treat us as a “passive foreign investment company,” which could have adverse U.S. federal income tax consequences to U.S. shareholders.
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We may be subject to U.S. federal income tax on our U.S. source income, which would reduce our earnings.
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We are a “foreign private issuer,” which could make our common shares less attractive to some investors or otherwise harm our stock price.
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The market price and trading volume of our common shares may continue to be highly volatile, which could lead to a loss of all or part of a shareholder’s investment.
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There is no guarantee of a continuing public market for you to resell our common shares.
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Nasdaq may delist our common shares from its exchange which could limit your ability to make transactions in our securities and subject us to additional trading restrictions.
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We have issued common shares in the past through various transactions and we may do so in the future without shareholder approval, which may dilute our existing shareholders, depress the trading price of our
securities and impair our ability to raise capital through subsequent equity offerings.
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| ● | We may be unable to successfully consummate a planned spin-off of certain of our assets or to achieve some or all of the benefits that we expect to achieve from the spin-off, and may incur significant risks associated with the spin-off. |
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We are incorporated in the Republic of the Marshall Islands, which does not have a well-developed body of corporate law and as a result, shareholders may have fewer rights and protections under Marshall
Islands law than under a typical jurisdiction in the United States.
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It may not be possible for investors to serve process on or enforce U.S. judgments against us.
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Our By-laws provide that the High Court of the Republic of Marshall Islands shall be the sole and exclusive forum for certain disputes between us and our shareholders, which could limit our shareholders’
ability to obtain a favorable judicial forum for disputes with us or our directors, officers, or employees.
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We may not achieve the intended benefits of having a forum selection provision if it is found to be unenforceable.
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Anti-takeover provisions in our organizational documents could have the effect of discouraging, delaying or preventing a merger, amalgamation or acquisition, which could reduce the market price of our common
shares.
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Our Fleet Manager, on whom we are dependent to perform the day-to-day management of our fleet, may have conflicts of interest between us and its other clients and is a privately held company and there may be
limited or no publicly available information about it.
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supply and demand for oil, petroleum products and chemicals carried;
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changes in oil production and refining capacity resulting in shifts in trade flows for oil products;
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oil prices;
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the distance oil, petroleum products and chemicals are to be moved by sea;
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any restrictions on crude oil production imposed by the OPEC and non-OPEC oil producing countries;
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global and regional economic and political conditions, including “trade wars” and developments in international trade, national oil reserves policies, fluctuations in industrial and agricultural production,
armed conflicts and work stoppages;
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increases in the production of oil in areas linked by pipelines to consuming areas, the extension of existing, or the development of new pipeline systems in markets we may serve, or the conversion of existing
non-oil pipelines to oil pipelines in those markets;
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worldwide and regional availability of refining capacity and inventories;
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environmental and other legal and regulatory developments;
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economic slowdowns caused by public health events such as the COVID-19 pandemic and its variants and efforts throughout the world to contain their spread, or inflationary pressures and resultant governmental
responses;
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currency exchange rates;
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weather, natural disasters and other acts of God;
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increased use of renewable and alternative sources of energy;
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competition from alternative sources of energy, other shipping companies and other modes of transportation; and
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international sanctions, embargoes, import and export restrictions, nationalizations, piracy and wars or other conflicts, including the war in Ukraine, the war between Israel and Hamas or the Houthi crisis in
and around the Red Sea.
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the number of newbuilding deliveries;
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current and expected newbuilding orders for vessels;
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the scrapping rate of older vessels;
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the availability of financing for new or secondhand tankers;
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the price of steel;
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speed of vessel operation;
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vessel freight rates, which are affected by factors that may affect the rate of newbuilding, swapping and laying up of vessels;
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the price of steel and vessel equipment;
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technological advances in the design, capacity, propulsion technology, and fuel consumption efficiency of vessels;
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potential conversion of vessels for alternative use;
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changes in environmental and other regulations that may limit the useful lives of vessels;
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port or canal congestion;
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national or international regulations that may effectively cause reductions in the carrying capacity of vessels or early obsolescence of tonnage;
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environmental concerns and regulations, including ballast water management, low sulfur fuel consumption regulations, and reductions in CO2 emissions;
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the number of vessels that are out of service at a given time, namely those that are laid-up, drydocked, awaiting repairs or otherwise not available for hire, including those that are in drydock for the
purpose of installing exhaust gas cleaning systems, known as scrubbers; and
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changes in global petroleum and chemical production.
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general economic and market conditions affecting the shipping industry;
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prevailing level of charter rates;
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competition from other shipping companies;
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types, sizes and ages of vessels;
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the availability of other modes of transportation;
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supply and demand for vessels;
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shipyard capacity and slot availability;
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cost of newbuildings;
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price of steel;
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exchange rate levels;
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number of tankers scrapped;
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governmental or other regulations; and
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technological advances and the development, availability, and cost of nuclear power, natural gas, coal, renewable energy, and other alternative sources of energy.
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IMO Data Collection System (DCS): in October 2016, at MEPC 70, the IMO adopted a
mandatory data collection system, or the IMO DCS, which requires vessels above 5,000 gross tons to report consumption data for fuel oil, hours under way and distance travelled. This IMO DCS covers any maritime activity carried out by
ships, including dredging, pipeline laying, and offshore installations. Data is reported annually to the flag state, which issues to the vessel a statement of compliance.
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Amendments to MARPOL Annex VI: MEPC 79 adopted amendments to MARPOL, Annex VI
regarding reporting requirements in connection with the implementation of the Energy Efficiency Existing Ship Index, or EEXI, and carbon intensity indicator, or CII, framework, which amendments are expected to become effective on May 1,
2024. Beginning in January 2023, Annex VI requires EEXI and CII certification. The first annual reporting was to be completed in 2023, with initial ratings given in 2024.
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Net zero greenhouse emissions in the EU by 2050: in 2021, the EU adopted a
European Climate Law (Regulation (EU) 2021/1119), establishing the aim of reaching net zero greenhouse gas emissions in the EU by 2050, with an intermediate target of reducing greenhouse gas emissions by at least 55% by 2030, compared to
1990 levels. In July 2021, the European Commission launched the “Fit for 55” to support the climate policy agenda. As of January 2019, large ships calling at EU ports have been required to collect and publish data on carbon dioxide
emissions and other information.
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Maritime emissions trading scheme in force on January 1, 2024: the maritime
emissions trading scheme, or ETS, is to apply gradually over the period from 2024 to 2026. 40% of allowances would have to be surrendered in 2025 for the year 2024; 70% of allowances would have to be surrendered in 2026 for the year 2025;
and 100% of allowances would have to be surrendered in 2027 for the year 2026. Compliance is to be on a companywide (rather than per ship) basis and “shipping company” is defined widely to capture both the ship owner and any contractually
appointed commercial operator/ship manager/bareboat charterer who not only assume full compliance for ETS but also under the ISM Code. If the latter contractual arrangement is entered into this needs to be reflected in a certified mandate
signed by both parties and presented to the administrator of the scheme. The cap under the ETS would be set by taking into account EU MRV system emissions data for the years 2018 and 2019, adjusted, from year 2021 and is to capture 100%
of the emissions from intra-EU maritime voyages; 100% of emissions from ships at berth in EU ports and 50% of emissions from voyages which start or end at EU ports (but the other destination is outside the EU). Furthermore, the newly
passed EU Emissions Trading Directive 2023/959/EC makes clear that all maritime allowances would be auctioned and there will be no free allocation. 78.4 million emissions allowances are to be allocated specifically to maritime. New
systems, personnel, data management systems, costs recovery mechanisms, revised service agreement terms and emissions reporting procedures will have to be put in place to prepare for and manage the administrative aspect of ETS
compliance. The cost of compliance, and of our future EU emissions and costs to purchase an allowance for emissions (if we must purchase in order to comply) are unknown and difficult to predict, and are based on a number of factors,
including the size of our fleet, our trips within and to and from the EU, and the prevailing cost of allowances.
|
|
|
● |
maintain a consolidated leverage ratio of not more than 75%;
|
|
|
● |
maintain minimum free liquidity of $0.5 million per operating vessel but not less than $4.0 million in aggregate; and
|
|
|
● |
assure no change of control of the company takes place, except with the lessor’s/lender’s prior written consent.
|
|
|
● |
increase our vulnerability to general economic downturns and adverse competitive and industry conditions;
|
|
|
● |
require us to dedicate a substantial portion, if not all, of our cash flow from operations to payments on our indebtedness, thereby reducing the availability of our cash flow to fund working capital, capital
expenditures and other general corporate purposes;
|
|
|
● |
limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate;
|
|
|
● |
place us at a competitive disadvantage compared to competitors that have less debt or better access to capital;
|
|
|
● |
limit our ability to raise additional financing on satisfactory terms or at all; and
|
|
|
● |
adversely impact our ability to comply with the financial and other restrictive covenants of our current or future financing arrangements, which could result in an event of default under such agreements.
|
|
|
● |
generate excess cash flow for investment without jeopardizing our ability to cover current and foreseeable working capital needs (including debt service);
|
|
|
● |
raise equity and obtain required financing for our existing and new operations;
|
|
|
● |
locate and acquire suitable vessels;
|
|
|
● |
identify and consummate acquisitions or joint ventures;
|
|
|
● |
integrate any acquired business successfully with our existing operations;
|
|
|
● |
our manager’s ability to hire, train and retain qualified personnel and crew to manage and operate our growing business and fleet;
|
|
|
● |
enhance our customer base; and
|
|
|
● |
manage expansion.
|
|
|
• |
fluctuations in interest rates;
|
|
|
• |
fluctuations in the availability or the price of oil and chemicals;
|
|
|
• |
fluctuations in foreign currency exchange rates;
|
|
|
• |
announcements by us or our competitors;
|
|
|
• |
changes in our relationships with customers or suppliers;
|
|
|
• |
actual or anticipated fluctuations in our semi-annual and annual results and those of other public companies in our industry;
|
|
|
• |
changes in United States or foreign tax laws;
|
|
|
• |
international sanctions, embargoes, import and export restrictions, nationalizations, piracy and wars or other conflicts, including the war in Ukraine.
|
|
|
• |
actual or anticipated fluctuations in our operating results from period to period;
|
|
|
• |
shortfalls in our operating results from levels forecast by securities analysts;
|
|
|
• |
market conditions in the shipping industry and the general state of the securities markets;
|
|
|
• |
business interruptions caused by the outbreak of COVID-19 or the war in Ukraine;
|
|
|
• |
mergers and strategic alliances in the shipping industry;
|
|
|
• |
changes in government regulation;
|
|
|
• |
a general or industry-specific decline in the demand for, and price of, shares of our common shares resulting from capital market conditions independent of our operating performance;
|
|
|
• |
the loss of any of our key management personnel;
|
|
|
• |
our failure to successfully implement our business plan;
|
|
|
• |
issuance of shares; and
|
|
|
• |
stock splits / reverse stock splits.
|
|
|
• |
actual or anticipated fluctuations in our results and those of other public companies in our industry;
|
|
|
• |
mergers and strategic alliances in the shipping industry;
|
|
|
• |
market conditions in the shipping industry and the general state of the securities markets;
|
|
|
• |
changes in government regulation;
|
|
|
• |
shortfalls in our operating results from levels forecast by securities analysts; and
|
|
|
• |
announcements concerning us or our competitors.
|
|
|
● |
our existing shareholders’ proportionate ownership interest in us will decrease;
|
|
|
● |
the amount of cash available for dividends payable on the shares of our common shares may decrease;
|
|
|
● |
the relative voting strength of each previously outstanding common share may be diminished; and
|
|
|
● |
the market price of the shares of our common shares may decline.
|
|
|
• |
authorizing our Board of Directors to issue “blank check” preferred stock without stockholder approval;
|
|
|
• |
providing for a classified Board of Directors with staggered, three-year terms;
|
|
|
• |
prohibiting cumulative voting in the election of directors;
|
|
|
• |
authorizing the removal of directors only for cause and only upon the affirmative vote of the holders of at least 80% of the outstanding shares of our capital stock entitled to vote for the directors;
|
|
|
• |
prohibiting shareholder action by written consent unless the written consent is signed by all shareholders entitled to vote on the action;
|
|
|
• |
limiting the persons who may call special meetings of shareholders;
|
|
|
• |
establishing advance notice requirements for nominations for election to our Board of Directors or for proposing matters that can be acted on by shareholders at shareholder meetings; and
|
|
|
• |
restricting business combinations with interested shareholders.
|
|
|
● |
continue to operate our vessels and service our customers;
|
|
|
● |
renew existing charters upon their expiration;
|
|
|
● |
obtain new charters;
|
|
|
● |
obtain financing on commercially acceptable terms;
|
|
|
● |
obtain insurance on commercially acceptable terms;
|
|
|
● |
maintain satisfactory relationships with our customers and suppliers; and
|
|
|
● |
successfully execute our growth strategy.
|
| A. |
History and Development of the Company
|
|
|
● |
$10.0 million in cash.
|
|
|
● |
100% ownership in a Marshall Islands company that was a party to a shipbuilding contract for a high specification scrubber fitted Suezmax Tanker (to be named M/T Eco Oceano CA) delivered from Hyundai Samho
shipyard in March 2022. The shipowning company was party to a time charter, starting from the vessel’s delivery, with Central Tankers Chartering, a company affiliated with Mr. Evangelos J. Pistiolis, for a firm duration of five years at a
gross daily rate of $32,450, with a charterer’s option to extend for two additional years at $33,950 and $35,450.
|
|
|
● |
35% ownership in one Marshall Islands company that was a party to a shipbuilding contract for a high specification scrubber fitted VLCC tanker (to be named M/T Julius Caesar) delivered from Hyundai Heavy
Industries shipyard in January 2022. The shipowning company was party to a time charter, starting from the vessel’s delivery, with Trafigura, for a firm duration of three years at a gross daily rate of $36,000, with a charterer’s option to
extend for two additional years at $39,000 and $41,500.
|
|
|
● |
35% ownership in one Marshall Islands company that was a party to a shipbuilding contract for a high specification scrubber fitted VLCC tanker (to be named M/T Legio X Equestris) delivered from Hyundai Heavy
Industries shipyard in March 2022. The shipowning company was party to a time charter, starting from the vessel’s delivery, with Trafigura, for a firm duration of three years at a gross daily rate of $35,750, with a charterer’s option to
extend for two additional years at $39,000 and $41,500.
|
|
|
● |
A forgiveness of $1.2 million in payables to the buyer.
|
| B. |
Business Overview
|
|
Name
|
Deadweight
|
Charterer
|
End of firm
period
|
Charterer’s
Optional Periods
|
Gross Rate fixed period/
options
|
|
M/T Eco Marina Del Rey
|
50,000
|
Cargill / WECO Tankers A/S
|
May 2024 / May 2027
|
- / 1 year
|
Cargill: $15,100 /
WECO Tankers A/S: $20,500 / $22,500
|
|
Name
|
Deadweight
|
Charterer
|
End of firm
period
|
Charterer’s
Optional Periods
|
Gross Rate fixed period/
options
|
|
M/T Eco Bel Air
|
157,000
|
Trafigura
|
December 10, 2025
|
-
|
$24,000
|
|
M/T Eco Beverly Hills
|
157,000
|
Trafigura
|
July 2024
|
16 months
|
$24,000 / $24,000
|
|
Name
|
Deadweight
|
Charterer
|
End of firm
period
|
Charterer’s
Optional Periods
|
Gross Rate fixed period/
options
|
|
M/T Eco Oceano CA
|
157,000
|
Central Tankers Chartering
|
March 2037
|
none
|
$24,500
|
|
Name
|
Deadweight
|
Charterer
|
End of firm
period
|
Charterer’s Optional Periods
|
Gross Rate fixed
period/ options
|
|
M/T Eco West Coast
|
157,000
|
Clearlake
|
January 2027
|
1+1 years
|
$32,850 / $34,750 / $36,750
|
|
M/T Eco Malibu
|
157,000
|
Clearlake
|
March 2027
|
1+1 years
|
$32,850 / $34,750 / $36,750
|
|
Name
|
Deadweight
|
Charterer
|
End of firm
period
|
Charterer’s Optional
Periods
|
Gross Rate fixed period/
options
|
|
M/T Julius Caesar
|
300,000
|
Trafigura
|
January 2028
|
1+1 years
|
$36,000 up to January 2025 and $41,500 afterwards / $44,000 / $46,000
|
|
M/T Legio X Equestris
|
300,000
|
Trafigura
|
March 2028
|
1+1 years
|
$35,750 up to March 2025 and $41,500 afterwards / $44,000 / $46,000
|
|
Name
|
Deadweight
|
Charterer
|
End of firm period
|
Charterer’s
Optional Periods
|
Gross Rate fixed period/
options
|
|
M/T Eco Yosemite Park
|
50,000
|
Clearlake
|
March 2025
|
5+1+1 years
|
$17,400 / $18,650 / $19,900
|
|
M/T Eco Joshua Park
|
50,000
|
Clearlake
|
March 2025
|
5+1+1 years
|
$17,400 / $18,650 / $19,900
|
|
|
(i) |
injury to, destruction or loss of, or loss of use of, natural resources and related assessment costs;
|
|
|
(ii) |
injury to, or economic losses resulting from, the destruction of real and personal property;
|
|
|
(iii) |
net loss of taxes, royalties, rents, fees or net profit revenues resulting from injury, destruction or loss of real or personal property, or natural resources;
|
|
|
(iv) |
loss of subsistence use of natural resources that are injured, destroyed or lost;
|
|
|
(v) |
lost profits or impairment of earning capacity due to injury, destruction or loss of real or personal property or natural resources; and
|
|
|
(vi) |
net cost of increased or additional public services necessitated by removal activities following a discharge of oil, such as protection from fire, safety or health
hazards, and loss of subsistence use of natural resources.
|
| C. |
Organizational Structure
|
| D. |
Property, Plants and Equipment
|
| ITEM 4A. |
UNRESOLVED STAFF COMMENTS
|
| ITEM 5. |
OPERATING AND FINANCIAL REVIEW AND PROSPECTS
|
| A. |
Operating Results
|
|
2022
|
2023
|
|||||||
|
FLEET DATA
|
||||||||
|
Total number of vessels at end of period (including leased vessels)
|
8
|
8
|
||||||
|
Average number of vessels(1)
|
8
|
8
|
||||||
|
Total calendar days for fleet
|
2,912
|
2,920
|
||||||
|
Total available days for fleet
|
2,901
|
2,920
|
||||||
|
Total operating days for fleet
|
2,893
|
2,920
|
||||||
|
Total time charter days for fleet
|
2,893
|
2,920
|
||||||
|
Total spot (voyage) days for fleet
|
-
|
-
|
||||||
|
Fleet utilization
|
99.72
|
%
|
100.00
|
%
|
||||
|
2022
|
2023
|
|||||||
|
AVERAGE DAILY RESULTS
|
||||||||
|
Time charter equivalent(2)
|
$
|
27,310
|
$
|
27,856
|
||||
|
Vessel operating expenses(3)
|
$
|
6,397
|
$
|
6,345
|
||||
|
General and administrative expenses(4)
|
$
|
555
|
$
|
2,293
|
| (1) |
Average number of vessels is the number of vessels that constituted our fleet (including chartered in vessels) for the relevant period, as measured by the sum of the number of days each vessel was a part of our fleet during the
period divided by the number of calendar days in that period.
|
| (2) |
Time charter equivalent rate, or TCE rate, is a measure of the average daily revenue performance of a vessel. Our definition of TCE may not be the same as
reported by other companies in the shipping industry or other industries. Our method of calculating TCE rate is determined by dividing TCE revenues by operating days for the relevant time period. TCE revenues are revenues minus
voyage expenses. Voyage expenses primarily consist of port, canal and fuel costs that are unique to a particular voyage, which would otherwise be paid by the charterer under a time charter contract, but are payable by us in the case
of a voyage charter, as well as commissions. TCE revenues and TCE rate, non-U.S. GAAP measures, are standard shipping industry performance measures that provide additional supplemental information in conjunction with shipping
revenues, the most directly comparable U.S. GAAP measure. We use TCE rates and TCE revenues to compare period-to-period changes in our performance and it assists investors and our management in evaluating our financial performance.
The following table reconciles our net revenues from vessel to TCE rate.
|
| (3) |
Operating expenses include crew wages and related costs, insurance, repairs and maintenance, spares and consumable stores, tonnage taxes and value added tax, or VAT, and other miscellaneous expenses. Daily vessel operating expenses
are calculated by dividing vessel operating expenses by fleet calendar days for the relevant time period. Our ability to control our fixed and variable expenses, including our daily vessel operating expenses, also affects our financial
results.
|
| (4) |
Daily general and administrative expenses are calculated by dividing general and administrative expenses by fleet calendar days for the relevant time period.
|
|
U.S. dollars in thousands, except average daily time charter equivalent and total operating days
|
2022
|
2023
|
||||||
|
On a consolidated basis
|
||||||||
|
Total Revenues
|
80,656
|
82,949
|
||||||
|
Less:
|
||||||||
|
Voyage expenses
|
(1,648
|
)
|
(1,609
|
)
|
||||
|
Time charter equivalent revenues
|
79,008
|
81,340
|
||||||
|
Total operating days
|
2,893
|
2,920
|
||||||
|
Average Daily Time Charter Equivalent (TCE)
|
$
|
27,310
|
$
|
27,856
|
||||
|
EBITDA*
|
||||||||
|
U.S. dollars in thousands
|
2022
|
2023
|
||||||
|
EBITDA
|
46,554
|
43,058
|
||||||
|
(Expressed in thousands of U.S. Dollars)
|
2022
|
2023
|
||||||
|
Net income
|
18,948
|
6,066
|
||||||
|
Add: Vessel depreciation
|
13,289
|
14,349
|
||||||
|
Add: Interest and finance costs
|
14,365
|
22,989
|
||||||
|
Less: Interest income
|
(48
|
)
|
(346
|
)
|
||||
|
EBITDA
|
46,554
|
43,058
|
||||||
|
|
• |
management of our financial resources, including banking relationships, i.e., administration of bank loans and bank accounts;
|
|
|
• |
management of our accounting system and records and financial reporting;
|
|
|
• |
administration of the legal and regulatory requirements affecting our business and assets; and
|
|
|
• |
management of the relationships with our service providers and customers.
|
|
|
• |
charter rates and periods of charter hire for our tankers;
|
|
|
• |
utilization of our tankers (earnings efficiency);
|
|
|
• |
levels of our tanker’s operating expenses and dry-docking costs;
|
|
|
• |
depreciation and amortization expenses;
|
|
|
• |
financing costs; and
|
|
|
• |
fluctuations in foreign exchange rates.
|
|
(Expressed in thousands of U.S. Dollars)
|
Year Ended December 31,
|
change
|
||||||||||||||
|
2022
|
2023
|
YE23 v YE22
|
||||||||||||||
|
$
|
%
|
|||||||||||||||
|
Total charter revenues
|
80,656
|
82,949
|
2,293
|
3
|
%
|
|||||||||||
|
Voyage expenses
|
1,648
|
1,609
|
(39
|
)
|
-2
|
%
|
||||||||||
|
Operating lease Expense
|
10,840
|
10,840
|
-
|
0
|
%
|
|||||||||||
|
Vessel operating expenses
|
18,628
|
18,527
|
(101
|
)
|
-1
|
%
|
||||||||||
|
Vessel depreciation
|
13,289
|
14,349
|
1,060
|
8
|
%
|
|||||||||||
|
Management fees-related parties
|
2,093
|
2,200
|
107
|
5
|
%
|
|||||||||||
|
General and administrative expenses
|
1,617
|
6,697
|
5,080
|
314
|
%
|
|||||||||||
|
Gain on sale of vessels
|
(78
|
)
|
-
|
78
|
-100
|
%
|
||||||||||
|
Operating income
|
32,619
|
28,727
|
(3,892
|
)
|
-12
|
%
|
||||||||||
|
Interest and finance costs
|
(14,365
|
)
|
(22,989
|
)
|
(8,624
|
)
|
60
|
%
|
||||||||
|
Interest income
|
48
|
346
|
298
|
621
|
%
|
|||||||||||
|
Equity gain/(loss) in unconsolidated joint ventures
|
646
|
(18
|
)
|
(664
|
)
|
-103
|
%
|
|||||||||
|
Total other expenses, net
|
(13,671
|
)
|
(22,661
|
)
|
(8,990
|
)
|
66
|
%
|
||||||||
|
Net income
|
18,948
|
6,066
|
(12,882
|
)
|
-68
|
%
|
||||||||||
|
|
1. |
Vessel depreciation
|
|
|
2. |
General and administrative expenses
|
|
|
3. |
Interest and Finance Costs
|
|
|
• |
a $7.3 million increase in interest costs mainly due to a) the increase in the variable interest rate of our credit facilities (LIBOR and SOFR) which increased from 4.74% in January 2023 to 5.62% in December 2023, while LIBOR ranged
from 0.10% in January 2022 to 4.74% in December 2022, and b) the three new SLBs for M/Ts Eco Oceano CA, Julius Caesar and Legio X Equestris that we closed in March, January and March 2022 respectively for an aggregate amount of $156.2
million, that where incurring interest expense for the whole year ended December 31, 2023. These increases were offset by a $0.9 million decrease in interest and finance costs relating to M/Ts Eco Los Angeles and Eco City of Angels that
were sold on February 28 and March 15, 2022;
|
|
|
• |
$3.5 million of amortization of debt discount relating to the Cargill facility (please see “Item 18. Financial Statements—Note 7—Debt”) that commenced in 2023; and
|
|
|
• |
an offsetting $1.3 million decrease in amortization of deferred financing fees mainly due to the acceleration of the amortization of $1.9 million of unamortized balances of deferred financing fees relating to the sale of M/Ts Eco Los
Angeles and Eco City of Angels and the prepayment of our Unsecured Bridge Loan in 2022. By comparison, in 2023 we accelerated $0.6 million of deferred financing fees relating to the prepayment of the ABN and the Alpha Bank facilities
(see “—B. Liquidity and Capital Resources—Debt Facilities— Prepayments of senior secured loans)”.
|
|
|
4. |
Equity gain/(loss) in unconsolidated joint ventures
|
| B. |
Liquidity and Capital Resources
|
| C. |
Research and Development, Patents and Licenses, Etc.
|
| D. |
Trend Information
|
| E. |
Critical Accounting Estimates
|
| ITEM 6. |
DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
|
| A. |
Directors and Senior Management
|
|
Name
|
Age
|
Position
|
||
|
Evangelos J. Pistiolis
|
51
|
Director, President, Chief Executive Officer
|
||
|
Alexandros Tsirikos
|
49
|
Director, Chief Financial Officer
|
||
|
Konstantinos Patis
|
50
|
Chief Technical Officer
|
||
|
Vangelis G. Ikonomou
|
60
|
Chief Operating Officer
|
||
|
Konstantinos Karelas
|
51
|
Independent Non-Executive Director
|
||
|
Stavros Emmanuel
|
81
|
Independent Non-Executive Director
|
||
|
Paolo Javarone
|
50
|
Independent Non-Executive Director
|
| B. |
Compensation
|
| C. |
Board Practices
|
| D. |
Employees
|
| E. |
Share Ownership
|
| F. |
Disclosure of a registrant’s action to recover erroneously awarded compensation.
|
| ITEM 7. |
MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
|
| A. |
Major Shareholders
|
|
Name and Address of Beneficial Owner
|
Number of Shares Owned
|
Percentage of
Class
|
Percentage
of
Total
Voting
Power
|
||||||
|
Lax Trust (1)
|
100,000 Series D Preferred Shares (1)
|
100
|
%
|
95.58
|
%
|
||||
|
3 Sororibus Trust(2)
|
2,930,718 Common Shares
|
63.35
|
%
|
2.80
|
%
|
||||
|
Evangelos J. Pistiolis(3)
|
446,446 Common Shares
|
9.65
|
%
|
0.43
|
%
|
||||
|
Executive officers, directors and key employees(4)
|
0 Common Shares
|
0
|
%
|
0.00
|
%
|
||||
| (1) |
The Lax Trust is an irrevocable trust established for the benefit of certain family members of Mr. Evangelos J. Pistiolis, our President, Chief Executive
Officer and Director. The business address of the Lax Trust is Level 3, 18 Stanley Street, Auckland 1010, New Zealand. As a prerequisite for the Navigare Lease, Mr. Evangelos J. Pistiolis personally guaranteed the performance of the
bareboat charters entered in connection with the lease, under certain circumstances, and in exchange, we amended the Certificate of Designations governing the terms of the Series D Preferred Shares, to adjust the voting rights per
share of Series D Preferred Shares such that during the term of the Navigare Lease, the combined voting power controlled by Mr. Evangelos J. Pistiolis and the Lax Trust does not fall below a majority of our total voting power,
irrespective of any new common or preferred stock issuances, and thereby complying with a relevant covenant of the bareboat charters entered in connection with the Navigare Lease. The above percentage of total voting power is based on
100,000,000 votes carried by the outstanding Series D Preferred Share (1,000 votes per Series D Preferred Share held).
|
| (2) |
The above information is derived, in part, from the Amendment No. 39 to the 13D/A filed with the SEC on February 14, 2024. 3 Sororibus Trust is an irrevocable trust established for the benefit of certain
family members of Mr. Evangelos J. Pistiolis. The business address of 3 Sororibus Trust is 31 Kitiou Kyprianou, 3036, Limassol, Cyprus. 3 Sororibus Trust is the sole shareholder of Family Trading Inc., or Family Trading, a Marshall
Islands corporation, and may be deemed to beneficially own all of the common shares beneficially owned by Family Trading.
|
| (3) |
The above information is derived, in part, from the Amendment No. 39 to the 13D/A filed with the SEC on February 14, 2024.
|
| (4) |
Excludes the shares held by Mr. Evangelos J. Pistiolis that are reported elsewhere in this table.
|
| B. |
Related Party Transactions
|
| C. |
Interests of Experts and Counsel
|
| ITEM 8. |
FINANCIAL INFORMATION
|
| A. |
Consolidated Statements and Other Financial Information
|
| B. |
Significant Changes
|
| ITEM 9. |
THE OFFER AND LISTING
|
| ITEM 10. |
ADDITIONAL INFORMATION
|
| A. |
Share Capital
|
| B. |
Memorandum and Articles of Association
|
|
|
● |
prior to the date of the transaction that resulted in the shareholder becoming an interested shareholder, the Board approved either the business combination or the transaction that resulted in the shareholder
becoming an interested shareholder;
|
|
|
● |
upon consummation of the transaction that resulted in the shareholder becoming an interested shareholder, the interested shareholder owned at least 85% of the voting stock of the corporation outstanding at the
time the transaction commenced;
|
|
|
● |
at or subsequent to the date of the transaction that resulted in the shareholder becoming an interested shareholder, the business combination is approved by the Board and authorized at an annual or special
meeting of shareholders by the affirmative vote of at least 66 2/3% of the outstanding voting stock that is not owned by the interested shareholder; and
|
|
|
● |
the shareholder became an interested shareholder prior to the consummation of the initial public offering.
|
|
|
● |
not be redeemable;
|
|
|
● |
entitle holders to quarterly dividend payments in an amount per share equal to the aggregate per share amount of all cash dividends, and the aggregate per share amount (payable in kind) of all non-cash
dividends or other distributions other than a dividend payable in our common shares or a subdivision of our outstanding common shares (by reclassification or otherwise), declared on our common shares since the immediately preceding
quarterly dividend payment date; and
|
|
|
● |
entitle holders to one vote on all matters submitted to a vote of our shareholders.
|
|
|
● |
Flip In. If an Acquiring Person obtains beneficial ownership of 15% or more of our common shares, then each Right will entitle the holder thereof to purchase, for the
Exercise Price, a number of our common shares (or, in certain circumstances, cash, property or other of our securities) having a then-current market value of twice the Exercise Price. However, the Rights are not exercisable following
the occurrence of the foregoing event until such time as the Rights are no longer redeemable by us, as further described below.
|
|
|
● |
Flip Over. If, after an Acquiring Person obtains 15% or more of our common shares, (i) we merge into another entity; (ii) an acquiring entity merges into us; or (iii)
we sell or transfer 50% or more of its assets, cash flow or earning power, then each Right (except for Rights that have previously been voided as set forth above) will entitle the holder thereof to purchase, for the Exercise Price, a
number of our common shares of the person engaging in the transaction having a then-current market value of twice the Exercise Price.
|
|
|
● |
Notional Shares. Shares held by affiliates and associates of an Acquiring Person, including certain entities in which the Acquiring Person beneficially owns a majority
of the equity securities, and Notional Common Shares (as defined in the Rights Agreement) held by counterparties to a Derivatives Contract (as defined in the Rights Agreement) with an Acquiring Person, will be deemed to be beneficially
owned by the Acquiring Person.
|
| C. |
Material Contracts
|
| D. |
Exchange controls
|
| E. |
Taxation
|
|
|
(1) |
we are organized in a foreign country, or our country of organization, that grants an “equivalent exemption” to corporations organized in the United States; and
|
|
|
(2) |
either
|
|
|
A. |
more than 50% of the value of our stock is owned, directly or indirectly, by individuals who are “residents” of our country of organization or of another foreign country that grants an “equivalent exemption”
to corporations organized in the United States (each such individual a “qualified shareholder” and such individuals collectively, “qualified shareholders”), which we refer to as the “50% Ownership Test,” or
|
|
|
B. |
our stock is “primarily and regularly traded on an established securities market” in our country of organization, in another country that grants an “equivalent exemption” to U.S. corporations, or in the United
States, which we refer to as the “Publicly Traded Test.”
|
|
|
● |
We have, or are considered to have, a fixed place of business in the United States involved in the earning of shipping income; and
|
|
|
● |
substantially all of our U.S.-source shipping income is attributable to regularly scheduled transportation, such as the operation of a vessel that follows a published schedule with repeated sailings at regular
intervals between the same points for voyages that begin or end in the United States, or is leasing income that is attributable to such fixed place of business in the United States.
|
|
|
● |
is a U.S. citizen or resident, U.S. corporation or other U.S. entity taxable as a corporation, an estate the income of which is subject to U.S. federal income taxation regardless of its source, or a trust (i)
if a court within the United States is able to exercise primary jurisdiction over the administration of the trust and one or more U.S. persons have the authority to control all substantial decisions of the trust or (ii) the trust has in
effect a valid election to be treated as a United States person for U.S. federal income tax purposes;
|
|
|
● |
owns the common shares as a capital asset, generally, for investment purposes; and
|
|
|
● |
owns less than 10% of our common shares for U.S. federal income tax purposes.
|
|
|
● |
at least 75% of our gross income for such taxable year consists of passive income (e.g., dividends, interest, capital gains and rents derived other than in the active conduct of a rental business); or
|
|
|
● |
at least 50% of the average value of the assets held by the corporation during such taxable year produce, or are held for the production of, passive income.
|
|
|
● |
the excess distribution or gain would be allocated ratably over the Non-Electing Holder’s aggregate holding period for the common shares;
|
|
|
● |
the amount allocated to the current taxable year and any taxable year before we became a PFIC would be taxed as ordinary income; and
|
|
|
● |
the amount allocated to each of the other taxable years would be subject to tax at the highest rate of tax in effect for the applicable class of taxpayer for that year, and an interest charge for the deemed
tax deferral benefit would be imposed with respect to the resulting tax attributable to each such other taxable year.
|
|
|
● |
the gain is effectively connected with a trade or business conducted by the Non-U.S. Holder in the United States. If the Non-U.S. Holder is entitled to the benefits of a U.S. income tax treaty with respect to
that gain, that gain is taxable only if it is attributable to a permanent establishment maintained by the Non-U.S. Holder in the United States; or
|
|
|
● |
the Non-U.S. Holder is an individual who is present in the United States for 183 days or more during the taxable year of disposition and other conditions are met.
|
|
|
● |
fail to provide an accurate taxpayer identification number;
|
|
|
● |
are notified by the IRS that you have failed to report all interest or dividends required to be shown on your U.S. federal income tax returns; or
|
|
|
● |
in certain circumstances, fail to comply with applicable certification requirements.
|
| F. |
Dividends and Paying Agents
|
| G. |
Statement by Experts
|
| H. |
Documents on Display
|
| I. |
Subsidiary Information
|
| J. |
Annual Report to Security Holders
|
| ITEM 11. |
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
| ITEM 12. |
DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
|
| ITEM 13. |
DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
|
| ITEM 14. |
MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS
|
| ITEM 15. |
CONTROLS AND PROCEDURES
|
| a) |
Disclosure Controls and Procedures
|
| b) |
Management’s Annual Report on Internal Control over Financial Reporting
|
|
|
● |
Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets;
|
|
|
● |
Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and
expenditures are being made only in accordance with authorizations of Company’s management and directors; and
|
|
|
● |
Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.
|
| c) |
Attestation Report of the Registered Public Accounting Firm
|
| d) |
Changes in Internal Control over Financial Reporting
|
| ITEM 16. |
RESERVED
|
| ITEM 16A. |
AUDIT COMMITTEE FINANCIAL EXPERT
|
| ITEM 16B. |
CODE OF ETHICS
|
| ITEM 16C. |
PRINCIPAL ACCOUNTANT FEES AND SERVICES
|
|
U.S. dollars in thousands,
|
Year Ended
|
|||||||
|
2022
|
2023
|
|||||||
|
Audit Fees
|
379.5
|
410.3
|
||||||
| ITEM 16D. |
EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES
|
| ITEM 16E. |
PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS
|
| ITEM 16F. |
CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT
|
| ITEM 16G. |
CORPORATE GOVERNANCE
|
|
|
● |
Audit Committee. Nasdaq requires, among other things, that a listed company has an audit committee with a minimum of three independent members, at least one of whom
meets certain standards of financial sophistication. As permitted under Marshall Islands law, our audit committee consists of three independent directors but we do not designate any one audit commit member as meeting the standards of
financial sophistication.
|
|
|
● |
As a foreign private issuer, we are not required to hold regularly scheduled board meetings at which only independent directors are present.
|
|
|
● |
In lieu of obtaining shareholder approval prior to the issuance of designated securities, we will comply with provisions of the BCA, which allows our Board of Directors to approve share issuances.
|
| ITEM 16H. |
MINE SAFETY DISCLOSURE
|
| ITEM 16I. |
DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
|
| ITEM 16J. |
INSIDER TRADING POLICIES
|
| ITEM 16K. |
CYBERSECURITY
|
| ITEM 17. |
FINANCIAL STATEMENTS
|
| ITEM 18. |
FINANCIAL STATEMENTS
|
| ITEM 19. |
EXHIBITS
|
|
Number
|
Description of Exhibits
|
|
1.1
|
|
|
|
|
|
1.2
|
|
|
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1.3
|
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|
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|
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1.4
|
|
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|
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1.5
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|
|
|
|
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1.6
|
|
|
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1.7
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|
|
|
|
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1.8
|
|
|
|
|
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1.9
|
|
|
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|
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1.10
|
|
|
|
|
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1.11
|
|
|
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|
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1.12
|
|
|
|
|
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1.13
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|
|
|
|
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1.14
|
|
|
|
|
|
2.1
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|
|
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|
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2.2
|
|
|
|
|
|
2.3
|
|
2.4
|
|
|
|
|
|
2.5
|
|
2.6
|
|
|
|
|
|
2.7
|
|
|
|
|
|
2.8
|
|
|
|
|
|
4.1
|
|
|
|
|
|
4.2
|
|
|
|
|
|
4.3
|
|
|
|
|
|
4.4
|
|
|
|
|
|
4.5
|
|
|
|
|
|
4.6
|
|
|
|
|
|
4.7
|
|
|
|
|
|
4.8
|
|
|
|
|
|
4.9
|
|
|
|
|
|
4.10
|
|
|
|
|
|
4.11
|
|
|
|
|
|
4.12
|
|
4.13
|
|
|
|
|
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4.14
|
|
|
|
|
|
4.15
|
|
|
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|
|
4.16
|
|
|
|
|
|
4.17
|
|
|
|
|
|
4.18
|
|
4.19
|
|
|
|
|
|
4.20
|
|
|
4.21
|
|
|
4.22
|
|
|
4.23
|
|
|
4.24
|
|
|
4.25
|
|
|
4.26
|
|
|
4.27
|
|
|
4.28
|
|
|
|
|
|
4.29
|
|
|
|
|
|
4.30
|
|
|
|
|
|
4.31
|
|
|
|
|
|
4.32
|
|
4.33
|
|
|
|
|
|
4.34
|
|
|
|
|
|
8.1
|
|
|
|
|
|
11.1
|
|
|
|
|
|
12.1
|
|
|
|
|
|
12.2
|
|
|
|
|
|
13.1
|
|
|
|
|
|
13.2
|
|
|
|
|
|
15.1
|
|
|
|
|
|
97.1
|
|
|
|
|
|
101
|
The following materials from the Company’s Annual Report on Form 20-F for the fiscal year ended December 31, 2023, formatted in Inline
eXtensible Business Reporting Language (iXBRL): (i) Consolidated Balance Sheets as of December 31, 2022 and 2023; (ii) Consolidated Statements of Comprehensive Income/(Loss) for the years ended December 31, 2021, 2022 and 2023; (iii)
Consolidated Statements of Stockholders’ Equity for the years ended December 31, 2021, 2022 and 2023; (iv) Consolidated Statements of Cash Flows for the years ended December 31, 2021, 2022 and 2023; and (v) Notes to Consolidated
Financial Statements
|
|
|
|
|
104
|
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101
|
|
TOP SHIPS INC.
|
||
|
(Registrant)
|
||
|
Date: March 29, 2024
|
By:
|
/s/ Evangelos J. Pistiolis
|
|
Evangelos J. Pistiolis
|
||
|
President, Chief Executive Officer, and Director
|
||
TOP SHIPS INC.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
|
December 31, |
December 31, |
|||||||
|
2022 |
2023 |
|||||||
|
ASSETS |
||||||||
|
|
||||||||
|
CURRENT ASSETS: |
||||||||
|
|
||||||||
|
Cash and cash equivalents |
20,544 | 35,956 | ||||||
|
Trade accounts receivable |
8 | 317 | ||||||
|
Prepayments and other |
1,314 | 1,545 | ||||||
|
Inventories |
1,026 | 915 | ||||||
|
Total current assets |
22,892 | 38,733 | ||||||
|
FIXED ASSETS: |
||||||||
|
Vessels, net (Note 4) |
389,059 | 374,710 | ||||||
|
Right of use assets from operating leases (Note 6) |
28,708 | 19,476 | ||||||
|
Other fixed assets, net |
505 | 505 | ||||||
|
Total fixed assets |
418,272 | 394,691 | ||||||
|
OTHER NON CURRENT ASSETS: |
||||||||
|
Restricted cash (Note 6 and 7) |
4,000 | 4,000 | ||||||
|
Investments in unconsolidated joint ventures (Note 16) |
22,173 | 19,635 | ||||||
|
Deposit asset |
2,000 | 2,000 | ||||||
|
Deferred Charges
|
- | 130 | ||||||
|
Total non-current assets |
28,173 | 25,765 | ||||||
|
Total assets |
469,337 | 459,189 | ||||||
|
LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS’ EQUITY |
||||||||
|
CURRENT LIABILITIES: |
||||||||
|
Current portion of long-term debt (Note 7) |
12,344 | 12,418 | ||||||
|
Due to related parties (Note 5) |
237 | 4,648 | ||||||
|
Accounts payable |
1,953 | 1,356 | ||||||
|
Accrued liabilities |
2,061 | 2,355 | ||||||
|
Unearned revenue |
7,030 | 6,615 | ||||||
|
Current portion of Operating lease liabilities (Note 6) |
8,610 | 8,980 | ||||||
|
Current portion of Vessel fair value participation liability (Note 7)
|
- | 5,000 | ||||||
|
Total current liabilities |
32,235 | 41,372 | ||||||
|
NON-CURRENT LIABILITIES: |
||||||||
|
Non-current portion of long term debt (Note 7) |
221,370 | 228,080 | ||||||
|
Non-current portion of Operating lease liabilities (Note 6) |
15,338 | 6,357 | ||||||
|
Other non-current liabilities |
100 | - | ||||||
|
Vessel fair value participation liability (Note 7)
|
3,271 | - | ||||||
|
Total non-current liabilities |
240,079 | 234,437 | ||||||
|
COMMITMENTS AND CONTINGENCIES (Note 8) |
|
|
||||||
|
Total liabilities |
272,314 |
275,809 |
||||||
|
MEZZANINE EQUITY: |
||||||||
|
Preferred stock, $0.01 par value; 20,000,000 shares authorized; 13,452 and 0 Series E Shares and 5,850,748 and 3,659,627 Series F Shares issued and outstanding at December 31, 2022, and 2023 (Note 15) |
59 | 37 | ||||||
|
Preferred stock, Paid-in capital in excess of par
|
86,292 | 43,879 | ||||||
|
Total mezzanine equity |
86,351 | 43,916 | ||||||
|
STOCKHOLDERS’ EQUITY: |
||||||||
|
Preferred stock, $0.01 par value; 20,000,000 shares authorized; of which 100,000 Series D Shares were outstanding at December 31, 2022 and 2023 (Note 9) |
1 | 1 | ||||||
|
Common stock, $0.01 par value; 1,000,000,000 shares authorized; 857,908 and 4,626,197 shares issued and outstanding at December 31, 2022 and 2023 (Note 9) |
9 | 46 | ||||||
|
Additional paid-in capital |
428,468 | 451,157 | ||||||
|
Accumulated deficit |
(317,806 | ) | (311,740 | ) | ||||
|
Total stockholders’ equity |
110,672 | 139,464 | ||||||
|
|
||||||||
|
Total liabilities, mezzanine equity and stockholders’ equity |
469,337 | 459,189 | ||||||
The accompanying notes are an integral part of these consolidated financial statements.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
FOR THE YEARS ENDED DECEMBER 31, 2021, 2022 and 2023
|
2021 |
2022 |
2023 |
||||||||||
|
Revenues (including $0, $7,294 and $8,943 respectively, from related party) (Note 17 & 5) |
56,367 | 80,656 | 82,949 | |||||||||
|
EXPENSES: |
||||||||||||
|
Voyage expenses (including $705, $1,008 and $1,037 respectively, to related party) (Note 11) |
1,317 | 1,648 | 1,609 | |||||||||
|
Operating lease expense (Note 6) |
10,840 | 10,840 | 10,840 | |||||||||
|
Vessel operating expenses (including $17, $37 and $42 respectively, to related party) (Note 11) |
15,679 | 18,628 | 18,527 | |||||||||
|
Dry-docking costs |
361 | - | - | |||||||||
|
Vessel depreciation (Note 4) |
7,670 | 13,289 | 14,349 | |||||||||
|
Management fees-related parties (Note 5) |
2,596 | 2,093 | 2,200 | |||||||||
|
General and administrative expenses (including $360, $360 and $5,360 respectively, to related party)(Note 5) |
1,943 | 1,617 | 6,697 | |||||||||
|
Gain on sale of vessels |
- | (78 | ) | - | ||||||||
|
Impairment of vessels |
1,160 | - | - | |||||||||
|
Operating income |
14,801 | 32,619 | 28,727 | |||||||||
|
|
||||||||||||
|
OTHER EXPENSES: |
||||||||||||
|
Interest and finance costs (including $0, $207 and $0 respectively, to related party) (Note 12) |
(6,998 | ) | (14,365 | ) | (22,989 | ) | ||||||
|
Gain on derivative financial instruments (Note 14) |
66 | - | - | |||||||||
|
Interest income |
- | 48 | 346 | |||||||||
|
Equity gain/(loss) in unconsolidated joint ventures |
747 | 646 | (18 | ) | ||||||||
|
Total other expenses, net |
(6,185 | ) | (13,671 | ) | (22,661 | ) | ||||||
|
Net income and comprehensive income |
8,616 | 18,948 | 6,066 | |||||||||
|
Less: Deemed dividend for beneficial conversion feature of Series E Shares (Note 15) |
(900 | ) | - | - | ||||||||
|
Less: Deemed dividend equivalents on preferred shares related to redemption value (Note 15) |
(437 | ) | (14,400 | ) | - | |||||||
|
Less: Preferred shares dividend (Note 15) |
(1,883 | ) | (12,390 | ) | (6,010 | ) | ||||||
|
Less: Deemed dividend on warrant inducement (Note 9)
|
- | (1,345 | ) | - | ||||||||
|
Less: Deemed dividend on Series E Shares conversion
|
- | - | (22,426 | ) | ||||||||
|
Net income/ (loss) attributable to common shareholders |
5,396 | (9,187 | ) | (22,370 | ) | |||||||
|
Earnings/(Loss) per common share, basic and diluted (Note 10) |
32.51 | (36.34 | ) | (12.44 | ) | |||||||
The accompanying notes are an integral part of these consolidated financial statements.
TOP SHIPS INC.
CONSOLIDATED STATEMENTS OF MEZZANINE AND STOCKHOLDERS’ EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2021, 2022 and 2023
(Expressed in thousands of U.S. Dollars – except number of shares and per share data)
| Mezzanine Equity |
Preferred Stock |
Common Stock |
Additional |
Accumulated Deficit
attributable
|
||||||||||||||||||||||||||||||||||||
|
# of Shares |
Par
Value
|
Mezzanine Equity |
# of Shares |
Par Value |
# of Shares* |
Par Value* |
Paid-In Capital* |
to common stockholders |
Total |
|||||||||||||||||||||||||||||||
|
BALANCE, December 31, 2020 |
11,264 | - | 13,517 | 100,000 |
1 |
165,966 |
2 |
466,068 | (345,370 | ) | 120,701 | |||||||||||||||||||||||||||||
|
Net Income |
8,616 | 8,616 | ||||||||||||||||||||||||||||||||||||||
|
Stock-based compensation |
(34 | ) | (34 | ) | ||||||||||||||||||||||||||||||||||||
|
Issuance of Series E Shares (Note 15) |
2,188 | - | 2,188 | - | ||||||||||||||||||||||||||||||||||||
|
Deemed dividend equivalents on Series E Shares issued during the period related to redemption value |
437 | (437 | ) | (437 | ) | |||||||||||||||||||||||||||||||||||
|
Dividends of Series E shares (Note 15) |
(1,883 | ) | (1,883 | ) | ||||||||||||||||||||||||||||||||||||
|
Beneficial conversion feature related to the issuance of Series E Shares |
(900 | ) | 900 | 900 | ||||||||||||||||||||||||||||||||||||
|
Deemed dividend related to beneficial conversion feature of Series E Shares |
900 | (900 | ) | (900 | ) | |||||||||||||||||||||||||||||||||||
|
Excess of consideration over carrying value of acquired assets (Note 1) |
(33,741 | ) | (33,741 | ) | ||||||||||||||||||||||||||||||||||||
|
BALANCE, December 31, 2021 |
13,452 | - | 16,142 | 100,000 |
1 |
165,966 |
2 |
429,973 | (336,754 | ) | 93,222 | |||||||||||||||||||||||||||||
|
Net Income |
18,948 | 18,948 | ||||||||||||||||||||||||||||||||||||||
|
Stock-based compensation |
(16 | ) | (16 | ) | ||||||||||||||||||||||||||||||||||||
|
Redemption of fractional shares due to reverse stock split |
(535 | ) | (15 | ) | (15 | ) | ||||||||||||||||||||||||||||||||||
|
Issuance of preferred shares (Note 15) |
7,200,000 | 72 | 71,928 | - | ||||||||||||||||||||||||||||||||||||
|
Deemed dividend of Series F shares related to redemption value |
14,400 | (14,400 | ) | (14,400 | ) | |||||||||||||||||||||||||||||||||||
|
Dividends of preferred shares (Note 15) |
(12,390 | ) | (12,390 | ) | ||||||||||||||||||||||||||||||||||||
|
Exercise of warrants, net of fees |
59,595 | 1 | 4,535 | 4,536 | ||||||||||||||||||||||||||||||||||||
|
Redemptions of preferred shares (Note 15) |
(1,349,252 | ) | (13 | ) | (16,178 | ) | - | |||||||||||||||||||||||||||||||||
|
Issuance of common stock pursuant to equity offerings, net (Note 9)
|
632,882 | 6 | 20,781 | 20,787 | ||||||||||||||||||||||||||||||||||||
|
Deemed dividend on warrant inducement (Note 9)
|
(1,345 | ) | (1,345 | ) | ||||||||||||||||||||||||||||||||||||
|
Incremental fair value of the October 2022 Warrants (Note 9)
|
1,345 | 1,345 | ||||||||||||||||||||||||||||||||||||||
|
BALANCE, December 31, 2022 |
5,864,200 | 59 | 86,292 | 100,000 |
1 |
857,908 |
9 |
428,468 | (317,806 | ) | 110,672 | |||||||||||||||||||||||||||||
|
Net Income
|
6,066 | 6,066 | ||||||||||||||||||||||||||||||||||||||
|
Redemption of fractional shares due to reverse stock split
|
(27 | ) | - | |||||||||||||||||||||||||||||||||||||
|
Conversion of Series E Shares (Note 15)
|
(13,452 | ) | - | (16,142 | ) | 2,930,718 | 29 | 38,539 | 38,568 | |||||||||||||||||||||||||||||||
|
Deemed dividend on Series E Shares conversion (Note 15)
|
(22,426 | ) | (22,426 | ) | ||||||||||||||||||||||||||||||||||||
|
Dividends of preferred shares (Note 15)
|
(6,010 | ) | (6,010 | ) | ||||||||||||||||||||||||||||||||||||
|
Exercise of warrants, net of fees
|
500 | 12 | 12 | |||||||||||||||||||||||||||||||||||||
|
Redemptions of preferred shares (Note 15)
|
(2,191,121 | ) | (22 | ) | (26,271 | ) | - | |||||||||||||||||||||||||||||||||
|
Issuance of common stock pursuant to equity offerings, net (Note 9)
|
837,098 | 8 | 12,574 | 12,582 | ||||||||||||||||||||||||||||||||||||
| BALANCE, December 31, 2023 | 3,659,627 | 37 | 43,879 | 100,000 | 1 | 4,626,197 | 46 | 451,157 | (311,740 | ) | 139,464 | |||||||||||||||||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
* Adjusted to reflect the reverse stock split effected in September 2023 (see Note 1)
TOP SHIPS INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2021, 2022 and 2023
(Expressed in thousands of U.S. Dollars)
|
2021 |
2022 |
2023 |
||||||||||
|
Cash Flows from Operating Activities: |
||||||||||||
|
Net income |
8,616 | 18,948 | 6,066 | |||||||||
|
Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||||||
|
Vessel depreciation |
7,670 | 13,289 | 14,349 | |||||||||
|
Other fixed assets depreciation |
14 | 4 | - | |||||||||
|
Equity (gains)/losses in unconsolidated joint ventures |
(747 | ) | (646 | ) | 18 | |||||||
|
Dividends from cumulative earnings of joint venture |
1,524 | 646 | - | |||||||||
|
Amortization and write off of deferred financing costs and debt discounts |
840 | 2,522 | 4,726 | |||||||||
|
Stock-based compensation expense |
(34 | ) | (16 | ) | - | |||||||
|
Change in fair value of derivative financial instruments |
(66 | ) | - | - | ||||||||
|
Amortization of Right of use assets from operating leases
|
7,943 | 8,571 | 9,232 | |||||||||
|
Impairment on vessels |
1,160 | - | - | |||||||||
|
Gain on sale of other fixed assets
|
- | (15 | ) | - | ||||||||
|
Gain on sale of vessels
|
- | (78 | ) | - | ||||||||
|
(Increase)/Decrease in: |
||||||||||||
|
Trade accounts receivable |
(76 | ) | 68 | (309 | ) | |||||||
|
Inventories |
(157 | ) | (355 | ) | 111 | |||||||
|
Prepayments and other |
323 | (733 | ) | (231 | ) | |||||||
|
Increase/(Decrease) in: |
||||||||||||
|
Due to related parties |
(2,797 | ) | (3,204 | ) | 4,411 | |||||||
|
Accounts payable |
(123 | ) | (82 | ) | (503 | ) | ||||||
|
Other non-current liabilities |
(75 | ) | (125 | ) | (100 | ) | ||||||
|
Accrued liabilities |
(207 | ) | 1,068 | 189 | ||||||||
|
Unearned revenue |
1,584 | 3,372 | (415 | ) | ||||||||
|
Operating lease liabilities
|
(9,331 | ) | (9,815 | ) | (8,611 | ) | ||||||
|
Net Cash provided by Operating Activities |
16,061 | 33,419 | 28,933 | |||||||||
|
Cash Flows used in Investing Activities: |
||||||||||||
|
Advances for vessels under construction and capitalized expenses |
(115,513 | ) | (216,714 | ) | - | |||||||
|
Returns of investments in unconsolidated joint ventures (2020 Joint Venture – see Note 16) |
2,976 | 2,304 | 2,520 | |||||||||
|
Net proceeds from vessel sales |
35,886 | 71,714 | - | |||||||||
|
Net proceeds from sales of other fixed assets, net
|
- | 40 | - | |||||||||
|
Net Cash (used in)/ provided by Investing Activities
|
(76,651 | ) | (142,656 | ) | 2,520 | |||||||
|
Cash Flows from Financing Activities: |
||||||||||||
|
Proceeds from debt |
74,800 | 156,201 | 82,000 | |||||||||
|
Proceeds from related party debt
|
- | 9,000 | - | |||||||||
|
Principal payments and prepayments of related party debt
|
- | (9,000 | ) | - | ||||||||
|
Principal payments and prepayments of debt |
(28,313 | ) | (68,893 | ) | (76,384 | ) | ||||||
|
Redemption of preferred shares
|
- | (16,191 | ) | (26,293 | ) | |||||||
|
Proceeds from issuance of common stock |
- | 22,718 | 13,562 | |||||||||
|
Proceeds from warrant exercises, net of fees
|
- | 4,556 | 12 | |||||||||
|
Equity offering issuance costs |
- | (1,671 | ) | (1,260 | ) | |||||||
|
Payment of financing costs |
(1,076 | ) | (3,566 | ) | (1,668 | ) | ||||||
|
Dividends of preferred shares
|
(1,779 | ) | (13,358 | ) | (6,010 | ) | ||||||
|
Proceeds from issuance of preferred shares (Note 15)
|
- | 47,630 | - | |||||||||
|
Redemption of fractional shares due to reverse stock split
|
- | (15 | ) | - | ||||||||
|
Net Cash provided by/(used in) Financing Activities |
43,632 | 127,411 | (16,041 | ) | ||||||||
|
Net (decrease)/increase in cash and cash equivalents and restricted cash |
(16,958 | ) | 18,174 | 15,412 | ||||||||
|
Cash and cash equivalents and restricted cash at beginning of year |
23,328 | 6,370 | 24,544 | |||||||||
|
Cash and cash equivalents and restricted cash at end of the year |
6,370 | 24,544 | 39,956 | |||||||||
|
Cash breakdown |
||||||||||||
|
Cash and cash equivalents |
2,370 | 20,544 | 35,956 | |||||||||
|
Restricted cash, current |
- | - | - | |||||||||
|
Restricted cash, non-current |
4,000 | 4,000 | 4,000 | |||||||||
|
SUPPLEMENTAL CASH FLOW INFORMATION |
||||||||||||
|
Capital expenditures included in Accounts payable/Accrued liabilities/Due to related parties |
1,530 | - | - | |||||||||
|
Interest paid, net of capitalized interest |
7,412 | 11,161 | 18,277 | |||||||||
|
Finance fees included in Accounts payable/Accrued liabilities/Due to related parties |
151 | - | 290 | |||||||||
|
Equity issuance costs and warrant related costs included in liabilities
|
- | 280 | - | |||||||||
|
Unpaid Excess of consideration over carrying value of acquired assets included in Due to Related Parties (Note 1) |
27,562 | - | - | |||||||||
|
Beneficial conversion feature of Series E perpetual convertible preferred stock |
900 | - | - | |||||||||
|
Settlement of related party debt, interest, finance fees, Excess consideration over acquired assets,
capital expenditures and dividends with issuance of preferred shares (Note 15)
|
2,188 | 24,370 | - | |||||||||
|
Dividends payable included in Due to related parties |
968 | - | - | |||||||||
|
Carrying value of net assets of companies acquired (Note 1) |
8,933 | - | - | |||||||||
|
Deemed dividend equivalents on preferred shares related to redemption value (Note 15)
|
437 | 14,400 | - | |||||||||
|
Deemed dividend on warrant inducement (Note 9)
|
- | 1,345 | - | |||||||||
|
Deemed dividend on Series E Shares conversion
|
- | - | 22,426 | |||||||||
The accompanying notes are an integral part of these consolidated financial statements.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2022 AND 2023
AND FOR THE YEARS ENDED DECEMBER 31, 2021, 2022 and 2023
(Expressed in thousands of United States Dollars – except share, per share earnings and rate per day, unless otherwise stated)
|
1. |
Basis of Presentation and General Information: |
The consolidated financial statements include the accounts of Top Ships Inc. (formerly Top Tankers Inc. and Ocean Holdings Inc.) and its wholly owned subsidiaries (collectively the “Company”). Ocean Holdings Inc. was formed on January 10, 2000, under the laws of Marshall Islands and was renamed to Top Tankers Inc. and Top Ships Inc. in May 2004 and December 2007, respectively. The Company is an international provider of worldwide oil, petroleum products and chemicals transportation services.
As of December 31, 2023, the Company was the sole owner of all outstanding shares of the following subsidiary companies. The following list is not exhaustive as the Company has other subsidiaries relating to vessels that have been sold and that remain dormant for the periods presented in these consolidated financial statements as well as intermediary companies that own shipowning companies that are 100% subsidiaries of the Company.
|
Companies |
Date of Incorporation |
Country of Incorporation |
Activity |
|
Top Tanker Management Inc. |
May 2004 |
Marshall Islands |
Management company |
|
Wholly owned Shipowning Companies (“SPC”) with vessels in operation during years ended December 31, 2021, 2022 and 2023 |
Date of Incorporation |
Country of Incorporation |
Vessel |
Delivery Date |
|
|
1 |
Monte Carlo Lax Shipping Company Limited |
May 2013 |
Marshall Islands |
M/T Nord Valiant |
August 2016 (sold in 2021) |
|
2 |
PCH Dreaming Inc. |
January 2018 |
Marshall Islands |
M/T Eco Marina Del Rey |
March 2019 |
|
3 |
Roman Empire Inc. |
February 2020 |
Marshall Islands |
Eco West Coast |
March 2021 |
|
4 |
Athenean Empire Inc. |
February 2020 |
Marshall Islands |
Eco Malibu |
May 2021 |
| 5 |
Julius Caesar Inc.
|
May 2020
|
Marshall Islands
|
Julius Caesar
|
January 2022
|
| 6 |
Legio X Inc.
|
December 2020
|
Marshall Islands
|
Legio X Equestris
|
March 2022
|
| 7 |
Eco Oceano CA Inc.
|
December 2020
|
Marshall Islands
|
Eco Oceano CA
|
March 2022
|
As of December 31, 2021, 2022 and 2023, the Company was the owner of 50% of outstanding shares of the following companies.
|
|
SPC |
Date of Incorporation |
Country of Incorporation |
Vessel |
Built Date |
|
1 |
California 19 Inc. |
May 2019 |
Marshall Islands |
M/T Eco Yosemite Park |
March 2020 |
|
2 |
California 20 Inc. |
May 2019 |
Marshall Islands |
M/T Eco Joshua Park |
March 2020 |
On January 6, 2021 the Company sold to a related party affiliated with the Company’s Chief Executive Officer, President and director, Mr. Evangelos J. Pistiolis (the “Buyer”) the three shipowning companies that owned the newbuilding vessels M/T Eco Van Nuys (Hull No 2789), M/T Eco Santa Monica (Hull No 2790) and M/T Eco Venice Beach (Hull No 2791) in exchange for:
|
● |
$10,000 in cash. |
|
|
● |
100% ownership in a Marshall Islands company that was party to a shipbuilding contract for a high specification scrubber fitted Suezmax Tanker at the time under construction at Hyundai Samho shipyard, delivered in March 2022 (M/T Eco Oceano CA - Hull No 871). The shipowning company is party to a time charter, starting from the vessel’s delivery, with Central Tankers Chartering, a related party affiliated with the family of Mr. Evangelos J. Pistiolis, for a firm duration of five years at a gross daily rate of $32,450, with a charterer’s option to extend for two additional years at $33,950 and $35,450 (also see Note 5). |
|
|
● |
35% ownership in one Marshall Islands company that was a party to a shipbuilding contract for a high specification scrubber fitted VLCC tanker at the time under construction at Hyundai Heavy Industries shipyard, delivered in January 2022 (Julius Caesar - Hull No. 3213). The shipowning company is party to a time charter, starting from the vessel’s delivery, with Trafigura Maritime Logistics Pte Ltd (“Trafigura”), for a firm duration of three years at a gross daily rate of $36,000, with a charterer’s option to extend for two additional years at $39,000 and $41,500. |
|
|
● |
35% ownership in one Marshall Islands company that is party to a shipbuilding contract for a high specification scrubber fitted VLCC tanker at the time under construction at Hyundai Heavy Industries shipyard, delivered in March 2022 (Legio X Equestris - Hull No. 3214). The shipowning company is party to a time charter, starting from the vessel’s delivery, with Trafigura, for a firm duration of three years at a gross daily rate of $35,750, with a charterer’s option to extend for two additional years at $39,000 and $41,500. |
|
|
● |
A settlement of $1,150 in related party payables to the Buyer. |
The Buyer remained the guarantor on the shipbuilding contracts towards the shipyard and in addition, the Buyer provided the Company with an option for a credit line up to 10% of the total shipbuilding cost at market terms, to be negotiated when the option was to be exercised, amounting to $23,815.
On September 8, 2021 the Company purchased from the Buyer for a consideration of $29,750 an additional 65% ownership interest in Julius Caesar Inc. - Hull No. 3213 and Legio X Inc. - Hull No. 3214 (the “VLCC Companies”). Following this transaction, the Company is the 100% owner of the VLCC Companies. The Buyer remained the guarantor on the shipbuilding contracts towards the shipyard and in addition the Buyer provided a financing option to the Company by remaining responsible to the shipyard for up to 20% of the shipbuilding cost per vessel (increased from 10%, as previously agreed on January 6, 2021), at the option of the Company, to be exercised until each vessel’s delivery date.
Due to the abovementioned purchase of the remaining 65% of the VLCC Companies, which were initially accounted for as Investments in affiliates, the Company consolidates the VLCC Companies.
Each of the abovementioned transactions were approved by a special committee of the Company’s board of directors (the “Special Committee”), of which all of the directors were independent and for each transaction the Special Committee obtained a fairness opinion relating to the consideration of each transaction from an independent financial advisor. The Company accounted for the abovementioned acquisitions as a transfer of assets between entities under common control and has recognized the vessels at their historical carrying amounts at the date of transfer.
The amount of the consideration given in excess of the historical carrying value of the net assets acquired is recognized as a reduction to the Company’s additional paid in capital and presented as Excess of consideration over the carrying value of acquired assets in the Company’s consolidated statement of stockholders’ equity for the twelve months ended December 31, 2021, 2022 and 2023 respectively. An analysis of the consideration paid is presented in the table below:
|
As of December 31, |
2021 |
2022 |
2023 |
|||||||||
|
Consideration |
29,750 | - | - | |||||||||
|
Carrying value of net assets of companies sold |
24,074 | - | - | |||||||||
|
Less: Carrying value of net assets of companies acquired |
(8,933 | ) | - | - | ||||||||
|
Less: Consideration received in cash |
(10,000 | ) | - | - | ||||||||
|
Less: Settlement of related party payables |
(1,150 | ) | - | - | ||||||||
|
Excess of consideration over acquired assets |
33,741 | - | - | |||||||||
On September 29, 2023 the Company effected a 1-for-12 reverse stock split of its common stock. There was no change in the number of authorized common shares of the Company, or the floor price of the Company’s Series E Shares, or the number of votes of the Company’s Series D, E and F Shares. All numbers of common share and earnings per share amounts, as well as warrant shares eligible for purchase under the Company’s warrants, exercise price of said warrants and conversion prices of the Company’s Series E Shares, in these consolidated financial statements have been retroactively adjusted to reflect this 1-for-12 reverse stock split.
|
2. |
Significant Accounting Policies: |
|
(a) |
Principles of Consolidation: The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and include the accounts and operating results of Top Ships Inc. and its subsidiaries referred to in Note 1. Intercompany balances and transactions have been eliminated on consolidation. Non-controlling interests are stated at the non-controlling interest’s proportion of the net assets of the subsidiaries where the Company has less than 100% interest. Subsequent to initial recognition the carrying amount of non-controlling interest is increased or decreased by the non-controlling interest’s share of subsequent changes in the equity of such subsidiaries. Total comprehensive income is attributed to a non-controlling interest even if this results in a deficit balance. Changes in the Company’s ownership interests in subsidiaries that do not result in the Company losing control over the subsidiaries are accounted for as equity transactions and the carrying amounts of the Company’s interests and the non-controlling interests are adjusted to reflect these changes in their relative interests in the subsidiaries. Any difference between the amount by which the non-controlling interests are adjusted and the fair value of the consideration paid or received is recognized directly in equity and attributed to owners of the Company. |
|
(b) |
Use of Estimates: The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates mainly include impairment of vessels, vessel useful lives and residual values and fair values of derivative instruments. Actual results may differ from these estimates. |
|
(c) |
Foreign Currency Translation: The Company’s functional currency is the U.S. Dollar because all vessels operate in international shipping markets, and therefore primarily transact business in U.S. Dollars. The Company’s books of account are maintained in U.S. Dollars. Transactions involving other currencies during the year are converted into U.S. Dollars using the exchange rates in effect at the time of the transactions. At the balance sheet dates, monetary assets and liabilities, which are denominated in other currencies are translated to U.S. Dollars based on the year-end exchange rates and any gains and losses are included in the statement of comprehensive income. |
|
(d) |
Cash and Cash Equivalents: The Company considers highly liquid investments such as time deposits and certificates of deposit with an original maturity of three months or less to be cash equivalents. |
|
(e) |
Restricted Cash: The Company considers amounts that are pledged, blocked, held as cash collateral, required to be maintained with a specific bank or be maintained by the Company as minimum cash under the terms of a loan agreement, as restricted and these amounts are presented separately on the balance sheets. In the event original maturities are shorter than twelve months, such deposits are presented as current assets while if original maturities are longer than twelve months, such deposits are presented as non-current assets. |
|
(f) |
Trade Accounts Receivable, net: The amount shown as trade accounts receivable, net at each balance sheet date, includes estimated recoveries from charterers for hire billings, net of a provision for doubtful accounts and also accrued revenue resulting from straight-line revenue recognition of charter agreements that provide for varying charter rates. At each balance sheet date, all potentially uncollectible accounts are assessed individually, combined with the application of a historical recoverability ratio, for purposes of determining the appropriate provision for doubtful accounts. The Company assessed that it had no potentially uncollectible accounts and hence formed no provision for doubtful accounts at December 31, 2022 and 2023 respectively. |
|
(g) |
Inventories: Inventories consist of lubricants, bonded stores and spares on board the vessels. Inventories are stated at the lower of cost and net realizable value. Cost, which consists of the purchase price, is determined by the first in, first out method. |
|
(h) |
Vessel Cost: Vessels are stated at cost, which consists of the contract price, pre-delivery costs and capitalized interest incurred during the construction of new building vessels, and any material expenses incurred upon acquisition (improvements and delivery costs). Subsequent expenditures for conversions and major improvements are also capitalized when they appreciably extend the life, increase the earning capacity or improve the efficiency or safety of the vessels. Repairs and maintenance are charged to expense as incurred and are included in Vessel operating expenses in the consolidated statements of comprehensive income. |
|
(i) |
Impairment of Long-Lived Assets: The Company evaluates the existence of impairment indicators whenever events or changes in circumstances indicate that the carrying values of the Company’s long lived assets are not recoverable. Such indicators of potential impairment include, vessel sales and purchases, business plans, declines in the fair market value of vessels and overall market conditions. If there are indications for impairment present, the Company determines undiscounted projected net operating cash flows for each vessel and compares it to the vessel’s carrying value. If the carrying value of the related vessel exceeds its undiscounted future net cash flows, the carrying value is reduced to its fair value, and the difference is recognized as an impairment loss. The impairment evaluation the Company conducted as of December 31, 2022 and 2023 showed that there are no impairment indications for any of the vessels held for use in the Company’s fleet. |
|
(j) |
Vessel Depreciation: Depreciation is calculated using the straight-line method over the estimated useful life of the vessels, after deducting the estimated salvage value. Each vessel’s salvage value is equal to the product of its lightweight tonnage and estimated scrap rate, of $300 per lightweight ton. Management estimates the useful life of the Company’s vessels to be 25 years from the date of initial delivery from the shipyard. Second hand vessels are depreciated from the date of their acquisition through their remaining estimated useful life. When regulations place limitations over the ability of a vessel to trade on a worldwide basis, its useful life is adjusted at the date such regulations are adopted. |
|
(k) |
Long Lived Assets Held for Sale: The Company classifies vessels as being held for sale when the following criteria are met: (a) management, having the authority to approve the action, commits to a plan to sell the asset, (b) the asset is available for immediate sale in its present condition subject only to terms that are usual and customary for sales of such assets, (c) an active program to locate a buyer and other actions required to complete the plan to sell the asset have been initiated, (d) the sale of the asset is probable and transfer of the asset is expected to qualify for recognition as a completed sale, within one year, (e) the asset is being actively marketed for sale at a price that is reasonable in relation to its current fair value, (f) actions required to complete the plan indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn. |
|
|
Long-lived assets classified as held for sale are measured at the lower of their carrying amount or fair value less costs to sell. These vessels are not depreciated once they meet the criteria to be classified as held for sale. |
|
|
Long-lived assets previously classified as held for sale that are classified as held and used are revalued at the lower of (a) the carrying amount of the asset before it was classified as held for sale, adjusted for any depreciation expense that would have been recognized had the asset been continuously classified as held and used and (b) the fair value of the asset at the date that the Company decided not to sell the asset. |
|
(l) |
Other Fixed Assets, Net: Other fixed assets, net, consist of furniture, office equipment, and cars, stated at cost, which consists of the purchase/contract price less accumulated depreciation. Depreciation is calculated using the straight-line method over the estimated useful life of the assets as presented below: |
|
Description |
Useful Life (years) |
|||
|
Cars |
|
6 | ||
|
Office equipment |
5 | |||
|
Furniture and fittings |
5 | |||
|
Computer equipment |
3 | |||
|
Art works
|
∞
|
|||
| (m) |
Accounting for Dry-Docking Costs: All dry-docking and special survey costs are expensed in the period incurred.
|
| (n) |
Financing Costs: Fees incurred and paid to the lenders for obtaining new loans or refinancing existing ones are
recorded as a contra to debt and such fees are amortized to interest and finance costs over the life of the related debt using the effective interest method. Any unamortized balance of costs relating to debt repaid or refinanced that meet
the criteria for Debt Extinguishment (Subtopic 470-50), is expensed in interest and finance costs in the period in which the repayment is made or refinancing occurs. Any unamortized balance of costs relating to debt refinanced that do not
meet the criteria for Debt Extinguishment, are amortized over the term of the refinanced debt.
|
| (o) |
Accounting for Revenue and Expenses: Revenues are generated from time charter arrangements. A time charter is a
contract for the use of a vessel for a specific period of time and a specified daily charter hire rate, which is generally payable monthly in advance. Revenue is shown net of address commissions, if applicable, payable directly to
charterers under the relevant charter agreements. Address commissions represent a common market practice discount (sales incentive) on services rendered by the Company and no identifiable benefit is received in exchange for the
consideration provided to the charterer. Commissions on time charter revenues are recognized on a pro rata basis over the duration of the period.
|
|
The Company based on ASC 842 determined that all time charter-out contracts are considered operating leases and therefore fall under
the scope of ASC 842 because: (i) the vessel is an identifiable asset; (ii) the Company as lessor, does not have substantive substitution rights; and (iii)
the charterer, as lessee, has the right to control the use of the vessel during the term of the contract and derives the economic benefits from such use.
|
|
Time charter revenue is recognized as earned on a straight-line basis over the term of the relevant time charter starting from the vessel’s delivery to the charterer until the
vessel is redelivered to the Company, except for any off-hire period. Revenue generated from variable lease payments is recognized in the period when changes in the facts and circumstances on which the variable lease payments are based
occur. The Company elected to not separate the lease and non-lease components included in the time charter revenue because (i) the pattern of revenue recognition for the lease and non-lease components (included in the daily hire rate) is
the same and (ii) the lease component would be classified as an operating lease. The daily hire rate represents the hire rate for a bare boat charter as well as the compensation for expenses incurred running the vessel such as crewing
expense, repairs, insurance, maintenance and lubes. Both the lease and non-lease components are earned by passage of time. Under a time charter agreement, vessel operating expenses such as management fees, crew wages, provisions and stores,
technical maintenance and insurance expenses and broker’s commissions are paid by the vessel owner, whereas voyage expenses such as bunkers, port expenses, agents’ fees, and extra war risk insurance are paid by the charterer. Vessel
operating expenses are expensed as incurred. Unearned revenue represents cash received prior to year-end related to revenue applicable to periods after December 31 of each year and also amounts resulting from straight-line revenue
recognition of charter agreements that provide for varying charter rates.
|
|
When vessels are acquired with time charters attached and the rates on such charters are below or above market on the acquisition date, the Company allocates the total cost
between the vessel and the fair value of the attached time charter based on the relative fair values of the vessel and time charter acquired. The fair value of the attached time charter is computed as the present value of the difference
between the contractual amount to be received over the term of the time charter and management’s estimates of the market time charter rate at the time of acquisition. The fair value of below or above market time charter is recognized as a
liability or an intangible asset respectively and is amortized over the remaining period of the time charter as an increase or decrease to revenues.
|
|
Where the time charter contains a profit or loss sharing arrangement, the profit or loss is recognized based on amounts earned or incurred as of the reporting date.
|
|
The Company pays commissions to ship brokers and to the Company’s fleet manager (Note 5), a related party affiliated with the family of Mr. Evangelos J. Pistiolis, associated
with arranging the Company’s charters. These brokers’ commissions are recognized over the related charter period and are included in voyage expenses.
|
| (p) |
Earnings / (Loss) per Share: Basic earnings/(loss) per share are computed by dividing net income or loss available to common stockholders by the weighted average number of common shares outstanding during the
year. Diluted earnings per share reflect the potential dilution that could occur if securities or other contracts to issue common stock were exercised. For purposes of calculating diluted earnings per share the denominator of the
diluted earnings per share calculation includes the incremental shares assumed issued under the treasury stock method weighted for the period the non-vested shares were outstanding. The computation of diluted earnings per share also
reflects the potential dilution that could occur if warrants to issue common stock were exercised, to the extent that they are dilutive, using the treasury stock method, the potential dilution that could occur if convertible preferred
stock were converted, using the if-converted method as well as the potential dilution that could occur if the Company completed all sales pursuant to common stock purchase agreements, using the if-converted method. Finally net income
or loss available to common stockholders, when computing basic earnings/(loss) per share, is reduced to reflect any dividends or deemed dividends on preferred stock.
|
| (q) |
Derivatives and Hedging, Hedge Accounting: The Company records every derivative instrument (including certain
derivative instruments embedded in other contracts) on the balance sheet as either an asset or liability measured at its fair value, with changes in the derivatives’ fair value recognized in earnings unless specific hedge accounting
criteria are met.
|
|
At the inception of a hedge relationship, the Company formally designates and documents the hedge relationship to which the Company wishes to apply hedge accounting and the
risk management objective and strategy undertaken for the hedge. The documentation includes identification of the hedging instrument, hedged item or transaction, the nature of the risk being hedged and how the entity will assess the
hedging instrument’s effectiveness in offsetting exposure to changes in the hedged item’s cash flows attributable to the hedged risk. Such hedges are expected to be highly effective in achieving offsetting changes in cash flows and are
assessed on an ongoing basis to determine whether they actually have been highly effective throughout the financial reporting periods for which they were designated. Contracts which meet the criteria for hedge accounting are accounted for
as cash flow hedges. A cash flow hedge is a hedge of the exposure to variability in cash flows that is attributable to a particular risk associated with a recognized asset or liability, or a highly probable forecasted transaction that
could affect profit or loss. The effective portion of the gain or loss on the hedging instrument is recognized directly as a component of “Accumulated other comprehensive income” in equity, while the ineffective portion, if any, is
recognized immediately in current period earnings. The Company discontinues cash flow hedge accounting if the hedging instrument expires and it no longer meets the criteria for hedge accounting or
designation is revoked by the Company. At that time, any cumulative gain or loss on the hedging instrument recognized in equity is kept in equity until the forecasted transaction occurs. When the forecasted transaction occurs, any
cumulative gain or loss on the hedging instrument is recognized in the statement of income. If a hedged transaction is no longer expected to occur, the net cumulative gain or loss recognized in
equity is transferred to net profit or loss for the year as a component of “Gain/(Loss) on derivatives”.
|
| (r) |
Financial liabilities: Financial liabilities are classified as either
financial liabilities at ‘fair value through the profit and loss’ (“FVTPL”) or ‘other financial liabilities’. Financial instruments classified as FVTPL are recognized at fair value in the balance sheet when the Company has an obligation
to perform under the contractual provisions of those instruments. Financial instruments are classified as liabilities or equity in accordance with the substance of the contractual arrangement. Changes in the fair value of financial
instruments are recognized in earnings, except in the cases where these financial instruments fall under the guidance in ASC 815-40, where they are
initially classified in equity and are initially measured at fair value in permanent equity and subsequent changes in fair value are not subsequently measured. Other financial liabilities
(including borrowings and trade and other payables) are subsequently measured at amortized cost using the effective interest rate method.
|
| (s) |
Segment Reporting: The Chief Operating Decision Maker (“CODM”), Mr. Evangelos J. Pistiolis, receives financial
information and evaluates the Company’s operations by charter revenues and not by the length, type of vessel or type of ship employment for its customers or by geographical region as the
charterer is free to trade the vessel worldwide and as a result, the disclosure of geographic information is impracticable. The CODM does not use discrete financial information to evaluate the
operating results for each such type of charter or vessel. Although revenue can be identified for these types of charters or vessels, management cannot and does not identify expenses,
profitability or other financial information for these various types of charters or vessels. As a result, management, including the CODM, reviews operating results solely by revenue per day and operating results of the fleet, and thus
the Company has determined that it operates as one reportable segment.
|
| (t) |
Leases:
|
|
|
● |
Sale-leaseback transactions: In accordance with ASC 842, the Company,
as seller-lessee, determines whether the transfer of an asset should be accounted for as a sale in accordance with ASC 606 (existence of a contract and satisfaction of performance obligation by
transferring of the control of the asset). The existence of an option for the seller-lessee to repurchase the asset precludes the accounting for the transfer of the asset as a sale unless both of the following criteria are met: (1) the exercise price of the option is the fair value of the asset at the time the option is exercised; and (2) there are alternative assets, substantially
the same as the transferred asset, readily available in the marketplace. If the transfer of the asset meets the criteria of sale, the Company, as seller-lessee recognizes the transaction price for the sale when the buyer-lessor obtains
control of the asset, derecognizes the carrying amount of the underlying asset and accounts for the lease in accordance with ASC 842. If the transfer does not
meet the criteria of sale, the Company does not derecognize the transferred asset, accounts for any amounts received as a financing arrangement and recognizes the difference between the amount
of consideration received and the amount of consideration to be paid as interest.
|
|
|
● |
Finance lease: The Company classifies a lease as a finance lease when the lease meets any of the following
criteria at lease commencement:
|
|
|
i.
|
The lease transfers ownership of the underlying asset to the lessee by the end of the lease term.
|
|
|
ii.
|
The lease grants the lessee an option to purchase the underlying asset that the lessee is reasonably certain to exercise.
|
|
|
iii.
|
The lease term is for the major part of the remaining economic life of the underlying asset. However, if the commencement date falls at or near the end of the economic life
of the underlying asset, this criterion shall not be used for purposes of classifying the lease.
|
|
|
iv.
|
The present value of the sum of the lease payments and any residual value guaranteed by the lessee that is not already reflected in
the lease payments equals or exceeds substantially all of the fair value of the underlying asset.
|
|
|
v.
|
The underlying asset is of such a specialized nature that it is expected to have no alternative use to the lessor at the end of the
lease term.
|
|
● |
Operating lease- The Company as a lessee: The Company recognizes right-of-use assets (“ROU”) and corresponding lease liabilities for its operating leases. ROU assets and liabilities are recognized at the commencement date of an arrangement based on the present value of lease payments over the lease term. The operating lease ROU asset also includes any lease payments made to the lessor prior to lease commencement, less any lease incentives, and initial direct costs incurred. Lease expense for operating lease payments is recognized on a straight-line basis over the lease term. |
| (u) |
Beneficial conversion feature: A beneficial conversion feature is defined as a non-detachable conversion feature
that is in the money at the commitment date. The beneficial conversion feature guidance requires recognition of the intrinsic value of the option, which is the in-the- money portion of the conversion option, in equity, with an offsetting
reduction to the carrying amount of the instrument. The resulting discount is amortized as a deemed dividend over either the life of the instrument, if a stated maturity date exists, or to the earliest conversion date, if there is no stated maturity date. If the earliest conversion date is immediately upon issuance, the dividend must be recognized at inception.
|
| (v) |
Investments in unconsolidated joint ventures: The Company’s investments in unconsolidated joint ventures are
accounted for using the equity method of accounting. Under the equity method of accounting, investments are stated at initial cost and are adjusted for subsequent additional investments and the Company’s proportionate share of earnings or
losses and distributions. The Company evaluates its investments in unconsolidated joint ventures for impairment when events or circumstances indicate that the carrying value of such investments may have
experienced other than temporary decline in value below their carrying value. If the estimated fair value is less than the carrying value and is considered other than a temporary decline, the carrying value is written down to its estimated
fair value and the resulting impairment is recorded in the Consolidated Statements of comprehensive income.
|
| (w) |
Other Comprehensive Income: The Company follows the provisions of guidance regarding reporting comprehensive income
which requires separate presentation of certain transactions, such as unrealized gains and losses from effective portion of cash flow hedges, which are recorded directly as components of stockholders’ equity
|
| (x) |
Impairment of Right of use assets from operating leases: The Company evaluates its Right of use assets from
operating leases for potential impairment when it determines a triggering event has occurred. When a triggering event has occurred, the Company performs a test of recoverability by comparing the expected undiscounted future cash flows
(including expected residual values) over the remaining lease terms to the carrying value of the Right of use asset. If the test of recoverability identifies a possible impairment, the Right of use asset’s fair value is measured in
accordance with the fair value measurement framework. An impairment charge is recognized for the amount by which the carrying value of the Right of use asset exceeds its estimated fair value and would be recorded in the Consolidated
Statements of comprehensive income. For the years ended December 31, 2022, and 2023 there was no impairment of the Company’s
Right of use assets from operating leases due to the absence of impairment indications for all the vessels of the Company’s.
|
| (y) |
Recent Accounting Pronouncements: In March 2020, the FASB issued ASU No. 2020-04,
Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, updated in December 2022 by ASU No. 2022-06, Deferral of Sunset Date of Topic 848. The ASUs apply to all entities that have
contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. The ASUs provide optional expedients and exceptions for applying GAAP to
contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The expedients and exceptions provided by the ASUs do not apply to contract modifications made and hedging
relationships entered into or evaluated after December 31, 2024, except for hedging relationships existing as of December 31, 2024, that an entity has elected certain optional expedients for and that are retained through the end of the
hedging relationship. ASU 2020-04, as updated by ASU 2022-06, is effective for all entities as of March 12, 2020, through December 31, 2024. The impact of the adoption in the second half of the year ended December 31, 2023 did not have a
material impact on the Company’s consolidated financial statements.
|
|
There are no
other recent accounting pronouncements the adoption of which is expected to have a material effect on the Company’s consolidated financial statements in the current period.
|
|
3. |
Going Concern: |
At December 31, 2023, the Company had a working capital deficit of $2,639 which included an amount of $6,615 relating to pre-collected revenue and is included in Unearned revenue in the accompanying consolidated balance sheets. This amount represents a current liability that does not require future cash settlement. For the year ended December 31, 2023 realized a net income of $6,066 and generated cash flow from operations of $28,933.
|
4. |
Vessels, net: |
The amounts in the consolidated balance sheets are analyzed as follows:
|
Vessel Cost |
Accumulated Depreciation |
Net Book Value |
||||||||||
|
Balance, December 31, 2021 |
163,501 | (6,916 | ) | 156,585 | ||||||||
|
— Transferred from advances for vessels under construction |
245,763 | - | 245,763 | |||||||||
|
— Depreciation |
- | (13,289 | ) | (13,289 | ) | |||||||
|
Balance, December 31, 2022 |
409,264 | (20,205 | ) | 389,059 | ||||||||
|
— Depreciation |
- | (14,349 | ) | (14,349 | ) | |||||||
|
Balance, December 31, 2023 |
409,264 | (34,554 | ) | 374,710 | ||||||||
In 2022, the Company took delivery of the following vessels and hence advances paid and capitalized expenses relating to these vessels were transferred from Advances for vessels under construction to Vessels, net:
|
Vessel Name |
Delivery Date |
Yard Installments |
Capitalized Expenses |
Final Cost |
|||||||||
|
M/T Julius Caesar |
January 17, 2022 | 90,008 |
2,056 |
92,064 |
|||||||||
|
M/T Legio X Equestris |
March 2, 2022 | 89,995 | 2,138 | 92,133 | |||||||||
| M/T Eco Oceano CA |
March 4, 2022 | 60,250 | 1,316 | 61,566 | |||||||||
|
Total 2022 |
240,253 | 5,510 | 245,763 | ||||||||||
As of December 31, 2023 all the titles of ownership of our vessels are held by the respecting vessel lenders to secure the relevant sale and lease back financing transactions (see Note 7).
|
5. |
Transactions with Related Parties: |
As of December 31, 2022 and 2023 there are no outstanding amounts due to Central Mare.
The
fees charged by and expenses relating to Central Mare for the years ended December 31, 2021, 2022 and 2023 are as follows:
|
Year Ended December 31, |
|||||||||||||
|
2021 |
|
2022 |
|
2023 |
Presented in: |
||||||||
|
Executive officers and other personnel expenses |
360 |
360 |
360 |
General and administrative expenses – Statement of comprehensive income |
|||||||||
|
Amortization of awarded shares* |
(34 |
) |
(16 |
) |
- |
|
Management fees – related parties – Statement of comprehensive income |
||||||
|
Total |
326 |
344 |
360 |
||||||||||
|
*
|
As per the Company’s equity incentive plan, or the 2015 plan (null and void since due to the reverse stock splits of the Company’s stock the shares left to be vested are zero),
the Company incurred an amortization gain of $34, $16 and $0 relating to the amortization of the original fair value of
the equity incentive plan recognized at inception, for each of the years ended December 31, 2021, 2022 and 2023 respectively. The Company’s equity incentive plan ended on June 30, 2022.
|
(b) Central Shipping Inc (“CSI”) – Letter Agreement and Management Agreements: On January 1, 2019, the Company entered into a letter agreement with CSI (“CSI Letter Agreement”), a related party affiliated with the family of Evangelos J. Pistiolis and between January 1, 2019 and September 8, 2021 the Company entered into management agreements, or Management Agreements, between CSI and the Company’s vessel-owning subsidiaries. The CSI Letter Agreement can only be terminated subject to an eighteen-month advance notice, subject to a termination fee equal to twelve months of fees payable under the CSI Letter Agreement.
Pursuant to the CSI Letter Agreement, as well as the Management Agreements concluded between CSI and the Company’s vessel-owning subsidiaries, the Company pays a management fee of $630 per day per vessel for the provision of technical, commercial, operation, insurance, bunkering and crew management, commencing three months before the vessel is scheduled to be delivered by the shipyard. In addition, the Management Agreements provide for payment to CSI of: (i) $573 per day for superintendent visits plus actual expenses; (ii) a chartering commission of 1.25% on all freight, hire and demurrage revenues; (iii) a commission of 1.00% on all gross vessel sale proceeds or the purchase price paid for vessels and (iv) a financing fee of 0.2% on derivative agreements and loan financing or refinancing. CSI also performs supervision services for all of the Company’s newbuilding vessels while the vessels are under construction, for which the Company pays CSI the actual cost of the supervision services plus a fee of 7% of such supervision services.
CSI provides, at cost, all accounting, reporting and administrative services. Finally, the CSI Letter Agreement provides for a performance incentive fee for the provision of management services to be determined at the discretion of the Company’s Board of Directors. The management agreements have an initial term of five years, after which they will continue to be in effect until terminated by either party subject to an eighteen-month advance notice of termination. Pursuant to the terms of the management agreements, all fees payable to CSI are adjusted annually according to the US Consumer Price Inflation (“CPI”) of the previous year. If CPI is less than 2% then a 2% increase is effected and if CPI is more than 5% than a 5% increase is effected. On September 15, 2021 the Company entered into an amendment to the CSI Letter Agreement, whereby the payment for the already agreed commission for sale and purchase of vessels in the case of the purchase of a vessel under construction is denoted as “Newbuilding vessels monitoring fee” and is payable as follows: 25% of the commission on the purchase of the newbuilding construction contract, 25% of the commission on the steel cutting of the newbuilding vessel, 25% of the commission on launching of the newbuilding vessel and 25% of the commission on the delivery of the newbuilding vessel to the Company (“steel cutting” and “launching” are newbuilding vessel construction milestones, evidenced by notices received by the shipyard).
As of December 31, 2022 and 2023, the amounts
due to/(from) CSI were $237 and $(352)
respectively and are presented in Due to related parties, on the consolidated balance sheets.
The fees charged by and expenses relating to CSI for the years ended December 31, 2021, 2022 and 2023 are as follows:
|
Year Ended December 31,
|
|||||||||||||
|
2021 |
2022 |
2023 |
Presented in: |
||||||||||
|
Management fees |
|
199 |
61 |
- |
Capitalized in Vessels, net – Balance sheet |
||||||||
| 1,477 |
1,749 |
1,840 |
Management fees – related parties –Statement of comprehensive income |
||||||||||
|
Supervision services fees |
79 |
14 |
- |
Capitalized in Vessels, net – Balance sheet |
|||||||||
|
Superintendent fees |
17 |
37 |
42 |
Vessel operating expenses –Statement of comprehensive income |
|||||||||
| 255 |
129 |
- |
Capitalized in Vessels, net – Balance sheet |
||||||||||
|
Accounting and reporting cost |
360 |
360 |
360 |
Management fees – related parties –Statement of comprehensive income |
|||||||||
|
Commission for sale and purchase of vessels |
793 |
- |
- |
Management fees – related parties –Statement of comprehensive income |
|||||||||
| - |
730 |
- |
Gain from vessel sales –Statement of comprehensive income |
||||||||||
| 264 |
- |
- |
Impairment on vessels – Statement of comprehensive income |
||||||||||
|
Newbuilding vessels monitoring fee |
1,365 |
455 |
- |
Capitalized in Vessels, net – Balance sheet |
|||||||||
|
Financing fees |
150 |
312 |
164 |
Net in Current and Non-current portions of long-term debt – Balance sheet |
|||||||||
|
Commission on charter hire agreements |
705 |
1,008 |
1,037 |
Voyage expenses - Statement of comprehensive income |
|||||||||
|
Total |
5,664 |
4,855 |
3,443 |
||||||||||
For the years ended December 31, 2021, 2022 and 2023 CSI charged the Company newbuilding supervision related pass-through costs amounting to $1,207, $236 and $0 respectively, which are not included in the table above and are presented within Vessels, net / Advances for vessels acquisitions / under construction in the Company’s consolidated balance sheet.
(c) Issuance and conversion of Series E Shares: On March 29, 2019 the Company entered into a stock purchase agreement with Family Trading Inc (“Family Trading”), a related party owned by the Lax Trust, an irrevocable trust established for the benefit of certain family members of Mr. Evangelos J. Pistiolis, pursuant to which the Company exchanged the outstanding principal, fees and interest of the Further Amended Family Trading Credit Facility with 27,129 Series E Shares (defined below, also see Note 15). For the years ended December 31, 2022 and 2023 the Company declared dividends of $2,046 and $1,001 respectively and accrued interest on unpaid dividends amounted to $30 and $0 for the same periods. As of December 31, 2022 and 2023, there were no dividends due to Family Trading. On December 6, 2023 the Company received a conversion notice for the conversion of all the outstanding Series E Shares (13,452 shares) into 2,930,718 of the Company’s common shares (see Note 15).
(d) Vessel Acquisitions from affiliated entities: From January 6, 2021 to September 8, 2021 the Company entered into a series of transactions with a number of entities affiliated with Mr. Evangelos J. Pistiolis (see Note 1). As of December 31, 2021, there were no amounts due to the previous owners of the newbuilding vessels pursuant to these transactions.
(e) Charter Party with Central Tankers Chartering Inc (“CTC”): On January 6, 2021 the Company acquired a shipowning company from an entity affiliated with Mr. Evangelos J. Pistiolis that owned M/T Eco Oceano CA which was party to a time charter, with CTC, for a firm duration of five years at a gross daily rate of $32,450, with two optional years at $33,950 and $35,450 at CTC’s option. On February 22, 2022 the Company amended the previously agreed time charter with CTC and increased its firm period from 5 years to 15 years and reduced the daily rate from $32,450 to $24,500. This amendment was approved by a committee of the Company’s board of directors, of which all of the directors were independent, after obtaining a fairness opinion from an independent financial advisor. The time charter commenced on the date of delivery. For the years ended December 31, 2021, 2022 and 2023 the CTC charter generated $0, $7,294 and $8,943 of revenue presented in Time charter revenues in the accompanying consolidated statements of comprehensive income. As of December 31, 2022 and 2023, there are no amounts due from CTC.
(f) Personal Guarantees by Mr. Evangelos J. Pistiolis and Related Amendments to the Series D Preferred Shares: As a prerequisite for the Navigare Lease (defined below, see Note 6), Mr. Evangelos J. Pistiolis personally guaranteed the performance of the bareboat charters connected to the lease and in exchange, the Company agreed to indemnify him for any losses suffered as a result of the guarantee provided, and the Company amended the Certificate of Designations governing the terms of the Series D Preferred Shares (see Note 9), to adjust the voting rights per share of Series D Preferred Shares such that during the term of the Navigare Lease, the combined voting power controlled by Mr. Evangelos J. Pistiolis and the Lax Trust does not fall below a majority of the Company’s total voting power, irrespective of any new common or preferred stock issuances, and thereby complying with a relevant covenant of the bareboat charters entered in connection with the Navigare Lease. This personal guarantee comes into effect in the case 120 days have passed and the Company is still unable to pay down all amounts due under the Navigare lease, with the exception of amounts due to Navigare due to a total loss, where in this case the personal guarantee will cover an amount equal to all unpaid charter hire and a further amount equivalent to all future charter hire that would have accrued from the date of the total loss up to the end of the charter period and is callable 200 days after the date of the total loss. Due to the related party nature of the transactions involving Mr. Evangelos J. Pistiolis, such transactions were unanimously approved by our Board of Directors, including all three independent directors.
(g) Issuance of Series F Shares: On January 17, 2022, the Company entered into a stock purchase agreement with Africanus Inc., an affiliate of Evangelos J. Pistiolis for the sale of up to 7,560,759 newly-issued Series F Non-Convertible Perpetual Preferred Shares (“Series F Shares”, see Note 15). The issuance of the Series F Shares was approved by a committee of
the Company’s board of directors, of which all of the directors were independent. In December 2022, 100% of Africanus Inc shares were
transferred to 3 Sororibus Trust, which is an irrevocable trust established for the benefit of certain family members of Mr. Pistiolis. For the year ended December 31, 2022 and 2023 the Company declared dividends of $10,344 and $5,009 respectively and
accrued interest on unpaid dividends amounted to $8 and $0 for the same periods. As of December 31, 2022 and 2023 there were no
dividends due to Africanus Inc.
(h) Short-term loan from Central Mare (“Central Mare Bridge Loan”): On January 5, 2022 the Company entered into an unsecured credit facility for up to $20,000 with Central Mare in order to finance part of the cost of its newbuilding program (see Note 7). Related party interest expense, commitment fees and arrangement fees for the year ended December 31, 2022 incurred in connection with this credit facility, amounted to $169, $18 and $400 respectively and are included in interest and finance costs in the accompanying consolidated statements of comprehensive income. The Central Mare Bridge Loan was terminated on March 4, 2022 and as of December 31, 2022, there are no interest, arrangement fees nor commitment fees due to Central Mare.
(i) Executive bonus: On December 10, 2023 the Company’s compensation committee comprising of independent directors suggested and the board of directors granted to Mr. Evangelos J. Pistiolis a bonus of $5,000 which is included in “General and administrative expenses” in the accompanying consolidated statements of comprehensive income. As of December 31, 2023, there are $5,000 due to Mr. Evangelos J. Pistiolis and such amount is included in due to related parties in the accompanying consolidated balance sheets.
|
6. |
Leases |
A. Lease arrangements, under which the Company acts as the lessee
Bareboat Chartered-in Vessels:
The Company has treated the Navigare lease as an operating lease. An operating lease ROU asset amounting to $45,765 was recognized at the inception of the lease together with a lease liability of $43,759 based on the present value of lease payments over the lease term. The operating lease ROU asset also includes initial direct costs of $1,666 and deferred losses from the sale of the vessels of $340. The discount rate used to calculate the present value of lease payments was calculated by taking into account the original lease term and lease payments and was estimated to be 6.72% (same as the weighted average), which was the Company’s estimated incremental borrowing rate, that reflects the interest the Company would have to pay to borrow funds on a collateralized basis over a similar term and similar economic environment. Losses from the sale of these two vessels and initial direct costs which were included in the respective ROU assets are amortized on a straight-line basis over the duration of the lease and are included in operating lease expense in the statement of consolidated income. The cash paid for operating leases with original terms greater than 12 months was $12,083 and $10,220 for the years ended December 31, 2022 and 2023 respectively. The revenue generated from vessels under operating leases with original terms greater than 12 months was $17,625 and $ 17,520 for the years ended December 31, 2022 and 2023 respectively.
The Company’s future minimum operating lease payments required to be made after December 31, 2023, relating to the bareboat chartered-in vessels M/T Eco Beverly Hills and M/T Eco Bel Air are as follows:
|
Year ending December 31, |
Bareboat charter lease payments |
|||
|
2024 |
10,038 | |||
|
2025 |
6,777 | |||
|
Total |
16,815 | |||
|
Less imputed interest |
(1,478 | ) | ||
|
Total Lease Liability |
15,337 | |||
|
Presented as follows: |
||||
|
Short-term lease liability |
8,980 | |||
|
Long-term lease liability |
6,357 | |||
The average remaining lease term on our bareboat chartered-in contracts greater than 12 months is 23.2 months.
B. Lease arrangements, under which the Company acts as the lessor
Charter agreements:
During the year ended December 31, 2023, the Company operated one vessel (M/T Marina Del Rey) under a time charter with Cargill International SA, another vessel (M/T Eco Oceano CA) with CTC, two vessels (M/T Eco West Coast and M/T Eco Malibu) with Clearlake Shipping Pte Ltd and four vessels (M/T Eco Bel Air, M/T Eco Beverly Hills, M/T Julius Caesar and M/T Legio X Equestris) under time charters with Trafigura.
Future minimum time-charter receipts of the Company’s vessels in operation as of December
31, 2023, based on commitments relating to non-cancellable time charter contracts as of December 31, 2023, are as follows :
|
Year ending December 31, |
Time Charter receipts |
|||
|
2024 |
74,078 | |||
|
2025 |
70,229 | |||
|
2026 |
60,782 | |||
| 2027 |
36,304 | |||
|
2028 and thereafter
|
81,173 | |||
|
Total |
322,566 | |||
In arriving at the minimum future charter revenues, an estimated 20 days off-hire time to perform scheduled dry-docking in the year the dry-docking is expected on each vessel has been deducted, and it has been assumed that no additional off-hire time is incurred, although there is no assurance that such estimate will be reflective of the actual off-hire in the future.
|
7. |
Debt: |
The amounts in the consolidated balance sheets are analyzed as follows (facility names defined below):
|
Bank / Vessel(s) |
December 31, |
|||||||
|
|
2022 |
2023 |
||||||
|
Total long-term debt: |
||||||||
|
ABN Facility (M/T Eco West Coast) |
32,495 |
- |
||||||
|
Alpha Bank Facility (M/T Eco Malibu) |
33,500 |
- |
||||||
|
Cargill Facility (M/T Eco Marina Del Rey) |
25,189 |
23,094 |
||||||
| CMBFL Facility (M/T Julius Caesar and M/T Legio X Equestris) |
103,952 |
98,552 |
||||||
| 2nd AVIC Facility (M/T Eco Oceano CA) |
45,489 |
42,777 |
||||||
| 3rd AVIC Facility (M/T Eco West Coast) | - |
40,817 |
||||||
| Huarong Facility (M/T Eco Malibu) |
- |
41,000 |
||||||
|
Total long-term debt |
240,625 |
246,240 |
||||||
|
Less: Deferred finance fees |
(3,640 |
) |
(4,279 |
) |
||||
| Less: Debt discount
relating to Vessel fair value participation liability |
(3,271 |
) |
(1,463 |
) |
||||
|
Total long-term debt net of deferred finance fees and debt discounts |
233,714 |
240,498 |
||||||
|
|
||||||||
|
Presented: |
||||||||
|
Current portion of long-term debt |
12,344 |
12,418 |
||||||
|
Long-term debt |
221,370 |
228,080 |
||||||
ABN Facility
On March 18, 2021, the Company entered into a credit facility with ABN Amro for $36,800 for the financing of the vessel M/T Eco West Coast. This facility was drawn down in full. The credit facility was repayable in 24 consecutive quarterly installments of $615 commencing in June 2021, plus a balloon installment of $22,040 payable together with the last installment.
The facility contained various covenants, including (i) an asset cover ratio of 125%, (ii) a ratio of total net debt to the aggregate market value of the Company’s fleet, current or future, of no more than 75% (iii) minimum free liquidity of $500 per delivered vessel owned/operated by the Company and (iv) market adjusted total assets of the Company minus total liabilities to be at least $60,000. Additionally, the facility contained restrictions on the shipowning company incurring further indebtedness or guarantees and change of control provisions (whereby Mr. Evangelos J. Pistiolis may not control less than 50.1% of the voting rights of the Company). It also restricted the Company and the shipowning company from paying dividends if such a payment would result in an event of default or in a breach of covenants under the loan agreement.
The facility was secured as follows:
|
|
● |
First priority mortgage over M/T Eco West Coast; |
|
|
● |
Assignment of insurance and earnings of the mortgaged vessel; |
|
|
● |
Specific assignment of any time charters with duration of more than 12 months; |
|
|
● |
Corporate guarantee of the Company; |
|
|
● |
Pledge of the shares of the shipowning subsidiary; |
|
|
● |
Pledge over the earnings account of the vessel. |
The facility bore interest at LIBOR plus a margin of 2.50%. From June 23, 2023 ABN Amro bank switched the facility’s variable rate from LIBOR to Compounded SOFR. On December 14, 2023 the facility was fully prepaid using part of the proceeds from the 3rd AVIC facility (see below) and the Company accelerated the amortization of $264 of deferred finance fees outstanding relating to the facility.
Alpha Bank Facility
On May 6, 2021, the Company entered into a credit facility with Alpha Bank for $38,000 for the financing of the vessel M/T Eco Malibu. This facility was drawn down in full. The credit facility was repayable in 12 consecutive quarterly installments of $750 and 12 consecutive quarterly installments of $625, commencing three months from draw down, and a balloon payment of $21,500 payable together with the last installment.
The facility contained various covenants, including (i) an asset cover ratio of 125%, (ii) a ratio of total net debt to the aggregate market value of the Company’s fleet, current or future, of no more than 75% and minimum free liquidity of $500 per delivered vessel owned/operated by the Company. Additionally, the facility contained restrictions on the shipowning company incurring further indebtedness or guarantees and change of control provisions (whereby Mr. Evangelos J. Pistiolis may not control less than 50.1% of the voting rights of the Company). It also restricted the Company and the shipowning company from paying dividends if such a payment would result in an event of default or in a breach of covenants under the loan agreement.
The facility was secured as follows:
|
|
● |
First priority mortgage over M/T Eco Malibu; |
|
|
● |
Assignment of insurance and earnings of the mortgaged vessel; |
|
|
● |
Specific assignment of any time charters with duration of more than 12 months; |
|
|
● |
Corporate guarantee of the Company; |
|
|
● |
Pledge of the shares of the shipowning subsidiary; |
|
|
● |
Pledge over the earnings account of the vessel. |
The facility bore interest at LIBOR plus a margin of 3.00%. On June 9, 2023 Alpha Bank switched the facility’s variable rate from LIBOR to Term SOFR. On December 21, 2023 the facility was fully prepaid using part of the proceeds from the Huarong facility (see below) and the Company accelerated the amortization of $225 of deferred finance fees outstanding relating to the facility.
FINANCINGS COMMITTED UNDER SALE AND LEASEBACK AGREEMENTS
The majority of the below sale and leaseback agreements (“SLB”s) contain, customary covenants and event of default clauses, including cross-default provisions and restrictive covenants and performance requirements including (i) a ratio of total net debt to the aggregate market value of the Company’s fleet, current or future, of no more than 75% and (ii) minimum free liquidity of $500 per vessel at the guarantors level.
Additionally, all the SLBs contain restrictions on the relative shipowning company incurring further indebtedness or guarantees and paying dividends when in default or if such dividend payment would result in an event of default or termination event under the SLB agreements. The same dividend restrictions apply to the Company as well. All the SLBs except the Cargill Facility have change of control provisions whereby there may not be a change of control of the Company, save with the prior written consent of the financier.
All the below SLBs are secured mainly by the following:
|
|
● |
Ownership of the vessel financed; |
|
|
● |
Assignment of insurances and earnings of the vessel financed; |
|
|
● |
Specific assignment of any time charters of the vessel financed with duration of more than 12 months; |
|
|
● |
Corporate guarantee of Top Ships Inc.; |
|
|
● |
Pledge of the shares of the relative shipowning subsidiary; |
|
|
● |
Pledge over the earnings account of the vessel financed. |
On June 29, 2018 the Company entered into an SLB and a five-year time charter with Cargill, a non-affiliated party, for its newbuilding vessel M/T Eco Marina Del Rey delivered in March 2019. Consummation of the SLB took place on the vessel’s delivery date. Following the sale, the Company has bareboat chartered back the vessel at a bareboat hire rate of $8,600 per day and simultaneously the vessel commenced its five-year time charter with Cargill. As part of this transaction, the Company has the obligation to buy back the vessel at the end of the five-year period for $22,680. The gross proceeds from the sale were $32,387.
The Company had also entered into a fair value appreciation sharing agreement with Cargill whereby it would share with the latter 25% of the excess of the fair market value of the vessel over a predetermined amount amortized on a daily basis to the facility’s maturity when the vessel was sold or when the loan matured. As a result of Cargill’s entitlement to participate in the appreciation of the market value of the vessel and the significant increase in tankers’ fair values as of December 31, 2022 compared to December 31, 2021, the Company recognized a participation liability of $3,271 as of December 31, 2022, presented in “Vessel fair value participation liability” in the consolidated balance sheets, with a corresponding debit to a debt discount account, presented contra to the loan balance, broken down to current and non-current long-term debt accordingly. Due to the fact that tanker values continued to increase throughout 2023 values the Company increased that participation liability by $1,729 to $5,000 during the year ended December 31, 2023 and since the facility matures in the first quarter of 2024, such participation liability was presented under current liabilities. During the year ended December 31, 2023 the Company amortized $3,537 of that Debt discount, such amortization presented in Interest and finance costs in the consolidated statements of comprehensive income.
The SLB with Cargill is accounted for as a financing transaction, as control remains with the Company and the M/T Eco Marina Del Rey will continue to be recorded as an asset on the Company’s balance sheet. In addition, the Company has an obligation to repurchase the vessel.
CMBFL Facility
On November 23, 2021 the Company entered into an SLB with CMBFL, for its newbuilding vessels M/T Julius Caesar and M/T Legio X Equestris. Consummation of the SLB took place on January 17 and March 2 2022, respectively. Following the sale, the Company has bareboat chartered back the vessels for a period of eight years at bareboat hire rates comprising of 32 consecutive quarterly installments of $675 and a balloon payment of $32,403 payable together with the last installment, plus interest based on the three months LIBOR plus 2.60%.
As part of this transaction, the Company has continuous options to buy back the vessels at purchase prices stipulated in the bareboat agreements depending on when the option will be exercised and at the end of the eight-year period it has an option to buy back the vessels at a cost represented by the balloon payment. The gross proceeds from the sale of the two vessels were $54,005 and $53,997 for M/T Julius Caesar and M/T Legio X Equestris respectively.
The CMBFL facility was accounted for as a financing transaction, as control will remain with the Company and the two vessels will continue to be recorded as assets on the Company’s balance sheet. In addition, the Company has continuous options to repurchase the vessels below fair value.
Scheduled Principal Repayments: The Company’s annual principal payments required to be made after December 31, 2023 on its loan obligations, are as follows (including the financings under sale and leaseback agreements):
|
Years |
||||
|
December 31, 2024 |
14,426 |
|||
|
December 31, 2025 |
14,511 |
|||
|
December 31, 2026 |
14,511 |
|||
|
December 31, 2027 |
14,511 |
|||
|
December 31, 2028 and thereafter |
188,281 |
|||
|
Total |
246,240 |
|||
As of December 31, 2022 and 2023, the Company was in compliance with all debt covenants with respect to its loans and credit facilities. The fair value of debt outstanding on December 31, 2023, after excluding unamortized financing fees and debt discounts, approximates its carrying amount.
Financing Costs: The net additions in deferred financing costs amounted to $3,417 and $1,958 during the years ended December 31, 2022 and 2023 respectively.
|
8.
|
Commitments and Contingencies:
|
Various claims, suits, and complaints, including those involving government regulations and product liability, arise in the ordinary course of the shipping business. As part of the normal course of operations, the Company’s customers may disagree on amounts due to the Company under the provision of the contracts which are normally settled through negotiations with the customer. Disputed amounts are normally reflected in revenues at such time as the Company reaches agreement with the customer on the amounts due.
Other than the cases mentioned above, the Company is not a party to any material litigation where claims or counterclaims have been filed against the Company other than routine legal proceedings incidental to its business.
On December 10, 2020, the Company entered into a corporate guarantee agreement with Alpha Bank of Greece (which was amended on February 2, 2022) in respect of the obligations of its 50% subsidiary California 19 Inc. and California 20 Inc. under the Loan Agreement dated March 12, 2020 for a secured loan facility of $37,660 ($18,830 for each vessel at inception and $18,500 as of December 31, 2023) for the financing of M/T Eco Yosemite Park and M/T Eco Joshua Park (the “Alpha Corporate Guarantee”). The Company assigns zero probability of default to said loan agreements and hence has not established any provisions for losses relating to this matter.
Environmental Liabilities:
The Company accrues for the cost of environmental liabilities when management becomes aware that a liability is probable and is able to reasonably estimate the probable exposure. Currently, management is not aware of any such claims or contingent liabilities, which should be disclosed, or for which a provision should be established in the consolidated financial statements.
|
9. |
Common and Preferred Stock, Additional Paid-In Capital and Dividends: |
Reverse stock split: On September 29, 2023 the Company effected a 1-for-12 reverse stock split of its common stock. There was no change in the number of authorized common shares of the Company, or the floor price of the Company’s Series E Shares, or the number of votes of the Company’s Series D, E and F Shares. All numbers of common share and earnings per share amounts, as well as warrant shares eligible for purchase under the Company’s warrants, exercise price of said warrants and conversion prices of the Company’s Series E Shares, in these consolidated financial statements have been retroactively adjusted to reflect this 1-for-12 reverse stock split.
Series D preferred shares: On May 8, 2017, the Company issued 100,000 shares of Series D preferred shares (the “Series D shares”) to Tankers Family Inc., a company controlled by Lax Trust for one thousand dollars ($1,000) pursuant to a stock purchase agreement. The Series D shares are not convertible into common shares and each Series D share has the voting power of 1,000 common shares. The Series D shares have no dividend or distribution rights and shall expire and all outstanding Series D shares shall be redeemed by the Company for par value on the date that any financing facility with any financial institution, which contain covenants that require that any member of the family of Mr. Evangelos J. Pistiolis maintain a specific minimum ownership or voting interest (either directly and/or indirectly through companies or other entities beneficially owned by any member of the Pistiolis family and/or trusts or foundations of which any member of the Pistiolis family are beneficiaries) of the Company’s issued and outstanding common shares, respectively, are fully repaid or reach their maturity date. The Series D shares shall not be otherwise redeemable and upon any liquidation, dissolution or winding up of the Company, the Series D shares shall have a liquidation preference of $0.01 per share. Currently the SLBs with CMBFL, AVIC Leasing and Huarong as well as the Alpha Corporate Guarantee and the Navigare Lease have similar provisions that are satisfied via the existence of the Series D Shares. As a prerequisite for the Navigare Lease, Mr. Evangelos J. Pistiolis guaranteed the performance of the bareboat charters, under certain circumstances, and in exchange, the Company agreed to indemnify him for any losses suffered as a result of the guarantee provided and in addition, the Company has amended the Certificate of Designation governing the terms of the Series D Shares, to adjust the voting rights per share of Series D Shares such that during the term of the Navigare Lease, the combined voting power controlled by Mr. Evangelos J. Pistiolis and the Lax Trust does not fall below a majority of the total voting power of the Company, irrespective of any new common or preferred stock issuances, and thereby complying with a relevant covenant of the bareboat charters entered in connection with the Navigare Lease. Due to the related party nature of the transactions involving Mr. Evangelos J. Pistiolis, such transactions were unanimously approved by the Company’s Board of Directors, including all three independent directors.
Equity distribution agreement: On April 15, 2022, the Company, entered into an equity distribution agreement, or as they are commonly known, at-the-market offering (“ATM”), with Maxim Group LLC (“Maxim”). Under the ATM the Company could sell up to $19,700 of its common stock with Maxim acting as a sales agent. Since Maxim was acting solely as a sales agent, it had no right to require any common stock sales. No warrants, derivatives, or other share classes were associated with this ATM. The Company terminated the ATM on October 6, 2022. The Company has received proceeds from the ATM (net of 2% fees), amounting to $2,025, issued 10,786 common shares and incurred $81 of expenses related to this equity distribution agreement.
|
10. |
Earnings/(Loss) Per Common Share: |
All shares issued are included in the Company’s common stock and have equal rights to vote and participate in dividends and in undistributed earnings.
The components of the calculation of basic and diluted earnings/(loss) per share for the years ended December 2021, 2022 and 2023 are as follows:
|
Year Ended December 31, |
||||||||||||
|
2021 |
2022 |
2023 |
||||||||||
|
Net Income |
8,616 | 18,948 | 6,066 | |||||||||
|
Less: Deemed dividend for beneficial conversion feature of Series E Shares |
(900 | ) | - | - | ||||||||
|
Less: Deemed dividend equivalents on preferred shares related to redemption value |
(437 | ) | (14,400 | ) | - | |||||||
|
Less: Dividends of preferred shares |
(1,883 | ) | (12,390 | ) | (6,010 | ) | ||||||
| Less: Deemed dividend on warrant inducement |
- | (1,345 | ) | - | ||||||||
| Less: Deemed dividend on Series E Shares conversion | - | - | (22,426 | ) | ||||||||
|
Net Income / (Loss) attributable to common shareholders |
5,396 | (9,187 | ) | (22,370 | ) | |||||||
|
Earnings / (Loss) per share: |
||||||||||||
|
Weighted average common shares outstanding, basic and dilutive |
165,966 | 252,815 | 1,798,761 | |||||||||
|
Earnings / (Loss) per share, basic and diluted |
32.51 | (36.34 | ) | (12.44 | ) | |||||||
For the years ended December 31, 2021, 2022 and 2023, 52,984, 81,231 and 1,177,547 dilutive shares on an as-if converted basis relating to Series E Shares were not included in the computation of diluted earnings per share because to do so would have been antidilutive for the period presented.
|
11. |
Voyage and Vessel Operating Expenses: |
The amounts in the consolidated statements of comprehensive income are as follows:
|
Voyage Expenses |
Year Ended December 31, |
|||||||||||
|
2021 |
2022 |
2023 |
||||||||||
|
Bunkers |
165 | 80 | 20 | |||||||||
|
Commissions (including $705, $1,008 and $1,037 respectively, to related party) |
1,152 | 1,568 | 1,589 | |||||||||
|
Total |
1,317 | 1,648 | 1,609 | |||||||||
|
Vessel Operating Expenses |
Year Ended December 31, |
|||||||||||
|
2021 |
2022 |
2023 |
||||||||||
|
Crew wages and related costs |
|
11,066 | 11,881 | 11,898 | ||||||||
|
Insurance |
1,026 | 1,577 | 1,670 | |||||||||
|
Repairs and maintenance (including $17, $37 and $42 respectively, to related party) |
747 | 1,592 | 1,138 | |||||||||
|
Spares and consumable stores |
2,530 | 3,339 | 3,538 | |||||||||
|
Registration and taxes (Note 13) |
310 | 239 | 283 | |||||||||
|
Total |
15,679 | 18,628 | 18,527 | |||||||||
|
12. |
Interest and Finance Costs: |
The amounts in the consolidated statements of comprehensive income are analyzed as follows:
|
Interest and Finance Costs |
Year Ended December 31, |
|||||||||||
|
2021 |
2022 |
2023 |
||||||||||
|
Interest on debt (including $-, $207 and $- respectively, to related party) |
7,342 | 11,895 | 18,142 | |||||||||
|
Bank charges |
20 | 132 | 120 | |||||||||
|
Amortization and write-off of financing fees |
840 | 2,522 | 1,190 | |||||||||
| Amortization of debt discount relating to Vessel fair value participation liability (Note 7) | - | - | 3,537 | |||||||||
|
Total |
8,202 | 14,549 | 22,989 | |||||||||
|
Less interest capitalized |
(1,204 | ) | (184 | ) | - | |||||||
|
Total |
6,998 | 14,365 | 22,989 | |||||||||
|
13. |
Income Taxes: |
Marshall Islands and Greece does not impose a tax on international shipping income. Under the laws of Marshall Islands and Greece the countries of the companies’ incorporation and vessels’ registration, the companies are subject to registration and tonnage taxes, which have been included in Vessel operating expenses in the consolidated statements of comprehensive income.
Under the United States Internal Revenue Code of 1986, as amended (the “Code”), the U.S. source gross transportation income of a ship-owning or chartering corporation, such as the Company, is subject to a 4% U.S. Federal income tax without allowance for deduction, unless that corporation qualifies for exemption from tax under Section 883 of the Code and the Treasury Regulations promulgated thereunder. U.S. source gross transportation income consists of 50% of the gross shipping income that is attributable to transportation that begins or ends, but that does not both begin and end, in the United States.
Under Section 883 of the Code and the regulations thereunder, the Company will be exempt from U.S. federal income tax on our U.S.-source shipping income if:
(1) the Company is organized in a foreign country, or its country of organization, grants an “equivalent exemption” to corporations organized in the United States; and
(2) either
A. more than 50% of the value of the Company’s stock is owned, directly or indirectly, by individuals who are “residents” of the Company’s country of organization or of another foreign country that grants an “equivalent exemption” to corporations organized in the United States (each such individual a “qualified shareholder” and such individuals collectively, “qualified shareholders”), which the Company refers to as the “50% Ownership Test,” or
B. the Company’s stock is “primarily and regularly traded on an established securities market” in the Company’s country of organization, in another country that grants an “equivalent exemption” to U.S. corporations, or in the United States, which the Company refers to as the “Publicly-Traded Test.”
The Marshall Islands, the jurisdiction where the Company and the Company’s ship-owning subsidiaries are incorporated, grants an “equivalent exemption” to U.S. corporations. Therefore, the Company will be exempt from U.S. federal income tax with respect to the Company’s U.S.-source shipping income if either the 50% Ownership Test or the Publicly-Traded Test is met.
Treasury Regulations provide, in pertinent part, that stock of a foreign corporation will be considered to be “primarily traded” on an established securities market if the number of shares of each class of stock that are traded during any taxable year on all established securities markets in that country exceeds the number of shares in each such class that are traded during that year on established securities markets in any other single country. The Company’s common shares, which is the Company’s sole class of issued and outstanding stock that is traded, is and the Company anticipates will continue to be “primarily traded” on the Nasdaq Capital Market.
The Treasury Regulations also require that the Company’s stock be “regularly traded” on an established securities market. Under the Treasury Regulations, the Company’s stock will be considered to be “regularly traded” if one or more classes of the Company’s stock representing more than 50% of the Company’s outstanding shares, by total combined voting power of all classes of stock entitled to vote and by total combined value of all classes of stock, are listed on one or more established securities markets, which the Company refers to as the “listing threshold.” The Company’s common stock, which is listed on the Nasdaq Capital Market and is the Company’s only class of publicly-traded stock, did not constitute more than 50% of the Company’s outstanding shares by value for the 2021 taxable year, and accordingly, the Company didn’t satisfy the 50% Ownership Test for the 2021 taxable year and consequently the Company didn’t qualify for exemption from tax under Section 883 for the 2021 taxable year.
The Company for the 2021 taxable year was subject to an effective 2% United States federal tax on the U.S. source shipping income that is attributable to the transport of cargoes to or from the United States which is not considered an income tax. The amount of this tax for the year ended December 31, 2021 was $152 and it was recorded within “Vessel operating expenses” in the consolidated statements of comprehensive income. For 2022 and for 2023 the Company qualified for the exemption from tax under Section 883.
|
14. |
Financial Instruments: |
The principal financial assets of the Company consist of cash on hand and at banks, restricted cash, prepaid expenses and other receivables and long term deposits. The principal financial
liabilities of the Company consist of long-term loans, accounts payable due to suppliers, amounts due to related parties and accrued liabilities.
|
a) |
Interest rate risk: The Company as of December 31, 2023 is subject to market risks relating to changes in interest rates, since all of its debt except the Cargill Facility is subject to floating interest rates. |
|
|
b) |
Credit risk: Financial instruments, which potentially subject the Company to significant concentrations of credit risk, consist principally of cash. The Company places its temporary cash investments, consisting mostly of deposits, with high credit qualified financial institutions. The Company performs periodic evaluations of the relative credit standing of those financial institutions with which it places its temporary cash investments. |
|
|
c) |
Fair value: |
The following methods and assumptions were used to estimate the fair value of each class of financial instrument:
Cash and cash equivalents and restricted cash are considered Level 1 items as they represent liquid assets with short term maturities. The Company considers its creditworthiness when determining the fair value of its liquid assets.
The Company follows the accounting guidance for Fair Value Measurements. This guidance enables the reader of the financial statements to assess the inputs used to develop those measurements by establishing a hierarchy for ranking the quality and reliability of the information used to determine fair values. The guidance requires assets and liabilities carried at fair value to be classified and disclosed in one of the following three categories:
Level 1: Quoted market prices in active markets for identical assets or liabilities;
Level 2: Observable market based inputs or unobservable inputs that are corroborated by market data;
Level 3: Unobservable inputs that are not corroborated by market data.
|
15. |
Mezzanine Equity |
On March 29, 2019, the Company entered into a Stock Purchase Agreement with Family Trading for the sale of 27,129 newly issued perpetual convertible preferred shares (the “Series E Shares”) at a price of one thousand dollars ($1,000) per share. The proceeds of the sale were used for the full and final settlement of all amounts due under the Further Amended Family Trading Credit Facility. The issuance of the Series E Shares was approved by a committee of the Company’s board of directors, of which all of the directors were independent.
Each holder of Series E Shares, at any time, had the right, subject to certain conditions, to convert all or any portion of the Series E Shares then held by such holder into the Company’s common shares at the conversion rate then in effect. Each Series E Share was convertible into the number of the Company’s common shares equal to the quotient of one thousand dollars ($1,000) plus any accrued and unpaid dividends divided by the lesser of the following four prices (the “Series E Conversion Price”): (i) $120,000.00, (ii) 80% of the lowest daily VWAP of the Company’s common shares over the twenty consecutive trading days expiring on the trading day immediately prior to the date of delivery of a conversion notice, (iii) the conversion price or exercise price per share of any of the Company’s then outstanding convertible shares or warrants, (iv) the lowest issuance price of the Company’s common shares in any transaction from the date of the issuance the Series E Shares onwards, but in no event could the Series E Conversion Price be less than the floor price ($0.60). The floor price was adjusted (decreased) in case of splits or subdivisions of the Company’s outstanding shares and was not adjusted in case of reverse stock splits or combinations of the Company’s outstanding shares. The holders of each Series E Share were entitled to the voting power of one thousand (1,000) common shares of the Company. Upon any liquidation, dissolution or winding up of the Company, the holders of Series E Shares would have been entitled to receive the net assets of the Company pari-passu with the common shareholders. Furthermore, the Company at its option had the right to redeem a portion or all of the outstanding Series E Shares. The Company could pay an amount equal to one thousand dollars ($1,000) per each Series E Share (the “Liquidation Amount”), plus a redemption premium equal to fifteen percent (15%) of the Liquidation Amount being redeemed if that redemption took place up to and including March 29, 2020 and twenty percent (20%) of the Liquidation Amount being redeemed if that redemption took place after March 29, 2020, plus an amount equal to any accrued and unpaid dividends on such Series E Shares (collectively referred to as the “Redemption Amount”).
The Series E Shares were not subject to redemption in cash at the option of the holders thereof under any circumstance. Finally, the holders of outstanding Series E Shares were entitled to receive, semi-annual dividends payable in cash on the last day of June and December of each year (each such date being referred to herein as a “Semi Annual Dividend Payment Date”), commencing on the first Semi Annual Dividend Payment Date, being June 30, 2019 in an amount per share (rounded to the nearest cent) equal to fifteen percent (15%) per year of the liquidation amount of the then outstanding Series E Shares computed on the basis of a 365-day year and the actual days elapsed. Accrued but unpaid dividends shall bore interest at fifteen percent (15%). Dividends would not have been payable in cash, if such payment violated any provision of any senior secured facility of the Company or any senior secured facility for which the Company had provided a guarantee, for as long as such provisions, remained in effect.
The Company determined that the Series E shares were more akin to equity than debt and that the above identified conversion feature, subject to adjustments, was clearly and closely related to the host instrument, and accordingly bifurcation and classification of the conversion feature as a derivative liability was not required. Given that the Series D and Series E preferred stock’s holder (Lax Trust) controlled a majority of the Company votes, the preferred equity was in essence redeemable at the option of the holder and hence was classified in Mezzanine equity as per ASC 480-10-S99 “Distinguishing liabilities from Equity – SEC Materials”.
On February 17, 2020 the Company issued 16,004 Series E Shares to Family Trading, as settlement of $14,350 of consideration then outstanding for the purchase of the M/T Eco City of Angels and M/T Eco Los Angeles from Mr. Evangelos J. Pistiolis, $1,621 of Series E Share dividends of the second half of 2019 and $32 of accrued interest on unpaid dividends from 2019. On September 8, 2021 the Company issued 2,188 Series E Shares to Family Trading, as partial settlement for $2,188 of the consideration payable for the VLCC Transaction (see Note 1).
At each issuance of Series E Shares, the Company recognized the beneficial conversion feature by allocating the intrinsic value of the conversion option, which is the number of shares of common stock available upon conversion multiplied by the difference between the effective conversion price per share and the fair value of the Company’s common stock per share on the commitment date, to additional paid-in capital. As the Company was in an accumulated deficit position, the offsetting amount was amortized as a deemed dividend recorded against additional paid-in-capital. During the year ended December 31, 2021, pursuant to issuances of Series E Shares, the Company recognized the beneficial conversion feature to additional paid-in capital, resulting in a discount of $900 respectively on the Series E Shares which has been recognized as a deemed dividend. In the years ended December 31, 2022 and 2023 the Company didn't issue any Series E Shares.
During the years ended December 31, 2021, 2022 and 2023 the Company didn’t redeem any Series E Shares.
After March
29, 2020 as per the original Series E Shares Statement of Designations all redemptions of Series E Shares would incur a redemption premium equal to twenty percent (20%) of the Liquidation Amount being redeemed instead of fifteen percent (15%). As a result, as of December 31, 2021, the
Company adjusted the carrying value of the Series E Shares to the maximum redemption amount, resulting in an increase of $437, which has
been accounted as deemed dividend. No such adjustment took place in the year ended December 31, 2022 and 2023 as no Series E Shares
were issued during 2022 and 2023.
During the years ended December 31, 2021, 2022 and 2023 the Company declared $1,883, $2,046 and $1,001 of dividends to the Series E Shares holder.
On December
6, 2023 the Company received a conversion notice for the conversion of all the outstanding Series E Shares (13,452 shares) into 2,930,718 of the Company’s common shares. The Series E Shares were converted on the same date of the receipt of the conversion notice with a conversion
price of $4.59, which represented 80%
of the lowest daily volume weighted average price of the Company’s common stock over the 20 consecutive trading days expiring on the
trading day immediately prior to the date of delivery of the conversion notice.
The
Company, based on ASC 470-20-40-5, determined that the Series E Shares conversion feature is in essence a redemption, since such conversion was settled by a delivery of a variable number of shares of common stock with a fixed monetary amount and by
applying ASC 260-10-S99-2 has recognized the difference between the carrying amount of the Series E Shares at the date of conversion and the fair value of the common stock delivered on the same date as a deemed dividend.
SERIES F PREFERRED SHARES
On January 17, 2022, the Company entered
into a stock purchase agreement with Africanus Inc., an affiliate of Evangelos J. Pistiolis for the sale of up to 7,560,759
newly-issued Series F Non-Convertible Perpetual Preferred Shares (“Series F Shares”), in exchange for (i) the assumption by Africanus Inc. of an amount of $47,630 of shipbuilding costs for its newbuilding vessels M/T Eco Oceano CA (Hull No. 871), M/T Julius Caesar (Hull No. 3213) and M/T Legio X Equestris (Hull No. 3214), and (ii) settlement of the Company’s
remaining payment obligations relating to the VLCC Transaction, in an amount of up to $27,978. From January 17 to March 16, 2022 a
total of 7,200,000 Series F Shares have been issued, to cover $47,630 of shipbuilding costs in connection with the deliveries of M/T Julius Caesar, M/T Legio X Equestris and M/T Eco Oceano CA and as a consideration for the settlement of
$24,370 of Due to related parties. During the years ended December 31, 2022 and 2023 the Company redeemed a total of 1,349,252 and 2,191,121 Series F
Shares for $16,191 and $26,293.
|
16. |
Investments in Unconsolidated Joint Ventures |
New 2020 Joint Venture
On April 24, 2020 the Company acquired from a company affiliated with Mr. Evangelos J. Pistiolis, or the MR Seller, a 50% interest in two vessel owning companies (California 19 Inc. and California 20 Inc.) that owned two scrubber-fitted 50,000 dwt eco MR product tankers, M/T Eco Yosemite Park and M/T Eco Joshua Park respectively for $27,000, representing the Company’s share of interest in the fair value of the net assets acquired. Both vessels were delivered in March 2020 to the MR Seller from Hyundai Mipo shipyard of South Korea. The MR Seller had already entered into two joint venture agreements, for the two vessels, each with an equal ownership interest of 50%, with Just-C Limited, a wholly owned subsidiary of Gunvor Group Ltd (the other 50% owner). The abovementioned acquisition was approved by a special committee of the Company’s board of directors (the “JV Special Committee”), of which all of the directors were independent and for which the JV Special Committee obtained a fairness opinion relating to the consideration of the transaction from an independent financial advisor. Sale and purchase commissions due to CSI related to these investments amounting to $454 were accounted for as part of the investment.
Out of the purchase price of $27,000, $1,646 and $1,654 were recognized as excess of the purchase price over the underlying net book value (“Basis Differences”) for California 19 Inc. and California 20 Inc. respectively, attributed to the value assigned to the attached time charter. These Basis Differences are amortized over the duration of the firm period of the charter (5 years) and their amortization is included as a reduction in Equity gain/(loss) in unconsolidated joint ventures. Furthermore $1,963 and $1,963 were also recognized as Basis Differences for California 19 Inc. and California 20 Inc. respectively, attributed to the fair market value over the carrying value of the vessels. These Basis Differences are amortized over the useful life of the vessels (25 years) and their amortization is also included as a reduction in Equity gain/(loss) in unconsolidated joint ventures.
On March 12, 2020, California 19 Inc. together with California 20 Inc. entered into a loan agreement with Alpha Bank for a senior debt facility of $37,660 ($18,830 for each vessel). The loan has a term of five years and is payable on maturity via a balloon payment of $18,830 per vessel. The credit facility bears interest at LIBOR plus a margin of 3.00%. The facility carries customary covenants and restrictions, including the covenant that during the life of the facility, the market value of the vessels should be at least 200% of the facility outstanding and any shortfall should be covered by partial prepayments. Vessels are to be valued three times per year, every March, July and December. Provided that there is no breach of the above-mentioned covenant and no event of default has occurred and is continuing or would occur if such dividend distribution would take place, California 19 Inc. and California 20 Inc. may distribute dividends, without any consent from Alpha Bank. The loans are guaranteed by the Company in their entirety and this guarantee is not limited to the Company’s share of the net assets of California 19 Inc. and California 20 Inc (see Note 8). On April 22, 2021 California 19 Inc. and California 20 Inc. prepaid $330 each to reduce each of the outstanding loans to $18,500.
Each of the two product tankers are on time charters that commenced in March 2020 with Clearlake Shipping Pte Ltd, a subsidiary of Gunvor Group Ltd for a firm term of five years plus two additional optional years.
The Company’s exposure is limited to its share of the net assets of California 19 Inc. and California 20 Inc., proportionate to its 50% equity interest in these companies. Generally, the Company will share the profits and losses, cash flows and other matters relating to its investments in California 19 Inc. and California 20 Inc. in accordance with its ownership percentage. The vessels are managed by CSI, pursuant to management agreements. The Company accounts for investments in joint ventures using the equity method since it has joint control over the investment.
California 19 Inc. and California 20 Inc. made the following disbursements to the Company in 2021, 2022 and 2023:
|
December 31, 2021 |
December 31, 2022 |
December 31, 2023 |
||||||||||||||||||||||
|
California 19 Inc. |
California 20 Inc. |
California 19 Inc. |
California 20 Inc. |
California 19
Inc.
|
California
20 Inc.
|
|||||||||||||||||||
|
Total disbursements |
2,359 |
2,141 |
1,475 |
1,475 |
1,260 | 1,260 | ||||||||||||||||||
Recognition of Equity gain/(loss) in unconsolidated joint ventures of the 2020 Joint Venture for the years ended December 31, 2021, 2022 and 2023 are summarized below:
|
December 31, 2021 |
December 31, 2022 |
December 31, 2023 | ||||||||||||||||||||||
|
California 19 Inc. |
California 20 Inc. |
California 19 Inc. |
California 20 Inc. |
California 19
Inc.
|
California 20
Inc.
|
|||||||||||||||||||
|
Net profit attributable to the Company |
880 | 684 | 725 | 738 | 399 | 400 | ||||||||||||||||||
|
Amortization of Basis Differences |
(408 | ) | (409 | ) | (408 | ) | (409 | ) | (408 | ) | (409 | ) | ||||||||||||
|
Equity gains in unconsolidated joint ventures (attributed to the 2020 Joint Venture) |
472 | 275 | 317 | 329 | (9 | ) | (9 | ) | ||||||||||||||||
|
17. |
Revenues |
Revenues are comprised of the following:
|
2021 |
2022 |
2023 |
||||||||||
|
Time charter revenues |
|
56,367 | 73,362 | 74,006 | ||||||||
|
Time charter revenues from related party (Note 5) |
- | 7,294 | 8,943 | |||||||||
|
Total |
56,367 | 80,656 | 82,949 | |||||||||
The Company typically enters into time charters for periods ranging between three to fifteen years and includes a charterer’s option to renew for a further two one-year periods at predetermined daily rates. Due to the volatility of the charter rates, the Company only accounts for the options when the charterer gives notice that the option will be exercised. In a time charter contract, the vessel is hired by the charterer for a specified period of time in exchange for consideration which is based on a daily hire rate. The charterer has the full discretion over the ports visited, shipping routes and vessel speed. The contract/charter party generally provides typical warranties regarding the speed and performance of the vessel. The charter party generally has some owner protective restrictions such that the vessel is sent only to safe ports by the charterer, subject always to compliance with applicable sanction laws, and carry only lawful or non-hazardous cargo. In a time charter contract, the Company is responsible for all the costs incurred for running the vessel such as crew costs, vessel insurance, repairs and maintenance and lubes. The charterer bears the voyage related costs such as bunker expenses, port charges and canal tolls during the hire period. The charterer generally pays the charter hire in advance of the upcoming contract period.
As of December 31, 2023, all of the Company’s vessels are employed under time charters.
|
18. |
Subsequent Events |
Exhibit 2.8
DESCRIPTION OF THE REGISTRANT’S SECURITIES REGISTERED PURSUANT TO SECTION 12 OF THE SECURITIES EXCHANGE ACT OF 1934
As of December 31, 2023, TOP Ships Inc. (the “Company”, “we”, “us” and “our”) had common stock, par value $0.01 per share, and preferred stock purchase rights for each outstanding common share registered under Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).
The following description sets forth certain material terms and provisions of the Company’s common stock. The following summary does not purport to be complete and is subject to, and is qualified in its entirety by reference to, the applicable provisions of the Company’s Third Amended and Restated Articles of Incorporation (the “Articles of Incorporation”), as amended, and the Amended and Restated By-laws (the “By-laws”), as amended, each of which is incorporated by reference as an exhibit to the annual report on Form 20-F of which this exhibit is a part. We encourage you to refer to our Articles of Incorporation and By-laws for additional information.
Capitalized terms used but not defined herein have the meanings given to them in the annual report on Form 20-F of which this exhibit is a part.
Purpose
Our purpose is to engage in any lawful act or activity for which corporations may now or hereafter be organized under the BCA. Our Third Amended and Restated Articles of Incorporation and Amended and Restated By-Laws, as further amended, do not impose any limitations on the ownership rights of our shareholders.
Authorized Capitalization
Our authorized capital stock consists of 1,000,000,000 common shares, par value $0.01 per share, of which 4,626,197 common shares were issued and outstanding as of December 31, 2023 and as of the date of the annual report on Form 20-F of which this exhibit is a part, respectively, and 20,000,000 preferred shares with par value of $0.01, of which 100,000 Series D Preferred Shares and 3,659,627 Series F Preferred Shares were issued and outstanding as of December 31, 2023 and, with respect to the Series D Preferred Shares, as of the date of the annual report on Form 20-F of which this exhibit is a part, respectively. On February 6, 2024, we fully redeemed all of our outstanding Series F Preferred, following which no Series F Preferred Shares are outstanding. Our Board of Directors has the authority to establish such series of preferred stock and with such designations, preferences and relative, participating, optional or special rights and qualifications, limitations or restrictions as shall be stated in the resolution or resolutions providing for the issue of such preferred stock.
Description of Common Shares
Holders of our common shares do not have conversion, redemption or preemptive rights to subscribe to any of our securities. The rights, preferences and privileges of holders of our common shares are subject to the rights of the holders of any preferred shares that we may issue in the future.
Voting Rights
Each outstanding common share entitles the holder to one vote on all matters submitted to a vote of shareholders. Our directors are elected by a plurality of the votes cast at a meeting of the shareholders by the holders of shares entitled to vote in the election. Our Articles of Incorporation and By-laws, as further amended, prohibit cumulative voting in the election of directors.
Our Board of Directors must consist of at least one member and not more than twelve, as fixed from time to time by the vote of not less than 66 2/3% of the entire board. Each director shall be elected to serve until the third succeeding annual meeting of shareholders and until his successor shall have been duly elected and qualified, except in the event of his death, resignation, removal, or the earlier termination of his term of office. Our Board of Directors has the authority to fix the amounts which shall be payable to the members of our Board of Directors, and to members of any committee, for attendance at any meeting or for services rendered to us.
Our Articles of Incorporation provide for the division of our Board of Directors into three classes of directors, with each class as nearly equal in number as possible, serving staggered, three-year terms. Approximately one-third of our Board of Directors will be elected each year. This classified board provision could discourage a third party from making a tender offer for our shares or attempting to obtain control of our company. It could also delay shareholders who do not agree with the policies of our Board of Directors from removing a majority of our Board of Directors for two years.
Dividend Rights
Subject to preferences that may be applicable to any outstanding preferred shares, holders of common shares are entitled to receive ratably all dividends, if any, declared by our Board of Directors out of funds legally available for dividends.
Liquidation Rights
Upon our dissolution or liquidation or the sale of all or substantially all of our assets, after payment in full of all amounts required to be paid to creditors and to the holders of our preferred shares having liquidation preferences, if any, the holders of our common shares will be entitled to receive pro rata our remaining assets available for distribution.
Limitations on Ownership
Our Articles of Incorporation and By-Laws, as further amended, do not impose any limitations on the ownership rights of our shareholders.
Description of Preferred Stock Purchase Rights
On September 14, 2016, our Board of Directors declared a dividend of one preferred share purchase right, or a Right, for each outstanding common share and adopted a shareholder rights plan, as set forth in the Stockholders Rights Agreement dated as of September 22, 2016, or the Rights Agreement, by and between us and Computershare Trust Company, N.A. (succeeded by our current transfer agent, AST), as rights agent. In connection with the Rights Agreement, we designated 1,000,000 shares as Series A Participating Preferred Stock (the “Series A Preferred Shares”), none of which were outstanding as of December 31, 2023 and as of the date of the annual report on Form 20-F of which this exhibit is a par.
The Board adopted the Rights Agreement to protect shareholders from coercive or otherwise unfair takeover tactics. In general terms, it works by imposing a significant penalty upon any person or group that acquires 15% or more of our outstanding common shares without the approval of our Board of Directors. If a shareholder’s beneficial ownership of our common shares as of the time of the public announcement of the rights plan and associated dividend declaration is at or above the applicable threshold, that shareholder’s then-existing ownership percentage would be grandfathered, but the rights would become exercisable if at any time after such announcement, the shareholder increases its ownership percentage by 1% or more.
The Rights may have anti-takeover effects. The Rights will cause substantial dilution to any person or group that attempts to acquire us without the approval of our Board of Directors. As a result, the overall effect of the Rights may be to render more difficult or discourage any attempt to acquire us. Because our Board of Directors can approve a redemption of the Rights for a permitted offer, the Rights should not interfere with a merger or other business combination approved by our Board.
For those interested in the specific terms of the Rights Agreement, we provide the following summary description. Please note, however, that this description is only a summary, and is not complete, and should be read together with the entire Rights Agreement, which is an exhibit to the Form 8-A filed by us on September 22, 2016 and incorporated herein by reference. The foregoing description of the Rights Agreement is qualified in its entirety by reference to such exhibit.
The Rights. The Rights trade with, and are inseparable from, our common shares. The Rights are evidenced only by certificates that represent our common shares. New Rights will accompany any new of our common shares issued after October 5, 2016 until the Distribution Date described below.
Exercise Price. Each Right allows its holder to purchase from us one one-thousandth of a share of Series A Participating Preferred Stock, or a Series A Preferred Share, for $50.00, or the Exercise Price, once the Rights become exercisable. This portion of a Series A Preferred Share will give the shareholder approximately the same dividend, voting and liquidation rights as would one common share. Prior to exercise, the Right does not give its holder any dividend, voting, or liquidation rights.
Exercisability. The Rights are not exercisable until ten days after the public announcement that a person or group has become an “Acquiring Person” by obtaining beneficial ownership of 15% or more of our outstanding common shares.
Certain synthetic interests in securities created by derivative positions—whether or not such interests are considered to be ownership of the underlying common shares or are reportable for purposes of Regulation 13D of the
Exchange Act—are treated as beneficial ownership of the number of our common shares equivalent to the economic exposure created by the derivative position, to the extent our actual common shares are directly or indirectly held by counterparties to the derivatives contracts. Swaps dealers unassociated with any control intent or intent to evade the purposes of the Rights Agreement are excepted from such imputed beneficial ownership.
For persons who, prior to the time of public announcement of the Rights Agreement, beneficially own 15% or more of our outstanding common shares, the Rights Agreement “grandfathers” their current level of ownership, so long as they do not purchase additional shares in excess of certain limitations.
The date when the Rights become exercisable is the “Distribution Date.” Until that date, our common share certificates (or, in the case of uncertificated shares, by notations in the book-entry account system) will also evidence the Rights, and any transfer of our common shares will constitute a transfer of Rights. After that date, the Rights will separate from our common shares and will be evidenced by book-entry credits or by Rights certificates that we will mail to all eligible holders of our common shares. Any Rights held by an Acquiring Person are null and void and may not be exercised.
Series A Preferred Share Provisions
Each one one-thousandth of a Series A Preferred Share, if issued, will, among other things:
| ● | not be redeemable; |
| ● | entitle holders to quarterly dividend payments in an amount per share equal to the aggregate per share amount of all cash dividends, and the aggregate per share amount (payable in kind) of all non-cash dividends or other distributions other than a dividend payable in our common shares or a subdivision of our outstanding common shares (by reclassification or otherwise), declared on our common shares since the immediately preceding quarterly dividend payment date; and |
| ● | entitle holders to one vote on all matters submitted to a vote of our shareholders. |
The value of one one-thousandth interest in a Series A Preferred Share should approximate the value of one common share.
Consequences of a Person or Group Becoming an Acquiring Person
| ● | Flip In. If an Acquiring Person obtains beneficial ownership of 15% or more of our common shares, then each Right will entitle the holder thereof to purchase, for the Exercise Price, a number of our common shares (or, in certain circumstances, cash, property or other of our securities) having a then-current market value of twice the Exercise Price. However, the Rights are not exercisable following the occurrence of the foregoing event until such time as the Rights are no longer redeemable by us, as further described below. |
Following the occurrence of an event set forth in preceding paragraph, all Rights that are or, under certain circumstances specified in the Rights Agreement, were beneficially owned by an Acquiring Person or certain of its transferees will be null and void.
| ● | Flip Over. If, after an Acquiring Person obtains 15% or more of our common shares, (i) we merge into another entity; (ii) an acquiring entity merges into us; or (iii) we sell or transfer 50% or more of its assets, cash flow or earning power, then each Right (except for Rights that have previously been voided as set forth above) will entitle the holder thereof to purchase, for the Exercise Price, a number of our common shares of the person engaging in the transaction having a then-current market value of twice the Exercise Price. |
| ● | Notional Shares. Shares held by affiliates and associates of an Acquiring Person, including certain entities in which the Acquiring Person beneficially owns a majority of the equity securities, and Notional Common Shares (as defined in the Rights Agreement) held by counterparties to a Derivatives Contract (as defined in the Rights Agreement) with an Acquiring Person, will be deemed to be beneficially owned by the Acquiring Person. |
Redemption. Our Board of Directors may redeem the Rights for $0.01 per Right at any time before any person or group becomes an Acquiring Person. If our Board of Directors redeems any Rights, it must redeem all of the Rights. Once the Rights are redeemed, the only right of the holders of the Rights will be to receive the redemption price of $0.01 per Right. The redemption price will be adjusted if we have a stock dividend or a stock split.
Exchange. After a person or group becomes an Acquiring Person, but before an Acquiring Person owns 50% or more of our outstanding common shares, the Board may extinguish the Rights by exchanging one common share or an equivalent security for each Right, other than Rights held by the Acquiring Person. In certain circumstances, we may elect to exchange the Rights for cash or other of our securities having a value approximately equal to one common share.
Expiration. The Rights expire on the earliest of (i) September 22, 2026; or (ii) the redemption or exchange of the Rights as described above.
Anti-Dilution Provisions. The Board may adjust the purchase price of the Series A Preferred Shares, the number of Series A Preferred Shares issuable and the number of outstanding Rights to prevent dilution that may occur from a stock dividend, a stock split, or a reclassification of the Series A Preferred Shares or our common shares. No adjustments to the Exercise Price of less than 1% will be made.
Amendments. The terms of the Rights and the Rights Agreement may be amended in any respect without the consent of the holders of the Rights on or prior to the Distribution Date. Thereafter, the terms of the Rights and the Rights Agreement may be amended without the consent of the holders of Rights, with certain exceptions, in order to (i) cure any ambiguities; (ii) correct or supplement any provision contained in the Rights Agreement that may be defective or inconsistent with any other provision therein; (iii) shorten or lengthen any time period pursuant to the Rights Agreement; or (iv) make changes that do not adversely affect the interests of holders of the Rights (other than an Acquiring Person or an affiliate or associate of an Acquiring Person).
Taxes. The distribution of Rights should not be taxable for federal income tax purposes. However, following an event that renders the Rights exercisable or upon redemption of the Rights, shareholders may recognize taxable income.
Description of Series D Preferred Shares
On May 8, 2017, we issued 100,000 shares of Series D Preferred Shares to Tankers Family Inc., a company controlled by Lax Trust, which is an irrevocable trust established for the benefit of certain family members of Mr. Evangelos J. Pistiolis, for $1,000 pursuant to a stock purchase agreement. Each Series D Preferred Share has the voting power of one thousand (1,000) common shares.
On April 21, 2017, we were informed by ABN Amro Bank that we were in breach of a loan covenant that requires that any member of the family of Mr. Evangelos J. Pistiolis, maintain an ownership interest (either directly and/or indirectly through companies beneficially owned by any member of the Pistiolis family and/or trusts or foundations of which any member of the Pistiolis family are beneficiaries) of 30% of our outstanding Common Shares. ABN Amro Bank requested that either the family of Mr. Evangelos J. Pistiolis maintain an ownership interest of at least 30% of the outstanding common shares or maintain voting rights interests of above 50% in us. In order to regain compliance with the loan covenant, we issued the Series D Preferred Shares.
The Series D Preferred Stock has the following characteristics:
Conversion. The Series D Preferred Shares are not convertible into common shares.
Voting. Each Series D Preferred Share has the voting power of 1,000 common shares. As a prerequisite for the Navigare Lease, Mr. Evangelos J. Pistiolis personally guaranteed the performance of the bareboat charters entered in connection with the lease, under certain circumstances, and in exchange, we amended the Certificate of Designations governing the terms of the Series D Preferred Shares, to adjust the voting rights per share of Series D Preferred Shares such that during the term of the Navigare Lease, the combined voting power controlled by Mr. Evangelos J. Pistiolis and the Lax Trust does not fall below a majority of our total voting power, irrespective of any new common or preferred stock issuances, and thereby complying with a relevant covenant of the bareboat charters entered in connection with the Navigare Lease.
Distributions. The Series D Preferred Shares shall have no dividend or distribution rights.
Maturity. The Series D Preferred Shares shall expire and all outstanding Series D shares shall be redeemed by us for par value on the date that any financing facility with any financial institution, which requires that any member of the family of Mr. Evangelos J. Pistiolis maintains a specific minimum ownership or voting interest (either directly and/or indirectly through companies or other entities beneficially owned by any member of the Pistiolis family and/or trusts or foundations of which any member of the Pistiolis family are beneficiaries) of our issued and outstanding common shares, respectively, are fully repaid or reach their maturity date. The Series D Preferred Shares shall not be otherwise redeemable. Currently the SLBs with AVIC, CMBFL, Huarong and Navigare have similar provisions that are satisfied via the existence of the Series D Shares.
Liquidation, Dissolution or Winding Up. Upon any liquidation, dissolution or winding up of our Company, the Series D Preferred Shares shall have a liquidation preference of $0.01 per share.
The description of the Series D Convertible Preferred Shares is subject to and qualified in its entirety by reference to the Securities Purchase Agreement, Certificate of Designation of the Series D Preferred Shares, and Certificate of Amendment to the Certificate of Designation. Copies of the Securities Purchase Agreement and Certificate of Designation of the Series D Preferred Shares have been filed as exhibits to our Report on Form 6-K filed with the SEC on May 8, 2017. The Certificate of Amendment to the Certificate of Designation was filed as an exhibit to our Report on Form 6-K filed with the SEC on December 4, 2020.
Description of Series F Preferred Shares
On January 17, 2022, we entered into a stock purchase agreement with Africanus Inc., an affiliate of our CEO for the sale of up to 7,560,759 Series F Non-Convertible Perpetual Preferred Shares, par value $0.01, in exchange for (i) the assumption by Africanus Inc. of an amount of $48.0 million of shipbuilding costs for vessels M/T Eco Oceano CA (Hull No. 871), M/T Julius Caesar and M/T Legio X Equestris (Hull No. 3214), and (ii) settlement of our remaining payment obligations relating to the acquisition in September 8, 2021 of an additional 65% ownership interest in the newbuilding contracts for its 2 VLCCs, in an amount of up to $27.6 million.
As of December 31, 2023, 3,659,627 Series F Preferred Shares were issued and outstanding. On February 6, 2024, we fully redeemed all of our outstanding Series F Preferred Shares for an aggregate amount of approximately $43.9 million, payable in cash, following which no Series F Preferred Shares are outstanding..
The Series F Preferred Shares had the following characteristics:
Voting. The holders of Series F Preferred Shares were entitled to the voting power of ten (10) of our common shares per Series F Preferred Share. The holders of Series F Preferred Shares and the holders of common shares voted together as one class on all matters submitted to a vote of shareholders. Except as required by law, the holders of Series F Preferred Shares had no special voting rights and their consent was not required for taking any corporate action.
Distributions. Upon any liquidation, dissolution or winding up of our Company, the holders of Series F Preferred Shares were entitled to receive the net assets of the Company pari passu with the Common Shares.
Redemption. The Company at its option had the right to redeem a portion or all of the outstanding Series F Preferred Shares. Upon an optional redemption, the Company was required to pay an amount equal to $10 per Series F Preferred Share redeemed (the “Liquidation Amount”), plus a redemption premium of 20% of the Liquidation Amount. The Series F Preferred Shares included a mandatory redemption provision tied to minimum voting requirements for the Company’s major shareholders, including affiliates of the CEO, pursuant to which if such minimum voting rights fell below 50% the Company would be obliged to redeem the full amount of the then outstanding Series F Preferred Shares at a redemption premium of 40%.
Dividends. The holders of outstanding Series F Preferred Shares were entitled to receive semi-annual dividends payable in cash at a rate of 13.5% per year of the Liquidation Amount of the then outstanding Series F Preferred Shares. In addition, a one-time cash dividend equal to 4.0% of the Liquidation Amount was payable to the relevant holders 30 days following the initial issuance of Series F Preferred Shares.
Ranking. All shares of Series F Preferred Shares ranked pari passu with the Company’s common shares.
Shareholder Meetings
Under our Amended and Restated By-Laws, annual shareholder meetings will be held at a time and place selected by our Board of Directors. The meetings may be held in or outside of the Marshall Islands. Special meetings of the shareholders, unless otherwise prescribed by law, may be called for any purpose or purposes at any time exclusively by our Board of Directors. Notice of every annual and special meeting of shareholders shall be given at least 15 but not more than 60 days before such meeting to each shareholder of record entitled to vote thereat.
Directors
Our directors are elected by a plurality of the votes cast at a meeting of the shareholders by the holders of shares entitled to vote in the election. Our Third Amended and Restated Articles of Incorporation and Amended and Restated By-laws, as further amended, prohibit cumulative voting in the election of directors.
Our Board of Directors must consist of at least one member and not more than twelve, as fixed from time to time by the vote of not less than 66 2/3% of the entire board. Each director shall be elected to serve until the third succeeding annual meeting of shareholders and until his successor shall have been duly elected and qualified, except in the event of his death, resignation, removal, or the earlier termination of his term of office. Our Board of Directors has the authority to fix the amounts which shall be payable to the members of our Board of Directors, and to members of any committee, for attendance at any meeting or for services rendered to us.
Classified Board
Our Amended and Restated Articles of Incorporation provide for the division of our Board of Directors into three classes of directors, with each class as nearly equal in number as possible, serving staggered, three-year terms. Approximately one-third of our Board of Directors will be elected each year. This classified board provision could discourage a third party from making a tender offer for our shares or attempting to obtain control of our company. It could also delay shareholders who do not agree with the policies of our Board of Directors from removing a majority of our Board of Directors for two years.
Election and Removal
Our Third Amended and Restated Articles of Incorporation and Amended and Restated By-Laws require parties other than our Board of Directors to give advance written notice of nominations for the election of directors. Our Third Amended and Restated Articles of Incorporation provide that our directors may be removed only for cause and only upon the affirmative vote of the holders of at least 80% of the outstanding shares of our capital stock entitled to vote for those directors. These provisions may discourage, delay or prevent the removal of incumbent officers and directors.
Dissenters’ Rights of Appraisal and Payment
Under the BCA, our shareholders have the right to dissent from various corporate actions, including certain mergers or consolidations or sales of all or substantially all of our assets not made in the usual course of our business, and receive payment of the fair value of their shares, subject to exceptions. For example, the right of a dissenting shareholder to receive payment of the fair value of his shares is not available if for the shares of any class or series of shares, which shares at the record date fixed to determine the shareholders entitled to receive notice of and vote at the meeting of shareholders to act upon the agreement of merger or consolidation, were either (1) listed on a securities exchange or admitted for trading on an interdealer quotation system or (2) held of record by more than 2,000 holders. In the event of any further amendment of the articles, a shareholder also has the right to dissent and receive payment for his or her shares if the amendment alters certain rights in respect of those shares. The dissenting shareholder must follow the procedures set forth in the BCA to receive payment. In the event that we and any dissenting shareholder fail to agree on a price for the shares, the BCA procedures involve, among other things, the institution of proceedings in the High Court of the Republic of the Marshall Islands or in any appropriate court in any jurisdiction in which our shares are primarily traded on a local or national securities exchange. The value of the shares of the dissenting shareholder is fixed by the court after reference, if the court so elects, to the recommendations of a court-appointed appraiser.
Shareholders’ Derivative Actions
Under the BCA, any of our shareholders may bring an action in our name to procure a judgment in our favor, also known as a derivative action, provided that the shareholder bringing the action is a holder of common shares both at the time the derivative action is commenced and at the time of the transaction to which the action relates. On November 20, 2014, we amended our Amended and Restated By-Laws to provide that unless we consent in writing to the selection of alternative forum, the sole and exclusive forum for (i) any shareholders’ derivative action or proceeding brought on behalf of us, (ii) any action asserting a claim of breach of a fiduciary duty owed by any director, officer or other of our employees or our shareholders, (iii) any action asserting a claim arising pursuant to any provision of the BCA, or (iv) any action asserting a claim governed by the internal affairs doctrine shall be the High Court of the Republic of the Marshall Islands, in all cases subject to the court’s having personal jurisdiction over the indispensable parties named as defendants. This provision of our By-Laws does not apply to actions arising under U.S. federal securities laws.
Anti-takeover Provisions of our Charter Documents
Several provisions of our Third Amended and Restated Articles of Incorporation and Amended and Restated By-Laws may have anti-takeover effects. These provisions are intended to avoid costly takeover battles, lessen our vulnerability to a hostile change of control and enhance the ability of our Board of Directors to maximize shareholder value in connection with any unsolicited offer to acquire us. However, these anti-takeover provisions, which are summarized below, could also discourage, delay or prevent (1) the merger or acquisition of our company by means of a tender offer, a proxy contest or otherwise, that a shareholder may consider in its best interest and (2) the removal of incumbent officers and directors.
Business Combinations
Our Third Amended and Restated Articles of Incorporation include provisions which prohibit us from engaging in a business combination with an interested shareholder for a period of three years after the date of the transaction in which the person became an interested shareholder, unless:
| ● | prior to the date of the transaction that resulted in the shareholder becoming an interested shareholder, the Board approved either the business combination or the transaction that resulted in the shareholder becoming an interested shareholder; |
| ● | upon consummation of the transaction that resulted in the shareholder becoming an interested shareholder, the interested shareholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced; |
| ● | at or subsequent to the date of the transaction that resulted in the shareholder becoming an interested shareholder, the business combination is approved by the Board and authorized at an annual or special meeting of shareholders by the affirmative vote of at least 66 2/3% of the outstanding voting stock that is not owned by the interested shareholder; and |
| ● | the shareholder became an interested shareholder prior to the consummation of the initial public offering. |
Limited Actions by Shareholders
Our Third Amended and Restated Articles of Incorporation and our Amended and Restated By-Laws provide that any action required or permitted to be taken by our shareholders must be effected at an annual or special meeting of shareholders or by the unanimous written consent of our shareholders.
Our Third Amended and Restated Articles of Incorporation and our Amended and Restated By-Laws provide that only our Board of Directors may call special meetings of our shareholders and the business transacted at the special meeting is limited to the purposes stated in the notice. Accordingly, a shareholder may be prevented from calling a special meeting for shareholder consideration of a proposal over the opposition of our Board of Directors and shareholder consideration of a proposal may be delayed until the next annual meeting.
Blank Check Preferred Stock
Under the terms of our Third Amended and Restated Articles of Incorporation, our Board of Directors has authority, without any further vote or action by our shareholders, to issue up to 20,000,000 shares of blank check preferred stock. Our Board of Directors may issue shares of preferred stock on terms calculated to discourage, delay or prevent a change of control of our company or the removal of our management.
Super-majority Required for Certain Amendments to Our By-Laws
On February 28, 2007, we amended our by-laws to require that amendments to certain provisions of our by-laws may be made when approved by a vote of not less than 66 2/3% of the entire Board of Directors. These provisions that require not less than 66 2/3% vote of our Board of Directors to be amended are provisions governing: the nature of business to be transacted at our annual meetings of shareholders, the calling of special meetings by our Board of Directors, any amendment to change the number of directors constituting our Board of Directors, the method by which our Board of Directors is elected, the nomination procedures of our Board of Directors, removal of our Board of Directors and the filling of vacancies on our Board of Directors.
Marshall Islands Company Considerations
Our corporate affairs are governed by our Articles of Incorporation and By-laws and by the BCA. The provisions of the BCA resemble provisions of the corporation laws of a number of states in the United States. While the BCA also provides that it is to be interpreted according to the laws of the State of Delaware and other states with substantially similar legislative provisions, there have been few, if any, court cases interpreting the BCA in the Marshall Islands and we cannot predict whether Marshall Islands courts would reach the same conclusions as courts in the United States. As a result, you may have more difficulty protecting your interests in the face of actions by our management, directors or controlling shareholders than would shareholders of a corporation incorporated in a U.S. jurisdiction which has developed a substantial body of case law. The following table provides a comparison between the statutory provisions of the BCA and the General Corporation Law of the State of Delaware relating to shareholders’ rights.
| Marshall Islands | Delaware | |
| Shareholder Meetings | ||
| Held at a time and place as designated in the bylaws. | May be held at such time or place as designated in the certificate of incorporation or the bylaws, or if not so designated, as determined by the board of directors. | |
| Special meetings of the shareholders may be called by the board of directors or by such person or persons as may be authorized by the articles of incorporation or by the bylaws. | Special meetings of the shareholders may be called by the board of directors or by such person or persons as may be authorized by the certificate of incorporation or by the bylaws. | |
| May be held within or outside of the Marshall Islands. | May be held within or outside of Delaware. | |
| Notice: | Notice: | |
| Whenever shareholders are required to take any action at a meeting, written notice of the meeting shall be given which shall state the place, date and hour of the meeting and, unless it is an annual meeting, indicate that it is being issued by or at the direction of the person calling the meeting. Notice of a special meeting shall also state the purpose for which the meeting is called. | Whenever shareholders are required to take any action at a meeting, a written notice of the meeting shall be given which shall state the place, if any, date and hour of the meeting, and the means of remote communication, if any. | |
| A copy of the notice of any meeting shall be given personally, sent by mail or by electronic mail not less than 15 nor more than 60 days before the meeting. | Written notice shall be given not less than 10 nor more than 60 days before the meeting. | |
| Shareholders’ Voting Rights | ||
| Unless otherwise provided in the articles of incorporation, any action required to be taken at a meeting of shareholders may be taken without a meeting, without prior notice and without a vote, if a consent in writing, setting forth the action so taken, is signed by all the shareholders entitled to vote with respect to the subject matter thereof, or if the articles of incorporation so provide, by the holders of outstanding shares having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted. |
Any action required to be taken at a meeting of shareholders may be taken without a meeting if a consent for such action is in writing and is signed by shareholders having not fewer than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted
.
|
|
| Marshall Islands | Delaware | |
| Any person authorized to vote may authorize another person or persons to act for him by proxy. | Any person authorized to vote may authorize another person or persons to act for him by proxy. | |
| Unless otherwise provided in the articles of incorporation or bylaws, a majority of shares entitled to vote constitutes a quorum. In no event shall a quorum consist of fewer than one-third of the shares entitled to vote at a meeting. | For stock corporations, the certificate of incorporation or bylaws may specify the number of shares required to constitute a quorum but in no event shall a quorum consist of less than one-third of shares entitled to vote at a meeting. In the absence of such specifications, a majority of shares entitled to vote shall constitute a quorum. | |
| When a quorum is once present to organize a meeting, it is not broken by the subsequent withdrawal of any shareholders. | When a quorum is once present to organize a meeting, it is not broken by the subsequent withdrawal of any shareholders. | |
| The articles of incorporation may provide for cumulative voting in the election of directors. | The certificate of incorporation may provide for cumulative voting in the election of directors. | |
| Merger or Consolidation | ||
|
Any two or more domestic corporations may merge into a single corporation if approved by the board and if authorized by a majority vote of the holders of outstanding shares at a shareholder meeting.
Any sale, lease, exchange or other disposition of all or substantially all the assets of a corporation, if not made in the corporation’s usual or regular course of business, once approved by the board, shall be authorized by the affirmative vote of two-thirds of the shares of those entitled to vote at a shareholder meeting.
Any domestic corporation owning at least 90% of the outstanding shares of each class of another domestic corporation may merge such other corporation into itself without the authorization of the shareholders of any corporation.
Any mortgage, pledge of or creation of a security interest in all or any part of the corporate property may be authorized without the vote or consent of the shareholders, unless otherwise provided for in the articles of incorporation. |
Any two or more corporations existing under the laws of the state may merge into a single corporation pursuant to a board resolution and upon the majority vote by shareholders of each constituent corporation at an annual or special meeting.
Every corporation may at any meeting of the board sell, lease or exchange all or substantially all of its property and assets as its board deems expedient and for the best interests of the corporation when so authorized by a resolution adopted by the holders of a majority of the outstanding stock of the corporation entitled to vote.
Any corporation owning at least 90% of the outstanding shares of each class of another corporation may merge the other corporation into itself and assume all of its obligations without the vote or consent of shareholders; however, in case the parent corporation is not the surviving corporation, the proposed merger shall be approved by a majority of the outstanding stock of the parent corporation entitled to vote at a duly called shareholder meeting.
Any mortgage or pledge of a corporation’s property and assets may be authorized without the vote or consent of shareholders, except to the extent that the certificate of incorporation otherwise provides |
|
| Directors | ||
| The board of directors must consist of at least one member. | The board of directors must consist of at least one member. | |
| The number of board members may be changed by an amendment to the bylaws, by the shareholders, or by action of the board under the specific provisions of a bylaw. |
The number of board members shall be fixed by, or in a manner provided by, the bylaws, unless the certificate of incorporation fixes the number of directors, in which case a change in the number shall be made only by an amendment to the certificate of incorporation. |
|
| If the board is authorized to change the number of directors, it can only do so by a majority of the entire board and so long as no decrease in the number shall shorten the term of any incumbent director. |
If the number of directors is fixed by the certificate of incorporation, a change in the number shall be made only by an amendment of the certificate. |
|
| Removal: | Removal: | |
|
Any or all of the directors may be removed for cause by vote of the shareholders. |
Any or all of the directors may be removed, with or without cause, by the holders of a majority of the shares entitled to vote unless the certificate of incorporation otherwise provides. | |
| If the articles of incorporation or the bylaws so provide, any or all of the directors may be removed without cause by vote of the shareholders.. |
In the case of a classified board, shareholders may effect removal of any or all directors only for cause. |
|
| Dissenter’s Rights of Appraisal | |||
| Marshall Islands | Delaware | ||
| Shareholders have a right to dissent from any plan of merger, consolidation or sale of all or substantially all assets not made in the usual course of business, and receive payment of the fair value of their shares. However, the right of a dissenting shareholder under the BCA to receive payment of the appraised fair value of his shares shall not be available for the shares of any class or series of stock, which shares or depository receipts in respect thereof, at the record date fixed to determine the shareholders entitled to receive notice of and to vote at the meeting of the shareholders to act upon the agreement of merger or consolidation, were either (i) listed on a securities exchange or admitted for trading on an interdealer quotation system or (ii) held of record by more than 2,000 holders. The right of a dissenting shareholder to receive payment of the fair value of his or her shares shall not be available for any shares of stock of the constituent corporation surviving a merger if the merger did not require for its approval the vote of the shareholders of the surviving corporation. | Appraisal rights shall be available for the shares of any class or series of stock of a corporation in a merger or consolidation, subject to limited exceptions, such as a merger or consolidation of corporations listed on a national securities exchange in which listed stock is offered for consideration is (i) listed on a national securities exchange or (ii) held of record by more than 2,000 holders. | ||
| A holder of any adversely affected shares who does not vote on or consent in writing to an amendment to the articles of incorporation has the right to dissent and to receive payment for such shares if the amendment: | |||
| ● | alters or abolishes any preferential right of any outstanding shares having preference; or | ||
| ● | creates, alters or abolishes any provision or right in respect to the redemption of any outstanding shares; or | ||
| ● | alters or abolishes any preemptive right of such holder to acquire shares or other securities; or | ||
| ● | excludes or limits the right of such holder to vote on any matter, except as such right may be limited by the voting rights given to new shares then being authorized of any existing or new class. | ||
| Shareholders’ Derivative Actions | |||
| An action may be brought in the right of a corporation to procure a judgment in its favor, by a holder of shares or of voting trust certificates or of a beneficial interest in such shares or certificates. It shall be made to appear that the plaintiff is such a holder at the time of bringing the action and that he was such a holder at the time of the transaction of which he complains, or that his shares or his interest therein devolved upon him by operation of law. | In any derivative suit instituted by a shareholder of a corporation, it shall be averred in the complaint that the plaintiff was a shareholder of the corporation at the time of the transaction of which he complains or that such shareholder’s stock thereafter devolved upon such shareholder by operation of law. | ||
|
A complaint shall set forth with particularity the efforts of the plaintiff to secure the initiation of such action by the board or the reasons for not making such effort.
Such action shall not be discontinued, compromised or settled, without the approval of the High Court of the Republic of the Marshall Islands |
Other requirements regarding derivative suits have been created by judicial decision, including that a shareholder may not bring a derivative suit unless he or she first demands that the corporation sue on its own behalf and that demand is refused (unless it is shown that such demand would have been futile). | ||
| Reasonable expenses including attorneys’ fees may be awarded if the action is successful. | |||
| A corporation may require a plaintiff bringing a derivative suit to give security for reasonable expenses if the plaintiff owns less than 5% of any class of outstanding shares or holds voting trust certificates or a beneficial interest in shares representing less than 5% of any class of such shares and the shares, voting trust certificates or beneficial interest of such plaintiff has a fair value of $50,000 or less. | |||
11
Exhibit 4.18
1. Shipbroker N/A 2. Place and date 8 December 2023 3. Owners/Place of business (Cl. 1) Great Equinox Limited, a corporation incorporated and existing under the laws of the Republic of the Marshall Islands with entity number 102028 and its registered address at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960 4. Bareboat Charterers/Place of business (Cl. 1) Roman Empire Inc., a corporation incorporated and existing under the laws of the Republic of Marshall Islands with entity number 104089 and its registered address at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH 96960 5. Vessel’s name, call sign and flag (Cl. 1 and 3) Eco West Coast IMO: 9902811 Call sign: V7A4460 Flag: Marshall Islands or any other Pre-Approved Flag 6. Type of Vessel Crude Oil Tanker 7. GT/NT 81,206/51,026 8. When/Where built 2021 / Ulsan, South Korea 9. Total DWT (abt.) in metric tons on summer freeboard 157,632 10. Classification Society (Cl. 3) American Bureau of Shipping (ABS) 11. Date of last special survey by the Vessel’s classification society N/A 12. Further particulars of Vessel (also indicate minimum number of months’ validity of class certificates agreed acc. to Cl. 3) 13. Port or Place of delivery (Cl. 3) See Clause 36 14. Time for delivery (Cl. 4) See Clause 36 15. Cancelling date (Cl. 5) See Clause 39 16. Port or Place of redelivery (Cl. 15) See Clause 46 17. No. of months’ validity of trading and class certificates upon redelivery (Cl. 15) See Clause 47 18. Running days’ notice if other than stated in Cl. 4 N/A 19. Frequency of dry-docking (Cl. 10(g)) 20. Trading limits (Cl. 6) Worldwide within International Navigating Limits, see also Clause 52.9(d) 21. Charter period (Cl. 2) See Clause 57 22. Charter hire (Cl. 11) See Clause 44 23. New class and other safety requirements (state percentage of Vessel’s insurance value acc. to Box 29)(Cl. 10(a)(ii)) N/A 24. Rate of interest payable acc. to Cl. 11 (f) and, if applicable, acc. to PART IV See Clause 44.4 - Clause 11 does not apply 25. Currency and method of payment (Cl. 11) Dollars / bank transfer - Clause 11 does not apply 26. Place of payment; also state beneficiary and bank account (Cl. 11) See Clause 44.2(e) - Clause 11 does not apply 27. Bank guarantee/bond (sum and place) (Cl. 24) (optional) See Clause 24 28. Mortgage(s), if any (state whether 12(a) or (b) applies; if 12(b) applies state date of Financial Instrument and name of Mortgagee(s)/Place of business) (Cl. 12) N/A See Clause 48 29. Insurance (hull and machinery and war risks) (state value acc. to Cl. 13(f) or, if applicable, acc. to Cl. 14(k)) (also state if Cl. 14 applies) See Clause 45 - Clause 14 does not apply 30. Additional insurance cover, if any, for Owners’ account limited to (Cl. 13(b) or, if applicable, Cl. 14(g)) See Clause 45 31. Additional insurance cover, if any, for Charterers’ account limited to (Cl. 13(b) or, if applicable, Cl. 14(g)) See Clause 45 32. Latent defects (only to be filled in if period other than stated in Cl. 3) N/A 33. Brokerage commission and to whom payable (Cl. 27) N/A 34. Grace period (state number of clear banking days) (Cl. 28) See Clause 54 - Clause 28 does not apply 35. Dispute Resolution (state 30(a), 30(b) or 30(c); if 30(c) agreed Place of Arbitration must be stated (Cl. 30)
Copyright © 2001 BIMCO. All rights reserved. Any unauthorised copying, duplication, reproduction or distribution of this BIMCO SmartCon document will constitute an infringement of BIMCO’s copyright. Explanatory notes are available from BIMCO at www.bimco.org.
First published in 1974 as BARECON A and B. Amalgamated and revised in 1989. Revised 2001.
(a) English law, London arbitration / See Clause 81 36. War cancellation (indicate countries agreed) (Cl. 26(f)) N/A 38. Name and place of Builders (only to be filled In If PART III applies) 37. Newbuilding Vessel (indicate with “yes” or “no” whether PART III applies) (optional) N/A Yes, Part III does not apply 40. Date of Building Contract (only to be filled in if PART III applies) 39. Vessel’s Yard Building No. (only to be filled in if PART III applies) N/A N/A 41. Liquidated damages and costs shall accrue to (state party acc. to Cl, 1) a) N/A b) N/A c) N/A 42. Hire/Purchase agreement (indicate with “yes” or “no” whether PART IV applies) (optional) No, Part IV does not apply 43. Bareboat Charter Registry (indicate with “yes” or “no” whether PART V applies) (optional) No, Part V does not apply 45. Country of the Underlying Registry (only to be filled in if PART V applies) 44. Flag and Country of the Bareboat Charter Registry (only to be filled in if PART V applies) N/A N/A 46. Number of additional clauses covering special provisions, if agreed Clause 32 to 85
PREAMBLE - It is mutually agreed that this Contract shall be performed subject to the conditions contained in this Charter which shall Include PART I and PART II. In the event of a conflict of conditions, the provisions of PART I shall prevail over those of PART II to the extent of such conflict but no further. It is further mutually agreed that PART III and/or PART IV and/or PART V shall only apply and only form part of this Charter if expressly agreed and stated in Boxes 37, 42 and 43. If PART III and/or PART IV and/or PART V apply, it is further agreed that in the event of a conflict of conditions, the provisions of PART I and PART II shall prevail over those of PART III and/or PART IV and/or PART V to the extent of such conflict but no further
| Signature (Owners) /s/ Zhu Jiafeng Zhu Jiafeng Attorney-in-fact |
Signature (Charterers) /s/ Alexandros Tsirikos Alexandros Tsirikos Attorney-in-fact |
Copyright © 2001 BIMCO. All rights reserved. Any unauthorised copying, duplication, reproduction or distribution of this BIMCO SmartCon document will constitute an infringement of BIMCO’s copyright. Explanatory notes are available from BIMCO at www.bimco.org.
First published in 1974 as BARECON A and B. Amalgamated and revised in 1989. Revised 2001.
PART II
BARECON 2001 Standard Bareboat Charter
1 1. Definitions - See also Clause 32 2 In this Charter, the following terms shall have the 3 meanings hereby assigned to them: 4 “The Owners” shall mean the party identified in Box 3; 5 “The Charterers” shall mean the party identified in Box 4; 6 . . 11 2 Charter Period - Sell also Clause 57 12 In consideration of the hire detailed in Box 22, 13 the Owners have agreed to let and the Charterers have 14 agreed to hire the Vessel for the period stated in Box 21 15 16 3. Delivery - See also Clause 36 17 (not applicable when Part III applies, as indicated in Box 37) 18 The Vessel shall be delivered by the Owners and taken over by the Charterers at the port or place indicated in Box 13 . 26 (b) The Vessel is properly documented on 27 delivery in accordance with the laws of the Fflag State 28 indicated in Box 5 and the requirements of the 29 Cclassification Ssociety stated in Box 10. 33 (c) The delivery of the Vessel by the Owners and the 34 taking over of the Vessel by the Charterers shall 35 constitute a full performance by the Owners of all the 36 Owners’ obligations under this Clause 3, and thereafter 37 the Charterers shall not be entitled to make or assert 38 any claim against the Owners on account of any 39 conditions, representations or warranties expressed or 40 implied with respect to the Vessel . 47 4. Time for Delivery - See Clause 36 48 49 50 . . 60 5. Cancelling - See Clause 39 61 62 63 64 86 6. Trading Restrictions - See also Clause 52.9 87 The Vessel shall be employed in lawful trades for the 88 carriage of suitable lawful merchandise within the trading 89 limits indicated in Box 20. 90 The Charterers undertake not to employ the Vessel or 91 suffer the Vessel to be employed otherwise than in 92 conformity with the terms of the contracts of insurance 93 (including any warranties expressed or implied therein) 94 without first obtaining the consent of the insurers to such 95 employment and complying with such requirements as 96 to extra premium or otherwise as the insurers may 97 prescribe. 98 The Charterers also undertake not to employ the Vessel 99 or suffer her employment in any trade or business which 100 is forbidden by the law of any country to which the Vessel 101 may sail or is otherwise illicit or in carrying illicit or 102 prohibited goods or in any manner whatsoever which 103 may render her liable to condemnation, destruction, 104 seizure or confiscation. 105 Notwithstanding any other provisions contained in this 106 Charter it is agreed that nuclear fuels or radioactive 107 products or waste are specifically excluded from the 108 cargo permitted to be loaded or carried under this 109 Charter. This exclusion does not apply to radio-isotopes 110 used or intended to be used for any industrial, 111 commercial, agricultural, medical or scientific purposes 112 provided the Owners’ prior approval has been obtained 113 to loading thereof. 114 7. Surveys on Redelivery 115 116 117 See Clauses 47 and 49 124 8. Inspection - See also Clause 52.28
Copyright © 2001 BIMCO. All rights reserved. Any unauthorised copying, duplication, reproduction or distribution of this BIMCO SmartCon document will constitute an infringement of BIMCO’s copyright. Explanatory notes are available from BIMCO at www.bimco.org.
First published in 1974 as BARECON A and B. Amalgamated and revised in 1989. Revised 2001.
PART II
BARECON 2001 Standard Bareboat Charter
125 The Owners shall have the right at any time after giving 126 reasonable notice to the Charterers to inspect or survey 127 the Vessel or instruct a duly authorised surveyor to carry 128 out such survey on their behalf:- 129 (a) to ascertain the condition of the Vessel and satisfy 130 themselves that the Vessel is being properly repaired 131 and maintained. The costs and fees for such inspection 132 or survey shall be paid by the Owners unless the Vessel 133 is found to require repairs or maintenance in order to 134 achieve the condition so provided; 135 (b) in dry-dock if the Charterers have not dry-docked 136 Her in accordance with Clause 10(g). The costs and fees 137 for such inspection or survey shall be paid by the 138 Charterers; and 139 (c) for any other commercial reason they consider 140 necessary (provided it does not unduly interfere with 141 the commercial operation of the Vessel). The costs and 142 fees for such inspection and survey shall be paid by the 143 OwnersCharterers. 144 All time used in respect of inspection, survey or repairs 145 shall be for the Charterers’ account and form part of the 146 Charter Period. 147 The Charterers shall also permit the Owners to inspect 148 the Vessel’s log books whenever requested and shall 149 whenever required by the Owners furnish them with full 150 information regarding any casualties or other accidents 151 or damage to the Vessel. The Charterers shall provide all necessary assistance to the Owners, their representatives or agents in respect of any inspection and/or survey referred to hereunder. 152 9. Inventories, Oil and Stores - See Clause 41 153 A complete inventory of the Vessel’s entire equipment, 154 outfit including spare parts, appliances and of all 155 consumable stores on board the Vessel shall be made 156 by the Charterers in conjunction with the Owners on 157 delivery and again on redelivery of the Vessel. The 158 Charterers and the Owners, respectively, shall at the 159 time of delivery and redelivery take over and pay for all 160 bunkers, lubricating oil, unbroached provisions, paints, 161 ropes and other consumable stores (excluding spare 162 parts) in the said Vessel at the then current market prices 163 at the ports of delivery and redelivery, respectively. The 164 Charterers shall ensure that all spare parts listed in the 165 inventory and used during the Charter Period are 166 replaced at their expense prior to redelivery of the 167 Vessel. 168 10. Maintenance and Operation 169 (a)(i)Maintenance and Repairs - During the Charter 170 Period the Vessel shall be in the full possession 171 and at the absolute disposal for all purposes of the 172 Charterers and under their complete control in 173 every respect. The Charterers shall maintain the 174 Vessel, her machinery, boilers, appurtenances and 175 spare parts in a good state of repair, in efficient 176 operating condition and in accordance with good 177 commercial maintenance practice and, except as 178 provided for in Clause 14(l), if applicable, at their 179 own expense they shall at all times keep the 180 Vessel’s Class classification fully up to date with the Classification 181 Society indicated in Box 10 and maintain all other 182 necessary certificates in force at all times. 183 (ii) New Class and Other Safety Requirements - In the 184 event of any improvement, structural changes or 185 new equipment becoming necessary for the 186 continued operation of the Vessel by reason of new 187 class requirements or by compulsory legislation 188 costing (excluding the Charterers’ loss of time) 189 more than the percentage stated in Box 23, or if 190 Box 23 is left blank, 5 per cent. of the Vessel’s 191 insurance value as stated in Box 29, then the 192 extent, if any, to which the rate of hire shall be varied 193 and the ratio in which the cost of compliance shall 194 be shared between the parties concerned in order 195 to achieve a reasonable distribution thereof as 196 between the Owners and the Charterers having 197 regard, inter alia, to the length of the period 198 remaining under this Charter shall, in the absence 199 of agreement, be referred to the dispute resolution 200 method agreed in Clause 30. the Charterers shall ensure that the same are complied with and the time and costs of compliance shall be for the Charterers account. (See also Clause 43.3) 201 (iii) Financial Security - The Charterers shall maintain 202 financial security or responsibility in respect of third 203 party liabilities as required by any government, 204 including federal, state or municipal or other division 205 or authority thereof, to enable the Vessel, without 206 penalty or charge, lawfully to enter, remain at, or 207 leave any port, place, territorial or contiguous 208 waters of any country, state or municipality in 209 performance of this Charter without any delay. This 210 obligation shall apply whether or not such 211 requirements have been lawfully imposed by such 212 government or division or authority thereof. 213 The Charterers shall make and maintain all arrange- 214 ments by bond or otherwise as may be necessary to 215 satisfy such requirements at the Charterers’ sole 216 expense and the Charterers shall indemnify the Owners 217 against all consequences whatsoever (including loss of 218 time) for any failure or inability to do so. 219 (b) Operation of the Vessel - The Charterers shall at 220 their own expense and by their own procurement man, 221 victual, navigate, operate, supply, fuel and, whenever 222 required, repair the Vessel during the Charter Period 223 and they shall pay all charges and expenses of every 224 kind and nature whatsoever incidental to their use and 225 operation of the Vessel under this Charter, including 226 annual flag State fees and any foreign general 227 municipality and/or state taxes. The Master, officers 228 and crew of the Vessel shall be the servants of the Charterers 229 for all purposes whatsoever, even if for any reason 230 appointed by the Owners. 231 Charterers shall comply with the regulations regarding 232 officers and crew in force in the country of the Vessel’s 233 flag or any other applicable law. 234 (c) The Charterers shall keep the Owners and the 235 mortgagee(s) advised of the intended employment, 236 planned dry-docking (other than the periodical drydocking referred to under paragraph (g) below) and major repairs of the Vessel,
Copyright © 2001 BIMCO. All rights reserved. Any unauthorised copying, duplication, reproduction or distribution of this BIMCO SmartCon document will constitute an infringement of BIMCO’s copyright. Explanatory notes are available from BIMCO at www.bimco.org.
First published in 1974 as BARECON A and B. Amalgamated and revised in 1989. Revised 2001.
PART II
BARECON 2001 Standard Bareboat Charter
237 as reasonably required. 238 (d) Flag and Name of Vessel – During the Charter 239 Period, the Charterers shall have the liberty to paint the 240 Vessel in their own colours, install and display their 241 funnel insignia and fly their own house flag (with all fees, costs and expenses arising in relation thereto for the Charterers’ account). The 242 Charterers shall also have the liberty, with the Owners’ 243 consent, which shall not be unreasonably withheld, to 244 change the flag of the Vessel to that of another Flagd State (with all fees, costs and expenses arising in relation thereto for the Charterers’ account) and/or with the Owners’ consent the name of the Vessel (with all fees, costs and expenses arising in relation thereto for the Charterers’ account) during 245 the Charter Period. Any pPainting and re-painting, instalment 246 and re-instalment, registration (including maintenance and renewal thereof) and re-registration, if 247 required by the Owners, shall be at the Charterers’ 248 expense and time. If the Flag State requires the Owners to register themselves or establish a physical presence or office in the jurisdiction of such Flag State, all fees, cosys and expenses payable by the Owners to register themselves, establish and maintain such physical presence or office shall be for the account of the Charterers. 249 (e) Changes to the Vessel – Subject to Clause 10(a)(ii), 250 the Charterers shall make no structural changes in the 251 Vessel or changes in the machinery, boilers, appurten- 252 ances or spare parts thereof without in each instance 253 first securing the Owners’ approval thereof. If the Owners 254 so agree, the Charterers shall, if the Owners so require, 255 restore the Vessel to its former condition before the 256 termination of this Charter. See Clause 43 257 (f) Use of the Vessel’s Outfit, Equipment and 258 Appliances - The Charterers shall have the use of all 259 outfit, equipment, and appliances on board the Vessel 260 at the time of delivery, provided the same or their 261 substantial equivalent shall be returned to the Owners 262 on redelivery (without prejudice to Clauses 41, 46 and 47 and if redelivery is required pursuant to this Charter) in the same good order and condition as 263 when received, ordinary wear and tear excepted. The 264 Charterers shall from time to time during the Charter 265 Period replace such items of equipment as shall be so 266 damaged or worn as to be unfit for use. The Charterers 267 are to procure that all repairs to or replacement of any 268 damaged, worn or lost parts or equipment be effected 269 in such manner (both as regards workmanship and 270 quality of materials) as not to diminish the value of the 271 Vessel. Title to any equipment so replaced shall vest in and remain with the Owners. The Charterers have the right to fit additional 272 equipment at their expense and risk (provided that no permanent structural damage is caused to the Vessel by reason of such installation) and but the Charterers 273 shall, at their expense, remove such equipment and make good any damage caused by the fitting or removal of such additional equipment before the Vessel is redelivered to the Owners pursuant to Clause 46 and without prejudice to Clauses 41 and 47 at the end of the period if 274 requested by the Owners. Any equipment including radio 275 equipment on hire on the Vessel at time of delivery shall 276 be kept and maintained by the Charterers and the 277 Charterers shall assume the obligations and liabilities 278 of the Owners under any lease contracts in connection 279 therewith and shall reimburse the Owners for all 280 expenses incurred in connection therewith, also for any 281 new equipment required in order to comply with radio 282 regulations. 283 (g) Periodical Dry-Docking - The Charterers shall dry- 284 dock the Vessel and clean and paint her underwater 285 parts whenever the same may be necessary, but not 286 less than once during the period stated in Box 19 or, if 287 Box 19 has been left blank, every sixty (60) calendar 288 months after delivery or such other period as may be 289 required by the Classification Society or flag State. 290 11. Hire - See Clause 44 291 (a) The Charterers shall pay hire due to the Owners 292 punctually in accordance with the terms of this Charter 293 in respect of which time shall be of the essence. 294 (b) The Charterers shall pay to the Owners for the hire 295 of the Vessel a lump sum in the amount indicated in 296 Box 22 which shall be payable not later than every thirty 297 (30) running days in advance, the first lump sum being 298 payable on the date and hour of the Vessel’s delivery to 299 the Charterers. Hire shall be paid continuously 300 throughout the Charter Period. 301 (c) Payment of hire shall be made in cash without 302 discount in the currency and in the manner indicated in 303 Box 25 and at the place mentioned in Box 26. 304 (d) Final payment of hire, if for a period of less than 305 thirty (30) running days, shall be calculated proportionally 306 according to the number of days and hours remaining 307 before redelivery and advance payment to be effected 308 accordingly. 309 (e) Should the Vessel be lost or missing, hire shall 310 cease from the date and time when she was lost or last 311 heard of. The date upon which the Vessel is to be treated 312 as lost or missing shall be ten (10) days after the Vessel 313 was last reported or when the Vessel is posted as 314 missing by Lloyd’s, whichever occurs first. Any hire paid 315 in advance to be adjusted accordingly. 316 (f) Any delay in payment of hire shall entitle the 317 Owners to interest at the rate per annum as agreed 318 in Box 24. If Box 24 has not been filled in, the three months 319 Interbank offered rate in London (LIBOR or its successor) 320 for the currency stated in Box 25, as quoted by the British 321 Bankers’ Association (BBA) on the date when the hire 322 fell due, increased by 2 per cent., shall apply. 323 (g) Payment of interest due under sub-clause 11(f) 324 shall be made within seven (7) running days of the date 325 of the Owners’ invoice specifying the amount payable 326 or, in the absence of an invoice, at the time of the next 327 hire payment date.
Copyright © 2001 BIMCO. All rights reserved. Any unauthorised copying, duplication, reproduction or distribution of this BIMCO SmartCon document will constitute an infringement of BIMCO’s copyright. Explanatory notes are available from BIMCO at www.bimco.org.
First published in 1974 as BARECON A and B. Amalgamated and revised in 1989. Revised 2001.
PART II
BARECON 2001 Standard Bareboat Charter
328 12. Mortgage - See Clause 48 329 (only to apply if Box 28 has been appropriately filled in) 330 *) (a) The Owners warrant that they have not effected 331 any mortgage(s) of the Vessel and that they shall not 332 effect any mortgage(s) without the prior consent of the 333 Charterers, which shall not be unreasonably withheld. 334 *) (b) The Vessel chartered under this Charter is financed 335 by a mortgage according to the Financial Instrument. 336 The Charterers undertake to comply, and provide such 337 information and documents to enable the Owners to 338 comply, with all such instructions or directions in regard 339 to the employment, insurances, operation, repairs and 340 maintenance of the Vessel as laid down in the Financial 341 Instrument or as may be directed from time to time during 342 the currency of the Charter by the mortgagee(s) in 343 conformity with the Financial Instrument. The Charterers 344 confirm that, for this purpose, they have acquainted 345 themselves with all relevant terms, conditions and 346 provisions of the Financial Instrument and agree to 347 acknowledge this in writing in any form that may be 348 required by the mortgagee(s). The Owners warrant that 349 they have not effected any mortgage(s) other than stated 350 in Box 28 and that they shall not agree to any 351 amendment of the mortgage(s) referred to in Box 28 or 352 effect any other mortgage(s) without the prior consent 353 of the Charterers, which shall not be unreasonably 354 withheld. 355 *) (Optional, Clauses 12(a) and 12(b) are alternatives; 356 indicate alternative agreed in Box 28). 357 13. Insurance and Repairs - See also Clause 45 358 (a) Subject to and without prejudice to Clause 45 Dduring the Charter Period the Vessel shall be kept 359 insured by the Charterers at their expense against hull 360 and machinery, marine and war (including blocking and trapping when required or when applicable) and Protection and Indemnity risks and freight, demurrage and defence risks 361 (and any risks against which it is compulsory to insure 362 for the operation of the Vessel, including but not limited to maintaining 363 financial security in accordance with sub-clause 364 10(a)(iii)). in such form as the Owners shall in writing 365 approve, which approval shall not be un-reasonably 366 withheld. During the Charter Period, the Charterers shall procure (at Charterer’s expense) that there are in place innocent owners’ interest insurance, owners’ additional perils (pollution) insurance and if applicable mortgagees’ interest insurance and mortgagee’s additional perils (pollution) insurance. Such insurances as specified in this Clause 13 shall be arranged by the 367 Charterers to protect the interests of both the Owners 368 and the Charterers and the mortgagee(s) (if any)., and 369 The Charterers shall be at liberty to protect under such 370 insurances the interests of any Approved Managers managers they may 371 appoint. Insurance policies shall cover the Owners and 372 the Charterers and the mortgagees (if any) according to their respective interests. 373 Subject to the provisions of the Finance DocumentsFinancial Instrument (if any) and the agreed loss payable clauses, if 374 any, and the approval of the Owners and the insurers, 375 the Charterers shall effect all insured repairs and shall 376 undertake settlement and reimbursement from the 377 insurers of all costs in connection with such repairs as 378 well as insured charges, expenses and liabilities to the 379 extent of coverage under the insurances herein provided 380 for. 381 The Charterers also to remain responsible for and to 382 effect repairs and settlement of costs and expenses 383 incurred thereby in respect of all other repairs not 384 covered by the insurances and/or not exceeding any 385 possible franchise(s) or deductibles provided for in the 386 insurances. 387 All time used for repairs under the provisions of sub- 388 clause 13(a) and for repairs of latent defects according 389 to Clause 3(c) above, including any deviation, shall be 390 for the Charterers’ account. 391 (b) If the conditions of the above insurances permit 392 additional insurance to be placed by the parties, such 393 cover shall be limited to the amount for each party set 394 out in Box 30 and Box 31, respectively. The Owners or 395 the Charterers as the case may be shall immediately 396 furnish the other partyOwners with particulars of any additional 397 insurance effected, including copies of any cover notes 398 or policies and the written consent of the insurers of 399 any such required insurance in any case where the 400 consent of such insurers is necessary. 401 (c) The Charterers shall upon the request of the 402 Owners, provide information and promptly execute such 403 documents as may be required to enable the Owners to 404 comply with the insurance provisions of the each Finance DocumentFinancial 405 Instrument (if any). 406 (d) Subject to the provisions of the Finance DocumentsFinancial Instru- 407 ment, if any, and Clause 45 and Clause 54, should the Vessel become an actual, 408 constructive, compromised or agreed tTotal lLoss under 409 the insurances required under sub-clause 13(a), all 410 insurance payments for such loss shall be paid to the 411 Owners (or, if applicable, their financiers) in accordance with the agreed loss payable clauses who shall distribute the moneys between the 412 Owners and the Charterers according to their respective 413 interests. The Charterers undertake to notify the Owners 414 and the mortgagee(s), if any, of any occurrences in 415 consequence of which the Vessel is likely to become a 416 tTotal lLoss as defined in this Clause. 417 (e) The Owners shall upon the request of the 418 Charterers and subject to the Owners’ approval of such request, promptly execute such documents as may 419 be required to enable the Charterers to abandon the 420 Vessel to insurers and claim a constructive total loss. 421 (f) For the purpose of insurance coverage against hull 422 and machinery and war risks under the provisions of 423 sub-clause 13(a), the value of the Vessel is the sum 424 indicated in Box 29Clause 45.
Copyright © 2001 BIMCO. All rights reserved. Any unauthorised copying, duplication, reproduction or distribution of this BIMCO SmartCon document will constitute an infringement of BIMCO’s copyright. Explanatory notes are available from BIMCO at www.bimco.org.
First published in 1974 as BARECON A and B. Amalgamated and revised in 1989. Revised 2001.
PART II
BARECON 2001 Standard Bareboat Charter
425 14. Insurance, Repairs and Classification - intentionally omitted 426 (Optional, only to apply if expressly agreed and stated 427 in Box 29, in which event Clause 13 shall be considered 428 deleted). 429 (a) During the Charter Period the Vessel shall be kept 430 insured by the Owners at their expense against hull and 431 machinery and war risks under the form of policy or 432 policies attached hereto. The Owners and/or insurers 433 shall not have any right of recovery or subrogation 434 against the Charterers on account of loss of or any 435 damage to the Vessel or her machinery or appurt- 436 enances covered by such insurance, or on account of 437 payments made to discharge claims against or liabilities 438 of the Vessel or the Owners covered by such insurance. 439 Insurance policies shall cover the Owners and the 440 Charterers according to their respective interests. 441 (b) During the Charter Period the Vessel shall be kept 442 insured by the Charterers at their expense against 443 Protection and Indemnity risks (and any risks against 444 which it is compulsory to insure for the operation of the 445 Vessel, including maintaining financial security in 446 accordance with sub-clause 10(a)(iii)) in such form as 447 the Owners shall in writing approve which approval shall 448 not be unreasonably withheld. 449 (c) In the event that any act or negligence of the 450 Charterers shall vitiate any of the insurance herein 451 provided, the Charterers shall pay to the Owners all 452 losses and indemnify the Owners against all claims and 453 demands which would otherwise have been covered by 454 such insurance. 455 (d) The Charterers shall, subject to the approval of the 456 Owners or Owners’ Underwriters, effect all insured 457 repairs, and the Charterers shall undertake settlement 458 of all miscellaneous expenses in connection with such 459 repairs as well as all insured charges, expenses and 460 liabilities, to the extent of coverage under the insurances 461 provided for under the provisions of sub-clause 14(a). 462 The Charterers to be secured reimbursement through 463 the Owners’ Underwriters for such expenditures upon 464 presentation of accounts. 465 (e) The Charterers to remain responsible for and to 466 effect repairs and settlement of costs and expenses 467 incurred thereby in respect of all other repairs not 468 covered by the insurances and/or not exceeding any 469 possible franchise(s) or deductibles provided for in the 470 insurances. 471 (f) All time used for repairs under the provisions of 472 sub-clauses 14(d) and 14(e) and for repairs of latent 473 defects according to Clause 3 above, including any 474 deviation, shall be for the Charterers’ account and shall 475 form part of the Charter Period. 476 The Owners shall not be responsible for any expenses 477 as are incident to the use and operation of the Vessel 478 for such time as may be required to make such repairs. 479 (g) If the conditions of the above insurances permit 480 additional insurance to be placed by the parties such 481 cover shall be limited to the amount for each party set 482 out in Box 30 and Box 31, respectively. The Owners or 483 the Charterers as the case may be shall immediately 484 furnish the other party with particulars of any additional 485 insurance effected, including copies of any cover notes 486 or policies and the written consent of the insurers of 487 any such required insurance in any case where the 488 consent of such insurers is necessary. 489 (h) Should the Vessel become an actual, constructive, 490 compromised or agreed total loss under the insurances 491 required under sub-clause 14(a), all insurance payments 492 for such loss shall be paid to the Owners, who shall 493 distribute the moneys between themselves and the 494 Charterers according to their respective interests. 495 (i) If the Vessel becomes an actual, constructive, 496 compromised or agreed total loss under the insurances 497 arranged by the Owners in accordance with sub-clause 498 14(a), this Charter shall terminate as of the date of such 499 loss. 500 (j) The Charterers shall upon the request of the 501 Owners, promptly execute such documents as may be 502 required to enable the Owners to abandon the Vessel 503 to the insurers and claim a constructive total loss. 504 (k) For the purpose of insurance coverage against hull 505 and machinery and war risks under the provisions of 506 sub-clause 14(a), the value of the Vessel is the sum 507 indicated in Box 29. 508 (l) Notwithstanding anything contained in sub-clause 509 10(a), it is agreed that under the provisions of Clause 510 14, if applicable, the Owners shall keep the Vessel’s 511 Class fully up to date with the Classification Society 512 indicated in Box 10 and maintain all other necessary 513 certificates in force at all times. 514 15. Redelivery - See Clause 46 515 At the expiration of the Charter Period the Vessel shall 516 be redelivered by the Charterers to the Owners at a 517 safe and ice-free port or place as indicated in Box 16, in 518 such ready safe berth as the Owners may direct. The 519 Charterers shall give the Owners not less than thirty 520 (30) running days’ preliminary notice of expected date, 521 range of ports of redelivery or port or place of redelivery 522 and not less than fourteen (14) running days’ definite 523 notice of expected date and port or place of redelivery. 524 Any changes thereafter in the Vessel’s position shall be 525 notified immediately to the Owners. 526 The Charterers warrant that they will not permit the 527 Vessel to commence a voyage (including any preceding 528 ballast voyage) which cannot reasonably be expected 529 to be completed in time to allow redelivery of the Vessel 530 within the Charter Period. Notwithstanding the above, 531 should the Charterers fail to redeliver the Vessel within 532 The Charter Period, the Charterers shall pay the daily 533 equivalent to the rate of hire stated in Box 22 plus 10 534 per cent. or to the market rate, whichever is the higher, 535 for the number of days by which the Charter Period is 536 exceeded. All other terms, conditions and provisions of 537 this Charter shall continue to apply. 538 Subject to the provisions of Clause 10, the Vessel shall 539 be redelivered to the Owners in the same or as good 540 structure, state, condition and class as that in which she 541 was delivered, fair wear and tear not affecting class 542 excepted. 543 The Vessel upon redelivery shall have her survey cycles 544 up to date and trading and class certificates valid for at 545 least the number of months agreed in Box 17. 546 16. Non-Lien
Copyright © 2001 BIMCO. All rights reserved. Any unauthorised copying, duplication, reproduction or distribution of this BIMCO SmartCon document will constitute an infringement of BIMCO’s copyright. Explanatory notes are available from BIMCO at www.bimco.org.
First published in 1974 as BARECON A and B. Amalgamated and revised in 1989. Revised 2001.
PART II
BARECON 2001 Standard Bareboat Charter
547 TOther than Permitted Security Interests, the Charterers will not suffer, nor permit to be continued, 548 any lien or encumbrance incurred by them or their 549 agents, which might have priority over the title and 550 interest of the Owners in the Vessel. The Charterers 551 further agree to fasten to the Vessel in a conspicuous 552 place and to keep so fastened during the Charter Period 553 a notice reading as follows: 554 “This Vessel is the property of GREAT EQUINOX LIMITED (name of Owners). It is 555 under charter to ROMAN EMPIRE INC. (name of Charterers) and by the terms 556 of the Charter Party neither the Charterers nor the 557 Master have any right, power or authority to create, incur 558 or permit to be imposed on the Vessel any lien 559 whatsoever.” or a notice in such form as required by an mortgagees. 560 17. Indemnity See Clauses 59.6, 63 and 65 561 (a) The Charterers shall indemnify the Owners against 562 any loss, damage or expense incurred by the Owners 563 arising out of or in relation to the operation of the Vessel 564 by the Charterers, and against any lien of whatsoever 565 nature arising out of an event occurring during the 566 Charter Period. If the Vessel be arrested or otherwise 567 detained by reason of claims or liens arising out of her 568 operation hereunder by the Charterers, the Charterers 569 shall at their own expense take all reasonable steps to 570 secure that within a reasonable time the Vessel is 571 released, including the provision of bail. 572 Without prejudice to the generality of the foregoing, the 573 Charterers agree to indemnify the Owners against all 574 consequences or liabilities arising from the Master, 575 officers or agents signing Bills of Lading or other 576 documents. 577 (b) If the Vessel be arrested or otherwise detained by 578 reason of a claim or claims against the Owners, the 579 Owners shall at their own expense take all reasonable 580 steps to secure that within a reasonable time the Vessel 581 is released, including the provision of bail. 582 In such circumstances the Owners shall indemnify the 583 Charterers against any loss, damage or expense 584 incurred by the Charterers (including hire paid under 585 this Charter) as a direct consequence of such arrest or 586 detention. 587 18. Lien 588 The Owners to have a lien upon all cargoes, sub-hires 589 and sub-freights belonging or due to the Charterers or 590 any sub-charterers and any Bill of Lading freight for all 591 claims under this Charter, and the Charterers to have a 592 lien on the Vessel for all moneys paid in advance and 593 not earned. 594 19. Salvage 595 All salvage and towage performed by the Vessel shall 596 be for the Charterers’ benefit and the cost of repairing 597 damage occasioned thereby shall be borne by the 598 Charterers. 599 20. Wreck Removal 600 In the event of the Vessel becoming a wreck or 601 obstruction to navigation the Charterers shall indemnify 602 the Owners against any sums whatsoever which the 603 Owners shall become liable to pay and shall pay in 604 consequence of the Vessel becoming a wreck or 605 obstruction to navigation. 606 21. General Average 607 The Owners shall not contribute to General Average. 608 22. Assignment, Sub-Charter and SaleSee Clauses 48, 52.31, 55 and 60 609 (a) The Charterers shall not assign this Charter nor 610 sub-charter the Vessel on a bareboat basis except with 611 the prior consent in writing of the Owners, which shall 612 not be unreasonably withheld, and subject to such terms 613 and conditions as the Owners shall approve. 614 (b) The Owners shall not sell the Vessel during the 615 currency of this Charter except with the prior written 616 consent of the Charterers, which shall not be unreason- 617 ably withheld, and subject to the buyer accepting an 618 assignment of this Charter. 619 23. Contracts of Carriage 620 *) (a) The Charterers are to procure that all documents 621 issued during the Charter Period evidencing the terms 622 and conditions agreed in respect of carriage of goods 623 shall contain a paramount clause incorporating any 624 legislation relating to carrier’s liability for cargo 625 compulsorily applicable in the trade; if no such legislation 626 exists, the documents shall incorporate the Hague-Visby 627 Rules. The documents shall also contain the New Jason 628 Clause and the Both-to-Blame Collision Clause. 629 *) (b) The Charterers are to procure that all passenger 630 tickets issued during the Charter Period for the carriage 631 of passengers and their luggage under this Charter shall 632 contain a paramount clause incorporating any legislation 633 relating to carrier’s liability for passengers and their 634 luggage compulsorily applicable in the trade; if no such 635 legislation exists, the passenger tickets shall incorporate 636 the Athens Convention Relating to the Carriage of 637 Passengers and their Luggage by Sea, 1974, and any 638 protocol thereto. 639 *) Delete as applicable. 640 24. BankCharter Guarantee 641 (Optional, only to apply if Box 27 filled in) 642 The Charterers undertake to furnish on or about the date of this Charter, before delivery of 643 the Vessel, a first class bank a corporate guarantee from the Charter Guarantor or bond in the 644 sum and at the place as indicated in Box 27 as guarantee, and the other Security Documents as security, in each case 645 for full performance of their obligations under this 646 Charter. 647 25. Requisition/Acquisition 648 (a) I Subject to the provisions of Finance Documents (if any) and the Charterers’ Assignment, in the event of the Requisition for Hire of the Vessel 649 by any governmental or other competent authority 650 (hereinafter referred to as “Requisition for Hire”) 651 irrespective of the date during the Charter Period when 652 “Requisition for Hire” may occur and irrespective of the 653 length thereof and whether or not it be for an indefinite 654 or a limited period of time, and irrespective of whether it 655 may or will remain in force for the remainder of the 656 Charter Period, this Charter shall not be deemed thereby 657 or thereupon to be frustrated or otherwise terminated 658 and the Charterers shall continue to pay the stipulated
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First published in 1974 as BARECON A and B. Amalgamated and revised in 1989. Revised 2001.
PART II
BARECON 2001 Standard Bareboat Charter
659 hire in the manner provided by this Charter until the time 660 when the Charter would have terminated pursuant to 661 any of the provisions hereof always provided however 662 that if all hire has been paid by the Charterers hereunder then in the event of “Requisition for Hire” any Requisition 663 Hire or compensation received or receivable by the 664 Owners the same shall be payable to the Charterers during the 665 remainder of the Charter Period or the period of the 666 “Requisition for Hire” whichever be the shorter. 667 (b) In the event of the Owners being deprived of their 668 ownership in the Vessel by any Compulsory Acquisition 669 of the Vessel or requisition for title by any governmental 670 or other competent authority (hereinafter referred to as 671 “Compulsory Acquisition”), then, irrespective of the date 672 during the Charter Period when “Compulsory Acqui- 673 sition” may occur, this Charter shall be deemed 674 terminated as of the date of such “Compulsory 675 Acquisition”. In such event Charter Hire to be considered 676 as earned and to be paid up to the date and time of 677 such “Compulsory Acquisition”. 678 26. War 679 (a) FSubject to the provisions of the Finance Documents (if any), for the purpose of this Clause, the words “War 680 Risks” shall include any war (whether actual or 681 threatened), act of war, civil war, hostilities, revolution, 682 rebellion, civil commotion, warlike operations, the laying 683 of mines (whether actual or reported), acts of piracy, 684 acts of terrorists, acts of hostility or malicious damage, 685 blockades (whether imposed against all vessels or 686 imposed selectively against vessels of certain flags or 687 ownership, or against certain cargoes or crews or 688 otherwise howsoever), by any person, body, terrorist or 689 political group, or the Government of any state 690 whatsoever, which may be dangerous or are likely to be 691 or to become dangerous to the Vessel, her cargo, crew 692 or other persons on board the Vessel. 693 (b) TUnless trading within the limits and safe places in accordance with the relevant Sub-Charter and the Charterer has complied with the terms of Clause 45 and such other requirements as to extra insurance premiums or any other requirements as may be prescribed by the insurers, the Vessel, unless the written consent of the 694 Owners be first obtained, shall not continue to or go 695 through any port, place, area or zone (whether of land 696 or sea), or any waterway or canal, where it reasonably 697 appears that the Vessel, her cargo, crew or other 698 persons on board the Vessel, in the reasonable 699 judgement of the Owners, may be, or are likely to be, 700 exposed to War Risks. Should the Vessel be within any 701 such place as aforesaid, which only becomes danger- 702 ous, or is likely to be or to become dangerous, after her 703 entry into it, the Owners shall have the right to require 704 the Vessel to leave such area. 705 (c) The Vessel shall not load contraband cargo, or to 706 pass through any blockade, whether such blockade be 707 imposed on all vessels, or is imposed selectively in any 708 way whatsoever against vessels of certain flags or 709 ownership, or against certain cargoes or crews or 710 otherwise howsoever, or to proceed to an area where 711 she shall be subject, or is likely to be subject to 712 a belligerent’s right of search and/or confiscation. 713 (d) If the insurers of the war risks insurance, when 714 Clause 14 is applicable, should require payment of 715 premiums and/or calls because, pursuant to the 716 Charterers’ orders, the Vessel is within, or is due to enter 717 and remain within, any area or areas which are specified 718 by such insurers as being subject to additional premiums 719 because of War Risks, then such premiums and/or calls 720 shall be reimbursed by the Charterers to the Owners at 721 the same time as the next payment of hire is due. 722 (e) The Charterers shall have the liberty: 723 (i) to comply with all orders, directions, recommend- 724 ations or advice as to departure, arrival, routes, 725 sailing in convoy, ports of call, stoppages, 726 destinations, discharge of cargo, delivery, or in any 727 other way whatsoever, which are given by the 728 Government of the Nation under whose flag the 729 Vessel sails, or any other Government, body or 730 group whatsoever acting with the power to compel 731 compliance with their orders or directions; 732 (ii) to comply with the orders, directions or recom- 733 mendations of any war risks underwriters who have 734 the authority to give the same under the terms of 735 the war risks insurance; 736 (iii) to comply with the terms of any resolution of the 737 Security Council of the United Nations, any 738 directives of the European Community, the effective 739 orders of any other Supranational body which has 740 the right to issue and give the same, and with 741 national laws aimed at enforcing the same to which 742 the Owners are subject, and to obey the orders 743 and directions of those who are charged with their 744 enforcement. 745 (f) In the event of outbreak of war (whether there be a 746 declaration of war or not) (i) between any two or more 747 of the following countries: the United States of America; 748 Russia; the United Kingdom; France; and the People’s 749 Republic of China, (ii) between any two or more of the 750 countries stated in Box 36, both the Owners and the 751 Charterers shall have the right to cancel this Charter, 752 whereupon the Charterers shall redeliver the Vessel to 753 the Owners in accordance with Clause 15, if the Vessel 754 has cargo on board after discharge thereof at 755 destination, or if debarred under this Clause from 756 reaching or entering it at a near, open and safe port as 757 directed by the Owners, or if the Vessel has no cargo 758 on board, at the port at which the Vessel then is or if at 759 sea at a near, open and safe port as directed by the 760 Owners. In all cases hire shall continue to be paid in 761 accordance with Clause 11 and except as aforesaid all 762 other provisions of this Charter shall apply until the end of the Agreement Term 763 redelivery. 764 27. Commission - intentionally omitted 765 The Owners to pay a commission at the rate indicated 766 in Box 33 to the Brokers named in Box 33 on any hire 767 paid under the Charter. If no rate is indicated in Box 33, 768 the commission to be paid by the Owners shall cover 769 the actual expenses of the Brokers and a reasonable 770 fee for their work.
Copyright © 2001 BIMCO. All rights reserved. Any unauthorised copying, duplication, reproduction or distribution of this BIMCO SmartCon document will constitute an infringement of BIMCO’s copyright. Explanatory notes are available from BIMCO at www.bimco.org.
First published in 1974 as BARECON A and B. Amalgamated and revised in 1989. Revised 2001.
PART II
BARECON 2001 Standard Bareboat Charter
771 If the full hire is not paid owing to breach of the Charter 772 by either of the parties the party liable therefor shall 773 indemnify the Brokers against their loss of commission. 774 Should the parties agree to cancel the Charter, the 775 Owners shall indemnify the Brokers against any loss of 776 commission but in such case the commission shall not 777 exceed the brokerage on one year’s hire. 778 28. Termination - See Clause 54 779 (a) Charterers’ Default 780 The Owners shall be entitled to withdraw the Vessel from 781 the service of the Charterers and terminate the Charter 782 with immediate effect by written notice to the Charterers if: 783 (i) the Charterers fail to pay hire in accordance with 784 Clause 11. However, where there is a failure to 785 make punctual payment of hire due to oversight, 786 negligence, errors or omissions on the part of the 787 Charterers or their bankers, the Owners shall give 788 the Charterers written notice of the number of clear 789 banking days stated in Box 34 (as recognised at 790 the agreed place of payment) in which to rectify 791 the failure, and when so rectified within such 792 number of days following the Owners’ notice, the 793 payment shall stand as regular and punctual. 794 Failure by the Charterers to pay hire within the 795 number of days stated in Box 34 of their receiving 796 the Owners’ notice as provided herein, shall entitle 797 the Owners to withdraw the Vessel from the service 798 of the Charterers and terminate the Charter without 799 further notice; 800 (ii) the Charterers fail to comply with the requirements of: 801 (1) Clause 6 (Trading Restrictions) 802 (2) Clause 13(a) (Insurance and Repairs) 803 provided that the Owners shall have the option, by 804 written notice to the Charterers, to give the 805 Charterers a specified number of days grace within 806 which to rectify the failure without prejudice to the 807 Owners’ right to withdraw and terminate under this 808 Clause if the Charterers fail to comply with such 809 notice; 810 (iii) the Charterers fail to rectify any failure to comply 811 with the requirements of sub-clause 10(a)(i) 812 (Maintenance and Repairs) as soon as practically 813 possible after the Owners have requested them in 814 writing so to do and in any event so that the Vessel’s 815 insurance cover is not prejudiced. 816 (b) Owners’ Default 817 If the Owners shall by any act or omission be in breach 818 of their obligations under this Charter to the extent that 819 the Charterers are deprived of the use of the Vessel 820 and such breach continues for a period of fourteen (14) 821 running days after written notice thereof has been given 822 by the Charterers to the Owners, the Charterers shall 823 be entitled to terminate this Charter with immediate effect 824 by written notice to the Owners. 825 (c) Loss of Vessel 826 This Charter shall be deemed to be terminated if the 827 Vessel becomes a total loss or is declared as a 828 constructive or compromised or arranged total loss. For 829 the purpose of this sub-clause, the Vessel shall not be 830 deemed to be lost unless she has either become an 831 actual total loss or agreement has been reached with 832 her underwriters in respect of her constructive, 833 compromised or arranged total loss or if such agreement 834 with her underwriters is not reached it is adjudged by a 835 competent tribunal that a constructive loss of the Vessel 836 has occurred. 837 (d) Either party shall be entitled to terminate this 838 Charter with immediate effect by written notice to the 839 other party in the event of an order being made or 840 resolution passed for the winding up, dissolution, 841 liquidation or bankruptcy of the other party (otherwise 842 than for the purpose of reconstruction or amalgamation) 843 or if a receiver is appointed, or if it suspends payment, 844 ceases to carry on business or makes any special 845 arrangement or composition with its creditors. 846 (e) The termination of this Charter shall be without 847 prejudice to all rights accrued due between the parties 848 prior to the date of termination and to any claim that 849 either party might have. 850 29. Repossession - See also Clause 54 851 In the event of the Owners have given a Termination Notice to the Charterers pursuant to Clause 54.3, the Owners shall in addition termination of this Charter in 852 accordance with the applicable provisions of Clause 28, 853 the Owners shall have the right to repossess the Vessel 854 from the Charterers at her current or next port of call, or 855 at a port or place convenient to them without hindrance 856 or interference by the Charterers, courts or local 857 authorities. Pending physical repossession of the Vessel 858 in accordance with this Clause 29 and/or Clause 54, the Charterers shall 859 hold the Vessel as gratuitous bailee only to the Owners and the Charterers shall procure that the master and crew follow the orders and directions of the Owners. 860 The Owners shall arrange for an authorised represent- 861 ative to board the Vessel as soon as reasonably 862 practicable following the termination of the Charter. The 863 Vessel shall be deemed to be repossessed by the 864 Owners from the Charterers upon the boarding of the 865 Vessel by the Owners’ representative. All arrangements 866 and expenses relating to the settling of wages, 867 disembarkation and repatriation of the Charterers’ 868 Master, officers and crew shall be the sole responsibility 869 of the Charterers. 870 30. Dispute Resolution - See Clause 81 871 *) (a) This Contract shall be governed by and construed 872 in accordance with English law and any dispute arising 873 out of or in connection with this Contract shall be referred 874 to arbitration in London in accordance with the Arbitration 875 Act 1996 or any statutory modification or re-enactment 876 thereof save to the extent necessary to give effect to 877 the provisions of this Clause. 878 The arbitration shall be conducted in accordance with 879 the London Maritime Arbitrators Association (LMAA) 880 Terms current at the time when the arbitration proceed- 881 ings are commenced. 882 The reference shall be to three arbitrators. A party 883 wishing to refer a dispute to arbitration shall appoint its 884 arbitrator and send notice of such appointment in writing 885 to the other party requiring the other party to appoint its 886 own arbitrator within 14 calendar days of that notice and 887 stating that it will appoint its arbitrator as sole arbitrator 888 unless the other party appoints its own arbitrator and 889 gives notice that it has done so within the 14 days 890 specified. If the other party does not appoint its own
Copyright © 2001 BIMCO. All rights reserved. Any unauthorised copying, duplication, reproduction or distribution of this BIMCO SmartCon document will constitute an infringement of BIMCO’s copyright. Explanatory notes are available from BIMCO at www.bimco.org.
First published in 1974 as BARECON A and B. Amalgamated and revised in 1989. Revised 2001.
PART II
BARECON 2001 Standard Bareboat Charter
891 arbitrator and give notice that it has done so within the 892 14 days specified, the party referring a dispute to 893 arbitration may, without the requirement of any further 894 prior notice to the other party, appoint its arbitrator as 895 sole arbitrator and shall advise the other party 896 accordingly. The award of a sole arbitrator shall be 897 binding on both parties as if he had been appointed by 898 agreement. 899 Nothing herein shall prevent the parties agreeing in 900 writing to vary these provisions to provide for the 901 appointment of a sole arbitrator. 902 In cases where neither the claim nor any counterclaim 903 exceeds the sum of US$50,000 (or such other sum as 904 the parties may agree) the arbitration shall be conducted 905 in accordance with the LMAA Small Claims Procedure 906 current at the time when the arbitration proceedings are 907 commenced. 908 *) (b) This Contract shall be governed by and construed 909 in accordance with Title 9 of the United States Code 910 and the Maritime Law of the United States and any 911 dispute arising out of or in connection with this Contract 912 shall be referred to three persons at New York, one to 913 be appointed by each of the parties hereto, and the third 914 by the two so chosen; their decision or that of any two 915 of them shall be final, and for the purposes of enforcing 916 any award, judgement may be entered on an award by 917 any court of competent jurisdiction. The proceedings 918 shall be conducted in accordance with the rules of the 919 Society of Maritime Arbitrators, Inc. 920 In cases where neither the claim nor any counterclaim 921 exceeds the sum of US$50,000 (or such other sum as 922 the parties may agree) the arbitration shall be conducted 923 in accordance with the Shortened Arbitration Procedure 924 of the Society of Maritime Arbitrators, Inc. current at 925 the time when the arbitration proceedings are commenced. 926 *) (c) This Contract shall be governed by and construed 927 in accordance with the laws of the place mutually agreed 928 by the parties and any dispute arising out of or in 929 connection with this Contract shall be referred to 930 arbitration at a mutually agreed place, subject to the 931 procedures applicable there. 932 (d) Notwithstanding (a), (b) or (c) above, the parties 933 may agree at any time to refer to mediation any 934 difference and/or dispute arising out of or in connection 935 with this Contract. 936 In the case of a dispute in respect of which arbitration 937 has been commenced under (a), (b) or (c) above, the 938 following shall apply:- 939 (i) Either party may at any time and from time to time 940 elect to refer the dispute or part of the dispute to 941 mediation by service on the other party of a written 942 notice (the “Mediation Notice”) calling on the other 943 party to agree to mediation. 944 (ii) The other party shall thereupon within 14 calendar 945 days of receipt of the Mediation Notice confirm that 946 they agree to mediation, in which case the parties 947 shall thereafter agree a mediator within a further 948 14 calendar days, failing which on the application 949 of either party a mediator will be appointed promptly 950 by the Arbitration Tribunal (“the Tribunal”) or such 951 person as the Tribunal may designate for that 952 purpose. The mediation shall be conducted in such 953 place and in accordance with such procedure and 954 on such terms as the parties may agree or, in the 955 event of disagreement, as may be set by the 956 mediator. 957 (iii) If the other party does not agree to mediate, that 958 fact may be brought to the attention of the Tribunal 959 and may be taken into account by the Tribunal when 960 allocating the costs of the arbitration as between 961 the parties. 962 (iv) The mediation shall not affect the right of either 963 party to seek such relief or take such steps as it 964 considers necessary to protect its interest. 965 (v) Either party may advise the Tribunal that they have 966 agreed to mediation. The arbitration procedure shall 967 continue during the conduct of the mediation but 968 the Tribunal may take the mediation timetable into 969 account when setting the timetable for steps in the 970 arbitration. 971 (vi) Unless otherwise agreed or specified in the 972 mediation terms, each party shall bear its own costs 973 incurred in the mediation and the parties shall share 974 equally the mediator’s costs and expenses. 975 (vii) The mediation process shall be without prejudice 976 and confidential and no information or documents 977 disclosed during it shall be revealed to the Tribunal 978 except to the extent that they are disclosable under 979 the law and procedure governing the arbitration. 980 (Note: The parties should be aware that the mediation 981 process may not necessarily interrupt time limits.) 982 (e) If Box 35 in Part I is not appropriately filled in, sub-clause 983 30(a) of this Clause shall apply. Sub-clause 30(d) shall 984 apply in all cases. 985 *) Sub-clauses 30(a), 30(b) and 30(c) are alternatives; 986 indicate alternative agreed in Box 35. 987 31. Notices - See Clause 75 988 (a) Any notice to be given by either party to the other 989 party shall be in writing and may be sent by fax, telex, 990 registered or recorded mail or by personal service. 991 (b) The address of the Parties for service of such 992 communication shall be as stated in Boxes 3 and 4 993 respectively.
Copyright © 2001 BIMCO. All rights reserved. Any unauthorised copying, duplication, reproduction or distribution of this BIMCO SmartCon document will constitute an infringement of BIMCO’s copyright. Explanatory notes are available from BIMCO at www.bimco.org.
First published in 1974 as BARECON A and B. Amalgamated and revised in 1989. Revised 2001.
PART III
PROVISIONS TO APPLY FOR NEWBUILDING VESSELS ONLY
(Optional, only to apply if expressly agreed and stated in Box 37)
1 Specifications and Building Contract 2 (a) The Vessel shall be constructed in accordance with 3 the Building Contract (hereafter called “the Building 4 Contract”) as annexed to this Charter, made between the 5 Builders and the Owners and in accordance with the 6 specifications and plans annexed thereto, such Building 7 Contract, specifications and plans having been counter- 8 signed as approved by the Charterers. 9 (b) No change shall be made in the Building Contract or 10 in the specifications or plans of the Vessel as approved by 11 the Charterers as aforesaid, without the Charterers’ 12 consent. 13 (c) The Charterers shall have the right to send their 14 representative to the Builders’ Yard to inspect the Vessel 15 during the course of her construction to satisfy themselves 16 that construction is in accordance with such approved 17 specifications and plans as referred to under sub-clause 18 (a) of this Clause. 19 (d) The Vessel shall be built in accordance with the 20 Building Contract and shall be of the description set out 21 therein. Subject to the provisions of sub-clause 2(c)(ii) 22 hereunder, the Charterers shall be bound to accept the 23 Vessel from the Owners, completed and constructed in 24 accordance with the Building Contract, on the date of 25 delivery by the Builders. The Charterers undertake that 26 having accepted the Vessel they will not thereafter raise 27 any claims against the Owners in respect of the Vessel’s 28 performance or specification or defects, if any. 29 Nevertheless, in respect of any repairs, replacements or 30 defects which appear within the first 12 months from 31 delivery by the Builders, the Owners shall endeavour to 32 compel the Builders to repair, replace or remedy any defects 33 or to recover from the Builders any expenditure incurred in 34 carrying out such repairs, replacements or remedies. 35 However, the Owners’ liability to the Charterers shall be 36 limited to the extent the Owners have a valid claim against 37 the Builders under the guarantee clause of the Building 38 Contract (a copy whereof has been supplied to the 39 Charterers). The Charterers shall be bound to accept such 40 sums as the Owners are reasonably able to recover under 41 this Clause and shall make no further claim on the Owners 42 for the difference between the amount(s) so recovered and 43 the actual expenditure on repairs, replacement or 44 remedying defects or for any loss of time incurred. 45 Any liquidated damages for physical defects or deficiencies 46 shall accrue to the account of the party stated in Box 41(a) 47 or if not filled in shall be shared equally between the parties. 48 The costs of pursuing a claim or claims against the Builders 49 under this Clause (including any liability to the Builders) 50 shall be borne by the party stated in Box 41(b) or if not 51 filled in shall be shared equally between the parties. 52 2. Time and Place of Delivery 53 (a) Subject to the Vessel having completed her 54 acceptance trials including trials of cargo equipment in 55 accordance with the Building Contract and specifications 56 to the satisfaction of the Charterers, the Owners shall give 57 and the Charterers shall take delivery of the Vessel afloat 58 when ready for delivery and properly documented at the 59 Builders’ Yard or some other safe and readily accessible 60 dock, wharf or place as may be agreed between the parties 61 hereto and the Builders. Under the Building Contract the 62 Builders have estimated that the Vessel will be ready for 63 delivery to the Owners as therein provided but the delivery 64 date for the purpose of this Charter shall be the date when 65 the Vessel is in fact ready for delivery by the Builders after 66 completion of trials whether that be before or after as 67 indicated in the Building Contract. The Charterers shall not 68 be entitled to refuse acceptance of delivery of the Vessel 69 and upon and after such acceptance, subject to Clause 70 1(d), the Charterers shall not be entitled to make any claim 71 against the Owners in respect of any conditions, 72 representations or warranties, whether express or implied, 73 as to the seaworthiness of the Vessel or in respect of delay 74 in delivery. 75 (b) If for any reason other than a default by the Owners 76 under the Building Contract, the Builders become entitled 77 under that Contract not to deliver the Vessel to the Owners, 78 the Owners shall upon giving to the Charterers written 79 notice of Builders becoming so entitled, be excused from 80 giving delivery of the Vessel to the Charterers and upon 81 receipt of such notice by the Charterers this Charter shall 82 cease to have effect. 83 (c) If for any reason the Owners become entitled under 84 the Building Contract to reject the Vessel the Owners shall, 85 before exercising such right of rejection, consult the 86 Charterers and thereupon 87 (i) if the Charterers do not wish to take delivery of the Vessel 88 they shall inform the Owners within seven (7) running days 89 by notice in writing and upon receipt by the Owners of such 90 notice this Charter shall cease to have effect; or 91 (ii) if the Charterers wish to take delivery of the Vessel 92 they may by notice in writing within seven (7) running days 93 require the Owners to negotiate with the Builders as to the 94 terms on which delivery should be taken and/or refrain from 95 exercising their right to rejection and upon receipt of such 96 notice the Owners shall commence such negotiations and/ 97 or take delivery of the Vessel from the Builders and deliver 98 her to the Charterers; 99 (iii) in no circumstances shall the Charterers be entitled to 100 reject the Vessel unless the Owners are able to reject the 101 Vessel from the Builders; 102 (iv) if this Charter terminates under sub-clause (b) or (c) of 103 this Clause, the Owners shall thereafter not be liable to the 104 Charterers for any claim under or arising out of this Charter 105 or its termination. 106 (d) Any liquidated damages for delay in delivery under the 107 Building Contract and any costs incurred in pursuing a claim 108 therefor shall accrue to the account of the party stated in 109 Box 41(c) or if not filled in shall be shared equally between 110 the parties. 111 3. Guarantee Works 112 If not otherwise agreed, the Owners authorise the 113 Charterers to arrange for the guarantee works to be 114 performed in accordance with the building contract terms, 115 and hire to continue during the period of guarantee works. 116 The Charterers have to advise the Owners about the 117 performance to the extent the Owners may request. 118 4. Name of Vessel 119 The name of the Vessel shall be mutually agreed between 120 the Owners and the Charterers and the Vessel shall be
Copyright © 2001 BIMCO. All rights reserved. Any unauthorised copying, duplication, reproduction or distribution of this BIMCO SmartCon document will constitute an infringement of
BIMCO’s copyright. Explanatory notes are available from BIMCO at www.bimco.org.
First published in 1974 as BARECON A and B. Amalgamated and revised in 1989. Revised 2001.
PART III
PROVISIONS TO APPLY FOR NEWBUILDING VESSELS ONLY
(Optional, only to apply if expressly agreed and stated in Box 37)
121 painted in the colours, display the funnel insignia and fly 122 the house flag as required by the Charterers. 123 5. Survey on Redelivery 124 The Owners and the Charterers shall appoint surveyors 125 for the purpose of determining and agreeing in writing the 126 condition of the Vessel at the time of re-delivery. 127 Without prejudice to Clause 15 (Part II), the Charterers 128 shall bear all survey expenses and all other costs, if any, 129 including the cost of docking and undocking, if required, 130 as well as all repair costs incurred. The Charterers shall 131 also bear all loss of time spent in connection with any 132 docking and undocking as well as repairs, which shall be 133 paid at the rate of hire per day or pro rata.
Copyright © 2001 BIMCO. All rights reserved. Any unauthorised copying, duplication, reproduction or distribution of this BIMCO SmartCon document will constitute an infringement of
BIMCO’s copyright. Explanatory notes are available from BIMCO at www.bimco.org.
First published in 1974 as BARECON A and B. Amalgamated and revised in 1989. Revised 2001.
PART IV
HIRE/PURCHASE AGREEMENT
(Optional, only to apply if expressly agreed and stated in Box 42)
1 On expiration of this Charter and provided the Charterers 2 have fulfilled their obligations according to Part I and II 3 as well as Part III, if applicable, it is agreed, that on 4 payment of the final payment of hire as per Clause 11 5 the Charterers have purchased the Vessel with 6 everything belonging to her and the Vessel is fully paid 7 for. 8 In the following paragraphs the Owners are referred to 9 as the Sellers and the Charterers as the Buyers. 10 The Vessel shall be delivered by the Sellers and taken 11 over by the Buyers on expiration of the Charter. 12 The Sellers guarantee that the Vessel, at the time of 13 delivery, is free from all encumbrances and maritime 14 liens or any debts whatsoever other than those arising 15 from anything done or not done by the Buyers or any 16 existing mortgage agreed not to be paid off by the time 17 of delivery. Should any claims, which have been incurred 18 prior to the time of delivery be made against the Vessel, 19 the Sellers hereby undertake to indemnify the Buyers 20 against all consequences of such claims to the extent it 21 can be proved that the Sellers are responsible for such 22 claims. Any taxes, notarial, consular and other charges 23 and expenses connected with the purchase and 24 registration under Buyers’ flag, shall be for Buyers’ 25 account. Any taxes, consular and other charges and 26 expenses connected with closing of the Sellers’ register, 27 shall be for Sellers’ account. 28 In exchange for payment of the last month’s hire 29 instalment the Sellers shall furnish the Buyers with a 30 Bill of Sale duly attested and legalized, together with a 31 certificate setting out the registered encumbrances, if 32 any. On delivery of the Vessel the Sellers shall provide 33 for deletion of the Vessel from the Ship’s Register and 34 deliver a certificate of deletion to the Buyers. 35 The Sellers shall, at the time of delivery, hand to the 36 Buyers all classification certificates (for hull, engines, 37 anchors, chains, etc.), as well as all plans which may 38 be in Sellers’ possession. 39 The Wireless Installation and Nautical Instruments, 40 unless on hire, shall be included in the sale without any 41 extra payment. 42 The Vessel with everything belonging to her shall be at 43 Sellers’ risk and expense until she is delivered to the 44 Buyers, subject to the conditions of this Contract and 45 the Vessel with everything belonging to her shall be 46 delivered and taken over as she is at the time of delivery, 47 after which the Sellers shall have no responsibility for 48 possible faults or deficiencies of any description. 49 The Buyers undertake to pay for the repatriation of the 50 Master, officers and other personnel if appointed by the 51 Sellers to the port where the Vessel entered the Bareboat 52 Charter as per Clause 3 (Part II) or to pay the equivalent 53 cost for their journey to any other place.
Copyright © 2001 BIMCO. All rights reserved. Any unauthorised copying, duplication, reproduction or distribution of this BIMCO SmartCon document will constitute an infringement of
BIMCO’s copyright. Explanatory notes are available from BIMCO at www.bimco.org.
First published in 1974 as BARECON A and B. Amalgamated and revised in 1989. Revised 2001.
PART V
PROVISIONS TO APPLY FOR VESSELS REGISTERED IN A BAREBOAT CHARTER REGISTRY
(Optional, only to apply if expressly agreed and stated in Box 43)
1 1. Definitions 2 For the purpose of this PART V, the following terms shall 3 have the meanings hereby assigned to them: 4 “The Bareboat Charter Registry” shall mean the registry 5 of the State whose flag the Vessel will fly and in which 6 the Charterers are registered as the bareboat charterers 7 during the period of the Bareboat Charter. 8 “The Underlying Registry” shall mean the registry of the 9 state in which the Owners of the Vessel are registered 10 as Owners and to which jurisdiction and control of the 11 Vessel will revert upon termination of the Bareboat 12 Charter Registration. 13 2. Mortgage 14 The Vessel chartered under this Charter is financed by 15 a mortgage and the provisions of Clause 12(b) (Part II) 16 shall apply. 17 3. Termination of Charter by Default 18 If the Vessel chartered under this Charter is registered 19 in a Bareboat Charter Registry as stated in Box 44, and 20 if the Owners shall default in the payment of any amounts 21 due under the mortgage(s) specified in Box 28, the 22 Charterers shall, if so required by the mortgagee, direct 23 the Owners to re-register the Vessel in the Underlying 24 Registry as shown in Box 45. 25 In the event of the Vessel being deleted from the 26 Bareboat Charter Registry as stated in Box 44, due to a 27 default by the Owners in the payment of any amounts 28 due under the mortgage(s), the Charterers shall have 29 the right to terminate this Charter forthwith and without 30 prejudice to any other claim they may have against the 31 Owners under this Charter.
Copyright © 2001 BIMCO. All rights reserved. Any unauthorised copying, duplication, reproduction or distribution of this BIMCO SmartCon document will constitute an infringement of BIMCO’s copyright. Explanatory notes are available from BIMCO at www.bimco.org.
First published in 1974 as BARECON A and B. Amalgamated and revised in 1989. Revised 2001.
EXECUTION VERSION
CONTENTS
Page
| 33. | Interpretations | 19 |
| 34. | Background | 20 |
| 35. | INTENTIONALLY OMITTED | 21 |
| 36. | Delivery | 21 |
| 37. | INTENTIONALLY OMITTED | 21 |
| 38. | Terms of delivery | 21 |
| 39. | Cancellation | 22 |
| 40. | Conditions precedent | 23 |
| 41. | Bunkers and luboils | 27 |
| 42. | Further maintenance and operation | 27 |
| 43. | Structural changes and alterations | 28 |
| 44. | Hire | 29 |
| 45. | Insurance | 35 |
| 46. | Redelivery | 40 |
| 47. | Redelivery conditions | 40 |
| 48. | Owners’ mortgage | 42 |
| 49. | Diver’s inspection at redelivery | 43 |
| 50. | Transport documents | 43 |
| 51. | Charterers’ representations and warranties | 44 |
| 52. | Charterers’ undertakings | 48 |
| 53. | Earnings Account | 57 |
| 54. | Termination Events | 57 |
| 55. | Assignment by charterers | 65 |
| 56. | Name of Vessel | 65 |
| 57. | Charter Period | 65 |
| 58. | Handling Fee | 66 |
| 59. | Purchase Option, Purchase Obligation, Transfer of Title and Partial Prepayment | 66 |
| 60. | Sale of Vessel by the Owners | 67 |
| 61. | Total Loss | 68 |
| 62. | Additional payment obligations | 69 |
| 63. | Stamp duties and taxes | 69 |
| 64. | Operational notifiable events | 69 |
| 65. | Further indemnities | 70 |
| 66. | Set-off | 72 |
| 67. | Further assurances and undertakings | 72 |
AVIC Top Ships III – BBC Additional Clauses
| 68. | Cumulative rights | 72 |
| 69. | Day count convention | 73 |
| 70. | No waiver | 73 |
| 71. | Entire agreement | 73 |
| 72. | Invalidity | 73 |
| 73. | English language | 73 |
| 74. | No partnership | 73 |
| 75. | Notices | 74 |
| 76. | Conflicts | 75 |
| 77. | Survival of Charterers’ obligations | 76 |
| 78. | Counterparts | 76 |
| 79. | Confidentiality | 76 |
| 80. | Third Parties Act | 76 |
| 81. | Law and jurisdiction | 77 |
| 82. | Conditions subsequent | 77 |
| 83. | FATCA | 78 |
| 84. | Application of Proceeds | 80 |
| 85. | Grant of Security Interest | 81 |
| SCHEDULE 1 FORM OF PROTOCOL OF DELIVERY AND ACCEPTANCE | 83 |
| SCHEDULE 2 FORM OF TITLE TRANSFER PROTOCOL OF DELIVERY AND ACCEPTANCE | 84 |
| SCHEDULE 3 HIRE PAYMENT SCHEDULE | 85 |
AVIC Top Ships III – BBC Additional Clauses
ADDITIONAL CLAUSES
TO BAREBOAT CHARTER FOR
M.V. ECO WEST COAST
| 32. | Definitions |
In this Charter:
“Account Bank” means ABN AMRO Bank N.V. of Amsterdam, The Netherlands, or such other bank or financial institution as selected or designated by the Owners from time to time.
“Account Charge” means the account security deed in respect of the Earnings Account and all amounts from time to time standing to the credit to the Earnings Account from the Charterers in favour of the Owners.
“Actual Delivery Date” means the date of delivery of the Vessel by the Owners to the Charterers under this Charter.
“Advance Hire” means an amount which is the lower of (a) US Dollars thirty-four million (US$34,000,000) and (b) forty-five per cent (45%) of the Initial Market Value of the Vessel.
“Affiliate” means, in relation to any entity, a Subsidiary of that entity, a Holding Company of that entity or any other Subsidiary of that Holding Company.
“Agreement Term” means the period commencing on the date of this Charter and terminating on the expiration of the Charter Period or such earlier or later date on which all money of any nature owed by the Obligors to the Owners under the Transaction Documents or otherwise in connection with the Vessel have been paid in full to the Owners and no obligations of the Obligors of any nature to the Owners or otherwise in connection with the Transaction Documents or with the Vessel remain unperformed or undischarged.
“AML Laws” means as to any person and in relation to money laundering or terrorism, the constitutional or organisational documents of such person, and any treaty, law (including the common law), statute, ordinance, code, rule, regulation, guidelines, licence, permit requirement, order or determination of an arbitrator or a court or other governmental authority and the interpretation or administration thereof, in each case applicable to or binding upon such person or any of its property or to which such person or any of its property is subject.
“Approved Broker” means each of Arrow Sale & Purchase (UK) Limited, Braemar ACM Shipbroking, Clarkson Platou, Maersk Broker A/S, Fearnleys, SSY, Howe Robinson, Lorentzen & Stemoco and any other reputable and independent ship brokers nominated by the Charterers and acceptable to the Owners (such acceptance not to be unreasonably withheld or delayed).
“Approved Managers” in relation to the Vessel, means:
| (a) | Central Mare Inc., a corporation incorporated and existing under the laws of the Republic of the Marshall Islands with its registered address at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Republic of the Marshall Islands, MH 96960, in respect of technical management (the “Technical Manager”); and |
AVIC Top Ships III – BBC Additional Clauses
| (b) | Central Shipping Inc., a corporation incorporated and existing under the laws of the Republic of the Marshall Islands with its registered address at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Republic of the Marshall Islands, MH 96960, in respect of commercial management (the “Commercial Manager”), |
or in either case, any other management company reasonably acceptable to the Owners (which acceptance shall not be unreasonably delayed) and appointed by the Charterers, and “Approved Manager” means any of them.
“Assumed Owners’ Cost” means US Dollars forty-one million (US$41,000,000).
“Balloon Amount” means an amount which is the lower of (a) US Dollars nineteen million (US$19,000,000) and (b) twenty-six per cent. (26%) of the Initial Market Value of the Vessel, or such other amount representing the Cost Balance as at the last day of the Charter Period.
“Break Costs” means all costs, fees, expenses, reasonable losses, premiums or penalties incurred by the Owners as a result of the receipt by the Owners of any payment under or in relation to the Transaction Documents on a day other than the due date for payment of the sum in question, in accordance with the terms of this Charter, for the avoidance of doubt, including (without limitation) any payments made in accordance with Clause 59.
“Business Day” means a day (other than a Saturday or Sunday) on which banks and financial markets are open for business in Shanghai, Athens, the Netherlands, London and New York, and in relation to the fixing of an interest rate, also a day (other than a Saturday or Sunday) which is a US Government Securities Business Day.
“Cancelling Date” has the meaning given to such term in the MOA.
“Change of Control” means, in relation to the Charterers, the Charterers ceasing to be in the ownership and Control of (either directly or indirectly) the Pistiolis Family either directly or via the Charter Guarantor or, in relation to the Charterers or the Charter Guarantor, any circumstances in which Control of the Charterers or the Charter Guarantor passes from the Pistiolis Family who are in Control of the Charterers and the Charter Guarantor to a person or persons who is not or are not in Control of the Charterer and the Charter Guarantor as at the date of this Charter.
“Charter Group” means the Charterers, and the Charter Guarantor, including all of their respective Holding Company (if any) and Subsidiaries from time to time, and a “member of the Charter Group” means any one of them.
“Charter Guarantee” means the guarantee made or to be made by the Charter Guarantor in favour of the Owners in respect of the Charterers’ obligations under this Charter.
“Charter Guarantor” means TOP SHIPS INC., a corporation incorporated and existing under the laws of the Republic of the Marshall Islands with its registered address at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Republic of the Marshall Islands, MH 96960.
AVIC Top Ships II – BBC Additional Clauses
“Charter Period” has the meaning given to it in Clause 57.
“Charterers’ Assignment” means the deed of assignment executed or to be executed (as the case may be) by the Charterers in favour of the Owners in relation to certain of the Charterers’ rights and interest in and to (amongst other things) the Earnings, Insurances, Requisition Compensation and any Sub-Charter to which the Charterers are a party.
“Classification Society” means the vessel classification society referred to in Box 10 (Classification Society) of this Charter, or DNV GL, Lloyd’s Register of Shipping (LR), Bureau Veritas (BV), Korean Register of Shipping (KR), China Classification Society (CCS) or such other reputable classification society which the Owners may approve from time to time.
“Collateral Charter Amendment Deed” the amendment and restatement deed entered or to be entered into between, inter alia, the Collateral Owner, as owner and the Collateral Charterer, as charterer in relation to the bareboat charter dated 2 March 2022 in respect of the Collateral Vessel which was entered into between the Collateral Owner as owner and the Collateral Charterer as charterer.
“Collateral Charterer” means ECO OCEANO CA INC., a corporation incorporated and existing under the laws of the Republic of the Marshall Islands with its registered address at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960.
“Collateral Owner” means GREAT OCEANO LIMITED, a corporation incorporated and existing under the laws of the Republic of the Marshall Islands with its registered address at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960.
“Collateral Vessel” means the crude oil tanker named m.v. “ECO OCEANO CA” with IMO no. 9794020.
“Control” means, in respect of the Charterers and the Charter Guarantor, the power of a person to secure that the affairs of the Charterers and the Charter Guarantor are conducted in accordance with the wishes of that person:
| (a) | by means of the holding of shares, or the possession of voting powers in or in relation to the Charterers and the Charter Guarantor; or |
| (b) | as a result of any powers conferred by the articles of association or any other document regulating the Charterers and the Charter Guarantor. |
“Cost Balance” means at any relevant time during the Agreement Term, the Owners’ Cost minus the aggregated Fixed Hire which has been paid by the Charterers and received by the Owners as at such date.
“Default Termination” means a termination of the Charter Period pursuant to the provisions of Clause 54 (Termination Events).
AVIC Top Ships II – BBC Additional Clauses
“Delivery Conditions” means the conditions set out in paragraph (b) of Clause 40 (Delivery Conditions).
“Disruption Event” means either or both of:
| (a) | a material disruption to those payment or communications systems or to those financial markets which are, in each case, required to operate in order for payments to be made in order for the transactions contemplated by the Transaction Documents to be carried out which disruption is not caused by, and is beyond the control of, any of the Parties; or |
| (b) | the occurrence of any other event which results in a disruption (of a technical or systems-related nature) to the treasury or payments operations of a Party preventing that, or any other Party: |
| (i) | from performing its payment obligations under the Transaction Documents; or |
| (ii) | from communicating with other Parties in accordance with the terms of the Transaction Documents, |
and which (in either such case) is not caused by, and is beyond the control of, the Party whose operations are disrupted.
“Earnings” means all hires, freights, pool income and other sums payable to or for the account of the Charterers in respect of the Vessel including (without limitation) all remuneration for salvage and towage services, demurrage and detention moneys, contributions in general average, compensation in respect of any requisition for hire, and damages and other payments (whether awarded by any court or arbitral tribunal or by agreement or otherwise) for breach, termination or variation of any contract for the operation, employment or use of the Vessel.
“Earnings Account” means the US Dollar account in the name of the Charterers opened or to be opened with the Account Bank, and includes any sub-account thereof and such account which is designated by the Owners as the earnings account for the purposes of this Charter.
“Environmental Approvals” means any present or future permit, licence, approval, ruling, variance, exemption or other authorisation required under the applicable Environmental Law.
“Environmental Claim” means any claim, proceeding or investigation by any person in respect of any Environmental Law.
“Environmental Incident” means:
| (a) | any release, emission, spill or discharge from the Vessel or into or upon the air, sea, land or soils (including the seabed) or surface water of Environmentally Sensitive Material within or from the Vessel; or |
| (b) | any incident in which Environmentally Sensitive Material is released, emitted, spilled or discharged into or upon the air, sea, land or soils (including the seabed) or surface water from a vessel other than the Vessel and which involves a collision between the Vessel and such other vessel or some other 91127416v1 incident of navigation or operation, in either case, in connection with which the Vessel is actually or potentially liable to be arrested, attached, detained or injuncted and/or the Vessel and/or any Obligor and/or any operator or manager of the Vessel is at fault or allegedly at fault or otherwise liable to any legal or administrative action; or |
AVIC Top Ships II – BBC Additional Clauses
| (c) | any other incident in which Environmentally Sensitive Material is released, emitted, spilled or discharged into or upon the air, sea, land or soils (including the seabed) or surface water otherwise than from the Vessel and in connection with which the Vessel is actually or potentially liable to be arrested and/or where any Obligor and/or any operator or manager of the Vessel is at fault or allegedly at fault or otherwise liable to any legal or administrative action, other than in accordance with an Environmental Approval. |
“Environmentally Sensitive Material” means (i) oil and oil products and (ii) any other waste, pollutant, contaminant or other substance (including any liquid, solid, gas, ion, living organism or noise) that may be harmful to human health or other life or the environment or a nuisance to any person or that may make the enjoyment, ownership or other territorial control of any affected land, property or waters more costly for such person to a material degree.
“Environmental Law” means any applicable law and regulation in any jurisdiction in which any Obligor conducts business which relates to the pollution or protection of the environment or harm to or the protection of human health or the health of animals or plants.
“Environmental Permits” means any authorisation and the filing of any notification, report or assessment required under any Environmental Law for the operation of the business of any Obligor.
“Existing Mortgage” has the meaning given to such term in the MOA.
“Existing Security Documents” means the Existing Mortgage and the other security documents executed by an Obligor in favour of, among others, the Outgoing Mortgagee, which shall be discharged and released prior to the delivery of the Vessel under the MOA on the Actual Delivery Date.
“Finance Document”” means any facility agreement, security document, fee letter and any other document designated as such by the Finance Parties and the Owners and which have been or may be (as the case may be) entered into between the Finance Parties and the Owners for the purpose of, among other things, financing or (as the case may be) refinancing all or any part of the Cost Balance.
“Finance Party” means any bank or financial institution which is or will be party to a Finance Document (other than the Owners and other entities which may have agreed or be intended as debtors and/or obligors thereunder) and
“Finance Parties” means two or more of them.
“Financial Indebtedness” means any obligation for the payment or repayment of money, whether present or future, actual or contingent, in respect of:
| (a) | moneys borrowed; |
| (b) | any acceptance credit; |
AVIC Top Ships II – BBC Additional Clauses
| (c) |
any bond, note, debenture, loan stock or similar instrument; |
|
| (d) | any finance, capital lease or operating leases for financing purposes; |
| (e) | receivables sold or discounted (other than on a non-recourse basis); |
| (f) | deferred payments for assets or services; |
| (g) | any derivative transaction protecting against or benefiting from fluctuations in any rate or price (and, when calculating the value of any derivative transaction, only the marked to market value shall be taken into account); |
| (h) | any amount raised under any other transaction (including any forward sale or purchase agreement) having the commercial effect of a borrowing according to the relevant account principles; |
| (i) | any counter-indemnity obligation in respect of a guarantee, indemnity, bond, standby or documentary letter of credit or any other instrument issued by a bank or financial institution; and |
| (j) | the amount of any liability in respect of any guarantee or indemnity for any of the items referred to in (a) to (i). |
“Fixed Hire ” has the meaning given to it in Clause 44.1 (Hire), being, (a) in relation to each Hire Payment Date (other than the last Hire Payment Date), 1/120 of the difference between the Owners’ Cost and the Balloon Amount and (b) in relation to the last Hire Payment Date, the Balloon Amount, and in each case, which may be revised and adjusted from time to time in accordance with the terms of this Charter.
“GAAP” means generally accepted accounting principles in the United States of America.
“Handling Fee” has the meaning given to it in Clause 58 (Handling Fee).
“Hire” means:
| (a) | the Advance Hire, as further detailed in Clause 43A (Advance Hire); and |
| (b) | each of or, as the context may require, all of the instalments of hire payable under this Charter on each Hire Payment Date comprising in the case of each Hire Payment Date other than the last Hire Payment Date, both Fixed Hire and Variable Hire and in the case of the last Hire Payment Date, the Fixed Hire only, as further detailed in Clause 44.1 (Hire). |
“Hire Payment Date” means the tenth (10th) day of each month after the preceding Hire Payment Date (or if such date is not a Business Day, the immediately preceding Business Day), save that:
| (a) | the first Hire Payment Date shall fall on the Actual Delivery Date; |
| (b) | the second Hire Payment Date shall fall on the date which is the tenth (10th) day of the immediately subsequent month after the Actual Delivery Date (or if such date is not a Business Day, the immediately preceding Business Day); and |
AVIC Top Ships II – BBC Additional Clauses
| (c) | the last Hire Payment Date shall be the last day of the Charter Period (or if such date is not a Business Day, the immediately preceding Business Day). |
“Hire Payment Schedule” means a payment schedule to be provided by the Owners to the Charterers in accordance with paragraph (b) of Clause 44.2 (Hire) and as the same may be amended from time to time pursuant to the terms of this Charter and which shall be appended as Schedule 3.
“Hire Period” means:
| (a) | in respect of each Hire Payment Date (other than the last Hire Payment Date) the period commencing on such Hire Payment Date and ending on the next succeeding Hire Payment Date; and |
| (b) | in respect of the last Hire Payment Date, the period commencing on the second last Hire Payment Date and ending on the last day of the Charter Period. . |
“Historic Term SOFR” means, in relation to a Hire Period, the most recent applicable Term SOFR for a period of three (3) months and which is as of a day which is no more than five (5) US Government Securities Business Days before the Quotation Day.
“Holding Company” means, in relation to any entity, any other entity in respect of which it is a Subsidiary.
“IAPPC” means a valid international air pollution prevention certificate for the Vessel issued under Annex VI (Regulations for the Prevention of Air Pollution from Ships) to the International Convention for the Prevention of Pollution from Ships 1973 (as modified in 1978 and 1997).
“Indemnitee” has the meaning given to such term in Clause 65 (Further indemnities).
“Initial Market Value” has the meaning given to such term in Clause 52.30(a) (Valuation of Market Value).
“Initial Sub-Charters” means:
| (a) | the time charter party dated 1 April 2020 as amended by addendum no.1 dated 17 December 2021, addendum no.2 dated 28 December 2021, Addendum no.3 dated 15 December 2022 and Addendum no.4 dated 12 July 2023 made between the Charterers as owners and the relevant Initial Sub-Charterer as charterers (the “First Initial Sub-Charter”); and |
| (b) | a time charter party to be made between the Charterers as owners and the relevant Initial Sub-Charterer as charterers for the chartering of the Vessel by the Charterers to such Initial Sub-Charterer upon natural expiration of the First Initial Sub-Charter or in accordance with Clause 54.1(j)(iii) (Recission, Repudiation, Termination and Cancellation) (in each case, a “Subsequent Initial Sub-Charter”), |
and “Initial Charter” means any one of them.
AVIC Top Ships II – BBC Additional Clauses
“Initial Sub-Charterers” means:
| (a) | in relation to the First Initial Sub-Charter, Clearlake Shipping Pte Ltd, a company incorporated and existing under the laws of Singapore with its registered address at 12 Marina Bay Boulevard, 35-02 Marina Bay Financial Tower 33, Singapore 018982; and |
| (b) | in relation to a Subsequent Initial Sub-Charter, such first class oil major company acceptable to the Owners, |
and “Initial Sub-Charterer” means any one of them.
“Innocent Owners’ Interest Insurances” means all policies and contracts of innocent owners’ interest insurance, innocent owners’ additional perils (oil pollution) insurance and any other insurance from time to time taken out by the Owners in relation to the Vessel.
“Insurances” means all policies and contracts of insurance which are from time to time taken out or entered into by the Charterers in respect of the Vessel or her Earnings or otherwise in connection with the Vessel or her Earnings, with the exception of Loss of Hire and Contingent Liability.
“Interest Rate” means, in relation to a Hire Period, the aggregate of Margin plus the applicable Reference Rate.
“Interpolated Historic Term SOFR” means, in relation to any Hire Period, the rate (rounded to the same number of decimal places as Term SOFR) which results from interpolating on a linear basis between:
| (a) | either: |
| (i) | the most recent applicable Term SOFR (as of a day which is not more than three (3) US Government Securities Business Days before the Quotation Day) for the longest period (for which Term SOFR is available) which is less than the Hire Period; or |
| (ii) | if no such Term SOFR is available for a period which is less than the Hire Period, SOFR for a day which is no more than five (5) US Government Securities Business Days (and no less than two (2) US Government Securities Business Days) before the Quotation Day; and |
| (b) | the most recent applicable Term SOFR (as of a day which is not more than three (3) US Government Securities Business Days before the Quotation Day) the shortest period (for which Term SOFR is available) which exceeds the Hire Period. |
“Interpolated Term SOFR” means, in relation to any Hire Period, the rate (rounded to the same number of decimal places as Term SOFR) which results from interpolating on a linear basis between:
| (a) | either: |
| (i) | the applicable Term SOFR (as of the Quotation Day in respect of that Hire Period) for the longest period (for which Term SOFR is available) which is less than that Hire Period; or |
AVIC Top Ships II – BBC Additional Clauses
| (ii) | if no such Term SOFR is available for a period which is less than that Hire Period, SOFR for the day which is two (2) US Government Securities Business Days before the Quotation Day; and |
| (b) | the applicable Term SOFR (as of the Quotation Day in respect of that Hire Period) for the shortest period (for which Term SOFR is available) which exceeds that Hire Period. |
“ISM Code” means the International Safety Management Code (including the guidelines on its implementation), adopted by the International Maritime Organisation Assembly as Resolutions A.741 (18) (as amended by MSC 104 (73)) and A.913(22) (superseding Resolution A.788 (19)), as the same may be amended, supplemented or superseded from time to time (and the terms “safety management system”, “Safety Management Certificate” and “Document of Compliance” have the same meanings as are given to them in the ISM Code).
“ISM Company” means, at any given time, the company responsible for the Vessel’s compliance with the ISM Code under paragraph 1.1.2 of the ISM Code.
“ISPS Code” means the International Ship and Port Facility Security Code adopted by the International Maritime Organisation (as the same may be amended, supplemented or superseded from time to time).
“ISPS Company” means, at any given time, the company responsible for the Vessel’s compliance with the ISPS Code.
“ISSC” means a valid international ship security certificate for the Vessel issued under the ISPS Code.
“Major Casualty Amount” means US Dollars one million and five hundred thousand (US$1,500,000) or the equivalent in any other currency or currencies.
“Management Agreement” means, in relation to the Vessel, the technical and/or commercial ship management agreement and/or layup management agreement executed or to be executed (as the case may be) between the relevant Approved Manager and the Charterers.
“Manager’s Undertaking” means the deed of undertaking executed or to be executed by the relevant Approved Manager in favour of the Owners.
“Margin” means two point sixty five per cent (2.65%) per annum.
“Market Value” means, in relation to the Vessel, the value as determined in accordance with Clause 52.30 (Valuation of Market Value).
“MARPOL” means the International Convention for the Prevention of Pollution from Ships adopted by the International Maritime Organisation (as the same may be amended, supplemented or superseded from time to time).
“Material Adverse Effect” means a material adverse change in, or a material adverse effect on:
| (a) | the business or financial condition of the Charter Group taken as a whole; |
AVIC Top Ships II – BBC Additional Clauses
| (b) | the ability of the Obligors to perform and comply with their obligations under any Transaction Document or Project Document to which they are a party; or |
| (c) | the validity, legality or enforceability of this Charter, any other Transaction Document or any Project Document. |
“MOA” means the memorandum of agreement dated on or around the date of this Charter between the Charterers as sellers and the Owners as buyers in respect of the Vessel.
“Mortgagees’ Interest Insurances” means all policies and contracts of mortgagees’ interest insurance, mortgagees’ additional perils (oil pollution) insurance and any other insurance from time to time taken out by any Finance Party in relation to the Vessel.
“Necessary Authorisations” means all Authorisations of any person including any government or other regulatory authority required by applicable law to enable an Obligor to:
| (a) | lawfully enter into and perform its obligations under the Transaction Documents and the Project Documents to which it is party; |
| (b) | ensure the legality, validity, enforceability or admissibility in evidence in England and, if different, its jurisdiction of incorporation, of such Transaction Documents and Project Documents to which it is party; |
| (c) | carry on its business from time to time; and |
| (d) | perform any provision of the Transaction Documents and Project Documents to which it is a party without being in breach of any provision of this Charter relating to Sanctions (if, but for the obtaining of such Authorisation, such Obligor would be prohibited from performing any provision of the Transaction Documents and Project Documents by reason of Sanctions). |
“Obligor” means each of the Charterers, the Charter Guarantor, the Technical Manager, the Commercial Manager and any other person within the Charter Group that may be party to a Transaction Document from time to time (other than the Owners and any Account Bank).
“Outgoing Mortgagee” has the meaning given to such term in the MOA.
“Owners’ Cost” means an amount which is the lower of (a) US Dollars forty-one million (US$41,000,000) and (b) fifty-five per cent (55%) of the Initial Market Value of the Vessel.
“Party” means a party to this Charter.
“PDA” means the protocol of delivery and acceptance in relation to the Vessel to be executed between the Owners and the Charterers, substantially in the form contained in Schedule 1 (Form of Protocol of Delivery and Acceptance) hereto.
“Permitted Security Interest” means:
| (a) | any Security Interest created or to be created in accordance with the Security Documents; |
AVIC Top Ships II – BBC Additional Clauses
| (b) | liens for unpaid master’s and crew’s wages in accordance with first class ship ownership and management practice; |
| (c) | liens for salvage; |
| (d) | liens for master’s disbursements incurred in the ordinary course of trading; |
| (e) | any other lien arising by operation of law or otherwise in the ordinary course of the operation, repair or maintenance of the Vessel and not as a result of any default or omission by the Charterers, provided such liens do not secure amounts more than 21 days overdue (unless the overdue amount is being contested in good faith by appropriate steps); |
| (f) | any Security Interest arising by operation of law in respect of Taxes which are not overdue for payment or which are being contested in good faith by appropriate steps and in respect of which appropriate reserves have been made; |
| (g) | any liens securing obligations incurred in the ordinary course of trading and/or operating the Vessel and not more than 21 days overdue; and |
| (h) | any Security Interest which has the prior written approval of the Owners. |
“Pistiolis Family” means Evangelos Pistiolis and his immediate family members.
“Potential Termination Event” means an event or circumstance which, with the giving of any notice, the lapse of time, a determination of the Owners or any combination of the foregoing is a Termination Event.
“Pre-Approved Flag” or “Flag State” means the Republic of the Marshall Islands or other flag approved by the Owners.
“Prepositioning Date” has the meaning given to such term in the MOA.
“Project Documents” means any Sub-Charter and the Management Agreements.
“Published Rate” means Term SOFR for a tenor of three (3) months.
“Published Rate Replacement Event” means, in relation to a Published Rate:
| (a) | the methodology, formula or other means of determining that Published Rate has, in the opinion of the Owners and the Charterers, materially changed; |
| (b) |
| (i) |
| (A) | the administrator of that Published Rate or its supervisor publicly announces that such administrator is insolvent; or |
| (B) | information is published in any order, decree, notice, petition or filing, however described, of or filed with a court, tribunal, exchange, regulatory authority or similar administrative, regulatory or judicial body which reasonably confirms that the administrator of that Published Rate is insolvent, provided that, in each case, at that time, there is no successor administrator to continue to provide that Published Rate; |
AVIC Top Ships II – BBC Additional Clauses
| (ii) | the administrator of that Published Rate publicly announces that it has ceased or will cease, to provide that Published Rate permanently or indefinitely and, at that time, there is no successor administrator to continue to provide that Published Rate; |
| (iii) | the supervisor of the administrator of that Published Rate publicly announces that such Published Rate has been or will be permanently or indefinitely discontinued; or |
| (iv) | the administrator of that Published Rate or its supervisor announces that that Published Rate may no longer be used; or |
| (c) | the administrator of that Published Rate (or the administrator of an interest rate which is a constituent element of that Published Rate) determines that that Published Rate should be calculated in accordance with its reduced submissions or other contingency or fallback policies or arrangements and either: |
| (i) | the circumstance(s) or event(s) leading to such determination are not (in the opinion of the Owners and the Charterers) temporary; or |
| (ii) | that Published Rate is calculated in accordance with any such policy or arrangement for a period no less than a reasonable time period approved by the Owners and the Charterers; or |
| (d) | in the opinion of the Owners and the Charterers, that Published Rate is otherwise no longer appropriate for the purposes of calculating interest under this Charter. |
“Purchase Obligation Date” means the date on which the Owners shall transfer the legal and beneficial interest in the Vessel to the Charterers, and the Charterers shall purchase the Vessel, being the last day of the Charter Period.
“Purchase Obligation Price” means an amount equal to the aggregate as of the Purchase Obligation Date of (i) $100, (ii) any Break Costs, applicable only if this Charter is extended or terminated pursuant to Clauses 44 (Hire), 54 (Termination Events), 60 (Sale of the Vessel by the Owners) and 61 (Total Loss) and (iii) all other amounts payable under this Charter and the other Transaction Documents together with any applicable interest thereon.
“Purchase Option Date” has the meaning given to it in Clause 59 (Purchase option, purchase obligation and transfer of title).
“Purchase Option Price” means the amount due and payable by the Charterers to the Owners pursuant to Clause 59 (Purchase option, purchase obligation and transfer of title), being the aggregate of:
| (a) | all Variable Hire accrued but unpaid under this Charter up to and including the Purchase Option Date; |
| (b) | the Cost Balance prevailing as at the Purchase Option Date (for the purpose of this definition, the “Applicable Cost Balance”); and |
AVIC Top Ships II – BBC Additional Clauses
| (c) | a prepayment fee in the amount of: |
| (i) | if the purchase option is exercised after the second anniversary of the Actual Delivery Date but on or before the third anniversary of the Actual Delivery Date, two per cent (2%) of the Applicable Cost Balance; or |
| (ii) | if the purchase option is exercised after the third anniversary of the Actual Delivery Date (and before the natural expiration of this Charter), zero per cent (0%) of the Applicable Cost Balance; |
| (d) | all Unpaid Sums due and payable together with interest accrued thereon pursuant to Clause 44.4 (Hire) from the due date for payment thereof up to the date of actual payment; and . |
| (e) | any and all Break Costs (including any Break Costs under the Finance Documents) (excluding swap related expenses), |
provided that if the Purchase Option Date is not a Hire Payment Date, a pro-rated amount of the Variable Hire paid on the immediately preceding Hire Payment Date for the period starting from the day after the Purchase Option Date until the end of that Hire Period shall be deducted from the Purchase Option Price.
“Purchase Price” has the meaning given to such term in the MOA.
“Quotation Day” means in relation to any period for which a Variable Hire or an interest rate is to be determined, five (5) Business Days before the first day of that period unless market practice differs in the relevant interbank market in which case the Quotation Day will be determined by the Owners in accordance with that market practice in the relevant interbank market (and if quotations would normally be given on more than one day, the Quotation Day will be the last of those days).
“Reference Rate” means
| (a) | in relation to a Hire Period starting on or before the second anniversary of the Actual Delivery Date, the applicable Term SOFR for a period of three (3) months as of the relevant Quotation Day provided that if that rate is less than 2.5% per annum, the Reference Rate shall be deemed to be 2.5% per annum; and |
| (b) | in relation to a Hire Period starting after the second anniversary of the Actual Delivery Date, the applicable Term SOFR for a period of three (3) months as of the relevant Quotation Day provided that if that rate is less than zero, the Reference Rate shall be deemed to be zero, |
and, in either case, as otherwise determined pursuant to Clause 44.8.
“Relevant Nominating Body” means any applicable central bank, regulator or other supervisory authority or a group of them, or any working group or committee sponsored or chaired by, or constituted at the request of, any of them or the Financial Stability Board.
“Remittance Conditions” means the conditions set out in paragraph (a) of Clause 40 (Remittance Conditions).
AVIC Top Ships II – BBC Additional Clauses
“Replacement Reference Rate” means a reference rate which is:
| (a) | formally designated, nominated or recommended as the replacement for a Published Rate by: |
| (i) | the administrator of that Published Rate (provided that the market or economic reality that such reference rate measures is the same as that measured by that Published Rate); or |
| (ii) | any Relevant Nominating Body, |
and if replacements have, at the relevant time, been formally designated, nominated or recommended under both paragraphs, the “Replacement Reference Rate” will be the replacement under paragraph (ii) above;
| (b) | in the opinion of the Owners, generally accepted in the international or any relevant domestic syndicated loan markets as the appropriate successor to that Published Rate; or |
| (c) | in the opinion of the Owners, an appropriate successor to a Published Rate. |
“Requisition Compensation” means all compensation or other money which may from time to time be payable to the Charterers as a result of the Vessel being requisitioned for title or in any other way compulsorily acquired (other than by way of requisition for hire).
“Restricted Party” means a person or entity that is (i) listed on, or owned or controlled by a person listed on, or acting on behalf of a person listed on, any Sanctions List; (ii) a national of, located in, incorporated under the laws of, or owned or (directly or indirectly) controlled by, or acting on behalf of, a person located in or organised under the laws of a country or territory that is the target of country-wide or territory-wide Sanctions; or (iii) otherwise a target of Sanctions (“target of Sanctions” signifying a person with whom a US person or other national of Sanctions Authority would be prohibited or restricted by law from engaging in trade, business or other activities).
“Sanctioned Country” means a country or territory whose government is the target of Sanctions or that is subject to comprehensive country-wide or territory-wide Sanctions.
“Sanctions” means the economic sanction laws, regulations, embargoes or restrictive measures administered, enacted or enforced by: (i) the United States government; (ii) the United Nations; (iii) the European Union or its Member States, including, without limitation, the United Kingdom; (iv) the People’s Republic of China; or (v) the respective governmental institutions and agencies of any of the foregoing, including, without limitation, the Office of Foreign Assets Control of the US Department of Treasury (“OFAC”), the United States Department of State and His Majesty’s Treasury (“HMT”); (together, the “Sanctions Authorities”).
“Sanctions List” means the “Specially Designated Nationals and Blocked Persons” list maintained by the OFAC, the Consolidated List of Financial Sanctions Targets and the Investment Ban List maintained by HMT, or any similar list maintained by, or public announcement of Sanctions designation made by, any of the Sanctions Authorities.
AVIC Top Ships II – BBC Additional Clauses
“Security Interest” means a mortgage, charge, assignment, pledge, lien, or other security interest securing any obligation of any person or any other agreement or arrangement having a similar effect.
“Security Documents” means, in relation to the Vessel, the following:
| (a) | the Charter Guarantee; | |
| (b) | the Charterers’ Assignment; | |
| (c) | the Manager’s Undertaking(s); | |
| (d) | the Account Charge; | |
| (e) | the Shares Pledge; | |
| (f) | (if applicable) any Subordination Agreement; and | |
| (g) | any other document that may at any time be executed by any person creating,evidencing or perfecting any Security Interest to secure all or part of the Obligors’ obligations under or in connection with the Transaction Documents, |
and “Security Document” means any one of them.
“Sellers’ Bank” has the meaning given to such term in the MOA.
“Settlement Date” means, following a Total Loss of the Vessel, the earliest of:
| (a) | the date which falls 180 days after the date of occurrence of the Total Loss or,if such date is not a Business Day, the immediately preceding Business Day; and | |
| (b) | the date on which the Owners receive the Total Loss Proceeds in respect of the Total Loss. |
“Shares Pledge” means the deed of charge in respect of the shares in the Charterers executed or to be executed by the Charter Guarantor in favour of the Owners.
“SMC” means a valid safety management certificate issued for the Vessel by or on behalf of the Administration under paragraph 13.7 of the ISM Code.
“Sub-Charter” means the First Initial Sub-Charter or any other sub-charter (including any Subsequent Initial Sub-Charter) where approval is needed in accordance with Clause52.29 (Sub-Charters).
“Sub-Charterer” means an Initial Sub-Charterer or any other sub-charterer under a Sub-Charter.
“Subsidiary” means a subsidiary within the meaning of section 1159 of the UK Companies Act 2006.
“Subordination Agreement” means a subordination agreement entered into or to be entered into by the relevant subordinated creditor, the Charterers and the Owners in agreed form.
AVIC Top Ships II – BBC Additional Clauses
“Tax” or “tax” means any present and future tax (including, without limitation, value added tax, consumption tax or any other tax in respect of added value or any income), levy, impost, duty or other charge or withholding of any nature (including any penalty or interest payable in connection with any failure to pay or any delay in paying any of the same); and “Taxes”, “taxes”, “Taxation” and “taxation” shall be construed accordingly.
“Term SOFR” means the term SOFR reference rate administered by CME Group Benchmark Administration Limited (or any other person which takes over the administration of that rate) for the relevant period published (before any correction, recalculation or republication by the administrator) by CME Group Benchmark Administration Limited (or any other person which takes over the publication of that rate).
“Termination” means the termination at any time of the chartering of the Vessel under this Charter.
“Termination Event” means each of the events specified in Clause 54.1 (Termination Events).
“Termination Notice” means a written notice issued by the Owners to the Charterers in accordance with Clause 44.6 (Hire) or Clause 54.3 (Termination Events). .
“Termination Payment Date” means:
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(a) | in respect of a termination of this Charter in accordance with Clause 44.6 (Hire), the date specified in the Termination Notice served on the Charterers pursuant to that Clause having regard to the various remedy periods; |
| (b) | in respect of a Default Termination, the date specified in the Termination Notice served on the Charterers pursuant to Clause 54.3 (Termination Events) in respect of such Default Termination, which shall not be earlier than sixty (60) days after the date of such Termination Notice; and |
| (c) | in respect of a Total Loss Termination, the Settlement Date in respect of the Total Loss which gives rise to such Total Loss Termination. |
“Termination Sum” means, in relation to a Termination Payment Date, the aggregate of:
| (a) | all Variable Hire accrued but unpaid under this Charter up to and including the relevant Termination Payment Date; |
| (b) | the Cost Balance prevailing as at the relevant Termination Payment Date (for the purpose of this definition, the “Applicable Cost Balance”); |
| (c) | all liabilities, losses costs and expenses (including, without limitation, legal fees) so incurred or suffered directly by the Owners in relation to repossessing the Vessel, any Termination Event which has occurred and/or terminating this Charter including, without prejudice to the generality of the foregoing, all liabilities, costs and expenses so incurred in recovering possession of, and in moving, storing, insuring and maintaining the Vessel and in carrying out any works or modifications required to cause the Vessel to conform with the provisions of Clause 47 in respect of redelivery of the Vessel under this Charter,together with interest accrued thereon pursuant to Clause 44.4 (Hire) from the date on which the relevant loss etc. was suffered by the Owners until the date of actual payment or reimbursement thereof (both before and after any relevant judgment or winding-up of the Charterers)); |
AVIC Top Ships II – BBC Additional Clauses
| (d) | any and all Break Costs (including any Break Costs under the Finance Documents) (excluding swap related expenses); |
| (e) | all Unpaid Sums due and payable together with interest accrued thereon pursuant to Clause 44.4 (Hire) from the due date for payment thereof up to the date of actual payment; and |
| (f) | a fee in the amount of: |
| (i) | if the relevant Termination Payment Date falls on or before the first anniversary of the Actual Delivery Date, five per cent (5%) of the Applicable Cost Balance; |
| (ii) | if the relevant Termination Payment Date falls after the first anniversary of the Actual Delivery Date but on or before the third anniversary of the Actual Delivery Date, two per cent (2%) of the Applicable Cost Balance; or |
| (iii) | if the relevant Termination Payment Date falls after the third anniversary of the Actual Delivery Date (and before the natural expiration of this Charter), point five per cent (0.5%) of the Applicable Cost Balance, |
provided that this paragraph (f) shall not apply to the calculation of Termination Sum payable under the following provisions:
| (A) | Clause 44.6 (Hire), whereby it becomes unlawful or it is prohibited for the Owners to charter the Vessel pursuant to this Charter; |
| (B) | Clause 54.1(u) (Sanctions), whereby the occurrence of a Termination Event under this provision is attributable solely to the due performance and compliance by the relevant Initial Sub-Charterer of any provision of the First Initial Charter relating to Sanctions; or |
| (C) | Clause 61.3 (Total Loss). |
“Third Parties Act” means the Contracts (Rights of Third Parties) Act 1999.
“Title Transfer PDA” means the protocol of delivery and acceptance in relation to the Vessel to be executed between the Owners and the Charterers, substantially in the form contained in Schedule 2 (Form of Title Transfer Protocol of Delivery and Acceptance) hereto.
“Total Loss” means during the Charter Period:
| (a) | actual or constructive or compromised or agreed or arranged total loss of the Vessel; |
| (b) | the requisition for title or compulsory acquisition of the Vessel by any government or other competent authority (other than by way of requisition for hire); or |
AVIC Top Ships II – BBC Additional Clauses
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(c) | the capture, seizure, arrest, detention, hijacking, theft, condemnation as prize, confiscation or forfeiture of the Vessel (not falling within paragraph (b) of this definition), unless the Vessel is released and returned to the possession of the Owners or the Charterers within ninety (90) days after the capture, seizure, arrest, detention, hijacking, theft, condemnation as prize, confiscation or forfeiture in question, |
and for the purpose of this Charter, (i) an actual Total Loss of the Vessel shall be deemed to have occurred at the date and time when the Vessel was lost but if the date of the loss is unknown the actual Total Loss shall be deemed to have occurred on the date on which the Vessel was last reported, (ii) a constructive Total Loss shall be deemed to have occurred at the date and time at which a notice of abandonment of the Vessel is given to the insurers of the Vessel and (iii) a compromised, agreed or arranged Total Loss shall be deemed to have occurred on the date of the relevant compromise, agreement or arrangement.
“Total Loss Proceeds” means the proceeds of the Insurances or any other compensation of any description in respect of a Total Loss.
“Total Loss Termination” means a termination of the Charter Period pursuant to the provisions of Clause 61 (Total Loss).
“Transaction Documents” means, together, this Charter, the MOA, the Security Documents, and such other documents as maybe designated as such by the Owners and the Charterers from time to time.
“Unpaid Sum” means any sum due and payable but unpaid by any Obligor under the Transaction Documents.
“US Dollars”, “Dollars”, “USD”, “US$” and “$” each means available and freely transferable and convertible funds in lawful currency of the United States of America.
“US Government Securities Business Day” means any day other than:
| (a) | a Saturday or a Sunday; and |
| (a) | a day on which the Securities Industry and Financial Markets Association (or any successor organisation) recommends that the fixed income departments of its members be closed for the entire day for purposes of trading in US Government securities. |
“US Tax Obligor” means:
| (a) | an Obligor which is resident for tax purposes in the United States of America; or |
| (b) | an Obligor some or all of whose payments under the Transaction Documents to which it is a party are from sources within the United States for US federal income tax purposes. |
“Valuation Report” means, in relation to the Vessel, a valuation report of the Vessel addressed to the Owners from an Approved Broker.
“Variable Hire” has the meaning given to it in Clause 44.1(b).
AVIC Top Ships II – BBC Additional Clauses
“Vessel” means the crude oil tanker named m.v. “ECO WEST COAST” with IMO no. 9902811 as more particularly described in Boxes 5 (Vessel’s name, call sign and flag) to 10 (Classification Society) of this Charter.
| 33. | INTERPRETATIONS |
| (a) | In this Charter, unless the context otherwise requires, any reference to: |
| (i) | this Charter include the Schedules hereto and references to Clauses and Schedules are, unless otherwise specified, references to Clauses of and Schedules to this Charter and, in the case of a Schedule, to such Schedule as incorporated in this Charter as substituted from time to time; |
| (ii) | any statutory or other legislative provision shall be construed as including any statutory or legislative modification or re-enactment thereof, or any substitution therefor; |
| (iii) | the term “Vessel” includes any part of the Vessel; |
| (iv) | the “Owners”, the “Charterers”, any “Obligor”, “Sub-Charterer” or any other person include any of their respective successors, permitted assignees and permitted transferees; |
| (v) | any agreement, instrument or document include such agreement, instrument or document as the same may from time to time be amended, modified, supplemented, novated or substituted; |
| (vi) | the “equivalent” in one currency (the “first currency”) as at any date of an amount in another currency (the “second currency”) shall be construed as a reference to the amount of the first currency which could be purchased with such amount of the second currency at the spot rate of exchange quoted by the People’s Bank of China at or about 11:00 a.m. two (2) Business Days (being a day other than a Saturday or Sunday on which banks and foreign exchange markets are generally open for business in Beijing) prior to such date for the purpose of the first currency with the second currency for delivery and value on such date; |
| (vii) | “hereof”, “herein” and “hereunder” and other words of similar import means this Charter as a whole (including the Schedules) and not any particular part hereof; |
| (viii) | “law” includes common or customary law and any constitution, decree, judgment, legislation, order, ordinance, regulation, rule, statute, treaty or other legislative measure in any jurisdiction or any present or future directive, regulation, request or requirement, or official or judicial interpretation of any of the foregoing, in each case having the force of law and, if not having the force of law, in respect of which compliance is generally customary; |
| (ix) | the word “person” or “persons” or to words importing persons include, without limitation, any state, divisions of a state, government, individuals, partnerships, corporations, ventures, government agencies, committees, departments, authorities and other bodies, corporate or unincorporated, whether having distinct legal personality or not; |
AVIC Top Ships II – BBC Additional Clauses
| (x) | the “winding-up”, “dissolution”, “administration”, “liquidation”, “insolvency”, “reorganisation”, “readjustment of debt”, “suspension of payments”, “moratorium” or “bankruptcy” (and their derivatives and cognate expressions) of any person shall each be construed so as to include the others and any equivalent or analogous proceedings or event under the laws of any jurisdiction in which such person is incorporated or any jurisdiction in which such person carries on business; |
| (xi) | “protection and indemnity risks” means the usual risks covered by a protection and indemnity association which is a member of the International Group of P&I Club, including pollution risks, extended passenger cover and the proportion (if any) of any sums payable to any other person or persons in case of collision which are not recoverable under the hull and machinery policies by reason of the incorporation in them of clause 6 of the International Hull Clauses (1/11/02 or 1/11/03), clause 8 of the Institute Time Clauses (Hull)(1/10/83) or clause 8 of the Institute Time Clauses (Hulls)(1/11/1995) or the Institute Amended Running Down Clause (1/10/71) or any equivalent provision; |
| (xii) | a Potential Termination Event is “continuing” if it has not been remedied (to the satisfaction of the Owners) or waived, and a Termination Event is “continuing” if it has not been remedied (to the satisfaction of the Owners) or waived provided that, following the issuance of a Termination Notice in accordance with Clause 54.3, a Termination Event is “continuing” if it has not been waived; |
| (xiii) | the Owners’ “cost of funding” in relation to the Owners’ Cost or any part of the Owners’ Cost is a reference to the average cost (determined either on an actual or a notional basis) which the Owners would incur if they were to fund, from whatever source(s) they may reasonably select, an amount equal to the amount of the Owners’ Cost or that part of the Owners’ Cost for a period equal in length to the Hire Period of the Owners’ Cost or that part of the Owners’ Cost; and |
| (xiv) words | denoting the plural number include the singular and vice versa. |
| (b) | Headings are for the purpose of reference only, have no legal or other significance, and shall be ignored in the interpretation of this Charter. |
| (c) | A time of day (unless otherwise specified) is a reference to Beijing time. |
| 34. | BACKGROUND |
| (a) | By the MOA, the Owners have agreed to purchase the Vessel from the Charterers subject to the terms and conditions therein. | |
| (b) | Accordingly the parties hereby agree that the Owners’ obligation to charter the Vessel to the Charterers under this Charter is subject to the effective transfer of ownership of the Vessel from the Charterers to the Owners pursuant to the MOA. |
AVIC Top Ships II – BBC Additional Clauses
| 35. | INTENTIONALLY OMITTED |
| 36. | DELIVERY |
| 36.1 | The obligation of the Owners to charter and deliver the Vessel to the Charterers hereunder is conditional upon: |
| (a) | the simultaneous delivery of the Vessel to the Owners (in their capacity as buyers) by the Charterers (in their capacity as sellers) and acceptance of the Vessel by the Owners (in their capacity as buyers) pursuant to the MOA; and |
| (b) | the satisfaction of the conditions precedent set out in Clause 40 below and, in addition; |
| (i) | the representations and warranties contained in Clause 51 being true and correct on the Actual Delivery Date (unless otherwise specified); |
| (ii) | no Potential Termination Event or Termination Event having occurred which is continuing as at the Actual Delivery Date; and |
| (iii) | delivery occurring on or before the Cancelling Date, |
whereupon the Charterers shall be deemed to have simultaneously accepted and taken delivery of the Vessel (without reservation) under this Charter whether or not the Charterers takes actual physical possession and/or use of the Vessel on the Actual Delivery Date.
| 36.2 | On delivery, as evidence of the commencement of the Charter Period, the Parties shall sign the PDA. Nevertheless, the Charterers shall be deemed to have accepted the Vessel under this Charter, and the commencement of the Charter Period having started, on the Actual Delivery Date even if, for whatever reason, the PDA is not signed and/or the Charterers do not take actual possession of the Vessel at that time. |
| 37 | INTENTIONALLY OMITTED |
| 38. | TERMS OF DELIVERY |
| 38.1 | The Charterers shall not be entitled for any reason whatsoever to refuse to accept delivery of the Vessel under this Charter once the Vessel has been delivered to an accepted by the Owners (in their capacity as buyers) from the Charterers (in their capacity as sellers) under the MOA, and the Charterers hereby acknowledge and agree that the Owners make no condition, term, representation, warranty, covenant, agreement or declaration, express or implied (and whether statutory or otherwise) as to the seaworthiness, merchantability, condition, design, operation, performance, class, capacity or fitness for use or as to the eligibility of the Vessel for any particular trade or operation or any other condition, term, representation or warranty whatsoever, express or implied, with respect to the Vessel. Acceptance of delivery by the Charterers or (as the case may be) deemed delivery of the Vessel to the Charterers under this Charter shall be irrevocable, final and conclusive proof and evidence that, for the purposes of the obligations and liabilities of the Owners hereunder or in connection herewith, the Vessel is at that time seaworthy, in accordance with the provisions of this Charter, in good working order and repair. |
AVIC Top Ships II – BBC Additional Clauses
| 38.2 | The Charterers hereby waive all their rights in respect of any condition, term, representation or warranty express or implied (and whether statutory or otherwise) on the part of the Owners and all their claims against the Owners howsoever and whenever the same may arise in respect of the Vessel or arising out of the operation or performance of the Vessel and the chartering thereof under this Charter (including in respect of the seaworthiness, condition, design, operation, fitness for use or otherwise with respect to the Vessel). In particular, and without prejudice to the generality of the foregoing, the Owners shall be under no liability whatever and howsoever arising in relation to any injury, death, loss, damage or delay of, or to, or in connection with the Vessel or any person or property whatsoever, whether on board the Vessel or elsewhere, irrespective of whether such injury, death, loss, damage or delay shall arise from the unseaworthiness of or any defect in the Vessel. For the purposes of this Clause “delay” shall include delay in relation to the Vessel. (whether in respect of delivery of the Vessel to the Charterers under this Charter or otherwise) or any other delay whatsoever. The Charterers acknowledge that no representation has been made or will be made by or on behalf of the Owners in relation to the Vessel or any part thereof. |
To the extent permissible under applicable law, the Charterers also waive any rights which they may have in tort in respect of any of the matters referred to above in this Clause 38.2 excluding tort due to wilful misconduct or gross negligence and irrevocably agrees that the Owners shall have no greater liability in tort in respect of any such matter than it would have in contract after taking account of all the foregoing exclusions. No third party making any representation or warranty relating to the Vessel or any part of the Vessel is the agent or partner of the Owners nor has any such third party authority to bind the Owners thereby.
| 38.3 | The Charterers agree that the Owners shall be under no liability to supply any replacement vessel or any piece or part thereof during any period when the Vessel is unusable or becomes a Total Loss and shall not be liable to the Charterers or any other person as a result of the Vessel being unusable or a Total Loss. |
| 38.4 | None of the Owners or their respective shareholders, affiliates, subsidiaries, consultants, agents and their respective shareholders, directors, officers, employees, or representatives shall be liable to the Charterers (including any of its assigns, novatees, successors, shareholders, affiliates, subsidiaries, consultants, agents, managers, clients and their respective shareholders, directors, officers, employees, or representatives) for (i) indirect, special, exemplary, punitive or consequential losses and damages, arising from, or relating to or in connection with this Charter (ii) and to the extent not covered by (i) above, the following, whether direct or indirect loss of profit, loss of production, loss of revenue, loss of time, loss of contracts or otherwise, in each case irrespective of cause (by contract, by law, in tort or otherwise) and notwithstanding the negligence, misconduct or breach (whether contractual, statutory or otherwise) save for (in each case) resulting from the gross negligence of wilful misconduct of such indemnified parties. |
| 39. | CANCELLATION |
If:
| (a) | the Vessel is not delivered by the Charterers as sellers to the Owners as buyers under the MOA by the Cancelling Date (or such later date as the parties to the MOA may agree); or |
AVIC Top Ships II – BBC Additional Clauses
| (b) | the MOA expires, is cancelled, terminated, rescinded or suspended or otherwise ceases to remain in full force and effect for any reason (in whole or in part), |
then this Charter shall immediately terminate and be cancelled, provided that the Owners shall be entitled to retain all fees paid by the Charterers pursuant to Clause 58 (Transaction Fees), Clause 62 (Additional payment obligations) and Clause 65 (Further indemnities) (and without prejudice to the said Clauses but if such fees have not been paid but are due and payable, the Charterers shall forthwith pay such fees to the Owners in accordance therewith) and such payment shall be irrevocable and unconditional and is acknowledged by the Charterers to be proportionate as to amount, having regard to the legitimate interest of the Owners, in protecting against the Owners’ risk of the Charterers failing to perform its obligations under this Charter. For the avoidance of doubt, the termination of the Charter shall not prejudice the operation of any provision of any Transaction Document which is expressed to survive the termination or cancelling of this Charter.
| 40. | CONDITIONS PRECEDENT |
| (a) | Remittance Conditions |
Notwithstanding anything to the contrary in this Charter, the obligations of the Owners to preposition the Owners’ Cost with the Sellers’ Bank pursuant to the MOA, to purchase and take delivery of the Vessel pursuant to the MOA and to charter the Vessel to the Charterers under this Charter are subject to and conditional upon the Owners’ receipt of the following documents and evidence (in each case in form and substance acceptable to the Owners) not later than three (3) Business Days prior to the Prepositioning Date (or such other date as the Owners and the Charterers may agree):
| (i) | copies of each of the following: |
| (A) | the duly executed Charter; |
| (B) | the duly executed MOA; |
| (C) | the duly executed Charter Guarantee; |
| (D) | all documents required by any of the Security Documents set out in (C) above, including but not limited to the notices and acknowledgement required under such Security Documents, if any; and |
| (E) | the duly executed Collateral Charter Amendment Deed; |
| (ii) | agreed forms of the Security Documents (other than the Charter Guarantee); |
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| (iii) | certified true copies of the constitutional documents (including but not limited to the articles of incorporation and bylaws (or equivalent documents)) (and all amendments thereto) of each Obligor and any other documents required to be filed or registered or issued under the laws of their jurisdiction of incorporation to establish their incorporation, together with any up-to-date corporate certificate to be issued by the competent authority of their jurisdiction which may be required by the Owners’ legal advisers for the purpose of issuing their legal opinions; | |
| (iv) | certified true copies of written resolutions or (as the case may be), resolutions passed at separate meetings, in each case, of the board of directors and (if required by any legal advisors to the Owners) shareholders of each Obligor (or its sole member or general partners),evidencing its approval of the Transaction Documents and the Project Documents to which it is a party and authorising appropriate officers or attorneys to execute the same and to sign all notices required to be given hereunder or thereunder on its behalf or other evidence of such approvals and authorisations as shall be acceptable to the Owners; | |
| (v) | if applicable, the original power of attorney of each Obligor under which any documents (including the Transaction Documents and Project Documents to which it is a party) are to be executed or transactions undertaken by that party; | |
| (vi) | a certified list specifying the directors and officers of the Obligor (together with their respective specimen signatures); | |
| (vii) | a certificate of an officer or authorized signatory of each Obligor certifying that each copy document relating to it specified in this Clause is correct, complete and in full force and effect as at the date of such certificate; | |
| (viii) | if applicable, copies of all governmental and other consents, licences, approvals and authorisations as may be necessary to authorise the performance by each Obligor of its obligations under the Transaction Documents and Project Documents to which it is a party, and the execution, validity and enforceability of such Transaction Documents and Project Documents; | |
| (ix) | copies of each of the duly executed First Initial Sub-Charter and Management Agreements, in each case together with all addenda, amendments or supplements; | |
| (x) | evidence that the fees, costs and expenses then due from the Charterers pursuant to the MOA, this Charter (including the Handling Fee, and fees and expenses under Clauses 62 (Additional payment obligations) and 65 (Further indemnities)) have been paid or will be paid at such time as is agreed with the Owners; |
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| (xi) | agreed forms of legal opinions to be issued by legal advisers to the Owners in the following jurisdictions, each in form and substance satisfactory to and agreed by the Owners (acting reasonably) (or confirmation satisfactory to the Owners that such an opinion will be given): |
| (A) | England and Wales; |
| (B) | the Republic of the Marshall Islands; |
| (C) | the Netherlands; and |
| (D) | such other jurisdictions as the Owners may reasonably consider necessary; |
| (xii) | evidence that the Vessel is (or will on the Actual Delivery Date) be insured in the manner required by the Transaction Documents; |
| (xiii) | agreed forms of letters of undertaking and certificates of entry (as the case may be) relating to insurances as set out in Clause 45 from the relevant insurer, insurance broker, protection and indemnity association or war risks association (as the case may be); |
| (xiv) | agreed form of the insurance report by an insurance advisor appointed by the Owners (but at the cost of the Charterers); |
| (xv) | two (2) Valuation Reports for calculation of the Initial Market Value made in accordance with Clause 52.30(a), dated no more than thirty (30) days prior to the Actual Delivery Date; and |
| (xvi) | evidence that the Outgoing Mortgagee has agreed to discharge the Existing Security Documents immediately prior to, or simultaneously upon, the timing of the Protocol of Delivery and Acceptance (as defined in the MOA) on the Actual Delivery Date. |
| (b) | Delivery Conditions |
Notwithstanding anything to the contrary in this Charter, the obligations of the Owners to release the Owners’ Cost to the Sellers’ Bank in accordance with clause 19(b)(ii) of the MOA, to purchase and take delivery of the Vessel pursuant to the MOA and to charter the Vessel to the Charterers under this Charter are subject to and conditional upon the Owners’ receipt of following documents and evidence (in each case in form and substance acceptable to the Owners) on or before the Actual Delivery Date (or such other date as the Owners and the Charterers may agree):
| (i) | copies of the duly executed Account Charge, Shares Pledge, Charterers’ Assignment and Manager’s Undertaking(s) and all documents required by such Security Documents, including but not limited to the notices and acknowledgement required under such Security Documents, except for the following which will be provided to the Owners in accordance with Clause 82 (Conditions subsequent): |
| (A) | the letters of undertaking from the insurers, underwriters, protection and indemnity clubs and association which will be provided to the Owners, which will be required under the Charterers’ Assignment; |
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| (ii) | copies of: |
| (A) | the Approved Managers’ current Document of Compliance (as such term is defined pursuant to the ISM Code); |
| (B) | the Vessel’s current IAPPC; |
| (C) | the Vessel’s current ISSC; |
| (D) | the Vessel’s classification confirmation certificate evidencing that it is free of all overdue recommendations and requirements from the Classification Society; and |
| (E) | the Vessel’s current Safety Management Certificate (as such term is defined pursuant to the ISM Code); |
| (iii) | a copy of a Certificate of Ownership and Encumbrance, a Transcript of Registry or an email confirmation issued by the competent authorities of the Flag State on the Actual Delivery Date evidencing the Charterers’ ownership of the Vessel and that the Vessel is free from registered encumbrances and mortgages; |
| (iv) | Protocol of Delivery and Acceptance (as defined in the MOA) duly signed by the Charterers as seller and the Owners as buyer and dated (but untimed); |
| (v) | legal bill of sale in a form recordable in the Flag State to be executed by the Charterers, transferring title of the Vessel to the Owners and stating that the Vessel is free from all mortgages, encumbrances and maritime liens or any other debts whatsoever, duly notarially attested and legalised or apostilled, as required by the Flag State; |
| (vi) | the commercial invoice of the Vessel; |
| (vii) evidence | that the Vessel will simultaneously upon Delivery (as defined in the MOA) be: |
| (A) | definitely and permanently registered in the name of the Owners under the law of the Flag State; and |
| (B) | in the absolute and unencumbered ownership of the Owners; |
| (viii) | evidence that the fees, costs and expenses then due from the Charterers pursuant to the MOA, this Charter (including the Handling Fee, and fees and expenses under Clauses 62 (Fees and expenses) and 65 (Further indemnities)) have been paid or will be paid at such time as is agreed with the Owners; |
| (ix) | such other consent, licence, approval, authorisation or other document, opinion or assurance which are necessary in connection with the Obligors’ entry into and performance of the transactions contemplated by any of the Transaction Documents or for the validity and enforceability thereof (including, without limitation in relation to or for the purposes of any financing by the Owners); |
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| (x) | any additional documents as may be required by the competent authorities of the Flag State for the purpose of registering the Vessel in the Buyers’ name; and |
| (xi) | copies of the discharge of mortgage and deed(s) of release of the Existing Security Documents duly executed by the Outgoing Mortgagee and all documents to be delivered by the Outgoing Mortgagee thereunder. |
| (c) | If the Owners in their sole discretion agree to deliver the Vessel under this Charter to the Charterers before all of the documents and evidence required by this Clause 40 have been delivered to or to the order of the Owners, the Charterers undertake to deliver all outstanding documents and evidence to or to the order of the Owners no later than seven (7) Business Days after the Actual Delivery Date or such other date as specified by the Owners, acting in their sole discretion. The delivery of the Vessel by the Owners to the Charterers under this Charter shall not, unless otherwise notified by the Owners (acting in their sole discretion) to the Charterers in writing, be taken as a waiver of the Owners’ right to require production of all the documents and evidenced required by this Clause 40. |
| 41. | BUNKERS AND LUBOILS |
| 41.1 | At delivery the Charterers shall take over all bunkers, lubricating oil, hydraulic oil, greases, water and unbroached stores and provisions in the Vessel without cost. |
| 41.2 | To the extent that Clause 46 (Redelivery) applies, at redelivery the Owners shall take over all bunkers, unused lubricating oil, hydraulic oil, greases, water and unbroached provisions and other consumable stores in the Vessel without cost. |
| 42. | FURTHER MAINTENANCE AND OPERATION |
| 42.1 | The good commercial maintenance practice under Clause 10 (Maintenance and Operation) of this Charter shall be deemed to include: |
| (a) | the maintenance and operation of the Vessel by the Charterers in accordance with (as the following are amended from time to time): |
| (i) | the relevant regulations, requirements and recommendations of the Classification Society; |
| (ii) | the relevant regulations, requirements and recommendations of the country and flag of the Vessel’s registry; |
| (iii) | any applicable IMO regulations (including but not limited to the ISM Code, the ISPS Code and MARPOL); |
| (iv) | all other applicable laws or regulations; and |
| (v) | Charterers’ current standard operations and maintenance manuals; |
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| (b) | the maintenance and operation of the Vessel by the Charterers taking into account: |
| (i) | engine manufacturers’ recommended maintenance and service schedules; |
| (ii) | builder’s operations and maintenance manuals; and |
| (iii) | recommended maintenance and service schedules of all installed equipment and pipework. |
| 42.2 | In addition to the above, the Charterers covenant with the Owners to arrange online access to class records for the Owners as available to the Charterers. |
| 42.3 | Any equipment that is found not to be required on board as a result of law or regulation is either to be removed at the Charterers expense or to be maintained in operable condition. |
| 42.4 | The title to any equipment: |
| (a) | placed on board as a result of operational requirements of the Charterers shall automatically be deemed to belong to the Owners (unless hired from or belonging to a third party) immediately upon such placement, and such equipment may only be removed: (A) with the Owners’ prior written consent, (B) at the Charterers’ own expense, and (C) without damage to the Vessel; and |
| (b) | replaced, renewed or substituted shall remain with the Owners until the part or equipment which replaced it or the new or substitute part or equipment becomes property of the Owners. |
| 42.5 | Without prejudice to any other provisions under this Charter, the Charterers shall maintain, use and operate the Vessel with commercially reasonable care as if the Charterers were the owner of the same. |
| 43. | STRUCTURAL CHANGES AND ALTERATIONS |
| 43.1 | Unless required by the Classification Society, compulsory legislation or pursuant to the terms of the First Initial Sub-Charter, the Charterers shall make no material structural changes in the Vessel or material changes in the machinery, engines, appurtenances or spare parts thereof without in each instance first securing the Owners’ consent thereto, such consent not to be unreasonably withheld or delayed, provided that: |
| (a) | any such changes do not have a material adverse effect on the Vessel’s certification or the Vessel’s fitness for purpose; |
| (b) | any such changes will not materially diminish the value of the Vessel and/or have a material adverse effect on the safety, performance, value or marketability of the Vessel; |
| (c) | the Charterers shall bear all time, costs and expenses in relation to any such changes; |
| (d) | the Charterers shall furnish the Owners with: |
| (i) | copies of all plans in relation to such changes; |
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| (ii) | if applicable, confirmation from the Classification Society that such changes will not adversely affect the class of the Vessel, provided always that such Classification Society agrees to issue such confirmation; |
| (iii) | one Valuation Report (at the Charterers’ cost) on the Market Value of the Vessel after the implementation of such changes. |
| 43.2 | Upon the occurrence of any Termination Event which is continuing, if the Owners decide to retake possession of the Vessel, the Charterers shall at their expense restore the Vessel to its former condition unless the changes made are carried out: |
| (a) | to improve the performance, operation or marketability of the Vessel; or |
| (b) | as a result of a regulatory compliance. |
| 43.3 | Any improvement, structural changes or new equipment becoming necessary for the continued operation of the Vessel by reason of new class requirements or by compulsory legislation shall be for the Charterers’ account and the Charterers shall not have any right to recover from the Owners any part of the cost for such improvements, changes or new equipment either during the Charter Period or, to the extent that Clause 46 (Redelivery) applies, at redelivery of the Vessel. The Charterers shall give written notice to the Owners of any such improvement, structural changes or new equipment. |
| 43A. | ADVANCE HIRE |
| 43A.1 | In consideration of the Owners’ agreement to charter the Vessel to the Charterers pursuant to the terms hereof, the Charterers agree to pay to the Owners, on the first Hire Payment Date, the Advance Hire. |
| 43A.2 | The Charterers shall be deemed to have paid the Advance Hire to the Owners on the first Hire Payment Date by the Owners (as buyers under the MOA) setting off an amount equal to the Advance Hire against a corresponding amount of the Purchase Price payable by the Owners to the Charterers (as sellers) under the MOA. |
| 43A.3 | The Advance Hire shall not bear interest and shall be non-refundable. |
| 44. | HIRE |
| 44.1 | In consideration of the Owners’ agreement to charter the Vessel to the Charterers pursuant to the terms hereof, the Charterers agree to pay to the Owners Hire in advance on each Hire Payment Date, which shall comprise: |
| (a) | a fixed component (the “Fixed Hire”) which shall consist of one hundred and twenty one (121) instalments, namely the Balloon Amount plus one hundred and twenty (120) instalments which each such instalment shall be calculated by (i) deducting the Balloon Amount from the Owners’ Cost and (ii) dividing the difference by one hundred and twenty (120) (and, for the avoidance of doubt, the one hundred and twentieth (120th) instalment shall be paid on the second last Hire Payment Date and the last instalment (being the Balloon Amount) shall be paid on the last Hire Payment Date); and |
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| (b) | a variable component (the “Variable Hire”) which shall be calculated by applying the Interest Rate to the Cost Balance prevailing on such Hire Payment Date (which, for the purpose of the calculation of the Variable Hire, shall not be reduced by the Fixed Hire payable on such Hire Payment Date) for the actual number of days during the relevant Hire Period. |
| 44.2 | The Parties hereby agree that: |
| (a) | once the Owners’ Cost is confirmed or upon any adjustment of the Fixed Hire (including the Balloon Amount) pursuant to the terms of this Charter, the Owners shall within reasonable time deliver to the Charterers a Hire Payment Schedule at such time (including, without limitation, the Owners’ Cost, the Fixed Hire (including the Balloon Amount) and the Cost Balance during the Agreement Period) reflecting such payment schedule and the resulting calculations for the Charterers’ review and approval, which shall thereafter: |
| (i) | constitute the current Hire Payment Schedule; and |
| (ii) | save for manifest error, be conclusive evidence of the rate of Fixed Hire payable under this Charter; |
| (b) | for the avoidance of doubt and notwithstanding any provisions in this Clause 44 (Hire), the Charterers’ obligation to pay Hire as calculated in accordance with the formula set out in Clause 44.1 above shall remain absolute and unconditional at all times, whether or not the Owners provide any Hire Payment Schedule; |
| (c) | all payments of Hire shall be paid in advance on each Hire Payment Date (prior to 16:00, Shanghai time) (in respect of which time is of the essence) with the first (1st) instalment falling due on the Actual Delivery Date; |
| (d) | any payment provided herein due on any day which is not a Business Day shall be payable on the following Business Day; |
| (e) | all payments under this Charter shall be made to the account notified by the Owners to the Charterers prior to the first Hire Payment Date (or such other account as the Owners may thereafter notify the Charterers from time to time) for credit to such account notified by the Owners; |
| (f) | following delivery of the Vessel to, and acceptance by, the Charterers under this Charter, the Vessel shall not be at any time deemed off-hire and the Charterers’ obligation to pay Hire in accordance with this Clause 44 shall be absolute and unconditional under any and all circumstances and irrespective of any contingency whatsoever including but not limited to: |
| (i) | (except in the case of Advance Hire) any set-off, counterclaim, recoupment, defence or other right which the Charterers may have against the Owners, the Finance Parties or any other third party for any reason whatsoever including, without limitation, any act, omission or breach on the part of the Owners under this Charter or any other agreement at any time existing between the Owners and the Charterers (unless otherwise agreed between the Owners and the Charterers); |
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| (ii) | any unavailability of the Vessel, for any reason, including but not limited to seaworthiness, value, condition, design, operation, merchantability or fitness for use or purpose of the Vessel or any apparent or latent defects in the Vessel or its machinery and equipment or the ineligibility of the Vessel for any particular use or trade or for registration of documentation under the laws of any relevant jurisdiction or lack of registration or the absence or withdrawal of any consent required under the applicable law of any relevant jurisdiction for the ownership, chartering, use or operation of the Vessel or any damage to the Vessel; |
| (iii) | any lack or invalidity of title or any other defect in title or any encumbrance or any dispossession of the Vessel by title paramount or otherwise; |
| (iv) | any failure or delay on the part of either party to this Charter, whether with or without fault on its part, in performing or complying with any of the terms, conditions or other provisions of this Charter; |
| (v) | any insolvency, bankruptcy, reorganisation, arrangement, readjustment of debt, dissolution, administration, liquidation or similar proceedings by or against the Owners or the Charterers or any other Obligors or any change in the constitution of the Owners or the Charterers or any other Obligors; |
| (vi) | any invalidity or unenforceability or lack of due authorisation of or any defect, or any failure or delay in performing or complying with any of the terms and provisions in this Charter or any of the Transaction Documents by any party to this Charter or any other person; |
| (vii) | any change, extension, indulgence or other act or omission in respect of any indebtedness or obligation of the Charterers, or any sale, exchange, release or surrender of, or other dealing in, any security for any such indebtedness or obligation; |
| (viii) | the Total Loss or any damage to or forfeiture or court marshall’s or other sale of the Vessel if the Termination Sum or any part thereof remains due; |
| (ix) | any libel, attachment, levy, detention, sequestration or taking into custody of the Vessel or any restriction or prevention of or interference with or interruption or cessation in, the use or possession thereof by the Charterers; |
| (x) | any enforcement or attempted enforcement by the Owners of their rights under this Charter or any of the Transaction Documents executed or to be executed pursuant to this Charter; |
| (xi) | any loss of use of the Vessel due to deficiency or default or strike of officers or crew, fire, breakdown, damage, accident, defective cargo or any other cause which would or might but for this provision have the effect of terminating or in any way affecting any obligation of the Charterers under this Charter; |
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| (xii) | any prevention, delay, deviation or disruption in the use of the Vessel resulting from the wide outbreak of any viruses (including the 2019 novel coronavirus), including but not limited to those caused by: |
| (A) | closure of ports; |
| (B) | prohibitions or restrictions against the Vessel calling at or passing through certain ports; |
| (C) | restriction in the movement of personnel and/or shortage of labour affecting the operation of the Vessel or the operation of the ports (including stevedoring operations); |
| (D) | quarantine regulations affecting the Vessel, its cargo, the crew members or relevant port personnel; |
| (E) | fumigation or cleaning of the Vessel; or |
| (F) | any claims raised by any sub-charterer or manager of the Vessel that a force majeure event or termination event (or any other analogous event howsoever called) has occurred under the relevant charter agreement or management agreement (as the case may be) of the Vessel as a result of the outbreak of such viruses; or |
| (xiii) | any other cause which would but for this provision have the effect of terminating or in any way affecting the obligations of the Charterers hereunder, |
it being the intention of the parties that the provisions of this Clause 44, and the obligation of the Charterers to pay Hire and make any payments under this Charter, shall (save as expressly provided in this Clause 44) survive any frustration and that, save as expressly provided in this Charter, no moneys paid under this Charter by the Charterers to the Owners shall in any event or circumstance be repayable to the Charterers; and
| (g) | all payments of Hire and all other Unpaid Sums to the Owners pursuant to this Charter and the other relevant Transaction Documents shall be made in immediately available funds in US Dollars, free and clear of, and without deduction or withholding for or on account of, any Taxes (unless otherwise agreed between the Owners and the Charterers). |
| 44.3 | In the event that the Charterers are required by any law or regulation to make any deduction or withholding on account of any taxes which arise as a consequence of any payment due under this Charter, then: |
| (a) | the Charterers shall notify the Owners promptly after they become aware of such requirement; |
| (b) | the Charterers shall remit the amount of such taxes to the appropriate taxation authority within three (3) Business Days or any other applicable shorter time limits and in any event prior to the date on which penalties attach thereto; and |
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| (c) | such payment shall be increased by such amount as may be necessary to ensure that the Owners receive a net amount which, after deducting or withholding such taxes, is equal to the full amount which the Owners would have received had such payment not been subject to such taxes; and |
| (d) | the Charterers shall forward to the Owners evidence reasonably satisfactory to the Owners that any such taxes have been remitted to the appropriate taxation authority within thirty (30) days of the expiry of any time limit within which such taxes must be so remitted or, if earlier, the date on which such taxes are so remitted. |
| 44.4 | Without prejudice to sub-paragraph Clause 54.1(a) (Termination Events), if the Charterers fail to pay any amount payable by it under a Transaction Document on its due date, default interest shall accrue on a daily basis over the Unpaid Sum from the due date up to the date of actual payment (both before and after judgment) at a rate of 2% per annum above the Interest Rate for the relevant Hire Period. The Parties agree that such default rate is proportionate as to amount, having regard to the legitimate interest of the Owners, in protecting against the Owners’ risk of the Charterers failing to perform its obligations under this Charter. |
| 44.5 | In the event that this Charter is terminated for whatever reason, the Charterers’ obligation to pay Hire, and any other Unpaid Sum which (in each case) has accrued and is due before, and which remains unpaid, at the date of such termination shall continue notwithstanding such termination. |
| 44.6 | In the event that it becomes unlawful or it is prohibited for either the Owners or the Charterers to charter the Vessel pursuant to this Charter, then the Owners and Charterers, if such new or changed law or regulation or such interpretation or application permit, shall notify the other party of the relevant event and negotiate in good faith for a period of thirty (30) days from the date of the receipt of the relevant notice by the other party to agree an alternative. If such agreement is not reached within such thirty (30)-day period, the Charterers agree that, in such circumstances, the Owners shall have the right to terminate this Charter by delivering to the Charterers a Termination Notice, whereupon the Charterers shall be obliged to pay to the Owners the Termination Sum in accordance with Clause 54.3 (Termination Events) and/or such other terms and conditions as may be specified in such Termination Notice and this Charter shall be terminated in accordance with Clause 54 (Termination Events). |
| 44.7 | Subject to paragraph (c) below, the Charterers shall, within three (3) Business Days of a demand by the Owners, pay to the Owners the amount of any Increased Costs incurred by the Owners as a result of (i) the introduction of or any change in (or in the interpretation, administration or application of) any law or regulation or (ii) compliance with any law or regulation made after the date of this Charter: |
| (a) | for the purpose of this Clause 44.7, “Increased Costs” means: |
| (i) | a reduction in the rate of return from the Hire or on the Owners’ overall capital; |
| (ii) | an additional or increased cost; or |
| (iii) | a reduction of any amount due and payable under any Transaction Document, |
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which is incurred or suffered by the Owners to the extent that it is attributable to the Owners having entered into any Transaction Document or funding or performing its obligations under any Transaction Document;
| (b) | the Owners shall notify the Charterers of any claim arising from this Clause (and of the event giving rise to such claim). The Owners shall, as soon as practicable after having made a demand in respect of such claim, provide a certificate confirming the amount of its Increased Costs as well as evidence supporting its calculation; and |
| (c) | this Clause does not apply to the extent any Increased Costs is: |
| (i) | compensated for by a payment made under Clause 44.3(c); or |
| (ii) | attributable to the wilful breach by the Owners of any law or regulation. |
| 44.8 | For the purpose of determining the Variable Hire: |
| (a) | if no Term SOFR is available for any relevant Hire Period the applicable Reference Rate shall be the Interpolated Term SOFR for a period equal in length to for that Hire Period; |
| (b) | if no Term SOFR is available for any relevant Hire Period and it is not possible to calculate the Interpolated Term SOFR, the applicable Reference Rate shall be the Historic Term SOFR; |
| (c) | if paragraph (b) above applies but no Historic Term SOFR is available for any relevant Hire Period, the applicable Reference Rate shall be the Interpolated Historic Term SOFR for a period equal in length to that Hire Period; and |
| (d) | if paragraph (c) above applies but it is not possible to calculate the Interpolated Historic Term SOFR, there shall be no Reference Rate for that Hire Period and Clause 44.10 (Cost of funds) shall apply for that Hire Period. |
| 44.9 | If before close of business in Shanghai on the date falling one (1) Business Day after the Quotation Day for the relevant Hire Period the Owners determine (which determination shall be conclusive and binding) that the Owners’ cost of funding the Owners’ Cost or the relevant part of the Owners’ Cost would be in excess of the Reference Rate then the Owners shall promptly notify the Charterers and Clause 44.10 (Cost of funds) shall apply to the Owners’ Cost or that part of the Owners’ Cost (as applicable) for the relevant Hire Period. |
| 44.10 | Cost of funds. |
| (a) | If this Clause applies, the Interest Rate shall be the percentage rate per annum which is the sum of: (i) the Margin, and (ii) the cost certified and notified by the Owners, with relevant supporting evidence available to the Owners at the relevant time (expressed as an annual rate of interest) of funding the Owners’ Cost during the relevant Hire Period (as reasonably determined by the Owners). |
| (b) | If this Clause applies pursuant to Clause 44.9 and the Owners or the Charterers so require, the Owners and the Charterers shall negotiate for a period of no less than thirty (30) Business Days in good faith with a view to agreeing upon a substitute basis for determining the rate of interest or (as the case may be) an alternative basis for funding. Subject to Clause 44.11, any substitute or alternative basis agreed pursuant to this Clause shall, with the prior written consent of the Parties, be binding on the Parties. |
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| (c) | If a substitute basis is not so agreed pursuant to paragraph (b) above or after the occurrence of a Published Rate Replacement Event but prior to the making of any necessary amendment or waiver in accordance with Clause 44.11 below, paragraph (a) shall apply to the Owners’ Cost or that part of the Owners’ Cost (as applicable) for any relevant Hire Period. |
| 44.11 | If a Published Rate Replacement Event has occurred in relation to any Published Rate, the Owners are entitled to make any amendment or waiver to the terms of the Transaction Documents with the consent of the Charterers (at the Charterers’ cost) which relates to: |
| (i) | providing for the use of a Replacement Reference Rate in place of (or in addition to) that Published Rate; and |
| (ii) |
| (i) | aligning any provision of any Transaction Document to the use of that Replacement Reference Rate; |
| (ii) | enabling that Replacement Reference Rate to be used for the calculation of the Interest Rate under this Charter (including, without limitation, any consequential changes required to enable that Replacement Reference Rate to be used for the purposes of this Charter); |
| (iii) | implementing market conventions applicable to that Replacement Reference Rate; |
| (iv) | providing for appropriate fallback (and market disruption) provisions for that Replacement Reference Rate; and/or |
| (v) |
adjusting the pricing to reduce or eliminate, to the extent reasonably practicable, any transfer of economic value from one Party to another as a result of the
application of that Replacement Reference Rate (and if any adjustment or method for calculating any adjustment has been formally designated, nominated or recommended by the Relevant Nominating Body, the adjustment shall be determined on the
basis of that designation, nomination or recommendation),
and pending any such amendment or waiver and the Replacement Reference Rate being utilized under the Transaction Documents to calculate the Interest Rate, Clause
44.10(a) above shall apply to the calculation of the Interest Rate.
|
| 45. | INSURANCE |
| 45.1 | During the Agreement Term, the Charterers shall at their expense keep the Vessel insured against fire and usual marine risks (including hull and machinery and excess risks), oil pollution liability risks, war and protection and indemnity risks (and any risks against which it is compulsory to insure for the operation for the Vessel) in US Dollars and in such market and on such terms as the Owners and the Finance Parties (if any) shall in writing approve in line with good shipping practice. |
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| 45.2 | Such insurances shall be arranged by the Charterers to protect the interests of the Owners, the Charterers and (if any) the mortgagee of the Vessel or such other relevant Finance Party, and the Charterers shall be at liberty to protect under such insurances the interests of any Approved Manager. |
| 45.3 | Insurance policies shall cover the Owners, the Charterers and (if any) the Finance Parties according to their respective interests. Subject to the approval of the Owners(acting on the instructions or with the approval of the Finance Parties (in each case if applicable) and the insurers, the Charterers shall effect all insured repairs and shall undertake settlement and reimbursement from the insurers of all costs in connection with such repairs as well as insured charges, expenses and liabilities to the extent of coverage under the insurances herein provided for. |
| 45.4 | The Charterers shall also remain responsible for and to effect repairs and settlement of costs and expenses incurred thereby in respect of all other repairs not covered by the insurances and/or not exceeding any possible franchise(s) or deductibles provided for in the insurances. |
| 45.5 | The Charterers shall arrange that, at any time during the Agreement Term, the hull and machinery and war risks insurance shall be in an amount not less than the greater of: |
| (a) | an amount which equals one hundred and twenty per cent (120%) of the then current Cost Balance; and |
| (b) | the then current Market Value of the Vessel. |
| 45.6 | The terms of the hull and machinery insurance and the identity of the insurers shall be acceptable to the Owners and (if any) the Finance Parties. The Vessel shall be entered in a P&I Club which is a member of the International Group Association on customary terms and shall be covered against liability for pollution claims in an amount not less than one billion US Dollars (US$1,000,000,000). The P&I cover shall be placed with aP&I Club acceptable to the Owners and (if any) the Finance Parties. All insurances shall include customary protection in favour of the Owners and (if any) the Finance Parties as notice of cancellation and exclusion from liability for premiums or calls. The insurance policies or cover notes for the hull and machinery insurance shall name the Owners as co-assured, endorsing its rights and interests. The Owners shall be entered as a member for the P&I cover and war risks insurance. |
| 45.7 | The Charterers: |
| (a) | undertake to place the Insurances in such markets, in such currency, on such terms and conditions, and with such brokers, underwriters and associations as the Owners and, if applicable, the Finance Parties shall have previously approved in writing such approval not be unreasonably withheld; and |
| (b) | shall not alter the terms of any of the Insurances nor allow any person (except the Approved Manager) to be co-assured under any of the Insurances without the prior written consent of the Owners and, if applicable, the Finance Parties, and will supply the Owners and, if applicable, the Finance Parties from time to time on request with such information as the Owners and, if applicable, any Finance Party may in their discretion require with regard to the Insurances and the brokers, underwriters or associations through or with which the Insurances are placed. |
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| 45.8 | The Charterers undertake duly and punctually to pay all premiums, calls and contributions, and all other sums at any time payable in connection with the Insurances, and, at their own expense, to arrange and provide any guarantees from time to time required by any protection and indemnity or war risks association. The Charterers shall provide the Owners and/or such Finance Party with (i) copies of all invoices issued by the brokers, underwriters or associations in respect of such premiums calls, contributions and other sums, and (ii) evidence satisfactory to the Owners and/or such Finance Party that such premiums, calls, contributions and other sums have been duly and punctually paid; that any such guarantees have been duly given; and that all declarations and notices required by the terms of any of the Insurances to be made or given by or on behalf of the Charterers to brokers, underwriters or associations have been duly and punctually made or given. |
| 45.9 | The Charterers will comply in all respects with all terms and conditions of the Insurances and will make all such declarations to brokers, underwriters and associations as may be required to enable the Vessel to operate in accordance with the terms and conditions of the Insurances. The Charterers will not do, nor permit to be done, any act, nor make, nor permit to be made, any omission, as a result of which any of the Insurances may become liable to be suspended, cancelled or avoided, or may become unenforceable, or as a result of which any sums payable under or in connection with any of the Insurances may be reduced or become liable to be repaid or rescinded in whole or in part. In particular, but without limitation, the Charterers will not permit the Vessel to be employed other than in conformity with the Insurances without first taking out additional insurance cover in respect of that employment in all respects to the satisfaction of the Owners and, if applicable, the Finance Parties, and the Charterers will promptly notify the Owners and, if applicable, the Finance Parties of any new requirement imposed by any broker, underwriter or association in relation to any of the Insurances. |
| 45.10 | The Charterers will endeavour and before the expiry of any of the Insurances renew them and shall as soon as reasonably thereafter (but in any event within fifteen (15) days after the relevant renewals) give the Owners and, if applicable, the Finance Parties such details of those renewals as the Owners and, if applicable, the Finance Parties may require. |
| 45.11 | The Charterers shall deliver to the Owners and, if applicable, the Finance Parties certified copies (and, if required by the Owners and/or (if applicable) any Finance Parties, the originals) of all policies, certificates of entry (endorsed with the appropriate loss payable clauses as may be required by the Owners and the Finance Parties from time to time) and other documents relating to the Insurances (including, without limitation, receipts for premiums, calls or contributions) and shall procure that letters of undertaking in such form as the Owners and, if applicable, the Finance Parties may approve shall be issued to the Owners and, if applicable, the Finance Parties by the brokers through which the Insurances are placed (or, in the case of protection and indemnity or war risks associations, by their managers). If the Vessel is at any time during the Agreement Term insured under any form of fleet cover, the Charterers shall procure that those letters of undertaking contain confirmation that the brokers, underwriters or association (as the case may be) will not set off claims relating to the Vessel against premiums, calls or contributions in respect of any other vessel or other insurance, and that the insurance cover of the Vessel will not be cancelled by reason of non-payment of premiums, calls or contributions relating to any other vessel or other insurance. Failing receipt of those confirmations, the Charterers will instruct the brokers, underwriters or association concerned to issue a separate policy or certificate for the Vessel in the sole name of the Charterers or of the Charterers’ brokers as agents for the Charterers. |
AVIC Top Ships II – BBC Additional Clauses
| 45.12 | Upon the Owners’ reasonable request, the Charterers shall provide the Owners and, if applicable, the Finance Parties with full information available to the Charterers regarding any casualty or other accident or damage to the Vessel, including, without limitation, any communication with all parties involved in case of a claim under any of the Insurances. |
| 45.13 | The Charterers agree that, at any time after the occurrence of a Termination Event which is continuing, the Owners and, if applicable, the Finance Parties shall be entitled to collect, sue for, recover and give a good discharge for all claims in respect of any of the Insurances; to pay collecting brokers the customary commission on all sums collected in respect of those claims; to compromise all such claims or refer them to arbitration or any other form of judicial or non-judicial determination; and otherwise to deal with such claims in such manner as the Owners and, if applicable, the Finance Parties shall in their discretion think fit. |
| 45.14 | Whether or not a Termination Event shall have occurred, the proceeds of any claim under any of the Insurances in respect of a Total Loss shall be paid and applied in accordance with Clause 61 (Total Loss). |
| 45.15 | In the event of any claim in respect of any of the Insurances (other than in respect of a Total Loss), if the Charterers shall fail to reach agreement with any of the brokers, underwriters or associations for the immediate restoration of the Vessel, or for payment to third parties, within such time as the Owners and, if applicable, the Finance Parties may stipulate, the Owners and, if applicable, the Finance Parties shall be entitled to require payment to itself. In the event of any dispute arising between the Charterers and any broker, underwriter or association with respect to any obligation to make any payment to the Charterers or to the Owners and/or (if applicable) the Finance Parties under or in connection with any of the Insurances, or with respect to the amount of any such payment, the Owners and/or (if applicable) the Finance Parties shall be entitled to settle that dispute directly with the broker, underwriter or association concerned. Any such settlement shall be binding on the Charterers. |
| 45.16 | The Charterers shall: |
| (a) | implement any recommendations contained in the reports issued following any condition surveys required by the protection and indemnity insurers within the relevant time limits, and provide evidence satisfactory to the Owners and, if applicable, the Finance Parties that the protection and indemnity insurers are satisfied that this has been done; and |
| (b) | in addition to the foregoing (if the Vessel is to trade in the United States of America Exclusive Economic Zone): |
| (i) | obtain and retain a certificate of financial responsibility under the United States Oil Pollution Act in form and substance satisfactory to the United States Coast Guard and provide the Owners with evidence of the same; |
AVIC Top Ships II – BBC Additional Clauses
| (ii) | procure that the protection and indemnity insurances do not contain a US Trading Exclusion Clause or any other analogous provision and provide the Owners with evidence that this is so; and |
| (iii) | comply strictly with any operational or structural regulations issued from time to time by any relevant authorities under the United States Oil Pollution Act so that at all times the Vessel falls within the provisions which limit strict liability under the said Act for oil pollution. |
| 45.17 | The Owners shall be at liberty to, in relation to the Vessel, take out Lessor’s or Innocent Owners’ Interest Insurance and Lessor’s or Innocent Owners’ Additional Peril (Pollution) insurance on such terms and conditions as the Owners may from time to time decide. The Charterers shall from time to time upon the Owners’ demand reimburse the Owners for all costs, premiums and expenses paid or incurred by the Owners in connection with such Lessor’s or Innocent Owners’ Interest Insurance and Lessor’s Innocent Owners’ Additional Peril (Pollution) insurance, but only to the extent corresponding to each of the Lessor’s or Owners’ Interest Insurance or Lessor’s Innocent Owners’ Additional Peril (Pollution) insurance for an amount not exceeding one hundred and twenty per cent (120%) of the then current Cost Balance. |
| 45.18 | Any Finance Party shall be at liberty to take out a Mortgagees’ Interest Insurance in relation to the Vessel on such terms and conditions as that Finance Party may from time to time decide. The Charterers shall from time to time upon the Owners’ demand reimburse the Owners for all costs, premiums and expenses paid or incurred by the Owners or that Finance Party in connection with such Mortgagees’ Interest Insurance, but only to the extent corresponding to each of the Mortgagee’s Interest Insurance for an amount not exceeding one hundred and twenty per cent. (120%) of the amount then outstanding under any loan made available by the Finance Parties pursuant to any Finance Documents. |
| 45.19 | The Owners shall be at liberty to, in relation to the Vessel, take out freight, demurrage and defence cover or such other insurances as recommended by the Owners’ insurance advisor, shipping industry associations or regulatory institutions, on such terms and conditions as the Owners may from time to time decide. The Charterers shall from time to time upon the Owners’ demand reimburse the Owners for all costs, premiums and expenses paid or incurred by the Owners in connection with such cover, but only to the extent corresponding to such cover for an amount not exceeding one hundred and twenty per cent (120%) of the then current Cost Balance. |
| 45.20 | The Owners may (acting reasonably) from time to time request the Charterers to (at the Charterers’ expense) effect other insurances if recommended by, the insurance advisors of the Owners, shipping industry associations or regulatory institutions, including, but not limited to kidnap and ransom insurance but excluding loss of hire and contingent liability insurance. |
| 45.21 | The Charterers shall reimburse or indemnify the Owners for any expenses incurred or to be incurred by the Owners in obtaining a detailed report signed by an independent firm of marine insurance brokers approved by the Owners dealing with the Insurances and stating the opinion of such firm as to the adequacy of the Insurances: |
| (a) | when an agreed form of such detailed report satisfactory to the Owners is obtained as a Remittance Condition; and |
AVIC Top Ships II – BBC Additional Clauses
| (b) | further from time to time upon the Owners’ demand where, in the Owners’ opinion, at any time during the Agreement Period there has been a material change in the terms of the Insurances and/or a change in the circumstances which would materially adversely affect the adequacy of the Insurances. |
| 46. | REDELIVERY |
Upon the occurrence of any Termination Event which is continuing, subject to the terms of any quiet enjoyment letter entered into with any Sub-Charterers, if the Owners decide to retake possession of the Vessel pursuant to Clause 54.3 (Termination Events), the Charterers’ right to possess and operate the Vessel shall immediately cease and and (without in any way affecting the Charterers’ obligation to pay the Charterer the Termination Sum and comply with their other obligations under this Charter) the Charterers shall hold the Vessel as gratuitous bailee only to the Owners, the Charterers shall procure that the master and crew follow the orders and directions of the Owners and the Charterers shall, at their own cost and expense and upon the Owners’ request (at Owners’ sole discretion), be obliged to immediately redeliver or cause to be redelivered the Vessel to the Owners at a safe, ice free port nominated solely by the Owners where the Vessel would be afloat at all times in a ready safe berth or anchorage, in accordance with Clauses 47 (Redelivery conditions) and 49 (Diver’s inspection at redelivery). For the avoidance of doubt, any such redelivery shall not extinguish the Owners’ right to recover the Termination Sum from the Charterers under this Charter.
| 47. | REDELIVERY CONDITIONS |
| (a) | In addition to Clause 46 (Redelivery), the condition of the Vessel shall at redelivery be as follows: |
| (i) | the Vessel shall be free of any class and statutory recommendations affecting its trading certificates; |
| (ii) | the Vessel must be redelivered with all equipment and spares or replacement items listed in the delivery inventory carried out pursuant to Clause 9 (Inventories, Oil and Stores) and any spare parts on board or on order for any equipment installed on the Vessel following delivery (provided that any such items which are on lease or hire purchase shall be replaced with items of an equivalent standard and condition fair wear and tear excepted); all records, logs, plans, operating manuals and drawings, spare parts onboard shall be included at the time of redelivery in connection with a transfer of the Vessel or such other items as are then in the possession of the Charterers shall be delivered to the Owners; |
| (iii) | the Vessel must be redelivered with all national and international trading certificates and hull/machinery survey positions for both class and statutory surveys free of any overdue recommendation and qualifications valid and un-extended for a period of at least three (3) months beyond the redelivery date; |
| (iv) | all of the Vessel’s ballast tank coatings to be maintained in “Fair” (as such term (or its equivalent) may be defined and/or interpreted in the relevant survey report) condition as appropriate for the Vessel’s age at the time of redelivery, fair wear and tear excepted; |
AVIC Top Ships II – BBC Additional Clauses
| (v) | the Vessel shall have passed any flag or class surveys or inspections due within three (3) months after the date of redelivery and have its continuous survey system up to date; |
| (vi) | the Vessel must be re-delivered with accommodation and common spaces for crew and officers substantially in the same condition as at the Actual Delivery Date, free of damage over and above fair wear and tear, clean and free of infestation and odours; with cargo spaces generally fit to carry the cargoes originally designed and intended for the Vessel; with main propulsion equipment, auxiliary equipment, cargo handling equipment, navigational equipment, etc., in such operating condition as provided for in this Charter; |
| (vii) | the Vessel shall be free and clear of all liens other than those created by, in favour of or on the instruction of the Owners; |
| (viii) | the condition of the cargo holds to be in accordance with the maintenance regime undertaken by the Charterers during the Charter Period since delivery with allowance for legitimate cargoes carried since the last major maintenance programme; |
| (ix) | the anti-fouling coating system applied at the last scheduled dry-docking shall be in accordance with prevailing regulations at the time of application; |
| (x) | the funnel markings and name (unless being maintained by the Owner following redelivery) shall be painted out by the Charterers; and |
| (xi) | recently taken lube oil samples for all major machinery shall be made available within one (1) week of redelivery and results forwarded to Owners’ technical management for review. |
| (b) | At redelivery, the Charterers shall ensure that the Vessel shall meet the following performance levels (which where relevant shall be determined by reference to the Vessel’s log books): |
| (i) | all equipment controlling the habitability of the accommodation and service areas to be in proper working order, fair wear and tear excepted; and |
| (ii) | available deadweight to be within one per cent (1%) of that achieved at delivery (as the same may be adjusted as a result of any upgrading of the Vessel carried out in accordance with this Charter (such adjustment to be agreed between the Owners and Charterers at the time such upgrading work is to be undertaken); |
| (c) | Without prejudice to Clause 49, the Owners and Charterers shall each appoint (at the Charterers’ cost and expense) surveyors for the purpose of determining and agreeing in writing the condition of the Vessel at redelivery, and a final joint report as to the condition of the Vessel shall be drawn up together with a list of agreed deficiencies (if any) and the agreed costs of repairing or remedying such deficiencies. |
AVIC Top Ships II – BBC Additional Clauses
| (d) | The Charterers shall be obliged to repair any class items restricting the operation or trading of the Vessel prior to redelivery. |
| (e) | The Charterers shall be obliged to repair/remedy all such other deficiencies as are necessary to put the Vessel into the return condition required by this Clause 47. |
| (f) | The Charterers warrant that they will not permit (or request any sub-charterer not to permit) the Vessel to commence a voyage (including any preceding ballast voyage) which cannot reasonably be expected to be completed in time to allow redelivery of the Vessel within any time period required by the terms of this Charter. If the time of actual redelivery is after the date on which redelivery is required to take place in accordance with a Termination Notice issued pursuant to sub-paragraph (a)(i) of Clause 54.3 (Termination Event) (the “Redelivery Date”), the Charterer shall, without prejudice to any other amounts payable under the Transaction Documents (including without limitation pursuant to Clauses 46 (Redelivery), 47 (Redelivery conditions), 49 (Diver’s inspection at redelivery) and 54 (Termination Events)) pay to the Owners, as from the first date following the Redelivery Date and for each day until the date on which the Vessel is redelivered in accordance with the conditions of this Clause 47, the rate of hire equivalent to the higher of: |
| (i) | the prevailing market rate for the bareboat chartering of vessels of a similar type as the Vessel (as determined by an Approved Broker appointed by the Owners); and |
| (ii) | the prevailing market rate for the chartering of vessels of a similar type as the Vessel on the Baltic Tanker Indices applicable to the Vessel; and |
for the avoidance of doubt, all other terms, conditions and provisions of this Charter and the other Transaction Documents shall continue to apply during such period.
| 48. | OWNERS’ MORTGAGE |
| 48.1 | If required by a Sub-Charterer or the Charterers, the Owners shall provide, or procure, as the case may be, a quiet enjoyment letter in wording to be reasonably agreed between the parties. The Charterers: |
| (a) | acknowledge that the Owners are entitled and do intend to enter or have entered into certain funding arrangements with the Finance Parties in order to finance part of the Owners’ Cost, which funding arrangements may be secured, inter alia, by ship mortgages over the Vessel and (along with other related matters) the relevant Finance Documents (including any assignment of the Owners’ rights under this Charter and the other Transaction Documents), the Charterers irrevocably consent to any such assignment of the Owners’ rights under this Charter and the other Transaction Documents in favour of the Finance Parties; |
| (b) | irrevocably consent to any on-assignment in favour of the Finance Parties pursuant to the relevant Finance Documents of the Charterers’ rights, interests and benefits in and to the Insurances, Earnings, Requisition Compensation and any guarantee in favour of the Charterers for the performance of the obligations of any Sub-Charterers under any Sub-Charter; and |
AVIC Top Ships II – BBC Additional Clauses
| (c) | acknowledge that, without prejudice to the foregoing, the Owners may assign, transfer or novate their rights under this Charter and the other Transaction Document to any third party with the prior written consent of the Charterers (which shall not be unreasonably withheld or delayed) provided that no prior written consent shall be required if a Potential Termination Event or a Termination Event has occurred and is continuing; and |
| (d) | without limiting the generality of Clause 52.14 (Charterers’ undertakings), undertake to execute, provide or procure the execution or provision (as the case may be) of such further reasonable information or documents as are necessary to effect the assignment(s) referred to in paragraph (a), (b) or (c) above, including any assistance required by the Owners to de-register any financing charter recordation (if any) against the Vessel. |
| 48.2 | Without prejudice to any other provisions in this Charter, expenses arising out of the funding arrangement with the Finance Parties and assignment or transfer of this Charter and the other Transaction Documents as per Clause 48.1 above shall be for the Owners’ account subject to no Termination Event or Potential Termination Event having occurred and being continuing at the relevant time. |
| 49. | DIVER’S INSPECTION AT REDELIVERY |
| 49.1 | Unless the Vessel is returned in dry-dock, a diver’s inspection is required to be performed at the time of redelivery. |
| 49.2 | The Charterers shall, at the written request of the Owners, arrange at the Charterers’ time and expense for an underwater inspection by a diver approved by the Classification Society immediately prior to the redelivery. |
| 49.3 | A video film of the inspection shall be made. The extent of the inspection and the conditions under which it is performed shall be to the satisfaction of the Classification Society. |
| 49.4 | If damage to the underwater parts is found, the Charterers shall arrange, at their time and costs, for the Vessel to be dry-docked and repairs carried out to the satisfaction of the Classification Society. |
| 49.5 | If the conditions at the port of redelivery are unsuitable for such diver’s inspection, the Charterers shall take the Vessel (in Owners’ time but at Charterers’ expense) to a suitable alternative place nearest to the redelivery port unless an alternative solution is agreed. |
| 49.6 | All costs relating to any diver’s inspection shall be borne by the Charterers. |
| 50. | TRANSPORT DOCUMENTS |
The Charterers shall use their standard documents, waybills and conditions of carriage in the carriage of goods. Such documents, waybills and standard conditions shall comply with compulsory applicable legislation.
AVIC Top Ships II – BBC Additional Clauses
| 51. | CHARTERERS’ REPRESENTATIONS AND WARRANTIES |
| 51.1 | The Charterers represent and warrant to the Owners on the date of this Charter and (by reference to the facts and circumstances then pertaining) on, the Actual Delivery Date and each Hire Payment Date as follows (except that (1) the representation and warranty contained in paragraphs (g) and (x) below shall only be made on the date of this Charter and on the Actual Delivery Date, and (2) the representations and warranties in paragraph (b) below shall only be made on the date of this Charter): |
| (a) | Status and due authorisation: each Obligor is a corporation, limited partnership or limited liability company duly incorporated or formed under the laws of its jurisdiction of incorporation or formation (as the case may be) with power to enter into the Transaction Documents and the Project Documents (to which it is a party) and to exercise its rights and perform its obligations under the Transaction Documents and the Project Documents (to which it is a party) and all corporate and other action required to authorise its execution of the Transaction Documents and the Project documents (to which it is a party) and its performance of its obligations thereunder has been duly taken; |
| (b) | No deductions or withholding: under the laws of the Obligors’ respective jurisdictions of incorporation or formation in force at the date hereof, none of the Obligors will be required to make any deduction or withholding from any payment it may make under any of the Transaction Documents; |
| (c) | Claims pari passu: under the laws of the Obligors’ respective jurisdictions of incorporation or formation in force at the date hereof, the payment obligations of each Obligor under each Transaction Document to which it is a party, rank at least pari passu with the claims of all other unsecured and unsubordinated creditors of such obligor save for any obligations which are preferred solely by any bankruptcy, insolvency or other similar laws of general application; |
| (d) | No Immunity: in any proceedings taken in any of the Obligors’ respective jurisdictions of incorporation or formation in relation to any of the Transaction Documents, none of the Obligors will be entitled to claim for itself or any of its assets immunity from suit, execution, attachment or other legal process; |
| (e) | Governing law and judgments: in any proceedings taken in any of the Obligors’ jurisdiction of incorporation or formation in relation to any of the Transaction Documents in which there is an express choice of the law of a particular country as the governing law thereof, that choice of law and any judgment or (if applicable) arbitral award obtained in that country will be recognised and enforced; |
| (f) | Validity and admissibility in evidence: as at the date hereof, all acts, conditions and things required to be done, fulfilled and performed in order (A) to enable each of the Obligors lawfully to enter into, exercise its rights under and perform and comply with the obligations expressed to be assumed by it in the Transaction Documents and the Project Documents to which it is a party, (B) to ensure that the obligations expressed to be assumed by each of the Obligors in the Transaction Documents and the Project Documents are legal, valid and binding, and (C) to make the Transaction Documents and the Project Documents to which it is a party admissible in evidence in the jurisdictions of incorporation or formation of each of the Obligors, have been done, fulfilled and performed; |
AVIC Top Ships II – BBC Additional Clauses
| (g) | No filing or stamp taxes: under the laws of the Obligors’ respective jurisdictions of incorporation or formation in force at the date hereof, it is not necessary that any of the Transaction Documents to which it is a party be filed, recorded or enrolled with any court or other authority in its jurisdiction of incorporation or formation (other than the relevant maritime registry of the Pre-Approved Flag, to the extent applicable) or that any stamp, registration or similar tax be paid on or in relation to any of the Transaction Document; |
| (h) | Binding obligations: the obligations expressed to be assumed by each of the Obligors in the Transaction Documents and the Project Documents to which it is a party are legal and valid obligations, binding on each of them in accordance with the terms of such Transaction Documents and the Project Documents and no limit on any of their powers will be exceeded as a result of the borrowings, granting of security or giving of guarantees contemplated by such Transaction Documents and the Project Documents or the performance by any of them of any of their obligations thereunder; |
| (i) | No misleading information: to the best of its knowledge, any factual information provided by any Obligor to the Owners in connection with the Transaction Documents was true and accurate in all material respects as at the date it was provided and is not misleading in any material respect; |
| (j) | No winding-up: none of the Obligors has taken any corporate, limited liability company or limited partnership action nor have any other steps been taken or legal proceedings been started or (to the best of the Charterers’ knowledge and belief) threatened against any Obligor for its winding-up, dissolution, administration or reorganisation 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 which might have a Material Adverse Effect ; |
| (k) | Solvency: |
| (i) | None of the Obligors is unable, or admits or has admitted its inability, to pay its debts or has suspended making payments in respect of any of its debts; |
| (ii) | None of the Obligors by reason of actual or anticipated financial difficulties, has commenced, or intends to commence, negotiations with one or more of its creditors with a view to rescheduling any of its indebtedness; |
| (iii) | The value of the assets of each Obligor is not less than the liabilities of such Obligor (as the case may be) (taking into account contingent and prospective liabilities); and |
| (iv) | No moratorium has been, declared in respect of any indebtedness of any Obligor. |
AVIC Top Ships II – BBC Additional Clauses
| (l) | No material defaults: |
| (i) | Without prejudice to paragraph (ii) below, none of the Obligors are in breach of or in default under any agreement to which it is a party or which is binding on it or any of its assets to an extent or in a manner which might have a Material Adverse Effect; and |
| (ii) | No Potential Termination Event or Termination Event is continuing or might reasonably be expected to result from each Obligor’s entry into and performance of each Transaction Document to which such Obligor is a party; |
| (m) | No material proceedings: no material action or administrative proceeding of or before any court, arbitral body or agency which is not covered by adequate insurance or which might have a Material Adverse Effect has been started; |
| (n) | Accounts: all financial statements relating to the Charterers and the Charter Guarantor required to be delivered under paragraph Clause 52.1 (Charterers’ undertakings), were each prepared in accordance with GAAP, (in conjunction with the notes thereto) fairly represent the financial condition of the Charterers or the Charter Guarantor at the date as of which they were prepared and the results of their operations during the financial period then ended; |
| (o) | No obligation to create Security Interest: the execution of the Transaction Documents by the Obligors and their exercise of their rights and performance of their obligations thereunder will not result in the existence of nor oblige any Obligor to create any Security Interest over all or any of their present or future revenues or assets, other than pursuant to the Security Documents to which they are a party; |
| (p) | Non-conflict with other obligations: the execution of the Transaction Documents and the Project Documents by each of the Obligors and their exercise of their rights and performance of their obligations under any of the Transaction Documents and the Project Documents to which they are a party do not and will not conflict with: |
| (i) | any law or regulation applicable to such Obligor; |
| (ii) | the constitutional documents of such Obligor; or |
| (iii) | any agreement, instrument or treaty binding upon such Obligor or any such Obligor’s assets or constitute a default or termination event (however described) under any such agreement, instrument or treaty; |
| (q) | Security: each of the Obligors is the legal and beneficial owner of all assets and other property which it purports to charge, mortgage, pledge, assign or otherwise secure pursuant to each Security Document and those Security Documents to which it is a party create and give rise to valid and effective security having the ranking expressed in those Security Documents; |
| (r) | Necessary authorisations: the Necessary Authorisations required by each Obligor are in full force and effect, and each Obligor is in compliance with the material provisions of each such Necessary Authorisation relating to it and, to the best of its knowledge, none of the Necessary Authorisations relating to it are the subject of any pending or threatened proceedings or revocation; |
AVIC Top Ships II – BBC Additional Clauses
| (s) | No money laundering: the performance of the obligations of the Obligors under the Transaction Documents and the Project Documents, will be for the account of members of the respective Obligor(s) and will not involve any breach by any of them of any law or regulatory measure relating to “money laundering” as defined in Article 1 of the Directive (2005/EC/60) of the European Parliament and of the Council of the European Communities; |
| (t) | Disclosure of material facts: the Charterers are not aware of any material facts or circumstances which have not been disclosed to the Owners and which might, if disclosed, have reasonably been expected to materially adversely affect the decision of a person considering whether or not to enter into the Transaction Documents; |
| (u) | Compliance with laws: each of the Obligors is in compliance with all applicable laws, including Environmental Laws, to which it may be subject and (to the best of its knowledge and belief) no circumstances have occurred which would prevent such compliance in a manner or to an extent which has or is reasonably likely to have a Material Adverse Effect. No Environmental Claim has been commenced or (to the best of the Charterers’ knowledge and belief) is threatened against any Obligor where that claim has or is reasonably likely, if determined against that Obligor, to have a Material Adverse Effect; |
| (v) | Taxation |
| (i) | No Obligor is materially overdue in the filing of any Tax returns and no Obligor overdue in the payment of any amount in respect of Tax of one million US Dollars (US$1,000,000) (or its equivalent in any other currency) or more, save in the case of Taxes which are being contested in good faith. |
| (ii) | As far as the Charterers are aware, each of the Obligors (save for the Approved Manager) is resident for Tax purposes only in the jurisdiction of its incorporation. |
| (w) | No Restricted Party |
| (i) | No Obligor, and none of its Subsidiaries and none of their respective directors, officers or employees or, to the best of the knowledge of each such Obligor, its agents (x) is a Restricted Party or is otherwise owned or controlled by or acting directly or indirectly on behalf of or for the benefit of, a Restricted Party; (y) owns or controls a Restricted Party; or (z) has received notice or are aware of any claim, action, suit, proceeding or investigation against any of them with respect to Sanctions. |
| (ii) | Each Obligor, its Subsidiaries and their respective directors, officers and employees and, to the best of the knowledge of each such Obligor its agents, are in compliance with Sanctions in all material respects and are not knowingly engaged in any activity that would reasonably be expected to result in such Obligor being designated as a Restricted Party. |
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| (x) | No Material Adverse Effect: no event or circumstance which has occurred which has a Material Adverse Effect. |
| (y) | Status of Project Documents: The copies of the Project Documents delivered to the Owners are true and complete copies. The Project Documents constitute legal, valid, binding and enforceable obligations of the parties to them in accordance with their respective terms except insofar as enforcement may be limited by any applicable laws relating to bankruptcy, insolvency, administration and similar laws affecting creditors’ rights generally and by principles of equity. No amendments or additions to the Project Documents have been agreed nor has any party to any Project Document waived any of its respective rights under that Project Document (except as those notified to the Owners in writing and, if consent of the Owners are required pursuant to this Charter, as consented to by the Owners). |
| (z) | Initial Sub-Charters: The Vessel is sub-chartered by the Charterers to the relevant Initial Sub-Charterer pursuant to the First Initial Sub-Charter for minimum thirty-four (34) and maximum thirty-eight (38) months (the “Existing Firm Period”), extended for minimum thirty (30) months and maximum thirty-six (36) months (the “New Firm Period”) and the New Firm Period to commence on 30 January 2024 plus two (2) optional periods of one (1) year each at the relevant Initial Sub-Charterer’s option exercisable latest by 60 days before expiry of the previous period i.e. 30 November 2026, plus or minus thirty (30) days on the final period only, and with a daily hire rate of US$33,950 for the Existing Firm Period, US$32,850 for the New Firm Period, US$34,750 for the first (1st) optional period and US$36,750 for the second (2nd) optional period. |
| (aa) | Listing: The shares of the Charter Guarantor are traded on the NASDAQ Composite or Over the Counter (OTC) and the Charter Guarantor is an entity reporting with the United States Securities and Exchange Commission. |
| 51.2 | The representation and warranties of the Charterers contained in paragraphs (e), (f), (g), (h) and (p) of this Clause 51 are subject to: |
| (a) | the principle that equitable remedies are remedies which may be granted or refused at the discretion of the court; |
| (b) | the limitation of enforcement by laws relating to bankruptcy, insolvency, liquidation, reorganisation, court schemes, moratoria, administration and other laws generally affecting or limiting the rights of creditors; |
| (c) | the time barring of claims under any applicable limitation acts; |
| (d) | the possibility that a court may strike out provisions for a contract as being invalid for reasons of oppression, undue influence or similar; and |
| (e) | any other reservations or qualifications of law expressed in any legal opinions obtained by the Owners in connection with the Transaction Documents. |
| 52. | CHARTERERS’ UNDERTAKINGS |
The undertaking and covenants in this Clause 52 remain in force for the duration of the Agreement Term.
AVIC Top Ships II – BBC Additional Clauses
| 52.1 | Financial statements The Charterers shall, and shall procure the Charter Guarantor to each supply to the Owners (i) as soon as the same become available, but in any event within one hundred and eighty (180) days after the end of each of its financial years, the audited consolidated financial statements of the Charter Guarantor and the profit and loss accounts and balance sheets of the Charterers for that financial year, and (ii) as soon as the same become available, but in any event within ninety (90) days after the end of the first half-year of each financial year, the unaudited semi-annual consolidated financial statements of the Charter Guarantor and the profit and loss accounts and balance sheets of the Charter Guarantor for that financial half-year. |
| 52.2 | Requirements as to financial statements Each set of financial statements delivered to the Owners under Clause 52.1in relation to the Charterers and the Charter Guarantor (each a “Notifying Party”): |
| (a) | shall be certified by an authorised signatory of the relevant Notifying Party as fairly representing its financial condition as at the date as at which those financial statements were drawn up; and |
| (b) | shall be prepared in accordance with GAAP. |
| 52.3 | Information The Charterers shall supply to the Owners: |
| (a) | promptly upon becoming aware of them, details of any material litigation, arbitration or administrative proceedings which are current, threatened or pending against any Obligor, and which, if adversely determined, are reasonably likely to have a Material Adverse Effect; and |
| (b) | promptly, such further information regarding the financial condition, business and operations of the Charterers or the Charter Guarantor as the Owners may reasonably request. |
| 52.4 | Maintenance of legal validity The Charterers shall, and shall procure each other Obligor will, comply with the terms of and do all that is necessary to maintain in full force and effect all Necessary Authorisations required in or by the laws and regulations of its jurisdiction of formation or incorporation and all other applicable jurisdictions, to enable it lawfully to enter into and perform its obligations under the Transaction Documents and to ensure the legality, validity, enforceability or admissibility in evidence of the Transaction Documents in its jurisdiction of incorporation or formation and all other applicable jurisdictions. |
| 52.5 | Notification of Potential Termination Event The Charterers shall promptly, upon becoming aware of the same, inform the Owners in writing of the occurrence of any Termination Event or Potential Termination Event (and the steps, if any, being taken to remedy this) and, upon receipt of a written request to that effect from the Owners, confirm to the Owners that, save as previously notified to the Owners or as notified in such confirmation, no Termination Event or Potential Termination Event is continuing or if a Termination Event or Potential Termination Event is continuing specifying the steps, if any, being taken to remedy it. |
| 52.6 | Claims pari passu The Charterers shall ensure that at all times the claims of the Owners against it under the Transaction Documents rank at least pari passu with the claims of all its other unsecured and subordinated creditors save those whose claims are preferred by any bankruptcy, insolvency, liquidation, winding-up or other similar laws of general application. |
AVIC Top Ships II – BBC Additional Clauses
| 52.7 | Necessary Authorisations Without prejudice to any specific provision of the Transaction Documents relating to a Necessary Authorisation, the Charterers shall, and shall procure each other Obligor to (i) obtain, comply with and do all that is necessary to maintain in full force and effect all Necessary Authorisations if a failure to do the same may cause a Material Adverse Effect; and (ii) promptly upon request, supply certified copies to the Owners of all Necessary Authorisations. |
| 52.8 | Compliance with applicable laws The Charterers shall, and shall procure each other Obligor will, comply with all applicable laws, including Environmental Laws, to which it may be subject (except as regards Restricted Parties to which Clause 52.9 applies, and anti-corruption and anti-bribery laws to which Clause 52.10 applies) if a failure to do the same may have a Material Adverse Effect. |
| 52.9 | Sanctions |
| (a) | No proceeds of the Purchase Price or any part of the Purchase Price shall be made available, directly or indirectly, to or for the benefit of a Restricted Party nor shall they be otherwise, directly or indirectly, applied in a manner or for a purpose prohibited by Sanctions, or to fund any activity in a Sanctioned Country or in any manner which would cause the Owners or any Finance Party to be in breach of or made subject to Sanctions, or at risk of being in breach of or made subject to Sanctions. |
| (b) | No Obligor shall fund all or any part of any payment or repayment of the Purchase Price out of proceeds directly or indirectly derived from any activity in a Sanctioned Country or any transaction with a Restricted Party, or out of proceeds directly or indirectly derived from any other transactions which would be prohibited by Sanctions or in any other manner which would cause the Owners or any Finance Party to be in breach of or made subject to Sanctions, or at risk of being in breach of or made subject to Sanctions and no such proceeds shall be paid into the Earnings Account or the Owners’ bank account. |
| (c) | Each of the Obligors has implemented and shall maintain in effect a Sanctions compliance policy which is designed to ensure compliance by each such Obligor, its Subsidiaries and their respective directors, officers, employees and agents with Sanctions. |
| (d) | The Charterers shall procure: |
| (i) | that the Vessel shall not be used by or for the benefit of a Restricted Party or in trading to or from a Sanctioned Country unless it is a permissible trade which will not result in the Vessel becoming subject to Sanctions; |
| (ii) | that the Vessel shall not otherwise be used in any manner contrary to Sanctions, or in a manner that creates a risk that an Obligor, the Owners or any Finance Party will become a Restricted Party; |
| (iii) | that the Vessel shall not be used in trading in any manner that creates a risk that the Vessel will become subject to Sanctions; |
| (iv) | that the Vessel shall not be traded in any manner which would trigger the operation of any sanctions limitation or exclusion clause (or similar) in the Insurances; and |
AVIC Top Ships II – BBC Additional Clauses
| (v) | without prejudice to the above provisions, that each sub-charter in respect of the Vessel shall contain, for the benefit of the Charterers, language which gives effect to the provisions of this Charter relating to Sanctions and which sub-charter permits refusal of employment or voyage orders if non-compliance with such provisions either breaches, or risks breaching (in the opinion of the Charterers) Sanctions. |
| 52.10 | Anti-corruption and anti-bribery laws The Charterers shall, and shall procure each other Obligor will, conduct its business in compliance with applicable anti-corruption and anti-bribery laws. |
| 52.11 | Environmental compliance |
The Charterers shall, and shall procure each other Obligor will:
| (a) | comply with any Environmental Law; |
| (b) | obtain, maintain and ensure compliance with all requisite Environmental Approvals; and |
| (c) | implement procedures to monitor compliance with and to prevent liability under any Environmental Law, |
where failure to do so has or is reasonably likely to have a Material Adverse Effect.
| 52.12 | Environmental Claims The Charterers shall, promptly upon becoming aware of the same, inform the Owners in writing of: |
| (i) | any Environmental Claim against any Obligor or the Vessel which is current or pending; and |
| (ii) | any facts or circumstances which are reasonably likely to result in any Environmental Claim being commenced or threatened against any Obligor or the Vessel, |
where the claim, if determined against such Obligor or the Vessel, has or is reasonably likely to have a Material Adverse Effect.
52.13 Taxation
| (a) | The Charterers shall, and shall procure each other Obligor will, pay and discharge any Tax imposed upon it or its assets within the time period allowed without incurring penalties unless and only to the extent that: |
| (i) | such payment is being contested in good faith; |
| (ii) | adequate reserves are being maintained for such Tax and the costs required to contest them have been disclosed in its latest financial statements; and |
| (iii) | such payment can be lawfully withheld and failure to pay such Tax does not have or is not reasonably likely to have a Material Adverse Effect. |
| (b) | No Obligor may change its residence for Tax purposes. |
AVIC Top Ships II – BBC Additional Clauses
| 52.14 | Further assurance The Charterers shall, and shall procure each other Obligor will, at their own expense, promptly take all such action as the Owners may reasonably require for the purpose of perfecting or protecting any of the Owner’s rights with respect to the security created or evidenced (or intended to be created or evidenced) by the Security Documents. |
| 52.15 | Other information The Charterers will promptly supply to the Owners such financial information and explanations as the Owners may from time to time reasonably require in connection with the Obligors (other than the Commercial Manager and the Technical Manager) and the Vessel. |
| 52.16 | Inspection of records The Charterers will permit the inspection of their financial records and accounts relating to the Transaction Documents on reasonable notice from time to time during business hours by the Owners or its nominee. |
| 52.17 | Merger and demerger The Charterers shall not, and shall procure that the Charter Guarantor shall not, enter into any amalgamation, merger, demerger or corporate restructuring without the prior written consent of the Owners (such consent not to be unreasonably withheld or delayed), and in the case of the Charter Guarantor, unless (a) it remains as the surviving entity after such amalgamation, merger, demerger or corporate restructuring and (b) there is (i) no breach of any of its undertakings or the financial covenants contained under clause 10.2 of the Charter Guarantee occurring as a result of the proposed amalgamation, merger, demerger or corporate restructuring and (ii) no Termination Event having occurred. |
| 52.18 | Transfer of assets The Charterers shall not, sell or transfer any of its material assets other than: |
| (a) | on arm’s length terms to third parties where the net proceeds of sale are used as a prepayment hereunder; or |
| (b) | on arm’s length terms to its Affiliates, which are and remain members of the Charter Group. |
| 52.19 | Change of business The Charterers shall not, without the prior written consent of the Owners, make any substantial change to the general nature of their shipping business from that carried on at the date of this Charter. |
| 52.20 | “Know your customer” checks If: |
| (a) | the introduction of or any change in (or in the interpretation, administration or application of) any law or regulation made after the date of this Charter; |
| (b) | any change in the status of the Charterers or any other Obligor after the date of this Charter; or |
| (c) | a proposed assignment or transfer by Owners of any of its rights and obligations under this Charter, |
obliges the Owners to comply with “know your customer” or similar identification procedures in circumstances where the necessary information is not already available to it, the Charterers shall promptly upon the request of the Owners supply, or procure the supply of, such documentation and other evidence as is reasonably requested by the Owners in order for the Owners to carry out and be satisfied it has complied with all necessary “know your customer” or other similar checks under all applicable laws and regulations pursuant to the transactions contemplated in the Transaction Documents.
AVIC Top Ships II – BBC Additional Clauses
| 52.21 | Management of the Vessel The Charterers shall ensure that: |
| (a) | the Vessel is at all times technically and commercially managed by an Approved Manager; |
| (b) | unless (A) the Charterers have promptly informed the Owners in writing of any proposed change of an Approved Manager, and (B) the Owners have granted its prior written consent (which shall not be unreasonably withheld or delayed) to such proposed change, the Approved Manager shall not be changed to another entity; |
| (c) | the Approved Managers will provide a written confirmation confirming that, among other things, following the occurrence of Termination Event which is continuing, all claims of the Approved Managers against the Charterers shall be subordinated to the claims of the Owners or the Finance Parties (if applicable) under the Transaction Documents; |
| (d) | the Approved Managers shall, upon the Owners’ request, deliver on a semi-annual basis a ship management report and (if available) an in-house ship inspection report, all PSC/FSC/SIRE inspection deficiencies statistics and reports of any detention, pollution, injury casualty, major accident and/or machinery failure in respect of the Vessel, as well as their certificate of compliance; and |
| (e) | the terms of the Management Agreements shall not be varied without the Owners’ prior written consent. |
| 52.22 | Classification The Charterers shall ensure that the Vessel maintains the highest classification required for the purpose of the relevant trade of the Vessel which shall be with the Vessel’s Classification Society, in each case, free from any material overdue recommendations and adverse notations affecting that the Vessel’s class. |
| 52.23 | Certificate of financial responsibility The Charterers shall, if required, obtain and maintain a certificate of financial responsibility in relation to the Vessel which is to call at the United States of America. |
| 52.24 | Registration Without prejudice to Clause 10(d), the Charterers shall not change or permit a change to the flag of the Vessel during the duration of this Charter other than to a Pre-Approved Flag, such approval not to be unreasonably withheld or delayed. Any change to the flag of the Vessel shall be at the cost of the Charterers (which shall include any costs of the Finance Parties (if applicable)). |
| 52.25 | ISM, ISPS and Maritime Labour Convention Compliance The Charterers shall ensure that each ISM Company and ISPS Company complies in all material respects with the ISM Code and the ISPS Code, respectively, or any replacements thereof and in particular (without prejudice to the generality of the foregoing) shall ensure that such company holds (i) a valid and current Document of Compliance issued pursuant to the ISM Code, (ii) a valid and current SMC issued in respect of the Vessel pursuant to the ISM Code, and (iii) an ISSC in respect of the Vessel, and the Charterers shall promptly, upon request, supply the Owners with copies of the same. The Charterers shall at all time comply with the Maritime Labour Convention. |
AVIC Top Ships II – BBC Additional Clauses
| 52.26 | Chartering-in The Charterers shall not, during the duration of this Charter, without the prior written consent of the Owners, take any vessel on charter or other contract of employment (or agree to do so) except for vessels chartered in by the Charterers on a temporary basis to be provided to any Sub-Charterers in order to fulfil their obligations under the relevant Sub-Charter (in circumstances where the Vessel is not available for whatever reason). |
| 52.27 | Change of control |
| (a) | Unless with prior written consent of the Owners (which shall not be unreasonably withheld or delayed): |
| (i) | the Charterers shall remain a wholly-owned subsidiary of the Charter Guarantor; and |
| (ii) | each of the Charterers and the Charter Guarantor shall remain in the ownership and Control of (either directly or indirectly) the Pistiolis Family. |
| (b) | The Charterers shall ensure that during the duration of the Charter Period, no Change of Control shall occur without the prior written consent of the Owners (which shall not be unreasonably withheld or delayed). |
| 52.28 | Inspection of Vessel and inspection reports In the absence of a Termination Event, subject to there being no undue interference with the operation of the Vessel: |
| (a) | the Owners may at the Charterers’ cost arrange for persons appointed by the Owners to board the Vessel once in each calendar year during the Charter Period to inspect the Vessel’s state and condition, and the Charterers will (and will ensure that the Approved Managers will) provide all due and necessary assistance to facilitate such inspection; and |
| (b) | the Charterers shall, within five (5) Business Days’ of the Owners’ written demand, reimburse the Owners for all costs, fees and expenses reasonably incurred by the Owners in connection with the Owners’ procuring or arranging the procurement of the relevant inspection report as to the condition of the Vessel, |
provided always however that if a Termination Event has occurred and is continuing, the Owners may at any time and at the Charterers’ cost conduct such inspection and the Charterers shall be deemed to have granted such permission and shall provide such necessary assistance to the Owners in respect of such inspection.
| 52.29 | Sub-Charters |
| (a) | The Charterers will, where applicable, use best endeavours and forthwith execute and deliver any and all such other agreements, instruments and documents (including any novation agreement) as may be required by law or deemed necessary or desirable by the Owners to ensure that the First Initial Sub-Charter which is in effect on the date of this Charter remains in effect, so that all obligations previously owed by the relevant Initial Sub-Charterers to the Charterers under the First Initial Sub-Charterer shall continue to be owed to the Charterers throughout the term of the First Initial Sub-Charter. |
AVIC Top Ships II – BBC Additional Clauses
| (b) | Apart from the First Initial Sub-Charter, the Charterers shall ensure that there shall be no sub-charter (including but not limited to on a bareboat basis) of the Vessel without the consent of the Owners, such consent not to be unreasonably withheld save that (and subject to the foregoing) any sub-chartering contract of less than twelve (12) months (including optional extension periods) not made on a bareboat charter basis shall not require the consent of the Owners and further provided that, (i) the Charterers shall use all reasonable endeavours to procure (if required) the consent of the Sub-Charterers with whom they are chartering with to the assignment of any Sub-Charter to the Owners, upon obtaining which (if the same is required) the Charterers shall assign that Sub-Charter to the Owners by way of security for the Charterers’ obligations under this Charter; and (ii) all sub-chartering documentation is promptly provided to the Owners, for its information. |
| (c) | The Charterers shall notify the Owners promptly after they become aware of the expiry or early termination of any Sub-Charter to which they are respective a party. |
| 52.30 | Valuation of Market Value |
| (a) | The Charterers shall procure valuation of the Market Value of the Vessel to be made (and procure the delivery to the Owners of the Valuation Reports issued by the Approved Brokers), at the Charterers’ cost: (i) within thirty (30) days prior to the Actual Delivery Date (the Market Value so determined shall be the “Initial Market Value”), (ii) once every twelve (12) months during the Charter Period; and (iii) at such other times as the Owners may require in their absolute discretion (each such additional Valuation Reports to be at Owners’ cost unless a Termination Event has occurred and is continuing following which such additional Valuation Reports shall be at the cost of the Charterers). |
| (b) | The Initial Market Value of the Vessel shall be the arithmetic average of desk-top valuations obtained from two (2) Approved Brokers with one selected by the Charterers and the other selected by the Owners prior to the Actual Delivery Date, and subsequently the annual Market Value of the Vessel shall be the arithmetic average of valuations obtained from two (2) Approved Brokers acceptable to the Owners during the Agreement Term (in each such case the Approved Brokers shall be acceptable to the Owners and the expenses of all such appointments shall be borne by the Charterers, except for any additional Valuation report required by the Owners in the absence of any Termination Event as provided in paragraph (a) above). Each such valuation shall be made with or without physical inspection of that Vessel and on the basis of a sale for prompt delivery for cash on normal arm’s length commercial terms as between a willing buyer and a willing seller, free of any existing charter or other contract of employment. |
| (c) | If valuation is obtained in accordance with this Clause and the Market Value of the Vessel is less than one hundred and twenty per cent (120%) of the Cost Balance as at the date of such valuation (the “Required LTV Ratio”), the Charterers shall, within 5 days of the Owners’ notification of the same, either (i) prepay to the Owners in an amount equal to the shortfall as may be necessary to ensure that the Ratio does not exceed the Required LTV Ratio or (ii) provide or procure a third party to provide additional security which in the opinion of the Owners has a net realisable value at least equal to the shortfall and is acceptable to the Owners, and which is documented in such terms as the Owners may require. |
AVIC Top Ships II – BBC Additional Clauses
| (d) | If prepayment is elected under paragraph (c) above and after it is completed, the Fixed Hire (including the Balloon Amount) and the Cost Balance shall be adjusted pro rata on the basis of the proportion of the prepayment amount in relation to the Owners’ Cost. |
| 52.31 | Transactions with Affiliates The Charterers shall procure that all transactions conducted or to be conducted between them and any of the Obligors or any of that Obligor’s Affiliates will be on an arm’s length commercial basis. |
| 52.32 | Project Documents |
| (a) | The Charterers shall: |
| (i) | without affecting its obligations under the applicable provisions of the Transaction Documents, perform and observe its obligations under the Project Documents and use its best endeavours to procure that each of the other parties to the Project Documents performs and observes its obligations under them; |
| (ii) | obtain and maintain in force, and promptly furnish certified copies to the Owners of, all licences, authorisations, approvals and consents, and do all other acts and things, which may from time to time be necessary or desirable for the continued due performance of its obligations under the Transaction Documents and the Project Documents or which may be required for the validity, enforceability or admissibility in evidence of the Transaction Documents and the Project Documents; and |
| (iii) | not, without the prior consent of the Owners, vary the terms of any Project Documents; |
| (b) | The Charterers shall not, without the prior consent of the Owners: |
| (i) | except as contemplated by this Charter, sell or agree to sell the Vessel or convey, assign, transfer, sell or otherwise dispose of or deal with any of its other real or personal property, assets or rights, whether present or future, in connection with the Vessel; |
| (ii) | waive or fail to enforce any provision of, or agree to any amendment or supplement to, any Project Document, save to the extent expressly permitted by the terms of any Transaction Document. |
| 52.33 | No dividends |
The Charterers shall not, and shall procure that the Charter Guarantor shall not, make or pay any dividend or other distribution (in cash or in kind) in respect of its share capital following the occurrence of a Potential Termination Event or a Termination Event, or if such payment or distribution will result in the occurrence of a Termination Event.
AVIC Top Ships II – BBC Additional Clauses
| 52.34 | Restrictions on further Financial Indebtedness and obligations |
| (a) | Except with the prior written consent of the Owners, the Charterers shall not create, incur, assume, suffer to exist or in any manner become or remain liable for any Financial Indebtedness or obligations, other than: |
| (i) | Financial Indebtedness or obligations normally associated with the day to day operation of the Vessel, or otherwise in the normal course of business; |
| (ii) | Financial Indebtedness or obligations under the Project Contracts to which they are parties and the Transaction Documents; and |
| (iii) | Financial Indebtedness or obligations, including all shareholders’ and intercompany advances and loans, which by its terms is subordinate and subject in right of payment to the prior payment in full of the Financial Indebtedness under or pursuant to the Transaction Documents, as provided in paragraph (b) below or as otherwise evidenced by a Subordination Agreement; and |
| (b) | the Charterers shall, and shall procure that the other Obligors shall, acknowledge and undertake with the Owners that, so long as any Financial Indebtedness is outstanding under any Transaction Document, all shareholder’s and intercompany advances and loans from time to time made to the Charterers: |
| (i) | are and shall be subordinated in all respects to all amounts owing and which may in future become owing by the Charterers under the Transaction Documents; |
| (ii) | shall not be repaid or be subject to payment of interest (although interest may accrue), provided that this sub-paragraph (b)(ii) shall not apply to repayment of Financial Indebtedness due to other member of the Charter Group which fall under sub-paragraph (a)(i) above; |
| (iii) | are and shall remain unsecured by any Security Interest over the whole or any part of the assets of the Charterers; and |
| (iv) | are not and shall not be capable of becoming subject to any right of set-off or counterclaim. |
| 53. | EARNINGS ACCOUNT |
In addition to Clause 52 (Charterers’ undertakings), the Charterers hereby undertake to the Owners that, throughout the Agreement Term, they shall ensure that all Earnings and any other amounts received by them in connection with the Vessel are paid into the Earnings Account, free and clear of any costs, fees, expenses, disbursements, withholdings or deductions.
| 54. | TERMINATION EVENTS |
54.1 Each of the following events shall constitute a Termination Event:
| (a) | Failure to pay any Obligor (other than the Commercial Manager and the Technical Manager) fails to pay any amount due from it under any Transaction Document to which they are parties at the time, in the currency and otherwise in the manner specified therein provided that, if an Obligor can demonstrate to the reasonable satisfaction of the Owners that all necessary instructions were given to effect such payment and the non-receipt thereof is attributable solely to an administrative or technical error or an error in the banking system or a Disruption Event, then such payment shall instead be deemed to be due, solely for the purposes of this paragraph, within five (5) Business Days of the date on which it actually fell due under this Charter (if a payment of Hire) and seven (7) Business Days (if a sum payable on demand) ; or |
AVIC Top Ships II – BBC Additional Clauses
| (b) | Misrepresentation any representation or statement made by any Obligor in any Transaction Document to which it is a party or in any notice or other document, certificate or statement delivered by it pursuant thereto or in connection therewith is or proves to have been incorrect or misleading in any material respect, where the circumstances causing the same give rise to a Material Adverse Effect; or |
| (c) | Specific covenants any Obligor fails duly to perform or comply with any of the obligations expressed to be assumed by or procured by them under Clauses 52.27, 52.30 and 52.31; or |
| (d) | Other obligations any of the Obligors fails duly to perform or comply with any of the obligations expressed to be assumed by them in any Transaction Document (other than those referred to in paragraph (c) or any failure resulting in any Obligor, the Owners or the Vessel becoming subject to Sanctions, in relation to which paragraph (u) below shall apply) and such failure is not remedied within sixty (60) days after the earlier of (A) the Owners having given notice thereof to the relevant Obligor and (B) the Obligor becoming aware of such failure to perform or comply; or |
| (e) | Cross Default any of the following occurs in relation to any Financial Indebtedness of any Obligor: |
| (i) | any Financial Indebtedness of such entity is not paid when due or, if so payable, on demand after any applicable grace period has expired; |
| (ii) | any Financial Indebtedness of such entity becomes due and payable, or capable of being declared due and payable prior to its specified maturity as a consequence of any event of default and not as a consequence of the exercise of any voluntary right of prepayment; |
| (iii) | a lease, hire purchase agreement or charter creating any Financial Indebtedness of such entity is terminated by the lessor or owner as a consequence of any termination event or event of default (howsoever defined); or |
| (iv) | any overdraft, loan, note issuance, acceptance credit, letter of credit, guarantee, foreign exchange or other facility, or any swap or other derivative contract or transaction, relating to any Financial Indebtedness of such entity ceases to be available or becomes capable of being terminated or declared due and payable or cash cover is required or becomes capable of being required, as a result of any termination event or event of default (howsoever defined), |
AVIC Top Ships II – BBC Additional Clauses
provided that no Termination Event will occur under this paragraph (e) in respect of:
| (A) | the Charter Guarantor where the aggregate of all such Financial Indebtedness falling within sub-paragraphs (i) to (iv) above is less than US Dollars Ten Million (US$10,000,000) or its equivalent in any other currency or currencies and such default is remedied within 45 days after such default; or |
| (B) | an Obligor (other than the Charter Guarantor) where the aggregate of all such Financial Indebtedness falling within sub-paragraphs (i) to (iv) above is less than US Dollars One Million and Five Hundred Thousand (US$1,500,000) or its equivalent in any other currency or currencies and such default is remedied within forty five (45) days after such default; or |
| (f) | Insolvency and rescheduling any of the Obligors is unable to pay their debts as they fall due, commences negotiations with any one or more of their creditors with a view to the general readjustment or rescheduling of their indebtedness or makes a general assignment for the benefit of their creditors or a composition with their creditors; or |
| (g) | Winding-up any of the Obligors files for initiation of formal restructuring proceedings, is wound up or declared bankrupt or take any corporate action or other steps are taken or legal proceedings are started for their winding-up, dissolution, administration or re-organisation or for the appointment of a liquidator, receiver, administrator, administrative receiver, conservator, custodian, trustee or similar officer of them or of any or all of their revenues or assets or any moratorium is declared or sought in respect of any of their indebtedness; or |
| (h) | Execution or distress |
| (i) | any Obligor fails to comply with or pays any sum due from them (within 30 days of such amount falling due) under any final judgment or any final order made or given by any court or other official body of a competent jurisdiction in an aggregate in respect of (A) the Charter Guarantor, equal to or greater than US Dollars Ten Million (US$10,000,000) or its equivalent in any other currency and (B) an Obligor (other than the Charter Guarantor), equal to or greater than US Dollars One Million and Five Hundred Thousand (US$1,500,000) or its equivalent in any other currency, being a judgment or order against which there is no right of appeal or if a right of appeal exists, where the time limit for making such appeal has expired; or |
| (ii) | any execution or distress is levied against, or an encumbrancer takes possession of, the whole or any part of, the property, undertaking or assets of (A) the Charter Guarantor, in an aggregate amount equal to or greater than US Dollars Five Million (US$5,000,000) or its equivalent in any other currency and (B) an Obligor (other than the Charter Guarantor), equal to or greater than US Dollars One Million (US$1,000,000) or its equivalent in any other currency or currencies, other than any execution or distress which is being contested in good faith and which is either discharged within thirty (30) days or in respect of which adequate security has been provided within thirty (30) days to the relevant court or other authority to enable the relevant execution or distress to be lifted or released; or |
AVIC Top Ships II – BBC Additional Clauses
| (i) | Similar event any event occurs which, under the laws of any jurisdiction, has a similar or analogous effect to any of those events mentioned in paragraphs (f), (g) or (h) above; or |
| (j) | Recission, Repudiation, Termination and Cancellation |
| (i) | any of the Obligors rescinds or repudiates any Transaction Document to which it is a party or do or cause to be done any act or thing evidencing an intention to rescind or repudiate any such Transaction Document; |
| (ii) | the Charterers or the relevant Initial Sub-Charterer rescinds or purports to rescind or repudiates or purports to repudiate an Initial Sub-Charter to which it is a party; or |
| (iii) | an Initial Sub-Charter is terminated, cancelled or repudiated by the Charterers or the relevant Initial Sub-Charterer as a consequence of any termination event or event of default (howsoever defined therein), |
provided that there shall not be a Termination Event under sub-paragraph (j)(ii) or (iii) (as the case may be) if a Subsequent Initial Sub-Charter is entered into for the Vessel with an Initial Sub-Charterer upon such terms and conditions acceptable to the Owners within forty-five (45) days of such termination, cancellation or repudiation;
| (k) | Validity and admissibility at any time any act, condition or thing required to be done, fulfilled or performed in order: |
| (i) | to enable any of the Obligors lawfully to enter into, exercise their rights under and perform the material obligations expressed to be assumed by them in the Transaction Documents; |
| (ii) | to ensure that the material obligations expressed to be assumed by any of the Obligors in the Transaction Documents are legal, valid and binding; |
| (iii) | to make the Transaction Documents admissible in evidence in any applicable jurisdiction, |
is not done, fulfilled or performed within thirty (30) days after notification from the Owners to the relevant Obligor requiring the same to be done, fulfilled or performed; or
| (l) | Illegality at any time: |
| (i) | it is or becomes unlawful for any of the Obligors to perform or comply with any or all of their obligations under the Transaction Documents to which they are parties; |
AVIC Top Ships II – BBC Additional Clauses
| (ii) | any of the obligations of any of the Obligors under the Transaction Documents to which they are parties are not or cease to be legal, valid and binding; or |
| (iii) | any Security Interest created or purported to be created by the Security Documents ceases to be legal, valid, binding, enforceable or effective or is alleged by a party to such Security Document (other than the Owners) to be ineffective, |
and, in each case, such illegality is not remedied or mitigated to the satisfaction of the Owners within forty five (45) days (or such longer period as the Owners may agree) after it has given notice thereof to the Charterers; or
| (m) | Material adverse change at any time there shall occur any event or change which has a Material Adverse Effect in respect of any of the Obligors and such event or change, if capable of remedy, is not so remedied within thirty (30) days of the delivery of a notice confirming such event or change by the Owners to the Charterers; or |
| (n) | Conditions precedent if any of the conditions set out in Clause 40 (Conditions precedent) is not satisfied by the relevant time or such other time period specified by the Owners in their discretion; or |
| (o) | Revocation or modification of consents etc. if any Necessary Authorisation which is now or which at any time during the Agreement Term becomes necessary to enable an Obligor to comply with any of its obligations in or pursuant to any of the Transaction Documents or the Project Documents is revoked, withdrawn or withheld, or modified in a manner which the Owners reasonably consider is, or may be, prejudicial to the interests of Owners in a material manner, or if such Necessary Authorisation ceases to remain in full force and effect and not remedied with twenty (20) days; or |
| (p) | Cessation of business any of the Obligors ceases, or threatens to cease, to carry on all or a substantial part of its business; or |
| (q) | Curtailment of business if the business of any of the Obligors is wholly or materially curtailed by any intervention by or under authority of any government, or if all or a substantial part of the undertaking, property or assets of the Obligor is seized, nationalised, expropriated or compulsorily acquired by or under authority of any government or any of the Obligors disposes or threatens to dispose of a substantial part of their business or assets; or |
| (r) | Reduction of capital if any of the Obligors reduces their committed or subscribed capital other than in the course of regular finance or business activity; or |
| (s) | Environmental matters |
| (i) | any Environmental Claim is pending or made against any Obligors or in connection with the Vessel, where such Environmental Claim has a Material Adverse Effect; |
| (ii) | any actual Environmental Incident occurs in connection with the Vessel, where such Environmental Incident has a Material Adverse Effect; or |
AVIC Top Ships II – BBC Additional Clauses
| (t) | Loss of property all or a substantial part of the business or assets of any of the Obligors is destroyed, abandoned, seized, appropriated or forfeited for any reason, and such occurrence in the reasonable opinion of the Owners has a Material Adverse Effect; or |
| (u) | Sanctions any Obligor or any of their directors, officers or employees becomes a Restricted Party and no remedy is available within forty five (45) days (or such longer period as the Owners may agree) or any Sanctions are enacted against the Vessel or if the Vessel becomes otherwise subject to Sanctions; |
| (v) | Arrest the Vessel is arrested or seized for any reason whatsoever (other than caused solely and directly by any action or omission from the Owners) unless the Vessel is released and returned to the possession of the Charterers within forty five (45) days of such arrest or seizure; |
| (w) | Financial Covenants the Charter Guarantor fails to observe or perform any of its undertakings or the financial covenants contained under clause 10.2 of the Charter Guarantee; |
| (x) | Listing The shares of the Charter Guarantor cease to trade on the NASDAQ Composite or Over the Counter (OTC), or the Charter Guarantor ceases being an entity reporting with the United States Securities and Exchange Commission. |
| 54.2 | The Owners and the Charterers agree that it is a fundamental term and condition of this Charter that no Termination Event shall occur during the Agreement Term. Without prejudice to the forgoing, the Owners may treat a Termination Event which is continuing as a breach of condition by the Charterers which involves a breach of this Charter by the Charterers or as an agreed terminating event, the occurrence of which (a) gives rise to a right of the Owners, in their absolute discretion, to terminate the chartering of the Vessel under this Charter by issuing a Termination Notice requiring the Charterers to pay to the Owners the Termination Sum in accordance with this Clause 54 and (b) will entitle the Owners to exercise all or any of the remedies set out below in this Clause 54. |
54.3
| (a) | At any time after occurrence of a Termination Event, the Owners shall be entitled to terminate this Charter forthwith by giving a Termination Notice to the Charterers demanding the Charterers (i) to redeliver the Vessel to Owners and/or (ii) pay the Termination Sum to the Owners on the Termination Payment Date. |
| (b) | The Charterers shall be obliged to pay the Owners the Termination Sum on the Termination Payment Date and it is hereby agreed by the parties hereto that: |
| (i) | without prejudice to Clause 54.7, the obligation to pay the Termination Sum is a continuing obligation and shall survive the termination of the leasing of the Vessel under this Charter and shall continue in full force and effect until irrevocably and unconditionally paid in full; |
| (ii) | payment of the Termination Sum is deemed to be proportionate as to amount, having regard to the legitimate interest of the Owners, in protecting against the Owners’ risk of the Charterers failing to perform its obligations under this Charter; and |
AVIC Top Ships II – BBC Additional Clauses
| (iii) | the Termination Sum shall, depending on the nature of the Termination Event(s) on the basis of which the Owners serve a Termination Notice, be either an obligation to pay damages following acceptance by the Owners of a breach of condition by the Charterers or an obligation to pay an agreed sum in specified circumstances which do not involve a breach of contract by the Charterers. |
| (c) | Notwithstanding paragraph (a) above, once the Termination Notice is sent to the Charterers, the Owners shall be entitled to (but not bound and without prejudice to the Charterers’ obligations hereunder) retake possession of the Vessel immediately on the date of the Termination Notice or any other date as specified by the Owners and the Charterers shall, on the Termination Payment Date, pay the Termination Sum to the Owners. In case the Charterers fail to pay the Termination Sum in full on the Termination Payment Date, default interest shall accrue on the unpaid portion of the Termination Sum in accordance with Clause 44.4 and the Owners shall be entitled to exercise the remedies as provided in Clause 54.7. |
| 54.4 | The Owners may demand that the Charterers pay to the Owners on the Termination Payment Date or such later date as the Owners shall specify (and without prejudice to any other rights, claims or remedies which the Owners may have under this Charter and applicable laws) the Termination Sum. If the Termination Sum paid by the Charterers under this Charter does not cover in full the Owners’ loss in connection with the relevant Termination Event and/or the termination of this Charter, the Owners shall be entitled to claim further compensation for their losses and for all reasonable expenses incurred together with any interest accrued thereon. The Owners shall not be under any liability whatsoever to the Charterers for loss or damage if any occasioned by the Charterers for the termination of this Charter unless such termination is wrongful. |
54.5
| (a) | Upon the irrevocable and unconditional receipt of the full amount of the Termination Sum by the Owners, the Owners will transfer to the Charterers or its nominee all of the Owners’ rights, title and interests in the Vessel on “as is-where is” basis and shall discharge the mortgage as may be created over the Vessel pursuant to the Finance Documents at the Charterers’ cost, provided always that prior to such transfer or deletion (as the case may be), the Owners shall have received the letter of indemnity as referred to in Clause 59.6 below from the Charterers, and the Charterers shall have performed all their obligations in connection herewith and with the Vessel, including without limitation the full payment of all Unpaid Sums, taxes, charges, duties, costs and disbursements (including legal fees) in relation to the Vessel. |
| (b) | The Owners shall give the Charterers (or their nominee) no representations, warranties, agreements or guarantees whatsoever concerning or in connection with the Vessel, the Insurances, the Vessel’s condition, state or class or anything related to the Vessel, expressed or implied, statutory or otherwise, and the Charterers shall not be entitled for any reason whatsoever to claim against the Owners for any losses, or any loss of profit resulting directly or indirectly from any defect or alleged defect in the Vessel. All registration, legal or other expenses whatsoever incurred in respect of the transfer of the title in the Vessel from the Owners to the Charterers or its nominee shall be for the account of the Charterers. |
AVIC Top Ships II – BBC Additional Clauses
| 54.6 | Notwithstanding the termination of this Charter pursuant to this Clause, the Charterers shall irrevocably and unconditionally continue to comply with its obligations under this Charter until the Owners have irrevocably and unconditionally received the Termination Sum and other sum payable by the Charterers to the Owners pursuant to this Charter in full. |
| 54.7 | If the Charterers fail to pay in full the Termination Sum and other sums payable under this Charter on the Termination Payment Date or such later date as the Owners shall specify pursuant to Clause 54.4: |
| (a) | the Parties shall first obtain three valuation reports from three Approved Brokers (each party appoint one Approved Broker and the third one to be appointed by the Parties jointly): |
| (i) | if the average of the three assessments of the Market Value of the Vessel (the “Average Termination Market Value”) at that time is no less than the Termination Sum, subject to clause 54.8, the Owners shall be entitled (at Owners’ sole discretion) to sell the Vessel in the open market appointing as sales brokers, among other parties, at least one of the three independent Approved Broker, free of any charter, lease or other engagement concerning the Vessel for such price and on such terms and conditions as they may, in their absolute discretion, think fit, but in any event within the price ranges provided by the three Approved Brokers; or the Charterers shall have the right to bring forward a buyer during the time that Owners are circulating the Vessel for sale and in case terms are better, including without limitation, the purchase price offered by such buyer, the Owners shall, subject to the Owners’ “know your customer” requirements and any restrictions relating to Sanctions, sell to the party brought forward by Charterers; and |
| (ii) | if the Average Termination Market Value at that time is less than the Termination Sum, then the Owners may, at any time they think fit in their absolute discretion, sell the Vessel in the open market. In any event, the Owners shall, as soon as practicable following the Termination Payment Date, obtain three valuation reports from three independent Approved Brokers of the Market Value of the Vessel and the average of the three report values, the Average Termination Market Value, shall be deducted from the Termination Sum of the Vessel. |
| (b) | where the Owners sell the Vessel in accordance with paragraph (a) above, an amount equal to the aggregate of the expenses, disbursements, taxes, costs and losses whatsoever as may have been incurred by the Owners in respect of the sale of the Vessel shall be deducted from the gross proceeds of the sale of the Vessel (the balance of the sale proceeds is referred to hereinafter as the “Net Sale Proceeds”); and |
| (c) | an amount equal to the Termination Sum plus all other amounts due and payable from the Charterers to the Owners hereunder, shall be deducted from the Net Sale Proceeds or the Average Termination Market Value, as the case maybe. If the Net Sale Proceeds or the Average Termination Market Value, as the case maybe, are insufficient to satisfy all amounts due and payable from the Charterers to the Owners hereunder, the Charterers shall pay the outstanding balance to the Owners. If there is any amount remaining from the Net Sale Proceeds or the Average Termination Market Value after the deduction of all the amounts due and payable by the Charterers to the Owners hereunder, the Owners shall pay the difference to the Charterers provided that if the Average Termination Market Value of the Vessel has been deducted from the Termination Sum in accordance with this paragraph (c) the Owners shall be entitled to any surplus following a subsequent sale of the Vessel. |
AVIC Top Ships II – BBC Additional Clauses
| 54.8 | Where the Owners intend to sell the Vessel in accordance with Clause 54.7, the Owners shall notify the Charterers in writing of the potential sale and the potential sale price of the Vessel (the “Proposed Owners’ Sale Price”) whereupon the Charterers (or their nominee, subject to the Owners’ “know your customer” requirements and any restrictions relating to Sanctions) may, within 15 days of such notification, purchase the Vessel and pay an amount which is at least equal to the Termination Sum. If the Charterers notify the Owners that they do not intend to purchase the Vessel or the Charterers do not respond to the Owners within 5 days’ period or the memorandum of agreement has not been agreed by the Owners and the Charterers’ (or their nominee) or the deposit has not been remitted the nominated account under such memorandum of agreement within such 10 days’ period (or such longer period as the Owners may agree), the Owners may sell the Vessel on such terms as the Owners may deem fit. |
| 54.9 | Where the Owners decide to terminate this Charter and retake possession of the Vessel pursuant to this Clause 54, the Owners agree to appoint a reputable ship manager to oversee the operation of the Vessel while it is in the Owners’ possession in accordance with prudent and sound commercial ship practices. |
| 55. | ASSIGNMENT BY CHARTERERS |
The Charterers shall not assign or transfer (whether by novation or otherwise) their rights and/or obligations under this Charter except with the Owners’ prior written consent.
| 56. | NAME OF VESSEL |
Without prejudice to Clause 10(d), provided that the prior written consent has been given by the Owners:
| (a) | the name of the Vessel may be chosen by the Charterers; and |
| (b) | the Vessel may be painted in the colours, display the funnel insignia and fly the house flag as required by the Charterers. |
| 57. | CHARTER PERIOD |
The charter period under this Charter shall be one hundred and twenty (120) months commencing from the Actual Delivery Date, unless otherwise extended or terminated pursuant to Clauses 44.6 (Hire), 54 (Termination Events), 60 (Sale of the Vessel by the Owners) and 61 (Total Loss) (the “Charter Period”).
AVIC Top Ships II – BBC Additional Clauses
| 58. | HANDLING FEE |
A non-refundable handling fee (the “Handling fee”) equivalent to zero point six five per cent (0.65%) of the Assumed Owners’ Cost shall be paid by the Charterers to the Owners within five (5) Business Days of the date of this Charter.
| 59. | PURCHASE OPTION, PURCHASE OBLIGATION, TRANSFER OF TITLE AND PARTIAL PREPAYMENT |
| 59.1 | Subject to no Termination Events or Total Loss under Clause 61 (Total loss), the Charterers may, at any time after the second (2nd) anniversary of the Actual Delivery Date, by at least 90 days prior written notice to the Owners, declare to the Owners their exercise of the option to purchase the Vessel or to cause their nominee (subject to the Owners’ “know your customer” requirements and any restrictions relating to Sanctions) to purchase the Vessel on a date specified therein (the “Purchase Option Date”) by payment of the Purchase Option Price to the Owners. For the avoidance of doubt, the Charter Period will end immediately upon the Purchase Option Price having been irrevocably and unconditionally paid in full to the Owners. |
| 59.2 | If the Charterers have not exercised their rights under Clause 59.1 before the natural expiration of this Charter and subject to there being no Termination Event or Total Loss, the Charterers shall be obliged to purchase the Vessel or to cause their nominee (subject to the Owners’ “know your customer” requirements and any restrictions relating to Sanctions) to purchase the Vessel at the end of the Charter Period by payment of the Purchase Obligation Price and the Charterers shall pay the Purchase Obligation Price on the Purchase Obligation Date. |
| 59.3 | In exchange for the full payment of the Purchase Option Price (in the case of a purchase under Clause 59.1 above) or the Purchase Obligation Price (in the case of a purchase under Clause 59.2 above) and all sums due and payable to the Owners under the Transaction Documents and subject to compliance with the other conditions set out in this Clause, the Owners shall: |
| (a) | transfer title to and ownership of the Vessel to the Charterers (or their nominee) by delivering to the Charterers (in each case at the Charterers’ costs): |
| (i) | a duly executed and notarised, legalised and/or apostilled (as applicable) bill of sale; and |
| (ii) | the Title Transfer PDA; and |
| (b) | (subject to the prior written consent of any Finance Party or its agent or permitted assigns and transferees (in each case as applicable)) use all reasonable endeavours to procure the discharge and release of any mortgage or Security Interest created by the Owners in relation to the Vessel pursuant to the Finance Documents at the Charterers’ cost, |
provided always that prior to such transfer or deletion (as the case may be), the Owners shall have received the letter of indemnity as referred to in Clause 59.6 below from the Charterers, and the Charterers shall have performed all their obligations in connection herewith and with the Vessel, including without limitation the full payment of all Unpaid Sums, taxes, charges, duties, costs and disbursements (including legal fees) in relation to the Vessel.
AVIC Top Ships II – BBC Additional Clauses
| 59.4 | The transfer in accordance with Clause 59.3 above shall be made in all respects at the Charterers’ expense on an “as is, where is” basis and the Owners shall give the Charterers (or their nominee) no representations, warranties, agreements or guarantees whatsoever concerning or in connection with the Vessel, the Insurances, the Vessel’s condition, state or class or anything related to the Vessel, expressed or implied, statutory or otherwise. |
| 59.5 | The Owners shall have no responsibility for the registrability of a bill of sale referred to in Clause 59.3 above executed by the Owners, as far as such bill of sale is prescribed in a generally acceptable form. |
| 59.6 | The Charterers shall, immediately prior to the receipt of the bill of sale, furnish the Owners with a letter of indemnity (in a form satisfactory to the Owners) whereby the Charterers and the Charter Guarantor shall state that, among other things, the Owners has and will have no interest, concern or connection with the Vessel after the date of such letter and that the Charterers and/or the Charter Guarantor shall indemnify the Owners and keep the Owners indemnified forever against any claims made by any person arising in connection with the Vessel. |
| 59.7 | Upon at least ninety (90) days’ written notice, the Charterers shall have the option for one time only to make a one-off prepayment of up to US Dollars Five Million ($5,000,000) (by a minimum of US Dollars One Million (US$1,000,000) and in multiples thereof) after the second (2nd) anniversary of the Actual Delivery Date and subject to such prepayment being made together with: |
| (a) | a prepayment fee in the amount of: |
| (i) | if the option of such partial prepayment is exercised is after the second anniversary of the Actual Delivery Date but on or before the third anniversary of the Actual Delivery Date, two per cent (2%) of the amount prepaid; or |
| (ii) | if the option of such partial prepayment is exercised after the third anniversary of the Actual Delivery Date (and before the natural expiration of this Charter), zero per cent (0%) of the amount prepaid; and |
| (b) | any and all Break Costs (including any Break Costs under the Finance Documents) (excluding swap related expenses) relating to such partial prepayment. |
| 60. | SALE OF VESSEL BY THE OWNERS |
During the Charter Period, the Owners shall not sell the Vessel unless (i) the Vessel is sold to an Affiliate of the Owners subject to Charterers’ consent not to be unreasonably withheld, or (ii) such sale is permitted by and made in accordance with Clause 54 (Termination Events) or (iii) in any other case, with the Charterers’ prior written consent, provided that, in respect of a sale effected under (i) and (iii), such sale shall not increase the obligations of the Obligors under the Transaction Documents and any documentation required in connection with such sale shall be effected at the cost of the Owners. Notwithstanding the foregoing of this Clause (except for the sale permitted by and made in accordance with Clause 54 (Termination Events)), this Charter will continue to exist and be valid and effective on identical terms (save for logical and consequential amendments).
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| 61. | TOTAL LOSS |
| 61.1 | If circumstances exist giving rise to a Total Loss, the Charterers shall promptly notify the Owners of the facts of such Total Loss. If the Charterers wish to proceed on the basis of a Total Loss and advise the Owners thereof, the Owners shall agree to the Vessel being treated as a Total Loss for all purposes of this Charter. The Owners shall thereupon abandon the Vessel to the Charterers and/or execute such documents as may be required to enable the Charterers to abandon the Vessel to insurers and claim a Total Loss. Without prejudice to the obligations of the Charterers to pay to the Owners all monies then due or thereafter to become due under this Charter, if the Vessel shall become a Total Loss during the Charter Period, the Charter Period shall end on the Settlement Date (without prejudice to any provision of this Charter expressed to survive termination). |
| 61.2 | If the Vessel becomes a Total Loss during the Charter Period, the Charterers shall, on the Settlement Date, pay to the Owners the amount calculated in accordance with Clause 61.3. |
| 61.3 | On the Settlement Date, the Charterers shall pay to the Owners an amount equal to the Termination Sum as at the Termination Payment Date (provided that such amount payable shall be set off against the Total Loss Proceeds if they are irrevocably and unconditionally received by the Owners as referred to under Clause 61.4). The foregoing obligations of the Charterers under this Clause 61.3 shall apply regardless of whether or not any moneys are payable under any Insurances in respect of the Vessel, regardless of the amount payable thereunder, regardless of the cause of the Total Loss and regardless of whether or not any of the said compensation shall become payable. |
| 61.4 | All Total Loss Proceeds shall be paid to such account or accounts as the Owners may direct and shall be applied towards satisfaction of the Termination Sum and any other sums due and payable under the Transaction Documents. If the Total Loss Proceeds unconditionally received by the Owners (or any Finance Party in accordance with the terms of the relevant loss payable clause) are less than the Termination Sum, the Charterers shall remain liable for any shortfall which shall be paid to the Owners on the Settlement Date and default interest shall accrue thereon from the Settlement Date up to and including the date of actual payment in accordance with Clause 44.4. To the extent that there is any surplus after such application, such surplus shall be promptly returned to the Charterers. |
| 61.5 | The Charterers shall, at the Owners’ request, provide satisfactory evidence, in the reasonable opinion of the Owners, as to the date on which the constructive total loss of the Vessel occurred pursuant to the definition of Total Loss. |
| 61.6 | Until unconditional receipt of the Termination Sum by the Owners in full, the Charterers shall remain liable to pay Hire and all other amounts to the Owners on the days and in the amounts required under this Charter notwithstanding that the Vessel shall become a Total Loss provided always that no further instalments of Hire shall become due and payable after the Termination Sum has been paid in full to the Owners. |
| 61.7 | The Owners shall have no obligation to supply to the Charterers with a replacement vessel following the occurrence of a Total Loss. |
AVIC Top Ships II – BBC Additional Clauses
| 62. | ADDITIONAL PAYMENT OBLIGATIONS |
| 62.1 | Subject always to Clause 62.2, the Charterers shall bear all costs, fees (including inspections, valuations, legal fees, insurance reports and registration expenses) and disbursements reasonably incurred by the Owners and the Charterers in connection with: |
| (a) | the negotiation, preparation and execution of this Charter and the other Transaction Documents; |
| (b) | the delivery of the Vessel under the MOA and this Charter; |
| (c) | preparation or procurement of any survey, inspections, tax or insurance advice; |
| (d) | all legal fees and other expenses reasonably arising out of or in connection with the exercising of the purchase option or the purchase obligation by the Charterers pursuant to Clause 59 (Purchase Option, purchase obligation and Transfer of title); and |
| (e) | such other activities relevant to the transaction contemplated herein. |
| 62.2 | Unless otherwise stated, the Charterers shall not bear any costs, fees (including legal fees) and disbursements incurred by the Owners in connection with: |
| (a) | any financing activities undertaken by the Owners, whether or not such financing activities are undertaken for the purposes of entering into this Charter or any other Transaction Documents except as contemplated under Clause 59.3 (Purchase Option, purchase obligation and Transfer of title); and |
| (b) | the incorporation, setting-up or continued operation of any special purpose vehicles or legal entities for the purposes of or in relation to this Charter or any other Transaction Documents (other than as may be required by the Pre- Approved Flag for the purpose of registering and maintaining the Owners’ ownership of the Vessel). |
| 63. | STAMP DUTIES AND TAXES |
The Charterers shall pay promptly all documented stamp, documentary or other like duties and taxes to which the Charter, the MOA and the other Transaction Documents may be subject or give rise and shall indemnify the Owners on demand against any and all liabilities with respect to or resulting from any delay on the part of the Charterers to pay such duties or taxes, provided that the Owners will procure that their tax residence is at all times in the most tax efficient jurisdiction for this transaction. If the parties determine that there is a more tax efficient jurisdiction, the Owners agree to reasonably consider to move the Owners’ tax residency to such jurisdiction at Charterers’ cost.
| 64. | OPERATIONAL NOTIFIABLE EVENTS |
The Owners are to be advised as soon the Charterers are aware of the occurrence of any of the following events:
| (a) | when a material condition of class is applied by the Classification Society; |
AVIC Top Ships II – BBC Additional Clauses
| (b) | whenever the Vessel is arrested, confiscated, seized, requisitioned, impounded, forfeited or detained by any government or other competent authorities or any other persons; |
| (c) | whenever a class or flag authority refuses to issue or withdraw trading certification; |
| (d) | in the event of a fire requiring the use of fixed fire systems or collision / grounding; |
| (e) | whenever the Vessel is planned for dry-docking in accordance with Clause 10(g) and whether routine or emergency; |
| (f) | the Vessel is taken under tow unless in the normal course of shipping operations; |
| (g) | any death or serious injury on board; or |
| (h) | any damage to the Vessel the repair costs of which (whether before or after adjudication) are likely to exceed the Major Casualty Amount; or |
| (i) | any notice, or the Charterers becoming aware, of any claim, action, suit, proceeding or investigation against any Obligor, any of its Subsidiaries or any of their respective directors, officers, employees or agents with respect to Sanctions. |
| 65. | FURTHER INDEMNITIES |
| 65.1 | Whether or not any of the transactions contemplated hereby are consummated, the Charterers shall, indemnify, protect, defend and hold harmless the Owners and their respective officers, directors and employees (collectively, the “Indemnitees”) throughout the Agreement Term from, against and in respect of, any and all liabilities, obligations, losses, damages, penalties, fines, fees, claims, actions, proceedings, judgement, order or other sanction, lien, salvage, general average, suits, costs, expenses and disbursements, including reasonable legal fees and expenses, of whatsoever kind and nature (collectively, the “Expenses”), imposed on, suffered or incurred by or asserted against any Indemnitee, in any way relating to, resulting from or arising out of or in connection with, in each case, directly or indirectly, any one or more of the following: |
| (a) | this Charter, any of the other Transaction Documents and the Project Documents, and any amendment, supplement or modification thereof or thereto requested by any Obligor; |
| (b) | the Vessel or any part thereof, including with respect to: |
| (i) | the ownership of, manufacture, design, possession, use or non-use, operation, maintenance, testing, repair, overhaul, condition, alteration, modification, addition, improvement, storage, seaworthiness, replacement, repair of the Vessel or any part (including, in each case, latent or other defects, whether or not discoverable and any claim for patent, trademark, or copyright infringement and all liabilities, obligations, losses, damages and claims in any way relating to or arising out of spillage of cargo or fuel, out of injury to persons, properties or the environment or strict liability in tort); |
AVIC Top Ships II – BBC Additional Clauses
| (ii) | any claim or penalty arising out of violations of applicable law by the Charterers or any Sub-Charterers; |
| (iii) | death or property damage of shippers or others; |
| (iv) | any liens in respect of the Vessel or any part thereof; or |
| (v) | any registration and/or tonnage fees (whether periodic or not) in respect of the Vessel payable to any registry of ships; |
| (c) | any breach of or failure to perform or observe, or any other non-compliance with, any covenant or agreement or other obligation to be performed by any Obligor under any Transaction Document to which it is a party or the falsity of any representation or warranty of any Obligor in any Transaction Document to which it is a party or the occurrence of any Termination Event; |
| (d) | in preventing or attempting to prevent the arrest, confiscation, seizure, taking and execution, requisition, impounding, forfeiture or detention of the Vessel, or in securing or attempting to secure the release of the Vessel in connection with the exercise of the rights of a holder of a lien created by the Charterers; |
| (e) | incurred or suffered by the Owners in: |
| (i) | procuring the delivery of the Vessel by the Charterers to the Owners under the MOA, and by the Owners to the Charterers under Clause 36 (Delivery); |
| (ii) | registering the Vessel at the registry of the Pre-Approved Flag; |
| (iii) | recovering possession of the Vessel following termination of this Charter under Clause 54 (Termination Events); |
| (iv) | arranging for a sale of the Vessel in accordance with Clause 54 (Termination Events) or 60 (Sale of the Vessel by the Owners); or |
| (v) | arranging for a transfer of the title of the Vessel in accordance with Clause 59 (Purchase Option, purchase obligation and transfer of title) |
| (f) | arising from the Master or officers of the Vessel or the Charterers’ agents signing bills of lading or other documents; |
| (g) | in connection with: |
| (i) | the arrest, seizure, taking into custody or other detention by any court or other tribunal or by any governmental entity; or |
| (ii) | subjection to distress by reason of any process, claim, exercise of any rights conferred by a lien or by any other action whatsoever, of the Vessel which are expended, suffered or incurred as a result of or in connection with any claim or against, or liability of, the Charterers or any other member of the Charter Group, together with any costs and expenses or other outgoings which may be paid or incurred by the Owners in releasing the Vessel from any such arrest, seizure, custody, detention or distress. |
AVIC Top Ships II – BBC Additional Clauses
Provided however that the Owners shall not be entitled to any indemnification or recompense pursuant to this Clause 65 for any liabilities, obligations, losses, damages, penalties, claims, actions, suits, fees, costs, expenses and disbursements incurred by the Owners as a consequence of any (A) wilful breach of this Charter by the Owners, or (B) arrest of the Vessel arising due to any action or omission on the part of the Owners.
| 65.2 | The Charterers shall pay to the Owners promptly on the Owners’ written demand the amount of all costs and expenses (including legal fees) incurred by the Owners in connection with the enforcement of, or the preservation of any rights under, any Transaction Document including (without limitation) (i) any losses, costs and expenses which the Owners may from time to time sustain, incur or become liable for by reason of the Owners being deemed by any court or authority to be an operator, or in any way concerned in the operation, of the Vessel and (ii) collecting and recovering the proceeds of any claim under any of the Insurances. |
| 65.3 | Without prejudice to any right to damages or other claim which either party may, at any time, have against the other hereunder, it is hereby agreed and declared that the indemnities of the Owners by the Charterers contained in this Charter shall continue in full force and effect for a period of twenty four (24) months after the Agreement Term. |
| 66. | SET-OFF |
| 66.1 | The Owners may set off any matured and/or contingent obligation due from the Charterers under the Transaction Documents (to the extent beneficially owned by the Owners) against any obligation (whether matured or not) owed by the Owners to the Charterers, regardless of the place of payment or currency of either obligation. If the obligations are in different currencies, the Owners may convert either obligation at a market rate of exchange in its usual course of business for the purpose of the set-off. |
| 66.2 | The Charterers may not set off any matured and/or contingent obligation due from the Owners under the Transaction Documents (to the extent beneficially owned by the Charterers) against any obligation (whether matured or not) owed by the Charterers to the Owners, regardless of the place of payment or currency of either obligation. |
| 67. | FURTHER ASSURANCES AND UNDERTAKINGS |
| 67.1 | Each Party shall make all applications and execute all other documents and do all other acts and things as may be necessary to implement and to carry out their obligations under, and the intent of, this Charter. |
| 67.2 | The Parties shall act in good faith to each other in respect of any dealings or matters under, or in connection with, this Charter. |
| 68. | CUMULATIVE RIGHTS |
The rights, powers and remedies provided in this Charter are cumulative and not exclusive of any rights, powers or remedies at law or in equity unless specifically otherwise stated.
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| 69. | DAY COUNT CONVENTION |
| (a) | Other than Variable Hire, any interest, commission or fee accruing under a Transaction Document will accrue from day to day and is calculated on the basis of the actual number of days elapsed and a year of 360 days. |
| (b) | Variable Hire shall be payable in advance and will accrue and be calculated on the basis of the actual number of days during the relevant Hire Period in accordance with paragraph (b) of Clause 44.1(Hire). |
| 70. | NO WAIVER |
No delay, failure or forbearance by a party to exercise (in whole or in part) any right, power or remedy under, or in connection with, this Charter will operate as a waiver. No waiver of any breach of any provision of this Charter will be effective unless that waiver is in writing and signed by the party against whom that waiver is claimed. No waiver of any breach will be, or be deemed to be, a waiver of any other or subsequent breach.
| 71. | ENTIRE AGREEMENT |
| 71.1 | This Charter contains all the understandings and agreements of whatsoever kind and nature existing between the Parties in respect of this Charter, the rights, interests, undertakings agreements and obligations of the Parties to this Charter and shall supersede all previous and contemporaneous negotiations and agreements. |
| 71.2 | This Charter may not be amended, altered or modified except by a written instrument executed by each of the parties to this Charter. |
| 72. | INVALIDITY |
If any term or provision of this Charter or the application thereof to any person or circumstances shall to any extent be invalid or unenforceable the remainder of this Charter or application of such term or provision to persons or circumstances (other than those as to which it is already invalid or unenforceable) shall (to the extent that such invalidity or unenforceability does not materially affect the operation of this Charter) not be affected thereby and each term and provision of this Charter shall be valid and be enforceable to the fullest extent permitted by law.
| 73. | ENGLISH LANGUAGE |
All notices, communications and financial statements and reports under or in connection with this Charter and the other Transaction Documents shall be in English language or, if in any other language, shall be accompanied by a translation into English. In the event of any conflict between the English text and the text in any other language, the English text shall prevail.
| 74. | NO PARTNERSHIP |
Nothing in this Charter creates, constitutes or evidences any partnership, joint venture, agency, trust or employer/employee relationship between the parties, and neither party may make, or allow to be made any representation that any such relationship exists between the Parties. Neither Party shall have the authority to act for, or incur any obligation on behalf of, the other party, except as expressly provided in this Charter.
AVIC Top Ships II – BBC Additional Clauses
| 75. | NOTICES |
| 75.1 | Communications in writing; addresses |
All communications (which expression includes any notice, demand, request, consent or other communication) to be made under or in connection with this Charter shall be made in writing and unless otherwise stated may be made by fax or letter or, subject to Clause 75.3 (Electronic communication), electronic mail and be addressed:
| (a) | in the case of the Owners, to them at: |
c/o AVIC INTERNATIONAL LEASING CO., LTD.
Address: 18/F, Hangrong Mansion,
1481 Guozhan Road,
Pudong, Shanghai 200126
The People’s Republic of China
Telefax No.:
Attn:
Email:
| (b) | in the case of the Charterers, to them at: |
c/o TOP SHIPS INC.
| Address: | 1, Vas. Sofias & Meg. Alexandrou Str., 15124 Maroussi, Athens, Greece |
Telefax No:
Telephone No:
Attn:
Email:
or to such other address or fax number or department or officer as is notified by one Party to the other under this Charter by not less than five (5) Business Days’ notice.
| 75.2 | Delivery |
| (a) | Subject to paragraph (b) below, any communication or document made or delivered by one person to another under or in connection with this Charter will only be effective: |
| (i) | if by way of fax, when received in legible form; |
| (ii) | if by way of letter, when it has been left at the relevant address or five (5) Business Days after being deposited in the post postage prepaid in an envelope addressed to it at that address; or |
AVIC Top Ships II – BBC Additional Clauses
| (iii) | if by way of electronic mail, then in accordance with Clause 75.3 (Electronic communication), |
and, if a particular department or officer is specified as part of its address details provided under Clause 75.1 (Communications in writing; addresses), if addressed to that department or officer.
| (b) | Any communication or document to be made or delivered to the Owner will be effective only when actually received by the Owner and then only if it is expressly marked for the attention of the department or officer specified as part of its address details provided under Clause 75.1 (Communications in writing; addresses). |
| (c) | Any communication or document which becomes effective, in accordance with paragraph (a) or paragraph (b) above, on a non-working day or after 5:00 p.m. in the place of receipt shall be deemed only to become effective at the opening of business hours on the next working day in the place of receipt. |
| 75.3 | Electronic communication |
Any communication to be made between the Parties under or in connection with this Charter may be made by electronic mail or other electronic means to the extent that the Parties agree that, unless and until notified to the contrary, this is to be an accepted form of communication and if the Parties:
| (a) | notify each other in writing of their electronic mail address and/or any other information required to enable the sending and receipt of information by that means; and |
| (b) | notify each other of any change to their address or any other such information supplied by them by not less than five (5) Business Days’ notice. |
Any electronic communication made between the Parties will be effective only when actually received in readable form and in the case of any electronic communication made by the Charterers to the Owners only if it is addressed in such a manner as the Owners shall specify for this purpose.
| 75.4 | English language |
All communications and documents to be given or delivered pursuant to or otherwise in relation to this Charter and the other Transaction Documents to which the Charterers are (or are to become) a party shall be in the English language or be accompanied by a certified English translation.
| 76. | CONFLICTS |
Unless stated otherwise, in the event of there being any conflict between the provisions of Clauses 1 (Definitions) to 31 (Notices) and the provisions of Clauses 32 (Definitions) to 84 (Application of Proceeds), the provisions of Clauses 32 (Definitions) to 84 (Application of Proceeds) shall prevail.
AVIC Top Ships II – BBC Additional Clauses
| 77. | SURVIVAL OF CHARTERERS’ OBLIGATIONS |
The termination of this Charter for any cause whatsoever shall not affect the right of the Owners to recover from the Charterers any money due to the Owners on or before the termination in consequence thereof (including, for the avoidance of doubt, any Termination Sum) and all other rights of the Owners (including but not limited to any rights, benefits or indemnities which are expressly provided to continue after the termination of this Charter) are reserved hereunder.
| 78. | COUNTERPARTS |
This Charter may be executed in any number of counterparts and any single counterpart or set of counterparts signed, in either case, by all the parties hereto shall be deemed to constitute a full and original agreement for all purposes.
| 79. | CONFIDENTIALITY |
| 79.1 | The Parties shall maintain the information provided in connection with the Transaction Documents strictly confidential and agree to disclose to no person other than: |
| (a) | its board of directors, employees (only on a need to know basis), and shareholders, professional advisors and rating agencies; |
| (b) | as may be required to be disclosed under applicable law or stock market or other regulations or for the purpose of legal proceedings or required by any regulatory authorities; |
| (c) | in the case of the Owners, to any Finance Party or other actual or potential financier providing funding for the acquisition or refinancing of the Vessel; |
| (d) | in the case of the Charterers, to any Sub-Charterers in respect of obtaining any consent required under the terms of any Sub-Charter to which they are respectively a party; and |
| (e) | the managers, the classification society and flag authorities as may be necessary in connection with the transactions contemplated hereunder. |
| 79.2 | Any other disclosure by each Party shall be subject to the prior written consent of the other Party. |
| 80. | THIRD PARTIES ACT |
| 80.1 | Any person which is an Indemnitee or a Finance Party from time to time and is not a party to this Charter shall be entitled to enforce such terms of this Charter as provided for in this Charter in relation to the obligations of the Charterers to such Indemnitee or (as the case may be) Finance Party, subject to the provisions of Clause 81 (Law and jurisdiction) and the Third Parties Act. The Third Parties Act applies to this Charter as set out in this Clause 80. |
| 80.2 | Save as provided above, a person who is not a party to this Charter has no right under the Third Parties Act to enforce or to enjoy the benefit of any term of this Charter. |
AVIC Top Ships II – BBC Additional Clauses
| 81. | LAW AND JURISDICTION |
| 81.1 | This Charter and any non-contractual obligations arising from or in connection with it shall in all respects be governed by and interpreted in accordance with English law. |
| 81.2 | Any dispute, controversy or claim arising out of or relating to this Charter, including the existence, validity, interpretation, performance, breach or termination thereof or any dispute regarding non-contractual obligations arising out of or relating to it shall be referred to and finally resolved by London arbitration. |
| 81.3 | The governing law of this Clause 81 shall be English law. |
| 81.4 | Any dispute arising out of or in connection with this Charter shall be referred to arbitration in London in accordance with the Arbitration Act 1996 or any statutory modification or re-enactment thereof save to the extent necessary to give effect to the provisions of this Clause. |
| 81.5 | The arbitration shall be conducted in accordance with the London Maritime Arbitrations Association (LMAA). Terms current at the time when the arbitration proceedings are commenced. |
| 81.6 | The reference shall be to three (3) arbitrators. A party wishing to refer a dispute to arbitration shall appoint its arbitrator and send notice of such appointment in writing to the other party requiring the other party to appoint its own arbitrator within fourteen (14) calendar days of that notice and stating that it will appoint its arbitrator as sole arbitrator unless the other party appoints its own arbitrator and gives notice that it has done so within the fourteen (14) days specified. |
| 81.7 | If one party does not appoint its own arbitrator and give notice that it has done so within the fourteen (14) days specified, the party referring a dispute to arbitration may, without the requirement of any further prior notice to the other party, appoint its arbitrator as sole arbitrator and shall advise the other party accordingly. The award of a sole arbitrator shall be binding on both Parties as if the sole arbitrator had been appointed by agreement. Nothing herein shall prevent the Parties agreeing in writing to vary these provisions to provide for the appointment of a sole arbitrator. |
| 81.8 | Where the reference is to three (3) arbitrators the procedure for making appointments shall be in accordance with the procedure for full arbitration stated above. |
| 81.9 | The language of the arbitration shall be English. |
| 81.10 | In cases where neither the claim nor any counterclaim exceeds the sum of US$100,000 (or such other sum as the parties may agree) the arbitration shall be conducted in accordance with the LMAA Small Claims Procedures current at the time when the arbitration proceedings are commenced and the number of arbitrators shall be one (1). |
| 82. | CONDITIONS SUBSEQUENT |
| 82.1 | Notwithstanding anything to the contrary in this Charter, the obligations of the Owners to charter, or continue to charter, the Vessel to the Charterers under this Charter shall be subject to the condition that the Owners shall have received the following documents and evidence in form and substance satisfactory to the Owners no later than three (3) Business Days after the Actual Delivery Date (unless otherwise specified): |
| (a) | a copy of the endorsed policy issued by the insurer in respect of the Vessel; |
AVIC Top Ships II – BBC Additional Clauses
| (b) | a copy of the duly signed letter of undertaking issued by all the relevant underwriters or insurance brokers in respect of the Vessel; |
| (c) | no later than thirty (30) days after the Actual Delivery Date, originals of the documents required under Clauses 40(a)(i) and 40(b)(i); |
| (d) | no later than one (1) calendar day after the Actual Delivery Date, a copy of the Vessel’s certificate of ownership and encumbrance or transcript of register evidencing that the Vessel is registered in the name of the Owners free from any registered Security Interest; and |
| (e) | legal opinions and insurance reports issued by legal advisers and insurance advisers to the Owners respectively referred to in Clause 40(a), each in its agreed form. |
| 83. | FATCA |
| 83.1 | Defined terms |
For the purposes of this Clause 83 (FATCA), the following terms shall have the following meanings:
“Code” means the United States Internal Revenue Code of 1986, as amended.
“FATCA” means sections 1471 through 1474 of the Code and any Treasury regulations thereunder.
“FATCA Deduction” means a deduction or withholding from a payment under the Transaction Documents or the Project Documents required by or under FATCA.
“FATCA Exempt Party” means a Relevant Party that is entitled under FATCA to receive payments free from any FATCA Deduction.
“FATCA FFI” means a foreign financial institution as defined in section 1471(d)(4) of the Code which, if a Relevant Party is not a FATCA Exempt Party, could be required to make a FATCA Deduction.
“FATCA Non-Exempt Party” means any Relevant Party who is not a FATCA Exempt Party.
“Relevant Party” means any of the parties to the Transaction Documents.
“IRS” means the United States Internal Revenue Service or any successor taxing authority or agency of the United States government.
| 83.2 | FATCA Information |
| (a) | Subject to paragraph (iii) below, each Relevant Party shall, on the date of this Charter, and thereafter within ten (10) Business Days of a reasonable request by another Relevant Party: |
| (i) | confirm to that other party whether it is a FATCA Exempt Party or is not a FATCA Exempt Party; and |
AVIC Top Ships II – BBC Additional Clauses
| (ii) | supply to the requesting party (with a copy to all other Relevant Parties) such other form or forms (including IRS Form W-8 or Form W-9 or any successor or substitute form, as applicable) and any other documentation and other information relating to its status under FATCA (including its applicable “pass thru percentage” or other information required under FATCA or other official guidance including intergovernmental agreements) as the requesting party reasonably requests for the purpose of the requesting party’s compliance with FATCA. |
| (b) | If a Relevant Party confirms to any other Relevant Party that it is a FATCA Exempt Party or provides an IRS Form W-8 or W-9 showing that it is a FATCA Exempt Party and it subsequently becomes aware that it is not, or has ceased to be a FATCA Exempt Party, that party shall so notify all other Relevant Parties reasonably promptly. |
| (c) | Nothing in this Clause 74 (FATCA) shall oblige any Relevant Party to do anything which would or, in its reasonable opinion, might constitute a breach of any law or regulation, any policy of that party, any fiduciary duty or any duty of confidentiality, or to disclose any confidential information (including, without limitation, its tax returns and calculations); provided, however, that nothing in this paragraph shall excuse any Relevant Party from providing a true, complete and correct IRS Form W-8 or W-9 (or any successor or substitute form where applicable). Any information provided on such IRS Form W-8 or W-9 (or any successor or substitute forms) shall not be treated as confidential information of such party for purposes of this paragraph. |
| (d) | If a Relevant Party fails to confirm its status or to supply forms, documentation or other information requested in accordance with the provisions of this Charter or the provided information is insufficient under FATCA, then: |
| (i) | if that party failed to confirm whether it is (and/or remains) a FATCA Exempt Party then such party shall be treated for the purposes of the Transaction Documents as if it is a FATCA Non-Exempt Party; and |
| (ii) |
if that party failed to confirm its applicable passthru percentage then such party shall be treated for the purposes of this Charter and the Transaction Documents (and payments made thereunder) as if its applicable passthru percentage is 100%,
until (in each case) such time as the party in question provides sufficient confirmation, forms, documentation or other information to establish the relevant facts. |
| 83.3 | FATCA Deduction and gross-up by Relevant Party |
| (a) | If the representation made by the Charterers under Clause 51 (Charterers’ representations and warranties) proves to be untrue or misleading such that the Charterers are required to make a FATCA Deduction, the Charterers shall make the FATCA Deduction and any payment required in connection with that FATCA Deduction within the time allowed and in the minimum amount required by FATCA. |
AVIC Top Ships II – BBC Additional Clauses
| (b) | If the Charterers are required to make a FATCA Deduction then the Charterers shall increase the payment due from them to the Owners to an amount which (after making any FATCA Deduction) leaves an amount equal to the payment which would have been due if no FATCA Deduction had been required. |
| (c) | The Charterers shall promptly upon becoming aware that they must make a FATCA Deduction (or that there is any change in the rate or basis of a FATCA Deduction) notify the Owners accordingly. Within thirty (30) days of the Charterers making either a FATCA Deduction or any payment required in connection with that FATCA Deduction, the Charterers shall deliver to the Owners evidence reasonably satisfactory to the Owners that the FATCA Deduction has been made or (as applicable) any appropriate payment paid to the relevant governmental or taxation authority. |
| (d) | If the Owners are required to make a deduction or withholding from a payment under the Finance Documents in respect of FATCA, which deduction or withholding would not have been required if a Relevant Person were not a US Tax Obligor or FATCA FFI, and are required under the Finance Documents (if any) to pay additional amounts in respect of such deduction or withholding, the amount of the payment due from the Charterers shall be increased to an amount which, after any such deduction or withholding and payment of additional amounts, leaves the Owners with an amount equal to the amount which it would have had remaining if it had not been required to pay additional amounts under such Finance Documents. |
| 83.4 | FATCA Deduction by Owners |
The Owners may make any FATCA Deduction they are required by FATCA to make, and any payment required in connection with that FATCA Deduction, and the Owners shall not be required to increase any payment in respect of which it makes such a FATCA Deduction or otherwise compensate the recipient for that FATCA Deduction.
| 84. | APPLICATION OF PROCEEDS |
Any Net Sale Proceeds, Total Loss Proceeds, any proceeds realised by the Owners in connection with the enforcement of the Security Documents (unless otherwise specified in the Security Documents) shall be applied in the following order of application against amounts payable under the Transaction Documents:
| (a) | firstly, in or towards any amounts outstanding under the Transaction Documents other than the Termination Sum (including but not limited to any costs and expenses incurred in the enforcement of the Security Documents, to the extent these are not covered under the Termination Sum); |
| (b) | secondly, in or towards satisfaction of the Charterers’ obligation to pay the Termination Sum (or such portion of it that then remains unpaid) in any order of application in the amounts comprising the Termination Sum as the Owners may determine; and |
| (c) | thirdly, any amounts remaining after the application of Clauses 84(a) and (b) above, shall be paid to the Charterers. |
AVIC Top Ships II – BBC Additional Clauses
| 85. | GRANT OF SECURITY INTEREST |
| (a) | For purposes of Section 302A of the Republic of the Marshall Islands Maritime Act 1990, as amended (the “Act”), each of the parties hereby acknowledges and agrees that this Charter (a) shall be construed as a “financing charter” (as such term is defined in Section 112(7) of the Act and as such term is used in Section 302A of the Act) and the Charterers shall cause this Charter to be recorded in accordance with said Section 302A), and (b) is intended to be deemed under the Act a preferred mortgage over the Vessel granted by Charterers, as owner, in favour of Owners, as mortgagee. |
| (b) | In consideration of the premises and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Charterers hereby grant, convey, mortgage, pledge, confirm, assign, transfer and set over the whole of the Vessel to the Owners, as mortgagee, as security for the Charterers’ performance and observance of and compliance with all its obligations under, and the covenants, terms and conditions contained in, this Charter and the other Transaction Documents to which the Charterers are or may become a party. |
| (c) | For purposes of recording this Charter together under Section 302A of the Act as a financing charter: |
| (i) | the name of the Vessel is “ECO WEST COAST”; |
| (ii) | the Official Number of the Vessel is 9213; |
| (iii) | the date of this Charter is 8 December 2023; |
| (iv) | the name and address of the Owners are: |
GREAT EQUINOX LIMITED, a corporation incorporated and existing under the laws of the Republic of the Marshall Islands whose registered address is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960
| (v) | the name and address of the Charterers are: |
ROMAN EMPIRE INC., a corporation incorporated and existing under the laws of the Republic of the Marshall Islands whose registered address is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960
| (vi) | the maximum aggregate of the nominal amount of all charter hire payments, termination payment, purchase obligation, purchase option or put option amounts payable, or which may become payable, under this Charter, forty-one million (US$41,000,000) exclusive of any interest, indemnities, expenses or fees and performance of charter covenants. |
| (d) | The Charterers will place and at all times retain, a properly certified copy of the Charter on board the Vessel with the Vessel’s papers, and will cause such certified copy of the Charter and the Vessel’s registration document to be exhibited to any and all persons having business therewith which might give rise to any lien thereon, other than liens for crew’s wages, general average and salvage. In addition, the Charterers will place and keep prominently displayed in the chart room and in the master’s cabin of the Vessel in a conspicuous place, a notice, framed under glass, printed in plain type of such size that the paragraph of reading material shall cover a reasonable space acceptable to the Owners reading as follows: |
AVIC Top Ships II – BBC Additional Clauses
“THIS VESSEL IS OWNED BY GREAT EQUINOX LIMITED AND IS UNDER CHARTER TO ROMAN EMPIRE INC. PURSUANT TO THE TERMS OF THE BAREBOAT CHARTER AGREEMENT DATED AS OF [●] 2023 (THE “CHARTER”). UNDER THE TERMS OF THE CHARTER, WHICH IS A FINANCING CHARTER UNDER THE MARITIME LAWS OF THE REPUBLIC OF THE MARSHALL ISLANDS, NEITHER THE CHARTERERS, NOR ANY SUB-CHARTERER, NOR THE MASTER NOR ANY OTHER PERSON HAS THE RIGHT, POWER OR AUTHORITY TO CREATE, INCUR OR PERMIT TO BE PLACED OR IMPOSED UPON THIS VESSEL ANY LIEN WHATSOEVER OTHER THAN PERMITTED LIENS AS DEFINED IN THE CHARTER.”
| (e) | The Charterers hereby consent and agree, at their sole cost and expense, to the recordation of the Charter under Section 302 of the Act and will perform all such acts as may be reasonably requested by the Owners to accomplish said recordation. |
| (f) | Without prejudice to paragraphs (a) to (e) above, to the extent law other than English law or Marshall Islands law is deemed to apply to this Charter and the Charterers are deemed owners of the Vessel, the Charterers and Owners hereby further agree as follows: |
| (i) | For the purpose of securing the obligations of the Charterers under this Charter and the other Transaction Documents to which the Charterers are or may become a party, the Owners and Charterers intend and agree that (i) this Charter shall be deemed to be a security agreement within the meaning of Article 9 of the Uniform Commercial Code (the “UCC”) of the State of New York or of any other state of the United States of America is found to be applicable to the Charter, and (ii) pursuant to sub-paragraph (ii) of this paragraph (f) below, this Charter also creates a “security interest” under Section 1-203 of the UCC in all of the Charterers’ right, title and interest in, to and under the Vessel and the Transaction Documents to which the Charterers are or may become a party (collectively, the “Collateral”). |
| (ii) | To secure the obligations of the Charterers under this Charter and the other Transaction Documents to which the Charterers are or may become a party, the Charterers hereby grant to the Owners a lien on and security interest in and mortgage lien on all of the Collateral. The Charterers promptly shall take such action as may be necessary or advisable in the Owners’ opinion to ensure that the lien, security interest and mortgage on the Collateral will be a perfected lien, security interest and mortgage of first priority under applicable law and will be maintained as such until payment and performance in full of all the obligations of the Charterers under the Transaction Documents to which the Charterers are or may become a party. Upon the occurrence and during the continuance of a Termination Event, the Owners shall have all rights and remedies under Clause 54 (Termination Events) of this Charter or otherwise provided to a secured creditor upon a default under the UCC or provided to a mortgagee of a ship under applicable law. |
| (iii) | The Charterers hereby consent and agree, at their sole cost and expense, to the filing of such UCC financing statements as the Owners may deem reasonably necessary to perfect the security interest intended to be created hereby and will perform all such acts as may be reasonably requested by the Owners to accomplish said perfection. |
AVIC Top Ships II – BBC Additional Clauses
SCHEDULE 1
FORM OF PROTOCOL OF DELIVERY AND ACCEPTANCE
PROTOCOL OF DELIVERY AND ACCEPTANCE UNDER BAREBOAT CHARTER
It is hereby certified that pursuant to a bareboat charter dated
and made between GREAT EQUINOX LIMITED, a corporation incorporated and existing under the laws of the Republic of the Marshall Islands whose registered address is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960 (the “Owners”) as owner and ROMAN EMPIRE INC., a corporation incorporated and existing under the laws of the Republic of the Marshall Islands whose registered address is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960 (the “Bareboat Charterers”) as bareboat charterer (as maybe amended and supplemented from time to time, the “Bareboat Charter”) in respect of one (1) vessel named ECO WEST COAST and registered under the laws and flag of the Marshall Islands with IMO number 9902811 (the “Vessel”), the Vessel is delivered for charter by the Owner to the Bareboat Charterer, and accepted by the Bareboat Charterer from the Owner at hours ([●] time) on the date hereof in accordance with the terms and conditions of the Bareboat Charter.
IN WITNESS WHEREOF, the Owners and the Bareboat Charterers have caused this PROTOCOL OF DELIVERY AND ACCEPTANCE to be executed by their duly authorised representative on this day of 20[●] in [●].
|
THE OWNERS |
THE BAREBOAT CHARTERERS |
|
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by: |
by: |
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| Name: | Name: | |
| Title: | Title: | |
| Date: | Date: |
AVIC Top Ships II – BBC Additional Clauses
SCHEDULE 2
FORM OF TITLE TRANSFER PROTOCOL OF DELIVERY AND ACCEPTANCE
PROTOCOL OF DELIVERY AND ACCEPTANCE FOR TITLE TRANSFER UNDER THE
BAREBOAT CHARTER
GREAT EQUINOX LIMITED, a corporation incorporated and existing under the laws of the Republic of the Marshall Islands whose registered address is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960 (the “Owners”) deliver to ROMAN EMPIRE INC., a corporation incorporated and existing under the laws of the Republic of the Marshall Islands whose registered address is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960 (the “Bareboat Charterers”) the Vessel described below and the Bareboat Charterers accept delivery of, title and risk to the Vessel pursuant to the terms and conditions of the bareboat charter dated __ (as may be amended and supplemented from time to time, the “Bareboat Charter”) and made between (1) the Owners and (2) the Bareboat Charterers.
| Name of Vessel: | ECO WEST COAST | |
| Flag: | Marshall Islands | |
| Place of Registration: | Marshall Islands | |
| IMO Number: | 9902811 | |
| Gross Registered Tonnage: | [..] | |
| Net Registered Tonnage: | [..] | |
| Dated: | 20[●] | |
| At: | hours ([●] time) | |
| Place of delivery: | ||
| THE OWNER | THE BAREBOAT CHARTERER | |
| by: | by: | |
| Name: | Name: | |
| Title: | Title: | |
| Date: | Date: |
AVIC Top Ships II – BBC Additional Clauses
SCHEDULE 3
HIRE PAYMENT SCHEDULE
AVIC Top Ships II – BBC Additional Clauses
SIGNATURE PAGE
ADDITIONAL CLAUSES
TO BAREBOAT CHARTER FOR
ECO WEST COAST
| THE OWNERS | THE CHARTERERS | |
| GREAT EQUINOX LIMITED | ROMAN EMPIRE INC. | |
| by: | by: | |
| /s/ Zhu Jiafeng | /s/ Alexandros Tsirikos | |
| Name: Zhu Jiafeng | Name: Alexandros Tsirikos | |
| Title: Attorney-in-fact | Title: Attorney-in-fact | |
| Date: 8 December 2023 | Date: 8 December 2023 |
AVIC Top Ships II – BBC Additional Clauses
86
Exhibit 4.19
EXECUTION VERSION
Dated 8 December 2023
TOP SHIPS INC.
as Guarantor
and
GREAT EQUINOX LIMITED
as Owner
GUARANTEE AND INDEMNITY
relating to a bareboat charter
dated 8 December 2023
of the vessel m.v. “ECO WEST COAST”
TABLE OF CONTENTS
| Clause | Page | |
| 1. | DEFINITIONS AND INTERPRETATION | 1 |
| 2. | GUARANTEE AND INDEMNITY | 2 |
| 3. | CONTINUING SECURITY | 3 |
| 4. | RESTRICTIONS ON GUARANTOR | 4 |
| 5. | PAYMENTS | 5 |
| 6. | NO SET-OFF, COUNTERCLAIM OR TAX DEDUCTION | 6 |
| 7. | DISCHARGE CONDITIONAL | 6 |
| 8. | REPRESENTATIONS AND WARRANTIES | 6 |
| 9. | INFORMATION UNDERTAKINGS | 10 |
| 10. | FINANCIAL COVENANTS | 12 |
| 11. | INDEMNITIES AND EXPENSES | 13 |
| 12. | CHANGES TO THE PARTIES | 14 |
| 13. | SET-OFF | 15 |
| 14. | MISCELLANEOUS | 15 |
| 15. | NOTICES | 16 |
| 16. | GOVERNING LAW AND JURISDICTION | 17 |
| SCHEDULE 1 FORM OF COMPLIANCE CERTIFICATE | 19 | |
| EXECUTION PAGES | 20 | |
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THIS DEED OF GUARANTEE AND INDEMNITY is made on 8 December 2023
BETWEEN
| (1) | TOP SHIPS INC., a corporation incorporated and existing under the laws of the Republic of the Marshall Islands whose registered address is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960 (the Guarantor); and |
| (2) | GREAT EQUINOX LIMITED, a corporation incorporated and existing under the laws of the Republic of the Marshall Islands whose registered address is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro MH96960, the Republic of the Marshall Islands (the Owner which expression includes its successors and assigns). |
BACKGROUND
| (A) | By a bareboat charter dated 8 December 2023 (as amended and/or supplemented from time to time, the Charter) and entered into between (i) the Owner as owners and (ii) ROMAN EMPIRE INC . as charterers (the Charterer), the Owner agreed to bareboat charter the Vessel to the Charterer pursuant to the terms and conditions contained therein. |
| (B) | It is one of the conditions precedent to the chartering of the Vessel by the Owner to the Charterer under the Charter that the Assignor enters into this Deed. |
| (C) | This is the Charter Guarantee relating to the Vessel. |
IT IS AGREED as follows:
| 1. | DEFINITIONS AND INTERPRETATION |
| 1.1 | Definitions |
Words and expressions defined in the Charter shall, unless otherwise expressly provided in this Guarantee or the context otherwise requires, have the same meanings when used in this Guarantee, including the recitals.
“Compliance Certificate” means a certificate in the form set out in Schedule 1 (Form of Compliance Certificate) or in any other form agreed between the Guarantor and the Owner.
“Outstanding Indebtedness” means liabilities which the Charterer has, at the date of this Guarantee or at any later time or times, to the Owner under or in connection with the Transaction Documents or any judgment relating to the Transaction Document, and for this purpose there shall be disregarded any total or partial discharge of these liabilities, or variation of their terms, which is effected by, or in connection with, any bankruptcy, liquidation, arrangement or other procedure under the insolvency laws of any country.
| 1.2 | General interpretation |
In this Guarantee:
| (a) | unless the context otherwise requires, words in the singular include the plural and vice versa; |
| (b) | references to any document include that document as varied, novated, supplemented, extended or replaced from time to time; |
| (c) | references to any enactment include re-enactments, amendments and extensions of that enactment; |
1HFWSH\1478430-2
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| (d) | references to any person include that person’s successors and permitted assigns and references to a Party mean a party to this Guarantee; |
| (e) | clause headings are for convenience of reference only and are not to be taken into account in construction; |
| (f) | unless otherwise specified, references to Clauses and the recitals are respectively to Clauses of and the recitals to this Guarantee; |
| (g) | any rights in respect of an asset includes: |
| (i) | all amounts and proceeds paid or payable; |
| (ii) | all rights to make any demand or claim; and |
| (iii) | all powers, remedies, causes of action, security, guarantees and indemnities, in each case |
in respect of or derived from that asset;
| (h) | the term the Security means the Security Interests created by the Transaction Documents to which the Guarantor is at any time a party; |
| (i) | any words following the terms including, include, in particular or any similar expression shall be construed as illustrative and shall not limit the sense of the words, description, definition, phrase or term preceding those terms; and |
| (j) | a Potential Termination Event is continuing if it has not been remedied or waived and a Termination Event is continuing it has not been waived. |
| 1.3 | Agreement to prevail |
This Guarantee shall be read together with the Charter and, in the event of any conflict between the provisions of this Guarantee and the provisions of the Charter, the provisions of the Charter shall prevail.
| 1.4 | Third party rights |
| (a) | A person who is not a Party has no right under the Contracts (Rights of Third Parties) Act 1999 (the Third Parties Act) to enforce or enjoy the benefit of any term of this Guarantee. |
| (b) | Notwithstanding Clause 1.4(a) but subject always to Clause 1.4(c) and the provisions of the Third Parties Act, a person who is not a Party may rely on any clause under this Guarantee which expressly confers rights on them. |
| (c) | Notwithstanding any term of this Guarantee or any other Transaction Document, the consent of any person who is not a Party is not required to rescind or vary this Guarantee at any time. |
| 2. | GUARANTEE AND INDEMNITY |
| 2.1 | Guarantee and indemnity |
The Guarantor irrevocably and unconditionally:
| (a) | guarantees the due and punctual performance by the Charterer of all its obligations under or pursuant to the Charter and the other Transaction Documents to which the Charterer is a party and the due and punctual payment by the Charterer to the Owner of each and every part of the Outstanding Indebtedness in accordance with the terms of the Transaction Documents; |
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| (b) | undertakes that, if and whenever the Charterer fails to pay on the due date any sum whatsoever due and payable under or pursuant to any Transaction Document, the Guarantor shall pay such sum on demand by the Owner; and |
| (c) | agrees, as a separate and independent stipulation, that if any amounts intended to be guaranteed by Clause 2.1(a) are not recoverable on the footing of a guarantee, whether by reason of illegality, incapacity, lack or exceeding of powers, ineffectiveness of execution or any other fact or circumstance, whether or not known to the Owner or the Guarantor, then such amounts shall nevertheless be recoverable from the Guarantor as sole or principal debtor by way of indemnity and shall be payable by the Guarantor to the Owner on demand. |
| 2.2 | Default interest |
If the Guarantor fails to pay any amount payable by it under this Guarantee on its due date, interest shall accrue on the overdue amount from the due date up to the date of actual payment (both before and after judgment) at the rate described in clause 44.4 of the Charter and otherwise in accordance with the terms thereof, unless interest on that same amount also accrues under the Charter. Any interest accruing under this Clause 2.2 shall be immediately payable by the Guarantor on demand by the Owner. If unpaid, any such interest will be compounded with the overdue amount at the end of each period applicable to that overdue amount but will remain immediately due and payable.
| 2.3 | Nature of guarantee |
| (a) | The guarantee contained in this Clause 2 is a guarantee of payment and performance and not of collection. |
| (b) | This Guarantee shall be construed and take effect as a guarantee of all amounts due to the Owner under the Transaction Documents. |
| 2.4 | Guarantor as principal debtor |
The Guarantor agrees that it is, and will throughout the Agreement Term remain, liable under this Guarantee as a principal debtor and not as a surety only.
| 2.5 | Immediate recourse |
The Guarantor waives any rights which it may have to require the Owner first to enforce any of the other Transaction Documents or claim payment from the Charterer or any other person (including without limitation to commence any proceedings under any Transaction Documents or to enforce any Security Interest created in accordance with the Security Documents) before enforcing any rights of the Owner against the Guarantor under this Guarantee. This waiver applies irrespective of any law or any provision of a Transaction Document to the contrary.
| 3. | CONTINUING SECURITY |
| 3.1 | Continuing security; guarantee not affected by other security |
This Guarantee:
| (a) | is and shall at all times throughout the Agreement Term remain a continuing security for the payment of the full amount of the Outstanding Indebtedness from time to time; |
| (b) | shall not be satisfied by any intermediate payment or satisfaction of any part of the Outstanding Indebtedness; and |
| (c) | shall be in addition to and shall not merge with or be prejudiced or affected by any other security for the Outstanding Indebtedness which has been, or may at any time be, given to the Owner by the Charterer or any other person. |
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| 3.2 | Waiver of defences |
Neither the rights of the Owner nor the obligations of the Guarantor under this Guarantee or any other Transaction Document to which it is at any time a party shall be discharged, impaired or otherwise affected by reason of any of the following, whether or not known to the Guarantor, the Owner or any other person:
| (a) | any time or indulgence granted to, or composition with, the Charterer or any other person; or |
| (b) | any termination, renewal, extension or variation of any credit, accommodation or facility granted by the Owner to the Charterer or any other person or any amendment of, or the making of any supplement to, any Transaction Document or any other document or security; or |
| (c) | the taking, variation, compromise, renewal, enforcement, realisation or release of, or refusal or neglect to take, perfect, release or enforce, any rights, remedies or securities against, or granted by, any Obligor or other person; or |
| (d) | any incapacity, disability, or defect in powers of any Obligor or other person, or any irregular exercise of it by, or lack of authority of, any person purporting to act on behalf of any Obligor or other person; or |
| (e) | any illegality, invalidity, avoidance or unenforceability on any grounds whatsoever of, or of any obligations of any Obligor or other person under, any Transaction Document or any other document or security; or |
| (f) | the death, liquidation, administration, insolvency, amalgamation, reorganisation or dissolution, or any change in the constitution, name or style, of any Obligor, the Owner or any other person; or |
| (g) | any other act, omission, matter or thing which, but for this provision, might operate to exonerate the Guarantor from liability, whether in whole or in part, under this Guarantee. |
| 3.3 | Validity of demands |
| (a) | The Owner may serve more than one demand under this Guarantee. |
| (b) | A demand under this Guarantee shall be valid notwithstanding that it is served: |
| (i) | on the date on which the amount to which it relates is payable by the Charterer under any Transaction Documents; |
| (ii) | at the same time as the service of a notice under clause 54 of the Charter; |
and a demand under this Guarantee may refer to all amounts payable under or in connection with Transaction Documents without specifying a particular sum or aggregate sum.
| 4. | RESTRICTIONS ON GUARANTOR |
| 4.1 | Deferral of Guarantor’s rights |
Until the expiry of the Agreement Term, the Guarantor shall not be entitled, nor shall the Guarantor claim, by virtue of any payment made by the Guarantor under this Guarantee:
| (a) | to exercise any right of subrogation or indemnity or any other right or remedy in relation to any rights, security or moneys held by or recovered or receivable by the Owner under the Transaction Documents; or |
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| (b) | to exercise any right of set-off or counterclaim against the Charterer or any other Obligor; or |
| (c) | to exercise any right of contribution from the Charterer or any other Obligor in respect of the Outstanding Indebtedness; or |
| (d) | to receive, claim or have the benefit of any payment, distribution or security from the Charterer or any other Obligor; or |
| (e) | unless so directed by the Owner (in which case the Guarantor shall prove in accordance with the Owner’s directions), to rank as a creditor or have any right of proof in the bankruptcy, liquidation or insolvency of the Charterer or any other Obligor in competition with the Owner. |
| 4.2 | No security to be taken by the Guarantor |
The Guarantor represents and warrants that it has not taken, and undertakes that it will not take, without the prior written consent of the Owner, any security from the Charterer or any other Obligor in respect of the Guarantor’s liability under this Guarantee.
| 4.3 | Application of payments or benefits received by the Guarantor |
If the Guarantor is required by the Owner to prove in the bankruptcy, liquidation or insolvency of the Charterer or any other Obligor, or receives any payment, distribution or security from the Charterer or any other Obligor, or exercises any right of set off or counterclaim in respect of any payment made by it under this Guarantee, or otherwise acts in breach of any provision of this Clause 4 (Restrictions On Guarantor), then in each such case the Guarantor shall hold on trust for the Owner and immediately pay or transfer (as may be appropriate) to the Owner any such payment, amount set off, distribution or benefit of such security received by it.
| 5. | PAYMENTS |
| 5.1 | Place, time and manner of payment |
Unless otherwise specified by the Owner, all moneys to be paid by the Guarantor under this Guarantee shall be paid to the Owner in Dollars on the due date and in same day funds to such account as the Owner may from time to time notify the Guarantor.
| 5.2 | Non-Business Days |
Any payment which is due to be made on a day that is not a Business Day shall be made on the following Business Day.
| 5.3 | Accrual of interest and periodic payments |
| (a) | Other than Variable Hire, all payments of interest and other payments of an annual or periodic nature to be made by the Guarantor shall accrue from day to day and be calculated on the basis of the actual number of days elapsed and a 360 day year. |
| (b) | Variable Hire shall be payable in advance and will accrue and be calculated on the basis of the actual number of days during the relevant Hire Period in accordance with paragraph (b) of clause 44.1 (Hire) of the Charter. |
| 5.4 | Application of receipts |
Without prejudice to Clause 5.5 (Waiver of rights of appropriation and suspense account), all moneys received or recovered by the Owner pursuant to this Guarantee shall be applied, in the first place, to pay or make good all costs, expenses and liabilities whatsoever incurred by the Owner in or about or incidental to the recovery of such moneys, and the balance shall be applied in accordance with clause 84 (Application of Proceeds) of the Charter.
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| 5.5 | Waiver of rights of appropriation and suspense account |
| (a) | The Guarantor irrevocably waives any rights of appropriation to which it may be entitled in respect of any payment made under this Guarantee. |
| (b) | Until all amounts which may be or become payable by the Obligors under or in connection with the Transaction Documents have been irrevocably paid in full, the Owner may hold in a suspense account any moneys received from the Guarantor or on account of the Guarantor’s liability under this Guarantee. |
| 6. | NO SET-OFF, COUNTERCLAIM OR TAX DEDUCTION |
The provisions of clause 44.3 (Hire), clause 66 (Set-Off) and clause 83 (FATCA) of the Charter shall extend and apply to this Guarantee as if the same were expressly set out in this Guarantee but as if all references in the Charter to a Party included the Guarantor.
| 7. | DISCHARGE CONDITIONAL |
Any release, discharge or settlement between the Guarantor and the Owner in relation to this Guarantee shall be conditional on no right, security, disposition or payment to the Owner by the Guarantor, the Charterer or any other person in respect of the Outstanding Indebtedness being avoided, set aside or ordered to be refunded pursuant to any enactment or law relating to breach of duty by any person, bankruptcy, liquidation, administration, protection from creditors generally or insolvency or for any other reason. If any such right, security, disposition or payment is avoided, set aside or ordered to be refunded, the Owner shall be entitled subsequently to enforce this Guarantee against the Guarantor as if such release, discharge or settlement had not occurred and any such security, disposition or payment had not been made.
| 8. | REPRESENTATIONS AND WARRANTIES |
| 8.1 | Date of representations and warranties |
The Guarantor represents and warrants that the following matters are true at the date of this Guarantee and (by reference to the facts and circumstances then pertaining) on, the Actual Delivery Date and each Hire Payment Date as follows (except that (a) the representation and warranty contained in Clause 8.14 (No filing or stamp taxes) and 8.20 (No Material Adverse Effect) shall only be made on the date of this Guarantee and on the Actual Delivery Date, and (b) the representations and warranties in Clause 8.13 (No liability to deduction or withholding) shall only be made on the date of this Guarantee).
| 8.2 | Existence, powers and compliance |
| (a) | The Guarantor is a corporation duly incorporated as a corporation under the Marshall Islands’ Business Corporations Act, as amended (the “BCA”),, validly existing and in good standing under the laws of the Republic of the Marshall Islands (its jurisdiction of incorporation). |
| (b) | The Guarantor has full power to own its property and assets and to carry on its business as it is now being conducted. |
| (c) | The Guarantor has complied with all statutory and other requirements relative to its business. |
| (d) | The shares of the Guarantor are traded on the NASDAQ Composite or Over the Counter (OTC) and the Guarantor is an entity reporting with the United States Securities and Exchange Commission. |
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| 8.3 | Capacity and authorisation |
The entry into and performance by the Guarantor of this Guarantee and the other Transaction Documents to which it is (or is to become) a party are within the corporate powers of the Guarantor and have been duly authorised by all necessary corporate actions and approvals and no limitation on its powers will be exceeded as a result of the liabilities incurred under this Guarantee. In entering into this Guarantee and the other relevant Transaction Documents the Guarantor is acting on its own account and not as agent or nominee of any person.
| 8.4 | No contravention of laws or contractual restrictions |
The entry into and performance by the Guarantor of, and the transactions contemplated by, this Guarantee and the other Transaction Documents to which it is (or is to become) a party and the granting of Security Interest by the Guarantor do not and will not:
| (a) | contravene in any respect the constitutional documents of the Guarantor or any law, regulation or any agreement or instrument binding upon the Guarantor or any of its assets or constitute a default or termination event (however described) under any such agreement or instrument; or |
| (b) | result in the creation or imposition of any Security Interest (other than a Permitted Security Interest) on any of its assets in favour of any party. |
| 8.5 | Licences and approvals in force |
All licences, authorisations, approvals and consents necessary for the entry into, performance, validity, enforceability or admissibility in evidence of this Guarantee and the other Transaction Documents to which the Guarantor is (or is to become) a party have been obtained and are in full force and effect and there has been no breach of any condition or restriction imposed in this respect. For the avoidance of doubt, the Guarantor executes this Guarantee in furtherance of its corporate purposes pursuant to s.16 of the BCA (as that term is defined in clause 8.2(a)), and no authorisation by vote of its shareholders is (or shall be) required for it to execute this Guarantee.
| 8.6 | Validity and enforceability |
When duly executed and delivered, and where applicable registered, this Guarantee and each other Transaction Document to which the Guarantor is (or is to become) a party will:
| (a) | constitute the legal, valid and binding obligations of the Guarantor enforceable against it in accordance with its terms; and |
| (b) | (to the extent that by its terms it purports to do so) create a legal, valid and binding first priority Security Interest in accordance with its terms over all the assets to which by its terms it relates, |
except insofar as enforcement may be limited by any applicable laws relating to bankruptcy, insolvency, administration and similar laws affecting creditors’ rights generally and by principles of equity.
| 8.7 | No third party Security Interests; title |
At the time of execution of each Security Document to which the Guarantor is (or is to become) a party, no third party will have any Security Interest (other than a Permitted Security Interest) in any asset over which a Security Interest is to be created pursuant to that Security Document and the Guarantor will be the sole and absolute legal and beneficial owner of that asset.
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| 8.8 | Insolvency |
No corporate action, legal proceeding or other procedure or step described in clause 54(1)(f) (Insolvency and rescheduling) of the Charter or creditors’ process described in clause 54(1)(g) (Winding-up) of the Charter has been taken or, to the knowledge of the Guarantor, threatened in relation to any Obligor.
| 8.9 | No litigation current or pending |
No litigation, arbitration, tax claim or administrative proceeding is current or pending or (to the knowledge of the Guarantor) threatened, which, if adversely determined, might reasonably be expected to have a Material Adverse Effect.
| 8.10 | Governing law and enforcement |
Subject to the matters contemplated under clause 51.2 (Charterers’ representations and warranties) of the Charter, the choice of English law as the governing law of this Guarantee and each other Transaction Document expressed to be governed by English law to which the Guarantor is (or is to become) a party will be recognised and enforced in the jurisdiction of incorporation or formation of the Guarantor, and any judgment or (if applicable) arbitral award obtained in England in relation to this Guarantee or any such other Transaction Document will be recognised and enforced in that jurisdiction.
| 8.11 | Truth of financial and other information |
All factual information furnished in writing to the Owner by or on behalf of the Guarantor in connection with the negotiation and preparation of this Guarantee and the other Transaction Documents was (when given) true and correct in all material respects and there are no other facts or considerations the omission of which would render any such information materially misleading.
| 8.12 | Financial statements |
| (a) | Its most recent financial statements delivered pursuant to Clause 9.2 (Provision of financial information) and clause 52.1 (Financial statements) of the Charter: |
| (i) | have been prepared in accordance with Clause 9.2 (Provision of financial information) and clause 52.2 (Requirements as to financial statements) of the Charter; and |
| (ii) | give a true and fair view of (if audited) or fairly represent (if unaudited) its financial condition as at the end of the relevant financial year and operations during the relevant financial year (consolidated). |
| (b) | Since the date of the most recent financial statements delivered pursuant to Clause 9.2 (Provision of financial information) and clause 52.1 (Financial statements) of the Bareboat Charter there has been no material adverse change in its business, assets or financial condition (or the business or consolidated financial condition of the Charter Group). |
| 8.13 | No liability to deduction or withholding |
Except in respect of any FATCA Deduction which may be required by Clause 6 (No Set-Off, Counterclaim Or Tax Deduction), all payments to be made by the Guarantor under this Guarantee or any other Transaction Document may be made free and clear of and without deduction or withholding for or on account of any taxes.
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| 8.14 | No filing or stamp taxes |
Under the law of the Guarantor’s jurisdiction of incorporation or formation it is not necessary to ensure the legality, validity, enforceability or admissibility in evidence of this Guarantee or any other Transaction Document to which the Guarantor is (or is to become) a party that this Guarantee or such other Transaction Document (or particulars of it) be filed, recorded or enrolled with any court or other authority in that jurisdiction or that any stamp, registration or similar tax be paid on or in relation to it executed by the Guarantor at the company’s registration office in its jurisdiction of incorporation (and payment of associated fees) (but if required such registration will be made (and such fees paid) promptly after the date of each relevant Security Document).
| 8.15 | Tax compliance |
The Guarantor has complied in all material respects with all relevant tax laws and regulations applicable to it and its business and no claims or investigations are being made or conducted against it with respect to taxes.
| 8.16 | Pari passu obligations |
The payment obligations of the Guarantor under this Guarantee and the other Transaction Documents to which it is (or is to become) a party rank at least pari passu with the claims of all its other unsecured and unsubordinated creditors, except for obligations mandatorily preferred by law applying to companies generally.
| 8.17 | Familiarity with the terms of the Agreement |
The Guarantor has received a copy of the Charter and is familiar with and has approved its terms and conditions.
| 8.18 | Anti-Corruption Laws |
The Guarantor has conducted its business in compliance with all AML laws and anti-corruption and anti-bribery laws applicable to it and has instituted and maintains policies and procedures designed to prevent violation of such laws.
| 8.19 | Sanctions |
| (a) | The Guarantor, and none of its Subsidiaries and none of their respective directors, officers or employees or, to the best of the knowledge of the Guarantor, its agents (x) is a Restricted Party or is otherwise owned or controlled by or acting directly or indirectly on behalf of or for the benefit of, a Restricted Party; (y) owns or controls a Restricted Party; or (z) has received notice or are aware of any claim, action, suit, proceeding or investigation against any of them with respect to Sanctions. |
| (b) | The Guarantor, its Subsidiaries and their respective directors, officers and employees and, to the best of the knowledge of the Guarantor its agents, are in compliance with Sanctions in all material respects and are not knowingly engaged in any activity that would reasonably be expected to result in the Guarantor being designated as a Restricted Party. |
| 8.20 | No Material Adverse Effect |
No event or circumstance which has occurred which has a Material Adverse Effect.
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| 9. | INFORMATION UNDERTAKINGS |
| 9.1 | Duration of undertakings |
The undertakings in this Clause 9 (Information Undertakings) shall remain in force from the date of this Guarantee to the end of the Agreement Term.
| 9.2 | Provision of financial information |
The Guarantor will provide to the Owner:
| (a) | as soon as the same become available, but in any event within 180 days after the end of each of its financial year, certified copies of the audited consolidated financial statements of the Guarantor for that financial year, prepared in accordance with GAAP; |
| (b) | as soon as the same become available, but in any event within 90 days after the end of the first half-year of each financial year, certified copies of the unaudited semi-annual consolidated financial statements of the Guarantor for that financial half-year, prepared in accordance with GAAP; |
| (c) | together with the audited consolidated financial statements referred to in paragraph 9.2(a) or the unaudited semi-annual consolidated financial statements referred to in paragraph (b) above, a Compliance Certificate addressed to the Owner substantially in the form set out in Schedule 1 (Form Of Compliance Certificate) evidencing the compliance (or otherwise) of the Guarantor with the financial covenants in respect of the Charter Group as set out in Clause 9.9 (Change Of Control |
| (d) | Unless With Prior Written Consent Of The Owner (Which Shall Not Be Unreasonably Withheld Or Delayed): |
| (i) | The Charterer Shall Remain A Wholly-Owned Subsidiary Of The Guarantor; And |
| (ii) | Each Of The Charterer And The Guarantor Shall Remain In The Ownership And Control Of (Either Directly Or Indirectly) The Pistiolis Family. |
| (e) | The Charterers Shall Ensure That During The Duration Of The Charter Period, No Change Of Control Shall Occur Without The Prior Written Consent Of The Owner (Which Shall Not Be Unreasonably Withheld Or Delayed). |
| (f) | FINANCIAL Covenants); and |
| (g) | promptly, such further information in the possession or control of the Guarantor regarding the financial condition and operations of the Charter Group as the Owner may reasonably request. |
| 9.3 | Notification of default |
The Guarantor shall:
| (a) | notify the Owner of any Potential Termination Event or Termination Event (and the steps, if any, being taken to remedy it) promptly upon its becoming aware of the occurrence of it; and |
| (b) | promptly upon a request by the Owner, supply to the Owner a certificate signed on behalf of the Guarantor by two of its directors or senior officers certifying that no Termination Event or Potential Termination Event is continuing (or if a Termination Event or a Potential Termination Event is continuing, specifying such event and the steps, if any, being taken to remedy it). |
AVIC Top Ships II – Guarantee
| 9.4 | Notification of claims, material litigation and other proceedings |
The Guarantor shall, promptly upon becoming aware of the same, inform the Owner in writing of:
| (a) | any claim, action, suit, proceedings or investigation against any Obligor, any of its Subsidiaries or any of their respective directors, officers, employees or agents in connection with Sanctions; |
| (b) | any Environmental Claim against any Obligor or the Vessel which is current, pending or threatened and of any facts or circumstances which are reasonably likely to result in any Environmental Claim being commenced or threatened against any Obligor or the Vessel; and |
| (c) | any litigation, arbitration, tax claim or administrative proceeding instituted or (to its knowledge) threatened and of any other occurrence of which it becomes aware which might have a Material Adverse Effect. |
| 9.5 | Provision of other information |
The Guarantor shall promptly provide the Owner with such other information concerning itself and its affairs as the Owner may from time to time require.
| 9.6 | No Dividend |
The Guarantor shall not, and shall procure that the Charterer will not, make or pay any dividend or other distribution (in cash or in kind) in respect of its issued shares following the occurrence of a Potential Termination Event or a Termination Event, or if such payment or distribution will result in the occurrence of a Termination Event.
| 9.7 | Merger and demerger |
The Guarantor shall not, and shall procure that the Charterer will not, enter into any amalgamation, merger, demerger or corporate restructuring without the prior written consent of the Owner (such consent not to be unreasonably withheld or delayed), and in the case of the Guarantor, unless (a) it remains as the surviving entity after such amalgamation, merger, demerger or corporate restructuring and (b) there is (i) no breach of any of its undertakings or the financial covenants contained under Clause 10 (Financial Covenants) occurring as a result of the proposed amalgamation, merger, demerger or corporate restructuring and (ii) no Termination Event having occurred.
| 9.8 | “Know your customer” checks |
The Guarantor shall promptly provide the Owner with such other information concerning itself and its affairs as the Owner may requested by the Owner in order for it to comply with any anti- money laundering or know your customer legislation, regulation or procedures applicable to it from time to time.
| 9.9 | Change of control |
| (a) | Unless with prior written consent of the Owner (which shall not be unreasonably withheld or delayed): |
| (i) | the Charterer shall remain a wholly-owned subsidiary of the Guarantor; and |
| (ii) | each of the Charterer and the Guarantor shall remain in the ownership and Control of (either directly or indirectly) the Pistiolis Family. |
AVIC Top Ships II – Guarantee
| (b) | The Charterers shall ensure that during the duration of the Charter Period, no Change of Control shall occur without the prior written consent of the Owner (which shall not be unreasonably withheld or delayed). |
| 10. | FINANCIAL COVENANTS |
| 10.1 | Duration |
The undertakings contained in this Clause 9.9 (Change Of Control
| (a) | Unless With Prior Written Consent Of The Owner (Which Shall Not Be Unreasonably Withheld Or Delayed): |
| (i) | The Charterer Shall Remain A Wholly-Owned Subsidiary Of The Guarantor; And |
| (ii) | Each Of The Charterer And The Guarantor Shall Remain In The Ownership And Control Of (Either Directly Or Indirectly) The Pistiolis Family. |
| (b) | The Charterers Shall Ensure That During The Duration Of The Charter Period, No Change Of Control Shall Occur Without The Prior Written Consent Of The Owner (Which Shall Not Be Unreasonably Withheld Or Delayed). |
FINANCIAL Covenants) shall remain in force from date of this Guarantee until the end of the Agreement Term.
| 10.2 | Financial covenants |
| (a) | The Guarantor shall ensure that, at any time during the Agreement Term, the Guarantor’s Leverage Ratio shall not be more than seventy five per cent (75%). |
| (b) | The Guarantor shall ensure that all time during the Agreement Term the Cash and Cash Equivalents shall not be less than $500,000 multiplied by the number of the Fleet Vessels. |
| 10.3 | Financial definitions |
In this Guarantee:
“Cash and Cash Equivalents” means, at any time, cash at bank and credited to an account in the name of any member of the Charter Group and to which the Guarantor is solely (or together with other members of the Charter Group) beneficially entitled and for so long as such cash has not been blocked due to the existence and/or enforcement of any Security Interest held by any bank or any other third party or otherwise unless such cash is held in such account charged, as the case may be, by way of a floating charge for the purposes of meeting minimum liquidity requirements in the context of any financing arrangement of the Charter Group.
“Fleet Vessel” means any ship or vessel (including, but not limited to, the Vessel) from time to time wholly owned, leased under a capital lease, operating lease with a purchase option at the end of the relevant charter period excluding, for the avoidance of doubt, any newbuilding vessels not delivered to the relevant member of the Charter Group at the relevant time.
“Joint Venture Vessel” means any ship or vessel owned under a joint venture agreement where the relevant member of the Charter Group owns no less than fifty per cent. (50%) of the issued shares of the jointly owned entity or controlled by the Guarantor (directly or indirectly).
“Leverage Ratio” means, at any date, the ratio (expressed as a percentage) of:
| (a) | the Total Net Debt; and |
AVIC Top Ships II – Guarantee
| (b) | the aggregate Market Value of all Fleet Vessels and all Joint Venture Vessels adjusted, in each case, to reflect the percentage of ownership by the Guarantor of each such Fleet Vessel and each such Joint Venture Vessel. |
“Total Net Debt” means, at any date, the aggregate Financial Indebtedness of the Charter Group as per US GAAP as at such date, adjusted to include a percentage of the Financial Indebtedness of any joint venture with a minimum holding of 50 per cent by any member of the Charter Group which is equal to the percentage of the Guarantor’s ownership in such joint venture, minus the aggregate amount of all cash balances standing on such date to the credit of a bank account of any member of the Charter Group, adjusted to include a percentage of the cash balances of any entity holding any Joint Venture Vessel which is equal to the percentage of the Guarantor’s and/or such member’s ownership in that entity, but excluding any cash held by any bank or any other third party or otherwise which is subject to the existence and/or enforcement any Security Interest unless such cash is held in such account charged, as the case may be, by way of a floating charge for the purposes of meeting minimum liquidity requirements in the context of any financing arrangement of the Charter Group.
“US GAAP” means the generally accepted accounting principles in the United States.
| 10.4 | Testing of financial condition |
The requirements contained in Clause 10.2 (Financial covenants) as to the financial condition of the Charter Group shall be tested on the Actual Delivery Date by reference to the most recent unaudited consolidated financial statements of the Charter Group and thereafter semi-annually as at 30 June and 31 December in each year in each case by reference to the unaudited consolidated financial statements or (as the case may be) the Compliance Certificate delivered to the Owner pursuant to Clause 9.2 (Provision of financial information).
| 11. | INDEMNITIES AND EXPENSES |
| 11.1 | Indemnity against costs |
The Guarantor shall pay to the Owner on demand, and the Guarantor shall indemnify and keep the Owner indemnified against, all costs, charges, expenses, claims, liabilities, losses, duties and fees (including, but not limited to, legal fees and expenses on a full indemnity basis) and taxes thereon suffered or incurred by the Owner:
| (a) | in the negotiation, preparation, printing, execution and registration of this Guarantee and the other Transaction Documents; |
| (b) | in collating, monitoring and otherwise attending to the relevant conditions precedent in the Charter; |
| (c) | in the enforcement or preservation or the attempted enforcement or preservation of any of the rights and powers of the Owner under this Guarantee and the other Transaction Documents; |
| (d) | in connection with any actual or proposed amendment of or supplement to this Guarantee or any other of the Transaction Documents, or with any request to the Owner to grant any consent or waiver in respect of any provision of this Guarantee or any other Transaction Document, whether or not it is given; and |
| (e) | arising out of any act or omission made by the Owner in good faith in connection with any of the matters dealt with in this Guarantee or any other Transaction Document. |
| 11.2 | Documentary taxes |
The Guarantor shall promptly pay all stamp duty, registration and other similar taxes payable on or by reference to this Guarantee and the other Transaction Documents to which the Guarantor is (or is to become) a party and shall indemnify the Owner on the Owner’s written demand against any and all claims, expenses, liabilities and losses resulting from any failure or delay by the Guarantor to pay any such duty or tax.
AVIC Top Ships II – Guarantee
| 11.3 | Currency indemnity |
If any sum due from the Guarantor under the Transaction Documents (a Sum), or any order, judgment or award given or made in relation to a Sum, has to be converted from the currency (the First Currency) in which that Sum is payable into another currency (the Second Currency) for the purpose of making or filing a claim or proof against the Guarantor or obtaining or enforcing an order, judgment or award in relation to any litigation or arbitration proceedings, the Guarantor shall as an independent obligation, within 3 Business Days of demand, indemnify the Owner against any cost, loss or liability arising out of or as a result of the conversion including any discrepancy between (a) the rate of exchange used to convert that Sum from the First Currency into the Second Currency and (b) the rate or rates of exchange available to the Owner at the time of its receipt of that Sum.
| 11.4 | Survival of indemnities |
The indemnities contained in this Guarantee and the other Transaction Documents to which the Guarantor is (or is to become) a party shall continue in full force and effect after the full and final discharge of the Outstanding Indebtedness with respect to matters arising prior to such discharge.
| 12. | CHANGES TO THE PARTIES |
| 12.1 | No assignment or transfer by the Guarantor |
The Guarantor may not assign or transfer all or any of its rights, benefits or obligations under this Guarantee.
| 12.2 | Assignments and transfers by the Owner |
The Owner may assign or transfer all or any portion of its rights, benefits or obligations under this Guarantee to any person to whom it assigns or transfers a corresponding proportion of its rights, benefits or obligations under and in accordance with the Charter.
| 12.3 | Change of office |
The Owner may at any time and from time to time change the office through which it performs its obligations under this Guarantee and the other Transaction Documents.
| 12.4 | Delegation |
The Owner may at any time and from time to time delegate any one or more of its rights, powers and/or obligations under this Guarantee and the other Transaction Documents to any person (provided that the Owner shall remain fully responsible for the exercise or performance of any rights, powers and/or obligations delegated by it).
| 12.5 | Guarantor to assist |
The Guarantor undertakes to do or to procure all such acts and things and to sign, execute and deliver or procure the signing, execution and delivery of all such instruments and documents as the Owner may reasonably require for the purpose of perfecting any such assignment or transfer as mentioned in Clause 12.2 (Assignments and transfers by the Owner).
| 12.6 | Disclosure of information |
The Owner may disclose to any potential assignee, transferee or sub-participant, or to any other party with whom it may propose to enter into contractual relations in connection with this Agreement or any other of the Transaction Documents, such information about the Guarantor and the other Obligors and their respective businesses, assets or financial condition as the Owner shall request from the Guarantor (Guarantors consent not to be unreasonably withheld).
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| 13. | SET-OFF |
The Owner may set off any matured obligation due from the Guarantor under this Guarantee or any other Transaction Document to which the Guarantor is at any time a party (to the extent beneficially owned by the Owner) against any matured obligation owed by the Owner to the Guarantor, regardless of the place of payment, booking branch or currency of either obligation. If the obligations are in different currencies, the Owner may convert either obligation at a market rate of exchange in its usual course of business for the purpose of the set-off.
| 14. | MISCELLANEOUS |
| 14.1 | Time of essence |
Time is of the essence as regards every obligation of the Guarantor under this Guarantee and the other Transaction Documents to which it is (or is to become) a party.
| 14.2 | Remedies and waivers |
No failure to exercise, nor any delay in exercising, on the part of the Owner, any right or remedy under the Transaction Documents shall operate as a waiver of any such right or remedy or constitute an election to affirm any of the Transaction Documents. No election to affirm any Transaction Document on the part of the Owner shall be effective unless it is in writing. No single or partial exercise of any such right or remedy shall prevent any further or other exercise of it or the exercise of any other right or remedy. The rights and remedies provided in each Transaction Document are cumulative and not exclusive of any rights or remedies provided by law.
| 14.3 | Waivers and amendments to be in writing |
Any waiver by the Owner of any provision of this Guarantee or any other Transaction Document, and any consent or approval given by the Owner under or in respect of this Guarantee or any other Transaction Document, shall only be effective if given in writing and then only strictly for the purpose and upon the terms for which it is given. This Guarantee may not be amended or varied orally but only by an instrument signed by the Parties.
| 14.4 | Partial invalidity |
If at any time one or more of the provisions of this Guarantee or any other of the Transaction Documents is or becomes invalid, illegal or unenforceable in any respect under any law by which it may be governed or affected, the validity, legality and enforceability of the remaining provisions shall not be in any way affected or impaired as a result.
| 14.5 | Counterparts |
This Guarantee may be executed in any number of counterparts and all such counterparts taken together shall be deemed to constitute one and the same instrument.
| 14.6 | Conclusiveness of certificates |
The certificate or determination of the Owner of a rate or amount under this Guarantee or any other Transaction Document is, in the absence of manifest error, conclusive evidence of the matters to which it relates and is binding on the Guarantor.
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| 14.7 | Further assurances |
The Guarantor shall, upon demand, and at its own expense, sign, perfect, do, execute and register all such further assurances, documents, acts and things as the Owner may require for:
| (a) | perfecting or protecting this Guarantee or any other Security Document to which the Guarantor is at any time a party; |
| (b) | the exercise by the Owner of any right, power or remedy vested in it under this Guarantee or any other Security Document to which the Guarantor is at any time a party; or |
| (c) | enforcing this Guarantee or any other Security Document to which the Guarantor is at any time a party after it has become enforceable (and the Guarantor undertakes to allow its name to be used as and when required by the Owner for this purpose). |
| 15. | NOTICES |
| 15.1 | Communications in writing; addresses |
All communications (which expression includes any notice, demand, request, consent or other communication) to be made under or in connection with this Guarantee shall be made in writing and unless otherwise stated may be made by fax or letter or, subject to Clause 15.3 (Electronic communication), electronic mail and be addressed:
| (a) | in the case of the Owner, to it at: |
c/o AVIC INTERNATIONAL LEASING CO., LTD.
| Address: | 18/F, Hangrong Mansion, | |
| 1481 Guozhan Road, | ||
| Pudong, Shanghai 200126 | ||
| The People’s Republic of China | ||
| Telefax No.: | ||
| Attn: | ||
| Email: |
| (b) | in the case of the Guarantor, to it at: |
TOP SHIPS INC.
| Address: | 1, Vas. Sofias & Meg. Alexandrou Str., 15124 Maroussi, Athens, Greece |
|
| Telefax No: | ||
| Telephone No: | ||
| Attn: | ||
| Email: |
or to such other address or fax number or department or officer as is notified by one Party to the other under this Guarantee by not less than 5 Business Days’ notice.
AVIC Top Ships II – Guarantee
| 15.2 | Delivery |
| (a) | Subject to paragraph (b) below, any communication or document made or delivered by one person to another under or in connection with this Guarantee will only be effective: |
| (i) | if by way of fax, when received in legible form; |
| (ii) | if by way of letter, when it has been left at the relevant address or 5 Business Days after being deposited in the post postage prepaid in an envelope addressed to it at that address; or |
| (iii) | if by way of electronic mail, then in accordance with Clause 15.3 (Electronic communication), |
and, if a particular department or officer is specified as part of its address details provided under Clause 15.1 (Communications in writing; addresses), if addressed to that department or officer.
| (b) | Any communication or document to be made or delivered to the Owner will be effective only when actually received by the Owner and then only if it is expressly marked for the attention of the department or officer specified as part of its address details provided under Clause 15.1 (Communications in writing; addresses). |
| (c) | Any communication or document which becomes effective, in accordance with paragraph (a) or paragraph (b) above, on a non-working day or after 5:00 p.m. in the place of receipt shall be deemed only to become effective at the opening of business hours on the next working day in the place of receipt. |
| 15.3 | Electronic communication |
Any communication to be made between the Parties under or in connection with this Guarantee may be made by electronic mail or other electronic means to the extent that the Parties agree that, unless and until notified to the contrary, this is to be an accepted form of communication and if the Parties:
| (a) | notify each other in writing of their electronic mail address and/or any other information required to enable the sending and receipt of information by that means; and |
| (b) | notify each other of any change to their address or any other such information supplied by them by not less than 5 Business Days’ notice. |
Any electronic communication made between the Parties will be effective only when actually received in readable form and in the case of any electronic communication made by the Guarantor to the Owner only if it is addressed in such a manner as the Owner shall specify for this purpose.
| 15.4 | English language |
All communications and documents to be given or delivered pursuant to or otherwise in relation to this Guarantee and the other Transaction Documents to which the Guarantor is (or is to become) a party shall be in the English language or be accompanied by a certified English translation.
| 16. | GOVERNING LAW AND JURISDICTION |
| 16.1 | This Guarantee and any non-contractual obligations arising out of or in connection with it shall be governed by and construed in accordance with English law. |
| 16.2 | Any dispute arising out of or in connection with this Guarantee (including a dispute regarding the existence, validity or termination of this Guarantee or any non-contractual obligation arising out of or in connection with this Guarantee) (a “Dispute”) shall be referred to and finally resolved by arbitration in London in accordance with the Arbitration Act 1996 or any statutory modification or re-enactment thereof save to the extent necessary to give effect to the provisions of this Clause 16 (Law and Jurisdiction). The arbitration shall be conducted in accordance with the London Maritime Arbitrators Association (LMAA) Terms current at the time when the arbitration proceedings are commenced. |
AVIC Top Ships II – Guarantee
| 16.3 | The reference shall be to three (3) arbitrators. A Party wishing to refer a Dispute to arbitration shall appoint its arbitrator and send notice of such appointment in writing to the other Party requiring the other Party to appoint its own arbitrator within fourteen (14) calendar days of that notice and stating that it will appoint its arbitrator as sole arbitrator unless the other Party appoints its own arbitrator and gives notice that it has done so within the fourteen (14) days specified. If the other Party does not appoint its own arbitrator and give notice that it has done so within the fourteen (14) days specified, the Party referring a Dispute to arbitration may, without the requirement of any further prior notice to the other Party, appoint its arbitrator as sole arbitrator and shall advise the other Party accordingly. The award of a sole arbitrator shall be binding on both Parties as if he had been appointed by agreement. Nothing herein shall prevent the Parties agreeing in writing to vary these provisions to provide for the appointment of a sole arbitrator. |
| 16.4 | In cases where neither the claim nor any counterclaim exceeds the sum of US$100,000 (or such other sum as the Parties may agree) the arbitration shall be conducted in accordance with the LMAA Small Claims Procedure current at the time when the arbitration proceedings are commenced and the number of arbitrators shall be one (1). Where the reference is to three arbitrators the procedure for making appointments shall be in accordance with the procedure for full arbitration stated above. |
| 16.5 | The language of the arbitration shall be English. |
| 16.6 | The governing law of this Clause 16 shall be English law. |
This Guarantee has been executed and delivered as a deed on the date stated at the beginning of this Guarantee.
AVIC Top Ships II – Guarantee
SCHEDULE 1
FORM OF COMPLIANCE CERTIFICATE
| To: | GREAT EQUINOX LIMITED |
Trust Company Complex
Ajeltake Road
Ajeltake Island
Majuro MH96960
The Republic of the Marshall Islands
Date: [●]
Dear Sirs
Compliance Certificate –Bareboat Charter dated [●]
| 1 | We refer to the Guarantee. This is a Compliance Certificate. Terms defined in the Guarantee have the same meaning when used in this Compliance Certificate unless given a difference meaning in this Compliance Certificate. |
| 2 | We confirm that, as at the date hereof, no Termination Event has occurred and is continuing which has not been waived or remedied at the date hereof or if that is not the case, specifying the same and the steps, if any, being taken to remedy the same. |
| 3 | We confirm that, at any time during the Agreement Term, Leverage Ratio was not more than 75 per cent (75%). |
| 4 | We confirm that at all times during the Agreement Term the Cash and Cash Equivalents was not less than the aggregate of $500,000 multiplied by the number of the Fleet Vessels which are fully owned by the Guarantor or leased or operated (including those under a capital lease or operating lease with a purchase option at the end of the relevant charter period) by the Guarantor and/or any member of the Charter Group. |
Yours faithfully
| Name: |
Co-Chief Financial Officer
For and on behalf of
TOP SHIPS INC.
AVIC Top Ships II – Guarantee
EXECUTION PAGES
THE GUARANTOR
| EXECUTED AND DELIVERED as a DEED | ) | Signature in the name of the corporation |
| by TOP SHIPS INC. | ) | TOP SHIPS INC. |
| acting by ALEXANDROS TSIRIKOS | ) | |
| as attorney-in-fact | ) | |
| ) | ||
| ) | ||
| ) | ||
| ) | ||
| ) | ||
| in the presence of: | ) | /s/ Alexandros Tsirikos |
| ) | ||
| ) | Authorised signatory |
Signature of witness: /s/ Dimitra Karkaletsi
Name of witness: DIMITRA KARKALETSI
Occupation of witness: ATTORNEY-AT-LAW
| Address of witness: | 1, Vassilissis Sofias Str. & Meg. Alexandrou Str., Maroussi, Attica, Greece |
AVIC Top Ships II - Guarantee
THE OWNER
| EXECUTED AND DELIVERED as a DEED | ) | Signature in the name of the corporation |
| by GREAT EQUINOX LIMITED | ) | GREAT EQUINOX LIMITED |
| acting by | ) | |
| as attorney-in-fact | ) | |
| ) | ||
| ) | ||
| ) | ||
| ) | ||
| ) | ||
| in the presence of: | ) | |
| ) | /s/ Zhu Jiafeng | |
| ) | Zhu Jiafeng |
Signature of witness: /s/ Yixin Zhang
Name of witness: Yixin Zhang
Occupation of witness: Project Manager
| Address of witness: | 16/F, Hangrong Mansion, 1481 Guozhan Road, Pudong, Shanghai, China |
AVIC Top Ships II - Guarantee
21
Exhibit 4.20
1. Shipbroker N/A 2. Place and date 3. Owners/Place of business (Cl. 1) GIANT 9 HOLDING LIMITED, a company incorporated under the laws of Hong Kong with company number 3304181 whose registered office is at 6/F, Manulife Place, 348 Kwun Tong Road, Kowloon, Hong Kong 4. Bareboat Charterers/Place of business (Cl. 1) ATHENEAN EMPIRE INC. a corporation incorporated under the laws of the Republic of the Marshall Islands, having its registered address at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960 5. Vessel’s name, call sign and flag (Cl. 1 and 3) Eco Malibu Call Sign: V7A4461 Flag: Marshall Islands or any other flag state of the Vessel as may be agreed in writing by the Owners and the Charterers. 6. Type of Vessel CRUDE OIL TANKER 7. GT/NT 81206/51026 8. When/Where built 2021 Hyundai Heavy Industries Co., Ltd, Korea 9. Total DWT (abt.) in metric tons on summer freeboard 157,286 10. Classification Society (Cl. 3) ABS or any other Approved Classification Society 11. Date of last special survey by the Vessel’s classification society N/A 12 Further particulars of Vessel (also indicate minimum number of months’ validity of class certificates agreed acc. to Cl. 3) IMO No.: 9902823 Length: 269.02 metres Breadth: 48.00 metres Depth: 23.20 metres 13. Port or Place of delivery (Cl. 3) Back to back with MOA delivery 14. Time for delivery (Cl. 4) See Clause 34 (Delivery and Charter of Vessel) 15. Cancelling date (Cl. 5) See definition of “Cancelling Date” and Clause 33 (Cancellation) 16. Port or Place of redelivery (Cl. 15) See Clauses 41.6 (Termination, Redelivery and Total Loss) 17. No. of months’ validity of trading and class certificates upon redelivery (Cl. 15) Six (6) months 18. Running days’ notice if other than stated in Cl. 4 N/A 19. Frequency of dry-docking (Cl. 10(g)) In accordance with Approved Classification Society or requirements of Flag State 20. Trading limits (Cl. 6) International Navigating Limits and excluding any war listed area declared by the Joint War Committee, see also Clause 46.1(t), 46.1(u) and 46.1(v) (Undertakings) 21. Charter period (Cl. 2) See Clause 32 (Charter Period) 22. Charter hire (Cl. 11) See Clause 36 (Charterhire and Advance Charterhire) 23. New class and other safety requirements (state percentage of Vessel’s insurance value acc. to Box 29)(Cl. 10(a)(ii)) N/A 24. Rate of interest payable acc. to Cl. 11 (f) and, if applicable, acc. to PART IV See Clause 37 (Changes to Interest Rate, Default Interest) 25. Currency and method of payment (Cl. 11) Dollars/Bank transfer 26. Place of payment; also state beneficiary and bank account (Cl. 11) See Clause 36 (Charterhire and Advance Charterhire); such account as the Owners may notify the Charterers from time to time 27. Bank guarantee/bond (sum and place) (Cl. 24) (optional) See Clause 24 28. Mortgage(s), if any (state whether 12(a) or (b) applies; if 12(b) applies state date of Financial Instrument and name of Mortgagee(s)/Place of business) (Cl. 12) N/A 29. Insurance (hull and machinery and war risks) (state value acc. to Cl. 13(f) or, if applicable, acc. to Cl. 14(k)) (also state if Cl. 14 applies) See Clause 39 (Insurance) - Clause 14 does not apply
Copyright © 2001 BIMCO. All rights reserved. Any unauthorised copying, duplication, reproduction or distribution of this BIMCO SmartCon document will
constitute an infringement of BIMCO’s copyright. Explanatory notes are available from BIMCO at www.bimco.org.
First published in 1974 as BARECON A and B. Amalgamated and revised in 1989. Revised 2001.
30. Additional insurance cover. If any, for Owners’ account limited to (Cl. 13(b) or, if applicable, Cl. 14(g)) See Clause 39 (Insurance) See Clause 39 (Insurance) 33. Brokerage commission and to whom payable (Cl. 27) N/A 32. Latent defects (only to be filled in if period other than stated in Cl. 3) NJA 35. Dispute Resolution (state 30(a), 30(b) or 30(c); if 30(c) agreed Place of Arbitration must be stated (Cl. 30) (c) Clause 30 not applicable. See Clause 66 (Governing Law and Enforcement) 34. Grace period (state number of clear banking days) (Cl. 28) N/A 36. War cancellation (indicate countries agreed) (Cl, 26(f)) 38. Name and place of Builders (only to be filled in if PART III applies) 37. Newbuilding Vessel (indicate witli “yes” or “no” whether PART 111 applies) (optional) ujik Ho 39. Vessel’s Yard Building No. (only to be filled in if PART III applies) 40. Date of Building Contract (only to be filled in if PART III applies) N/A 41. Liquidated damages and costs shall accrue to (state party acc. to Cl. 1) a) N/A b) N/A c) N/A _______ 42. Hire/Purchase agreement (indicate with “yes” or “no” whether 43. Bareboat Charter Registry (indicate with “yes” or “no” PART IV applies) (optional) No, Part IV does not apply whether PART V applies) (optional) No 45. Country of the Underlying Registry (only to be filled in if PART V applies) 44. Flag and Country of the Bareboat Charter Registry (only to be filled in if PART V applies) N/A N/A 46. Number of additional clauses covering special provisions, if agreed Clause 32 (Charter Period) to Clause 68 (Definitions)
PREAMBLE - It is mutually agreed that this Contract shall be performed subject to the conditions contained in this Charter which shall include PART I and PART II. In the event of a conflict of conditions, the provisions of PART I shall prevail over those of PART II to the extent of such conflict but no further. It is further mutually agreed that PART III and/or PART IV and/or PART V shall only apply and only form part of this Charter if expressly agreed and stated in Boxes 37, 42 and 43. If PART III and/or PART IV and/or PART V apply, it is further agreed that in the event of a conflict of conditions, the provisions of PART I and PART II shall prevail over those of PART III and/or PART IV and/or PART V to the extent of such conflict but no further.
| Signature (Owners) /s/ Mao Yufei Mao Yufei, Director |
Signature (Charterers) /s/ Alexandros Tsirikos Alexandros Tsirikos Attorney-in-fact |
Copyright © 2001 BIMCO. All rights reserved. Any unauthorised copying, duplication, reproduction or distribution of this BIMCO SmartCon document will
constitute an infringement of BIMCO’s copyright. Explanatory notes are available from BIMCO at www.bimco.org.
First published in 1974 as BARECON A and B. Amalgamated and revised in 1989. Revised 2001.
PART II
BARECON 2001 Standard Bareboat Charter
1 1. Definitions 2 In this Charter, the following terms shall have the 3 meanings hereby assigned to them: 4 “The Owners” shall mean the party identified in Box 3; 5 “The Charterers” shall mean the party identified in Box 4; 6 “The Vessel” shall mean the vessel named in Box 5 and 7 with particulars as stated in Boxes 6 to 12. 8 “Financial Instruments” has the meaning ascribed to it in Clause 68 (Definitions). means the mortgage, deed of 9 covenant or other such financial security instrument as 10 annexed to this Charter and stated in Box 28. 11 2 Charter Period 12 In consideration of the hire detailed in Box 22, 13 the Owners have agreed to let and the Charterers have 14 agreed to hire the Vessel for the period stated in Box 21 15 (“The Charter Period”). See also Clause 32 (Charter Period) 16 3. Delivery 17 (not applicable when Part III applies, as indicated in Box 37) 18 (a) The Owners shall before and at the time of delivery 19 exercise due diligence to make the Vessel seaworthy 20 And in every respect ready in hull, machinery and 21 equipment for service under this Charter. 22 The Vessel shall be delivered by the Owners and taken 23 over by the Charterers at the port or place indicated in 24 Box 13. in such ready safe berth as the Charterers may 25 direct. 26 (b) The Vessel shall be properly documented on 27 delivery in accordance with the laws of the flag State 28 indicated in Box 5 and the requirements of the 29 classification society stated in Box 10. The Vessel upon 30 delivery shall have her survey cycles up to date and 31 trading and class certificates valid for at least the number 32 of months agreed in Box 12. 33 (c) The delivery of the Vessel by the Owners and the 34 taking over of the Vessel by the Charterers shall 35 constitute a full performance by the Owners of all the 36 Owners’ obligations under this Clause 3, and thereafter 37 the Charterers shall not be entitled to make or assert 38 any claim against the Owners on account of any 39 conditions, representations or warranties expressed or 40 implied with respect to the Vessel. but the Owners shall 41 be liable for the cost of but not the time for repairs or 42 renewals occasioned by latent defects in the Vessel, 43 her machinery or appurtenances, existing at the time of 44 delivery under this Charter, provided such defects have 45 manifested themselves within twelve (12) months after 46 delivery unless otherwise provided in Box 32. 47 4. Time for Delivery (See Clause 34 (Delivery and Charter of Vessel)) 48 (not applicable when Part III applies, as indicated in Box 37) 49 The Vessel shall not be delivered before the date 50 indicated in Box 14 without the Charterers’ consent and 51 the Owners shall exercise due diligence to deliver the 52 Vessel not later than the date indicated in Box 15. 53 Unless otherwise agreed in Box 18, the Owners shall 54 give the Charterers not less than thirty (30) running days’ 55 preliminary and not less than fourteen (14) running days’ 56 definite notice of the date on which the Vessel is 57 expected to be ready for delivery. 58 The Owners shall keep the Charterers closely advised 59 of possible changes in the Vessel’s position. 60 5. Cancelling (See Clause 33 (Cancellation)) 61 (not applicable when Part III applies, as indicated in Box 37) 62 (a) Should the Vessel not be delivered latest by the 63 cancelling date indicated in Box 15, the Charterers shall 64 have the option of cancelling this Charter by giving the 65 Owners notice of cancellation within thirty-six (36) 66 running hours after the cancelling date stated in Box 67 15, failing which this Charter shall remain in full force 68 and effect. 69 (b) If it appears that the Vessel will be delayed beyond 70 the cancelling date, the Owners may, as soon as they 71 are in a position to state with reasonable certainty the 72 day on which the Vessel should be ready, give notice 73 thereof to the Charterers asking whether they will 74 exercise their option of cancelling, and the option must 75 then be declared within one hundred and sixty-eight 76 (168) running hours of the receipt by the Charterers of 77 such notice or within thirty-six (36) running hours after 78 the cancelling date, whichever is the earlier. If the 79 Charterers do not then exercise their option of cancelling, 80 the seventh day after the readiness date stated in the 81 Owners’ notice shall be substituted for the cancelling 82 date indicated in Box 15 for the purpose of this Clause 5. 83 (c) Cancellation under this Clause 5 shall be without 84 prejudice to any claim the Charterers may otherwise 85 have on the Owners under this Charter. 86 6. Trading Restrictions (see also Clauses 46.1(t), 46.1(u) and 46.1(v)) (Undertakings) 87 The Vessel shall be employed in lawful trades for the 88 carriage of suitable lawful merchandise within the trading 89 limits indicated in Box 20. 90 The Charterers undertake not to employ the Vessel or 91 suffer the Vessel to be employed otherwise than in 92 conformity with the terms of the contracts of insurance 93 (including any warranties expressed or implied therein) 94 without first obtaining the consent of the insurers to such 95 employment and complying with such requirements as 96 to extra premium or otherwise as the insurers may 97 prescribe. 98 The Charterers also undertake not to employ the Vessel 99 or suffer her employment in any trade or business which 100 is forbidden by the law of any country to which the Vessel 101 may sail or is otherwise illicit or in carrying illicit or 102 prohibited goods or in any manner whatsoever which 103 may render her liable to condemnation, destruction, 104 seizure or confiscation. 105 Notwithstanding any other provisions contained in this 106 Charter it is agreed that nuclear fuels or radioactive 107 products or waste are specifically excluded from the 108 cargo permitted to be loaded or carried under this 109 Charter. This exclusion does not apply to radio-isotopes 110 used or intended to be used for any industrial, 111 commercial, agricultural, medical or scientific purposes 112 provided the Owners’ prior approval has been obtained 113 to loading thereof. 114 7. Surveys on Delivery and Redelivery 115 Provision on Delivery see Clause 47.2 (Inspection of Vessel)(not applicable when Part III applies, as indicated in Box 37) 116 The Owners and Charterers shall each appoint 117 surveyors for the purpose of determining and agreeing 118 in writing the condition of the Vessel at the time of
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First published in 1974 as BARECON A and B. Amalgamated and revised in 1989. Revised 2001.
PART II
BARECON 2001 Standard Bareboat Charter
119 delivery and redelivery pursuant to Clause 41.6 (Termination, Redelivery and Total Loss)hereunder (if applicable) at the costs of the Charterers. The Owners shall 120 bear all expenses of the On-hire Survey including loss 121 of time, if any, and the Charterers shall bear all expenses 122 of the Off-hire Survey including loss of time, if any, at 123 the daily equivalent to the rate of hire or pro rata thereof. 124 8. Inspection (See Clause 47 (Inspection of Vessel)) 125 The Owners shall have the right at any time after giving 126 reasonable notice to the Charterers to inspect or survey 127 the Vessel or instruct a duly authorised surveyor to carry 128 out such survey on their behalf:- 129 (a) to ascertain the condition of the Vessel and satisfy 130 themselves that the Vessel is being properly repaired 131 and maintained. The costs and fees for such inspection 132 or survey shall be paid by the Owners unless the Vessel 133 is found to require repairs or maintenance in order to 134 achieve the condition so provided; 135 (b) in dry-dock if the Charterers have not dry-docked 136 Her in accordance with Clause 10(g). The costs and fees 137 for such inspection or survey shall be paid by the 138 Charterers; and 139 (c) for any other commercial reason they consider 140 necessary (provided it does not unduly interfere with 141 the commercial operation of the Vessel). The costs and 142 fees for such inspection and survey shall be paid by the 143 Owners. 144 All time used in respect of inspection, survey or repairs 145 shall be for the Charterers’ account and form part of the 146 Charter Period. 147 The Charterers shall also permit the Owners to inspect 148 the Vessel’s log books whenever requested and shall 149 whenever required by the Owners furnish them with full 150 information regarding any casualties or other accidents 151 or damage to the Vessel. 152 9. Inventories, Oil and Stores (See Clause 34.7 (Delivery and Charter of Vessel)) 153 A complete inventory of the Vessel’s entire equipment, 154 outfit including spare parts, appliances and of all 155 consumable stores on board the Vessel shall be made 156 by the Charterers in conjunction with the Owners on 157 delivery and again on redelivery of the Vessel. The 158 Charterers and the Owners, respectively, shall at the 159 time of delivery and redelivery take over and pay for all 160 bunkers, lubricating oil, unbroached provisions, paints, 161 ropes and other consumable stores (excluding spare 162 parts) in the said Vessel at the then current market prices 163 at the ports of delivery and redelivery, respectively. The 164 Charterers shall ensure that all spare parts listed in the 165 inventory and used during the Charter Period are 166 replaced at their expense prior to redelivery of the 167 Vessel. 168 10. Maintenance and Operation 169 (a)(i)Maintenance and Repairs - During the Charter 170 Period the Vessel shall be in the full possession 171 and at the absolute disposal for all purposes of the 172 Charterers and under their complete control in 173 every respect. The Charterers shall maintain the 174 Vessel, her machinery, boilers, appurtenances and 175 spare parts in a good state of repair, in efficient 176 operating condition and in accordance with good 177 commercial maintenance practice and, except as 178 provided for in Clause 14(l), if applicable, at their 179 own expense they shall at all times keep the 180 Vessel’s Classification Class fully up to date with the Classification 181 Society indicated in Box 10 and maintain all other 182 necessary certificates in force at all times. 183 (ii) New Class and Other Safety Requirements - In the 184 event of any improvement, structural changes or 185 new equipment becoming necessary for the 186 continued operation of the Vessel by reason of new 187 class requirements or by compulsory legislation, the Charterers shall ensure that the same are complied with and the time and costs of compliance shall be for the Charterers’ account. 188 costing (excluding the Charterers’ loss of time) 189 more than the percentage stated in Box 23, or if 190 Box 23 is left blank, 5 per cent. of the Vessel’s 191 insurance value as stated in Box 29, then the 192 extent, if any, to which the rate of hire shall be varied 193 and the ratio in which the cost of compliance shall 194 be shared between the parties concerned in order 195 to achieve a reasonable distribution thereof as 196 between the Owners and the Charterers having 197 regard, inter alia, to the length of the period 198 remaining under this Charter shall, in the absence 199 of agreement, be referred to the dispute resolution 200 method agreed in Clause 30. 201 (iii) Financial Security - The Charterers shall maintain 202 financial security or responsibility in respect of third 203 party liabilities as required by any government, 204 including federal, state or municipal or other division 205 or authority thereof, to enable the Vessel, without 206 penalty or charge, lawfully to enter, remain at, or 207 leave any port, place, territorial or contiguous 208 waters of any country, state or municipality in 209 performance of this Charter without any delay. This 210 obligation shall apply whether or not such 211 requirements have been lawfully imposed by such 212 government or division or authority thereof. 213 The Charterers shall make and maintain all arrange- 214 ments by bond or otherwise as may be necessary to 215 satisfy such requirements at the Charterers’ sole 216 expense and the Charterers shall indemnify the Owners 217 against all consequences whatsoever (including loss of 218 time) for any failure or inability to do so. 219 (b) Operation of the Vessel - The Charterers shall at 220 their own expense and by their own procurement man, 221 victual, navigate, operate, supply, fuel and, whenever 222 required, repair the Vessel during the Charter Period 223 and they shall pay all charges and expenses of every 224 kind and nature whatsoever incidental to their use and 225 operation of the Vessel under this Charter, including 226 annual flag State fees of the Flag State and any foreign general 227 municipality and/or state taxes. The Master, officers 228 and crew of the Vessel shall be the servants of the Charterers 229 for all purposes whatsoever, even if for any reason 230 appointed by the Owners. 231 Charterers shall comply with the regulations regarding 232 officers and crew in force in the country of the Vessel’s 233 flag or any other applicable law.
Copyright © 2001 BIMCO. All rights reserved. Any unauthorised copying, duplication, reproduction or distribution of this BIMCO SmartCon document will
constitute an infringement of BIMCO’s copyright. Explanatory notes are available from BIMCO at www.bimco.org.
First published in 1974 as BARECON A and B. Amalgamated and revised in 1989. Revised 2001.
PART II
BARECON 2001 Standard Bareboat Charter
234 (c) The Charterers shall keep the Owners and the 235 mortgagee(s) advised of the intended employment, 236 planned dry-docking and major repairs of the Vessel, 237 as reasonably required. 238 (d) Flag and Name of Vessel – During the Charter 239 Period, the Charterers shall have the liberty to paint the 240 Vessel in their own colours, install and display their 241 funnel insignia and fly their own house flag (with all fees, costs and expenses arising in relation thereto for the Charterers’ account). The 242 Charterers shall also have the liberty, with the Owners’ 243 consent, which shall not be unreasonably withheld, to 244 change the flag and/or the name of the Vessel during 245 the Charter Period (with all fees, costs and expenses arising in relation thereto for the Charterers’ account). Painting and re-painting, instalment 246 and re-instalment, registration and re-registration, if 247 required by the Owners, shall be at the Charterers’ 248 expense and time. 249 (e) Changes to the Vessel – Subject to Clause 10(a)(ii), 250 the Charterers shall make no structural changes in the 251 Vessel or changes in the machinery, boilers, appurten- 252 ances or spare parts thereof without in each instance 253 first securing the Owners’ approval thereof. If the Owners 254 so agree, the Charterers shall, if the Owners so require, 255 restore the Vessel to its former condition before the 256 termination of this Charter. 257 (f) Use of the Vessel’s Outfit, Equipment and 258 Appliances - The Charterers shall have the use of all 259 outfit, equipment, and appliances on board the Vessel 260 at the time of delivery, provided the same or their 261 substantial equivalent shall be returned to the Owners 262 on redelivery in the same good order and condition as 263 when received, ordinary wear and tear excepted. The 264 Charterers shall from time to time during the Charter 265 Period replace, renew or substitute such items of equipment as shall be so 266 damaged or worn as to be unfit for use. The Charterers 267 are to procure that all repairs to or replacement of any 268 damaged, worn or lost parts or equipment be effected 269 in such manner (both as regards workmanship and 270 quality of materials) as not to diminish the value of the 271 Vessel. Title of any equipment so replaced, renewed or substituted shall vest in and remain with the Owners. The Charterers have the right to fit additional 272 equipment at their expense and risk (provided that no permanent structural damage is caused to the Vessel by reason of such installation) and but the Charterers 273 shall, at their expenses, remove such equipment and make good any damage caused by the fitting or removal of such additional equipment before the Vessel is redelivered to the Owners. at the end of the period if 274 requested by the Owners. Any equipment including radio 275 equipment on hire on the Vessel at time of delivery shall 276 be kept and maintained by the Charterers and the 277 Charterers shall assume the obligations and liabilities 278 of the Owners under any lease contracts in connection 279 therewith and shall reimburse the Owners for all 280 expenses incurred in connection therewith, also for any 281 new equipment required in order to comply with radio 282 regulations. 283 (g) Periodical Dry-Docking - The Charterers shall dry- 284 dock the Vessel and clean and paint her underwater 285 parts whenever the same may be necessary, but not 286 less than once during the period stated in Box 19. or, if 287 Box 19 has been left blank, every sixty (60) calendar 288 months after delivery or such other period as may be 289 required by the Classification Society or flag State. 290 11. Hire (See Clause 36 (Charterhire and Advance Charterhire)) 291 (a) The Charterers shall pay hire due to the Owners 292 punctually in accordance with the terms of this Charter 293 in respect of which time shall be of the essence. 294 (b) The Charterers shall pay to the Owners for the hire 295 of the Vessel a lump sum in the amount indicated in 296 Box 22 which shall be payable not later than every thirty 297 (30) running days in advance, the first lump sum being 298 payable on the date and hour of the Vessel’s delivery to 299 the Charterers. Hire shall be paid continuously 300 throughout the Charter Period. 301 (c) Payment of hire shall be made in cash without 302 discount in the currency and in the manner indicated in 303 Box 25 and at the place mentioned in Box 26. 304 (d) Final payment of hire, if for a period of less than 305 thirty (30) running days, shall be calculated proportionally 306 according to the number of days and hours remaining 307 before redelivery and advance payment to be effected 308 accordingly. 309 (e) Should the Vessel be lost or missing, hire shall 310 cease from the date and time when she was lost or last 311 heard of. The date upon which the Vessel is to be treated 312 as lost or missing shall be ten (10) days after the Vessel 313 was last reported or when the Vessel is posted as 314 missing by Lloyd’s, whichever occurs first. Any hire paid 315 in advance to be adjusted accordingly. 316 (f) Any delay in payment of hire shall entitle the 317 Owners to interest at the rate per annum as agreed 318 in Box 24. If Box 24 has not been filled in, the three months 319 Interbank offered rate in London (LIBOR or its successor) 320 for the currency stated in Box 25, as quoted by the British 321 Bankers’ Association (BBA) on the date when the hire 322 fell due, increased by 2 per cent., shall apply. 323 (g) Payment of interest due under sub-clause 11(f) 324 shall be made within seven (7) running days of the date 325 of the Owners’ invoice specifying the amount payable 326 or, in the absence of an invoice, at the time of the next 327 hire payment date. 328 12. Mortgage (See Clause 64.3 (Assignment and Transfer)) 329 (only to apply if Box 28 has been appropriately filled in) 330 *) (a) The Owners warrant that they have not effected 331 any mortgage(s) of the Vessel and that they shall not 332 effect any mortgage(s) without the prior consent of the 333 Charterers, which shall not be unreasonably withheld. 334 *) (b) The Vessel chartered under this Charter is financed 335 by a mortgage according to the Financial Instrument. 336 The Charterers undertake to comply, and provide such 337 information and documents to enable the Owners to 338 comply, with all such instructions or directions in regard 339 to the employment, insurances, operation, repairs and 340 maintenance of the Vessel as laid down in the Financial 341 Instrument or as may be directed from time to time during
Copyright © 2001 BIMCO. All rights reserved. Any unauthorised copying, duplication, reproduction or distribution of this BIMCO SmartCon document will
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First published in 1974 as BARECON A and B. Amalgamated and revised in 1989. Revised 2001.
PART II
BARECON 2001 Standard Bareboat Charter
342 the currency of the Charter by the mortgagee(s) in 343 conformity with the Financial Instrument. The Charterers 344 confirm that, for this purpose, they have acquainted 345 themselves with all relevant terms, conditions and 346 provisions of the Financial Instrument and agree to 347 acknowledge this in writing in any form that may be 348 required by the mortgagee(s). The Owners warrant that 349 they have not effected any mortgage(s) other than stated 350 in Box 28 and that they shall not agree to any 351 amendment of the mortgage(s) referred to in Box 28 or 352 effect any other mortgage(s) without the prior consent 353 of the Charterers, which shall not be unreasonably 354 withheld. 355 *) (Optional, Clauses 12(a) and 12(b) are alternatives; 356 indicate alternative agreed in Box 28). 357 13. Insurance and Repairs (See also Clause 39 (Insurance)) 358 (a) Subject to Clause 39 (Insurance), dDuring the Charter Period the Vessel shall be kept 359 insured in accordance with Clause 39 (Insurance) by the Charterers at their expense against hull 360 and machinery, marine and (including blocking and trapping) war and Protection and Indemnity risks and freight, demurrage and defence risks 361 (and any risks against which it is compulsory to insure 362 for the operation of the Vessel, including but not limited to maintaining 363 financial security in accordance with sub-clause 364 10(a)(iii)) in such form as the Owners shall in writing 365 approve., which approval shall not be un-reasonably 366 withheld. Such insurances shall be arranged by the 367 Charterers to protect the interests of both the Owners 368 and the Charterers and the Owners’ Financiers mortgagee(s) (if any), and 369 The Charterers shall be at liberty to protect under such 370 insurances the interests of any managers they may 371 appoint provided such manager has entered into a manager’s undertaking in form and substance acceptable to the Owners and the Owners’ Financiers (if any). Insurance policies shall cover the Owners, the Owners’ Financiers (if any) and 372 the Charterers according to their respective interests. 373 Subject to the provisions of the agreed loss payable clauses, Financial Instrument, if 374 any, and the approval of the Owners and the insurers, 375 the Charterers shall effect all insured repairs and shall 376 undertake settlement and reimbursement from the 377 insurers of all costs in connection with such repairs as 378 well as insured charges, expenses and liabilities to the 379 extent of coverage under the insurances herein provided 380 for. 381 The Charterers also to remain responsible for and to 382 effect repairs and settlement of costs and expenses 383 incurred thereby in respect of all other repairs not 384 covered by the insurances and/or not exceeding any 385 possible franchise(s) or deductibles provided for in the 386 insurances. 387 All time used for repairs under the provisions of sub- 388 clause 13(a) and for repairs of latent defects according 389 to Clause 3(c) above, including any deviation, shall be 390 for the Charterers’ account. 391 (b) If the conditions of the above insurances permit 392 additional insurance to be placed by the parties, such 393 cover shall be limited to the amount for each party set 394 out in Box 30 and Box 31, respectively. The Owners or 395 the Charterers as the case may be shall immediately 396 furnish the other partyOwners with particulars of any additional 397 insurance effected, including copies of any cover notes 398 or policies and the written consent of the insurers of 399 any such required insurance in any case where the 400 consent of such insurers is necessary. The Charterers hereby undertake that any additional insurances that they arrange now or in the future will always be compliant with the terms of the underlying hull and machinery policies. 401 (c) The Charterers shall upon the request of the 402 Owners, provide information and promptly execute such 403 documents as may be required to enable the Owners to 404 comply with the insurance provisions of the Financial 405 Instrument (if any). 406 (d) Subject to the provisions of the Financial Instru- 407 ments and Clause 41.13 (Termination, Redelivery and Total Loss), if any, should the Vessel become a Total Loss, an actual, 408 constructive, compromised or agreed total loss under 409 the insurances required under sub-clause 13(a), all 410 insurance payments for such loss shall be paid to the 411 Owners (or, if applicable, the Owners’ Financiers in accordance with the terms of the relevant loss payable clauses). who shall distribute the moneys between the 412 Owners and the Charterers according to their respective 413 interests. The Charterers undertake to notify the Owners and the Owners’ Financiers (if any), 414 and the mortgagee(s), if any, of any occurrences in 415 consequence of which the Vessel is likely to become a 416 tTotal lLoss. as defined in this Clause. 417 (e) The Owners shall upon the request of the 418 Charterers, promptly execute such documents as may 419 be required to enable the Charterers to abandon the 420 Vessel to insurers and claim a constructive total loss. 421 (f) For the purpose of insurance coverage against hull 422 and machinery and war risks under the provisions of 423 sub-clause 13(a), the value of the Vessel is the sum 424 indicated in Clause 39 (Insurance).Box 29. 425 14. Insurance, Repairs and Classification 426 (Optional, only to apply if expressly agreed and stated 427 in Box 29, in which event Clause 13 shall be considered 428 deleted). 429 (a) During the Charter Period the Vessel shall be kept 430 insured by the Owners at their expense against hull and 431 machinery and war risks under the form of policy or 432 policies attached hereto. The Owners and/or insurers 433 shall not have any right of recovery or subrogation 434 against the Charterers on account of loss of or any 435 damage to the Vessel or her machinery or appurt- 436 enances covered by such insurance, or on account of 437 payments made to discharge claims against or liabilities 438 of the Vessel or the Owners covered by such insurance. 439 Insurance policies shall cover the Owners and the
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First published in 1974 as BARECON A and B. Amalgamated and revised in 1989. Revised 2001.
PART II
BARECON 2001 Standard Bareboat Charter
440 Charterers according to their respective interests. 441 (b) During the Charter Period the Vessel shall be kept 442 insured by the Charterers at their expense against 443 Protection and Indemnity risks (and any risks against 444 which it is compulsory to insure for the operation of the 445 Vessel, including maintaining financial security in 446 accordance with sub-clause 10(a)(iii)) in such form as 447 the Owners shall in writing approve which approval shall 448 not be unreasonably withheld. 449 (c) In the event that any act or negligence of the 450 Charterers shall vitiate any of the insurance herein 451 provided, the Charterers shall pay to the Owners all 452 losses and indemnify the Owners against all claims and 453 demands which would otherwise have been covered by 454 such insurance. 455 (d) The Charterers shall, subject to the approval of the 456 Owners or Owners’ Underwriters, effect all insured 457 repairs, and the Charterers shall undertake settlement 458 of all miscellaneous expenses in connection with such 459 repairs as well as all insured charges, expenses and 460 liabilities, to the extent of coverage under the insurances 461 provided for under the provisions of sub-clause 14(a). 462 The Charterers to be secured reimbursement through 463 the Owners’ Underwriters for such expenditures upon 464 presentation of accounts. 465 (e) The Charterers to remain responsible for and to 466 effect repairs and settlement of costs and expenses 467 incurred thereby in respect of all other repairs not 468 covered by the insurances and/or not exceeding any 469 possible franchise(s) or deductibles provided for in the 470 insurances. 471 (f) All time used for repairs under the provisions of 472 sub-clauses 14(d) and 14(e) and for repairs of latent 473 defects according to Clause 3 above, including any 474 deviation, shall be for the Charterers’ account and shall 475 form part of the Charter Period. 476 The Owners shall not be responsible for any expenses 477 as are incident to the use and operation of the Vessel 478 for such time as may be required to make such repairs. 479 (g) If the conditions of the above insurances permit 480 additional insurance to be placed by the parties such 481 cover shall be limited to the amount for each party set 482 out in Box 30 and Box 31, respectively. The Owners or 483 the Charterers as the case may be shall immediately 484 furnish the other party with particulars of any additional 485 insurance effected, including copies of any cover notes 486 or policies and the written consent of the insurers of 487 any such required insurance in any case where the 488 consent of such insurers is necessary. 489 (h) Should the Vessel become an actual, constructive, 490 compromised or agreed total loss under the insurances 491 required under sub-clause 14(a), all insurance payments 492 for such loss shall be paid to the Owners, who shall 493 distribute the moneys between themselves and the 494 Charterers according to their respective interests. 495 (i) If the Vessel becomes an actual, constructive, 496 compromised or agreed total loss under the insurances 497 arranged by the Owners in accordance with sub-clause 498 14(a), this Charter shall terminate as of the date of such 499 loss. 500 (j) The Charterers shall upon the request of the 501 Owners, promptly execute such documents as may be 502 required to enable the Owners to abandon the Vessel 503 to the insurers and claim a constructive total loss. 504 (k) For the purpose of insurance coverage against hull 505 and machinery and war risks under the provisions of 506 sub-clause 14(a), the value of the Vessel is the sum 507 indicated in Box 29. 508 (l) Notwithstanding anything contained in sub-clause 509 10(a), it is agreed that under the provisions of Clause 510 14, if applicable, the Owners shall keep the Vessel’s 511 Class fully up to date with the Classification Society 512 indicated in Box 10 and maintain all other necessary 513 certificates in force at all times. 514 15. Redelivery (See Clause 41.6 (Termination, Redelivery and Total Loss)) 515 At the expiration of the Charter Period the Vessel shall 516 be redelivered by the Charterers to the Owners at a 517 safe and ice-free port or place as indicated in Box 16, in 518 such ready safe berth as the Owners may direct. The 519 Charterers shall give the Owners not less than thirty 520 (30) running days’ preliminary notice of expected date, 521 range of ports of redelivery or port or place of redelivery 522 and not less than fourteen (14) running days’ definite 523 notice of expected date and port or place of redelivery. 524 Any changes thereafter in the Vessel’s position shall be 525 notified immediately to the Owners. 526 The Charterers warrant that they will not permit the 527 Vessel to commence a voyage (including any preceding 528 ballast voyage) which cannot reasonably be expected 529 to be completed in time to allow redelivery of the Vessel 530 within the Charter Period. Notwithstanding the above, 531 should the Charterers fail to redeliver the Vessel within 532 The Charter Period, the Charterers shall pay the daily 533 equivalent to the rate of hire stated in Box 22 plus 10 534 per cent. or to the market rate, whichever is the higher, 535 for the number of days by which the Charter Period is 536 exceeded. All other terms, conditions and provisions of 537 this Charter shall continue to apply. 538 Subject to the provisions of Clause 10, the Vessel shall 539 be redelivered to the Owners in the same or as good 540 structure, state, condition and class as that in which she 541 was delivered, fair wear and tear not affecting class 542 excepted. 543 The Vessel upon redelivery shall have her survey cycles 544 up to date and trading and class certificates valid for at 545 least the number of months agreed in Box 17. 546 16. Non-Lien 547 Save for Permitted Security Interest (if any), The Charterers will not suffer, nor permit to be continued, 548 any lien or encumbrance incurred by them or their 549 agents, which might have priority over the title and 550 interest of the Owners in the Vessel. The Charterers 551 further agree to fasten to the Vessel in a conspicuous 552 place and to keep so fastened during the Charter Period 553 a notice reading as follows: 554 “This Vessel is the property of (name of Owners). It is 555 under charter to (name of Charterers) and by the terms 556 of the Charter Party neither the Charterers nor the 557 Master have any right, power or authority to create, incur 558 or permit to be imposed on the Vessel any lien 559 whatsoever.” or a notice in such analogous form as reasonably required by any Mortgagee(s) (if any).
Copyright © 2001 BIMCO. All rights reserved. Any unauthorised copying, duplication, reproduction or distribution of this BIMCO SmartCon document will
constitute an infringement of BIMCO’s copyright. Explanatory notes are available from BIMCO at www.bimco.org.
First published in 1974 as BARECON A and B. Amalgamated and revised in 1989. Revised 2001.
PART II
BARECON 2001 Standard Bareboat Charter
560 17. Indemnity (See Clauses 38.3 (Possession of Vessel), 39.16 (Insurance), 39.17 (Insurance), 39.18 (Insurance), 41.4 (Termination, Redelivery and Total Loss), 54 (Indemnities) and 56.4 (Increased Costs)) 561 (a) The Charterers shall indemnify the Owners against 562 any loss, damage or expense incurred by the Owners 563 arising out of or in relation to the operation of the Vessel 564 by the Charterers, and against any lien of whatsoever 565 nature arising out of an event occurring during the 566 Charter Period. If the Vessel be arrested or otherwise 567 detained by reason of claims or liens arising out of her 568 operation hereunder by the Charterers, the Charterers 569 shall at their own expense take all reasonable steps to 570 secure that within a reasonable time the Vessel is 571 released, including the provision of bail. 572 Without prejudice to the generality of the foregoing, the 573 Charterers agree to indemnify the Owners against all 574 consequences or liabilities arising from the Master, 575 officers or agents signing Bills of Lading or other 576 documents. 577 (b) If the Vessel be arrested or otherwise detained by 578 reason of a claim or claims against the Owners, the 579 Owners shall at their own expense take all reasonable 580 steps to secure that within a reasonable time the Vessel 581 is released, including the provision of bail. 582 In such circumstances the Owners shall indemnify the 583 Charterers against any loss, damage or expense 584 incurred by the Charterers (including hire paid under 585 this Charter) as a direct consequence of such arrest or 586 detention. 587 18. Lien 588 The Owners to shall have a lien upon all cargoes, sub-hires 589 and sub-freights belonging or due to the Charterers or 590 any sub-charterers and any Bill of Lading freight for all 591 claims under this Charter., and the Charterers to have a 592 lien on the Vessel for all moneys paid in advance and 593 not earned. 594 19. Salvage 595 All salvage and towage performed by the Vessel shall 596 be for the Charterers’ benefit and the cost of repairing 597 damage occasioned thereby shall be borne by the 598 Charterers. 599 20. Wreck Removal 600 In the event of the Vessel becoming a wreck or 601 obstruction to navigation the Charterers shall indemnify 602 the Owners against any sums whatsoever which the 603 Owners shall become liable to pay and shall pay in 604 consequence of the Vessel becoming a wreck or 605 obstruction to navigation. 606 21. General Average 607 The Owners shall not contribute to General Average. 608 22. Assignment, Sub-Charter and Sale (See Clause 64 (Assingment and Transfer)) 609 (a) The Charterers shall not assign this Charter nor 610 sub-charter the Vessel on a bareboat basis except with 611 the prior consent in writing of the Owners, which shall 612 not be unreasonably withheld, and subject to such terms 613 and conditions as the Owners shall approve. 614 (b) The Owners shall not sell the Vessel during the 615 currency of this Charter except with the prior written 616 consent of the Charterers, which shall not be unreason- 617 ably withheld, and subject to the buyer accepting an 618 assignment of this Charter. 619 23. Contracts of Carriage 620 *) (a) The Charterers are to procure that all documents 621 issued during the Charter Period evidencing the terms 622 and conditions agreed in respect of carriage of goods 623 shall contain a paramount clause incorporating any 624 legislation relating to carrier’s liability for cargo 625 compulsorily applicable in the trade; if no such legislation 626 exists, the documents shall incorporate the Hague-Visby 627 Rules. The documents shall also contain the New Jason 628 Clause and the Both-to-Blame Collision Clause. 629 *) (b) The Charterers are to procure that all passenger 630 tickets issued during the Charter Period for the carriage 631 of passengers and their luggage under this Charter shall 632 contain a paramount clause incorporating any legislation 633 relating to carrier’s liability for passengers and their 634 luggage compulsorily applicable in the trade; if no such 635 legislation exists, the passenger tickets shall incorporate 636 the Athens Convention Relating to the Carriage of 637 Passengers and their Luggage by Sea, 1974, and any 638 protocol thereto. 639 *) Delete as applicable. 640 24. Bank Corporate Guarantee 641 (Optional, only to apply if Box 27 filled in) 642 The Charterers undertake to furnish, on or about the date of this Charter, before delivery of 643 the Vessel, a first class bank guarantee or bond in the 644 sum and at the place as indicated in Box 27 as a corporate guarantee from the Guarantor as guarantee and the other Security Documents (if not already earlier entered into) 645 for full performance of their obligations under this 646 Charter. 647 25. Requisition/Acquisition 648 (a) Subject to the provisions of the Financial Instruments (if any) and the General Assignment, Iin the event of the Requisition for Hire of the Vessel 649 by any governmental or other competent authority 650 (hereinafter referred to as “Requisition for Hire”) 651 irrespective of the date during the Charter Period when 652 “Requisition for Hire” may occur and irrespective of the 653 length thereof and whether or not it be for an indefinite 654 or a limited period of time, and irrespective of whether it 655 may or will remain in force for the remainder of the 656 Charter Period, this Charter shall not be deemed thereby 657 or thereupon to be frustrated or otherwise terminated 658 and the Charterers shall continue to pay the stipulated 659 hire in the manner provided by this Charter until the time 660 when the Charter would have terminated pursuant to 661 any of the provisions hereof. always provided however 662 that in the event of “Requisition for Hire” any Requisition 663 Hire or compensation received or receivable by the 664 Owners shall be payable to the Charterers during the 665 remainder of the Charter Period or the period of the 666 “Requisition for Hire” whichever be the shorter. 667 (b) Subject to the other provisions of this Charter and the Financial Instruments (if any) Iin the event of the Owners being deprived of their 668 ownership in the Vessel by any Compulsory Acquisition 669 of the Vessel or requisition for title by any governmental 670 or other competent authority (hereinafter referred to as 671 “Compulsory Acquisition”), then, irrespective of the date
Copyright © 2001 BIMCO. All rights reserved. Any unauthorised copying, duplication, reproduction or distribution of this BIMCO SmartCon document will
constitute an infringement of BIMCO’s copyright. Explanatory notes are available from BIMCO at www.bimco.org.
First published in 1974 as BARECON A and B. Amalgamated and revised in 1989. Revised 2001.
PART II
BARECON 2001 Standard Bareboat Charter
672 during the Charter Period when “Compulsory Acqui- 673 sition” may occur, this Charter shall be deemed 674 terminated as of the date of such “Compulsory 675 Acquisition”. In such event Charter Hire to be considered 676 as earned and to shall be paid up to the date and time of 677 such “Compulsory Acquisition”. 678 26. War 679 (a) For the purpose of this Clause, the words “War 680 Risks” shall include any war (whether actual or 681 threatened), act of war, civil war, hostilities, revolution, 682 rebellion, civil commotion, warlike operations, the laying 683 of mines (whether actual or reported), acts of piracy, 684 acts of terrorists, acts of hostility or malicious damage, 685 blockades (whether imposed against all vessels or 686 imposed selectively against vessels of certain flags or 687 ownership, or against certain cargoes or crews or 688 otherwise howsoever), by any person, body, terrorist or 689 political group, or the Government of any state 690 whatsoever, which may be dangerous or are likely to be 691 or to become dangerous to the Vessel, her cargo, crew 692 or other persons on board the Vessel. 693 (b) The Vessel, unless the written consent of the 694 Owners be first obtained, unless trading within the limits and safe places in accordance with The Approved Sub-charter and the Charterer has effected the additional premium required by the Vessels insurers and prior notice has been given to the Owners about the details of the itineary and the additional insurances of the Vessel, shall not continue to or go 695 through any port, place, area or zone (whether of land 696 or sea), or any waterway or canal, where it reasonably 697 appears that the Vessel, her cargo, crew or other 698 persons on board the Vessel, in the reasonable 699 judgement of the Owners, may be, or are likely to be, 700 exposed to War Risks. Should the Vessel be within any 701 such place as aforesaid, which only becomes danger- 702 ous, or is likely to be or to become dangerous, after her 703 entry into it, the Owners shall have the right to require 704 the Vessel to leave such area. 705 (c) The Vessel shall not load contraband cargo, or to 706 pass through any blockade, whether such blockade be 707 imposed on all vessels, or is imposed selectively in any 708 way whatsoever against vessels of certain flags or 709 ownership, or against certain cargoes or crews or 710 otherwise howsoever, or to proceed to an area where 711 she shall be subject, or is likely to be subject to 712 a belligerent’s right of search and/or confiscation. 713 (d) If the insurers of the war risks insurance, when 714 Clause 14 is applicable, should require payment of 715 premiums and/or calls because, pursuant to the 716 Charterers’ orders, the Vessel is within, or is due to enter 717 and remain within, any area or areas which are specified 718 by such insurers as being subject to additional premiums 719 because of War Risks, then such premiums and/or calls 720 shall be reimbursed by the Charterers to the Owners at 721 the same time as the next payment of hire is due. 722 (e) The Charterers shall have the liberty: 723 (i) to comply with all orders, directions, recommend- 724 ations or advice as to departure, arrival, routes, 725 sailing in convoy, ports of call, stoppages, 726 destinations, discharge of cargo, delivery, or in any 727 other way whatsoever, which are given by the 728 Government of the Nation under whose flag the 729 Vessel sails, or any other Government, body or 730 group whatsoever acting with the power to compel 731 compliance with their orders or directions; 732 (ii) to comply with the orders, directions or recom- 733 mendations of any war risks underwriters who have 734 the authority to give the same under the terms of 735 the war risks insurance; 736 (iii) to comply with the terms of any resolution of the 737 Security Council of the United Nations, any 738 directives of the European Community, the effective 739 orders of any other Supranational body which has 740 the right to issue and give the same, and with 741 national laws aimed at enforcing the same to which 742 the Owners are subject, and to obey the orders 743 and directions of those who are charged with their 744 enforcement. 745 (f) In the event of outbreak of war (whether there be a 746 declaration of war or not) (i) between any two or more 747 of the following countries: the United States of America; 748 Russia; the United Kingdom; France; and the People’s 749 Republic of China, (ii) between any two or more of the 750 countries stated in Box 36, both the Owners and the 751 Charterers shall have the right to cancel this Charter, 752 whereupon the Charterers shall redeliver the Vessel to 753 the Owners in accordance with Clause 15, if the Vessel 754 has cargo on board after discharge thereof at 755 destination, or if debarred under this Clause from 756 reaching or entering it at a near, open and safe port as 757 directed by the Owners, or if the Vessel has no cargo 758 on board, at the port at which the Vessel then is or if at 759 sea at a near, open and safe port as directed by the 760 Owners. In all cases hire shall continue to be paid in 761 accordance with Clause 11 and except as aforesaid all 762 other provisions of this Charter shall apply until 763 redelivery the end of the Charter Period. 764 27. Commission 765 The Owners to pay a commission at the rate indicated 766 in Box 33 to the Brokers named in Box 33 on any hire 767 paid under the Charter. If no rate is indicated in Box 33, 768 the commission to be paid by the Owners shall cover 769 the actual expenses of the Brokers and a reasonable 770 fee for their work. 771 If the full hire is not paid owing to breach of the Charter 772 by either of the parties the party liable therefor shall 773 indemnify the Brokers against their loss of commission. 774 Should the parties agree to cancel the Charter, the 775 Owners shall indemnify the Brokers against any loss of 776 commission but in such case the commission shall not 777 exceed the brokerage on one year’s hire. 778 28. Termination (See Clauses 41 (Termination, Redelivery and Total Loss) and 49 (Termination Events)) 779 (a) Charterers’ Default 780 The Owners shall be entitled to withdraw the Vessel from 781 the service of the Charterers and terminate the Charter 782 with immediate effect by written notice to the Charterers if: 783 (i) the Charterers fail to pay hire in accordance with 784 Clause 11. However, where there is a failure to 785 make punctual payment of hire due to oversight, 786 negligence, errors or omissions on the part of the
Copyright © 2001 BIMCO. All rights reserved. Any unauthorised copying, duplication, reproduction or distribution of this BIMCO SmartCon document will
constitute an infringement of BIMCO’s copyright. Explanatory notes are available from BIMCO at www.bimco.org.
First published in 1974 as BARECON A and B. Amalgamated and revised in 1989. Revised 2001.
PART II
BARECON 2001 Standard Bareboat Charter
787 Charterers or their bankers, the Owners shall give 788 the Charterers written notice of the number of clear 789 banking days stated in Box 34 (as recognised at 790 the agreed place of payment) in which to rectify 791 the failure, and when so rectified within such 792 number of days following the Owners’ notice, the 793 payment shall stand as regular and punctual. 794 Failure by the Charterers to pay hire within the 795 number of days stated in Box 34 of their receiving 796 the Owners’ notice as provided herein, shall entitle 797 the Owners to withdraw the Vessel from the service 798 of the Charterers and terminate the Charter without 799 further notice; 800 (ii) the Charterers fail to comply with the requirements of: 801 (1) Clause 6 (Trading Restrictions) 802 (2) Clause 13(a) (Insurance and Repairs) 803 provided that the Owners shall have the option, by 804 written notice to the Charterers, to give the 805 Charterers a specified number of days grace within 806 which to rectify the failure without prejudice to the 807 Owners’ right to withdraw and terminate under this 808 Clause if the Charterers fail to comply with such 809 notice; 810 (iii) the Charterers fail to rectify any failure to comply 811 with the requirements of sub-clause 10(a)(i) 812 (Maintenance and Repairs) as soon as practically 813 possible after the Owners have requested them in 814 writing so to do and in any event so that the Vessel’s 815 insurance cover is not prejudiced. 816 (b) Owners’ Default 817 If the Owners shall by any act or omission be in breach 818 of their obligations under this Charter to the extent that 819 the Charterers are deprived of the use of the Vessel 820 and such breach continues for a period of fourteen (14) 821 running days after written notice thereof has been given 822 by the Charterers to the Owners, the Charterers shall 823 be entitled to terminate this Charter with immediate effect 824 by written notice to the Owners. 825 (c) Loss of Vessel 826 This Charter shall be deemed to be terminated if the 827 Vessel becomes a total loss or is declared as a 828 constructive or compromised or arranged total loss. For 829 the purpose of this sub-clause, the Vessel shall not be 830 deemed to be lost unless she has either become an 831 actual total loss or agreement has been reached with 832 her underwriters in respect of her constructive, 833 compromised or arranged total loss or if such agreement 834 with her underwriters is not reached it is adjudged by a 835 competent tribunal that a constructive loss of the Vessel 836 has occurred. 837 (d) Either party shall be entitled to terminate this 838 Charter with immediate effect by written notice to the 839 other party in the event of an order being made or 840 resolution passed for the winding up, dissolution, 841 liquidation or bankruptcy of the other party (otherwise 842 than for the purpose of reconstruction or amalgamation) 843 or if a receiver is appointed, or if it suspends payment, 844 ceases to carry on business or makes any special 845 arrangement or composition with its creditors. 846 (e) The termination of this Charter shall be without 847 prejudice to all rights accrued due between the parties 848 prior to the date of termination and to any claim that 849 either party might have. 850 29. Repossession (See also Clauses 41 (Termination, Redelivery and Total Loss) and 49 (Termination Events)) In the event the Vessel Is due for redelivery pursuant to Clause 41.6 (Termination, Redelivery and Total Loss) or Owners have made a request for redelivery of the Vessel in accordance with the applicable provisions of Clause 41.10 (Termination, Redelivery and Total Loss), 851 In the event of the termination of this Charter in 852 accordance with the applicable provisions of Clause 28, 853 the Owners shall have the right to repossess the Vessel 854 from the Charterers at her current or next port of call, or 855 at a port or place convenient to them without hindrance 856 or interference by the Charterers, courts or local 857 authorities. Pending physical repossession of the Vessel 858 in accordance with this Clause 29, the Charterers shall 859 hold the Vessel as gratuitous bailee only to the Owners and the Charterers shall procure that the master and crew follow the directions of the Owners (but always provided that the safety of the Vessel and its crew shall not be materially and adversely compromised).. 860 The Owners shall arrange for an authorised represent- 861 ative to board the Vessel as soon as reasonably 862 practicable following the termination of the Charter. The 863 Vessel shall be deemed to be repossessed by the 864 Owners from the Charterers upon the boarding of the 865 Vessel by the Owners’ representative. All arrangements 866 and expenses relating to the settling of wages, 867 disembarkation and repatriation of the Charterers’ 868 Master, officers and crew shall be the sole responsibility 869 of the Charterers. 870 30. Dispute Resolution (See Clause 66 (Governing Law and Enforcement)) 871 *) (a) This Contract shall be governed by and construed 872 in accordance with English law and any dispute arising 873 out of or in connection with this Contract shall be referred 874 to arbitration in London in accordance with the Arbitration 875 Act 1996 or any statutory modification or re-enactment 876 thereof save to the extent necessary to give effect to 877 the provisions of this Clause. 878 The arbitration shall be conducted in accordance with 879 the London Maritime Arbitrators Association (LMAA) 880 Terms current at the time when the arbitration proceed- 881 ings are commenced. 882 The reference shall be to three arbitrators. A party 883 wishing to refer a dispute to arbitration shall appoint its 884 arbitrator and send notice of such appointment in writing 885 to the other party requiring the other party to appoint its 886 own arbitrator within 14 calendar days of that notice and 887 stating that it will appoint its arbitrator as sole arbitrator 888 unless the other party appoints its own arbitrator and 889 gives notice that it has done so within the 14 days 890 specified. If the other party does not appoint its own 891 arbitrator and give notice that it has done so within the 892 14 days specified, the party referring a dispute to 893 arbitration may, without the requirement of any further 894 prior notice to the other party, appoint its arbitrator as 895 sole arbitrator and shall advise the other party 896 accordingly. The award of a sole arbitrator shall be 897 binding on both parties as if he had been appointed by 898 agreement. 899 Nothing herein shall prevent the parties agreeing in
Copyright © 2001 BIMCO. All rights reserved. Any unauthorised copying, duplication, reproduction or distribution of this BIMCO SmartCon document will
constitute an infringement of BIMCO’s copyright. Explanatory notes are available from BIMCO at www.bimco.org.
First published in 1974 as BARECON A and B. Amalgamated and revised in 1989. Revised 2001.
PART II
BARECON 2001 Standard Bareboat Charter
900 writing to vary these provisions to provide for the 901 appointment of a sole arbitrator. 902 In cases where neither the claim nor any counterclaim 903 exceeds the sum of US$50,000 (or such other sum as 904 the parties may agree) the arbitration shall be conducted 905 in accordance with the LMAA Small Claims Procedure 906 current at the time when the arbitration proceedings are 907 commenced. 908 *) (b) This Contract shall be governed by and construed 909 in accordance with Title 9 of the United States Code 910 and the Maritime Law of the United States and any 911 dispute arising out of or in connection with this Contract 912 shall be referred to three persons at New York, one to 913 be appointed by each of the parties hereto, and the third 914 by the two so chosen; their decision or that of any two 915 of them shall be final, and for the purposes of enforcing 916 any award, judgement may be entered on an award by 917 any court of competent jurisdiction. The proceedings 918 shall be conducted in accordance with the rules of the 919 Society of Maritime Arbitrators, Inc. 920 In cases where neither the claim nor any counterclaim 921 exceeds the sum of US$50,000 (or such other sum as 922 the parties may agree) the arbitration shall be conducted 923 in accordance with the Shortened Arbitration Procedure 924 of the Society of Maritime Arbitrators, Inc. current at 925 the time when the arbitration proceedings are commenced. 926 *) (c) This Contract shall be governed by and construed 927 in accordance with the laws of the place mutually agreed 928 by the parties and any dispute arising out of or in 929 connection with this Contract shall be referred to 930 arbitration at a mutually agreed place, subject to the 931 procedures applicable there. 932 (d) Notwithstanding (a), (b) or (c) above, the parties 933 may agree at any time to refer to mediation any 934 difference and/or dispute arising out of or in connection 935 with this Contract. 936 In the case of a dispute in respect of which arbitration 937 has been commenced under (a), (b) or (c) above, the 938 following shall apply:- 939 (i) Either party may at any time and from time to time 940 elect to refer the dispute or part of the dispute to 941 mediation by service on the other party of a written 942 notice (the “Mediation Notice”) calling on the other 943 party to agree to mediation. 944 (ii) The other party shall thereupon within 14 calendar 945 days of receipt of the Mediation Notice confirm that 946 they agree to mediation, in which case the parties 947 shall thereafter agree a mediator within a further 948 14 calendar days, failing which on the application 949 of either party a mediator will be appointed promptly 950 by the Arbitration Tribunal (“the Tribunal”) or such 951 person as the Tribunal may designate for that 952 purpose. The mediation shall be conducted in such 953 place and in accordance with such procedure and 954 on such terms as the parties may agree or, in the 955 event of disagreement, as may be set by the 956 mediator. 957 (iii) If the other party does not agree to mediate, that 958 fact may be brought to the attention of the Tribunal 959 and may be taken into account by the Tribunal when 960 allocating the costs of the arbitration as between 961 the parties. 962 (iv) The mediation shall not affect the right of either 963 party to seek such relief or take such steps as it 964 considers necessary to protect its interest. 965 (v) Either party may advise the Tribunal that they have 966 agreed to mediation. The arbitration procedure shall 967 continue during the conduct of the mediation but 968 the Tribunal may take the mediation timetable into 969 account when setting the timetable for steps in the 970 arbitration. 971 (vi) Unless otherwise agreed or specified in the 972 mediation terms, each party shall bear its own costs 973 incurred in the mediation and the parties shall share 974 equally the mediator’s costs and expenses. 975 (vii) The mediation process shall be without prejudice 976 and confidential and no information or documents 977 disclosed during it shall be revealed to the Tribunal 978 except to the extent that they are disclosable under 979 the law and procedure governing the arbitration. 980 (Note: The parties should be aware that the mediation 981 process may not necessarily interrupt time limits.) 982 (e) If Box 35 in Part I is not appropriately filled in, sub-clause 983 30(a) of this Clause shall apply. Sub-clause 30(d) shall 984 apply in all cases. 985 *) Sub-clauses 30(a), 30(b) and 30(c) are alternatives; 986 indicate alternative agreed in Box 35. 987 31. Notices (See Clause 44 (Notices)) 988 (a) Any notice to be given by either party to the other 989 party shall be in writing and may be sent by fax, telex, 990 registered or recorded mail or by personal service. 991 (b) The address of the Parties for service of such 992 communication shall be as stated in Boxes 3 and 4 993 respectively.
Copyright © 2001 BIMCO. All rights reserved. Any unauthorised copying, duplication, reproduction or distribution of this BIMCO SmartCon document will
constitute an infringement of BIMCO’s copyright. Explanatory notes are available from BIMCO at www.bimco.org.
First published in 1974 as BARECON A and B. Amalgamated and revised in 1989. Revised 2001.
PART III
PROVISIONS TO APPLY FOR NEWBUILDING VESSELS ONLY
(Optional, only to apply if expressly agreed and stated in Box 37)
1. Specifications and Building Contract 2 (a) The Vessel shall be constructed in accordance with 3 the Building Contract (hereafter called “the Building 4 Contract”) as annexed to this Charter, made between the 5 Builders and the Owners and in accordance with the 6 specifications and plans annexed thereto, such Building 7 Contract, specifications and plans having been counter- 8 signed as approved by the Charterers. 9 (b) No change shall be made in the Building Contract or 10 in the specifications or plans of the Vessel as approved by 11 the Charterers as aforesaid, without the Charterers’ 12 consent. 13 (c) The Charterers shall have the right to send their 14 representative to the Builders’ Yard to inspect the Vessel 15 during the course of her construction to satisfy themselves 16 that construction is in accordance with such approved 17 specifications and plans as referred to under sub-clause 18 (a) of this Clause. 19 (d) The Vessel shall be built in accordance with the 20 Building Contract and shall be of the description set out 21 therein. Subject to the provisions of sub-clause 2(c)(ii) 22 hereunder, the Charterers shall be bound to accept the 23 Vessel from the Owners, completed and constructed in 24 accordance with the Building Contract, on the date of 25 delivery by the Builders. The Charterers undertake that 26 having accepted the Vessel they will not thereafter raise 27 any claims against the Owners in respect of the Vessel’s 28 performance or specification or defects, if any. 29 Nevertheless, in respect of any repairs, replacements or 30 defects which appear within the first 12 months from 31 delivery by the Builders, the Owners shall endeavour to 32 compel the Builders to repair, replace or remedy any defects 33 or to recover from the Builders any expenditure incurred in 34 carrying out such repairs, replacements or remedies. 35 However, the Owners’ liability to the Charterers shall be 36 limited to the extent the Owners have a valid claim against 37 the Builders under the guarantee clause of the Building 38 Contract (a copy whereof has been supplied to the 39 Charterers). The Charterers shall be bound to accept such 40 sums as the Owners are reasonably able to recover under 41 this Clause and shall make no further claim on the Owners 42 for the difference between the amount(s) so recovered and 43 the actual expenditure on repairs, replacement or 44 remedying defects or for any loss of time incurred. 45 Any liquidated damages for physical defects or deficiencies 46 shall accrue to the account of the party stated in Box 41(a) 47 or if not filled in shall be shared equally between the parties. 48 The costs of pursuing a claim or claims against the Builders 49 under this Clause (including any liability to the Builders) 50 shall be borne by the party stated in Box 41(b) or if not 51 filled in shall be shared equally between the parties. 52 2. Time and Place of Delivery 53 (a) Subject to the Vessel having completed her 54 acceptance trials including trials of cargo equipment in 55 accordance with the Building Contract and specifications 56 to the satisfaction of the Charterers, the Owners shall give 57 and the Charterers shall take delivery of the Vessel afloat 58 when ready for delivery and properly documented at the 59 Builders’ Yard or some other safe and readily accessible 60 dock, wharf or place as may be agreed between the parties 61 hereto and the Builders. Under the Building Contract the 62 Builders have estimated that the Vessel will be ready for 63 delivery to the Owners as therein provided but the delivery 64 date for the purpose of this Charter shall be the date when 65 the Vessel is in fact ready for delivery by the Builders after 66 completion of trials whether that be before or after as 67 indicated in the Building Contract. The Charterers shall not 68 be entitled to refuse acceptance of delivery of the Vessel 69 and upon and after such acceptance, subject to Clause 70 1(d), the Charterers shall not be entitled to make any claim 71 against the Owners in respect of any conditions, 72 representations or warranties, whether express or implied, 73 as to the seaworthiness of the Vessel or in respect of delay 74 in delivery. 75 (b) If for any reason other than a default by the Owners 76 under the Building Contract, the Builders become entitled 77 under that Contract not to deliver the Vessel to the Owners, 78 the Owners shall upon giving to the Charterers written 79 notice of Builders becoming so entitled, be excused from 80 giving delivery of the Vessel to the Charterers and upon 81 receipt of such notice by the Charterers this Charter shall 82 cease to have effect. 83 (c) If for any reason the Owners become entitled under 84 the Building Contract to reject the Vessel the Owners shall, 85 before exercising such right of rejection, consult the 86 Charterers and thereupon 87 (i) if the Charterers do not wish to take delivery of the Vessel 88 they shall inform the Owners within seven (7) running days 89 by notice in writing and upon receipt by the Owners of such 90 notice this Charter shall cease to have effect; or 91 (ii) if the Charterers wish to take delivery of the Vessel 92 they may by notice in writing within seven (7) running days 93 require the Owners to negotiate with the Builders as to the 94 terms on which delivery should be taken and/or refrain from 95 exercising their right to rejection and upon receipt of such 96 notice the Owners shall commence such negotiations and/ 97 or take delivery of the Vessel from the Builders and deliver 98 her to the Charterers; 99 (iii) in no circumstances shall the Charterers be entitled to 100 reject the Vessel unless the Owners are able to reject the 101 Vessel from the Builders; 102 (iv) if this Charter terminates under sub-clause (b) or (c) of 103 this Clause, the Owners shall thereafter not be liable to the 104 Charterers for any claim under or arising out of this Charter 105 or its termination. 106 (d) Any liquidated damages for delay in delivery under the 107 Building Contract and any costs incurred in pursuing a claim 108 therefor shall accrue to the account of the party stated in 109 Box 41(c) or if not filled in shall be shared equally between 110 the parties. 111 3. Guarantee Works 112 If not otherwise agreed, the Owners authorise the 113 Charterers to arrange for the guarantee works to be 114 performed in accordance with the building contract terms, 115 and hire to continue during the period of guarantee works. 116 The Charterers have to advise the Owners about the 117 performance to the extent the Owners may request. 118 4. Name of Vessel 119 The name of the Vessel shall be mutually agreed between 120 the Owners and the Charterers and the Vessel shall be
Copyright © 2001 BIMCO. All rights reserved. Any unauthorised copying, duplication, reproduction or distribution of this BIMCO SmartCon document will
constitute an infringement of BIMCO’s copyright. Explanatory notes are available from BIMCO at www.bimco.org.
First published in 1974 as BARECON A and B. Amalgamated and revised in 1989. Revised 2001.
PART III
PROVISIONS TO APPLY FOR NEWBUILDING VESSELS ONLY
(Optional, only to apply if expressly agreed and stated in Box 37)
121 painted in the colours, display the funnel insignia and fly 122 the house flag as required by the Charterers. 123 5. Survey on Redelivery 124 The Owners and the Charterers shall appoint surveyors 125 for the purpose of determining and agreeing in writing the 126 condition of the Vessel at the time of re-delivery. 127 Without prejudice to Clause 15 (Part II), the Charterers 128 shall bear all survey expenses and all other costs, if any, 129 including the cost of docking and undocking, if required, 130 as well as all repair costs incurred. The Charterers shall 131 also bear all loss of time spent in connection with any 132 docking and undocking as well as repairs, which shall be 133 paid at the rate of hire per day or pro rata.
Copyright © 2001 BIMCO. All rights reserved. Any unauthorised copying, duplication, reproduction or distribution of this BIMCO SmartCon document will
constitute an infringement of BIMCO’s copyright. Explanatory notes are available from BIMCO at www.bimco.org.
First published in 1974 as BARECON A and B. Amalgamated and revised in 1989. Revised 2001.
PART IV
HIRE/PURCHASE AGREEMENT
(Optional, only to apply if expressly agreed and stated in Box 42)
1 On expiration of this Charter and provided the Charterers 2 have fulfilled their obligations according to Part I and II 3 as well as Part III, if applicable, it is agreed, that on 4 payment of the final payment of hire as per Clause 11 5 the Charterers have purchased the Vessel with 6 everything belonging to her and the Vessel is fully paid 7 for. 8 In the following paragraphs the Owners are referred to 9 as the Sellers and the Charterers as the Buyers. 10 The Vessel shall be delivered by the Sellers and taken 11 over by the Buyers on expiration of the Charter. 12 The Sellers guarantee that the Vessel, at the time of 13 delivery, is free from all encumbrances and maritime 14 liens or any debts whatsoever other than those arising 15 from anything done or not done by the Buyers or any 16 existing mortgage agreed not to be paid off by the time 17 of delivery. Should any claims, which have been incurred 18 prior to the time of delivery be made against the Vessel, 19 the Sellers hereby undertake to indemnify the Buyers 20 against all consequences of such claims to the extent it 21 can be proved that the Sellers are responsible for such 22 claims. Any taxes, notarial, consular and other charges 23 and expenses connected with the purchase and 24 registration under Buyers’ flag, shall be for Buyers’ 25 account. Any taxes, consular and other charges and 26 expenses connected with closing of the Sellers’ register, 27 shall be for Sellers’ account. 28 In exchange for payment of the last month’s hire 29 instalment the Sellers shall furnish the Buyers with a 30 Bill of Sale duly attested and legalized, together with a 31 certificate setting out the registered encumbrances, if 32 any. On delivery of the Vessel the Sellers shall provide 33 for deletion of the Vessel from the Ship’s Register and 34 deliver a certificate of deletion to the Buyers. 35 The Sellers shall, at the time of delivery, hand to the 36 Buyers all classification certificates (for hull, engines, 37 anchors, chains, etc.), as well as all plans which may 38 be in Sellers’ possession. 39 The Wireless Installation and Nautical Instruments, 40 unless on hire, shall be included in the sale without any 41 extra payment. 42 The Vessel with everything belonging to her shall be at 43 Sellers’ risk and expense until she is delivered to the 44 Buyers, subject to the conditions of this Contract and 45 the Vessel with everything belonging to her shall be 46 delivered and taken over as she is at the time of delivery, 47 after which the Sellers shall have no responsibility for 48 possible faults or deficiencies of any description. 49 The Buyers undertake to pay for the repatriation of the 50 Master, officers and other personnel if appointed by the 51 Sellers to the port where the Vessel entered the Bareboat 52 Charter as per Clause 3 (Part II) or to pay the equivalent 53 cost for their journey to any other place.
Copyright © 2001 BIMCO. All rights reserved. Any unauthorised copying, duplication, reproduction or distribution of this BIMCO SmartCon document will
constitute an infringement of BIMCO’s copyright. Explanatory notes are available from BIMCO at www.bimco.org.
First published in 1974 as BARECON A and B. Amalgamated and revised in 1989. Revised 2001.
PART V
PROVISIONS TO APPLY FOR VESSELS REGISTERED IN A BAREBOAT CHARTER REGISTRY
(Optional, only to apply if expressly agreed and stated in Box 43)
1 1. Definitions 2 For the purpose of this PART V, the following terms shall 3 have the meanings hereby assigned to them: 4 “The Bareboat Charter Registry” shall mean the registry 5 of the State whose flag the Vessel will fly and in which 6 the Charterers are registered as the bareboat charterers 7 during the period of the Bareboat Charter. 8 “The Underlying Registry” shall mean the registry of the 9 state in which the Owners of the Vessel are registered 10 as Owners and to which jurisdiction and control of the 11 Vessel will revert upon termination of the Bareboat 12 Charter Registration. 13 2. Mortgage 14 The Vessel chartered under this Charter is financed by 15 a mortgage and the provisions of Clause 12(b) (Part II) 16 shall apply. 17 3. Termination of Charter by Default 18 If the Vessel chartered under this Charter is registered 19 in a Bareboat Charter Registry as stated in Box 44, and 20 if the Owners shall default in the payment of any amounts 21 due under the mortgage(s) specified in Box 28, the 22 Charterers shall, if so required by the mortgagee, direct 23 the Owners to re-register the Vessel in the Underlying 24 Registry as shown in Box 45. 25 In the event of the Vessel being deleted from the 26 Bareboat Charter Registry as stated in Box 44, due to a 27 default by the Owners in the payment of any amounts 28 due under the mortgage(s), the Charterers shall have 29 the right to terminate this Charter forthwith and without 30 prejudice to any other claim they may have against the 31 Owners under this Charter.
Copyright © 2001 BIMCO. All rights reserved. Any unauthorised copying, duplication, reproduction or distribution of this BIMCO SmartCon document will
constitute an infringement of BIMCO’s copyright. Explanatory notes are available from BIMCO at www.bimco.org.
First published in 1974 as BARECON A and B. Amalgamated and revised in 1989. Revised 2001.
EXECUTION VERSION
ADDITIONAL CLAUSES TO BARECON 2001 DATED 8 December 2023
CLAUSE 32 – CHARTER PERIOD
| 32.1 | The period of this Charter (the “Charter Period”) shall, subject to the terms of this Charter, continue for a period of one hundred and twenty (120) months starting from the Commencement Date. |
| 32.2 | Notwithstanding the fact that the Charter Period shall commence on the Commencement Date, this Charter shall be: |
| (a) | in full force and effect; and |
| (b) | valid, binding and enforceable against the parties hereto, |
with effect from the date hereof until the end of the Charter Period (subject to the terms of this Charter).
CLAUSE 33 – CANCELLATION
| 33.1 | If: |
| (a) | the Vessel is not delivered by the Charterers as sellers to the Owners as buyers under the MOA by the Cancelling Date (or such later date as the parties to the MOA may agree); or |
| (b) | the MOA expires, is cancelled, terminated, rescinded or suspended or otherwise ceases to remain in full force and effect for any reason (in whole or in part), |
then this Charter shall immediately terminate and be cancelled (without prejudice to Clause 54 – (Indemnities) and without the need for either the Owners or the Charterers to take any action whatsoever), provided that the Owners shall be entitled to retain all fees and expenses paid by the Charterers pursuant to Clause 42 – (Fees and Expenses) (and without prejudice to Clause 42 – (Fees and Expenses) and any clause of the MOA, if such fees have not been paid, the Charterers shall forthwith pay such fees and expenses to the Owners in accordance with Clause 42 – (Fees and Expenses) and such payment shall be irrevocable and unconditional and is acknowledged by the Charterers to be proportionate as to amount, having regard to the legitimate interest of the Owners, in protecting against the Owners’ risk of the Charterers failing to perform its obligations under this Charter. For the avoidance of doubt, the termination of this Charter shall not prejudice the operation of any provision of any Leasing Document which is expressed to survive the termination or cancellation of this Charter).
CLAUSE 34 – DELIVERY AND CHARTER OF VESSEL
| 34.1 | This Charter is part of a transaction involving the sale, purchase and charter back of the Vessel and constitutes one of the Leasing Documents. |
| 34.2 | The obligation of the Owners to charter the Vessel to the Charterers hereunder is subject to and conditional upon: |
| (a) | the delivery to and acceptance by the Owners as buyers of the Vessel under the MOA; |
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| (b) | no Potential Termination Event or Termination Event having occurred which is continuing from the date of this Charter to the last day of the Charter Period (inclusive); |
| (c) | the representations and warranties contained in Clause 45 – (Representations and Warranties) being true and correct on the date hereof and each day thereafter until and including the last date of the Charter Period; |
| (d) | the Delivery occurring on or before the Cancelling Date; and |
| (e) | the Owners having received from the Charterers: |
| (i) | on or before the date falling five (5) Business Days prior to the Prepositioning Date, the documents or evidence set out in Part A of Schedule 2 in form and substance satisfactory to them; and |
| (ii) | on the Commencement Date and prior to or simultaneously with the Owners executing a dated and timed copy of the protocol of delivery and acceptance evidencing delivery of the Vessel under the MOA and a dated and timed copy of the Acceptance Certificate, the documents or evidence set out in Part B of Schedule 2 in form and substance satisfactory to them, |
and if any of the documents listed in Schedule 2 are not in the English language then, where required by the Owners, they shall be accompanied by a certified English translation.
| 34.3 | The conditions precedent specified in Clause 34.2(e) are inserted for the sole benefit of the Owners and may be waived or deferred in whole or in part and with or without conditions by the Owners. |
| 34.4 | On delivery to and acceptance by the Owners (in their capacity as buyers) of the Vessel from the Charterers (in their capacity as sellers) under the MOA, the Vessel shall be deemed to have been delivered to, and accepted without reservation by, the Charterers under this Charter and the Charterers shall become and be entitled to the possession and use of the Vessel on and subject to the terms and conditions of this Charter on the same day as the delivery date of the Vessel under the MOA. |
| 34.5 | On Delivery, as evidence of the commencement of the Charter Period, the Charterers shall sign and deliver to the Owners, the Acceptance Certificate. The Charterers shall be deemed to have accepted the Vessel under this Charter, and the commencement of the Charter Period having started, on Delivery even if, for whatever reason, the Acceptance Certificate is not signed and/or the Charterers do not take actual possession of the Vessel at that time. |
| 34.6 | The Charterers shall not be entitled for any reason whatsoever to refuse to accept delivery of the Vessel under this Charter once the Vessel has been delivered to and accepted by the Owners (in their capacity as buyers) from the Charterers (in their capacity as sellers) under the MOA, and the Owners shall not be liable for any losses, costs or expenses whatsoever or howsoever arising including without limitation, any loss of profit or any loss or otherwise: |
| (a) | resulting directly or indirectly from any defect or alleged defect in the Vessel (including but not limited to any deficiency in seaworthiness, merchantability, classification, condition, design, quality, operation, performance, capacity or fitness for use or the eligibility of the Vessel for any particular trade or operation) or any failure of the Vessel; or |
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| (b) | arising from any delay in the commencement of the Charter Period or any failure of the Charter Period to commence. |
| 34.7 | The Owners shall not be obliged to deliver the Vessel to the Charterers with any bunkers and unused lubricating oils and hydraulic oils and greases in storage tanks and unopened drums of the Vessel except for such items which are already on the Vessel on Delivery. The Owners shall not be responsible for the fitness, quality or quantity of any such bunkers and unused lubricating oils and hydraulic oils and greases and the Charterers shall make no claim against Owners in respect of the same. |
| 34.8 | The Charterers shall procure receipt by the Owners of the conditions subsequent set out in Part C of Schedule 2 in a form and substance satisfactory to the Owners within the time periods permitted therein. |
CLAUSE 35 – QUIET ENJOYMENT
Provided that no Termination Event or Total Loss has occurred, the Owners hereby agree not to disturb or interfere with the Charterers’ lawful use, possession and quiet enjoyment of the Vessel during the Charter Period. The Owners shall procure that any Mortgagee shall execute and deliver to the Charterers a quiet enjoyment letter in favour of the Charterers in a form mutually acceptable to the Mortgagee and the Charterer.
CLAUSE 36 – CHARTERHIRE AND ADVANCE CHARTERHIRE
| 36.1 | In consideration of the Owners agreeing to charter the Vessel to the Charterers under this Charter at the request of the Charterers, the Charterers hereby irrevocably and unconditionally agree to pay to the Owners the Charterhire, the Advance Charterhire and all other amounts payable under this Charter in accordance with the terms of this Charter. |
| 36.2 | The Charterers shall pay to the Owners on the Commencement Date, an amount which is equal to the difference between the Purchase Price and the Financing Amount as of the Commencement Date (the “Advance Charterhire”). |
| 36.3 | The Charterers shall be deemed to have paid the Advance Charterhire to the Owners on the Commencement Date by the Owners (as buyers under the MOA) setting off an amount equal to the Advance Charterhire against a corresponding amount of the Purchase Price payable by the Owners to the Charterers (as sellers) under the MOA. |
36.4 The Advance Charterhire shall not bear interest and shall be non-refundable.
| 36.5 | Following Delivery and commencing from the Commencement Date, the Charterers shall pay the Charterhire in arrears in monthly instalments on each Payment Date. Each instalment shall consist of: |
| (a) | a capital element of Charterhire (the “Fixed Charterhire”) which shall be an amount equal to: |
| (i) | in relation to the first (1st) to the one hundred nineteenth (119th) Payment Date (both inclusive), US$183,333; and |
| (ii) | in relation to the one hundred twentieth (120th) Payment Date, US$183,373; and |
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| (b) | a variable element of Charterhire (the “Variable Charterhire”) which shall be calculated by applying the applicable Interest Rate to the Outstanding Capital Balance on the immediately preceding Payment Date (or, in the case of the First Payment Date only, on the Commencement Date) for the relevant Hire Period ending on the relevant Payment Date by reference to the actual number of days elapsed. |
| 36.5A | For the purposes of determining the Variable Charterhire: |
| (a) | if no Term SOFR is available for any relevant Hire Period the applicable Reference Rate shall be the Interpolated Term SOFR for a period equal in length to for that Hire Period; |
| (b) | If no Term SOFR is available for any relevant Hire Period and it is not possible to calculate the Interpolated Term SOFR, the applicable Reference Rate shall be the Historic Term SOFR; |
| (c) | if paragraph (b) above applies but no Historic Term SOFR is available for any relevant Hire Period, the applicable Reference Rate shall be the Interpolated Historic Term SOFR for a period equal in length to that Hire Period; and |
| (d) | if paragraph (c) above applies but it is not possible to calculate the Interpolated Historic Term SOFR, there shall be no Reference Rate for that Hire Period and Clause 37.3 shall apply for that Hire Period. |
| 36.6 | Charterhire shall be payable in arrears on the tenth (10th) day of the calendar month following the month in which the preceding Payment Date falls, save that: |
| (a) | the first instalment of Charterhire shall fall on the tenth (10th) day of the calendar month following the month in which the Commencement Date falls (the “First Payment Date”); and |
| (b) | the final instalment of Charterhire shall fall on the last day of the Charter Period, |
such that there is a total of one hundred and twenty (120) Payment Dates during the Charter Period (each, a “Payment Date”).
| 36.7 | Payment of Charterhire on any Payment Date shall be made in same day available funds and received by the Owners by not later than 4.00 pm (Beijing time). Any payment of Charterhire which is due to be made on a Payment Date which is not also a Business Day shall be made on the preceding Business Day instead. |
| 36.8 | Time of payment of the Charterhire and any other payments by the Charterers under this Charter shall be of the essence of this Charter. |
| 36.9 | All payments of the Charterhire and any other moneys payable hereunder shall be made in Dollars. |
| 36.10 | All payments of the Charterhire and any other moneys payable hereunder shall be payable by the Charterers to the Owners’ designated bank account as the Owners may notify the Charterers in writing from time to time. |
| 36.11 | Payment of the Charterhire and any other amounts under this Charter shall be at the Charterers’ risk until receipt by the Owners. |
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| 36.12 | The Vessel shall not at any time be deemed off-hire and the Charterers’ obligation to pay the Charterhire and any other amounts payable in this Charter (including but not limited to the Termination Sum) in Dollars shall be absolute and unconditional under any and all circumstances and shall not be affected by any circumstances of any nature whatsoever including but not limited to: |
| (a) | (except in the case of the Advance Charterhire) any set off, counterclaim, recoupment, defence, claim or other right which the Charterers may at any time have against the Owners or any other person for any reason whatsoever including, without limitation, any act, omission or breach on the part of the Owners under this Charter or any other agreement at any time existing between the Owners and the Charterers; |
| (b) | any change, extension, indulgence or other act or omission in respect of any indebtedness or obligation of the Charterers, or any sale, exchange, release or surrender of, or other dealing in, any security for any such indebtedness or obligation; |
| (c) | any title defect or encumbrance or any dispossession of the Vessel by title paramount or otherwise; |
| (d) | any defect in the seaworthiness, condition, value, design, merchantability, operation or fitness for use of the Vessel or the ineligibility of the Vessel for any particular trade, or for registration or documentation under the laws of any relevant jurisdiction; |
| (e) | the Total Loss or any damage to or forfeiture or court marshall’s or other sale of the Vessel if the Termination Sum or any part thereof remains due; |
| (f) | any libel, attachment, levy, detention, sequestration or taking into custody of the Vessel or any restriction or prevention of or interference with or interruption or cessation in, the use or possession thereof by the Charterers unless for such period where such arrest, detention or seizure is solely attributable to the fault of the Owners; |
| (g) | any insolvency, bankruptcy, reorganization, arrangement, readjustment, dissolution, liquidation or similar proceedings by or against the Charterers and any other Relevant Person; |
| (h) | any invalidity, unenforceability, lack of due authorization or other defects, or any failure or delay in performing or complying with any of the terms and provisions of this Charter or any of the Leasing Documents by any party to this Charter or any other person; |
| (i) | any enforcement or attempted enforcement by the Owners of their rights under this Charter or any of the Leasing Documents executed or to be executed pursuant to this Charter; |
| (j) | any loss of use of the Vessel due to deficiency or default or strike of officers or crew, fire, breakdown, damage, accident, defective cargo or any other cause which would or might but for this provision have the effect of terminating or in any way affecting any obligation of the Charterers under this Charter; or |
| (k) | any prevention, delay, deviation or disruption in the use of the Vessel resulting from the wide outbreak of any viruses or any other highly infectious or contagious diseases (including the 2019 novel coronavirus), including but not limited to those caused by: |
| (i) | closure of ports; |
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| (ii) | prohibitions or restrictions against the Vessel calling at or passing through certain ports; |
| (iii) | restriction in the movement of personnel and/or shortage of labour affecting the operation of the Vessel or the operation of the ports (including stevedoring operations); |
| (iv) | quarantine regulations affecting the Vessel, its cargo, the crew members or relevant port personnel; |
| (v) | fumigation or cleaning of the Vessel; or |
| (vi) | any claims raised by any Sub-charterer or manager of the Vessel that a force majeure event or termination event (or any other analogous event howsoever called) has occurred under the relevant charter agreement or management agreement (as the case may be) of the Vessel as a result of the outbreak of such viruses. |
| 36.13 | All stamp duty, value added tax (for the avoidance of doubt, including without limitation, goods and services tax), withholding or other taxes and import and export duties and all other similar types of charges which may be levied or assessed on or in connection with: |
| (a) | the operation of this Charter in respect of the hire and all other payments to be made pursuant to this Charter and the remittance thereof to the Owners; and |
| (b) | the import, export, purchase, operation, delivery and re-delivery of the Vessel, |
shall be borne by the Charterers. The Charterers shall pay, if applicable, value added tax and other similar tax levied on any Charterhire and other payments payable under this Charter by addition to, and at the time of payment of, such amounts. If any such taxes arise as a result of (i) the Owners being incorporated in Hong Kong and (ii) the introduction or alteration after the date of this Charter of a law in Hong Kong or an alteration after the date of this Charter in the manner in which a law in Hong Kong is interpreted or applied (the “Tax Changes”). Provided that if after the Owners and the Charterers having exercised reasonable endeavours to mitigate the effect of the Tax Changes (at the cost of the Charterers) following notification from the Owners to the Charterers regarding the occurrence of the Tax Changes such Tax Changes continue to have the same effect, the Charterers shall have the option to pay the Mandatory Sale Price to the Owners within thirty (30) days following such notice by the Owners, and this Charter shall terminate in accordance with the procedures set out in Clause 50.4.
CLAUSE 37 – CHANGES TO INTEREST RATE, DEFAULT INTEREST
| 37.1 | If, before the Reporting Time, the Owners determine (which determination shall be conclusive and binding) that their cost of funds relating to the then prevailing Outstanding Capital Balance or any part thereof would be in excess of the Market Disruption Rate, the Owners shall promptly notify the Charterers accordingly and Clause 37.3 below shall apply to the prevailing Outstanding Capital Balance or any part thereof for that Hire Period. |
| 37.2 | Immediately following the notification referred to in Clause 37.1 above, if the Owners and Charterers so require, the Owners and the Charterers shall negotiate in good faith (for a period not more than thirty (30) days) with a view to agreeing upon a substitute basis for determining the applicable Interest Rate for that Hire Period. Subject to Clause 37.4, any substitute or alternative basis agreed pursuant to this Clause shall, with the prior written consent of the Parties, be binding on the Parties. |
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| 37.3 | If: |
| (a) | this Clause 37.3 applies pursuant to Clause 36.5A and Clause 37.1; or |
| (b) | a substitute basis is not so requested and/or agreed pursuant to Clause 37.2 above; or |
| (c) | the amendment or waiver to the terms of the Leasing Documents is not so agreed pursuant to Clause 37.4, |
the applicable Interest Rate shall be the percentage rate per annum which is the sum of:
| (i) | the Margin, and |
| (ii) | the cost of funds certified and notified by the Owners, with relevant supporting evidence available to the Owners at the relevant time (expressed as an annual rate of interest) relating to the then prevailing Outstanding Capital Balance or any part thereof during the relevant Hire Period (as reasonably determined by the Owners), |
provided that if the rate pursuant to (ii) above is less than zero, the relevant rate shall be deemed to be zero. It is hereby agreed that the Charterers shall have the option to pay the Mandatory Sale Price to the Owners within thirty (30) days following such notice by the Owners pursuant to this Clause 37.3, and this Charter shall terminate in accordance with the procedures set out in Clause 50.4.
If this Clause 37.3 applies pursuant to Clause 37.1 and the Owners do not notify a Funding Rate to the Charterers by the Reporting Time, the Owners’ cost of funds relating to that portion of the Outstanding Capital Balance for that Hire Period shall be deemed, for the purposes of Clause 37.3(ii) above, to be the Market Disruption Rate.
| 37.4 | If a Published Rate Replacement Event has occurred in relation to any Published Rate for dollars, the Owners are entitled to make any amendment or waiver to the terms of the Leasing Documents with the consent of the Charterers (at the Charterers’ cost) which relates to: |
| (a) | providing for the use of a Replacement Reference Rate in relation to Dollars in place of (or in addition to) that Published Rate; and |
(b)
| (i) | aligning any provision of any Leasing Document to the use of that Replacement Reference Rate; |
| (ii) | enabling that Replacement Reference Rate to be used for the calculation of the Interest Rate under this Charter (including, without limitation, any consequential changes required to enable that Replacement Reference Rate to be used for the purposes of this Charter); |
| (iii) | implementing market conventions applicable to that Replacement Reference Rate; |
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| (iv) | providing for appropriate fallback (and market disruption) provisions for that Replacement Reference Rate; or |
| (v) | adjusting the pricing to reduce or eliminate, to the extent reasonably practicable, any transfer of economic value from one Party to another as a result of the application of that Replacement Reference Rate (and if any adjustment or method for calculating any adjustment has been formally designated, nominated or recommended by the Relevant Nominating Body, the adjustment shall be determined on the basis of that designation, nomination or recommendation), |
and pending any such amendment or waiver and the Replacement Reference Rate being utilised under the Leasing Documents to calculate the Interest Rate, Clause 37.3 shall apply to the calculation of the Interest Rate.
| 37.5 | If the Charterers fail to make any payment due under this Charter on the due date, they shall pay additional interest on such late payment at a rate which is equal to two per cent. (2%) per annum above the applicable Interest Rate for the relevant Hire Period which shall apply prior to, during or following Delivery and shall accrue on a daily basis from the date on which such payment became due up to and excluding the date of payment thereof, and the Charterers and the Owners agree that such default rate is proportionate as to amount, having regard to the legitimate interest of the Owners, in protecting against the Owners’ risk of the Charterers failing to perform its obligations under this Charter. |
| 37.6 | All interest (including default interest) and any other payments under this Charter which are of an annual or periodic nature shall accrue from day to day and shall be calculated on the basis of the actual number of days elapsed and a three hundred and sixty (360) days’ year. |
CLAUSE 38 – POSSESSION OF VESSEL
| 38.1 | The Charterers shall not, without the prior written consent of the Owners, assign, mortgage or pledge the Vessel or any interest therein, its Earnings, Insurances and/or any Requisition Compensation and shall not permit the creation or existence of any Security Interest thereon (including for any monies paid in advance and not earned, and for any claims for damages arising from any breach by the Owners of this Charter and other amounts due to the Charterers under this Charter) except for the Permitted Security Interests. |
| 38.2 | The Charterers shall promptly notify any party (including, without limitation, the Initial Sub-charterer or any other Sub-charterer of the Vessel) (as the Owners may request) in writing that the Vessel is the property of the Owners and the Charterers shall provide the Owners with a copy of such written notification and satisfactory evidence to the opinion of the Owners that such party has received such written notification. |
| 38.3 | Subject to Clause 38.4, if the Vessel is arrested, seized, impounded, forfeited, detained or taken out of their possession or control (whether or not pursuant to any distress, execution or other legal process), the Charterers shall procure the immediate release of the Vessel (whether by providing bail or procuring the provision of security or otherwise do such lawful things as the circumstances may require) and shall immediately notify the Owners of such event and shall indemnify the Owners against all losses, costs or charges incurred by the Owners by reason thereof in re-taking possession or otherwise in re-acquiring the Vessel. Without prejudice to the generality of the foregoing and Clause 53 –, the Charterers agree to indemnify the Owners against all consequences or liabilities arising from the master, officers or agents signing bills of lading or other documents. |
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| 38.4 | If the Vessel is arrested, seized, impounded, forfeited or otherwise detained solely because of the Owners’ direct actions or omissions and for reasons which are not in any part of a consequence of contributory negligence and/or wilful misconduct of any Sub-charterer, a Relevant Person or any other member of the Group (or its affiliates), the Owners shall at their own expense take all reasonable steps to procure that the Vessel is released within a reasonable time. |
| 38.5 | The Charterers shall pay and discharge or cause the Initial Sub-charterer or any other Sub-charterer of the Vessel to pay and discharge all obligations and liabilities whatsoever which have given or may give rise to liens on or claims enforceable against the Vessel. The Charterers shall take all steps to prevent (and shall procure that any Sub-charterer shall take all steps to prevent) an arrest (threatened or otherwise) of the Vessel. |
CLAUSE 39 – INSURANCE
| 39.1 | The Charterers shall procure that the insurances for the Vessel are effected: |
| (a) | in Dollars; |
| (b) | in the case of fire and usual hull and machinery, marine risks and war risks (including blocking and trapping), on an agreed value basis of at least the higher of (i) one hundred per cent (100%) of then applicable Market Value of the Vessel and (ii) one hundred and twenty per cent (120%) of the then prevailing Outstanding Capital Balance; |
| (c) | in the case of oil pollution liability risks for the Vessel, for an aggregate amount equal to the higher of (i) the highest level of cover from time to time available under protection and indemnity club entry and in the international marine insurance market and (ii) an amount of not less than $1,000,000,000; |
| (d) | in the case of protection and indemnity risks, in respect of the full tonnage of the Vessel and with a protection and indemnity club which is a member of the International Group of Protection and Indemnity Clubs; |
| (e) | with first class international insurers and/or underwriters acceptable to the Owners and having a Standard & Poor’s rating of BBB+ or above, a Moody’s rating of A or above or an AM Best rating of A- or above or otherwise acceptable to the Owners or, in the case of war risks through a protection and indemnity club which meets the requirements of paragraph (d) above; and |
| (f) | on terms and in form acceptable to the Owners and the Owners’ Financiers (if any). |
| 39.2 | In addition to the terms set out in Clause 13(a) (Insurance and Repairs), the Charterers shall procure that the Obligatory Insurances shall: |
| (a) | subject always to paragraph (b), name the Charterers, the Approved Manager and the Owners(and if applicable the Owners’ Financiers if so required by the Owners) as the only named assureds unless the interest of every other named assured or co-assured is limited: |
| (i) | in respect of any Obligatory Insurances for hull and machinery and war risks; |
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| (A) | to any provable out-of-pocket expenses that they have incurred and which form part of any recoverable claim on underwriters; and |
| (B) | to any third party liability claims where cover for such claims is provided by the policy (and then only in respect of discharge of any claims made against them); and |
| (ii) | in respect of any Obligatory Insurances for protection and indemnity risks, to any recoveries they are entitled to make by way of reimbursement following discharge of any third party liability claims made specifically against them, |
and every other named assured or co-assured has undertaken in writing to the Owners or the Owners’ Financiers (in such form as they may require) that any deductible shall be apportioned between the Charterers and every other named assured or co-assured (save for the Owners or the Owners’ Financiers (if any)) in proportion to the gross claims made by or paid to each of them and that they shall do all things necessary and provide all documents, evidence and information to enable the Owners and the Owners’ Financiers (if any) in accordance with the terms of the loss payable clause, to collect or recover any moneys which at any time become payable in respect of the Obligatory Insurances;
| (b) | whenever the Owners’ Financiers (if any) require: |
| (i) | in respect of fire and other usual marine risks and war risks, name (or be amended to name) the same as additional named assured for their rights and interests, warranted no operational interest and with full waiver of rights of subrogation against such financiers, but without such financiers thereby being liable to pay (but having the right to pay) premiums, calls or other assessments in respect of such insurance; |
| (ii) | in relation to protection and indemnity risks, name (or be amended to name) the same as additional insured or co-assured for their rights and interests to the extent permissible under the relevant protection and indemnity club rules; and |
| (iii) | name the same and the Owners as respectively the first ranking loss payee and the second ranking loss payee (and in the absence of any financiers, the Owners as first ranking loss payee) in accordance with the terms of the relevant loss payable clauses approved by the Owners’ Financiers and the Owners with such directions for payment in accordance with the terms of such relevant loss payable clause, as the Owners and the Owners’ Financiers (if any) may specify; |
| (c) | provide that all payments by or on behalf of the insurers under the Obligatory Insurances to the Owners and/or the Owners’ Financiers (as applicable) shall be made without set-off, counterclaim, deductions or condition whatsoever; |
| (d) | provide that such Obligatory Insurances shall be primary without right of contribution from other insurances which may be carried by the Owners or the Owners’ Financiers (if any); |
| (e) | provide that the Owners and/or the Owners’ Financiers (if any) may make proof of loss if the Charterers fail to do so; and |
| (f) | provide that if any Obligatory Insurance is cancelled, or if any substantial change is made in the coverage which adversely affects the interest of the Owners and/or the Owners’ Financiers (if any), or if any Obligatory Insurance is allowed to lapse for non-payment of premium, such cancellation, change or lapse shall not be effective with respect to the Owners and/or the Owners’ Financiers (if any) for thirty (30) days after receipt by the Owners and/or the Owners’ Financiers (if any) of prior written notice from the insurers of such cancellation, change or lapse. |
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| 39.3 | The Charterers shall: |
| (a) | at least fifteen (15) days prior to Delivery (or such shorter period agreed by the parties), notify in writing the Owners of the terms and conditions of all Insurances (copied to the Owners’ Financiers (if any) and the brokers or insurers with whom the Insurances are or will be placed); |
| (b) | at least fifteen (15) days before the expiry of any obligatory insurance or otherwise before the change of appointment of any brokers (or other insurers) and any protection and indemnity or war risks association through which Obligatory Insurances are taken from time to time pursuant to this Clause 39 – (Insurance), notify the Owners (copied to the Owners’ Financiers (if any)) of the brokers (or other insurers) and any protection and indemnity or war risks association through or with whom the Charterers propose to renew or obtain that Obligatory Insurance and of the proposed terms of such renewed or new insurance cover and obtain the Owners’ approval to such matters; |
| (c) | at least seven (7) days before the expiry of any Obligatory Insurance, procure that such Obligatory Insurance is renewed or to be renewed on its expiry date in accordance with the provisions of this Charter; |
| (d) | procure that the approved brokers and/or the war risks and protection and indemnity associations with which such a renewal is effected shall promptly after the renewal or the effective date of the new insurance and protection and indemnity cover notify the Owners (copied to the Owners’ Financiers (if any)) in writing of the terms and conditions of the renewal; and |
| (e) | as soon as practicable after the expiry of any Obligatory Insurance and within thirty (30) days after such expiry, deliver to the Owners a letter of undertaking as required by this Charter in respect of such Insurances for the Vessel as renewed pursuant to Clause 39.3(c) (Insurance) together with copies of the relevant policies or cover notes or entry certificates duly endorsed with the interest of the Owners and/or the Owners’ Financiers (if any). |
| 39.4 | The Charterers shall ensure that all insurance companies and/or underwriters, and/or insurance brokers (if any) provide the Owners with copies (or upon the Owners’ request, originals) of policies, cover notes and certificates of entry relating to the Obligatory Insurances which they are to effect or renew and letter or letters of undertaking in a form required by the Owners and/or the Owners’ Financiers (if any) and including undertakings by the insurance companies and/or underwriters that: |
| (a) | they will have endorsed on each policy, immediately upon issuance, a loss payable clause and a notice of assignment complying with the provisions of this Charter and the Financial Instruments; |
| (b) | they will hold the benefit of such policies and such insurances, to the order of the Owners and/or the Owners’ Financiers (if any) and/or such other party in accordance with the said loss payable clause; |
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| (c) | they will advise the Owners and the Owners’ Financiers (if any) promptly of any material change to the terms of the Obligatory Insurances of which they are aware; |
| (d) | (i) they will indicate in the letters of undertaking that they will immediately notify the Owners and the Owners’ Financiers (if any) when any cancellation, charge or lapse of the relevant obligatory insurance occur and (ii) following a written application from the Owners and/or the Owners’ Financiers (if any) not later than one (1) month before the expiry of the Obligatory Insurances they will notify the Owners and the Owners’ Financiers (if any) not less than fourteen (14) days before the expiry of the obligatory insurances, in the event of their not having received notice of renewal instructions from the Charterers and, in the event of their receiving instructions to renew, they will promptly notify the Owners and the Owners’ Financiers (if any) of the terms of the instructions; and |
| (e) | if any of the Obligatory Insurances form part of any fleet cover, the Charterers shall procure that the insurance broker(s), or leading insurer, as the case may be, undertakes to the Owners and the Owners’ Financiers (if any) that such insurance broker or insurer will not set off against any sum recoverable in respect of a claim relating to the Vessel under such Obligatory Insurances any premiums due in respect of any other vessel under any fleet cover of which the Vessel forms a part or any premium due for other insurances, they waive any lien on the policies, or any sums received under them, which they might have in respect of such premiums, and they will not cancel such Obligatory Insurances by reason of non-payment of such premiums or other amounts, and will arrange for a separate policy to be issued in respect of the Vessel forthwith upon being so requested by the Owners and/or the Owners’ Financiers (if any) and where practicable. |
| 39.5 | The Charterers shall ensure that any protection and indemnity and/or war risks associations in which the Vessel is entered provides the Owners and the Owners’ Financiers (if any) with: |
| (a) | a copy of the certificate of entry for the Vessel as soon as such certificate of entry is issued; |
| (b) | a letter or letters of undertaking in such form as may be required by the Owners and the Owners’ Financiers (if any) or in such association’s standard form; and |
| (c) | a certified copy of each certificate of financial responsibility for pollution by oil or other Environmentally Sensitive Material issued by the relevant certifying authority in relation to the Vessel. |
| 39.6 | The Charterers shall ensure that all policies relating to Obligatory Insurances are deposited with the approved brokers (if any) through which the insurances are effected or renewed. |
| 39.7 | The Charterers shall procure that all premiums or other sums payable in respect of the Obligatory Insurances are punctually paid and produce all relevant receipts when so required by the Owners. |
| 39.8 | The Charterers shall ensure that any guarantees required by a protection and indemnity or war risks association are promptly issued and remain in full force and effect. |
| 39.9 | The Charterers shall neither do nor omit to do (nor permit to be done or not to be done) any act or thing which would or might render any Obligatory Insurance invalid, void, voidable or unenforceable or render any sum payable under an Obligatory Insurance repayable in whole or in part; and, in particular: |
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| (a) | the Charterers shall procure that all necessary action is taken and all requirements are complied with which may from time to time be applicable to the Obligatory Insurances, and (without limiting the obligations contained in this Clause 39 – (Insurance)) ensure that the Obligatory Insurances are not made subject to any exclusions or qualifications to which the Owners have not given their prior approval (unless such exclusions or qualifications are made in accordance with the rules of a protection and indemnity association which is a member of the International Group of Protection And Indemnity Clubs); |
| (b) | the Charterers shall not make or permit any changes relating to the classification or the classification society of the Vessel or, subject to procuring the provision of a replacement manager’s undertaking in substantially the same form as the Manager’s Undertaking, any changes to the manager or operator of the Vessel unless such changes have, if required, first been approved by the underwriters of the Obligatory Insurances, the Owners and the Owners’ Financiers (if any); |
| (c) | the Charterers shall procure that all quarterly or other voyage declarations which may be required by the protection and indemnity risks association in which the Vessel is entered to maintain cover for trading to the United States of America and Exclusive Economic Zone (as defined in the United States Oil Pollution Act 1990 or any other applicable legislation) are made and the Charterers shall promptly provide the Owners with copies of such declarations and a copy of its valid certificate of financial responsibility; and |
| (d) | the Charterers shall not employ the Vessel, nor allow it to be employed, otherwise than in conformity with the terms and conditions of the Obligatory Insurances, without first obtaining the consent of the insurers and complying with any requirements (as to extra premium or otherwise) which the insurers specify. |
| 39.10 | The Charterers shall not make or agree to any alteration to the terms of any Obligatory Insurance nor waive any right relating to any Obligatory Insurance without the prior written consent of the Owners and the Owners’ Financiers (if any). |
| 39.11 | The Charterers shall not settle, compromise or abandon any claim under any obligatory insurance for Total Loss or for a Major Casualty, and shall do all things necessary and provide all documents, evidence and information to enable the Owners to collect or recover any moneys which at any time become payable in respect of the Obligatory Insurances. |
| 39.12 | The Charterers shall provide the Owners upon written request (except that upon the occurrence of a Total Loss or a Major Casualty the Charterers shall provide the following immediately without the Owners’ making any request), copies of: |
| (a) | all communications between the Charterers and: |
| (i) | the approved brokers; |
| (ii) | the approved protection and indemnity and/or war risks associations; and/or |
| (iii) | the approved insurers and/or underwriters, which relate directly or indirectly to: |
| (A) | the Charterers’ obligations relating to the Obligatory Insurances including, without limitation, all requisite declarations and payments of additional premiums or calls; and |
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| (B) | any credit arrangements made between the Charterers and any of the persons referred to in paragraphs (i) or (ii) above relating wholly or partly to the effecting or maintenance of the Obligatory Insurances; and |
| (b) | any communication with any party involved in case of a claim under any of the Vessel’s insurances. |
| 39.13 | The Charterers shall promptly provide the Owners (or any persons which they may designate) with: |
| (a) | any information which the Owners or the Owners’ Financiers (or any such designated person) request for the purpose of: |
| (i) | obtaining or preparing any report from an independent marine insurance broker as to the adequacy of the Obligatory Insurances effected or proposed to be effected; and/or |
| (ii) | effecting, maintaining or renewing any such insurances as are referred to in Clause 13(a) (Insurance and Repairs) or Clause 39 – (Insurance) dealing with or considering any matters relating to any such insurances; and |
| (b) | copies of any communication between all parties involved in case of a claim under any of the Vessel’s insurances exceeding the Major Casualty amount. |
| 39.14 | If one or more of the Obligatory Insurances are not effected and maintained with first class international insurers or are effected with an insurance or captive Subsidiary of the Owners or the Charterers, then the Charterers shall procure, at their own expense, that the relevant insurers maintain in full force and effect facultative reinsurances with reinsurers and through brokers, in each case, of recognised standing and acceptable in all respects to the Owners. Any reinsurance policy shall include, if and when permitted by law, a cut-through clause in a form acceptable to the Owners and/or the Owners’ Financiers (if any). The Charterers shall procure that underwriters of the primary insurances assign each reinsurance to the relevant financiers in full, if required. |
| 39.15 | The Charterers shall upon demand fully indemnify the Owners (including if requested by the Owners, make direct payment to the relevant insurer or broker for the same) in respect of all premiums and other expenses which are incurred by: |
| (a) | the Owners in connection with or with a view to effecting, maintaining or renewing an innocent owners interest insurance and an innocent owners additional perils insurance or any similar protective shipowner insurance that is taken out in respect of the Vessel; and/or |
| (b) | the Owners’ Financiers (if any) in connection with or with a view to effecting, maintaining or renewing a mortgagee’s interest insurance, a mortgagee’s additional perils insurance, all protection and indemnity insurance that is taken out in respect of the Vessel subject to the Owners’ Financiers (if any) having provided to the Owners at the relevant time any form of loan facility to refinance the Vessel, |
in the case as referred to in paragraph (a), in an amount not exceeding one hundred and twenty per cent (120%) of the Outstanding Capital Balance from time to time or in the case as referred to in paragraph (b), in an amount not exceeding one hundred and twenty per cent (120%) of the relevant outstanding loan amount from time to time and on such other terms, through such insurers and generally in such manner as the Owners or the Owners’ Financiers (as the case may be) may from time to time consider appropriate.
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| 39.16 | The Charterers shall be solely responsible for and indemnify the Owners in respect of all loss or damage to the Vessel (insofar as the Owners shall not be reimbursed by the proceeds of any insurance in respect thereof) however caused occurring at any time or times before physical possession thereof is retaken by the Owners, with only reasonable wear and tear to the Vessel excepted. |
| 39.17 | The Charterers shall reimburse or indemnify the Owners for any expenses incurred or to be incurred by the Owners in obtaining a detailed report signed by an independent firm of marine insurance brokers approved by the Owners dealing with the Obligatory Insurances and stating the opinion of such firm as to the adequacy of the Obligatory Insurances: |
| (a) | when an agreed form of such detailed report satisfactory to the Owners is obtained as a condition precedent requirement under Schedule 2 of this Charter; |
| (b) | when the Owners procure the issuance of such detailed report no more than once every calendar year, unless a Termination Event has occurred in which case such reports may be procured at the Charterer’s cost at any such time; and |
| (c) | further from time to time upon the Owners’ demand where, in the Owners’ opinion, at any time during the Charter Period there has been a material change in the terms of the Insurances and/or a change in the circumstances which would materially adversely affect the adequacy of the Obligatory Insurances. |
| 39.18 | The Charterers shall: |
| (a) | keep the Vessel insured at their expense against such other risks (other than loss of hire which shall be insured against upon an occurrence and during the continuance of a Termination Event) which the Owners or the Owners’ Financiers consider reasonable for a prudent shipowner or operator to insure against for trading, management, operational and/or safety purposes at the relevant time (as notified by the Owners and having regard to the then existing available insurance cover and standard practice in the operation of vessels of the same type as the Vessel) and which risks are, at that time, generally insured against by owners or operators of vessels similar to the Vessel or of the same type as the Vessel (including without limitation, innocent owners interest insurance, innocent owners additional perils insurance, mortgagee’s interest insurance and mortgagee’s additional perils insurance but excluding loss of hire and contingency liability insurance, save that the Owners may take out upon an occurrence and during the continuance of a Termination Event); and |
| (b) | upon demand fully indemnify the Owners in respect of all premiums and other expenses incurred by the Owners in respect of any other insurances (other than loss of hire insurances which the Owners may take out upon an occurrence and during the continuance of a Termination Event) which the Owners deem necessary (having regard to the existing insurance cover and market practice for the trading, management, operation and safety of vessels of the same type) and takes out in respect of the Vessel. |
CLAUSE 40 – WARRANTIES RELATING TO VESSEL
| 40.1 | It is expressly agreed and acknowledged that the Owners are not the manufacturer or original supplier of the Vessel but that the Owners (in their capacity as buyers) have purchased the Vessel from the Charterers (in their capacity as sellers) pursuant to the MOA at the request of the Charterers, for the purpose of then chartering the Vessel to the Charterers hereunder and that no condition, term, warranty or representation of any kind is or has been given to the Charterers by or on behalf of the Owners in respect of the Vessel (or any part thereof). |
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| 40.2 | All conditions, terms or warranties express or implied by the law relating to the specifications, quality, description, merchantability or fitness for any purpose of the Vessel (or any part thereof) or otherwise are hereby expressly excluded. |
| 40.3 | The Charterers agree and acknowledge that the Owners shall not be liable for any claim, loss, damage, expense or other liability of any kind or nature caused directly or indirectly by the Vessel or by any inadequacy thereof or the use or performance thereof or any repairs thereto or servicing thereof and the Charterers shall not by reason thereof be released from any liability to pay any Charterhire or other payment due under this Charter. |
CLAUSE 41 – TERMINATION, REDELIVERY AND TOTAL LOSS
Termination
| 41.1 | Upon termination of the leasing of the Vessel under this Charter pursuant to Clause 49.2, the Charterers shall be obliged to pay the Owners the Termination Sum on the Termination Date and it is hereby agreed by the parties hereto that: |
| (a) | without prejudice to Clause 41.9(b), the obligation to pay the Termination Sum is a continuing obligation and shall survive the termination of the leasing of the Vessel under this Charter and shall continue in full force and effect until irrevocably and unconditionally paid in full; |
| (b) | payment of the Termination Sum is deemed to be proportionate as to amount, having regard to the legitimate interest of the Owners, in protecting against the Owners’ risk of the Charterers failing to perform its obligations under this Charter; and |
| (c) | the Termination Sum shall, depending on the nature of the Termination Event(s) on the basis of which the Owners serve a Termination Notice, be either an obligation to pay damages following acceptance by the Owners of a breach of condition by the Charterers or an obligation to pay an agreed sum in specified circumstances which do not involve a breach of contract by the Charterers. |
| 41.2 | If the Charterers fail to make any payment of the Termination Sum on the Termination Date, Clause 37.5 shall apply and the Owners shall be entitled to exercise their rights under Clauses 41.9 and 41.10. |
| 41.3 | Concurrently with the unconditional and irrevocable payment of the Termination Sum in full pursuant to the terms of this Charter, this Charter shall terminate and the Owners shall (save in the event of Total Loss or in the event that the Vessel has been sold or contracted to be sold pursuant to Clauses 41.9 and 41.10), at the cost of the Charterers, transfer the legal and beneficial ownership of the Vessel on an “as is where is” basis to the Charterers (or their nominees as approved by the Owners) free from any registered mortgages, encumbrances, liens, debts or claims incurred or permitted by the Owners (save for those liens, encumbrances and debts incurred by the Charterers or arising out of or in connection with this Charter), and shall execute a bill of sale and a protocol of delivery and acceptance evidencing the same and such sale shall be completed otherwise in accordance with Clause 53.1. |
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| 41.4 | The Charterers hereby undertake to indemnify the Owners against any claims incurred in relation to the Vessel prior to such transfer of ownership. Any taxes, notarial, consular and other costs, charges and expenses connected with closing of the Owners’ register shall be for the Charterers’ account. |
Redelivery
| 41.5 | If the Charterers are required to redeliver the Vessel to the Owners pursuant to the terms of this Charter, the Vessel shall be redelivered and taken over safely afloat at a safe and accessible berth or anchorage in such location as the Owners may require (which, for the avoidance of doubt, shall exclude any war listed area declared by the Joint War Committee). The Charterers shall where applicable, give the Owners not less than 30/20/10/5 running days’ preliminary notice of expected date and port or place of redelivery and not less than 5/3/2/1/ running days’ definite notice of expected date and port or place of redelivery. Any changes thereafter in the Vessel’s position shall be notified immediately to the Owners. The Charterers shall ensure that, at the time of redelivery to the Owners, the Vessel: |
| (a) | be in compliance with the Obligatory Insurances; |
| (b) | be in an equivalent class as she was as at the Commencement Date and without any recommendation or condition and with valid, unextended certificates for not less than three (3) months and free of average damage affecting the Vessel’s classification and in the same or as good structure, state, condition and classification as that in which she was deemed on the Commencement Date, fair wear and tear not affecting the Vessel’s classification excepted; |
| (c) | has passed her 5-year special survey or 10-year special survey (if applicable), and subsequent second intermediate surveys and drydock at the Charterers’ time and expense without any recommendation or condition: |
| (d) | to the satisfaction of the Approved Classification Society; and |
| (e) | in the case of the 5-year special survey or 10-year special survey (if applicable), to the reasonable satisfaction of an Owners’ Surveyor appointed at the cost of the Charterers; |
| (f) | has her survey cycles up-to-date and trading and class certificate valid for at least the number of months agreed in Box 17; |
| (g) | be re-delivered to the Owners together with all spare parts and spare equipment as were on board at the time of Delivery, and any such spare parts and spare equipment on board at the time of re-delivery shall be taken over by the Owners free of charge; |
| (h) | be free of any cargo and Security Interest (save for the Security Interests granted pursuant to the Financial Instruments, if any); |
| (i) | be free of any crew and officers unless otherwise instructed by the Owners; |
| (j) | be free of any charter or other employment (unless the Owners wish to retain the continuance of any prevailing charter or as otherwise agreed by the Owners in their absolute discretion); |
| (k) | have had her underwater parts treated with ample anti-fouling to last for the ensuring period up to the next schedule dry docking of the Vessel; |
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| (l) | be redelivered to the Owner together with all material information generated during the Charter Period in respect of the use, possession, operation, navigation, utilization of lubricating oil and the physical condition of the Vessel, whether or not such information is contained in the Charterer’s equipment, computer or property; and |
| (m) | have such amount of bunkers on board the Vessel as would be sufficient to enable the Vessel to sail to the nearest bunker port in compliance with all bunkering fuel content regulations then applicable in such place of redelivery, including without limitation, the global sulphur limit imposed by the International Maritime Organization (IMO). |
| 41.6 | The Charterers warrant that they will not permit (or request any Sub-charterer not to permit) the Vessel to commence a voyage (including any preceding ballast voyage) which cannot reasonably be expected to be completed in time to allow redelivery of the Vessel within any time period required by Clause 41 – (Termination, Redelivery and Total Loss). If the time of actual redelivery is after the date on which redelivery is required to take place pursuant to Clause 41 – (the “Redelivery Date”), the Charterer shall, without prejudice to any other amounts payable under the Leasing Documents (including without limitation pursuant to Clause 41 – (Termination, Redelivery and Total Loss)) pay to the Owners, as from the first date following the Redelivery Date and for each day until the date on which the Vessel is redelivered in accordance with Clause 41.5, the rate of hire equivalent to the higher of: |
| (a) | the prevailing market rate for the bareboat chartering of vessels of a similar type as the Vessel (as determined by an Approved Valuer appointed by the Owners); and |
| (b) | the prevailing market rate for the chartering of vessels of a similar type as the Vessel on the Index. |
For the avoidance of doubt, all other terms, conditions and provisions of this Charter and the other Leasing Documents shall continue to apply during such period.
| 41.7 | The Charterers shall provide the Owners’ Surveyor with all such facilities and access to the Vessel as may be required to enable such Owners’ Surveyor to conduct its survey of the Vessel and shall take all such actions as may be reasonably recommended by the Owners’ Surveyor to ensure that the Vessel shall be redelivered in accordance with Clause 41.5. The Owners shall not be obliged to accept redelivery of the Vessel until the Owners are reasonably satisfied that all conditions for the redelivery of the Vessel under this Charter (including without limitation, Clause 41.5 and this Clause 41.7) are met, and the Vessel shall (if the redelivery is at the end of the Charter Period) continue to be on-hire under the terms of this Charter until such redelivery. The Owners reserve all rights to recover from the Charterers any costs, expense and/or liabilities incurred or suffered by them (including without limitation, the costs of any repairs which may be required to restore the Vessel to the condition required by Clause 41.5 as a result of the Vessel not being redelivered in accordance with the terms of this Charter). |
| 41.8 | The Owners shall, at the time of the redelivery of the Vessel, take over all bunkers, lubricating oil, unbroached provisions, paints, ropes, other consumable stores and spare parts in the Vessel (but excluding any such items owned by a third party which is not a member of the Group) at no cost to the Owners. |
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Non-payment of Termination Sum
| 41.9 | Subject to the terms of any quiet enjoyment letter entered into with any sub charterers, the Charterers agree that should the Termination Sum not be paid on the Termination Date: |
| (a) | the Charterers’ right to possess and operate the Vessel shall immediately cease and (without in any way affecting the Charterers’ obligation to pay the Charterer the Termination Sum and comply with their other obligations under this Charter) the Charterers shall hold the Vessel as gratuitous bailee only to the Owners, the Charterers shall procure that the master and crew follow the orders and directions of the Owners and the Charterers shall, upon the Owners’ request (at Owners’ sole discretion), be obliged to immediately (and at the Charterers’ own cost) redeliver the Vessel to the Owners at such ready and nearest safe port or location as the Owners may require and for the avoidance of doubt, any such redelivery shall not extinguish the Owners’ right to recover the Termination Sum from the Charterers under this Charter; |
| (b) | subject to paragraph (c) and (d) below and Clause 41.10, the Owners shall be entitled (at Owners’ sole discretion) but subject always to any quiet enjoyment letter entered into with any sub-charterer, to operate the Vessel as they may require and may create whatsoever interests thereon, including without limitation short term charterparties or any other form of short term employment contracts provided such contracts do not interfere with the Vessel’s sale process, including relevant inspections, provided that the Earnings of the Vessel during such period less its operational expenses (which would include, without limitation, any costs in relation to the provision of bunkers and lubricating oils), (the “Net Trading Proceeds”) shall be applied against the Termination Sum and any other amounts payable under the Leasing Documents pursuant to Clause 65 – (General Application of Proceeds) provided, that if such use of the Vessel results in the Owners suffering a loss then such losses shall be included in the indemnities contained in Clause 54 – (Indemnities) and be added to the Termination Sum; and |
| (c) | the Owners shall be entitled (at Owners’ sole discretion) to immediately thereafter sell the Vessel to any third party on arm’s length terms taking into account the prevailing market conditions, provided that the Charterers may for a period not exceeding a total of sixty (60) days from the Termination Date (the “Nomination Period”) nominate or identify a purchaser for the Vessel (a “Nominated Purchaser”). During the Nomination Period the Owners and the Charterers shall use their reasonable endeavours to market the Vessel and the Owners shall sell the Vessel to a Nominated Purchaser and subject to all of the following conditions being satisfied: |
| (i) | the Nominated Purchaser is acceptable to the Owners (such acceptability not to be unreasonably withheld or delayed); and |
| (ii) | the price to be paid by the Nominated Purchaser (after deducting any commissions, taxes and other costs of sale) is equal to or more than the applicable Termination Sum (unless otherwise agreed by the Owners in their absolute discretion); |
and any net sale proceeds (after deducting all fees, taxes, disbursements and any other costs and expenses incurred or suffered by the Owners in connection with such sale) (the “Net Sales Proceeds”) derived from any such sale to a Nominated Purchaser or any other person shall be applied towards reduction of the Termination Sum in accordance with Clause 65 – (General Application of Proceeds). If the Net Sales Proceeds are not sufficient to settle the Termination Sum in full, the Charterers shall remain liable to pay the shortfall and default interest shall continue to accrue on the unpaid portion of the Termination Sum in accordance with Clause 37.5.
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| (d) | Irrespective of any sales efforts, the Charterers have the right at all times, during the Nomination Period or until the Owners’ Purchase (as referred to in Clause 41.10) is concluded or until any third party’s sale is concluded, to purchase the vessel with priority by paying the Termination Sum. |
| 41.10 | The Owners may, by written notice to the Charterers at any time after the Nomination Period, inform the Charterers of the Owners’ intention to retain the Vessel instead of selling the Vessel under Clause 41.9(c) and 41.9(d) above, “Owners’ Purchase”, and in doing so, the Owners shall first obtain the Market Value of the Vessel (after deducting any commissions, taxes and costs which would be likely to be incurred in connection with a sale of the Vessel) and apply it towards the reduction of the Termination Sum calculated as of the day of the notice of the Owners’ Purchase. If the Market Value (less such deductions) of the Vessel as at the date of the notice of the Owners’ Purchase is less than the Termination Sum calculated as of the day of the notice of the Owners’ Purchase, the Charterers shall remain liable to pay the shortfall to the Owners and default interest shall continue to accrue on the unpaid portion of the Termination Sum. If the Market Value (less such deductions) of the Vessel as at the date of such nomination is more than the Termination Sum calculated as of the day of the notice of the Owners’ Purchase, the Owners shall pay the excess to Charterers within thirty (30) days from the day of the notice of the Owners’ Purchase in accordance with Clause 65 – (General Application of Proceeds). |
Total Loss
| 41.11 | Throughout the Charter Period, the Charterer shall bear the full risk of any Total Loss of or any other damage to the Vessel howsoever arising. If the Vessel becomes a Total Loss after Delivery, the Charterer shall, subject to Clause 41.12, pay the Termination Sum to the Owners by the Total Loss Payment Date. Upon such receipt by the Owners of the Termination Sum, this Charter shall terminate (without prejudice to any provision of this Charter expressed to survive termination) but until such receipt, the Charterers shall remain liable to make all payments of Charterhire and all other amounts to the Owners under this Charter, notwithstanding that the Vessel has become a Total Loss. |
| 41.12 | Any Total Loss Proceeds unconditionally received by the Owners (or the Owners’ Financiers in accordance with the terms of the relevant loss payable clause) shall be applied in accordance with Clause 65 – (General Application of Proceeds) and shall satisfy the obligation of the Charterers to pay the Termination Sum to the extent received by the Owners (or the Owners’ Financiers in accordance with the terms of the relevant loss payable clause, but for the avoidance of doubt, Total Loss Proceeds shall at all times be applied in accordance with Clause 65 (General Application of Proceeds)). The obligation of the Charterers to pay the Termination Sum shall remain unaffected and exist regardless of whether any of the insurers have agreed or refused to meet or has disputed in good faith, the claim for Total Loss. |
| 41.13 | If the Total Loss Proceeds unconditionally received by the Owners (or the Owners’ Financiers in accordance with the terms of the relevant loss payable clause) are less than the Termination Sum, the Charterers shall pay such shortfall to the Owner on the Total Loss Payment Date. |
| 41.14 | The Owners shall have no obligation to supply to the Charterers with a replacement vessel following the occurrence of a Total Loss. |
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CLAUSE 42 – FEES AND EXPENSES
| 42.1 | In consideration of: |
| (a) | the Owners (in their capacity as buyers) purchasing the Vessel from the Charterers (in their capacity as sellers) in accordance with the terms of the MOA; and |
| (b) | the Owners subsequently chartering the Vessel to the Charterers in accordance with the terms of this Charter, |
the Charterers agree to pay to the Owners a non-refundable arrangement fee (the “Arrangement Fee”) in the amount and at the times agreed in the Fee Letter.
| 42.2 | Without prejudice to any other rights of the Owners hereunder, the Charterers shall promptly pay to the Owners on written demand on a full indemnity basis all costs, charges and expenses incurred by the Owners in collecting any Charterhire or the Advance Charterhire or other payments not paid on the due date under this Charter and in remedying any other failure of the Charterers to observe the terms and conditions of this Charter. |
| 42.3 | Each Party shall be responsible for their own costs and expenses to review and negotiate the term sheet relating to this Charter. All documented costs and expenses (including, but not limited to, third party legal costs) reasonably incurred by the Owners or Owners’ legal counsel in the preparation, negotiation, finalisation and execution of all documentation in relation to this Charter or any other Leasing Document (including without limitation any registration or filing expenses, all documented costs incurred by the Owners and all third party legal costs, expenses and other disbursement incurred by the Owners’ legal counsels in connection with the same) shall be for the account of the Charterers (regardless of whether the transaction contemplated by the Leasing Documents actually completes). |
| 42.4 | All documented costs and expenses reasonably incurred by the Owners in relation to the acquisition, registration of title of the Vessel in the Owners’ name in the Flag State together with any and all fees (including but not limited to any vessel registration and tonnage fees and the Owners’ initial and ongoing annual registration and maintenance costs if required to be registered as a foreign maritime entity or the appointment of resident agents under the laws of the Flag State) payable by the Owners to register, maintain and/or renew such registration shall be for the account of the Charterers (regardless of whether the Vessel is delivered under the MOA and this Charter). Without prejudice to the foregoing, if the Flag State requires the Owners to establish a physical presence or office in the jurisdiction of such Flag State, all fees, costs and expenses payable by the Owners to establish and maintain such physical presence or office shall be for the account of the Charterers. The Charterers shall promptly provide the Owners with evidence of payment of the annual register/tonnage tax amounts payable to the Flag State or any other aforesaid costs, expenses and/or taxes when the same fall due. |
| 42.5 | All documented costs and expenses reasonably incurred by the Owners (including but not limited to legal fees) in relation to the transfer of title of the Vessel from the Owners to the Charterers and the re-delivery of the Vessel by the Charterers to the Owners pursuant to Clause 41 – (Termination, Redelivery and Total Loss) shall be for the account of the Charterers. |
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| 42.6 | If: |
| (a) | the Charterers request an amendment, waiver or consent (including an amendment or waiver which is required pursuant to 37.4 to address the fact that a Published Rate Replacement Event has occurred); or |
| (b) | the Charterers make a request to re-register the Vessel in another Flag State, |
the Charterers shall, on demand, reimburse the Owners for the amount of all documented costs and expenses (including third party legal fees) reasonably incurred by the Owners in responding to, evaluating, negotiating or complying with that request or requirement (including, for the avoidance of doubt, any amounts the Owners have to pay under the terms of the Financial Instruments).
| 42.7 | The Charterers shall, on demand, pay to the Owners the amount of all documented costs and expenses (including third party legal fees) incurred by the Owners in connection with the enforcement of, or the preservation of any rights under, any Leasing Document, including, without limitation, any action brought by the Owners to arrest or recover possession of the Vessel, and with any proceedings instituted by or against the Owners as a consequence of it entering into a Leasing Document or enforcing those rights. |
| 42.8 | Notwithstanding anything to the contrary herein, the indemnities provided by the Charterers shall be provided in favour of the Owners and shall continue in full force and effect notwithstanding any breach of the terms of this Charter or termination of this Charter pursuant to the terms hereof. |
CLAUSE 43 – NO WAIVER OF RIGHTS
| 43.1 | No neglect, delay, act, omission or indulgence on the part of either party in enforcing the terms and conditions of this Charter or any other Leasing Document (to which they are party to) shall prejudice the strict rights of that party or be construed as a waiver thereof nor shall any single or partial exercise of any right of either party preclude any other or further exercise thereof. |
| 43.2 | No right or remedy conferred upon either party by this Charter or any other Leasing Document shall be exclusive of any other right or remedy provided for herein or by law and all such rights and remedies shall be cumulative. |
CLAUSE 44 – NOTICES
| 44.1 | Any notice, certificate, demand or other communication to be served, given made or sent under or in relation to this Charter shall be in English and in writing and (without prejudice to any other valid method or giving making or sending the same) shall be deemed sufficiently given or made or sent if sent by registered post or by email to the following respective address or email address: |
| (a) | to the Owners: | China Huarong Shipping Financial Leasing Company Limited |
Room 6006, 6th Floor, No. 15 Second East Zhongshan Road, Shanghai, China, 200002
Attention:
Email:
Tel:
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| (b) | to the Charterers: | c/o TOP SHIPS INC. |
Attention:
Email:
Tel:
or, if a party hereto changes its address or email address, to such other address or email address as that party may notify to the other.
| 44.2 | Any such communication shall be deemed to have reached the party to whom it was addressed (a) when delivered (in case of a registered letter), or (b) when actually received in readable form (in case of an email). A notice or other such communication received on a non-working day or after 5.00 p.m. in the place of receipt shall be deemed to be served on the next following working day in such place. |
CLAUSE 45 – REPRESENTATIONS AND WARRANTIES
| 45.1 | The Charterers represent and warrant to the Owners as of the date hereof, and on each day during the Charter Period, as follows: |
| (a) | 100% of the issued and outstanding shares in the Charterers are legally, wholly and directly owned and controlled by the Guarantor and the Guarantor is controlled by companies affiliated with the family of Mr. Evangelos Pistiolis; |
| (b) | each Relevant Person or, to the best of its knowledge, the Approved Sub-charterer is duly incorporated and validly existing under the laws of its jurisdiction of its incorporation; |
| (c) | each Relevant Person or the Approved Sub-charterer has the corporate capacity, and has taken all corporate actions and obtained all consents, approvals, authorisations, licenses or permits necessary for it: |
| (i) | to execute each of the Leasing Documents to which it is a party; and |
| (ii) | to comply with and perform its obligations under each of the Leasing Documents to which it is a party; |
| (d) | all the consents, approvals, authorisations, licenses or permits referred to in Clause 45.1(c) (Representations and Warranties) remain in force and nothing has occurred which makes any of them liable to revocation; |
| (e) | each of the Leasing Documents and the Assignable Sub-charter to which a Relevant Person or an Approved Sub-charterer is a party (as the case may be) constitutes such Relevant Person’s or an Approved Sub-charterer’s legal, valid and binding obligations enforceable against such party in accordance with its respective terms and any relevant insolvency laws affecting creditors’ rights generally; |
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| (f) | the entry into and performance by each Relevant Person (and in the case of sub-paragraph (ii) below, an Approved Sub-charterer) of, and the transactions contemplated by, each Leasing Document to which it (and in the case of sub-paragraph (ii) below, an Approved Sub-charterer) is a party do not and will not conflict with: |
| (i) | any law or regulation applicable to it (including Anti-Money Laundering Laws, Business Ethics Laws, Sanctions or laws relating to anti-trust or collusion and laws relating to human rights violation); |
| (ii) | the constitutional documents of such Relevant Person; and |
| (iii) | any agreement or instrument binding upon it or any of its assets or constitute a default or termination event (however described) under any such agreement or instrument; |
| (g) | there are no outstanding notices or demands from any governmental, quasi-governmental or public authority or instrumentality or any other person claiming authority in respect of the Vessel requiring any work or other action to be taken or the expenditure of any money to be taken in respect of the Vessel or any part thereof; |
| (h) | the Vessel is free of encumbrances and liens except for the Permitted Security Interests; no third party has any Security Interest, other than the Permitted Security Interests, or any other interest, right or claim over, in or in relation to the Vessel, this Charter or any moneys payable hereunder and/or any of the other Leasing Documents; |
| (i) | all payments which a Relevant Person is liable to make under any Leasing Document to which such Relevant Person is a party may be made by such party without deduction or withholding for or on account of any tax payable under the laws of its Relevant Jurisdiction; |
| (j) | no legal or administrative action involving a Relevant Person has been commenced or taken (including but not limited to actions involving any Environmental Claim); |
| (k) | each Relevant Person has paid all taxes applicable to, or imposed on or in relation to it, its business or if applicable, the Vessel, except for those being contested in good faith with adequate reserves; |
| (l) | it is not necessary under the laws of the Relevant Jurisdictions that this Charter or any other Leasing Document be registered, filed, recorded, notarized or enrolled with any court or other authority in that jurisdiction or that any stamp, registration, notarial or similar taxes or fees be paid on or in relation to the Leasing Documents to which it is a party or the transactions contemplated by those Leasing Documents; the choice of governing law as stated in each Leasing Document to which a Relevant Person is a party and the agreement by such party to refer disputes to the relevant courts or tribunals as stated in such Leasing Document are valid and binding against such Relevant Person; |
| (m) | no Relevant Person nor any of their assets are entitled to immunity on the grounds of sovereignty or otherwise from any legal action or proceeding (which shall include, without limitation, suit, attachment prior to judgment, execution or other enforcement); |
| (n) | the obligations of each Relevant Person under each Leasing Document to which it is a party, are the direct, general and unconditional obligations of such Relevant Person and rank at least pari passu with all other present and future unsecured and unsubordinated creditors of such Relevant Person save for any obligation which is mandatorily preferred by law and not by virtue of any contract; |
| (o) | each Leasing Document creates (or, once entered into, will create) the Security Interest which it is expressed to create with the ranking and priority it is expressed to have; |
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| (p) | the Charterers and any other Relevant Person (i) are not US Tax Obligors and (ii) have not established a place of business in the United Kingdom or the United States of America; |
| (q) | no Relevant Person, Approved Manager, Sub-charterer and no member of the Group: |
| (i) | is a Prohibited Person; |
| (ii) | is owned or controlled by or acting directly or indirectly on behalf of or for the benefit of, a Prohibited Person; |
| (iii) | owns or controls a Prohibited Person; or |
| (iv) | has a Prohibited Person serving as a director, officer or, to the best of its knowledge, employee; |
| (r) | none of the Relevant Persons or any of their respective directors, officers, and employees or, to the best of its knowledge, any Sub-charterer is in breach of applicable Sanctions laws, and none of them (i) has been or is currently being investigated on compliance with Sanctions, (ii) has received notice or is aware of any claim, action, suit or proceeding against any of them with respect to Sanctions and (iii) has taken any action to evade the application of Sanctions; |
| (s) | no Relevant Person is in breach of any Anti-Money Laundering Laws, Anti-Terrorism Financing Laws and/or Business Ethics Laws and each Relevant Person has instituted and maintained systems, controls, policies and procedures designed to: |
| (i) | prevent and detect incidences of bribery and corruption, money laundering and terrorism financing; and |
| (ii) | promote and achieve compliance with Anti-Money Laundering Laws, Anti-Terrorism Financing Laws and or Business Ethics Laws including, but not limited to, ensuring thorough and accurate books and records, and utilization of best efforts to ensure that Affiliates acting on behalf of a Relevant Person shall act in compliance with Anti-Money Laundering Laws, Anti-Terrorism Financing Laws and Business Ethics Laws, |
| (t) | that in relation to any Assignable Sub-Charter: |
| (i) | each copy of that Assignable Sub-Charter provided to the Owners is a true and complete copy of such document and there have been no amendments, supplements or variations to the same; |
| (ii) | each of the Initial Sub-charterer or any other Approved Sub-Charterer is fully aware of the transactions contemplated under this Charter; and |
| (iii) | the Initial Sub-charterer or any other Approved Sub-Charterer has consented or, as the case may be, shall consent to the assignment by the Charterers to the Owners of all their rights, interests and benefits in relation to the Initial Sub-Charter or, as the case may be, the relevant Assignable Sub-Charter pursuant to the General Assignment; |
| (u) | the Vessel is not employed, operated or managed in any manner which (i) is contrary to any Sanctions and in particular, the Vessel is not used by or to benefit any party which is a target of Sanctions or trade to any area or country where trading the Vessel to such area or country would constitute a breach of any Sanctions or published boycotts imposed by any of the United Nations, the European Union, the United States of America, the United Kingdom or the People’s Republic of China (provided that operation or use of the Vessel by the Initial Sub-charterer pursuant to the Initial Sub-Charter shall not in any case be deemed to be in breach or contrary to any published boycotts or sanctions imposed by the People’s Republic of China) or (ii) would trigger the operation of any sanctions limitation or exclusion clause in any insurance documentation; |
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| (v) | none of the Relevant Persons nor any of their assets, in each case, has any right to immunity from set off, legal proceedings, attachment prior to judgment or other attachment or execution of judgement on the grounds of sovereign immunity or otherwise; |
| (w) | none of the Relevant Persons is insolvent, bankrupt or in liquidation, bankruptcy or administration or subject to any other formal or informal insolvency or bankruptcy procedure (including, without limitation, those referred to under Clause 49.1(g) and for the avoidance of doubt including the presentation of a petition for commencing such procedures), and no receiver, administrative receiver, administrator, liquidator, trustee or analogous officer has been appointed in respect of the any Relevant Person or all or material part of their assets; |
| (x) | no Termination Event is continuing or might reasonably be expected to result from the entry into and performance of this Charter or any other Leasing Document; |
| (y) | any factual information provided by any Relevant Person (or on their behalf) to the Owners was true and accurate in all material respects as at the date it was provided or as at the date at which such information was stated; |
| (z) | none of the following events has occurred: |
| (i) | any default by the Charterers under the terms of the Initial Sub-charter; |
| (ii) | breach of any Sanctions by any Relevant Person; and |
| (iii) | upon and after the commencement of the Charter Period, any casualty or occurrence (including damage caused to the Vessel for any reason whatsoever which results, or may be expected to result, in repairs on the Vessel) which amounts to Major Casualty and which are not being dealt with in accordance with the Leasing Documents (including without limitation in accordance with Clause 38 – (Possession of Vessel) and the General Assignment); |
| (aa) | all Environmental Laws relating to the ownership, operation and management of the Vessel and the business of each Relevant Person (as now conducted and as reasonably anticipated to be conducted in the future) have been complied with; |
| (bb) | no Environmental Claim has been made against any Relevant Person or otherwise in connection with the Vessel which is either (i) in excess of US$5,000,000 or (ii) has or is reasonably likely to have a Material Adverse Effect; and |
| (cc) | no Environmental Incident has occurred and no person has claimed that an Environmental Incident has occurred which has or is reasonably likely to have a Material Adverse Effect. |
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CLAUSE 46 – UNDERTAKINGS
| 46.1 | The Charterers undertake that they shall comply or procure compliance with the following undertakings during the Charter Period: |
| (a) | the Charterers shall, on the Commencement Date, procure the delivery of the full legal and beneficial title (free of any Security Interests save for those created under a Leasing Document or Financial Instrument or any other Permitted Security Interests) in the Vessel to the Owners; |
| (b) | there shall be sent to the Owners: |
| (i) | as soon as possible, but in no event later than one hundred and fifty (150) days after the end of each financial year of the Charterers, the annual financial statement accounts of the Charterers for that financial year as referred to in the Guarantor’s audited consolidated annual financial statement accounts for that financial year to be delivered under Clause 46.1(b)(iii); |
| (ii) | as soon as possible, but in no event later than ninety (90) days after the end of each half-year, the unaudited semi-annual accounts of the Charterers for that half-year (as referred to in the Guarantor’s audited consolidated financial statement accounts); |
| (iii) | as soon as possible, but in no event later than one hundred and fifty (150) days after the end of each financial year of the Guarantor, the audited consolidated annual financial statement accounts of the Guarantor for that financial year; and |
| (iv) | as soon as possible, but in no event later than ninety (90) days after the end of each half-year, the semi-annual consolidated unaudited accounts of the Guarantor for that half-year certified as to their correctness by at least one director of the Guarantor; |
and if any of the statements above are not in the English language then they shall be accompanied by an English translation and each set of financial statements delivered pursuant to this paragraph (b) shall be prepared using the generally accepted accounting principles in the United States and shall be certified by a duly authorised officer of the relevant company as giving a true and fair view (if audited) or fairly representing (if unaudited) its financial condition and operations as at the date as at which those financial statements were drawn;
| (c) | they shall provide to the Owners, at the same time as they are despatched, copies of all notices and minutes relating to any of their extraordinary shareholders’ meeting which are despatched to the Charterers’ or the Guarantor’s respective shareholders or creditors or any class of them, unless same are publicly available; |
| (d) | they will provide the Owners promptly upon becoming aware of them, the details of: |
| (i) | any litigation, arbitration or administrative proceedings or investigations relating to any alleged or actual breach of any Sanctions or Anti-Money Laundering Laws which are current or pending against any Relevant Person, Approved Manager, Sub-charterer or other member of the Group; |
| (ii) | any litigation, arbitration or administrative proceedings or investigations relating to any other matters not referred to in paragraph (i) above (including proceedings or investigations relating to any alleged or actual breach of the ISM Code or of the ISPS Code) in relation to a Relevant Person; and |
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| (iii) | any Termination Event or Potential Termination Event that has occurred (and the steps, if any, being taken to remedy it); |
| (e) | they will, promptly upon a request by the Owners, supply to the Owners a certificate signed by an officer on its behalf certifying that no Termination Event has occurred (or if a Termination Event has occurred, specifying the nature of the Termination Event (and the steps, if any, being taken to remedy it)); |
| (f) | they shall, and shall procure that each other Relevant Person will, obtain and promptly renew or procure the obtainment or renewal of and provide copies of, from time to time, any necessary consents, approvals, authorisations, licenses or permits of any regulatory body or authority for the transactions contemplated under each Leasing Document to which it is a party (including without limitation to sell, charter and operate the Vessel); |
| (g) | they shall not, and shall procure that each other Relevant Person will not, create, assume or permit to exist any Security Interest (other than any Permitted Security Interest) of any kind upon any Leasing Document to which such Relevant Person is a party, and if applicable, the Vessel; |
| (h) | they shall at their own cost and shall procure that each other Relevant Person will: |
| (i) | do all that such Relevant Person reasonably can to ensure that any Leasing Document to which such Relevant Person is a party validly creates the obligations and the Security Interests which such Relevant Person purports to create; and |
| (ii) | without limiting the generality of paragraph (i), promptly register, file, record or enroll any Leasing Document to which such Relevant Person is a party with any court or authority in all Relevant Jurisdictions, pay any stamp duty, registration or similar tax in all Relevant Jurisdictions in respect of any Leasing Document to which such Relevant Person is a party, give any notice or take any other step which, is or has become necessary for any such Leasing Document to be valid, enforceable or admissible in evidence or to ensure or protect the priority of any Security Interest which such Relevant Person creates; |
| (i) | they shall notify the Owners as soon as possible (but in any event no later than fifty nine (59) days prior to the expiry of the fixed period as per the Initial Sub-Charter), together with any evidence requested by the Owners, whether the Initial Sub-Charterer intends to and will (with irrevocable confirmation from the Initial Sub-Charterer) extend the charter period of the Initial Sub-Charter in accordance with the terms thereunder; |
| (j) | they shall, and shall procure that each other Relevant Person will (where applicable), notify the Owners as soon as they become aware of the occurrence of: |
| (i) | any default by either any Approved Sub-charterer or the Charterers of the terms of an Assignable Sub-charter; |
| (ii) | an event of default or termination event howsoever called under the terms of any Assignable Sub-charter entitling either the Charterers or any Approved Sub-charterer to terminate an Assignable Sub-charter; |
| (iii) | breach of any Sanctions; or |
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| (iv) | any Potential Termination Event or a Termination Event, |
and will keep the Owners fully up-to-date with all developments and the Charterers shall, if so requested by the Owners, provide any such certificate signed by at least one officer, confirming that there exists no Termination Event;
| (k) | they shall, and shall procure that each other Relevant Person will, on the sixth month anniversary of the Commencement Date and at six-monthly intervals thereafter and otherwise upon the Owners’ and/or the Owners’ Financiers (if any) request (acting reasonably) from time to time and as soon as practicable after receiving such request, provide the Owners with any additional financial or other information relating: |
| (i) | to the Vessel (including, but not limited to the management, employment, condition, class records, location and pooling arrangement of the Vessel) and, to their best knowledge having made due enquiry, to the Initial Sub-charterer; |
| (ii) | the terms and conditions of any Sub-charter together with any other information relating to such Sub-charter; and |
| (iii) | to any other matter (which include without limitation, to their best knowledge having made due enquiry, any other matters relating to the Initial Sub-charterer) which may be reasonably requested by the Owners (or the Owners’ Financiers (if any)) at any time or which under the terms of the relevant Leasing Document may be sought from the person in possession of such information. |
| (l) | without prejudice to Clause 46.1(t), comply, or procure compliance, and shall procure that each other Relevant Person will comply or procure compliance, with all laws or regulations relating to the Vessel and its construction, ownership, employment, operation, management and registration, including the ISM Code, the ISPS Code, all Environmental Laws and the laws of the Vessel’s registry and shall procure that the Technical Manager and the Commercial Manager and the Vessel to be in the possession of proper trading certificates and other vessel related documents and to comply with other relevant laws and regulations; |
| (m) | the Vessel shall be maintained in the highest standard and classed with the Approved Classification Society and shall be free of all overdue conditions, recommendations, qualifications and conditions; |
| (n) | they shall not and shall ensure that the Guarantor shall not enter into any form of merger, sub-division, amalgamation, demerger, reorganization, corporate reconstruction or change of ownership, or change of voting control, in the case of the Guarantor, unless it remains as the surviving entity after such merger, sub-division, amalgamation, demerger, reorganization, corporate reconstruction or change of ownership, or change of voting control and clause 11.14 of the Guarantee is complied with; |
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| (o) | they will comply, and will procure that each other Relevant Person, each other member of the Group or, will use best endeavours to procure that, any Sub-charterer will comply, with all Sanctions and all laws and regulations relating to such Relevant Person, the Vessel and its construction, ownership, employment, operation, management and registration, including the ISM Code, the ISPS Code (including the maintenance of an ISSC), all Environmental Laws, all Anti-Money Laundering Laws, Business Ethics Laws and the laws of the Vessel’s registry, and in particular, they shall effect and maintain a sanctions compliance policy which, inter alia, implements the recommendations of the Sanctions Advisory, to ensure compliance with all such laws and regulations implemented from time to time, including, without limitation they will, and will procure that (in the case of any Sub-charterer, use best endeavours to procure that) each other Relevant Person, each other member of the Group and any Sub-charterer will: |
| (i) | conduct their activities in a manner consistent with US and UN sanctions, as applicable; |
| (ii) | have sufficient resources in place to ensure execution of and compliance with their own sanctions policies by their personnel, e.g., direct hires, contractors, and staff; |
| (iii) | ensure subsidiaries and affiliates comply with the relevant policies, as applicable; |
| (iv) | have relevant controls in place to monitor automatic identification system (AIS) transponders; |
| (v) | have controls in place to screen and assess onboarding or offloading cargo in areas they determine to present a high risk; |
| (vi) | have controls to assess authenticity of bills of lading, as necessary; and |
| (vii) | have controls in place consistent with the Sanctions Advisory; |
| (p) | without limiting Clause 46.1(o), they will procure that: |
| (i) | the Vessel shall not be constructed, operated, employed, managed, used by or for the benefit of a Prohibited Person; |
| (ii) | the Vessel shall not be employed in trading with any Prohibited Person or in any manner contrary to Sanctions; |
| (iii) | notwithstanding any other provision of this paragraph (p), the Vessel shall not be permitted to call at any port in any Prohibited Country or any area or country where trading in such area or country would constitute or would be reasonably expected to constitute a breach of Sanctions; |
| (iv) | the Vessel shall not be traded in any manner which would trigger the operation of any sanctions limitation or exclusion clause (or similar) in the Insurances or in any manner which would result or would reasonably be expected to result in any Relevant Person or the Owners becoming a Prohibited Person; and |
| (v) | that each charterparty in respect of the Vessel shall contain, for the benefit of the Owners, language which gives effect to the provisions of Clause 46.1(p) as regards Sanctions and of this Clause and which permits refusal of employment or voyage orders if compliance would result in a breach of Sanctions and which prohibits trading to any Prohibited Country; |
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| (q) | they shall ensure that the Market Value of the Vessel will be tested at any of the following instances: |
| (i) | in the absence of a Termination Event which is continuing, at least once every six (6) months (i.e. 30 June and 31 December of each calendar year) and the Charterers shall procure a valuation report issued by the Approved Valuers to be delivered to the Owners (for the avoidance of doubt, such valuation report should be dated not earlier than fifteen (15) calendar days before the applicable testing date (or on such other date as the Owners may request)); |
| (ii) | if, in the opinion of the Owners, any volatile market fluctuations occur that may affect the value of the Vessel or vessels of the similar type of the Vessel, at any time at the request of the Owners; |
| (iii) | at any time at the request of the Owners if the Owners have determined that the then applicable Outstanding Capital Balance is likely to exceed eighty three point three (83.3%) per cent of the Market Value of the Vessel; and |
| (iv) | upon the occurrence of a Termination Event, at any time at the request of the Owners, |
and in each case above, the Charterers shall bear the fees and expenses of the Approved Valuers arising in connection with conducting any such valuations or reimburse the same to the Owners (as the case may be).
| (r) | they shall notify the Owners immediately of: |
| (i) | as soon as they become aware, any Environmental Claim made against the Charterers or any Sub-charterer in connection with the Vessel or any Environmental Incident; |
| (ii) | arrest or detention of the Vessel; |
| (iii) | any exercise or purported exercise of any lien on that Vessel or its Earnings or any requisition of that Vessel for hire; |
| (iv) | any damage caused to or alteration of the Vessel for any reason whatsoever which results, or may be expected to result, in repairs on the Vessel which exceed $5,000,000; or |
| (v) | any casualty or occurrence as a result of which the Vessel has become or is, by the passing of time or otherwise, likely to become, a Major Casualty; |
| (s) | subject to the terms of this Charter, the Charterers may freely sub-charter the Vessel (other than on a bareboat charter basis, irrespective of duration) save that the Owners’ prior written consent shall be required to any Assignable Sub-charter and the Charterers shall assign all their rights and interests under such Assignable Sub-charter and procure (on a best efforts basis) the Sub-charterer of such Assignable Sub-charter to give a written acknowledgment of such assignment and provide such documents as the Owners may reasonably require regarding the due execution of such Assignable Sub-charter; |
| (t) | they shall, and shall procure that each other Relevant Person will, comply with all applicable laws and regulations in respect of Sanctions, and in particular, the Charterers shall effect and maintain a sanctions compliance policy to ensure compliance with all such laws and regulations implemented from time to time; |
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| (u) | they shall, and shall procure that each other Relevant Person and their respective officers, directors and employees, will: |
| (i) | conduct its business in compliance with all Anti-Money Laundering Laws, Anti-Terrorism Financing Laws and/or Business Ethics Laws; |
| (ii) | maintain systems, controls, policies and procedures designed to promote and achieve ongoing compliance with Anti-Money Laundering Laws, Anti-Terrorism Financing Laws and/or Business Ethics Laws; |
| (iii) | in respect of the Charterers, not use, or permit or authorize any person to directly or indirectly use, the Financing Amount for any purpose that would breach any Anti-Money Laundering Laws, Anti-Terrorism Financing Laws and/or Business Ethics Laws; |
| (iv) | not lend, invest, contribute or otherwise make available the Financing Amount to or for any other person in a manner which would result in a violation of Anti-Money Laundering Laws, Anti-Terrorism Financing Laws and/or Business Ethics Laws. |
| (v) | they shall, and shall procure that that each other Relevant Person will, promptly notify the Owners and provide all information in relation to its business and operations which may be relevant for the purposes of ascertaining whether they are in compliance with all applicable laws and regulations relating to Sanctions, and in particular, the Charterers shall notify the Owners in writing immediately upon being aware that any of the Charterers’ shareholders, directors, officers or employees is a Prohibited Person or has otherwise become a target of Sanctions; |
| (w) | they shall not appoint or permit to be appointed any manager of the Vessel save for an Approved Manager on terms acceptable to the Owners and such Approved Manager has (prior to accepting its appointment entered into a Manager’s Undertaking); |
| (x) | if at any time; |
| (i) | the shares of the Guarantor cease to trade on the NASDAQ or Over the Counter (OTC), the Charterers shall promptly, and in any event within thirty (30) days upon receiving written request from the Owners, provide, or ensure that a third party has provided, additional security acceptable to the Owners and documented in such terms as the Owners may require; or |
| (ii) | pursuant to Clause 46.1(q), it is determined that the then applicable Outstanding Capital Balance exceeds eighty three point three (83.3%) per cent of the Market Value of the Vessel (the “LTV Breach” and the said difference between the applicable Outstanding Capital Balance and eighty three point three (83.3%) per cent of the Market Value of the Vessel shall be referred to as the “shortfall”), |
the Charterers shall, promptly and in any event no later than the date falling thirty (30) days from the date on which the Owners receive the valuation report(s) pursuant to Clause 46.1(q), at the Owners’ discretion, either:
| (A) | make payment in an amount such as to eliminate the shortfall which payment shall be deemed to be an advance payment of hire and credited against future instalment(s) of Fixed Charterhire (or part thereof) such that the amount of Fixed Charterhire for each Payment Date falling after that prepayment will be reduced pro rata by the amount paid; and/or |
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| (B) | provide, or ensure that a third party has provided, additional Security Interests which, has a Market Value (in the case of a Security Interests over a vessel) or otherwise in the opinion of the Owners (in the case of Security Interests over any other asset) has a net realisable value at least equal to the shortfall and is acceptable to the Owners, and which is documented in such terms as the Owners may require. |
| (y) | save with the prior written consent of the Owners, they shall not, and shall procure that no other Relevant Person shall, agree or enter into any transaction, arrangement, document or do or omit to do anything which will have the effect of varying, amending, supplementing or waiving any term of the Initial Sub-charter or any other Assignable Sub-Charter; |
| (z) | they shall ensure that: |
| (i) | all Earnings and any other amounts received by them in connection with the Vessel are paid into the Operating Account; |
| (ii) | all of their operating expenses in connection with the Vessel are paid from the Operating Account or via the monthly budget from the manager’s bank account which shall be credited from the Operating Account; and |
| (iii) | the credit balance in the Operating Account shall not at any time as from the Commencement Date, be less than $500,000; |
(aa)
| (i) | they shall not: |
| (A) | purchase, cancel or redeem any of its share capital; |
| (B) | increase or reduce its authorised share capital; |
| (C) | issues any further shares; and |
| (ii) | they shall not, and shall procure that the Guarantor shall not, make or pay any dividend or other distribution (in cash or in kind) in respect of its issued shares to any shareholder (including the holders of preference shares (if any)) following the occurrence of a Termination Event; |
| (bb) | the Vessel shall be registered under the Flag State at all times; |
| (cc) | they shall ensure that the Vessels to be maintained with all spare parts on board and on order and with all stores on board together with all records, logs, plans, operating manuals and drawings in relation to the Vessel or the Vessel’s operations and/or maintenance; and |
| (dd) | they shall, upon the request of the Owners and at the cost of the Charterers, on or before 31st July in each calendar year, supply or procure the supply to the Owners all information necessary in order for the Owners to comply with their or any Owners’ Financiers’ obligations under the Poseidon Principles in respect of the preceding year, including, without limitation, all ship fuel oil consumption data required to be collected and reported in accordance with Regulation 22A of Annex VI and any Statement of Compliance relating to the Vessel for the preceding calendar year and, for the avoidance of doubt, such information shall be “Confidential Information” for the purposes of Clause 57 – (Confidentiality) but the Charterers acknowledge that, in accordance with the Poseidon Principles, such information will form part of the information published regarding the Owners’ and/or Owners’ Financiers’ portfolio climate alignment. |
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CLAUSE 47 – INSPECTION OF VESSEL
| 47.1 | Without prejudice to Clause 47.2 (Inspection of Vessel) below, the Owners shall, after giving notice to the Charterers, be entitled to inspect or survey the Vessel or instruct a surveyor to carry out such survey on their behalf: |
| (a) | to ascertain the condition of the Vessel and satisfy themselves that the Vessel is being properly repaired and maintained; |
| (b) | in dry-dock if the Charterers have not dry-docked the Vessel in accordance with Clause 10(g) (Periodical Dry-Docking); and |
| (c) | for any other reason they consider necessary, |
provided it does not unduly interfere with the operation of the Vessel.
| 47.2 | The Owners shall be entitled to exercise its rights of inspection or survey as described under Clause 47.1 once a year at the cost of the Charterers and at any other time at the cost of the Owners (and, except where inspection or survey is carried out pursuant to the following (a) or (b), without interference to the operation of the Vessel), save that (a) upon the occurrence of a Termination Event or the occurrence of any major insurance claims which exceeds the Major Casualty amount in respect of the Vessel, the Owners shall have the right to inspect or survey the Vessel or instruct a duly authorized surveyor to carry out such survey on their behalf at any time (and for the avoidance of doubt, more than once a year) without prior notice to, and at the cost of, the Charterers; and (b) the Owners shall have the right to inspect or survey the Vessel or instruct a duly authorized surveyor to carry out such survey on their behalf at any time prior to the Commencement Date. The Charterers shall procure that the Owners can fully exercise such rights of inspection and survey. |
| 47.3 | The Charterers shall also permit the Owners to inspect the Vessel’s log books whenever requested and shall whenever required by the Owners furnish them with full information regarding any casualties or other accidents or damage to the Vessel. |
| 47.4 | Except as otherwise provided under Clause 47.2, the documented costs and fees for any inspection and survey permitted under this Clause shall be paid by the Charterers. |
| 47.5 | All time used in respect of inspection, survey or repairs pursuant to this Clause shall be for the Charterers’ account and form part of the Charter Period. |
CLAUSE 48 – VOLUNTARY PREPAYMENT
| 48.1 | Upon providing the Owners not less than sixty (60) days’ (or such shorter period as the Owners may agree) prior written notice, the Charterers shall have the option to make a prepayment to the Owners on the next occurring Payment Date in an amount of a minimum of one million dollars (US$1,000,000) or higher integral multiples thereof provided that, |
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| (a) | the Charterers may only exercise such option once per year after the date falling twelve (12) months from the Commencement Date; |
| (b) | any such prepayment shall be made together with a prepayment fee in the amount of: |
| (i) | if the option of such partial prepayment is exercised after the date falling twelve (12) months from the Commencement Date but on or before the date falling twenty four (24) months after the Commencement Date, one point five per cent (1.5%) of the amount prepaid; |
| (ii) | if the option of such partial prepayment is exercised after the date falling twenty four (24) months from the Commencement Date but on or before the date falling thirty six (36) months from the Commencement Date, one per cent (1.00%) of the amount prepaid; or |
| (iii) | if the option of such partial prepayment is exercised after the date falling thirty six (36) months from the Commencement Date, zero per cent (0%); |
| (c) | the aggregate amount of any such prepayment shall not exceed $5,000,000 in total throughout the Charter Period; and |
| (d) | any such prepayment shall be deemed to be an advance payment of hire and credited against future instalment(s) of Fixed Charterhire (or part thereof) such that the amount of Fixed Charterhire for each Payment Date falling after that prepayment will be reduced pro rata by the amount paid. |
CLAUSE 49 – TERMINATION EVENTS
| 49.1 | The Owners and the Charterers hereby agree that any of the following events shall constitute a Termination Event: |
| (a) | any Relevant Person fails to make any payment on the due date or on demand in accordance with the terms of any Leasing Document to which it is a party, unless such non-payment is caused by administrative or technical error and the relevant payment is made within three (3) Business Days (in the case of payment of Charterhire) or five (5) Business Days (in the case of any other payment, other than Charterhire) of the relevant due date; |
| (b) | the Charterers breach or omit to observe or perform any of their undertakings in Clause 46.1 (a), (f), (g), (j)(iii), (l), (p), (t), (u), (v), (x) or (z)(iii) or the Guarantor breaches or omits to observe or perform any of its undertakings or the financial covenants contained under clause 11.14 (Financial covenants) of the Guarantee; |
| (c) | the Charterers fail to obtain and/or maintain the Insurances required under Clause 39 – (Insurance) in accordance with the provisions thereof (or any insurer in respect of such Insurances cancels the Insurances or disclaims liability with respect thereto); |
| (d) | any Relevant Person commits any other breach of, or omits to observe or perform, any of their other obligations or undertakings in this Charter or any Leasing Document (other than a breach referred to in paragraphs (a), (b) and (c) above) unless such breach or omission is in the opinion of the Owners, remediable and the Relevant Person remedies (or cause to remedy) such breach or omission to the satisfaction of the Owners within ten (10) Business Days of the occurrence of such breach or omission; |
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| (e) | any representation or warranty made by any Relevant Person in or pursuant to any Leasing Document to which it is a party proves to be untrue or misleading when it is made; |
| (f) | any of the following occurs in relation to any Financial Indebtedness of either the Charterer or the Guarantor: |
| (i) | any Financial Indebtedness of such entity is not paid when due or, if so payable, on demand after any applicable grace period has expired; |
| (ii) | any Financial Indebtedness of such entity becomes due and payable, or capable of being declared due and payable, prior to its stated maturity date as a consequence of any event of default and not as a consequence of the exercise of any voluntary right of prepayment; |
| (iii) | a lease, hire purchase agreement or charter creating any Financial Indebtedness of such entity is terminated by the lessor or owner as a consequence of any termination event or event of default (howsoever defined); or |
| (iv) | any overdraft, loan, note issuance, acceptance credit, letter of credit, guarantee, foreign exchange or other facility, or any swap or other derivative contract or transaction, relating to any Financial Indebtedness of such entity ceases to be available or becomes capable of being terminated or declared due and payable or cash cover is required or becomes capable of being required, as a result of any termination event or event of default (howsoever defined); |
provided that no Termination Event will occur under this paragraph (f) in respect of (A) the Guarantor if the aggregate amount of Financial Indebtedness falling within sub-paragraphs (i) to (iv) above is less than US$10,000,000 (or its equivalent in any other currency or currencies) or (B) the Charterer if the aggregate amount of Financial Indebtedness falling within sub-paragraphs (i) to (iv) above is less than US$2,000,000 (or its equivalent in any other currency or currencies);
| (g) | any of the following occurs in relation to either the Charterer or the Guarantor: |
| (i) | such entity becomes, in the opinion of the Owners, unable to pay their debts as they fall due; |
| (ii) | in respect of such entity, the value of its assets is less than its liabilities (taking into account contingent liabilities); |
| (iii) | any administrative or other receiver is appointed over all or a substantial part of the assets of such entity unless as part of a solvent reorganisation which has been approved by the Owners; |
| (iv) | such entity makes any formal declaration of bankruptcy or any formal statement to the effect that they are insolvent or likely to become insolvent, or a winding up or administration order is made in relation to such entity, or the members or directors of such entity pass a resolution to the effect that they should be wound up, placed in administration or cease to carry on business; |
| (v) | a petition is presented in any Relevant Jurisdiction for the winding up or administration, or the appointment of a provisional liquidator, of such entity; |
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| (vi) | such entity petitions a court, or presents any proposal for, any form of judicial or non-judicial suspension or deferral of payments, reorganisation of their debt (or certain of their debt) or arrangement with all or a substantial proportion (by number or value) of their creditors or of any class of them or with a minority proportion (by number or value) of their creditors or of any class of them which would reasonably likely to have a Material Adverse Effect or any such suspension or deferral of payments, reorganisation or arrangement is effected by court order, contract or otherwise; |
| (vii) | any meeting of the members or directors of such entity is summoned for the purpose of considering a resolution or proposal to authorise or take any action of a type described in paragraph (iii), (iv), (v) or (vi); |
| (viii) | in any jurisdiction, any event occurs or any procedure is commenced which, in the opinion of the Owners, is similar to any of the foregoing referred to in (ii) to and including (vii) above; or |
| (ix) | any expropriation, attachment, sequestration, distress or execution or any analogous process in any jurisdiction which affects any asset or assets of such entity which is not discharged within fourteen (14) days; |
| (h) | the Charterer or the Guarantor suspends or ceases or threatens to suspend or cease carrying on its business; |
| (i) | any consent, approval, authorisation, license or permit necessary to enable the Charterers to operate or charter the Vessel or any Relevant Person to comply with any provision of Leasing Document (as the case may be) and/or to ensure that the obligations of any Relevant Person under any Leasing Document are legal, valid, binding or enforceable (I) is not granted, (II) expires without being renewed, (III) is revoked or becomes liable to revocation or (IV) any condition of such a consent, approval, authorisation, license or permit is not fulfilled; |
| (j) | any event or circumstance occurs which (in the opinion of the Owners) has or is reasonably likely to have a Material Adverse Effect; |
| (k) | this Charter or any Leasing Document or any Security Interest created by a Leasing Document: |
| (i) | is cancelled, terminated, rescinded or suspended or otherwise ceases to remain in full force and effect for any reason or no longer constitutes valid, binding and enforceable obligations of any party to that document for any reason whatsoever; or |
| (ii) | is amended or varied without the prior written consent of the Owners; |
| (l) | the Charterer, the Guarantor or the Approved Manager rescinds or purports to rescind or repudiates or purports to repudiate a Leasing Document; |
| (m) | the Security Interest constituted by any Leasing Document is in any way imperiled or in jeopardy; |
| (n) | the occurrence of any of the following events; |
| (i) | if any Relevant Person: |
| (A) | is or becomes a Prohibited Person; |
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| (B) | is owned or controlled by or acting directly or indirectly on behalf of or for the benefit of, a Prohibited Person; |
| (C) | owns or controls a Prohibited Person; |
| (D) | has a Prohibited Person serving as a director, officer or employee;; |
| (o) | there is a merger, amalgamation, demerger or corporate reconstruction of any of the Charterers and the Guarantor without the Owners’ prior written consent; |
(p)
| (i) | the shares of the Guarantor cease to trade on the NASDAQ or Over the Counter (OTC), unless the Charterers comply with their obligations under Clause 46.1(x); or |
| (ii) | the Guarantor ceases being an entity reporting with the U.S. Securities and Exchange Commission; |
| (q) | there is a change in control of ownership or control of the Charterers or there is a change of voting control in the case of the Guarantor as set out in Clause 45 – (Representations and Warranties) unless prior written consent from the Owners has been obtained prior to such change; |
| (r) | there is any occurrence of any litigation, arbitration or administrative proceedings or investigations involving a Relevant Person which has been commenced or taken and has been adversely determined and which has or is reasonably likely to have a Material Adverse Effect; or |
| (s) | any lease, hire purchase agreement, charter or any other financing arrangement in respect of any Associated Vessel (other than the Vessel) is terminated, cancelled or repudiated by the relevant lessor or owner or financier as a consequence of any termination event or event of default (howsoever defined therein). |
| 49.2 | Notwithstanding and without prejudice to Clause 33 – (Cancellation), upon the occurrence of any Termination Event which is continuing, the Owners may issue a written notice to the Charterers terminating this leasing of the Vessel under this Charter and demanding payment of the Termination Sum (the “Termination Notice”), whereupon the Charterers shall be obliged to pay the Termination Sum to the Owners on the date specified by the Owners in their sole discretion in the Termination Notice (the “Termination Date”). |
| 49.3 | For the avoidance of doubt, notwithstanding any action taken by the Owners following a Termination Event, the Charterers shall remain liable for the outstanding obligations on their part to be performed under this Charter including but not limited to all insurance, operational and maintenance covenants until such time as the Vessel is redelivered to the Owners in accordance with Clause 41.5, or the title is transferred to the Charterers in accordance with Clause 41.3, the Vessel is sold in accordance with 41.9 or the Owners exercise the option set out in Clause 41.10. |
| 49.4 | Without limiting the generality of the foregoing or any other rights of the Owners (but without prejudicing the rights of the Charterers pursuant to Clause 41.9), upon the occurrence of a Termination Event which is continuing, the Charterers agree and acknowledge that the Owners shall have the sole and exclusive right and power to (i) settle, compromise, compound, adjust or defend any action, suit or proceeding relating to or pertaining to the Vessel, (ii) make proof of loss, appear in and prosecute any action arising from any policy or policies of insurance maintained pursuant to this Charter, and settle, adjust or compromise any claims for loss, damage or destruction under, or take any other action in respect of, any such policy or policies and/or change or appoint a new manager for the Vessel and the appointment of any originally appointed manager may be terminated immediately without any recourse to the Owners. |
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| 49.5 | Each Termination Event which is continuing shall either be a breach of condition by the Charterers where it involves a breach of this Charter or any of the other Leasing Document by the Charterers or shall otherwise be an agreed terminating event, the occurrence of which gives rise to a right of the Owners to terminate the leasing of the Vessel under this Charter and to exercise its rights under this clause, provided that, in case of a breach of contract claim, the claim amount of the Owners should not exceed the applicable Termination Sum as at the relevant time. |
CLAUSE 50 – MANDATORY SALE
| 50.1 | If it becomes unlawful in any applicable jurisdiction for the Owners to perform any of their obligations as contemplated by this Charter or the MOA to perform their obligations under the Financial Instruments, the Owners shall notify the Charterers of this event and the Charterers shall be required to pay the Mandatory Sale Price to the Owners within sixty (60) days following such written notice by the Owners or, if earlier, the date specified by the Owners in the notice delivered to the Charterers (being no earlier than the last day of any applicable grace period permitted by law), and this Charter shall terminate in accordance with the procedures set out in Clause 50.4. |
| 50.2 | If it is or has become: |
| (a) | unlawful or prohibited, whether as a result of the introduction of a new law, an amendment to an existing law or a change in the manner in which an existing law is or will be interpreted or applied; or |
| (b) | contrary to, or inconsistent with, any regulation, |
for any Relevant Person to maintain or give effect to any of its obligations under this Charter or any of the other Leasing Documents to which it is a party in the manner it is contemplated under such Leasing Document or any of the obligations of such Relevant Person under any Leasing Document to which it is a party are not or cease to be legal, valid, binding and enforceable, the Charterers shall be required to pay the Mandatory Sale Price to the Owners within sixty (60) days following such occurrence or, if earlier, a date specified by the Owners (being no earlier than the last day of any applicable grace period permitted by law), and this Charter shall terminate in accordance with the procedures set out in Clause 50.4.
| 50.3 | If there is a breach of 46.1(j)(iii), 46.1(t), 46.1(u) or 46.1(v) in any such case on the basis that reference to “the People’s Republic of China” applies to the definition of “Prohibited Person” or paragraph (e) of the definition of “Sanctions Authority” applies to the definition of “Sanctions Authority”, the Charterers shall be required to pay the Mandatory Sale Price to the Owners within sixty (60) days following such occurrence or, if earlier, a date specified by the Owners (being no earlier than the last day of any applicable grace period permitted by law or the relevant official institution, agency or the government of the People’s Republic of China) and this Charter shall terminate in accordance with the procedures set out in Clause 50.4. |
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| 50.4 | If the Mandatory Sale Price becomes payable in accordance with Clause 36.13 or Clause 37.3 or Clause 50.1 or Clause 50.2 or Clause 50.3 or Clause 55.5, the same shall (in each such case) be payable in consideration of the purchase and transfer of the legal and beneficial title of the Vessel pursuant to Clause 53 – (Sale of the Vessel). The day on which the Mandatory Sale Price is paid pursuant to Clause 36.13 or Clause 37.3 or Clause 50.1, Clause 50.2 or Clause 50.3 or Clause 55.5 is a “Mandatory Sale Date” and such transfer of Vessel provided therein is a “Mandatory Sale”. |
CLAUSE 51 – VOLUNTARY EARLY TERMINATION
| 51.1 | The Charterers shall have the right (the “Voluntary Early Termination”), after the date falling twelve (12) months from the Commencement Date, to purchase the Vessel on any date specified in the Voluntary Early Termination Notice (as hereinafter defined) at the applicable Voluntary Early Termination Price, subject to the other terms of this Clause 51 (Voluntary Early Termination). |
| 51.2 | The Voluntary Early Termination shall be exercisable only: |
| (a) | upon the Charterers providing not less than ninety (90) days’ prior written notice (the “Voluntary Early Termination Notice”) to purchase the Vessel; |
| (b) | after the date falling twelve (12) months from the Commencement Date (unless otherwise agreed by the Owners) (the “Voluntary Early Termination Date”); and |
| (c) | in the absence of the occurrence of a Termination Event which is continuing on or prior to either the date of the Voluntary Early Termination Notice or the Voluntary Early Termination Date. |
| 51.3 | The Voluntary Early Termination Notice shall be signed by a duly authorised officer or attorney of the Charterers and, once delivered to the Owners, will be irrevocable and the Charterers shall be bound to pay to the Owners the Voluntary Early Termination Price on the Voluntary Early Termination Date. |
| 51.4 | The sale of the Vessel pursuant to the Charterers’ exercise of the Voluntary Early Termination shall be conducted in accordance with Clause 53 – (Sale of the Vessel). |
CLAUSE 52 – PURCHASE OBLIGATION
Provided all moneys owing and payable under this Charter have been fully and irrevocably paid to the Owners, the Charterers shall be obliged to purchase from the Owners all of the Owners’ beneficial and legal right, title and interest in the Vessel and all belonging to her, and the Owners and the Charterers shall perform their obligations referred to in Clause 53 (Sale of the Vessel) and the Charterer shall pay the Purchase Obligation Price on the last day of the Charter Period in relation thereto (unless the Parties agree otherwise in writing and upon such terms and conditions as the Owners may deem fit in their absolute discretion).
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CLAUSE 53 – SALE OF THE VESSEL
| 53.1 | The sale of the legal and beneficial interest and title in the Vessel pursuant to the Charterer’s payment of the Termination Sum under Clause 41 – (Termination, Redelivery and Total Loss), the Charterers’ exercise of the Charterers’ Voluntary Early Termination under Clause 51 – (Voluntary Early Termination), the Charterers’ payment of the Purchase Obligation Price under Clause 52 (Purchase Obligation) or the completion of the Mandatory Sale under Clause 50 – (Mandatory Sale) shall be on an “as is where is” and subject to the following terms and conditions: |
| (a) | no condition, warranty or representation of any kind is or has been given by or on behalf of the Owners in respect of the Vessel or any part thereof, and accordingly the Charterers confirm that they have not, in entering into this Charter, relied on any condition, warranty or representation by the Owners or any person on the Owners’ behalf, express or implied, whether arising by law or otherwise in relation to the Vessel or any part thereof, including, without limitation, warranties or representations as to the description, suitability, quality, merchantability, fitness for any purpose, value, state, condition, appearance, safety, durability, design or operation of any kind or nature of the Vessel or any part thereof, and the benefit of any such condition, warranty or representation by the Owners is hereby irrevocably and unconditionally waived by the Charterers to the extent permissible under applicable law; |
| (b) | the Charterers hereby also waive any rights which they may have in tort in respect of any of the matters referred to under paragraph (a) above and irrevocably agree that the Owners shall have no greater liability in tort in respect of any such matter than they would have in contract after taking account of all of the foregoing exclusions. No third party making any representation or warranty relating to the Vessel or any part thereof is the agent of the Owners nor has any such third party authority to bind the Owners thereby. Notwithstanding anything contained above, nothing contained herein is intended to obviate, remove or waive any rights or warranties or other claims relating thereto which the Charterers (or their nominee) or the Owners may have against the manufacturer or supplier of the Vessel or any third party; |
| (c) | the Owners shall procure the discharge and release of any registered mortgages created by the Owners in relation to the Vessel; |
| (d) | the Voluntary Early Termination Price or the Purchase Obligation Price or the Termination Sum or the Mandatory Sale Price shall be paid by (or on behalf of) the Charterers to the Owners on the Voluntary Early Termination Date or the last day of the Charter Period or the Termination Date or the Mandatory Sale Date (as the case may be) together with unpaid amounts of Charterhire and other moneys owing by or accrued or due from the Charterers under this Charter on or prior to the Voluntary Early Termination Date or the last day of the Charter Period or the Termination Date or the Mandatory Sale Date (as the case may be) which remain unpaid; and |
| (e) | concurrently with the Owners receiving irrevocable payment of the Voluntary Early Termination Price or, as the case may be, the Purchase Obligation Price or the applicable Termination Sum or the applicable Mandatory Sale Price and all other moneys payable under this Charter in full pursuant to the terms of this Charter, the Owners shall (save in the event of Total Loss) (at the Charterer’s cost) transfer the legal and beneficial ownership of the Vessel on an “as is where is” basis to the Charterers (or their nominees as approved by the Owners) and shall (at the Charterers’ cost) execute a bill of sale and a protocol of delivery and acceptance evidencing the same and any other document strictly necessary to transfer the title of the Vessel to the Charterers or their nominees (and to the extent required for such purposes, the Vessel shall be deemed first to have been redelivered to the Owners). |
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CLAUSE 54 – INDEMNITIES
| 54.1 | The Charterers shall indemnify the Owners, on the Owners’ demand, against all documented claims, expenses, liabilities, losses, fees (including but not limited to any vessel registration and tonnage fees or any tax incurred by the Owners as a result of the operation and/or trading of the Vessel) suffered or incurred by or imposed on the Owners arising from this Charter and any Leasing Document, including but not limited to (i) in connection with delivery, possession, performance, control, registration, repair, survey, insurance, maintenance, manufacture, purchase, ownership and operation of the Vessel by the Owners, (ii) costs related to the prevention or release of liens or detention of or requisition, use, operation or redelivery, sale or disposal of the Vessel or any part of it and (iii) enforcing the Owners’ rights under this Charter or any Leasing Document or for taking any action following the occurrence of a Termination Event of Potential Termination Event, in each case of paragraphs (i) to (iii), whether prior to, during or after termination of the leasing of this Charter and whether or not the Vessel is in the possession or the control of the Charterers or otherwise. Without prejudice to its generality, this Clause covers any claims, expenses, liabilities and losses which arise, or are asserted, under or in connection with any law relating to safety at sea, the ISM Code, the ISPS Code, the MARPOL Protocol, any Environmental Law, any Sanctions or any Anti- Money Laundering Laws, Anti-Terrorism Financing Laws or Business Ethics Laws. |
| 54.2 | The Charterers agree to indemnify the Owners against all consequences or liabilities arising from the Master, officers or agents signing Bills of Lading or other documents. |
| 54.3 | All rights which the Charterers have at any time (whether in respect of this Charter or any other transaction) against any Relevant Person shall be fully subordinated to the rights of the Owners under the Leasing Documents and until the end of this Charter and unless the Owners otherwise direct, the Charterers shall not exercise any rights which it may have (whether in respect of this Charter or any other transaction) by reason of performance by it of its obligations under the Leasing Documents or by reason of any amount becoming payable, or liability arising, under this Clause: |
| (a) | to be indemnified by such Relevant Person; |
| (b) | to claim any contribution from any third party providing security for, or any other guarantor of or such Relevant Person’s obligations under the Leasing Documents; |
| (c) | to take any benefit (in whole or in part and whether by way of subrogation or otherwise) of any rights of such Relevant Person under the Leasing Documents or of any other guarantee or security taken pursuant to, or in connection with, the Leasing Documents by any of the aforesaid parties; |
| (d) | to bring legal or other proceedings for an order requiring such Relevant Person to make any payment, or perform any obligation, in respect of any Leasing Document; |
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| (e) | to exercise any right of set-off against such Relevant Person; and/or |
| (f) | to claim or prove as a creditor of such Relevant Person, |
| (g) | and if the Charterers receive any benefit, payment or distribution in relation to such rights it shall hold that benefit, payment or distribution to the extent necessary to enable all amounts which may be or become payable to the Owners or such Relevant Person under or in connection with the Leasing Documents to be repaid in full on trust for the Owners and shall promptly pay or transfer the same to the Owners as may be directed by the Owners. |
| 54.4 | The Charterers hereby irrevocably agree to indemnify and hold harmless the Owners against any claim, expense, liability or loss reasonably incurred by the Owners in liquidating or employing deposits from the Owners’ Financiers or third parties to fund the acquisition of the Vessel pursuant to the MOA. |
| 54.5 | Notwithstanding anything to the contrary herein (but subject and without prejudice to Clause 33 – (Cancellation) ) and without prejudice to any right to damages or other claim which the Charterers may have at any time against the Owners under this Charter, the indemnities provided by the Charterers in favour of the Owners shall continue in full force and effect notwithstanding any breach of the terms of this Charter or termination of this Charter pursuant to the terms hereof or termination of this Charter by the Owners. |
| 54.6 | The obligations of the Charterers under this Clause 54 – (Indemnities) and in respect of any Security Interest created pursuant to the Security Documents will not be affected or discharged by an act, omission, matter or thing which would reduce, release or prejudice any of its obligations under this Clause 54 – or in respect of any Security Interest created pursuant to the Security Documents (without limitation and whether or not known to it or any Relevant Person) including: |
| (a) | any time, waiver or consent granted to, or composition with, any Relevant Person or other person; |
| (b) | the release of any other Relevant Person or any other person under the terms of any composition or arrangement with any creditor of a Relevant Person or any of its affiliates; |
| (c) | the taking, variation, compromise, exchange, renewal or release of, or refusal or neglect to perfect or delay in perfecting, or refusal or neglect to take up or enforce, or delay in taking or enforcing any rights against, or security over assets of, any Relevant Person or other person or any non-presentation or non-observance of any formality or other requirement in respect of any instrument or any failure to realise the full value of any security; |
| (d) | any incapacity or lack of power, authority or legal personality of or dissolution or change in the members or status of a Relevant Person or any other person; |
| (e) | any amendment, novation, supplement, extension, restatement (however fundamental and whether or not more onerous) or replacement of any Leasing Document or any other document or security; |
| (f) | any unenforceability, illegality or invalidity of any obligation of any person under any Security Document or any other document or security; or |
| (g) | any insolvency or similar proceedings. |
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CLAUSE 55 – NO SET-OFF OR TAX DEDUCTION
| 55.1 | All Charterhire and any other payment made from the Charterers to enable the Owners to pay all amounts under a Leasing Document shall be paid punctually and: |
| (a) | without any form of set-off, cross-claim, condition or counterclaim; |
| (b) | made free and clear of all present and future taxes, levies, duties or deductions of any nature whatsoever, whether levied now or in the future, unless required by law; and |
| (c) | net of any bank charges or bank fees. |
| 55.2 | Without prejudice to Clause 55.1 (No Set-off or Tax Deduction), if the Owners are required by law to make a tax deduction from any payment: |
| (a) | the Owners shall notify the Charterers as soon as they become aware of the requirement; and |
| (b) | the amount due in respect of the payment shall be increased by the amount necessary to ensure that the Owners receive and retain (free from any liability relating to the tax deduction) a net amount which, after the tax deduction, is equal to the full amount which they would otherwise have received. |
| 55.3 | The Charterers shall (within three (3) Business Days of demand by Owners) pay to the Owners an amount equal to the loss, liability or cost which the Owners determine will be or has been (directly or indirectly) suffered for or on account of tax by the Owners in respect of a Leasing Document. |
| 55.4 | Clause 55.3 shall not apply: |
| (a) | with respect to any tax assessed on the Owners under the law of the jurisdiction in which the Owners are incorporated or, if different, the jurisdiction (or jurisdictions) in which the Owners are treated as resident for tax purposes if that tax is imposed on or calculated by reference to the net income received or receivable (but not any sum deemed to be received or receivable) by the Owners; or |
| (b) | to the extent a loss, liability or cost is compensated for by an increased payment under Clauses 56.2 or 56.3. |
| 55.5 | Notwithstanding any other provision to this Charter, if any deduction or withholding or other tax is or will be required to be made by the Charterers or the Owners in respect of a payment to the Owners as a result of the Tax Changes, the Owners and the Charterers shall use reasonable endeavours to mitigate the effect of the Tax Changes and have the right to transfer their interest in the Vessel (and this Charter) to any person nominated by the Owners and all costs in relation to such mitigation or transfer shall be for the account of the Charterers. Provided that if after the Owners and the Charterers having exercised reasonable endeavours to mitigate the effect of the Tax Changes (at the cost of the Charterers) following notification from the Owners to the Charterers regarding the occurrence of the Tax Changes such Tax Changes continue to have the same effect, the Charterers shall have the option to pay the Mandatory Sale Price to the Owners within thirty (30) days following such notice by the Owners, and this Charter shall terminate in accordance with the procedures set out in Clause 50.4. |
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| 55.6 | If the Charterers compensate the Owners by an increased payment pursuant to Clause 56.2 or 56.3 and the Owners determine that they have obtained and utilized a tax credit attributable to this increased payment, the Owners shall reimburse the Charterers that increased payment (or part thereof if the tax credit is attributable to only part of such increased payment). |
CLAUSE 56 – INCREASED COSTS
| 56.1 | This Clause 56 – (Increased Costs) applies if the Owners notify the Charterers that they (or their financiers) consider that as a result of: |
| (a) | the introduction or alteration after the date of this Charter of a law or an alteration after the date of this Charter in the manner in which a law is interpreted or applied (excluding any effect which relates to the application to payments under this Charter of a tax on the Owners’ overall net income); or |
| (b) | complying with any regulation (including any which relates to capital adequacy or liquidity controls or which affects the manner in which the Owners allocates capital resources to their obligations under this Charter) which is introduced, or altered, or the interpretation or application of which is altered, after the date of this Charter, |
the Owners or a parent company of them (if any) has incurred or will incur an “increased cost”.
| 56.2 | In this Clause 56 – (Increased Costs), “increased cost” means, in relation to the Owners: |
| (a) | an additional or increased cost incurred as a result of, or in connection with, the Owners or the Owners’ parent company or the Owners’ Financiers (if any) having entered into, or being a party to, this Charter, of funding or financing the acquisition of the Vessel pursuant to the MOA or performing their obligations under this Charter; |
| (b) | a reduction in the amount of any payment to the Owners under this Charter or in the effective return which such a payment represents to the Owners (if any) on their capital; or |
| (c) | an additional or increased cost of funds relating to the acquisition of the Vessel pursuant to the MOA, |
and for the purposes of this Clause 56.2 the Owners may in good faith allocate or spread costs and/or losses among their assets and liabilities (or any class of their assets and liabilities) on such basis as they consider appropriate.
| 56.3 | Subject to the terms of Clause 56.1, the Charterers shall pay to the Owners, upon receipt of the Owners’ demand and any evidence thereto (where available to the Owners), the amounts which the Owners from time to time notify the Charterers to be necessary to compensate the Owners for the increased cost. |
| 56.4 | If any sum due from the Charterers to the Owners under this Charter or any other Leasing Document or under any order or judgment relating thereto has to be converted from the currency in which this Charter or such Leasing Document provided for the sum to be paid (the “Contractual Currency”) into another currency (the “Payment Currency”) for the purpose of: |
| (a) | making or lodging any claim or proof against the Charterers, whether in their liquidation, any arrangement involving them or otherwise; or |
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| (b) | obtaining an order or judgment from any court or other tribunal; or |
| (c) | enforcing any such order or judgment; |
the Charterers shall indemnify the Owners against the loss arising when the amount of the payment actually received by the Owners is converted at the available rate of exchange into the Contractual Currency.
In this Clause 56.4, the “available rate of exchange” means the rate at which the Owners are able at the opening of business (Beijing time) on the Business Day after it receives the sum concerned to purchase the Contractual Currency with the Payment Currency.
CLAUSE 57 – CONFIDENTIALITY
The Parties agree to keep the terms and conditions of this Charter and any other Leasing Documents (the “Confidential Information”) strictly confidential, provided that a Party may disclose Confidential Information in the following cases:
| (a) | it is already known to the public or becomes available to the public other than through the act or omission of the disclosing Party; |
| (b) | it is required to be disclosed under the applicable laws of any Relevant Jurisdiction, Stock Market regulation, the US Securities and Exchange Commission’s rules or by a governmental order, decree, regulation or rule (provided that the disclosing Party shall give written notice of such required disclosure to the other Party prior to the disclosure); |
| (c) | in filings with a court or arbitral body in proceedings in which the Confidential Information is relevant and in discovery arising out of such proceedings; |
| (d) | to (or through) whom a Party assigns or transfers (or may potentially assign or transfer) all or any of its rights and/or obligations under one or more Leasing Document (as permitted by the terms thereof), provided that such person receiving Confidential Information shall undertake that it would not disclose Confidential Information to any other party save for circumstances arising which are similar to those described under this Clause or such other circumstances as may be permitted by all Parties; |
| (e) | to any permitted Sub-charterer of the Vessel provided that such person receiving Confidential Information shall undertake that it would not disclose Confidential Information to any other party save for circumstances arising which are similar to those described under this Clause or such other circumstances as may be permitted by all Parties; |
| (f) | to any of the following persons on a need to know basis: |
| (i) | a shareholder or an Affiliate of either Party or a party referred to in either paragraph (d) or (e) (including the employees, officers and directors thereof); |
| (ii) | professional advisers retained by a disclosing party; or |
| (iii) | persons advising on, providing or considering the provision of financing to the
disclosing party or an Affiliate, provided that the disclosing party shall exercise due diligence to ensure that no such person shall disclose Confidential Information to any other party save for circumstances arising which are similar to those described under this Clause or such other circumstances as may be permitted by all Parties; |
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| (g) | with the prior written consent of all Parties; or |
| (h) | to any person which is a classification society or other entity which the Owners or the Owners’ Financiers have engaged to make the calculations necessary to enable the Owners and/or the Owners’ Financiers to comply with their reporting obligations under the Poseidon Principles. |
CLAUSE 58 – RIGHTS OF THIRD PARTIES
No term of this Charter is enforceable under the Contracts (Rights of Third Parties) Act 1999 by a person who is not party to this Charter.
CLAUSE 59 – PARTIAL INVALIDITY
If, at any time, any provision of a Leasing Document is or becomes illegal, invalid or unenforceable in any respect under any law of any jurisdiction, neither the legality, validity or enforceability of the remaining provisions under the law of that jurisdiction nor the legality, validity or enforceability of such provision under the law of any other jurisdiction will in any way be affected or impaired.
CLAUSE 60 – SETTLEMENT OR DISCHARGE CONDITIONAL
| 60.1 | Any settlement or discharge under any Leasing Document between the Owners and any Relevant Person shall be conditional upon no security or payment to the Owners by any Relevant Person or any other person being set aside, adjusted or ordered to be repaid, whether under any insolvency law or otherwise. |
| 60.2 | If the Owners consider that an amount paid or discharged by, or on behalf of, a Relevant Person or by any other person in purported payment or discharge of an obligation of that Relevant Person to the Owners under the Leasing Documents is capable of being avoided or otherwise set aside on the liquidation or administration of that Relevant Person or otherwise, then that amount shall not be considered to have been unconditionally and irrevocably paid or discharged for the purposes of the Leasing Documents. |
CLAUSE 61 – IMMUNITY
The Charterers waive any rights of sovereign immunity which they or any of their properties may enjoy in any jurisdiction and subjects itself to civil and commercial law with respect to their obligations under this Charter or any other Leasing Document.
CLAUSE 62 – COUNTERPARTIES
This Charter and each other Leasing Document may be executed in any number of counterparts, and this has the same effect as if the signatures on the counterparts were on a single copy of this Charter or that Leasing Document, as the case may be.
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CLAUSE 63 – FATCA
| 63.1 | Defined terms |
For the purposes of Clause 55 – (No Set-off or Tax Deduction) and this Clause 63 – (FATCA), the following terms shall have the following meanings:
“Code” means the United States Internal Revenue Code of 1986, as amended.
“FATCA” means:
| (a) | sections 1471 to 1474 of the Code or any associated regulations; |
| (b) | any treaty, law or regulation of any other jurisdiction, or relating to an intergovernmental agreement between the US and any other jurisdiction, which (in either case) facilitates the implementation of any law or regulation referred to in paragraph (a) above; or |
| (c) | any agreement pursuant to the implementation of any treaty, law or regulation referred to in paragraphs (a) or (b) above with the IRS, the US government or any governmental or taxation authority in any other jurisdiction. |
“FATCA Deduction” means a deduction or withholding from a payment under this Charter or the Leasing Documents required by or under FATCA.
“FATCA Exempt Party” means a Relevant Party that is entitled under FATCA to receive payments free from any FATCA Deduction.
“FATCA Non-Exempt Party” means any Relevant Party who is not a FATCA Exempt Party.
“IRS” means the United States Internal Revenue Service or any successor taxing authority or agency of the United States government.
“Relevant Party” means any of the parties to this Charter and the Leasing Documents (other than the Initial Sub-charterer).
| 63.2 | FATCA Information |
| (a) | Subject to paragraph (c) below, each Relevant Party shall, on the date of this Charter, and thereafter within ten Business Days of a reasonable request by another Relevant Party: |
| (i) | confirm to that other party whether it is a FATCA Exempt Party or is not a FATCA Exempt Party; and |
| (ii) | supply to the requesting party (with a copy to all other Relevant Parties) such other form or forms (including IRS Form W-8 or Form W-9 or any successor or substitute form, as applicable) and any other documentation and other information relating to its status under FATCA (including its applicable “pass thru percentage” or other information required under FATCA or other official guidance including intergovernmental agreements) as the requesting party reasonably requests for the purpose of the requesting party’s compliance with FATCA. |
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| (b) | If a Relevant Party confirms to any other Relevant Party that it is a FATCA Exempt Party or provides an IRS Form W-8 or W-9 showing that it is a FATCA Exempt Party and it subsequently becomes aware that it is not, or has ceased to be a FATCA Exempt Party, or that the said form provided has ceased to be correct or valid, that party shall so notify all other Relevant Parties or provide the relevant revised form, as applicable, reasonably promptly. |
| (c) | Nothing in this Clause shall oblige any Relevant Party to do anything which would or, in its reasonable opinion, might constitute a breach of any law or regulation, any policy of that party, any fiduciary duty or any duty of confidentiality, or to disclose any confidential information (including, without limitation, its tax returns and calculations); provided, however, that nothing in this paragraph shall excuse any Relevant Party from providing a true, complete and correct IRS Form W-8 or W-9 (or any successor or substitute form where applicable). Any information provided on such IRS Form W-8 or W-9 (or any successor or substitute forms) shall not be treated as confidential information of such party for purposes of this paragraph. |
| (d) | If a Relevant Party fails to confirm its status or to supply forms, documentation or other information requested in accordance with the provisions of this Charter or the provided information is insufficient under FATCA, then: |
| (i) | if that party failed to confirm whether it is (and/or remains) a FATCA Exempt Party then such party shall be treated for the purposes of this Charter and the Leasing Documents as if it is a FATCA Non-Exempt Party; and |
| (ii) | if that party failed to confirm its applicable passthru percentage then such party shall be treated for the purposes of this Charter and the Leasing Documents (and payments made thereunder) as if its applicable passthru percentage is 100%, |
until (in each case) such time as the party in question provides sufficient confirmation, forms, documentation or other information to establish the relevant facts.
63.3 FATCA Deduction and gross-up by Relevant Party
| (a) | If the representation made by the Charterers under Clause 45.1(p) (Representations and Warranties) proves to be untrue or misleading such that the Charterers are required to make a FATCA Deduction, the Charterers shall make the FATCA Deduction and any payment required in connection with that FATCA Deduction within the time allowed and in the minimum amount required by FATCA. |
| (b) | If the Charterers are required to make a FATCA Deduction then the Charterers shall increase the payment due from them to the Owners to an amount which (after making any FATCA Deduction) leaves an amount equal to the payment which would have been due if no FATCA Deduction had been required. |
| (c) | The Charterers shall promptly upon becoming aware that they must make a FATCA Deduction (or that there is any change in the rate or basis of a FATCA Deduction) notify the Owners accordingly. Within thirty (30) days of the Charterers making either a FATCA Deduction or any payment required in connection with that FATCA Deduction, the Charterers shall deliver to the Owners evidence satisfactory to the Owners that the FATCA Deduction has been made or (as applicable) any appropriate payment paid to the relevant governmental or taxation authority. |
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| (d) | If the Owners are required to make a deduction or withholding from a payment under any Financial Instruments in respect of FATCA, and is required under such Financial Instrument to pay additional amounts in respect of such deduction or withholding, the amount of the payment due from the Charterers under this Charter shall be increased to an amount which, after such deduction or withholding and payment of additional amounts, leaves the Owners with an amount equal to the amount which it would have had remaining if it had not been required to pay additional amounts under such Financial Instruments. |
| 63.4 | FATCA Deduction by Owners |
The Owners may make any FATCA Deduction they are required by FATCA to make, and any payment required in connection with that FATCA Deduction, and the Owners shall not be required to increase any payment in respect of which they make such a FATCA Deduction or otherwise compensate the recipient for that FATCA Deduction.
| 63.5 | FATCA Mitigation |
Notwithstanding any other provision to this Charter, if a FATCA Deduction is or will be required to be made by any party under Clause 63.3 (FATCA) in respect of a payment to the Owners as a result of the Owners not being a FATCA Exempt Party, the Owners shall have the right to transfer their interest in the Vessel (and this Charter) to any person nominated by the Owners and all costs in relation to such transfer shall be for the account of the Charterers.
CLAUSE 64 – ASSIGNMENT AND TRANSFER
| 64.1 | The Charterers shall not assign this Charter except with the Owners’ prior consent in writing. |
| 64.2 | The Owners may assign any of their rights or transfer by novation any of their rights and obligations under the Leasing Documents and/or sell and transfer title to of the Vessel to any third party with the prior written consent of the Charterers (such consent not to be unreasonably withheld) provided that such consent shall not be required if such assignment, transfer and/or sale is made: |
| (a) | at such time following the occurrence of a Termination Event which is continuing; or |
| (b) | to an affiliate of the Owners and provided always that, notwithstanding such assignment, transfer or sale, this Charter will continue (or will be novated to the applicable new owner) on identical terms (save for logical, consequential or mutually agreed amendments). |
| 64.3 | The Charterers shall remain liable to the aforesaid assignee, transferee or new owner of the Vessel (as the case may be) for its performance of all obligations under this Charter (where applicable, as novated) after any such assignment or transfer or any change of the registered ownership of the Vessel from the Owners to such new owner. The Charterers shall procure that any Relevant Person which is a party to a Leasing Document: |
| (a) | becomes liable to such assignee, transferee or new owner of the Vessel for its performance of all obligations pursuant to such Leasing Document; and |
| (b) | enters into all necessary documents or takes any necessary actions or provide all necessary assistance required for such Leasing Document and any Security Interest created thereunder remaining in full force and effect (or to be novated and/or executed) as from the completion of the relevant assignment, transfer or sale. |
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| 64.4 | Without limiting the generality of Clause 64.2: |
| (a) | subject to Clause 35 – (Quiet enjoyment), the Owners are entitled to enter into certain funding arrangements with their financier(s), including but not limited to, an affiliate of the Owners or any other banks and financial institutions acceptable to the Owners in their sole discretion (the “Mortgagee”) provided that such funding arrangement shall not result in any adverse effect of the Charterers’ rights and obligations under the Leasing Documents; and |
| (b) | the Owners may do any of the following as security for the funding arrangements referred to in paragraph (a) above, in each case, without the prior consent of the Charterers: |
| (i) | execute a ship mortgage over the Vessel or any other Financial Instrument in favour of a Mortgagee (or its agent, trustee or nominee); |
| (ii) | assign their rights and interests to, in or in connection with this Charter or any other Leasing Documents in favour of a Mortgagee (or its agent, trustee or nominee); |
| (iii) | assign their rights and interests to, in or in connection with the Insurances, the Earnings and the Requisition Compensation of the Vessel in favour of the Mortgagee (or its agent, trustee or nominee); and |
| (iv) | enter into any other document or arrangement which is necessary to give effect to such financing arrangements; |
| (c) | the Charterers undertake to comply, and provide such information and documents and all necessary assistance required to enable the Owners to comply, with all such instructions or directions in regard to the employment, insurances, operation, repairs and maintenance of the Vessel as laid down in any Financial Instrument or as may be directed from to time during the currency of this Charter by the Mortgagee (or its agent, trustee or nominee) in conformity with any Financial Instrument. The Charterers further agree and acknowledge all relevant terms, conditions and provisions of each Financial Instrument (if any) and agree to acknowledge this in writing in any form that may be required by the Mortgagee (or its agent, trustee or nominee); and |
| (d) | during the Charter Period a change in the registered or beneficial ownership of the Vessel or the Owners (by sale of shares in the Owners or other transactions having the same effect) may be effected without the Charterers’ consent, provided always that, in the event of change in the registered or beneficial ownership of the Vessel, notwithstanding such change, this Charter would continue on identical terms (save for logical, consequential or mutually agreed amendments). The Guarantor and the Charterers shall (where applicable) remain jointly and severally liable to the aforesaid new owner of the Vessel for its performance of all obligations pursuant to this Charter after change of the registered and/or beneficial ownership of the Vessel or the Owners from the Owners to such new owner and agree and undertake to enter into any such usual documents as the Owners shall reasonably require to complete or perfect the transfer of the Vessel (with the benefit and burden of this Charter) pursuant to this Clause. |
| (e) | All expenses arising out of assignment or transfer of this Charter as per Clause 64 – (Assignment and Transfer) shall be for the Owner’s account subject to no Termination Event or Potential Termination Event having occurred or being continuing at the relevant time. |
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CLAUSE 65 – GENERAL APPLICATION OF PROCEEDS
| 65.1 | Any Net Trading Proceeds, Net Sales Proceeds, Total Loss Proceeds, any proceeds realised by the Owners in connection with the enforcement of the Security Documents (unless otherwise specified in the Security Documents) shall be applied in the following order of application against amounts payable under the Leasing Documents: |
| (a) | firstly, in or towards any amounts outstanding under the Leasing Documents other than the Termination Sum (including but not limited to any costs and expenses incurred in the enforcement of the Security Documents, to the extent these are not covered under the Termination Sum); |
| (b) | secondly, in or towards satisfaction of the Charterers’ obligation to pay the Termination Sum (or such portion of it that then remains unpaid) in any order of application in the amounts comprising the Termination Sum as the Owners may determine; and |
| (c) | thirdly, any amounts remaining after the application of 65.1 (a) and 65.1 (b) above, shall be paid to the Charterers. |
CLAUSE 66 – GOVERNING LAW AND ENFORCEMENT
| (a) | This Charter and any non-contractual obligations arising under or in connection with it, shall be governed by and construed in accordance with English law. |
| (b) | Any dispute arising out of or in connection with this Charter (including a dispute regarding the existence, validity or termination of this Charter or any non-contractual obligation arising out of or in connection with this Charter) (a “Dispute”) shall be referred to and finally resolved by arbitration in London in accordance with the Arbitration Act 1996 or any statutory modification or re-enactment thereof save to the extent necessary to give effect to the provisions of this Clause 66 – (Governing Law and Enforcement). The arbitration shall be conducted in accordance with the London Maritime Arbitrators Association (“LMAA”) Terms current at the time when the arbitration proceedings are commenced. |
| (c) | The reference shall be to three arbitrators. A party wishing to refer a Dispute to arbitration shall appoint its arbitrator (who shall be either a full member of the LMAA, or a practising barrister of King’s Counsel who is also a member of the Commercial Bar Association, or a retired High Court Judge practising as an arbitrator, in each case who carries on business in London) and send notice of such appointment in writing to the other party requiring the other party to appoint its own arbitrator within fourteen (14) calendar days of that notice and stating that it will appoint its arbitrator as sole arbitrator unless the other party appoints its own arbitrator and gives notice that it has done so within the fourteen (14) days specified. If the other party does not appoint its own arbitrator and give notice that it has done so within the fourteen (14) days specified, the party referring a Dispute to arbitration may, without the requirement of any further prior notice to the other party, appoint its arbitrator as sole arbitrator and shall advise the other party accordingly. The award of a sole arbitrator shall be binding on both parties as if he or she had been appointed by agreement. Nothing herein shall prevent the parties agreeing in writing to vary these provisions to provide for the appointment of a sole arbitrator. If the two arbitrators so appointed are unable to agree on the appointment of the third arbitrator, they or either of them may by written notice request the President of the LMAA to appoint the third arbitrator within fourteen (14) days of such request. |
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| (d) | Where the reference is to three arbitrators the procedure for making appointments shall be in accordance with the procedure for full arbitration stated above. |
| (e) | The language of the arbitration shall be English. |
| (f) | In cases where neither the claim nor any counterclaim exceeds the sum of US$100,000 (or such other sum as the Parties may agree) the arbitration shall be conducted in accordance with the LMAA Small Claims Procedure current at the time when the arbitration proceedings are commenced. |
CLAUSE 66A- RECORDATION OF FINANCING CHARTER
Without prejudice and in addition to the Owners’ rights under this Charter:
| (a) | for all purposes under Section 302A of the Republic of the Marshall Islands Maritime Act 1990, as amended (the “Maritime Act”), the Owners and the Charterers acknowledge and agree that (i) this Charter shall be construed as a “financing charter”, as such term is defined in Section 112(7) (Definitions) of the Maritime Act, and (ii) this Charter is intended to be deemed under the Maritime Act as a preferred mortgage over the Vessel granted by the Charterers, as owner, in favour of the Owners, as mortgagee; |
| (b) | in consideration of the premises and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Charterers hereby grant, convey, mortgage, pledge, confirm, assign, transfer and set over the whole of the Vessel to the Owners, as mortgagee, as security for the performance and observance of and compliance with all their obligations as Charterers under, and the covenants, terms and conditions contained in, this Charter and the other Leasing Documents to which the Charterers are or may become a party; and |
| (c) | At their sole cost and expense, the Charterers shall cause this Charter to be recorded as a financing charter in accordance with the Maritime Act and will perform all such acts as may be reasonably requested by the Owners to accomplish the said recordation. For the purposes of recording this Charter under Section 302A of the Maritime Act as a financing charter: |
| (i) | the name of the Vessel is m.v. “ECO MALIBU”; |
| (ii) | the official number of the Vessel is 9214; |
| (iii) | the date of this Charter is 8 December 2023; |
| (iv) | the name and address of the Owners are: |
GIANT 9 HOLDING LIMITED
6/F., Manulife Place, 348 Kwun Tong Road, Kowloon, Hong Kong;
| (v) | the name and address of the Charterers are: |
ATHENEAN EMPIRE INC
Trust Company Complex, Ajeltake Road, Ajeltake Islands, Majuro, Marshall Islands MH 96960
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| (vi) | the maximum aggregate of the nominal amount of all charterhire payments, termination payments, purchase obligation, and purchase or put option amounts which could under any circumstances be due and payable under this Charter and the other Leasing Documents, exclusive of any interest, indemnities, expenses or fees, is US$41,000,000 which is the total amount secured hereby. |
CLAUSE 67 – ENTIRE AGREEMENT
| (a) | This Agreement, in conjunction with the other Leasing Documents, constitutes the entire agreement between the parties and supersedes all previous agreements, understandings and arrangements between them, whether in writing or oral, in respect of its subject matter. |
| (b) | Each Party acknowledges that it has not entered into this agreement or any other Leasing Document in reliance on, and shall have no remedies in respect of, any representation or warranty that is not expressly set out in this Agreement or in any other Leasing Document. |
CLAUSE 68 – DEFINITIONS
| 68.1 | In this Charter, unless as expressly defined otherwise, the following capitalized terms shall have the meanings ascribed to them below: |
“Acceptance Certificate” means a certificate substantially in the form set out in Schedule 1 (Acceptance Certificate) to be signed by the Charterers at Delivery.
“Account Bank” means Alpha Bank, Berenberg Bank, ABN Amro Bank N.V. or another reputable bank acceptable to the Owners, in and/or through which all revenues and operating expenses of the Charterers shall be credited and/or transferred.
“Account Security” means the document creating security over the Operating Account made or to be made between the Charterers and the Owners.
“Advance Charterhire” has the meaning as defined under Clause 36.2 (Charterhire and Advance Charterhire) of the Charter.
“Affiliate” means in relation to any person, a Subsidiary of that person or a Holding Company of that person or any other Subsidiary of that Holding Company.
“Annex VI” means Annex VI of the Protocol of 1997 to amend the International Convention for the Prevention of Pollution from Ships 1973 (Marpol), as modified by the Protocol of 1978 relating thereto.
“Anti-Money Laundering Laws” means all applicable financial record-keeping and reporting requirements, anti-money laundering statutes (including all applicable rules and regulations thereunder) and all applicable related or similar laws, rules, regulations or guidelines, of all jurisdictions including and without limitation, the United States of America, the European Union, the United Kingdom, the Republic of the Marshall Islands, Germany and the People’s Republic of China (including Hong Kong for the avoidance of doubt) and which in each case are (a) issued, administered or enforced by any governmental agency having jurisdiction over any Relevant Person or the Owners; (b) of any jurisdiction in which any Relevant Person or Owner conducts business; or (c) to which any Relevant Person or Owner is subjected or subject to.
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“Anti-Terrorism Financing Laws” means all applicable anti-terrorism laws, rules, regulations or guidelines of any jurisdiction, including and not limited to the United States of America or the People’s Republic of China which are: (a) issued, administered or enforced by any governmental agency, having jurisdiction over any Relevant Person or the Owners; (b) of any jurisdiction in which any Relevant Person or the Owners conduct business; or (c) to which any Relevant Person or the Owners are subjected or subject to.
“Approved Classification Society” means Bureau Veritas, DNV or such other generally recognized first class international classification society which is a member of the International Association of Classification Societies and approved by the Owners in writing.
“Approved Manager” means the Commercial Manager or the Technical Manager.
“Approved Valuer” means Simpson Spence & Young, Clarksons Platou, Maersk Broker, Arrow Shipbrokers, Howe Robinson, Fearnleys or any other reputable shipbroker nominated by the Charterers and approved by the Owners from time to time.
“Assignable Sub-charter” means the Initial Sub-charter or any charter or any other form of employment contract relating to the Vessel, whether or not already in existence on a time charter basis with a duration exceeding or capable of exceeding twelve (12) months (inclusive of options to renew).
“Approved Sub-charterer” means the Initial Sub-charterer and any Sub-charterer under any other Assignable Sub-charter.
“Arrangement Fee” has the meaning given to that term in Clause 42.1.
“Associated Vessel” means any ship or vessel (including, but not limited to, the Vessel) from time to time wholly leased, hired, chartered or financed under any lease, hire purchase agreement, charter or any other financing arrangement by affiliates of the Owners to subsidiaries or affiliates of the Guarantor.
“Breakfunding Costs” means all breakfunding costs and expenses (excluding expenses relating to interest rate swaps and similar interest rate hedging instruments and any costs relating to the early termination of the Financial Instruments) incurred or payable by the Owners pursuant to the relevant funding arrangement entered into by the Owners for the purpose of financing any part of the Purchase Price as a result of the receipt of an amount pursuant to this Charter on a day other than a Payment Date.
“Business Day” means a day on which banks are open for business in the principal business centres of Hong Kong, Shanghai and Greece and:
| (a) | in respect of a day on which a payment is required to be made or other dealing is due to take place under a Leasing Document in Dollars, also a day on which commercial banks are open in New York City; and |
| (b) | in relation to the fixing of an interest rate in relation to the Outstanding Capital Balance, also a day which is a US Government Securities Business Day. |
“Business Ethics Law” means any laws, regulations and/or other legally binding requirements or determinations in relation to corruption, fraud, collusion, bid-rigging or anti-trust, human rights violations (including forced labour and human trafficking) which are issued, administered or enforced by the United States, United Kingdom, the European Union or applicable to any Relevant Person or the Owners or to any jurisdiction where activities are performed and which shall include but not be limited to (i) the United Kingdom Bribery Act 2010 and (ii) the United States Foreign Corrupt Practices Act 1977 and all rules and regulations under each of (i) and (ii).
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“Cancelling Date” shall have the same meaning as defined under the MOA.
“Commencement Date” means the date on which Delivery takes place.
“Charter Period” means the period described in Clause 32.1 (Charter Period) unless it is terminated earlier in accordance with the provisions of this Charter.
“Charterhire” means each of, as the context may require, all of the instalments of hire payable hereunder on each applicable Payment Date comprising in each case both Fixed Charterhire and Variable Charterhire, as further detailed in Clause 36.5 (Charterhire and Advance Charterhire).
“Commercial Manager” means Central Shipping Inc., a corporation incorporated under the laws of Marshall Islands with registration number 98339 or any reputable management company designated by the Charterers and approved by the Owners in writing from time to time as the commercial manager of the Vessel.
“Deed of Release” means a deed of release to be executed by the Existing Financier in favour of the Charterers discharging (i) all of the Charterers’ obligations under the Existing Loan Agreement and documents conferring Security Interests entered into in connection with the Existing Loan Agreement and (ii) all Security Interests encumbering the Vessel or any part thereof (including but not limited to any mortgage over the Vessel granted in favour of the Existing Financier), in such form as is satisfactory to the Owners.
“Delivery” means the delivery of the legal and beneficial ownership in the Vessel from the Owners to the Charterers hereunder.
“Dollars” and “$” and “US$” mean the lawful currency for the time being of the United States of America.
“Document of Compliance” shall have the same meaning as ascribed under the ISM Code.
“Earnings” means all moneys whatsoever which are now, or later become, payable (actually or contingently) to the Charterers and which arise out of the use or operation of the Vessel, including (but not limited to):
| (a) | except to the extent that they fall within paragraph (b), |
| (i) | all freight, hire and passage moneys; |
| (ii) | any compensation payable in the event of requisition of the Vessel for hire; |
| (iii) | any remuneration for salvage and towage services; |
| (iv) | any demurrage and detention moneys; |
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| (v) | damages for breach (or payments for variation or termination) of any charterparty or other contract for the employment of the Vessel; and |
| (vi) | all moneys which are at any time payable under any Insurances in respect of loss of hire (if any); and |
| (b) | if and whenever the Vessel is employed on terms whereby any moneys falling within paragraphs (a)(i) to (vi) are pooled or shared with any other person, that proportion of the net receipts of the relevant pooling or sharing arrangement which is attributable to the Vessel. |
“Environmental Claim” means:
| (a) | any claim by any governmental, judicial or regulatory authority or any other person which arises out of an Environmental Incident or an alleged Environmental Incident or which relates to any Environmental Law; or |
| (b) | any claim by any other person which relates to an Environmental Incident, |
and “claim” means a claim for damages, compensation, fines, penalties or any other payment; an order or direction to take, or not to take, certain action or to desist from or suspend certain action; and any form of enforcement or regulatory action, including the arrest or attachment of any asset.
“Environmental Incident” means:
| (a) | any release, emission, spill or discharge of Environmentally Sensitive Material whether within the Vessel or from the Vessel into any other vessel or into or upon the air, water, land or soils (including the seabed) or surface water; or |
| (b) | any incident in which Environmentally Sensitive Material is released, emitted, spilled or discharged into or upon the air, water, land or soils (including the seabed) or surface water from a vessel other than the Vessel and which involves a collision between the Vessel and such other vessel or some other incident of navigation or operation, in either case, in connection with which the Vessel is actually or potentially liable to be arrested, attached, detained or injuncted and/or the Vessel and/or any Relevant Person and/or any operator or manager of the Vessel is at fault or allegedly at fault or otherwise liable to any legal or administrative action; or |
| (c) | any other incident in which Environmentally Sensitive Material is released, emitted, spilled or discharged into or upon the air, water, land or soils (including the seabed) or surface water otherwise than from the Vessel and in connection with which the Vessel is actually or potentially liable to be arrested and/or where any Relevant Person and/or any operator or manager of the Vessel is at fault or allegedly at fault or otherwise liable to any legal or administrative action. |
“Environmental Law” means any present or future law relating to pollution or protection of human health or the environment, to conditions in the workplace, to the carriage, generation, handling, storage, use, release or spillage of Environmentally Sensitive Material or to actual or threatened releases of Environmentally Sensitive Material.
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“Environmentally Sensitive Material” means and includes all contaminants, oil, oil products, toxic substances and any other substance (including any chemical, gas or other hazardous or noxious substance) which is (or is capable of being or becoming) polluting, toxic or hazardous.
“Escrow Agreement” has the meaning given to such term in the MOA.
“Existing Loan Agreement” has the meaning given to such term in the MOA.
“Existing Financier” has the meaning given to such term in the MOA.
“Fee Letter” means the fee letter referred to under Clause 42.1 for payment of the Arrangement Fee.
“Financing Amount” means $41,000,000.
“Financial Indebtedness” means, in relation to a person (the “debtor”), a liability of the debtor:
| (a) | for principal, interest or any other sum payable in respect of any moneys borrowed or raised by the debtor; |
| (b) | under any loan stock, bond, note or other security issued by the debtor; |
| (c) | under any acceptance credit, guarantee or letter of credit facility made available to the debtor; |
| (d) | under a financial lease, a deferred purchase consideration arrangement (other than deferred payments for assets or services obtained on normal commercial terms in the ordinary course of business) or any other agreement having the commercial effect of a borrowing or raising of money by the debtor; |
| (e) | under any foreign exchange transaction, any interest or currency swap or any other kind of derivative transaction entered into by the debtor or, if the agreement under which any such transaction is entered into requires netting of mutual liabilities, the liability of the debtor for the net amount; or |
| (f) | under a guarantee, indemnity or similar obligation entered into by the debtor in respect of a liability of another person which would fall within paragraphs (a) to (e) if the references to the debtor referred to the other person. |
“Financial Instruments” means the applicable loan or facility agreement entered into between the Owners (or their affiliate) and the Owners’ Financiers and any mortgage, deed of covenants, assignment in respect of this Charter, assignment in respect of the Guarantees, assignment in respect of Earnings, Insurances and Requisition Compensation, manager’s undertaking and subordination (including assignment of manager’s interests in the Insurances) or any other financial security instruments (excluding interest rate swaps and similar interest rate hedging instruments) granted by the Owners to the Owners’ Financiers as security for the financing or refinancing of the Owners’ acquisition of the Vessel.
“Flag State” means the flag state named in Box 5 of this Charter or any other state or jurisdiction approved in writing by the Owners (whose approval shall not be unreasonably withheld).
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“Fleet Vessel” means any ship or vessel (including but not limited to the Vessel) from time to time wholly owned, leased under a capital lease, operating lease with a purchase option at the end of the relevant charter period, vessels owned under a joint venture agreement where the relevant member of the Group owns no less than 50 per cent. of the issued shares of the jointly owned entity or controlled by the Guarantor (directly or indirectly) excluding, for the avoidance of doubt, any newbuilding vessels not delivered to the relevant member of the Group at the relevant time.
“Funding Rate” means any individual rate certified and notified by the Owners to the Charterers pursuant to Clause 37.3(c)(ii).
“General Assignment” means the general assignment executed or to be executed between the Charterers and the Owners in respect of the Vessel, pursuant to which the Charterers shall, inter alia, assign its rights under the Insurances, Earnings and Requisition Compensation and any Assignable Sub-Charter in respect of the Vessel, in favour of the Owners and in the agreed form agreed on or prior to signing of this Charter.
“Group” means the Guarantor and its Subsidiaries from time to time.
“Guarantee” means the guarantee executed or to be executed by the Guarantor in favour of the Owners securing, amongst others, the Charterers’ obligations in connection with the Leasing Documents.
“Guarantor” means Top Ships Inc., a corporation incorporated under the laws of Marshall Islands and having its registered address at Trust Company Complex, Ajeltake Road, Ajeltake Islands, Majuro, Marshall Islands MH96960.
“Hire Period” means (i) in the case of the first Hire Period, the period commencing on the Commencement Date and ending on the First Payment Date; and (ii) in the case of each subsequent Payment Date, the period commencing on the last day of the preceding Hire Period and ending on the next occurring Payment Date.
“Historic Term SOFR” means, in relation to any Hire Period, the most recent applicable Term SOFR for a period equal in length to three months and which is as of a day which is no more than three (3) US Government Securities Business Days before the Quotation Day.
“Holding Company” means, in relation to a person, any other person in relation to which it is a Subsidiary.
“IAPPC” means a valid international air pollution prevention certificate for the Vessel issued pursuant to the MARPOL Protocol.
“Index” means the Baltic Tanker Indices applicable to the Vessel.
“Initial Sub-charter” means a time charter entered into between the Charterers and the Initial Sub-charterer as time charterer dated 1 April 2020 in relation to the Vessel, as amended and supplemented from time to time.
“Initial Sub-charterer” means Clearlake Shipping Pte Ltd or any other nominee nominated as the charterers under the Initial Sub-charter (which is acceptable to the Owners) in accordance with the terms of the Initial Sub-charter.
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“Insurances” means:
| (a) | all policies and contracts of insurance, including entries of the Vessel in any protection and indemnity or war risks association, which are effected in respect of the Vessel or otherwise in relation to it whether before, on or after the date of this Charter; and |
| (b) | all rights and other assets relating to, or derived from, any of the foregoing, including any rights to a return of a premium and any rights in respect of any claim whether or not the relevant policy, contract of insurance or entry has expired on or before the date of this Charter. |
“Interpolated Historic Term SOFR” means, in relation to any Hire Period, the rate (rounded to the same number of decimal places as Term SOFR) which results from interpolating on a linear basis between:
| (a) | either: |
| (i) | the most recent applicable Term SOFR (as of a day which is not more than three (3) US Government Securities Business Days before the Quotation Day) for the longest period (for which Term SOFR is available) which is less than three months; or |
| (ii) | if no such Term SOFR is available for a period which is less than three months, SOFR for a day which is no more than five (5) US Government Securities Business Days (and no less than two (2) US Government Securities Business Days) before the Quotation Day; and |
| (b) | the most recent applicable Term SOFR (as of a day which is not more than three (3) US Government Securities Business Days before the Quotation Day) the shortest period (for which Term SOFR is available) which exceeds three months. |
“Interpolated Term SOFR” means, in relation to any Hire Period, the rate (rounded to the same number of decimal places as Term SOFR) which results from interpolating on a linear basis between:
| (a) | either: |
| (i) | the applicable Term SOFR (as of the Quotation Day in respect of that Hire Period) for the longest period (for which Term SOFR is available) which is less than three months; or |
| (ii) | if no such Term SOFR is available for a period which is less than three months, SOFR for the day which is two (2) US Government Securities Business Days before the Quotation Day; and |
| (b) | the applicable Term SOFR (as of the Quotation Day in respect of that Hire Period) for the shortest period (for which Term SOFR is available) which exceeds three months. |
“Interest Rate” means, in relation to each Hire Period and subject to Clause 37.3, the percentage rate of interest per annum equal to the aggregate of the (i) applicable Reference Rate for the relevant Hire Period and (ii) the Margin.
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“ISM Code” means the International Safety Management Code (including the guidelines on its implementation), adopted by the International Maritime Organisation Assembly as Resolutions A.741 (18) and A.788 (19), as the same may be amended or supplemented from time to time.
“ISPS Code” means the International Ship and Port Security Code as adopted by the Conference of Contracting Governments to the Safety of Life at Sea Convention 1974 on 13 December 2002 and incorporated as Chapter XI-2 of the Safety of Life at Sea Convention 1974, as the same may be supplemented or amended from time to time (and the terms “safety management system”, “Safety Management Certificate” and “Document of Compliance” have the same meanings as are given to them in the ISM Code).
“ISSC” means a valid international ship security certificate for the Vessel issued pursuant to the ISPS Code.
“Leasing Documents” means this Charter, the MOA, the Security Documents and the Escrow Agreement.
“Major Casualty” means any casualty to the Vessel in respect of which the claim or the aggregate of the claims against all insurers, before adjustment for any relevant franchise or deductible, exceeds $5,000,000 or the equivalent in any other currency.
“Management Agreement” means:
| (a) | the technical and commercial management agreement made or to be made between the Approved Manager and the Charterers; or |
| (b) | such other management agreement subsequently entered into in respect of the Vessel as may be approved by the Owners (such approval not to be unreasonably withheld). |
“Manager’s Undertaking” means, in relation to an Approved Manager, the letter of undertaking from that Approved Manager subordinating the rights of such Approved Manager against the Vessel and the Charterers to the rights of the Owners under the Leasing Documents in an agreed form agreed on or prior to signing of this Charter.
“Mandatory Sale” has the meaning given to that term in Clause 50.4.
“Mandatory Sale Date” has the meaning given to that term in Clause 50.4.
“Mandatory Sale Price” means, in respect of the Mandatory Sale Date, the aggregate of:
| (a) | the Outstanding Capital Balance prevailing as at the Mandatory Sale Date; |
| (b) | any Variable Charterhire accrued as at the date of payment of the Mandatory Sale Price; |
| (c) | (in case of Clause 37.3) if the Mandatory Sale Date occurs on or before the date falling thirty six (36) months from the Commencement Date, one per cent. (1.00%) of the Outstanding Capital Balance as at the relevant date; |
| (d) | any Breakfunding Costs; |
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| (e) | any documented legal or other costs reasonably incurred by the Owners in connection with the exercise of the Mandatory Sale; and |
| (f) | aside from the amounts described under paragraphs (a) to (e) above, any other moneys due and owing under the Leasing Documents at the relevant Mandatory Sale Date including any default interest on amounts under (a) to (f) above. |
“Margin” means two point five per cent. (2.5%) per annum.
“Market Disruption Rate” means the Reference Rate.
“Market Value” means:
| (a) | prior to the occurrence of a Termination Event which is continuing, a valuation prepared, a valuation prepared: |
| (i) | in Dollars; |
| (ii) | on a date no earlier than fifteen (15) days prior to the relevant date of valuation; |
| (iii) | with or without physical inspection of that Vessel; and |
| (iv) | on the basis of a sale for prompt delivery for cash on normal arm’s length commercial terms as between a willing seller and a willing buyer, free of any existing charter or other contract of employment, |
and such valuation shall be prepared by an Approved Valuer nominated by the Charterers; and
| (b) | upon the occurrence of a Termination Event which is continuing: |
| (i) | subject to sub-paragraph (ii) below, the arithmetic mean of the valuations shown by two (2) valuation reports prepared: |
| (A) | in Dollars; |
| (B) | on a date no earlier than fifteen (15) days prior to the relevant date of valuation; |
| (C) | with or without physical inspection of that Vessel; and |
| (D) | on the basis of a sale for prompt delivery for cash on normal arm’s length commercial terms as between a willing seller and a willing buyer, free of any existing charter or other contract of employment, |
and such reports shall be prepared by Approved Valuers nominated by the Owners; and
| (ii) | if there is a discrepancy of five per cent. (5%) or more between the market valuations shown on the two valuation reports obtained pursuant to the above paragraph (using the higher valuation figure as the denominator), the arithmetic mean of the valuations shown by three (3) valuation reports each prepared on the same terms and conditions as set out under paragraph (a) above. |
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(ECO MALIBU) BBC Additional Clauses
“MARPOL Protocol” means Annex VI (Regulations for the Prevention of Air Pollution from Ships) to the International Convention for the Prevention of Pollution from Ships 1973 (as amended in 1978 and 1997).
“Material Adverse Effect” means, in the opinion of the Owners, a material adverse effect on:
| (a) | the business, operations, property, condition (financial or otherwise) or prospects of any Relevant Person or the Guarantor and its Subsidiaries as a whole; |
| (b) | the ability of any Relevant Person to perform its obligations under any Leasing Document to which it is a party; or |
| (c) | the validity or enforceability of, or the effectiveness or ranking of any Security Interests granted pursuant to any of the Leasing Documents or the rights or remedies of the Owners under any of the Leasing Documents. |
“MOA” means the memorandum of agreement dated on or about the date of this Charter and made between the Owners (in their capacity as buyers) and the Charterers (in their capacity as sellers), pursuant to which the Charterers agree to sell and the Owners agree to purchase the Vessel upon the terms and conditions set out therein.
“Net Sales Proceeds” has the meaning given to it under Clause 41.9.
“Net Trading Proceeds” has the meaning given to it under Clause 41.9.
“Obligatory Insurances” means any insurances of the Vessel required to be effected by or on behalf of the Charterers pursuant to Clause 39 – (Insurance).
“Operating Account” means an account in the name of the Charterers with an Account Bank.
“Original Financial Statements” means:
| (a) | with respect to the Charterers, the annual financial statement accounts of the Charterers for that financial year as referred to in the Guarantor’s audited consolidated annual financial statement accounts of the Guarantor; and |
| (b) | with respect to the Guarantor, its audited financial statements for the financial year ended 31 December 2022 (and if such statements are not in English, they shall be accompanied by a certified English translation). |
“Original Jurisdiction” means, in relation to any Relevant Person, the jurisdiction under whose laws such Relevant Person incorporated or resided as at the date of this Charter.
“Outstanding Capital Balance” means, on any relevant date, (i) the Financing Amount minus (ii) the aggregate Fixed Charterhire which has been paid by the Charterers and received by the Owners as at such date taking into account any payment made in accordance with Clause 46.1(x)(A) or Clause 48.
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(ECO MALIBU) BBC Additional Clauses
“Owners’ Financier” means any financier providing financing or refinancing facilities to the Owners or any affiliate of the Owners in respect of the Owners’ purchase and/or lease of the Vessel to the Charterers under the terms of the Leasing Documents.
“Owners’ Surveyor” means the surveyor appointed by the Owners in accordance with Clause 7.
“Party” means a party to this Charter, namely the Owners or the Charterers.
“Payment Date” means each of the dates upon which Charterhire is to be paid by the Charterers to the Owners pursuant to Clauses 36.2, 36.5, 36.6 and 36.7 (Charterhire).
“Permitted Security Interest” means:
| (a) | any Security Interest created by a Security Document or a Financial Instrument; |
| (b) | prior to the Commencement Date, any Security Interest created by any “Finance Document” (howsoever defined in the Existing Loan Agreement); |
| (c) | any lien for unpaid master’s and crew’s wages in accordance with the ordinary course of operation of the Vessel or in accordance with usual reputable maritime practice; |
| (d) | any lien for salvage; |
| (e) | any lien for master’s disbursements incurred in the ordinary course of trading; |
| (f) | any other lien arising by operation of law or otherwise in the ordinary course of the operation, repair or maintenance of the Vessel provided such liens do not secure amounts more than thirty (30) days overdue; |
| (g) | any Security Interest created in favour of a plaintiff or defendant in any action of the court or tribunal before whom such action is brought as security for costs and expenses where the Owners are prosecuting or defending such action in good faith by appropriate steps; and |
| (h) | Security Interests arising by operation of law in respect of taxes which are not overdue or for payment of taxes which are overdue for payment but which are being contested by the Owners or the Charterers in good faith by appropriate steps and in respect of which adequate reserves have been made, |
provided that the foregoing have not arisen due to the default or omission of any Relevant Person.
“Poseidon Principles” means the financial industry framework for assessing and disclosing the climate alignment of ship finance portfolios published in June 2019 as the same may be amended or replaced to reflect changes in applicable law or regulation or the introduction of or changes to mandatory requirements of the International Maritime Organisation from time to time.
“Potential Termination Event” means, an event or circumstance which, with the expiry of a grace period, the giving of any notice, the lapse of time and/or the making of any determination under the Leasing Documents and/or the satisfaction of any other condition, would constitute a Termination Event.
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(ECO MALIBU) BBC Additional Clauses
“Prepositioning Date” shall have the same meaning as defined under the MOA.
“Prohibited Countries” means those countries and territories subject to country-wide or territory-wide Sanctions and/or trade embargoes from time to time during the Charter Period, in particular but not limited to pursuant to the U.S.’s Office of Foreign Assets Control of the U.S. Department of Treasury (“OFAC”) or the United Nations including at the date of this Charter, but without limitation, non-Ukrainian government controlled areas of Donetsk, Luhansk and Zaporizhzhia Regions, Cuba, Syria, Iran, North Korea, Crimea and Venezuela and any additional countries based on respective country-wide or territory-wide Sanctions being imposed by OFAC or any of the regulative bodies referred to in the definition of Prohibited Person.
“Prohibited Person” means any person, entity or any other party which is (i) located, domiciled, resident or incorporated in a Prohibited Country, and/or (ii) subject to any sanction administrated by the United Nations, the European Union, the United States and the U.S. Department of Treasury’s Office of Foreign Assets Control (“OFAC”), the United Kingdom, His Majesty’s Treasury (“HMT”) and the Foreign and Commonwealth Office of the United Kingdom, the Special Administrative Region of Hong Kong, the People’s Republic of China and/or (iii) owned or controlled by or affiliated with persons, entities or any other parties as referred to in (i) and (ii).
“Published Rate” means SOFR or Term SOFR for any Quoted Tenor.
“Published Rate Replacement Event” means, in relation to any Published Rate:
| (a) | the methodology, formula or other means of determining that Published Rate has, in the opinion of the Parties, materially changed; |
(b)
(i)
(A) the administrator of that Published Rate or its supervisor publicly announces that such administrator is insolvent;
B) information is published in any order, decree, notice, petition or filing, however described, of or filed with a court, tribunal, exchange, regulatory authority or similar administrative, regulatory or judicial body which reasonably confirms that the administrator of that Published Rate is insolvent,
provided that, in each case, at that time, there is no successor administrator to continue to provide that Published Rate;
| (ii) | the administrator of that Published Rate publicly announces that it has ceased or will cease to provide that Published Rate permanently or indefinitely and, at that time, there is no successor administrator to continue to provide that Published Rate; |
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(ECO MALIBU) BBC Additional Clauses
| (iii) | the supervisor of the administrator of that Published Rate publicly announces that such Published Rate has been or will be permanently or indefinitely discontinued; or |
| (iv) | the administrator of that Published Rate or its supervisor announces that that Published Rate may no longer be used; or |
| (c) | the administrator of that Published Rate (or the administrator of an interest rate which is a constituent element of that Published Rate) determines that that Published Rate should be calculated in accordance with its reduced submissions or other contingency or fallback policies or arrangements and either: |
| (i) | the circumstance(s) or event(s) leading to such determination are not (in the opinion of the Parties) temporary; |
| (ii) | that Published Rate is calculated in accordance with any such policy or arrangement for a period no less than a reasonable period determined by the Parties; or |
| (d) | in the opinion of the Parties, that Published Rate is otherwise no longer appropriate for the purposes of calculating interest under this Charter. |
“Purchase Obligation” means the purchase obligation referred to in Clause 52 (Purchase Obligation).
“Purchase Obligation Price” means US$19,000,000.
“Purchase Price” has the meaning given to it in the MOA.
“Quotation Day” means, in relation to any Hire Period, two (2) US Government Securities Business Days before the first day of that Hire Period unless market practice differs in the relevant syndicated loan market in which case the Quotation Day will be determined by the Owners in accordance with that market practice (and if quotations would normally be given on more than one day, the Quotation Day will be the last of those days).
“Quoted Tenor” means, in relation to Term SOFR, any period for which that rate is customarily displayed on the relevant page or screen of an information service.
“Reference Rate” means, in relation to a Hire Period:
| (b) | the applicable Term SOFR for three (3) months as of the relevant Quotation Day; or |
| (c) | as otherwise determined pursuant to Clause 36.5A, |
and if, in either case, that rate is less than zero, the Reference Rate shall be deemed to be zero.
“Relevant Jurisdiction” means, in relation to each Relevant Person:
| (a) | its Original Jurisdiction; |
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(ECO MALIBU) BBC Additional Clauses
| (b) | any jurisdiction where any property owned by it and charged under a Leasing Document is situated; |
| (c) | any jurisdiction where it conducts its business; and |
| (d) | any jurisdiction whose laws govern the perfection of any of the Leasing Documents entered into by it creating a Security Interest. |
“Relevant Nominating Body” means any applicable central bank, regulator or other supervisory authority or a group of them, or any working group or committee sponsored or chaired by, or constituted at the request of, any of them or the Financial Stability Board.
“Relevant Person” means each of the Charterers (for the avoidance of doubt, reference to Charterers here include the Charterers acting in their capacities as sellers under the MOA) and the Guarantor (in its capacity as the guarantor and the shareholder of the Charterers), any Approved Manager which is an entity within the Group, any Sub-charterer which is an entity within the Group and any other party providing security to the Owners in respect of the Charterers’ obligations under this Charter pursuant to a Security Document (except any Approved Manager or Sub-charterer which are not entities within the Group).
“Replacement Reference Rate” means a reference rate which is:
| (a) | formally designated, nominated or recommended as the replacement for a Published Rate by: |
| (i) | the administrator of that Published Rate (provided that the market or economic reality that such reference rate measures is the same as that measured by that Published Rate); or |
| (ii) | any Relevant Nominating Body, |
and if replacements have, at the relevant time, been formally designated, nominated or recommended under both paragraphs, the “Replacement Published Rate” will be the replacement under paragraph (ii) above;
| (b) | in the opinion of the Owners, generally accepted in the international or any relevant domestic syndicated loan markets as the appropriate successor or alternative to a Published Rate; or |
| (c) | in the opinion of the Owners, an appropriate successor or alternative to a Published Rate. |
“Reporting Time” means close of business in Beijing on the date falling one (1) Business Day after the Quotation Day for the relevant Hire Period.
“Requisition Compensation” includes all compensation or other moneys payable by reason of any act or event such as is referred to in paragraph (b) of the definition of “Total Loss”.
“Safety Management Certificate” shall have the same meaning as ascribed under the ISM Code.
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(ECO MALIBU) BBC Additional Clauses
“Sanctions” means any sanctions, embargoes, freezing provisions, prohibitions or other restrictions relating to trading, doing business, investment, exporting, financing or making assets available (or other activities similar to or connected with any of the foregoing):
| (a) | imposed by law or regulation of a Sanctions Authority, to the extent applicable to this transaction; or |
| (b) | otherwise imposed by any applicable law or regulation by which any Relevant Person is bound or to which it is subject. |
“Sanctions Authority” means:
| (a) | the United Nations or its Security Council; |
| (b) | the United States; |
| (c) | the European Union or the Council of the European Union; |
| (d) | the United Kingdom; |
| (e) | the People’s Republic of China (including for the avoidance of doubt, Hong Kong), provided that this paragraph (e) shall not apply to the Initial Sub-charterer when the Vessel is chartered under the Initial Sub-charter or the operation or use of the Vessel by the Initial Sub-charterer (but not any further sub-lessee of the Vessel) when the Vessel is operated by the Initial Sub-charterer (but not any further sub-lessee of the Vessel), in each case unless otherwise specified in Clause 50.3; and |
| (f) | the governments and official institutions or agencies of any of paragraphs (a) to (e) above, including the U.S. Department of the Treasury’s Office of Foreign Assets Control, the United States Department of State, the U.S. Department of Commerce and the Hong Kong Monetary Authority and His Majesty’s Treasury. |
“Sanctions Advisory” means the Sanctions Advisory for the Maritime Industry, Energy and Metals Sectors, and Related Communities issued May 14, 2020 by the US Department of the Treasury, Department of State and Coast Guard, as may be amended or supplemented, and any similar future advisory.
“Secured Liabilities” means all present and future obligations and liabilities (whether actual or contingent and whether owed jointly or severally or in any other capacity whatsoever) of a Relevant Person to the Owners under or in connection with the Leasing Documents or any judgment relating to the Leasing Documents; and for this purpose, there shall be disregarded any total or partial discharge of these liabilities, or variation of their terms, which is effected by, or in connection with, any bankruptcy, liquidation, arrangement or other procedure under the insolvency laws of any country.
“Security Documents” means collectively the Guarantee, the Account Security, the Shares Security, the General Assignment, the Manager’s Undertakings and any other document whether or not it creates a Security Interest which is executed as security for the obligations of the Charterers under or in connection with this Charter.
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(ECO MALIBU) BBC Additional Clauses
“Security Interest” means:
| (a) | a mortgage, charge (whether fixed or floating) or pledge, lien, assignment, hypothecation or any other security interest of any kind or any other agreement or arrangement having the effect of conferring a security interest; |
| (b) | the security rights of a plaintiff under an action in rem; or |
| (c) | any other right which confers on a creditor or potential creditor a right or privilege to receive the amount actually or contingently due to it ahead of the general unsecured creditors of the debtor concerned; however this paragraph (c) does not apply to a right of set off or combination of accounts conferred by the standard terms of business of a bank or financial institution. |
“Shares Security” means the share charge executed or to be executed by the Guarantor (in its capacity as shareholder of the Charterers) creating a Security Interest over all its shares in the Charterers in favour of the Owners.
“SOFR” means the secured overnight financing rate (SOFR) administered by the Federal Reserve Bank of New York (or any other person which takes over the administration of that rate) published (before any correction, recalculation or republication by the administrator) by the Federal Reserve Bank of New York (or any other person which takes over the publication of that rate).
“Statement of Compliance” means a Statement of Compliance related to fuel oil consumption pursuant to regulations 6.6 and 6.7 of Annex VI.
“Subsidiary” means a subsidiary within the meaning of section 1159 of the UK Companies Act 2006.
“Sub-charter” means, as the context requires, any sub-charter or other form of contract for employment in respect of the Vessel (including, but not limited to, any Assignable Sub-charter) entered or to be entered into by the Charterers (as disponent owners) and any other sub-charterer, whether or not already in existence.
“Sub-charterer” means the sub-charterer under a Sub-charter.
“Technical Manager” means Central Shipping Inc., a corporation incorporated under the laws of Marshall Islands with registration number 98339, Central Mare Inc., a corporation incorporated under the laws of Marshall Islands with registration number 32656 or any reputable management company designated by the Charterers and approved by Initial Sub-charterer, while on time charter to Initial Sub-charterer, and the Owners, thereafter, in writing from time to time as the technical manager of the Vessel.
“Term SOFR” means the term SOFR reference rate administered by CME Group Benchmark Administration Limited (or any other person which takes over the administration of that rate) for the relevant period published (before any correction, recalculation or republication by the administrator) by CME Group Benchmark Administration Limited (or any other person which takes over the publication of that rate).
“Termination Event” means any event described in Clause 49.1.
“Termination Fee” means an amount equals to one point five per cent. (1.50%) of the Outstanding Capital Balance as at the relevant date.
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(ECO MALIBU) BBC Additional Clauses
“Termination Notice” has the meaning given to it under Clause 49.2 (Termination Events).
“Termination Sum” means, in respect of any date (such date being referred to as the “Relevant Date” for the purposes of this definition only), the aggregate of (without double counting amounts that may be included in more than one sub-paragraph below):
| (a) | the Outstanding Capital Balance prevailing as at the Relevant Date; |
| (b) | any Variable Charterhire due and payable, but unpaid up to (and including) the date of payment of the Termination Sum; |
| (c) | any Termination Fee; |
| (d) | any Breakfunding Costs; |
| (e) | any and all documented costs, losses and liabilities incurred by the Owners as a result of the early termination of the leasing under this Charter including but not limited to any legal costs, any agency or broker fees incurred in attempting to re-charter or otherwise dispose of the Vessel; |
| (f) | any and all documented costs, losses and liabilities incurred by the Owners in locating, repossessing, recovering, repositioning, berthing, insuring and maintaining the Vessel and/or in collecting any payments due under this Charter and/or in obtaining the due performance of the obligations of the Charterers under this Charter or the other Leasing Documents (including, but not limited to, for carrying out any works or modifications or repairs required to cause the Vessel to conform with the provisions relating to redelivery as required under Clause 41.5); and |
| (g) | aside from the amounts described under paragraphs (a) to (f) above, any other moneys due and payable, but unpaid, under the Leasing Documents at the Relevant Date including any default interest on amounts under (a) to (f) above. |
“Total Loss” means:
| (a) | actual, constructive, compromised, agreed or arranged total loss of the Vessel; |
| (b) | any expropriation, confiscation, requisition or acquisition of the Vessel, whether for full consideration, a consideration less than its proper value, a nominal consideration or without any consideration, which is effected by any government or official authority or by any person or persons claiming to be or to represent a government or official authority (excluding a requisition for hire for a fixed period not exceeding one (1) year without any right to an extension) unless it is redelivered within twenty-one (21) days to the full control of the Owners or the Charterers; or |
| (c) | any arrest, capture, seizure or detention of the Vessel (including any hijacking or theft but excluding any event specified in paragraph (b) of this definition) unless it is redelivered within thirty (30) days to the full control of the Owners or the Charterers. |
“Total Loss Date” means, in relation to the Total Loss of the Vessel:
| (a) | in the case of an actual loss of the Vessel, the date on which it occurred; |
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(ECO MALIBU) BBC Additional Clauses
| (b) | in the case of a constructive, compromised, agreed or arranged total loss of the Vessel, the earlier of: |
| (i) | the date on which a notice of abandonment is given to the insurers; |
| (ii) | the date when the Vessel was last heard of; and |
| (iii) | the date of any compromise, arrangement or agreement made by or on behalf of the Charterers with the Vessel’s insurers in which the insurers agree to treat the Vessel as a Total Loss; and |
| (c) | in the case of any expropriation, confiscation, requisition or acquisition of the Vessel whether for full consideration, a consideration less than its proper value, a nominal consideration or without any consideration, which is effected by any government or official authority or by any person or persons claiming to be or to represent a government or official authority (excluding a requisition for hire for a fixed period not exceeding one (1) year without any right to an extension), on the date on which the expropriation, confiscation, requisition or, as the case may be, the acquisition of the Vessel is completed by delivery of the Vessel to the relevant government or official authority or the person or persons claiming to be or to represent the relevant government or official authority unless it is redelivered within twenty-one (21) days to the full control of the Owners or the Charterers; and |
| (d) | in the case of any arrest, condemnation, capture, seizure or detention of the Vessel (including any hijacking or theft), unless it is redelivered within thirty (30) days to the full control of the Owners or the Charterers, the date falling on the expiration of such days. |
“Total Loss Payment Date” means, following the occurrence of a Total Loss, the earlier of:
| (a) | the date falling one hundred and twenty (120) days after the Total Loss Date or such later date as the Owners may agree; and |
| (b) | the date on which the Owners receive the Total Loss Proceeds. |
“Total Loss Proceeds” means the proceeds of any policy or contract of insurance or any Requisition Compensation in each case arising in respect of a Total Loss.
“US” means the United States of America.
“US Government Securities Business Day” means any day other than:
| (a) | a Saturday or a Sunday; and |
| (b) | a day on which the Securities Industry and Financial Markets Association (or any successor organisation) recommends that the fixed income departments of its members be closed for the entire day for purposes of trading in US Government securities. |
“US Tax Obligor” means (a) a person which is resident for tax purposes in the United States of America or (b) a person some or all of whose payments under the Leasing Documents are from sources within the United States for United States federal income tax purposes.
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(ECO MALIBU) BBC Additional Clauses
“Variable Charterhire” shall have the meaning as defined under paragraph (b) of Clause 36.5.
“Vessel” means m.v. Eco Malibu, the 157,286 DWT suezmax tanker with IMO number 9902823.
“Voluntary Early Termination” means the right to early terminate referred to in Clause 51.1.
“Voluntary Early Termination Date” shall have the meaning ascribed thereto in Clause 51.2.
“Voluntary Early Termination Fee” means:
| (a) | if the Voluntary Early Termination is exercised on or after the date falling twelve (12) months from the Commencement Date and until (including) the date falling twenty four (24) months after the Commencement Date, one point five per cent. (1.50%) of the Outstanding Capital Balance on the applicable Voluntary Early Termination Date; |
| (b) | if the Voluntary Early Termination is exercised after the date falling twenty four (24) months from the Commencement Date and until (including) the date falling thirty six (36) months from the Commencement Date, one per cent. (1.00%) of the Outstanding Capital Balance on the applicable Voluntary Early Termination Date; and |
| (c) | if the Voluntary Early Termination is exercised after the date falling thirty six (36) months from the Commencement Date zero per cent. (0%) of the Outstanding Capital Balance as at the applicable Voluntary Early Termination Date. |
“Voluntary Early Termination Notice” shall have the meaning ascribed thereto in Clause 51.2.
“Voluntary Early Termination Price” means, in respect of any Voluntary Early Termination Date, the aggregate of:
| (a) | the Outstanding Capital Balance prevailing as at the relevant the Voluntary Early Termination Date; |
| (b) | any Variable Charterhire accrued but unpaid as at the date of payment of the Voluntary Early Termination Date Price; |
| (c) | any Voluntary Early Termination Fee; |
| (d) | any Breakfunding Costs; |
| (e) | any documented legal or other costs reasonably incurred by the Owners in connection with the exercise of the Voluntary Early Termination under Clause 51 (Voluntary Early Termination); and |
aside from the amounts described under paragraphs (a) to (e) above, any other moneys due and owing under the Leasing Documents at the relevant Voluntary Early Termination Date including any default interest on amounts under (a) to (e) above.
| 68.2 | Inconsistency between Charter provisions and Leasing Documents |
In the case of any conflict between the provisions or terms so of this Charter and the terms and provisions of a Leasing Document, the provisions of this Charter shall prevail.
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(ECO MALIBU) BBC Additional Clauses
| 68.3 | Construction |
Unless a contrary indication appears, in this Charter:
the “Approved Manager”, the “Charterers”, the “Guarantor”, any “Relevant Person”, the “Owners”, or any other person shall be construed so as to include its successors in title, permitted assigns and permitted transferees to, or of, its rights and/or obligations under the Leasing Documents;
“agreed form” means, in relation to a document, such document in a form agreed in writing between the Owners and the Charterers and, if required by the Owners in their sole discretion, the Owners’ Financiers;
“asset” includes every kind of property, asset, interest or right, including any present, future or contingent right to any revenues or other payment;
“company” includes any partnership, joint venture and unincorporated association;
“consent” means:
| (a) | an authorisation, consent, approval, resolution, licence, exemption, filing, registration, notarisation and legalization; and |
| (b) | in relation to anything which will be prohibited or restricted by law if a governmental or official authority intervenes or acts in any way within a specified period after lodgment, filing, registration or notification, the expiry of that period without intervention or action. |
“contingent liability” means a liability which is not certain to arise and/or the amount of which remains unascertained;
“continuing” means, in relation to any Termination Event, a Termination Event which has not been waived by the Owners or remedied to the satisfaction of the Owners (acting reasonably) and in relation to any Potential Termination Event, a Potential Termination Event which has not been waived by the Owners or remedied to the satisfaction of the Owners (acting reasonably), provided that following the issuance of a Termination Notice in accordance with Clause 49.2, a Termination Event is “continuing” if it has not been waived;
“control” over a particular company means the power (whether by way of ownership of shares, proxy, contract, agency or otherwise) to:
| (a) | cast, or control the casting of, more than 51 per cent, of the maximum number of votes that might be cast at a general meeting of such company; |
| (b) | appoint or remove all, or the majority, of the directors or other equivalent officers of such company; or |
| (c) | give directions with respect to the operating and financial policies of such company with which the directors or other equivalent officers of such company are obliged to comply; |
“document” includes a deed; also a letter, fax or telex;
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the Owners’ “cost of funds” in relation to the Outstanding Capital Balance or any part thereof is a reference to the average cost (determined either on an actual or a notional basis) which the Owners would incur if they were to fund or finance, from whatever source(s) they may reasonably select, an amount equal to the amount of the Outstanding Capital Balance or any part thereof for a period equal in length to the Hire Period of the Outstanding Capital Balance or any part thereof;
“expense” means any kind of cost, charge or expense (including all legal costs, charges and expenses) and any applicable value added or other tax;
“gross negligence” means a form of negligence which is distinct from ordinary negligence, in which the due diligence and care which are generally to be exercised have been disregarded to a particularly high degree, in which the plainest deliberations have not been made and that which should be most obvious to everybody has not been followed.
“law” includes any order or decree, any form of delegated legislation, any treaty or international convention and any regulation or resolution of the Council of the European Union, the European Commission, the United Nations or its Security Council;
“legal or administrative action” means any legal proceeding or arbitration and any administrative or regulatory action or investigation;
“liability” includes every kind of debt or liability (present or future, and including contingent liabilities only in the case of Clause 49.1(g)(ii), Clause 54 – (Indemnities) and the definition of “Financial Indebtedness”), whether incurred as principal or surety or otherwise;
“months” shall be construed in accordance with Clause 68.4 (Meaning of “month”);
“person” includes any company; any state, political sub-division of a state and local or municipal authority; and any international organisation;
“policy”, in relation to any insurance, includes a slip, cover note, certificate of entry or other document evidencing the contract of insurance or its terms;
“protection and indemnity risks” means the usual risks covered by a protection and indemnity association which is a member of the International Group of Protection And Indemnity Clubs including pollution risks, extended passenger cover and the proportion (if any) of any sums payable to any other person or persons in case of collision which are not recoverable under the hull and machinery policies by reason of the incorporation in them of clause 6 of the International Hull Clauses (1/11/02 or 1/11/03), clause 8 of the Institute Time Clauses (Hulls)(1/10/83) or clause 8 of the Institute Time Clauses (Hulls) (1/11/1995) or the Institute Amended Running Down Clause (1/10/71) or any equivalent provision;
“regulation” includes any regulation, rule, official directive, request or guideline whether or not having the force of law of any governmental, intergovernmental or supranational body, agency, department or regulatory, self-regulatory or other authority or organisation; and
“tax” includes any present or future tax, duty, impost, levy or charge of any kind which is imposed by any state, any political sub-division of a state or any local or municipal authority (including any such imposed in connection with exchange controls), and any connected penalty, interest or fine.
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(ECO MALIBU) BBC Additional Clauses
| 68.4 | Meaning of “month” |
A period of one or more “months” ends on the day in the relevant calendar month numerically corresponding to the day of the calendar month on which the period started (“the numerically corresponding day”), but:
| (a) | on the Business Day following the numerically corresponding day if the numerically corresponding day is not a Business Day or, if there is no later Business Day in the same calendar month, on the Business Day preceding the numerically corresponding day; or |
| (b) | on the last Business Day in the relevant calendar month, if the period started on the last Business Day in a calendar month or if the last calendar month of the period has no numerically corresponding day; |
and “month” and “monthly” shall be construed accordingly.
| 68.5 | In this Charter: |
| (a) | references to a Leasing Document or any other document being in the form of a particular appendix or to any document referred to in the recitals include references to that form with any modifications to that form which the Owners and the Charterers approve; |
| (b) | references to, or to a provision of, a Leasing Document or any other document are references to it as amended or supplemented, whether before the date of this Charter or otherwise; |
| (c) | references to, or to a provision of, any law include any amendment, extension, re-enactment or replacement, whether made before the date of this Charter or otherwise; |
| (d) | words denoting the singular number shall include the plural and vice versa; and |
| (e) | references to a page or screen of an information service displaying a rate shall include: |
| (i) | any replacement page of that information service which displays that rate; and |
| (ii) | the appropriate page of such other information service which displays that rate from time to time in place of that information service, |
and, if such page or service ceases to be available, shall include any other page or service displaying that rate specified by the Owners after consultation with the Charterers.
| 68.6 | Construction of Insurance terms |
In this Charter:
“approved” means, for the purposes of Clause 39 – (Insurance), approved in writing by the Owners.
“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 its insured value being less than the value at which the Vessel is assessed for the purpose of such claims.
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“obligatory insurances” means all insurances effected, or which the Charterers are obliged to effect, under Clause 39 – (Insurance) or any other provision of this Charter or another Leasing Document.
“policy” includes a slip, cover note, certificate of entry or other document evidencing the contract of insurance or its terms.
“protection and indemnity risks” means the usual risks (including but not limited to freight, demurrage and defence cover) covered by a protection and indemnity association being a member of the International Group of Protection and Indemnity Clubs, including pollution risks and the proportion (if any) of any sums payable to any other person or persons in case of collision which are not recoverable under the hull and machinery policies by reason of the incorporation in them of clause 6 of the International Hull Clauses (1/11/02) (1/11/03), clause 8 of the Institute Time Clauses (Hulls) (1/10/83) (1/11/95) or the Institute Amended Running Down Clause (1/10/71) or any equivalent provision.
“war risks” includes the risk of mines and all risks excluded by clause 29 of the International Hull Clauses (1/11/02 or 1/11/03), clause 24 of the Institute Time Clauses (Hulls) (1/11/95) or clause 23 of the Institute Time Clauses (Hulls)(1/10/83).
| 68.7 | Headings |
In interpreting a Leasing Document or any provision of a Leasing Document, all clauses, sub-clauses and other headings in that and any other Leasing Document shall be entirely disregarded.
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SCHEDULE 1
ACCEPTANCE CERTIFICATE
ATHENEAN EMPIRE INC. (the “Charterers”) hereby acknowledges that at [●] hours on [●], there was delivered to, and accepted by, the Charterers the Vessel known as m.v. “Eco Malibu”, registered in the name of GIANT 9 HOLDING LIMITED (the “Owners”) under the flag of the Marshall Islands with IMO number 9902823 under a bareboat charter dated [●] (the “Charter”) and made between the Owners and the Charterers and that Delivery (as defined in the Charter) thereupon took place and that, accordingly, the Vessel is and will be subject to all the terms and conditions contained in the Charter.
The Charterers warrant that the representations and warranties made by them in Clause 45 – (Representation and Warranties) of the Charter remain correct and that no Termination Event (as defined in the Charter) has occurred and is continuing at the date of this Acceptance Certificate.
Name:
Title:
for and on behalf of
ATHENEAN EMPIRE INC.
Dated:
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SCHEDULE 2
PART A
The following are the documents referred to in Clause 34.2(e)(i):
| 1 | Corporate Authority |
| 1.1 | A copy of the constitutional documents of each Relevant Person. |
| 1.2 | If required, a copy of the resolutions of the board of directors (or equivalent) of each Relevant Person: |
| (a) | approving the terms of, and the transactions contemplated by, the Leasing Documents to which it is a party and resolving that it execute the Leasing Documents to which it is a party; |
| (b) | authorizing a specified person or persons to execute the Leasing Documents to which it is a party on its behalf; and |
| (c) | authorising a specified person or persons, on its behalf, to sign and/or dispatch all documents and notices to be signed and/or dispatched by it under, or in connection with, the Leasing Documents to which it is a party. |
| 1.3 | If required, an original of the power of attorney of any party to a Leasing Document authorising a specified person or persons to execute the Leasing Documents to which it is a party. |
| 1.4 | If required, a specimen of the signature of each person authorized by the resolution referred to in paragraph 1.2 above. |
| 1.5 | If required, a copy of the resolutions signed by all the holder(s) of the issued shares of any Relevant Person, approving the terms of, and the transactions contemplated by such Leasing Document. |
| 1.6 | A certificate of an officer or authorized signatory of each Relevant Person certifying that each copy document relating to it specified in this Part A of Schedule 2 is correct, complete and in full force and effect as at a date no earlier than the date of this Agreement. |
| 2 | Documents and other security |
| 2.1 | A duly executed original of each Leasing Document (except the Account Security, the General Assignment, the Manager’s Undertaking and the Escrow Agreement) and of each document to be delivered under each of them. |
| 2.2 | Agreed forms of the Account Security, the General Assignment and the Manager’s Undertaking and of each document to be delivered under each of them. |
| 2.3 | Evidence that the Charterers’ Operating Account have been opened and maintained with the Account Bank. |
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| 3 | Legal opinion |
| 3.1 | Agreed form of legal opinion by English legal advisers to the Owners on such matters on the laws of England in relation to the applicable documents listed in paragraphs 2.1 and 2.2 of Part A of this Schedule, in form and substance acceptable to the Owners. |
| 3.2 | Agreed forms of legal opinions by lawyers appointed by the Owners on such matters relating to the applicable documents listed in paragraphs 2.1 and 2.2 of Part A this Schedule, concerning the laws of the Republic of the Marshall Islands, Greece and such other relevant jurisdictions as the Owners may reasonably require, in form and substance acceptable to the Owners. |
| 4 | Vessel Insurances |
| 4.1 | Evidence that the Vessel is or will be on Delivery insured in the manner required under Clause 39 – (Insurance). |
| 4.2 | Agreed form of letters of undertaking and certificates of entry (as the case may be) relating to insurances as set out in Clause 39 – (Insurance) from the relevant insurer, insurance broker, protection and indemnity association or war risks association (as the case may be). |
| 4.3 | An insurance report by an insurance advisor appointed by the Owners (but at the cost of the Charterers) in an agreed form acceptable to the Owners. |
| 5 | Vessel Documents |
| 5.1 | A copy of the Management Agreement and any amendments thereto, establishing that the Vessel will, as from the Commencement Date, be managed by the relevant Approved Manager. |
| 5.2 | A copy of the Document of Compliance of the Technical Manager. |
| 5.3 | A copy of the Vessel’s class certificate evidencing that the Vessel maintains such classification |
| 5.4 | Copies of the Vessel’s Safety Management Certificate (together with any other details of the applicable safety management system which the Owners may require) and of any other documents required under the ISM Code and the ISPS Code (including, without limitation, an ISSC and IAPPC). |
| 6 | Initial Sub-Charter |
| 6.1 | A copy of the executed Initial Sub-Charter (and any addendums thereto). |
| 6.2 | Evidence to the satisfaction of the Owners that the Initial Sub-Charterer consents to the sale and leaseback of the Vessel contemplated by the Leasing Documents. |
| 7 | Escrow Agreement |
A copy of the duly executed Escrow Agreement in form and substance acceptable to the Owners.
| 8 | Deed of Release |
An agreed form Deed of Release.
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| 9 | Others |
| 9.1 | A duly completed Payment Notice (as defined in the MOA) to be received by the Owners not later than five (5) Business Days prior to the Prepositioning Date. |
| 9.2 | A copy of the duly executed commercial invoice of the Vessel. |
| 9.3 | Evidence that the Arrangement Fee and all other fees, costs and expenses then due from the Charterers to the Owners under the Leasing Documents have been paid and received by the Owners. |
| 9.4 | Copies of the Original Financial Statements. |
| 9.5 | Such evidence relating to the Relevant Person as the Owners may reasonably require for their (or their financiers) to be able to satisfy each of their “know your customer” or similar identification procedures in relation to the Leasing Documents. |
| 9.6 | A copy of any other consents, approvals, authorization or other document, opinion or assurance which the Owners consider to be reasonably desirable in connection with the entry into and performance of the transactions contemplated by any of the Leasing Documents or for the validity and enforceability of such documents. |
| 9.7 | If required, evidence that any process agent referred to under the Leasing Documents has accepted its appointment. |
| 9.8 | If required by the Flag State for purposes of registering the Vessel in the name of the Owners, evidence that the Owners have been registered as a foreign maritime entity under the laws of the Flag State (with such cost to be borne by the Charterers). |
| 9.9 | Such other documents as the Owners may require by giving notice to the Charterers. |
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PART B
The following are the documents referred to in Clause 34.2(e)(ii):
| 1 | Corporate Authorisations/Confirmation |
| 1.1 | A certificate of an authorized signatory of each Relevant Person certifying that each copy document provided under paragraph 1 of Part A of Schedule 2 of the MOA remains correct, complete and in full force and effect as on the Commencement Date. |
| 1.2 | A certificate of an authorized signatory of the Charterers certifying that there is no Potential Termination Event or Termination Event has occurred and is continuing as of the Commencement Date. |
| 2 | Security Documents |
| 2.1 | Duly executed and dated copies of the General Assignment and each Manager’s Undertaking and of each document to be delivered under it and evidence of their delivery within the timing prescribed under it. |
| 2.2 | Documentary evidence that the Security Interests intended to be created by each of the Security Documents have been duly perfected under applicable law or will be perfected under applicable law within the prescribed period contained in such Security Documents. |
| 3 | Delivery and title registration of the Vessel |
| 3.1 | Documentary evidence that the Vessel: |
| (a) | will simultaneously upon Delivery definitively and permanently registered in the name of the Owners under the flag of the Flag State; and |
| (b) | will simultaneously upon Delivery in the absolute and unencumbered ownership of the Owners. |
| (c) | has been or will be unconditionally delivered by the Charterers to the Owners pursuant to the terms of the MOA, where such documents shall include without limitation: |
| (i) | a certificate or transcript or an email confirmation issued by the competent authorities of the Flag State on the date of Delivery evidencing the Charterers’ (as sellers under the MOA) ownership of the Vessel and that the Vessel is free from registered encumbrances and mortgages (save for the mortgage dated 11 May 2021 executed by the Charterers (as sellers under the MOA) in favour of the Existing Financier); |
| (ii) | the original (if required by the Flag State) or a copy of the notarized and legalized (if required by the Flag State) copies of the bill of sale duly executed by the Charterers (and where executed by an attorney of the Charterers, together with such original or a copy of the notarized and legalised copies (if required by the Flag State) of the Charterers’ power of attorney); and |
| (iii) | the original (if required by the Flag State) or a copy of the protocol of delivery and acceptance duly executed by the Charterers and the Owners. |
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| (d) | has been or will be delivered to the Initial Sub-Charterer in accordance with the Initial Sub-Charter. |
| 3.2 | The commercial invoice of the Vessel. |
| 4 | Legal opinions |
| 4.1 | A signed legal opinion of Watson Farley & Williams, legal advisers to the Owners on such matters on the laws of England as may be satisfactory to the Owners. |
| 4.2 | Signed legal opinions by lawyers appointed by the Owners on such matters on the laws of the Marshall Islands, Germany and Greece and any other jurisdictions as may be satisfactory to the Owners. |
| 5 | Deed of Release |
Duly executed and dated copy of the Deed of Release.
| 6 | Others |
The Owners being satisfied that all conditions precedent or documents or evidence specified in Schedule 1 to the MOA have been satisfied or provided in form and substance satisfactory to the Owners.
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PART C
The following are the documents referred to in Clause 34.8:
| 1 | Security Interests |
Not later than five (5) Business Days after the Commencement Date, documentary evidence that the Security Interests intended to be created by each of the Security Documents have been duly perfected under applicable law (as applicable).
| 2 | Legal opinions |
Not later than three (3) Business Days after the Commencement Date, issued signed copies of the legal opinions referred to in paragraph 5 of Part B of Schedule 2 of this Charter.
| 3 | Insurances |
| 3.1 | Not later than five (5) Business Days after the Commencement Date, receipt of copies of the executed letters of undertaking and certificates of entry (as the case may be) relating to insurances as set out in Clause 39 – (Insurance) acknowledged by the relevant insurer, insurance broker, protection and indemnity association or war risks association (as the case may be), each in the agreed form under paragraph 5.2 of Part A of Schedule 2 of this Charter. |
| 3.2 | Not later than ten (10) Business Days after the Commencement Date, the signed insurance report in the form agreed under paragraph 4 of Part A of Schedule 2 of this Charter. |
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EXECUTION PAGE
| OWNERS | ||
| SIGNED by | ) | |
| duly authorized | ) | |
| for and on behalf of | ) | |
| GIANT 9 HOLDING LIMITED | ) | /s/ Mao Yufei |
| in the presence of: | ) | Mao Yufei, Director |
| Witness’ signature: | /s/ TAO Beijuan | |
| Witness’ name: | TAO Beijuan | |
| Witness’ address: |
Room 6006, 6th Floor, No. 15 Second East Zhongshan Road, Shanghai, P.R. China 200002 |
| CHARTERERS | ||
| SIGNED by | ) | /s/ Alexandros Tsirikos |
| duly authorized | ) | Alexandros Tsirikos |
| for and on behalf of | ) | |
| ATHENEAN EMPIRE INC. | ) | |
| in the presence of: | ) |
| Witness’ signature: | ||
| Witness’ name: | ||
| Witness’ address: |
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Signature page to BBC Additional Clauses (ECO MALIBU)
Exhibit 4.21
EXECUTION VERSION
Dated 8 December 2023
TOP SHIPS INC.
as Guarantor
and
GIANT 9 HOLDING LIMITED
as Owner
GUARANTEE
relating to
a bareboat charter of the vessel m.v. ECO MALIBU
dated 8 December 2023
Index
| Clause | Page |
| 1 | Interpretation | 1 |
| 2 | Guarantee | 2 |
| 3 | Liability as Principal and Independent Debtor | 3 |
| 4 | Expenses | 3 |
| 5 | Adjustment of Transactions | 4 |
| 6 | Payments | 4 |
| 7 | Interest | 4 |
| 8 | Subordination | 5 |
| 9 | Enforcement | 5 |
| 10 | Representations and Warranties | 6 |
| 11 | Undertakings | 9 |
| 12 | Judgments and Currency Indemnity | 15 |
| 13 | Supplemental | 16 |
| 14 | Assignment | 18 |
| 15 | Notices | 18 |
| 16 | Invalidity of Bareboat Charter | 19 |
| 17 | Governing Law and Enforcement | 19 |
Schedules
| Schedule 1 Form of compliance Certificate | 21 |
Execution
| Execution Page | 22 |
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Guarantee (ECO MALIBU)
THIS GUARANTEE is made on 8 December 2023
PARTIES
| (1) | TOP SHIPS INC., a corporation incorporated under the laws of the Marshall Islands whose registered address is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands, MH96960 (the “Guarantor”) |
| (2) | GIANT 9 HOLDING LIMITED, a company incorporated under the laws of Hong Kong whose registered office is at 6/F, Manulife Place, 348 Kwun Tong Road, Kowloon, Hong Kong (the “Owner” which expression includes its successors and assigns) |
BACKGROUND
| (A) | By a bareboat charter dated 8 December 2023 (the “Bareboat Charter”) and made between (i) the Owner, as owner and (ii) Athenean Empire Inc., a corporation incorporated under the laws of the Marshall Islands whose registered address is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands, MH96960, as charterer (the “Charterer”), the Owner has agreed to bareboat charter one (1) suezmax tanker named m.v. “Eco Malibu” and flagged in the Marshall Islands with IMO no. 9902823 (the “Vessel”) to the Charterer pursuant to the terms and conditions contained therein. |
| (B) | The Guarantor is the shareholder of the Charterer and holds all of the issued and outstanding shares in the Charterer. |
| (C) | The execution and delivery to the Owner of this Guarantee is one of the conditions to the chartering of the Vessel under the Bareboat Charter. |
| (D) | This Guarantee is the Guarantee referred to in the Bareboat Charter. |
OPERATIVE PROVISIONS
| 1 | INTERPRETATION |
| 1.1 | Defined expressions |
Words and expressions defined in the Bareboat Charter shall have the same meanings when used in this Guarantee unless the context otherwise requires.
| 1.2 | Construction of certain terms |
In this Guarantee:
“bankruptcy” includes a liquidation, receivership or administration and any form of suspension of payments, arrangement with creditors or reorganisation under any corporate or insolvency law of any country.
“Compliance Certificate” means a certificate in the form set out in Schedule 1 or in any other form approved by the Owner.
“control” over a particular company means the power (whether by way of ownership of shares, proxy, contract, agency or otherwise) to:
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(ECO MALIBU) Guarantee
| (a) | cast, or control the casting of, more than 51 per cent, of the maximum number of votes that might be cast at a general meeting of such company; |
| (b) | appoint or remove all, or the majority, of the directors or other equivalent officers of such company; or |
| (c) | give directions with respect to the operating and financial policies of such company with which the directors or other equivalent officers of such company are obliged to comply. |
“Group” means the Guarantor and its subsidiaries from time to time. “Party” means a party to this Guarantee.
“Relevant Person” means each “Relevant Person” as defined in the Bareboat Charter.
“Secured Liabilities” means all present and future obligations and liabilities (whether actual or contingent and whether owed jointly or severally or in any other capacity whatsoever) of the Charterer to the Owner under or in connection with any Leasing Documents or any judgment relating to any Leasing Documents and for this purpose, there shall be disregarded any total or partial discharge of these liabilities, or variation of their terms, which is effected by, or in connection with, any bankruptcy, liquidation, arrangement or other procedure under the insolvency laws of any country.
“Security Period” means the period commencing on the date hereof and ending on the date on which the Owner is satisfied that the Secured Liabilities have been irrevocably and unconditionally paid and discharged in full.
| 2 | GUARANTEE |
| 2.1 | Guarantee and indemnity |
The Guarantor unconditionally and irrevocably:
| (a) | guarantees the due payment of all amounts payable by each other Relevant Person under or in connection to each Leasing Document to which such Relevant Person is a party; |
| (b) | undertakes to pay to the Owner on the Owner’s demand any such amount which is not paid by that Relevant Person when due and payable under or in connection to that Leasing Document; |
| (c) | guarantees the punctual performance by that Relevant Person of all that Relevant Person’s obligations under or in connection with that Leasing Document; and |
| (d) | fully indemnifies the Owner on its demand in respect of all claims, expenses, liabilities and losses which are made or brought against or incurred by the Owner as a result of or in connection with any obligation or liability guaranteed by the Guarantor being or becoming unenforceable, invalid, void or illegal; and the amount recoverable under this indemnity shall be equal to the amount which the Owner would otherwise have been entitled to recover. |
| 2.2 | No limit on number of demands |
The Owner may serve more than one demand under Clause 2.1.
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| 2.3 | Guarantee of whole amount |
This Guarantee shall be construed and take effect as a guarantee of all amounts due to the Owner under the Leasing Documents to which each other Relevant Person is a party.
| 3 | LIABILITY AS PRINCIPAL AND INDEPENDENT DEBTOR |
| 3.1 | Principal and independent debtor |
The Guarantor shall be liable under this Guarantee as a principal and independent debtor and accordingly it shall not have, as regards this Guarantee, any of the rights or defences of a surety.
| 3.2 | Waiver of rights and defences |
Without limiting the generality of Clause 3.1, the Guarantor shall neither be discharged by, nor have any claim against the Owner in respect of:
| (a) | any amendment or supplement being made to the Bareboat Charter or any other Leasing Document; |
| (b) | any arrangement or concession (including a rescheduling or acceptance of partial payments) relating to, or affecting, the Bareboat Charter or any other Leasing Document; |
| (c) | any release or loss (even though negligent) of any right or Security Interest created by any Leasing Document; |
| (d) | any failure (even though negligent) promptly or properly to exercise or enforce any such right or Security Interest, including a failure to realise for its full market value an asset covered by such a Security Interest; or |
| (e) | the Bareboat Charter or any other Leasing Document now being or later becoming void, unenforceable, illegal or invalid or otherwise defective for any reason, including a neglect to register it. |
| 4 | EXPENSES |
| 4.1 | Costs of preservation of rights, enforcement etc |
The Guarantor shall pay to the Owner on its demand the amount of all documented expenses (including, without limitation, legal fees) incurred by the Owner in connection with the enforcement of, or the preservation of any rights under this Guarantee or any other Leasing Document, including any advice, claim or proceedings relating to such matters.
| 4.2 | Fees and expenses payable under Leasing Documents |
Clause 4.1 is without prejudice to the Guarantor’s liabilities in respect of any other Relevant Person’s obligations under any Leasing Document to which it is a party.
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| 5 | ADJUSTMENT OF TRANSACTIONS |
| 5.1 | Reinstatement of obligation to pay |
The Guarantor shall pay to the Owner on its demand any amount which the Owner is required, or agrees, to pay pursuant to any claim by, or settlement with, a trustee in bankruptcy of any other Relevant Person on the ground that any Leasing Document to which that Relevant Person is a party, or a payment by that Relevant Person, was invalid or unenforceable or on any similar ground.
| 6 | PAYMENTS |
| 6.1 | Method of payments |
Any amount due under this Guarantee shall be paid:
| (a) | in immediately available funds; |
| (b) | to such account as the Owner may from time to time notify to the Guarantor; |
| (c) | without any form of set-off, cross-claim or condition; and |
| (d) | free and clear of any tax deduction or withholding for or on account of any tax payable under any law of relevant jurisdictions except a tax deduction which the Guarantor is required by law to make. |
| 6.2 | Grossing-up for taxes |
If the Guarantor is required by law to make a tax deduction, the amount due to the Owner shall be increased by the amount necessary to ensure that the Owner receives and retains a net amount which, after the tax deduction, is equal to the full amount that it would otherwise have received.
| 6.3 | Indemnity and evidence of payment of taxes |
The Guarantor shall fully indemnify the Owner on the Owner’s demand in respect of all claims, expenses, liabilities and losses incurred by the Owner by reason of any failure of the Guarantor to make any tax deduction or by reason of any increased payment not being made on the due date for such payment in accordance with Clause 6.2. Within 30 daysafter making a tax deduction, that Guarantor shall deliver to the Owner any receipts, certificates or other documentary evidence satisfactory to the Owner that the tax had been paid to the appropriate taxation authority.
| 7 | INTEREST |
| 7.1 | Accrual of interest |
Any amount due under this Guarantee shall carry interest after the date on which the Owner demands payment of it until it is actually paid, unless interest on that same amount also accrues under the Bareboat Charter.
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| 7.2 | Calculation of interest |
Interest under this Guarantee shall be calculated and accrue (as well after as before judgment) at the rate described in clauses 37.5 and 37.6 of the Bareboat Charter and otherwise in accordance with the terms thereof.
| 8 | SUBORDINATION |
| 8.1 | Subordination of rights of Guarantor |
All rights which the Guarantor at any time has (whether in respect of this Guarantee or any other transaction) against each other Relevant Person or its assets shall be fully subordinated to the rights of the Owner under the Leasing Documents (or any of them), and in particular, the Guarantor shall not:
| (a) | claim, or in a bankruptcy of that Relevant Person prove for, any amount payable to the Guarantor by that Relevant Person, whether in respect of this Guarantee or any other transaction; |
| (b) | take or enforce any Security Interest for any such amount; |
| (c) | claim to set-off any such amount against any amount payable by the Guarantor to that Relevant Person; or |
| (d) | claim any subrogation or other right in respect of any Leasing Document or any sum received or recovered by the Owner under such Leasing Document. |
| 9 | ENFORCEMENT |
| 9.1 | No requirement to commence proceedings against other Relevant Person |
The Owner will not need to commence any proceedings under, or enforce any Security Interest created by, the Bareboat Charter or any other Leasing Document before claiming or commencing proceedings under this Guarantee.
| 9.2 | Conclusive evidence of certain matters |
However, as against the Guarantor:
| (a) | any final and unappealable judgment or order of a court in England or any Relevant Jurisdiction or award of an arbitration tribunal in London in connection with the Bareboat Charter or any other Leasing Document; and |
| (b) | any statement or admission of any other Relevant Person in connection with the Bareboat Charter or any other Leasing Document, |
shall be binding and conclusive as to all matters of fact and law to which it relates.
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| 10 | REPRESENTATIONS AND WARRANTIES |
| 10.1 | General |
The Guarantor represents and warrants to the Owner as of the date of this Guarantee, and on each day henceforth until the last day of the Security Period as follows.
| 10.2 | Status |
| (a) | The Guarantor is duly incorporated and validly existing and in good standing under the laws of the Marshall Islands. |
| (b) | The Guarantor is not a FATCA foreign financial institution (“FFI”) or a US Tax Obligor. |
| 10.3 | Corporate power |
The Guarantor has the corporate capacity, and has taken all corporate action and obtained all consents necessary for it:
| (a) | to execute this Guarantee or any other Leasing Document to which it is a party; and |
| (b) | to make all the payments contemplated by, and to comply with, this Guarantee or any other Leasing Document to which it is a party. |
| 10.4 | Consents in force |
All the capacities, actions and consents referred to in Clause 10.3 remain in full force and nothing has occurred which makes any of them liable to revocation.
| 10.5 | No conflicts |
The execution by the Guarantor of the Leasing Documents to which it is a party and its compliance with this Guarantee will not involve or lead to a contravention of:
| (a) | any law or regulation applicable to it; or |
| (b) | the constitutional documents of the Guarantor; or |
| (c) | any contractual or other obligation or restriction which is binding on the Guarantor or any of its assets. |
| 10.6 | Legal, valid and binding obligations |
This Guarantee and the Leasing Document to which it is a party do now or will upon execution and delivery constitute the Guarantor’s legal, valid and binding obligations enforceable against it in accordance with its terms and any relevant insolvency laws affecting creditors’ rights generally.
| 10.7 | Governing law |
The choice of governing law as stated in this Guarantee and the agreement by the Guarantor to refer disputes to the relevant courts or tribunals as stated herein are valid and binding against the Guarantor.
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| 10.8 | Immunity |
Neither the Guarantor nor any of its assets are entitled to immunity on the grounds of sovereignty or otherwise from any legal action or proceeding (which shall include, without limitation, suit, attachment prior to judgment, execution or other enforcement).
| 10.9 | Pari passu ranking |
The obligations of the Guarantor under this Guarantee, are the direct, general and unconditional obligations of the Guarantor and rank at least pari passu with all other present and future unsecured and unsubordinated creditors of the Guarantor save for any obligation which is mandatorily preferred by law and not by virtue of any contract.
| 10.10 | Legal or administrative action |
No legal or administrative action involving the Guarantor has been commenced or taken which would have required notification to the Owner under Clause 11.8.
| 10.11 | No insolvency |
The Guarantor is not insolvent or in liquidation or administration or subject to any other formal or informal insolvency procedure, and no receiver, administrative receiver, administrator, liquidator, trustee or analogous officer has been appointed in respect of the Guarantor or all or material part of their assets.
| 10.12 | Tax obligor and place of business |
The Guarantor is not a US Tax Obligor, and has not established a place of business in the United Kingdom or the United States of America.
| 10.13 | No withholding taxes |
All payments which the Guarantor is liable to make under the Leasing Documents to which it is a party may be made without deduction or withholding for or on account of any tax payable under any law of relevant jurisdictions.
| 10.14 | Taxes paid |
The Guarantor has paid all taxes applicable to, or imposed on or in relation to it, its business or except for those being contested in good faith with adequate reserves.
| 10.15 | No default |
No Termination Event has occurred nor is continuing or might reasonably be expected to result from the entry into and performance of this Guarantee or any other Leasing Document.
| 10.16 | Information |
Any factual information provided by the Guarantor (or on its behalf) to the Owner was true and accurate in all material respects as at the date it was provided or as the date at which such information was stated; all accounts (audited and unaudited) delivered under Clause 11.3 satisfied the requirements of Clause 11.4; and there has been no Material Adverse Effect on the Guarantor from its position disclosed in the latest of those accounts.
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| 10.17 | No litigation |
No legal or administrative action involving the Guarantor has been commenced or taken or, to the Guarantor’s knowledge, is likely to be commenced or taken which, in either case, would be likely to have a Material Adverse Effect on the Guarantor.
| 10.18 | Sanctions |
| (a) | No Relevant Person, nor any of their respective directors, officers, or employees, is a Prohibited Person. |
| (b) | Each Relevant Person, and their respective directors, officers, and employees is in compliance with all Sanctions laws, and none of them have been or are currently being investigated on compliance with Sanctions, they have not received notice or are aware of any claim, action, suit or proceeding against any of them with respect to Sanctions and they have not taken any action to evade the application of Sanctions. |
| (c) | No Relevant Person is in breach of any Anti-Money Laundering Laws, Anti-Terrorism Financing Laws and/or Business Ethics Laws and, to the extent required by applicable law, has instituted and maintained systems, controls, policies and procedures designed to: |
| (i) | prevent and detect incidences of bribery and corruption, money laundering and terrorism financing; and |
| (ii) | promote and achieve compliance with Anti-Money Laundering Laws, Anti-Terrorism Financing Laws and/or Business Ethics Laws including, but not limited to, ensuring thorough and accurate books and records, and utilization of best efforts to ensure that Affiliates acting on behalf of a Relevant Person shall act in compliance with Anti-Money Laundering Laws, Anti-Terrorism Financing Laws and Business Ethics Laws. |
| 10.19 | Environmental Laws |
All Environmental Laws relating to the ownership, operation and management of the Vessel and the business of each Relevant Person (as now conducted and as reasonably anticipated to be conducted in the future) have been complied with.
| 10.20 | Environmental Claim |
No Environmental Claim has been made against any Relevant Person or otherwise in connection with the Vessel which is either (i) in excess of US$5,000,000 or (ii) has or is reasonably likely to have a Material Adverse Effect.
| 10.21 | Environmental Incident |
No Environmental Incident has occurred and no person has claimed that an Environmental Incident has occurred which has or is reasonably likely to have a Material Adverse Effect.
| 10.22 | Ownership of the Charterer |
The Charterer is legally and beneficially and indirectly wholly owned and controlled by the Guarantor.
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| 10.23 | Status of the Guarantor |
| (a) | Save for as permitted under the Bareboat Charter, the shares of the Guarantor are traded on the NASDAQ or Over the Counter (OTC); and |
| (b) | the Guarantor is an entity reporting with the U.S. Securities and Exchange Commission. |
| 11 | UNDERTAKINGS |
| 11.1 | General |
The Guarantor undertakes with the Owner to comply with the following provisions of this Clause 11 at all times during the Security Period, except as the Owner may otherwise permit.
| 11.2 | Information provided to be accurate |
All financial and other information which is provided by or on behalf of the Guarantor under or in connection with the Leasing Documents will be true and not misleading and will not omit any material fact or consideration.
| 11.3 | Provision of financial statements |
The Guarantor will send to the Owner:
| (a) | as soon as possible, but in no event later than one hundred and fifty (150) days after the end of each financial year of the Charterers, the audited annual financial statement accounts of the Charterers for that financial year as referred to in the Guarantor’s audited consolidated annual financial statement accounts of the Guarantor for that financial year to be delivered under paragraph (c); |
| (b) | as soon as possible, but in no event later than ninety (90) days after the end of each half-year, the unaudited semi-annual accounts of the Charterers for that half-year (as referred to in the Guarantor’s audited consolidated financial statement accounts); |
| (c) | as soon as possible, but in no event later than one hundred and fifty (150) days after the end of each financial year of the Guarantor, the audited consolidated annual financial statement accounts of the Guarantor for that financial year; and |
| (d) | as soon as possible, but in no event later than ninety (90) days after the end of each half-year, the semi-annual consolidated unaudited accounts of the Guarantor for that half-year certified as to their correctness by at least one director of the Guarantor. |
| 11.4 | Form of financial statements |
All accounts (audited and unaudited) delivered under Clause 11.3 will:
| (a) | be prepared in accordance with all applicable laws and generally accepted accounting principles in the United States consistently applied; |
| (b) | give a true and fair view of (in respect of the audited accounts) or fairly representing (in the case of the management accounts) the state of affairs of the Group at the date of those accounts and of their profit for the period to which those accounts relate; |
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| (c) | fully disclose or provide for all significant liabilities of the Group; and |
| (d) | If not in the English language, be accompanied by an English translation duly certified as to its correctness. |
| 11.5 | Shareholder and creditor notices |
The Guarantor will send the Owner, upon its request, copies of all communications which are despatched to the Guarantor’s shareholders or creditors or any class of them.
| 11.6 | Consents |
The Guarantor will obtain and promptly renew and will procure that each other Relevant Person obtains and promptly renews or procure the obtainment or renewal of and provide copies of, from time to time, any necessary consents, approvals, authorisations, licenses or permits of any regulatory body or authority for the transactions contemplated under each Leasing Document to which it is a party.
| 11.7 | Valid obligations |
The Guarantor will at its own cost, and will procure that each other Relevant Person will:
| (a) | do all that such Relevant Person reasonably can to ensure that any Leasing Document to which such Relevant Person is a party validly creates the obligations and the Security Interests which such Relevant Person purports to create; and |
| (b) | without limiting the generality of paragraph (a), promptly register, file, record or enrol any Leasing Document to which such Relevant Person is a party with any court or authority in all Relevant Jurisdictions, pay any stamp duty, registration or similar tax in all Relevant Jurisdictions in respect of any Leasing Document to which such Relevant Person is a party, give any notice or take any other step which, is or has become necessary or desirable for any such Leasing Document to be valid, enforceable or admissible in evidence or to ensure or protect the priority of any Security Interest which such Relevant Person creates. |
| 11.8 | Notification of legal or administrative action |
The Guarantor will provide or will procure that each other Relevant Person provides the Owner with details of any legal or administrative action involving such Relevant Person or the Vessel that is likely to have a Material Adverse Effect as soon as such action is instituted or it becomes apparent is likely to be instituted and is likely to have a Material Adverse Effect.
| 11.9 | Notification of damage or default |
The Guarantor:
| (a) | will, and will procure that each other Relevant Person will, notify the Owner immediately of the occurrence of any damage and/or alteration caused to the Vessel by any reason whatsoever which results, or may be expected to result, in repairs on the Vessel which exceed US$5,000,000; and |
| (b) | will, and will procure that each other Relevant Person will, notify the Owner immediately of the occurrence of any Termination Event, |
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and will keep the Owner fully up-to-date with all developments and the Guarantor will, if so requested by the Owner, provide any such certificate signed by its authorised signatory, confirming that there exists no Termination Event.
| 11.10 | Additional information |
The Guarantor will, and will procure that each other Relevant Person will, as soon as practicable after receiving the request, provide the Owner with any additional financial or other information relating:
| (a) | to themselves and/or the Vessel (including, but not limited to the condition, location and employment status of the Vessel); or |
| (b) | to any other matter relevant to, or to any provision of any Leasing Document to which it is a party, |
which may be reasonably requested by the Owner (or their financiers (if any)) at any time, provided that, in the case of information on the employment status of the Vessel, such information shall be in form and substance satisfactory to the Owner and shall be provided by the Charterers to the Owner at least once every six-monthly period during each calendar year.
| 11.11 | Compliance with operational laws |
The Guarantor shall procure compliance, and will procure that each other Relevant Person will comply or procure compliance, with all laws or regulations relating to the Vessel and its construction, ownership, employment, operation, management and registration, including the ISM Code, the ISPS Code, all Environmental Laws and the laws of the Vessel’s registry.
| 11.12 | Compliance with other laws |
| (a) | The Guarantor shall comply, and shall procure that each other Relevant Person will, comply with all applicable laws and regulations in respect of Sanctions, and in particular, the Charterers shall effect and maintain a sanctions compliance policy to ensure compliance with all such laws and regulations implemented from time to time. |
| (b) | The Guarantor: |
| (i) | shall, and shall procure that each other Relevant Person will, promptly notify the Owner of any non-compliance by any Relevant Person or their respective officers, directors, or employees with all laws and regulations relating to Sanctions, (including but not limited to notifying the Owner in writing immediately upon being aware that any Relevant Person or their respective shareholders, directors, officers or employees is a Prohibited Person or has otherwise become a target of Sanctions) as well as provide all information in relation to its business and operations which may be relevant for the purposes of ascertaining whether any of the aforesaid parties are in compliance with such laws. |
| (ii) | shall, and will procure that each other Relevant Person will, promptly notify the Owner of any non-compliance by any Relevant Person or their respective officers, directors, or employees with all laws and regulations relating to Anti-Money Laundering Laws, Anti-Terrorism Financing Laws and/or Business Ethics Laws as well as provide all information (once available) in relation to its business and operations which may be |
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relevant for the purposes of ascertaining whether any of the aforesaid parties are in compliance with such laws.
| (c) | The Guarantor shall procure that the Vessel shall not be employed, operated or managed in any manner which (i) is contrary to any Sanctions and in particular, the Vessel is not used by or to benefit any party which is a target of Sanctions or trade to any area or country where trading the Vessel to such area or country would constitute a breach of any Sanctions or published boycotts imposed by any of the United Nations, the European Union, the United States of America, the United Kingdom or the People’s Republic of China (provided that operation or use of the Vessel by the Initial Sub-charterer pursuant to the Initial Sub-charter shall not in any case be deemed to be in breach or contrary to any published boycotts or sanctions imposed by the People’s Republic of China) or (ii) would trigger the operation of any sanctions limitation or exclusion clause in any insurance documentation. |
| (d) | The Guarantor shall, and shall procure that each other Relevant Person and their respective officers, directors and employees, will: |
| (i) | conduct its business in compliance with all Anti-Money Laundering Laws, Anti- Terrorism Financing Laws and/or Business Ethics Laws; |
| (ii) | maintain systems, controls, policies and procedures designed to promote and achieve ongoing compliance with Anti-Money Laundering Laws, Anti-Terrorism Financing Laws and/or Business Ethics Laws; and |
| (iii) | in respect of the Charterers, not use, or permit or authorize any person to directly or indirectly use, the Financing Amount for any purpose that would breach any Anti- Money Laundering Laws, Anti-Terrorism Financing Laws and/or Business Ethics Laws; |
| (iv) | not lend, invest, contribute or otherwise make available the Financing Amount to or for any other person in a manner which would result in a violation of Anti-Money Laundering Laws, Anti-Terrorism Financing Laws and/or Business Ethics Laws. |
| 11.13 | No Security Interests |
The Guarantor shall not, and shall procure that each other Relevant Person will not create, assume or permit to exist any Security Interest (other than any Permitted Security Interest) of any kind upon any Leasing Document to which such Relevant Person is a party, and if applicable, the Vessel.
| 11.14 | Financial covenants |
| (a) | The Guarantor shall ensure that, at any time during the Security Period, the Guarantor’s Leverage Ratio shall not be more than seventy five per cent (75%). |
| (b) | The Guarantor shall ensure that all time during the Security Period the Liquid Funds shall not be less than US$500,000 multiplied by the number of the Fleet Vessels which are fully owned by the Guarantor (“100% Owned Vessels”) or leased or operated (including those under a capital lease or operating lease with a purchase option at the end of the relevant charter period) by the Guarantor and/or any member of the Group. |
In this Guarantee:
“Leverage Ratio” means, at any date, the ratio (expressed as a percentage) of:
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| (a) | the Total Net Debt; and |
| (b) | the aggregate Market Value of all Fleet Vessels adjusted, in each case, to reflect the percentage of ownership by the Guarantor of each such Fleet Vessel. |
“Liquid Funds” means, at any time, cash at bank and credited to an account in the name of any member of the Group and to which the Guarantor is solely (or together with other members of the Group) beneficially entitled and for so long as such cash has not been blocked due to the existence and/or enforcement of any Security Interest held by any bank or any other third party or otherwise unless such cash is held in such account charged, as the case may be, by way of a floating charge for the purposes of meeting minimum liquidity requirements in the context of any financing arrangement of any member of the Group.
“Market Value” means, in relation to any Fleet Vessel,
| (a) | prior to the occurrence of a Termination Event which is continuing, a valuation prepared: |
| (i) | in Dollars; |
| (ii) | on a date no earlier than fifteen (15) days prior to the relevant date of valuation; |
| (iii) | with or without physical inspection of that Vessel; and |
| (iv) | on the basis of a sale for prompt delivery for cash on normal arm’s length commercial terms as between a willing seller and a willing buyer, free of any existing charter or other contract of employment, |
and such valuation shall be prepared by an Approved Valuer nominated by the Charterer.
| (b) | upon the occurrence of a Termination Event which is continuing, |
| (i) | subject to sub-paragraph (ii) below, the arithmetic mean of the valuations shown by two (2) valuation reports prepared: |
| (A) | in Dollars; |
| (B) | on a date no earlier than fifteen (15) days prior to the relevant date of valuation; |
| (C) | with or without physical inspection of that Vessel; |
| (D) | on the basis of a sale for prompt delivery for cash on normal arm’s length commercial terms as between a willing seller and a willing buyer, free of any existing charter or other contract of employment, |
and such valuation shall be prepared by Approved Valuers nominated by the Owner.
| (ii) | if there is a discrepancy of five per cent. (5%) or more between the market valuations shown on the two valuation reports obtained pursuant to the |
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above paragraph (using the lower valuation figure as the denominator), the arithmetic mean of the valuations shown by three (3) valuation reports each prepared on the same terms and conditions as set out under paragraph (b) above.
“Total Net Debt” means, at any date, the aggregate Financial Indebtedness of the Group as per US GAAP as at such date, adjusted to include a percentage of the Financial Indebtedness of any joint venture with a minimum holding of 50 per cent by any member of the Group which is equal to the percentage of the Guarantor’s ownership in such joint venture, minus the aggregate amount of all cash balances standing on such date to the credit of a bank account of any member of the Group, adjusted to include a percentage of the cash balances of any entity holding any Fleet Vessel (other than the 100% Owned Vessels) which is equal to the percentage of the Guarantor’s and/or such member’s ownership in that entity, but excluding any cash held by any bank or any other third party or otherwise which is subject to the existence and/or enforcement any Security Interest unless such cash is held in such account charged, as the case may be, by way of a floating charge for the purposes of meeting minimum liquidity requirements in the context of any financing arrangement of any member of the Group.
“US GAAP” means the generally accepted accounting principles in the United States.
| 11.15 | Compliance Certificate |
The Guarantor shall supply to the Owner, a Compliance Certificate setting out (in reasonable detail) computations as to compliance with Clause 11.14 on each testing date, being 31st December in each calendar year; and each Compliance Certificate shall be signed by the Co- Chief Financial Officer of the Guarantor.
| 11.16 | Negative Pledge |
The Guarantor shall:
| (a) | procure that the Charterers will not create or permit to arise any Security Interest over any of its assets present or future except for the Permitted Security Interests; and |
| (b) | procure that its liabilities under this Guarantee will rank at least pari passu with all its other present and future unsecured liabilities, except for liabilities which are mandatorily preferred by law. |
| 11.17 | No disposal of assets, change of business |
The Guarantor will not, and shall (at all times) procure that no other Relevant Person shall:
| (a) | transfer, lease or otherwise dispose of all or a substantial part of their respective assets (or any of their assets, in the case of the Charterer), whether by one transaction or a number of transactions, whether related or not except in the usual course of their respective trading operations; or |
| (b) | make any substantial change (or any change, in the case of the Charterer) to the nature of their respective business or corporate structure from that existing as at the date of this Guarantee. |
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| 11.18 | No merger etc |
The Guarantor shall not enter into any form of merger, sub-division, amalgamation, demerger, reorganization, corporate reconstruction or change of ownership, or change of voting control unless the Guarantor remains as the surviving entity after such merger, sub-division, amalgamation, demerger, reorganization, corporate reconstruction or change of ownership, or change of voting control and Clause 11.14 has been complied with.
| 11.19 | FATCA |
The Guarantor shall not, and shall procure that no Relevant Person will become a FATCA FFI or US Tax Obligor.
| 11.20 | No payment of dividend |
The Guarantor shall not declare, make or pay any dividend or other distribution (or interest on any unpaid dividend or other distribution) on or in respect of its share capital (whether in cash or in kind) upon the occurrence of a Termination Event which is continuing in Clause 49 of the Bareboat Charter.
| 11.21 | Notification of Financial Indebtedness |
The Guarantor shall promptly notify the Owner if the Guarantor agrees to provide any new financial covenants to a creditor (or to amend existing ones such that they materially differ from the financial covenants under Clause 11.14 (Financial Covenants) of this Guarantee, placing such creditor in a position which is comparatively more favourable in terms of the financial covenants than the position of the Owner) under the agreements entered into or to be entered into in connection with any Financial Indebtedness owed by the Guarantor or Group member to such creditor and agrees that it will promptly enter into such necessary documentation as may be required to amend and supplement this Guarantee and any applicable Leasing Document so as to reflect and incorporate such more favourable financial covenants into this Guarantee and any applicable Leasing Document.
| 12 | JUDGMENTS AND CURRENCY INDEMNITY |
| 12.1 | Judgments relating to Bareboat Charter and other Leasing Documents |
This Guarantee shall cover any amount payable by any other Relevant Person under or in connection with any judgment or award relating to the Bareboat Charter and any other Leasing Document.
| 12.2 | Currency indemnity |
If any sum due from the Guarantor to the Owner under this Guarantee or under any order, judgment or award relating to this Guarantee has to be converted from the currency in which this Guarantee provided for the sum to be paid (the “Contractual Currency”) into another currency (the “Payment Currency”) for the purpose of:
| (a) | making or lodging any claim or proof against the Guarantor, whether in its liquidation, any arrangement involving it or otherwise; or |
| (b) | obtaining an order, judgment or award from any court or other tribunal; or |
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| (c) | enforcing any such order, judgment or award; |
the Guarantor shall indemnify the Owner against the loss arising when the amount of the payment actually received by the Owner is converted at the available rate of exchange into the Contractual Currency.
In this Clause 12.2, the “available rate of exchange” means the rate at which the Owners are able at the opening of business (Beijing time) on the Business Day after it receives the sum concerned to purchase the Contractual Currency with the Payment Currency.
| 13 | SUPPLEMENTAL |
| 13.1 | Continuing guarantee |
This Guarantee shall remain in force as a continuing security interest at all times during the Security Period.
| 13.2 | Rights cumulative, non-exclusive |
The Owner’s rights under and in connection with this Guarantee are cumulative, may be exercised as often as appears expedient and shall not be taken to exclude or limit any right or remedy conferred by law.
| 13.3 | No impairment of rights under Guarantee |
If the Owner omits to exercise, delays in exercising or invalidly exercises any of its rights under this Guarantee, that shall not impair that or any other right of the Owner under this Guarantee.
| 13.4 | Severability of provisions |
If any provision of this Guarantee is or subsequently becomes void, illegal, unenforceable or otherwise invalid, that shall not affect the validity, legality or enforceability of its other provisions.
| 13.5 | Guarantee not affected by other Security Interests |
This Guarantee shall not impair, nor be impaired by, any other guarantee or any right of set- off or netting or to combine accounts which the Owner may now or later hold in connection with the Bareboat Charter or any other Leasing Document.
| 13.6 | Guarantor bound by Bareboat Charter and other Leasing Documents |
The Guarantor agrees with the Owner to be bound by all provisions of the Bareboat Charter and any other Leasing Document in the same way as if those provisions had been set out (with any necessary modifications) in this Guarantee.
| 13.7 | Applicability of provisions of Guarantee to other rights |
Clauses 3 and 16 shall also apply to any right of set-off or netting or to combine accounts which the Guarantor creates by an agreement entered into at the time of this Guarantee or at any later time (notwithstanding that the agreement does not include provisions similar to Clauses 3 and 16), being an agreement referring to this Guarantee.
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| 13.8 | Third party rights |
A person who is not a party to this Guarantee has no right under the Contracts (Rights of Third Parties) Act 1999 to enforce or to enjoy the benefit of any term of this Guarantee.
| 13.9 | Counterpart |
This Guarantee may be executed in any number of counterparts, and this has the same effect as if the signatures on the counterparts were on a single copy of this Guarantee.
| 13.10 | FATCA Information |
| (a) | Subject to paragraph (c) below, each Party shall, on the date of the Bareboat Charter, and thereafter within ten (10) Business Days of a reasonable request by the other Party: |
| (i) | confirm to that other party whether it is a FATCA Exempt Party or is not a FATCA Exempt Party; and |
| (ii) | supply to the requesting party (with a copy to all other relevant parties) such other form or forms (including IRS Form W-8 or Form W-9 or any successor or substitute form, as applicable) and any other documentation and other information relating to its status under FATCA (including its applicable “pass thru percentage” or other information required under FATCA or other official guidance including intergovernmental agreements) as the requesting party reasonably requests for the purpose of the requesting party’s compliance with FATCA. |
| (b) | If a Party confirms to any other Party that it is a FATCA Exempt Party or provides an IRS Form W-8 or W-9 showing that it is a FATCA Exempt Party and it subsequently becomes aware that it is not, or has ceased to be a FATCA Exempt Party, or that the said form provided has ceased to be correct or valid, that party shall so notify all other relevant parties or provide the relevant revised form, as applicable, reasonably promptly. |
| (c) | Nothing in this Clause shall oblige a Party to do anything which would or, in its reasonable opinion, might constitute a breach of any law or regulation, any policy of that party, any fiduciary duty or any duty of confidentiality, or to disclose any confidential information (including, without limitation, its tax returns and calculations); provided, however, that nothing in this paragraph shall excuse a Party from providing a true, complete and correct IRS Form W-8 or W-9 (or any successor or substitute form where applicable). Any information provided on such IRS Form W-8 or W-9 (or any successor or substitute forms) shall not be treated as confidential information of such party for purposes of this paragraph. |
| (d) | If a Party fails to confirm its status or to supply forms, documentation or other information requested in accordance with the provisions of this Charter or the provided information is insufficient under FATCA, then: |
| (i) | if that party failed to confirm whether it is (and/or remains) a FATCA Exempt Party then such party shall be treated for the purposes of this Charter and the Leasing Documents as if it is a FATCA Non-Exempt Party; and |
| (ii) | if that party failed to confirm its applicable passthru percentage then such party shall be treated for the purposes of this Charter and the Leasing Documents (and payments made thereunder) as if its applicable passthru percentage is 100%, |
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until (in each case) such time as the party in question provides sufficient confirmation, forms, documentation or other information to establish the relevant facts.
| 14 | ASSIGNMENT |
| 14.1 | Assignment by Owner |
Clause 64 of the Bareboat Charter shall apply to this Guarantee as if they were expressly incorporated herein with any necessary modifications including the references to “the Charterers” therein shall be references to “the Guarantor” when applied herein and references to “the Leasing Document” and “this Charter” therein shall be references to “this Guarantee” when applied herein.
| 14.2 | Assignment by Guarantor |
The Guarantor may not assign any of its rights or transfer any of its rights or obligations under this Guarantee.
| 15 | NOTICES |
| 15.1 | Notices to Guarantor |
Any notice or demand to the Guarantor under or in connection with this Guarantee shall be given by letter or email at:
TOP SHIPS INC.
1 Vasilissis Sofias Street & Meg.
Alexandrou Street, 15124 Maroussi-Athens, Greece
Attention:
Email:
Tel:
or to such other address or email address which the Guarantor may notify to the Owner.
| 15.2 | Validity of demands |
A demand under this Guarantee shall be valid notwithstanding that it is served:
| (a) | on the date on which the amount to which it relates is payable by the Relevant Person under the Leasing Document to which it is a party; |
| (b) | at the same time as the service of a notice under Clause 44 of the Bareboat Charter; |
and a demand under this Guarantee shall (i) be in writing; (ii) be signed by a duly authorised officer of the Owner and delivered to the Guarantor pursuant to the provisions under this Guarantee; (iii) make reference to this Guarantee; (iv) specifically identify the Charterer or any other Relevant Person and the guaranteed obligations to be paid and/or performed (as the case may be); and (v) set forth payment instructions in respect of any amount or amounts payable to the Owner.
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| 15.3 | Notices to Owner |
Any notice to the Owner under or in connection with this Guarantee shall be sent to the same address and in the same manner as notices to the Owner under Clause 44 of the Bareboat Charter.
| 16 | INVALIDITY OF BAREBOAT CHARTER |
| 16.1 | Invalidity of Bareboat Charter or other Leasing Documents |
In the event of:
| (a) | the Bareboat Charter or any other Leasing Document now being or later becoming, with immediate or retrospective effect, void, illegal, unenforceable or otherwise invalid for any other reason whatsoever, whether of a similar kind or not; or |
| (b) | without limiting the scope of paragraph (a), a bankruptcy of the Relevant Person party thereto, the introduction of any law or any other matter resulting in that Relevant Person being discharged from liability under the Bareboat Charter or other Leasing Document, or the Bareboat Charter or other Leasing Document ceasing to operate (for example, by interest ceasing to accrue); |
this Guarantee shall cover any amount which would have been or become payable under or in connection with the Bareboat Charter or other Leasing Document if the Bareboat Charter or other Leasing Document had been and remained entirely valid, legal and enforceable, or that Party had not suffered bankruptcy, or any combination of such events or circumstances, as the case may be, and the Charterer had remained fully liable under it for liabilities whether invalidly incurred or validly incurred but subsequently retrospectively invalidated; and references in this Guarantee to amounts payable by that Party under or in connection with the Bareboat Charter or other Leasing Document shall include references to any amount which would have so been or become payable as aforesaid.
| 17 | GOVERNING LAW AND ENFORCEMENT |
| 17.1 | Governing law |
This Guarantee and any non-contractual obligations arising out of or in connection with it are governed by English law.
| 17.2 | Arbitration |
| (a) | Any dispute arising out of or in connection with this Guarantee (including a dispute regarding the existence, validity or termination of this Guarantee or any non-contractual obligation arising out of or in connection with this Guarantee) (a “Dispute”) shall be referred to and finally resolved by arbitration in London in accordance with the Arbitration Act 1996 or any statutory modification or re-enactment thereof save to the extent necessary to give effect to the provisions of this Clause 17. The arbitration shall be conducted in accordance with the London Maritime Arbitrators Association (“LMAA”) Terms current at the time when the arbitration proceedings are commenced. |
| (b) | The reference shall be to three arbitrators, one to be appointed by each Party and the third, by the two so appointed. A party wishing to refer a Dispute to arbitration shall appoint its arbitrator (who shall be either a full member of the LMAA, or a practising barrister of King’s |
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Counsel who is also a member of the Commercial Bar Association, or a retired High Court Judge practising as an arbitrator, in each case who carries on business in London) and shall send notice of such appointment in writing to the other party requiring the other party to appoint its own arbitrator within 14 calendar days of that notice and stating that it will appoint its arbitrator as sole arbitrator unless the other party appoints its own arbitrator and gives notice that it has done so within the 14 days specified. If the other party does not appoint its own arbitrator and give notice that it has done so within the 14 days specified, the party referring a Dispute to arbitration may, without the requirement of any further prior notice to the other party, appoint its arbitrator as sole arbitrator and shall advise the other party accordingly. The award of a sole arbitrator shall be binding on both parties as if he or she had been appointed by agreement. Nothing herein shall prevent the parties agreeing in writing to vary these provisions to provide for the appointment of a sole arbitrator. If the two arbitrators so appointed are unable to agree on the appointment of the third arbitrator within seven (7) days after the appointment of the second arbitrator, they or either of them may by written notice request the President of the LMAA to appoint the third arbitrator within fourteen (14) days of such request.
| (c) | Where the reference is to three arbitrators the procedure for making appointments shall be in accordance with the procedure for full arbitration stated above. |
| (d) | The language of the arbitration shall be English. |
| (e) | In cases where neither the claim nor any counterclaim exceeds the sum of US$100,000 (or such other sum as the Parties may agree) the arbitration shall be conducted in accordance with the LMAA Small Claims Procedure current at the time when the arbitration proceedings are commenced. |
IN WITNESS WHEREOF this GUARANTEE has been executed as a DEED and delivered on the date stated at the beginning of this GUARANTEE.
Huarong Top Ships
(ECO MALIBU) Guarantee
SCHEDULE 1
FORM OF COMPLIANCE CERTIFICATE
To:
GIANT 9 HOLDING LIMITED
From:
TOP SHIPS INC.
Date:
Guarantee dated 2023 (the “Guarantee”) in respect of a bareboat charter for m.v. “ECO MALIBU”
Dear Sirs
| 1 | We refer to the Guarantee. This is a Compliance Certificate. Terms defined in the Guarantee have the same meaning when used in this Compliance Certificate unless given a difference meaning in this Compliance Certificate. |
| 2 | We confirm that, as at the date hereof, no Termination Event has occurred and is continuing which has not been waived or remedied at the date hereof or if that is not the case, specifying the same and the steps, if any, being taken to remedy the same. |
| 3 | We confirm that, at any time during the Security Period, Leverage Ratio was not more than 75 per cent (75%). |
| 4 | We confirm that all time during the Security Period the Liquid Funds was not less than the aggregate of US$500,000 multiplied by the number of the Fleet Vessels which are fully owned by the Guarantor or leased or operated (including those under a capital lease or operating lease with a purchase option at the end of the relevant charter period) by the Guarantor and/or any member of the Group. |
Yours faithfully
Signed:
Co-Chief Financial Officer of
TOP SHIPS INC.
Huarong Top Ships
(ECO MALIBU) Guarantee
EXECUTION PAGE
GUARANTOR
| EXECUTED AS A DEED | ) | |
| by TOP SHIPS INC. | ) | |
| acting by | ) | |
| being an attorney-in-fact | ) | /s/ Alexandros Tsirikos |
| in the presence of: | ) | Alexandros Tsirikos |
| ) | ||
| ) | ||
| Witness’ signature: | ) | /s/ Dimitra Karkaletsi |
| Witness’ name: | ) | Dimitra Karkaletsi |
| Witness’ address: | ) | 1, Vassilissis Sofias Str. & Meg. Alexandrou |
| Str., Maroussi, Attica, Greece |
| OWNER | ) | ||
| SIGNED, SEALED AND DELIVERED | ) | ||
| by GIANT 9 HOLDING LIMITED | ) | ||
| acting by | ) | ||
| being an attorney-in-fact | ) | /s/ Mao Yufei | |
| ) | Mao Yufei | ||
| in the presence of: | ) | ||
| ) | |||
| ) | |||
| Witness’ signature: /s/ TAO Beijuan | ) | ||
| Witness’ name: TAO Beijuan | ) | ||
| Witness’ address: | Room 6006, 6th Floor, No,15 Second East Zhongshan Road, Shanghai, P.R. China 200002 |
) | |
Huarong Top Ships
Signature page to Guarantee (ECO MALIBU)
Exhibit 4.22
1. Shipbroker N/A 2. Place and date 3. Owners/Place of business (Cl. 1) SEA 268 LEASING CO. LIMITED, a company incorporated under the laws of Hong Kong with company number 3053427 whose registered office is at 27/F, Three Exchange Square, 8 Connaught Place, Central, Hong Kong 4. Bareboat Charterers/Place of business (Cl. 1) JULIUS CAESAR INC., a corporation incorporated under the laws of the Republic of the Marshall Islands, having its registered address at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960 5. Vessel’s name, call sign and flag (Cl. 1 and 3) Julius Caesar Call Sign: V7A4990 Flag: Marshall Islands or any other flag state of the Vessel as may be agreed in writing by the Owners and the Charterers. 6. Type of Vessel VERY LARGE CRUDE OIL CARRIER 7. GT/NT 154,449/106,663 8. When/Where built Under construction Hyundai Heavy Industries Co., Ltd 9. Total DWT (abt.) in metric tons on summer freeboard 300,000 10. Classification Society (Cl. 3) Bureau Veritas, DNV-GL or any other Approved Classification Society 11. Date of last special survey by the Vessel’s classification society N/A 12 Further particulars of Vessel (also indicate minimum number of months’ validity of class certificates agreed acc. to Cl. 3) IMO No.: 9912244 Length: 324.03 metres Breadth: 60.00 metres Depth: 26.72 metres 13. Port or Place of delivery (Cl. 3) Back to back with MOA delivery 14. Time for delivery (Cl. 4) See Clause 34 (Delivery and Charter of Vessel) 15. Cancelling date (Cl. 5) See definition of “Cancelling Date” and Clause 33 (Cancellation) 16. Port or Place of redelivery (Cl. 15) See Clauses 41.6 (Termintion, Redelivery and Total Loss) 17. No. of months’ validity of trading and class certificates upon redelivery (Cl. 15) Six (6) months 18. Running days’ notice if other than stated in Cl. 4 N/A 19. Frequency of dry-docking (Cl. 10(g)) In accordance with Approved Classification Society or requirements of Flag State 20. Trading limits (Cl. 6) International Navigating Limits and excluding any war listed area declared by the Joint War Committee, see also Clause 46.1(t), 46.1(u) and 46.1(v) (Undertakings) 21. Charter period (Cl. 2) See Clause 32 (Charter Period) 22. Charter hire (Cl. 11) See Clause 36 (Charterhire and Advance Charterhire) 23. New class and other safety requirements (state percentage of Vessel’s insurance value acc. to Box 29)(Cl. 10(a)(ii)) N/A 24. Rate of interest payable acc. to Cl. 11 (f) and, if applicable, acc. to PART IV See Clause 37 (Changes to Interest Rate, Default Interest) 25. Currency and method of payment (Cl. 11) Dollars/Bank transfer 26. Place of payment; also state beneficiary and bank account (Cl. 11) See Clause 36 (Charterhire and Advance Charterhire); such account as the Owners may notify the Charterers from time to time 27. Bank guarantee/bond (sum and place) (Cl. 24) (optional) See Clause 24 28. Mortgage(s), if any (state whether 12(a) or (b) applies; if 12(b) applies state date of Financial Instrument and name of Mortgagee(s)/Place of business) (Cl. 12) 29. Insurance (hull and machinery and war risks) (state value acc. to Cl. 13(f) or, if applicable, acc. to Cl. 14(k)) (also state if Cl. 14 applies)
Copyright © 2001 BIMCO. All rights reserved. Any unauthorised copying, duplication, reproduction or distribution of this BIMCO
SmartCon document will constitute an infringement of BIMCO’s copyright. Explanatory notes are available from BIMCO at www.bimco.org.
First published in 1974 as BARECON A and B. Amalgamated and revised in 1989. Revised 2001.
N/A See Clause 39 (Insurance) - Clause 14 does not applv 30. Additional insurance cover, if any, for Owners’ account limited to (Cl. 13(b) or, if applicable. Cl. 14(g)) 31. Additional insurance cover, if any, for Charterers’ account limited to (Cl. 13(b) or, if applicable. Cl. 14(g)) See Clause 39 (Insurance) See Clause 39 (Insurance) 32. Latent defects (only to be filled in if period other than stated in Cl. 3) 33. Brokerage commission and to whom payable (Cl. 27) 34. Grace period (state number of clear banking days) (Cl. 28) HjA 35. Dispute Resolution (state 30(a), 30(b) or 30(c); if 30(c) agreed Place of Arbitration must be stated (Cl. 30) (c) Clause 30 not applicable. See Clause 65 (Governing Law and Enforcement) 36. War cancellation (indicate countries agreed) (Cl. 26(f)) N/A 37. Newbuilding Vessel (indicate with “yes” or “no” whether PART III applies) (optional) 38. Name and place of Builders (only to be filled in if PART III applies) N/A No 39. Vessel’s Yard Building No. (only to be filled in if PART III applies) 40. Date of Building Contract (only to be filled in if PART III applies) N/A N|A 41. Liquidated damages and costs shall accrue to (state party acc. to Cl. 1) a) N/A b) N/A C) N/A 42. Hire/Purchase agreement (indicate with “yes” or “no” whether PART IV applies) (optional) No, Part IV does not apply 43. Bareboat Charter Registry (indicate with “yes” or “no” whether PART V applies) (optional) No 44. Flag and Country of the Bareboat Charter Registry (only to be filled in if PART V applies) 45. Country of the Underlying Registry (only to be filled in if PARTVapplies) N/A N/A 46. Number of additional clauses covering special provisions, if agreed Clause 32 (Charter-d) to clause 66 (Definitions)
PREAMBLE - It is mutually agreed that this Contract shall be performed subject to the conditions contained in this Charter which shall include PART I and PART II. In the event of a conflict of conditions, the provisions of PART I shall prevail over those of PART II to the extent of such conflict but no further. It is further mutually agreed that PART III and/or PART IV and/or PART V shall only apply and only form part of this Charter if expressly agreed and stated in Boxes 37, 42 and 43. If PART III and/or PART IV and/or PART V apply, it is further agreed that in the event of a conflict of conditions, the provisions of PART I and PART II shall prevail over those of PART III and/or PART IV and/or PART V to the extent of such conflict but no further.
| Signature (Owners) /s/ CUI Wanying CUI Wanying Attorney-in-Fact |
Signature (Charterers) /s/ Alexandros Tsirikos Alexandros Tsirikos Attorney-in-fact |
Copyright © 2001 BIMCO. All rights reserved. Any unauthorised copying, duplication, reproduction or distribution of this BIMCO
SmartCon document will constitute an infringement of BIMCO’s copyright. Explanatory notes are available from BIMCO at www.bimco.org.
First published in 1974 as BARECON A and B. Amalgamated and revised in 1989. Revised 2001.
PART II
BARECON 2001 Standard Bareboat Charter
1 1. Definitions 2 In this Charter, the following terms shall have the 3 meanings hereby assigned to them: 4 “The Owners” shall mean the party identified in Box 3; 5 “The Charterers” shall mean the party identified in Box 4; 6 “The Vessel” shall mean the vessel named in Box 5 and 7 with particulars as stated in Boxes 6 to 12. 8 “Financial Instruments” has the meaning ascribed to it in Clause 66. means the mortgage, deed of 9 covenant or other such financial security instrument as 10 annexed to this Charter and stated in Box 28. 11 2 Charter Period 12 In consideration of the hire detailed in Box 22, 13 the Owners have agreed to let and the Charterers have 14 agreed to hire the Vessel for the period stated in Box 21 15 (“The Charter Period”). See also Clause 32. 16 3. Delivery 17 (not applicable when Part III applies, as indicated in Box 37) 18 (a) The Owners shall before and at the time of delivery 19 exercise due diligence to make the Vessel seaworthy 20 And in every respect ready in hull, machinery and 21 equipment for service under this Charter. 22 Within Internatonal Navigating Limits TtThe Vessel shall be delivered by the Owners and taken 23 over by the Charterers at the port or place indicated in 24 Box 13. in such ready safe berth as the Charterers may 25 direct. 26 (b) The Vessel shall be properly documented on 27 delivery in accordance with the laws of the flag State 28 indicated in Box 5 and the requirements of the 29 classification society stated in Box 10. The Vessel upon 30 delivery shall have her survey cycles up to date and 31 trading and class certificates valid for at least the number 32 of months agreed in Box 12. 33 (c) The delivery of the Vessel by the Owners and the 34 taking over of the Vessel by the Charterers shall 35 constitute a full performance by the Owners of all the 36 Owners’ obligations under this Clause 3, and thereafter 37 the Charterers shall not be entitled to make or assert 38 any claim against the Owners on account of any 39 conditions, representations or warranties expressed or 40 implied with respect to the Vessel. but the Owners shall 41 be liable for the cost of but not the time for repairs or 42 renewals occasioned by latent defects in the Vessel, 43 her machinery or appurtenances, existing at the time of 44 delivery under this Charter, provided such defects have 45 manifested themselves within twelve (12) months after 46 delivery unless otherwise provided in Box 32. 47 4. Time for Delivery (See Clause 34 (Delivery and Charter of Vessel)) 48 (not applicable when Part III applies, as indicated in Box 37) 49 The Vessel shall not be delivered before the date 50 indicated in Box 14 without the Charterers’ consent and 51 the Owners shall exercise due diligence to deliver the 52 Vessel not later than the date indicated in Box 15. 53 Unless otherwise agreed in Box 18, the Owners shall 54 give the Charterers not less than thirty (30) running days’ 55 preliminary and not less than fourteen (14) running days’ 56 definite notice of the date on which the Vessel is 57 expected to be ready for delivery. 58 The Owners shall keep the Charterers closely advised 59 of possible changes in the Vessel’s position. 60 5. Cancelling (See Clause 33 (Cancellation)) 61 (not applicable when Part III applies, as indicated in Box 37) 62 (a) Should the Vessel not be delivered latest by the 63 cancelling date indicated in Box 15, the Charterers shall 64 have the option of cancelling this Charter by giving the 65 Owners notice of cancellation within thirty-six (36) 66 running hours after the cancelling date stated in Box 67 15, failing which this Charter shall remain in full force 68 and effect. 69 (b) If it appears that the Vessel will be delayed beyond 70 the cancelling date, the Owners may, as soon as they 71 are in a position to state with reasonable certainty the 72 day on which the Vessel should be ready, give notice 73 thereof to the Charterers asking whether they will 74 exercise their option of cancelling, and the option must 75 then be declared within one hundred and sixty-eight 76 (168) running hours of the receipt by the Charterers of 77 such notice or within thirty-six (36) running hours after 78 the cancelling date, whichever is the earlier. If the 79 Charterers do not then exercise their option of cancelling, 80 the seventh day after the readiness date stated in the 81 Owners’ notice shall be substituted for the cancelling 82 date indicated in Box 15 for the purpose of this Clause 5. 83 (c) Cancellation under this Clause 5 shall be without 84 prejudice to any claim the Charterers may otherwise 85 have on the Owners under this Charter. 86 6. Trading Restrictions (see also Clauses 46.1(t), 46.1(u) and 46.1(v) (Undertakings)) 87 The Vessel shall be employed in lawful trades for the 88 carriage of suitable lawful merchandise within the trading 89 limits indicated in Box 20. 90 The Charterers undertake not to employ the Vessel or 91 suffer the Vessel to be employed otherwise than in 92 conformity with the terms of the contracts of insurance 93 (including any warranties expressed or implied therein) 94 without first obtaining the consent of the insurers to such 95 employment and complying with such requirements as 96 to extra premium or otherwise as the insurers may 97 prescribe. 98 The Charterers also undertake not to employ the Vessel 99 or suffer her employment in any trade or business which 100 is forbidden by the law of any country to which the Vessel 101 may sail or is otherwise illicit or in carrying illicit or 102 prohibited goods or in any manner whatsoever which 103 may render her liable to condemnation, destruction, 104 seizure or confiscation. 105 Notwithstanding any other provisions contained in this 106 Charter it is agreed that nuclear fuels or radioactive 107 products or waste are specifically excluded from the 108 cargo permitted to be loaded or carried under this 109 Charter. This exclusion does not apply to radio-isotopes 110 used or intended to be used for any industrial, 111 commercial, agricultural, medical or scientific purposes 112 provided the Owners’ prior approval has been obtained 113 to loading thereof. 114 7. Surveys on Delivery and Redelivery 115 Provision on Delivery see Clause 47.2 (Inspection of Vessel)(not applicable when Part III applies, as indicated in Box 37) 116 The Owners and Charterers shall each appoint 117 surveyors for the purpose of determining and agreeing 118 in writing the condition of the Vessel at the time of
Copyright © 2001 BIMCO. All rights reserved. Any unauthorised copying, duplication, reproduction or distribution of this BIMCO
SmartCon document will constitute an infringement of BIMCO’s copyright. Explanatory notes are available from BIMCO at www.bimco.org.
First published in 1974 as BARECON A and B. Amalgamated and revised in 1989. Revised 2001.
PART II
BARECON 2001 Standard Bareboat Charter
119 delivery and redelivery pursuant to Clause 41.6 (Termination, Redelivery and Total Loss) hereunder (if applicable) at the costs of the Charterers. The Owners shall 120 bear all expenses of the On-hire Survey including loss 121 of time, if any, and the Charterers shall bear all expenses 122 of the Off-hire Survey including loss of time, if any, at 123 the daily equivalent to the rate of hire or pro rata thereof. 124 8. Inspection (See Clause 47 (Inspection of Vessel)) 125 The Owners shall have the right at any time after giving 126 reasonable notice to the Charterers to inspect or survey 127 the Vessel or instruct a duly authorised surveyor to carry 128 out such survey on their behalf:- 129 (a) to ascertain the condition of the Vessel and satisfy 130 themselves that the Vessel is being properly repaired 131 and maintained. The costs and fees for such inspection 132 or survey shall be paid by the Owners unless the Vessel 133 is found to require repairs or maintenance in order to 134 achieve the condition so provided; 135 (b) in dry-dock if the Charterers have not dry-docked 136 Her in accordance with Clause 10(g). The costs and fees 137 for such inspection or survey shall be paid by the 138 Charterers; and 139 (c) for any other commercial reason they consider 140 necessary (provided it does not unduly interfere with 141 the commercial operation of the Vessel). The costs and 142 fees for such inspection and survey shall be paid by the 143 Owners. 144 All time used in respect of inspection, survey or repairs 145 shall be for the Charterers’ account and form part of the 146 Charter Period. 147 The Charterers shall also permit the Owners to inspect 148 the Vessel’s log books whenever requested and shall 149 whenever required by the Owners furnish them with full 150 information regarding any casualties or other accidents 151 or damage to the Vessel. 152 9. Inventories, Oil and Stores (See Clause 34.7 (Delivery and Charter of Vessel)) 153 A complete inventory of the Vessel’s entire equipment, 154 outfit including spare parts, appliances and of all 155 consumable stores on board the Vessel shall be made 156 by the Charterers in conjunction with the Owners on 157 delivery and again on redelivery of the Vessel. The 158 Charterers and the Owners, respectively, shall at the 159 time of delivery and redelivery take over and pay for all 160 bunkers, lubricating oil, unbroached provisions, paints, 161 ropes and other consumable stores (excluding spare 162 parts) in the said Vessel at the then current market prices 163 at the ports of delivery and redelivery, respectively. The 164 Charterers shall ensure that all spare parts listed in the 165 inventory and used during the Charter Period are 166 replaced at their expense prior to redelivery of the 167 Vessel. 168 10. Maintenance and Operation 169 (a)(i)Maintenance and Repairs - During the Charter 170 Period the Vessel shall be in the full possession 171 and at the absolute disposal for all purposes of the 172 Charterers and under their complete control in 173 every respect. The Charterers shall maintain the 174 Vessel, her machinery, boilers, appurtenances and 175 spare parts in a good state of repair, in efficient 176 operating condition and in accordance with good 177 commercial maintenance practice and, except as 178 provided for in Clause 14(l), if applicable, at their 179 own expense they shall at all times keep the 180 Vessel’s Classification Class fully up to date with the Classification 181 Society indicated in Box 10 and maintain all other 182 necessary certificates in force at all times. 183 (ii) New Class and Other Safety Requirements - In the 184 event of any improvement, structural changes or 185 new equipment becoming necessary for the 186 continued operation of the Vessel by reason of new 187 class requirements or by compulsory legislation, the the Charterers shall ensure that the same are complied with and the time and costs of compliance shall be for the Charterers’ account. 188 costing (excluding the Charterers’ loss of time) 189 more than the percentage stated in Box 23, or if 190 Box 23 is left blank, 5 per cent. of the Vessel’s 191 insurance value as stated in Box 29, then the 192 extent, if any, to which the rate of hire shall be varied 193 and the ratio in which the cost of compliance shall 194 be shared between the parties concerned in order 195 to achieve a reasonable distribution thereof as 196 between the Owners and the Charterers having 197 regard, inter alia, to the length of the period 198 remaining under this Charter shall, in the absence 199 of agreement, be referred to the dispute resolution 200 method agreed in Clause 30. 201 (iii) Financial Security - The Charterers shall maintain 202 financial security or responsibility in respect of third 203 party liabilities as required by any government, 204 including federal, state or municipal or other division 205 or authority thereof, to enable the Vessel, without 206 penalty or charge, lawfully to enter, remain at, or 207 leave any port, place, territorial or contiguous 208 waters of any country, state or municipality in 209 performance of this Charter without any delay. This 210 obligation shall apply whether or not such 211 requirements have been lawfully imposed by such 212 government or division or authority thereof. 213 The Charterers shall make and maintain all arrange- 214 ments by bond or otherwise as may be necessary to 215 satisfy such requirements at the Charterers’ sole 216 expense and the Charterers shall indemnify the Owners 217 against all consequences whatsoever (including loss of 218 time) for any failure or inability to do so. 219 (b) Operation of the Vessel - The Charterers shall at 220 their own expense and by their own procurement man, 221 victual, navigate, operate, supply, fuel and, whenever 222 required, repair the Vessel during the Charter Period 223 and they shall pay all charges and expenses of every 224 kind and nature whatsoever incidental to their use and 225 operation of the Vessel under this Charter, including 226 annual flag State fees of the Flag State and any foreign general 227 municipality and/or state taxes. The Master, officers 228 and crew of the Vessel shall be the servants of the Charterers 229 for all purposes whatsoever, even if for any reason 230 appointed by the Owners. 231 Charterers shall comply with the regulations regarding 232 officers and crew in force in the country of the Vessel’s 233 flag or any other applicable law.
Copyright © 2001 BIMCO. All rights reserved. Any unauthorised copying, duplication, reproduction or distribution of this BIMCO
SmartCon document will constitute an infringement of BIMCO’s copyright. Explanatory notes are available from BIMCO at www.bimco.org.
First published in 1974 as BARECON A and B. Amalgamated and revised in 1989. Revised 2001.
PART II
BARECON 2001 Standard Bareboat Charter
234 (c) The Charterers shall keep the Owners and the 235 mortgagee(s) advised of the intended employment, 236 planned dry-docking and major repairs of the Vessel, 237 as reasonably required. 238 (d) Flag and Name of Vessel – During the Charter 239 Period, the Charterers shall have the liberty to paint the 240 Vessel in their own colours, install and display their 241 funnel insignia and fly their own house flag (with all fees, costs and expenses arising in relation thereto for the Charterers’ account). The 242 Charterers shall also have the liberty, with the Owners’ 243 consent, which shall not be unreasonably withheld, to 244 change the flag and/or the name of the Vessel during 245 the Charter Period (with all fees, costs and expenses arising in relation thereto for the Charterers’ account). Painting and re-painting, instalment 246 and re-instalment, registration and re-registration, if 247 required by the Owners, shall be at the Charterers’ 248 expense and time. 249 (e) Changes to the Vessel – Subject to Clause 10(a)(ii), 250 the Charterers shall make no structural changes in the 251 Vessel or changes in the machinery, boilers, appurten- 252 ances or spare parts thereof without in each instance 253 first securing the Owners’ approval thereof. If the Owners 254 so agree, the Charterers shall, if the Owners so require, 255 restore the Vessel to its former condition before the 256 termination of this Charter. 257 (f) Use of the Vessel’s Outfit, Equipment and 258 Appliances - The Charterers shall have the use of all 259 outfit, equipment, and appliances on board the Vessel 260 at the time of delivery, provided the same or their 261 substantial equivalent shall be returned to the Owners 262 on redelivery in the same good order and condition as 263 when received, ordinary wear and tear excepted. The 264 Charterers shall from time to time during the Charter 265 Period replace, renew or substitute such items of equipment as shall be so 266 damaged or worn as to be unfit for use. The Charterers 267 are to procure that all repairs to or replacement of any 268 damaged, worn or lost parts or equipment be effected 269 in such manner (both as regards workmanship and 270 quality of materials) as not to diminish the value of the 271 Vessel. Title of any equipment so replaced, renewed or substituted shall vest in and remain with the Owners. The Charterers have the right to fit additional 272 equipment at their expense and risk (provided that no permanent structural damage is caused to the Vessel by reason of such installation) and but the Charterers 273 shall, at their expenses, remove such equipment and make good any damage caused by the fitting or removal of such additional equipment before the Vessel is redelivered to the Owners. at the end of the period if 274 requested by the Owners. Any equipment including radio 275 equipment on hire on the Vessel at time of delivery shall 276 be kept and maintained by the Charterers and the 277 Charterers shall assume the obligations and liabilities 278 of the Owners under any lease contracts in connection 279 therewith and shall reimburse the Owners for all 280 expenses incurred in connection therewith, also for any 281 new equipment required in order to comply with radio 282 regulations. 283 (g) Periodical Dry-Docking - The Charterers shall dry- 284 dock the Vessel and clean and paint her underwater 285 parts whenever the same may be necessary, but not 286 less than once during the period stated in Box 19. or, if 287 Box 19 has been left blank, every sixty (60) calendar 288 months after delivery or such other period as may be 289 required by the Classification Society or flag State. 290 11. Hire (See Clause 36 (Charterhire and Advance Charterhire)) 291 (a) The Charterers shall pay hire due to the Owners 292 punctually in accordance with the terms of this Charter 293 in respect of which time shall be of the essence. 294 (b) The Charterers shall pay to the Owners for the hire 295 of the Vessel a lump sum in the amount indicated in 296 Box 22 which shall be payable not later than every thirty 297 (30) running days in advance, the first lump sum being 298 payable on the date and hour of the Vessel’s delivery to 299 the Charterers. Hire shall be paid continuously 300 throughout the Charter Period. 301 (c) Payment of hire shall be made in cash without 302 discount in the currency and in the manner indicated in 303 Box 25 and at the place mentioned in Box 26. 304 (d) Final payment of hire, if for a period of less than 305 thirty (30) running days, shall be calculated proportionally 306 according to the number of days and hours remaining 307 before redelivery and advance payment to be effected 308 accordingly. 309 (e) Should the Vessel be lost or missing, hire shall 310 cease from the date and time when she was lost or last 311 heard of. The date upon which the Vessel is to be treated 312 as lost or missing shall be ten (10) days after the Vessel 313 was last reported or when the Vessel is posted as 314 missing by Lloyd’s, whichever occurs first. Any hire paid 315 in advance to be adjusted accordingly. 316 (f) Any delay in payment of hire shall entitle the 317 Owners to interest at the rate per annum as agreed 318 in Box 24. If Box 24 has not been filled in, the three months 319 Interbank offered rate in London (LIBOR or its successor) 320 for the currency stated in Box 25, as quoted by the British 321 Bankers’ Association (BBA) on the date when the hire 322 fell due, increased by 2 per cent., shall apply. 323 (g) Payment of interest due under sub-clause 11(f) 324 shall be made within seven (7) running days of the date 325 of the Owners’ invoice specifying the amount payable 326 or, in the absence of an invoice, at the time of the next 327 hire payment date. 328 12. Mortgage (See Clause 63.3 (Assignment and Transfer)) 329 (only to apply if Box 28 has been appropriately filled in) 330 *) (a) The Owners warrant that they have not effected 331 any mortgage(s) of the Vessel and that they shall not 332 effect any mortgage(s) without the prior consent of the 333 Charterers, which shall not be unreasonably withheld. 334 *) (b) The Vessel chartered under this Charter is financed 335 by a mortgage according to the Financial Instrument. 336 The Charterers undertake to comply, and provide such 337 information and documents to enable the Owners to 338 comply, with all such instructions or directions in regard 339 to the employment, insurances, operation, repairs and 340 maintenance of the Vessel as laid down in the Financial 341 Instrument or as may be directed from time to time during
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SmartCon document will constitute an infringement of BIMCO’s copyright. Explanatory notes are available from BIMCO at www.bimco.org.
First published in 1974 as BARECON A and B. Amalgamated and revised in 1989. Revised 2001.
PART II
BARECON 2001 Standard Bareboat Charter
342 the currency of the Charter by the mortgagee(s) in 343 conformity with the Financial Instrument. The Charterers 344 confirm that, for this purpose, they have acquainted 345 themselves with all relevant terms, conditions and 346 provisions of the Financial Instrument and agree to 347 acknowledge this in writing in any form that may be 348 required by the mortgagee(s). The Owners warrant that 349 they have not effected any mortgage(s) other than stated 350 in Box 28 and that they shall not agree to any 351 amendment of the mortgage(s) referred to in Box 28 or 352 effect any other mortgage(s) without the prior consent 353 of the Charterers, which shall not be unreasonably 354 withheld. 355 *) (Optional, Clauses 12(a) and 12(b) are alternatives; 356 indicate alternative agreed in Box 28). 357 13. Insurance and Repairs (See also Clause 39 (Insurance)) 358 (a) Subject to Clause 39 (Insurance), dDuring the Charter Period the Vessel shall be kept 359 insured in accordance with Clause 39 (Insurance) by the Charterers at their expense against hull 360 and machinery, marine and (including blocking and trapping) war and Protection and Indemnity risks and freight, demurrage and defence risks 361 (and any risks against which it is compulsory to insure 362 for the operation of the Vessel, including but not limited to maintaining 363 financial security in accordance with sub-clause 364 10(a)(iii)) in such form as the Owners shall in writing 365 approve. During the Charter Period the Charterers shall procure (at Charteres’ expense) that there are in place innocent Owners’ interest insurance, lessor’s additional perils (pollution) insurance and if applicable, Mortgagees’ interest insurance and Mortgagees’ additional perils (pollution) insurance for an amount equal to at least one hundred and twenty percent. (120%) of the then Owners’ cost and shall procure (at Charterers’ expense), which approval shall not be un-reasonably 366 withheld. Such insurances shall be arranged by the 367 Charterers to protect the interests of both the Owners 368 and the Charterers and the Owners’ Financiers mortgagee(s) (if any), and 369 The Charterers shall be at liberty to protect under such 370 insurances the interests of any managers they may 371 appoint provided such manager has entered into a manager’s undertaking in form and substance acceptable to the Owners and the Owners’ Financiers (if any). Insurance policies shall cover the Owners, the mortgagee(s) (if any), and 372 the Charterers according to their respective interests. 373 Subject to the provisions of the agreed loss payable clauses, Financial Instrument, if 374 any, and the approval of the Owners and the insurers, 375 the Charterers shall effect all insured repairs and shall 376 undertake settlement and reimbursement from the 377 insurers of all costs in connection with such repairs as 378 well as insured charges, expenses and liabilities to the 379 extent of coverage under the insurances herein provided 380 for. 381 The Charterers also to remain responsible for and to 382 effect repairs and settlement of costs and expenses 383 incurred thereby in respect of all other repairs not 384 covered by the insurances and/or not exceeding any 385 possible franchise(s) or deductibles provided for in the 386 insurances. 387 All time used for repairs under the provisions of sub- 388 clause 13(a) and for repairs of latent defects according 389 to Clause 3(c) above, including any deviation, shall be 390 for the Charterers’ account. 391 (b) If the conditions of the above insurances permit 392 additional insurance to be placed by the parties, such 393 cover shall be limited to the amount for each party set 394 out in Box 30 and Box 31, respectively. The Owners or 395 the Charterers as the case may be shall immediately 396 furnish the other partyOwners with particulars of any additional 397 insurance effected, including copies of any cover notes 398 or policies and the written consent of the insurers of 399 any such required insurance in any case where the 400 consent of such insurers is necessary. The Charterers hereby undertake that any additional insurances that they arrange now or in the future will always be compliant with the terms of the underlying hull and machinery policies. 401 (c) The Charterers shall upon the request of the 402 Owners, provide information and promptly execute such 403 documents as may be required to enable the Owners to 404 comply with the insurance provisions of the Financial 405 Instrument (if any). 406 (d) Subject to the provisions of the Financial Instru- 407 ments and Clause 41.13 (Termination, Redelivery and Total Loss)3, if any, should the Vessel become a Total Loss, an actual, 408 constructive, compromised or agreed total loss under 409 the insurances required under sub-clause 13(a), all 410 insurance payments for such loss shall be paid to the 411 Owners (or, if applicable, the Owners’ Financiers) in accordance with the agreedterms of the relevant loss payable clauses). who shall distribute the moneys between the 412 Owners and the Charterers according to their respective 413 interests. The Charterers undertake to notify the Owners and the Owners’ Financiers, 414 and the mortgagee(s), if any, of any occurrences in 415 consequence of which the Vessel is likely to become a 416 tTotal lLoss. as defined in this Clause. 417 (e) The Owners shall upon the request of the 418 Charterers, promptly execute such documents as may 419 be required to enable the Charterers to abandon the 420 Vessel to insurers and claim a constructive total loss. 421 (f) For the purpose of insurance coverage against hull 422 and machinery and war risks under the provisions of 423 sub-clause 13(a), the value of the Vessel is the sum 424 indicated in Clause 39 (Insurance).Box 29. 425 14. Insurance, Repairs and Classification 426 (Optional, only to apply if expressly agreed and stated 427 in Box 29, in which event Clause 13 shall be considered 428 deleted). 429 (a) During the Charter Period the Vessel shall be kept
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First published in 1974 as BARECON A and B. Amalgamated and revised in 1989. Revised 2001.
PART II
BARECON 2001 Standard Bareboat Charter
430 insured by the Owners at their expense against hull and 431 machinery and war risks under the form of policy or 432 policies attached hereto. The Owners and/or insurers 433 shall not have any right of recovery or subrogation 434 against the Charterers on account of loss of or any 435 damage to the Vessel or her machinery or appurt- 436 enances covered by such insurance, or on account of 437 payments made to discharge claims against or liabilities 438 of the Vessel or the Owners covered by such insurance. 439 Insurance policies shall cover the Owners and the 440 Charterers according to their respective interests. 441 (b) During the Charter Period the Vessel shall be kept 442 insured by the Charterers at their expense against 443 Protection and Indemnity risks (and any risks against 444 which it is compulsory to insure for the operation of the 445 Vessel, including maintaining financial security in 446 accordance with sub-clause 10(a)(iii)) in such form as 447 the Owners shall in writing approve which approval shall 448 not be unreasonably withheld. 449 (c) In the event that any act or negligence of the 450 Charterers shall vitiate any of the insurance herein 451 provided, the Charterers shall pay to the Owners all 452 losses and indemnify the Owners against all claims and 453 demands which would otherwise have been covered by 454 such insurance. 455 (d) The Charterers shall, subject to the approval of the 456 Owners or Owners’ Underwriters, effect all insured 457 repairs, and the Charterers shall undertake settlement 458 of all miscellaneous expenses in connection with such 459 repairs as well as all insured charges, expenses and 460 liabilities, to the extent of coverage under the insurances 461 provided for under the provisions of sub-clause 14(a). 462 The Charterers to be secured reimbursement through 463 the Owners’ Underwriters for such expenditures upon 464 presentation of accounts. 465 (e) The Charterers to remain responsible for and to 466 effect repairs and settlement of costs and expenses 467 incurred thereby in respect of all other repairs not 468 covered by the insurances and/or not exceeding any 469 possible franchise(s) or deductibles provided for in the 470 insurances. 471 (f) All time used for repairs under the provisions of 472 sub-clauses 14(d) and 14(e) and for repairs of latent 473 defects according to Clause 3 above, including any 474 deviation, shall be for the Charterers’ account and shall 475 form part of the Charter Period. 476 The Owners shall not be responsible for any expenses 477 as are incident to the use and operation of the Vessel 478 for such time as may be required to make such repairs. 479 (g) If the conditions of the above insurances permit 480 additional insurance to be placed by the parties such 481 cover shall be limited to the amount for each party set 482 out in Box 30 and Box 31, respectively. The Owners or 483 the Charterers as the case may be shall immediately 484 furnish the other party with particulars of any additional 485 insurance effected, including copies of any cover notes 486 or policies and the written consent of the insurers of 487 any such required insurance in any case where the 488 consent of such insurers is necessary. 489 (h) Should the Vessel become an actual, constructive, 490 compromised or agreed total loss under the insurances 491 required under sub-clause 14(a), all insurance payments 492 for such loss shall be paid to the Owners, who shall 493 distribute the moneys between themselves and the 494 Charterers according to their respective interests. 495 (i) If the Vessel becomes an actual, constructive, 496 compromised or agreed total loss under the insurances 497 arranged by the Owners in accordance with sub-clause 498 14(a), this Charter shall terminate as of the date of such 499 loss. 500 (j) The Charterers shall upon the request of the 501 Owners, promptly execute such documents as may be 502 required to enable the Owners to abandon the Vessel 503 to the insurers and claim a constructive total loss. 504 (k) For the purpose of insurance coverage against hull 505 and machinery and war risks under the provisions of 506 sub-clause 14(a), the value of the Vessel is the sum 507 indicated in Box 29. 508 (l) Notwithstanding anything contained in sub-clause 509 10(a), it is agreed that under the provisions of Clause 510 14, if applicable, the Owners shall keep the Vessel’s 511 Class fully up to date with the Classification Society 512 indicated in Box 10 and maintain all other necessary 513 certificates in force at all times. 514 15. Redelivery (See Clause 41.6) 515 At the expiration of the Charter Period the Vessel shall 516 be redelivered by the Charterers to the Owners at a 517 safe and ice-free port or place as indicated in Box 16, in 518 such ready safe berth as the Owners may direct. The 519 Charterers shall give the Owners not less than thirty 520 (30) running days’ preliminary notice of expected date, 521 range of ports of redelivery or port or place of redelivery 522 and not less than fourteen (14) running days’ definite 523 notice of expected date and port or place of redelivery. 524 Any changes thereafter in the Vessel’s position shall be 525 notified immediately to the Owners. 526 The Charterers warrant that they will not permit the 527 Vessel to commence a voyage (including any preceding 528 ballast voyage) which cannot reasonably be expected 529 to be completed in time to allow redelivery of the Vessel 530 within the Charter Period. Notwithstanding the above, 531 should the Charterers fail to redeliver the Vessel within 532 The Charter Period, the Charterers shall pay the daily 533 equivalent to the rate of hire stated in Box 22 plus 10 534 per cent. or to the market rate, whichever is the higher, 535 for the number of days by which the Charter Period is 536 exceeded. All other terms, conditions and provisions of 537 this Charter shall continue to apply. 538 Subject to the provisions of Clause 10, the Vessel shall 539 be redelivered to the Owners in the same or as good 540 structure, state, condition and class as that in which she 541 was delivered, fair wear and tear not affecting class 542 excepted. 543 The Vessel upon redelivery shall have her survey cycles 544 up to date and trading and class certificates valid for at 545 least the number of months agreed in Box 17. 546 16. Non-Lien 547 Save for Permitted Security Interest (if any), The Charterers will not suffer, nor permit to be continued, 548 any lien or encumbrance incurred by them or their 549 agents, which might have priority over the title and 550 interest of the Owners in the Vessel. The Charterers 551 further agree to fasten to the Vessel in a conspicuous 552 place and to keep so fastened during the Charter Period
Copyright © 2001 BIMCO. All rights reserved. Any unauthorised copying, duplication, reproduction or distribution of this BIMCO
SmartCon document will constitute an infringement of BIMCO’s copyright. Explanatory notes are available from BIMCO at www.bimco.org.
First published in 1974 as BARECON A and B. Amalgamated and revised in 1989. Revised 2001.
PART II
BARECON 2001 Standard Bareboat Charter
553 a notice reading as follows: 554 “This Vessel is the property of (name of Owners). It is 555 under charter to (name of Charterers) and by the terms 556 of the Charter Party neither the Charterers nor the 557 Master have any right, power or authority to create, incur 558 or permit to be imposed on the Vessel any lien 559 whatsoever.” or a notice in such analogous form as reasonably required by any Mortgagee(s). 560 17. Indemnity (See Clauses 38.3 (Possession of Vessel), 39.16 (Insurance), 39.17 (Insurance), 39.18 (Insurance), 41.4 (Termination, Redelivery and Total Loss), 53 (Indemnities) and 55.4 (Increased Costs)) 561 (a) The Charterers shall indemnify the Owners against 562 any loss, damage or expense incurred by the Owners 563 arising out of or in relation to the operation of the Vessel 564 by the Charterers, and against any lien of whatsoever 565 nature arising out of an event occurring during the 566 Charter Period. If the Vessel be arrested or otherwise 567 detained by reason of claims or liens arising out of her 568 operation hereunder by the Charterers, the Charterers 569 shall at their own expense take all reasonable steps to 570 secure that within a reasonable time the Vessel is 571 released, including the provision of bail. 572 Without prejudice to the generality of the foregoing, the 573 Charterers agree to indemnify the Owners against all 574 consequences or liabilities arising from the Master, 575 officers or agents signing Bills of Lading or other 576 documents. 577 (b) If the Vessel be arrested or otherwise detained by 578 reason of a claim or claims against the Owners, the 579 Owners shall at their own expense take all reasonable 580 steps to secure that within a reasonable time the Vessel 581 is released, including the provision of bail. 582 In such circumstances the Owners shall indemnify the 583 Charterers against any loss, damage or expense 584 incurred by the Charterers (including hire paid under 585 this Charter) as a direct consequence of such arrest or 586 detention. 587 18. Lien 588 The Owners to shall have a lien upon all cargoes, sub-hires 589 and sub-freights belonging or due to the Charterers or 590 any sub-charterers and any Bill of Lading freight for all 591 claims under this Charter., and the Charterers to have a 592 lien on the Vessel for all moneys paid in advance and 593 not earned. 594 19. Salvage 595 All salvage and towage performed by the Vessel shall 596 be for the Charterers’ benefit and the cost of repairing 597 damage occasioned thereby shall be borne by the 598 Charterers. 599 20. Wreck Removal 600 In the event of the Vessel becoming a wreck or 601 obstruction to navigation the Charterers shall indemnify 602 the Owners against any sums whatsoever which the 603 Owners shall become liable to pay and shall pay in 604 consequence of the Vessel becoming a wreck or 605 obstruction to navigation. 606 21. General Average 607 The Owners shall not contribute to General Average. 608 22. Assignment, Sub-Charter and Sale (See Clause 63 (Assignment and Transfer)) 609 (a) The Charterers shall not assign this Charter nor 610 sub-charter the Vessel on a bareboat basis except with 611 the prior consent in writing of the Owners, which shall 612 not be unreasonably withheld, and subject to such terms 613 and conditions as the Owners shall approve. 614 (b) The Owners shall not sell the Vessel during the 615 currency of this Charter except with the prior written 616 consent of the Charterers, which shall not be unreason- 617 ably withheld, and subject to the buyer accepting an 618 assignment of this Charter. 619 23. Contracts of Carriage 620 *) (a) The Charterers are to procure that all documents 621 issued during the Charter Period evidencing the terms 622 and conditions agreed in respect of carriage of goods 623 shall contain a paramount clause incorporating any 624 legislation relating to carrier’s liability for cargo 625 compulsorily applicable in the trade; if no such legislation 626 exists, the documents shall incorporate the Hague-Visby 627 Rules. The documents shall also contain the New Jason 628 Clause and the Both-to-Blame Collision Clause. 629 *) (b) The Charterers are to procure that all passenger 630 tickets issued during the Charter Period for the carriage 631 of passengers and their luggage under this Charter shall 632 contain a paramount clause incorporating any legislation 633 relating to carrier’s liability for passengers and their 634 luggage compulsorily applicable in the trade; if no such 635 legislation exists, the passenger tickets shall incorporate 636 the Athens Convention Relating to the Carriage of 637 Passengers and their Luggage by Sea, 1974, and any 638 protocol thereto. 639 *) Delete as applicable. 640 24. Bank Corporate Guarantee 641 (Optional, only to apply if Box 27 filled in) 642 The Charterers undertake to furnish, on or about the date of this Charter, before delivery of 643 the Vessel, a first class bank guarantee or bond in the 644 sum and at the place as indicated in Box 27 as a corporate guarantee from the Guarantors as guarantee and the other Security Documents (if not already earlier entered into) 645 for full performance of their obligations under this 646 Charter. 647 25. Requisition/Acquisition 648 (a) Subject to the provisions of the Financial Instruments (if any) and the General Assignment, Iin the event of the Requisition for Hire of the Vessel 649 by any governmental or other competent authority 650 (hereinafter referred to as “Requisition for Hire”) 651 irrespective of the date during the Charter Period when 652 “Requisition for Hire” may occur and irrespective of the 653 length thereof and whether or not it be for an indefinite 654 or a limited period of time, and irrespective of whether it 655 may or will remain in force for the remainder of the 656 Charter Period, this Charter shall not be deemed thereby 657 or thereupon to be frustrated or otherwise terminated 658 and the Charterers shall continue to pay the stipulated 659 hire in the manner provided by this Charter until the time 660 when the Charter would have terminated pursuant to 661 any of the provisions hereof. always provided however 662 that in the event of “Requisition for Hire” any Requisition 663 Hire or compensation received or receivable by the 664 Owners shall be payable to the Charterers during the
Copyright © 2001 BIMCO. All rights reserved. Any unauthorised copying, duplication, reproduction or distribution of this BIMCO
SmartCon document will constitute an infringement of BIMCO’s copyright. Explanatory notes are available from BIMCO at www.bimco.org.
First published in 1974 as BARECON A and B. Amalgamated and revised in 1989. Revised 2001.
PART II
BARECON 2001 Standard Bareboat Charter
665 remainder of the Charter Period or the period of the 666 “Requisition for Hire” whichever be the shorter. 667 (b) Subject to the other provisions of this Charter and the Financial Instruments (if any) Iin the event of the Owners being deprived of their 668 ownership in the Vessel by any Compulsory Acquisition 669 of the Vessel or requisition for title by any governmental 670 or other competent authority (hereinafter referred to as 671 “Compulsory Acquisition”), then, irrespective of the date 672 during the Charter Period when “Compulsory Acqui- 673 sition” may occur, this Charter shall be deemed 674 terminated as of the date of such “Compulsory 675 Acquisition”. In such event Charter Hire to be considered 676 as earned and to shall be paid up to the date and time of 677 such “Compulsory Acquisition”. 678 26. War 679 (a) Subject to the provisions of the Financial Instruments (if any) FfFor the purpose of this Clause, the words “War 680 Risks” shall include any war (whether actual or 681 threatened), act of war, civil war, hostilities, revolution, 682 rebellion, civil commotion, warlike operations, the laying 683 of mines (whether actual or reported), acts of piracy, 684 acts of terrorists, acts of hostility or malicious damage, 685 blockades (whether imposed against all vessels or 686 imposed selectively against vessels of certain flags or 687 ownership, or against certain cargoes or crews or 688 otherwise howsoever), by any person, body, terrorist or 689 political group, or the Government of any state 690 whatsoever, which may be dangerous or are likely to be 691 or to become dangerous to the Vessel, her cargo, crew 692 or other persons on board the Vessel. 693 (b) The Vessel, unless the written consent of the 694 Owners be first obtained and adequate insurances are obtained (such adequacy to be deteremined by the Owners (acting reasonably)),unless trading within the limits and safe places in accordance with The Approved Sub-charter and the Charterer has effected the additional premium required by the Vessels insurers and prior notice has been given to the Owners about the details of the itineary and the additional insurances of the Vessel, shall not continue to or go 695 through any port, place, area or zone (whether of land 696 or sea), or any waterway or canal, where it reasonably 697 appears that the Vessel, her cargo, crew or other 698 persons on board the Vessel, in the reasonable 699 judgement of the Owners, may be, or are likely to be, 700 exposed to War Risks. Should the Vessel be within any 701 such place as aforesaid, which only becomes danger- 702 ous, or is likely to be or to become dangerous, after her 703 entry into it, the Owners shall have the right to require 704 the Vessel to leave such area. 705 (c) The Vessel shall not load contraband cargo, or to 706 pass through any blockade, whether such blockade be 707 imposed on all vessels, or is imposed selectively in any 708 way whatsoever against vessels of certain flags or 709 ownership, or against certain cargoes or crews or 710 otherwise howsoever, or to proceed to an area where 711 she shall be subject, or is likely to be subject to 712 a belligerent’s right of search and/or confiscation. 713 (d) If the insurers of the war risks insurance, when 714 Clause 14 is applicable, should require payment of 715 premiums and/or calls because, pursuant to the 716 Charterers’ orders, the Vessel is within, or is due to enter 717 and remain within, any area or areas which are specified 718 by such insurers as being subject to additional premiums 719 because of War Risks, then such premiums and/or calls 720 shall be reimbursed by the Charterers to the Owners at 721 the same time as the next payment of hire is due. 722 (e) The Charterers shall have the liberty: 723 (i) to comply with all orders, directions, recommend- 724 ations or advice as to departure, arrival, routes, 725 sailing in convoy, ports of call, stoppages, 726 destinations, discharge of cargo, delivery, or in any 727 other way whatsoever, which are given by the 728 Government of the Nation under whose flag the 729 Vessel sails, or any other Government, body or 730 group whatsoever acting with the power to compel 731 compliance with their orders or directions; 732 (ii) to comply with the orders, directions or recom- 733 mendations of any war risks underwriters who have 734 the authority to give the same under the terms of 735 the war risks insurance; 736 (iii) to comply with the terms of any resolution of the 737 Security Council of the United Nations, any 738 directives of the European Community, the effective 739 orders of any other Supranational body which has 740 the right to issue and give the same, and with 741 national laws aimed at enforcing the same to which 742 the Owners are subject, and to obey the orders 743 and directions of those who are charged with their 744 enforcement. 745 (f) In the event of outbreak of war (whether there be a 746 declaration of war or not) (i) between any two or more 747 of the following countries: the United States of America; 748 Russia; the United Kingdom; France; and the People’s 749 Republic of China, (ii) between any two or more of the 750 countries stated in Box 36, both the Owners and the 751 Charterers shall have the right to cancel this Charter, 752 whereupon the Charterers shall redeliver the Vessel to 753 the Owners in accordance with Clause 15, if the Vessel 754 has cargo on board after discharge thereof at 755 destination, or if debarred under this Clause from 756 reaching or entering it at a near, open and safe port as 757 directed by the Owners, or if the Vessel has no cargo 758 on board, at the port at which the Vessel then is or if at 759 sea at a near, open and safe port as directed by the 760 Owners. In all cases hire shall continue to be paid in 761 accordance with Clause 11 and except as aforesaid all 762 other provisions of this Charter shall apply until 763 redelivery the end of the Charter Period. 764 27. Commission 765 The Owners to pay a commission at the rate indicated 766 in Box 33 to the Brokers named in Box 33 on any hire 767 paid under the Charter. If no rate is indicated in Box 33, 768 the commission to be paid by the Owners shall cover 769 the actual expenses of the Brokers and a reasonable 770 fee for their work. 771 If the full hire is not paid owing to breach of the Charter 772 by either of the parties the party liable therefor shall 773 indemnify the Brokers against their loss of commission. 774 Should the parties agree to cancel the Charter, the 775 Owners shall indemnify the Brokers against any loss of 776 commission but in such case the commission shall not
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SmartCon document will constitute an infringement of BIMCO’s copyright. Explanatory notes are available from BIMCO at www.bimco.org.
First published in 1974 as BARECON A and B. Amalgamated and revised in 1989. Revised 2001.
PART II
BARECON 2001 Standard Bareboat Charter
777 exceed the brokerage on one year’s hire. 778 28. Termination (See Clauses 41 (Termination, Redelivery and Total Loss) and 49 (Termination Events)) 779 (a) Charterers’ Default 780 The Owners shall be entitled to withdraw the Vessel from 781 the service of the Charterers and terminate the Charter 782 with immediate effect by written notice to the Charterers if: 783 (i) the Charterers fail to pay hire in accordance with 784 Clause 11. However, where there is a failure to 785 make punctual payment of hire due to oversight, 786 negligence, errors or omissions on the part of the 787 Charterers or their bankers, the Owners shall give 788 the Charterers written notice of the number of clear 789 banking days stated in Box 34 (as recognised at 790 the agreed place of payment) in which to rectify 791 the failure, and when so rectified within such 792 number of days following the Owners’ notice, the 793 payment shall stand as regular and punctual. 794 Failure by the Charterers to pay hire within the 795 number of days stated in Box 34 of their receiving 796 the Owners’ notice as provided herein, shall entitle 797 the Owners to withdraw the Vessel from the service 798 of the Charterers and terminate the Charter without 799 further notice; 800 (ii) the Charterers fail to comply with the requirements of: 801 (1) Clause 6 (Trading Restrictions) 802 (2) Clause 13(a) (Insurance and Repairs) 803 provided that the Owners shall have the option, by 804 written notice to the Charterers, to give the 805 Charterers a specified number of days grace within 806 which to rectify the failure without prejudice to the 807 Owners’ right to withdraw and terminate under this 808 Clause if the Charterers fail to comply with such 809 notice; 810 (iii) the Charterers fail to rectify any failure to comply 811 with the requirements of sub-clause 10(a)(i) 812 (Maintenance and Repairs) as soon as practically 813 possible after the Owners have requested them in 814 writing so to do and in any event so that the Vessel’s 815 insurance cover is not prejudiced. 816 (b) Owners’ Default 817 If the Owners shall by any act or omission be in breach 818 of their obligations under this Charter to the extent that 819 the Charterers are deprived of the use of the Vessel 820 and such breach continues for a period of fourteen (14) 821 running days after written notice thereof has been given 822 by the Charterers to the Owners, the Charterers shall 823 be entitled to terminate this Charter with immediate effect 824 by written notice to the Owners. 825 (c) Loss of Vessel 826 This Charter shall be deemed to be terminated if the 827 Vessel becomes a total loss or is declared as a 828 constructive or compromised or arranged total loss. For 829 the purpose of this sub-clause, the Vessel shall not be 830 deemed to be lost unless she has either become an 831 actual total loss or agreement has been reached with 832 her underwriters in respect of her constructive, 833 compromised or arranged total loss or if such agreement 834 with her underwriters is not reached it is adjudged by a 835 competent tribunal that a constructive loss of the Vessel 836 has occurred. 837 (d) Either party shall be entitled to terminate this 838 Charter with immediate effect by written notice to the 839 other party in the event of an order being made or 840 resolution passed for the winding up, dissolution, 841 liquidation or bankruptcy of the other party (otherwise 842 than for the purpose of reconstruction or amalgamation) 843 or if a receiver is appointed, or if it suspends payment, 844 ceases to carry on business or makes any special 845 arrangement or composition with its creditors. 846 (e) The termination of this Charter shall be without 847 prejudice to all rights accrued due between the parties 848 prior to the date of termination and to any claim that 849 either party might have. 850 29. Repossession (See also Clauses 41 (Termination, Redelivery and Total Loss) and 49 (Termination Events)) In the event the Vessel Is due for redelivery pursuant to Clause 41.6 (Termination, Redelivery and Total Loss) or Owners have made a request for redelivery of the Vessel in accordance with the applicable provisions of Clause 41.10 (Termination, Redelivery and Total Loss), 851 In the event of the termination of this Charter in 852 accordance with the applicable provisions of Clause 28, 853 the Owners shall have the right to repossess the Vessel 854 from the Charterers at her current or next port of call, or 855 at a port or place convenient to them without hindrance 856 or interference by the Charterers, courts or local 857 authorities. Pending physical repossession of the Vessel 858 in accordance with this Clause 29, the Charterers shall 859 hold the Vessel as gratuitous bailee only to the Owners and the Charterers shall procure that the master and crew follow the directions of the Owners (but always provided that the safety of the Vessel and Iits crew shall not be materially and adversely compromised).. 860 The Owners shall arrange for an authorised represent- 861 ative to board the Vessel as soon as reasonably 862 practicable following the termination of the Charter. The 863 Vessel shall be deemed to be repossessed by the 864 Owners from the Charterers upon the boarding of the 865 Vessel by the Owners’ representative. All arrangements 866 and expenses relating to the settling of wages, 867 disembarkation and repatriation of the Charterers’ 868 Master, officers and crew shall be the sole responsibility 869 of the Charterers. 870 30. Dispute Resolution (See Clause 65 (Governing Law and Enforcement)) 871 *) (a) This Contract shall be governed by and construed 872 in accordance with English law and any dispute arising 873 out of or in connection with this Contract shall be referred 874 to arbitration in London in accordance with the Arbitration 875 Act 1996 or any statutory modification or re-enactment 876 thereof save to the extent necessary to give effect to 877 the provisions of this Clause. 878 The arbitration shall be conducted in accordance with 879 the London Maritime Arbitrators Association (LMAA) 880 Terms current at the time when the arbitration proceed- 881 ings are commenced. 882 The reference shall be to three arbitrators. A party 883 wishing to refer a dispute to arbitration shall appoint its 884 arbitrator and send notice of such appointment in writing 885 to the other party requiring the other party to appoint its 886 own arbitrator within 14 calendar days of that notice and
Copyright © 2001 BIMCO. All rights reserved. Any unauthorised copying, duplication, reproduction or distribution of this BIMCO
SmartCon document will constitute an infringement of BIMCO’s copyright. Explanatory notes are available from BIMCO at www.bimco.org.
First published in 1974 as BARECON A and B. Amalgamated and revised in 1989. Revised 2001.
PART II
BARECON 2001 Standard Bareboat Charter
887 stating that it will appoint its arbitrator as sole arbitrator 888 unless the other party appoints its own arbitrator and 889 gives notice that it has done so within the 14 days 890 specified. If the other party does not appoint its own 891 arbitrator and give notice that it has done so within the 892 14 days specified, the party referring a dispute to 893 arbitration may, without the requirement of any further 894 prior notice to the other party, appoint its arbitrator as 895 sole arbitrator and shall advise the other party 896 accordingly. The award of a sole arbitrator shall be 897 binding on both parties as if he had been appointed by 898 agreement. 899 Nothing herein shall prevent the parties agreeing in 900 writing to vary these provisions to provide for the 901 appointment of a sole arbitrator. 902 In cases where neither the claim nor any counterclaim 903 exceeds the sum of US$50,000 (or such other sum as 904 the parties may agree) the arbitration shall be conducted 905 in accordance with the LMAA Small Claims Procedure 906 current at the time when the arbitration proceedings are 907 commenced. 908 *) (b) This Contract shall be governed by and construed 909 in accordance with Title 9 of the United States Code 910 and the Maritime Law of the United States and any 911 dispute arising out of or in connection with this Contract 912 shall be referred to three persons at New York, one to 913 be appointed by each of the parties hereto, and the third 914 by the two so chosen; their decision or that of any two 915 of them shall be final, and for the purposes of enforcing 916 any award, judgement may be entered on an award by 917 any court of competent jurisdiction. The proceedings 918 shall be conducted in accordance with the rules of the 919 Society of Maritime Arbitrators, Inc. 920 In cases where neither the claim nor any counterclaim 921 exceeds the sum of US$50,000 (or such other sum as 922 the parties may agree) the arbitration shall be conducted 923 in accordance with the Shortened Arbitration Procedure 924 of the Society of Maritime Arbitrators, Inc. current at 925 the time when the arbitration proceedings are commenced. 926 *) (c) This Contract shall be governed by and construed 927 in accordance with the laws of the place mutually agreed 928 by the parties and any dispute arising out of or in 929 connection with this Contract shall be referred to 930 arbitration at a mutually agreed place, subject to the 931 procedures applicable there. 932 (d) Notwithstanding (a), (b) or (c) above, the parties 933 may agree at any time to refer to mediation any 934 difference and/or dispute arising out of or in connection 935 with this Contract. 936 In the case of a dispute in respect of which arbitration 937 has been commenced under (a), (b) or (c) above, the 938 following shall apply:- 939 (i) Either party may at any time and from time to time 940 elect to refer the dispute or part of the dispute to 941 mediation by service on the other party of a written 942 notice (the “Mediation Notice”) calling on the other 943 party to agree to mediation. 944 (ii) The other party shall thereupon within 14 calendar 945 days of receipt of the Mediation Notice confirm that 946 they agree to mediation, in which case the parties 947 shall thereafter agree a mediator within a further 948 14 calendar days, failing which on the application 949 of either party a mediator will be appointed promptly 950 by the Arbitration Tribunal (“the Tribunal”) or such 951 person as the Tribunal may designate for that 952 purpose. The mediation shall be conducted in such 953 place and in accordance with such procedure and 954 on such terms as the parties may agree or, in the 955 event of disagreement, as may be set by the 956 mediator. 957 (iii) If the other party does not agree to mediate, that 958 fact may be brought to the attention of the Tribunal 959 and may be taken into account by the Tribunal when 960 allocating the costs of the arbitration as between 961 the parties. 962 (iv) The mediation shall not affect the right of either 963 party to seek such relief or take such steps as it 964 considers necessary to protect its interest. 965 (v) Either party may advise the Tribunal that they have 966 agreed to mediation. The arbitration procedure shall 967 continue during the conduct of the mediation but 968 the Tribunal may take the mediation timetable into 969 account when setting the timetable for steps in the 970 arbitration. 971 (vi) Unless otherwise agreed or specified in the 972 mediation terms, each party shall bear its own costs 973 incurred in the mediation and the parties shall share 974 equally the mediator’s costs and expenses. 975 (vii) The mediation process shall be without prejudice 976 and confidential and no information or documents 977 disclosed during it shall be revealed to the Tribunal 978 except to the extent that they are disclosable under 979 the law and procedure governing the arbitration. 980 (Note: The parties should be aware that the mediation 981 process may not necessarily interrupt time limits.) 982 (e) If Box 35 in Part I is not appropriately filled in, sub-clause 983 30(a) of this Clause shall apply. Sub-clause 30(d) shall 984 apply in all cases. 985 *) Sub-clauses 30(a), 30(b) and 30(c) are alternatives; 986 indicate alternative agreed in Box 35. 987 31. Notices (See Clause 44 (Notices)) 988 (a) Any notice to be given by either party to the other 989 party shall be in writing and may be sent by fax, telex, 990 registered or recorded mail or by personal service. 991 (b) The address of the Parties for service of such 992 communication shall be as stated in Boxes 3 and 4 993 respectively.
Copyright © 2001 BIMCO. All rights reserved. Any unauthorised copying, duplication, reproduction or distribution of this BIMCO
SmartCon document will constitute an infringement of BIMCO’s copyright. Explanatory notes are available from BIMCO at www.bimco.org.
First published in 1974 as BARECON A and B. Amalgamated and revised in 1989. Revised 2001.
PART III
PROVISIONS TO APPLY FOR NEWBUILDING VESSELS ONLY
(Optional, only to apply if expressly agreed and stated in Box 37)
1. Specifications and Building Contract 2 (a) The Vessel shall be constructed in accordance with 3 the Building Contract (hereafter called “the Building 4 Contract”) as annexed to this Charter, made between the 5 Builders and the Owners and in accordance with the 6 specifications and plans annexed thereto, such Building 7 Contract, specifications and plans having been counter- 8 signed as approved by the Charterers. 9 (b) No change shall be made in the Building Contract or 10 in the specifications or plans of the Vessel as approved by 11 the Charterers as aforesaid, without the Charterers’ 12 consent. 13 (c) The Charterers shall have the right to send their 14 representative to the Builders’ Yard to inspect the Vessel 15 during the course of her construction to satisfy themselves 16 that construction is in accordance with such approved 17 specifications and plans as referred to under sub-clause 18 (a) of this Clause. 19 (d) The Vessel shall be built in accordance with the 20 Building Contract and shall be of the description set out 21 therein. Subject to the provisions of sub-clause 2(c)(ii) 22 hereunder, the Charterers shall be bound to accept the 23 Vessel from the Owners, completed and constructed in 24 accordance with the Building Contract, on the date of 25 delivery by the Builders. The Charterers undertake that 26 having accepted the Vessel they will not thereafter raise 27 any claims against the Owners in respect of the Vessel’s 28 performance or specification or defects, if any. 29 Nevertheless, in respect of any repairs, replacements or 30 defects which appear within the first 12 months from 31 delivery by the Builders, the Owners shall endeavour to 32 compel the Builders to repair, replace or remedy any defects 33 or to recover from the Builders any expenditure incurred in 34 carrying out such repairs, replacements or remedies. 35 However, the Owners’ liability to the Charterers shall be 36 limited to the extent the Owners have a valid claim against 37 the Builders under the guarantee clause of the Building 38 Contract (a copy whereof has been supplied to the 39 Charterers). The Charterers shall be bound to accept such 40 sums as the Owners are reasonably able to recover under 41 this Clause and shall make no further claim on the Owners 42 for the difference between the amount(s) so recovered and 43 the actual expenditure on repairs, replacement or 44 remedying defects or for any loss of time incurred. 45 Any liquidated damages for physical defects or deficiencies 46 shall accrue to the account of the party stated in Box 41(a) 47 or if not filled in shall be shared equally between the parties. 48 The costs of pursuing a claim or claims against the Builders 49 under this Clause (including any liability to the Builders) 50 shall be borne by the party stated in Box 41(b) or if not 51 filled in shall be shared equally between the parties. 52 2. Time and Place of Delivery 53 (a) Subject to the Vessel having completed her 54 acceptance trials including trials of cargo equipment in 55 accordance with the Building Contract and specifications 56 to the satisfaction of the Charterers, the Owners shall give 57 and the Charterers shall take delivery of the Vessel afloat 58 when ready for delivery and properly documented at the 59 Builders’ Yard or some other safe and readily accessible 60 dock, wharf or place as may be agreed between the parties 61 hereto and the Builders. Under the Building Contract the 62 Builders have estimated that the Vessel will be ready for 63 delivery to the Owners as therein provided but the delivery 64 date for the purpose of this Charter shall be the date when 65 the Vessel is in fact ready for delivery by the Builders after 66 completion of trials whether that be before or after as 67 indicated in the Building Contract. The Charterers shall not 68 be entitled to refuse acceptance of delivery of the Vessel 69 and upon and after such acceptance, subject to Clause 70 1(d), the Charterers shall not be entitled to make any claim 71 against the Owners in respect of any conditions, 72 representations or warranties, whether express or implied, 73 as to the seaworthiness of the Vessel or in respect of delay 74 in delivery. 75 (b) If for any reason other than a default by the Owners 76 under the Building Contract, the Builders become entitled 77 under that Contract not to deliver the Vessel to the Owners, 78 the Owners shall upon giving to the Charterers written 79 notice of Builders becoming so entitled, be excused from 80 giving delivery of the Vessel to the Charterers and upon 81 receipt of such notice by the Charterers this Charter shall 82 cease to have effect. 83 (c) If for any reason the Owners become entitled under 84 the Building Contract to reject the Vessel the Owners shall, 85 before exercising such right of rejection, consult the 86 Charterers and thereupon 87 (i) if the Charterers do not wish to take delivery of the Vessel 88 they shall inform the Owners within seven (7) running days 89 by notice in writing and upon receipt by the Owners of such 90 notice this Charter shall cease to have effect; or 91 (ii) if the Charterers wish to take delivery of the Vessel 92 they may by notice in writing within seven (7) running days 93 require the Owners to negotiate with the Builders as to the 94 terms on which delivery should be taken and/or refrain from 95 exercising their right to rejection and upon receipt of such 96 notice the Owners shall commence such negotiations and/ 97 or take delivery of the Vessel from the Builders and deliver 98 her to the Charterers; 99 (iii) in no circumstances shall the Charterers be entitled to 100 reject the Vessel unless the Owners are able to reject the 101 Vessel from the Builders; 102 (iv) if this Charter terminates under sub-clause (b) or (c) of 103 this Clause, the Owners shall thereafter not be liable to the 104 Charterers for any claim under or arising out of this Charter 105 or its termination. 106 (d) Any liquidated damages for delay in delivery under the 107 Building Contract and any costs incurred in pursuing a claim 108 therefor shall accrue to the account of the party stated in 109 Box 41(c) or if not filled in shall be shared equally between 110 the parties. 111 3. Guarantee Works 112 If not otherwise agreed, the Owners authorise the 113 Charterers to arrange for the guarantee works to be 114 performed in accordance with the building contract terms, 115 and hire to continue during the period of guarantee works. 116 The Charterers have to advise the Owners about the 117 performance to the extent the Owners may request. 118 4. Name of Vessel 119 The name of the Vessel shall be mutually agreed between 120 the Owners and the Charterers and the Vessel shall be
Copyright © 2001 BIMCO. All rights reserved. Any unauthorised copying, duplication, reproduction or distribution of this BIMCO
SmartCon document will constitute an infringement of BIMCO’s copyright. Explanatory notes are available from BIMCO at www.bimco.org.
First published in 1974 as BARECON A and B. Amalgamated and revised in 1989. Revised 2001.
PART III
PROVISIONS TO APPLY FOR NEWBUILDING VESSELS ONLY
(Optional, only to apply if expressly agreed and stated in Box 37)
121 painted in the colours, display the funnel insignia and fly 122 the house flag as required by the Charterers. 123 5. Survey on Redelivery 124 The Owners and the Charterers shall appoint surveyors 125 for the purpose of determining and agreeing in writing the 126 condition of the Vessel at the time of re-delivery. 127 Without prejudice to Clause 15 (Part II), the Charterers 128 shall bear all survey expenses and all other costs, if any, 129 including the cost of docking and undocking, if required, 130 as well as all repair costs incurred. The Charterers shall 131 also bear all loss of time spent in connection with any 132 docking and undocking as well as repairs, which shall be 133 paid at the rate of hire per day or pro rata.
Copyright © 2001 BIMCO. All rights reserved. Any unauthorised copying, duplication, reproduction or distribution of this BIMCO
SmartCon document will constitute an infringement of BIMCO’s copyright. Explanatory notes are available from BIMCO at www.bimco.org.
First published in 1974 as BARECON A and B. Amalgamated and revised in 1989. Revised 2001.
PART IV
HIRE/PURCHASE AGREEMENT
(Optional, only to apply if expressly agreed and stated in Box 42)
1 On expiration of this Charter and provided the Charterers 2 have fulfilled their obligations according to Part I and II 3 as well as Part III, if applicable, it is agreed, that on 4 payment of the final payment of hire as per Clause 11 5 the Charterers have purchased the Vessel with 6 everything belonging to her and the Vessel is fully paid 7 for. 8 In the following paragraphs the Owners are referred to 9 as the Sellers and the Charterers as the Buyers. 10 The Vessel shall be delivered by the Sellers and taken 11 over by the Buyers on expiration of the Charter. 12 The Sellers guarantee that the Vessel, at the time of 13 delivery, is free from all encumbrances and maritime 14 liens or any debts whatsoever other than those arising 15 from anything done or not done by the Buyers or any 16 existing mortgage agreed not to be paid off by the time 17 of delivery. Should any claims, which have been incurred 18 prior to the time of delivery be made against the Vessel, 19 the Sellers hereby undertake to indemnify the Buyers 20 against all consequences of such claims to the extent it 21 can be proved that the Sellers are responsible for such 22 claims. Any taxes, notarial, consular and other charges 23 and expenses connected with the purchase and 24 registration under Buyers’ flag, shall be for Buyers’ 25 account. Any taxes, consular and other charges and 26 expenses connected with closing of the Sellers’ register, 27 shall be for Sellers’ account. 28 In exchange for payment of the last month’s hire 29 instalment the Sellers shall furnish the Buyers with a 30 Bill of Sale duly attested and legalized, together with a 31 certificate setting out the registered encumbrances, if 32 any. On delivery of the Vessel the Sellers shall provide 33 for deletion of the Vessel from the Ship’s Register and 34 deliver a certificate of deletion to the Buyers. 35 The Sellers shall, at the time of delivery, hand to the 36 Buyers all classification certificates (for hull, engines, 37 anchors, chains, etc.), as well as all plans which may 38 be in Sellers’ possession. 39 The Wireless Installation and Nautical Instruments, 40 unless on hire, shall be included in the sale without any 41 extra payment. 42 The Vessel with everything belonging to her shall be at 43 Sellers’ risk and expense until she is delivered to the 44 Buyers, subject to the conditions of this Contract and 45 the Vessel with everything belonging to her shall be 46 delivered and taken over as she is at the time of delivery, 47 after which the Sellers shall have no responsibility for 48 possible faults or deficiencies of any description. 49 The Buyers undertake to pay for the repatriation of the 50 Master, officers and other personnel if appointed by the 51 Sellers to the port where the Vessel entered the Bareboat 52 Charter as per Clause 3 (Part II) or to pay the equivalent 53 cost for their journey to any other place.
Copyright © 2001 BIMCO. All rights reserved. Any unauthorised copying, duplication, reproduction or distribution of this BIMCO
SmartCon document will constitute an infringement of BIMCO’s copyright. Explanatory notes are available from BIMCO at www.bimco.org.
First published in 1974 as BARECON A and B. Amalgamated and revised in 1989. Revised 2001.
PART V
PROVISIONS TO APPLY FOR VESSELS REGISTERED IN A BAREBOAT CHARTER REGISTRY
(Optional, only to apply if expressly agreed and stated in Box 43)
1 1. Definitions 2 For the purpose of this PART V, the following terms shall 3 have the meanings hereby assigned to them: 4 “The Bareboat Charter Registry” shall mean the registry 5 of the State whose flag the Vessel will fly and in which 6 the Charterers are registered as the bareboat charterers 7 during the period of the Bareboat Charter. 8 “The Underlying Registry” shall mean the registry of the 9 state in which the Owners of the Vessel are registered 10 as Owners and to which jurisdiction and control of the 11 Vessel will revert upon termination of the Bareboat 12 Charter Registration. 13 2. Mortgage 14 The Vessel chartered under this Charter is financed by 15 a mortgage and the provisions of Clause 12(b) (Part II) 16 shall apply. 17 3. Termination of Charter by Default 18 If the Vessel chartered under this Charter is registered 19 in a Bareboat Charter Registry as stated in Box 44, and 20 if the Owners shall default in the payment of any amounts 21 due under the mortgage(s) specified in Box 28, the 22 Charterers shall, if so required by the mortgagee, direct 23 the Owners to re-register the Vessel in the Underlying 24 Registry as shown in Box 45. 25 In the event of the Vessel being deleted from the 26 Bareboat Charter Registry as stated in Box 44, due to a 27 default by the Owners in the payment of any amounts 28 due under the mortgage(s), the Charterers shall have 29 the right to terminate this Charter forthwith and without 30 prejudice to any other claim they may have against the 31 Owners under this Charter.
Copyright © 2001 BIMCO. All rights reserved. Any unauthorised copying, duplication, reproduction or distribution of this BIMCO
SmartCon document will constitute an infringement of BIMCO’s copyright. Explanatory notes are available from BIMCO at www.bimco.org.
First published in 1974 as BARECON A and B. Amalgamated and revised in 1989. Revised 2001.
EXECUTION VERSION
ADDITIONAL CLAUSES TO BARECON 2001 DATED 11 January 2024
CLAUSE 32 - CHARTER PERIOD
| 32.1 | The period of this Charter (the “Charter Period”) shall, subject to the terms of this Charter, continue for a period of eighty-four (84) months starting from the Commencement Date. |
| 32.2 | Notwithstanding the fact that the Charter Period shall commence on the Commencement Date, this Charter shall be: |
| (a) | in full force and effect; and |
| (b) | valid, binding and enforceable against the parties hereto, |
with effect from the date hereof until the end of the Charter Period (subject to the terms of this Charter).
CLAUSE 33 - CANCELLATION
| 33.1 | If: |
| (a) | the Vessel is not delivered by the Charterers as sellers to the Owners as buyers under the MOA by the Cancelling Date (or such later date as the parties to the MOA may agree); or |
| (b) | the MOA expires, is cancelled, terminated, rescinded or suspended or otherwise ceases to remain in full force and effect for any reason (in whole or in part), |
| 33.2 | then this Charter shall immediately terminate and be cancelled (without prejudice to Clause 53 - (Indemnities) and without the need for either the Owners or the Charterers to take any action whatsoever), provided that the Owners shall be entitled to retain all fees and expenses paid by the Charterers pursuant to Clause 42 - (Fees and Expenses) (and without prejudice to Clause 42 - (Fees and Expenses) and any clause of the MOA, if such fees have not been paid, the Charterers shall forthwith pay such fees and expenses to the Owners in accordance with Clause 42 - (Fees and Expenses) and such payment shall be irrevocable and unconditional and is acknowledged by the Charterers to be proportionate as to amount, having regard to the legitimate interest of the Owners, in protecting against the Owners’ risk of the Charterers failing to perform its obligations under this Charter. For the avoidance of doubt, the termination of this Charter shall not prejudice the operation of any provision of any Leasing Document which is expressed to survive the termination or cancellation of this Charter). |
CLAUSE 34 - DELIVERY AND CHARTER OF VESSEL
| 34.1 | This Charter is part of a transaction involving the sale, purchase and charter back of the Vessel and constitutes one of the Leasing Documents. |
| 34.2 | The obligation of the Owners to charter the Vessel to the Charterers hereunder is subject to and conditional upon: |
| (a) | the delivery to and acceptance by the Owners as buyers of the Vessel under the MOA; |
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| (b) | no Potential Termination Event or Termination Event having occurred which is continuing from the date of this Charter to the last day of the Charter Period (inclusive); |
| (c) | the representations and warranties contained in Clause 45 - (Representations and Warranties) being true and correct on the date hereof and each day thereafter until and including the last date of the Charter Period; |
| (d) | the Delivery occurring on or before the Cancelling Date; and |
| (e) | the Owners having received from the Charterers: |
| (i) | on or before the date of the Payment Notice (or on a date otherwise specified thereunder), the documents or evidence set out in Part A of Schedule 2 in form and substance satisfactory to them; and |
| (ii) | on the Commencement Date and prior to or simultaneously with the Owners executing a dated and timed copy of the protocol of delivery and acceptance evidencing delivery of the Vessel under the MOA and a dated and timed copy of the Acceptance Certificate, the documents or evidence set out in Part B of Schedule 2 in form and substance satisfactory to them, |
and if any of the documents listed in Schedule 2 are not in the English language then, where required by the Owners, they shall be accompanied by a certified English translation.
| 34.3 | The conditions precedent specified in Clause 34.2(e) are inserted for the sole benefit of the Owners and may be waived or deferred in whole or in part and with or without conditions by the Owners. |
| 34.4 | On delivery to and acceptance by the Owners (in their capacity as buyers) of the Vessel from the Charterers (in their capacity as sellers) under the MOA, the Vessel shall be deemed to have been delivered to, and accepted without reservation by, the Charterers under this Charter and the Charterers shall become and be entitled to the possession and use of the Vessel on and subject to the terms and conditions of this Charter on the same day as the delivery date of the Vessel under the MOA. |
| 34.5 | On Delivery, as evidence of the commencement of the Charter Period, the Charterers shall sign and deliver to the Owners, the Acceptance Certificate. The Charterers shall be deemed to have accepted the Vessel under this Charter, and the commencement of the Charter Period having started, on Delivery even if, for whatever reason, the Acceptance Certificate is not signed and/or the Charterers do not take actual possession of the Vessel at that time. |
| 34.6 | The Charterers shall not be entitled for any reason whatsoever to refuse to accept delivery of the Vessel under this Charter once the Vessel has been delivered to and accepted by the Owners (in their capacity as buyers) from the Charterers (in their capacity as sellers) under the MOA, and the Owners shall not be liable for any losses, costs or expenses whatsoever or howsoever arising including without limitation, any loss of profit or any loss or otherwise: |
| (a) | resulting directly or indirectly from any defect or alleged defect in the Vessel (including but not limited to any deficiency in seaworthiness, merchantability, classification, condition, design, quality, operation, performance, capacity or fitness for use or the eligibility of the Vessel for any particular trade or operation) or any failure of the Vessel; or |
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| (b) | arising from any delay in the commencement of the Charter Period or any failure of the Charter Period to commence. |
| 34.7 | The Owners shall not be obliged to deliver the Vessel to the Charterers with any bunkers and unused lubricating oils and hydraulic oils and greases in storage tanks and unopened drums of the Vessel except for such items which are already on the Vessel on Delivery. The Owners shall not be responsible for the fitness, quality or quantity of any such bunkers and unused lubricating oils and hydraulic oils and greases and the Charterers shall make no claim against Owners in respect of the same. |
| 34.8 | The Charterers shall procure receipt by the Owners of the conditions subsequent set out in Part C of Schedule 2 in a form and substance satisfactory to the Owners within the time periods permitted therein. |
CLAUSE 35 - QUIET ENJOYMENT
| 35.1 | Provided that no Termination Event or Total Loss has occurred, the Owners hereby agree not to disturb or interfere with the Charterers’ lawful use, possession and quiet enjoyment of the Vessel during the Charter Period. |
CLAUSE 36 - CHARTERHIRE AND ADVANCE CHARTERHIRE
| 36.1 | In consideration of the Owners agreeing to charter the Vessel to the Charterers under this Charter at the request of the Charterers, the Charterers hereby irrevocably and unconditionally agree to pay to the Owners the Charterhire, the Advance Charterhire, the Option Premium and all other amounts payable under this Charter in accordance with the terms of this Charter. |
| 36.2 | The Charterers shall pay to the Owners on the Commencement Date, an amount which is equal to the difference between the Purchase Price and the Opening Capital Balance as of the Commencement Date (the “Advance Charterhire”). |
| 36.3 | The Charterers shall be deemed to have paid the Advance Charterhire to the Owners on the Commencement Date by the Owners (as buyers under the MOA) setting off an amount equal to the Advance Charterhire against a corresponding amount of the Purchase Price payable by the Owners to the Charterers (as sellers) under the MOA. |
| 36.4 | The Advance Charterhire shall not bear interest and shall be non-refundable. |
| 36.5 | Following Delivery and commencing from the Commencement Date, the Charterers shall pay the Charterhire in arrears in quarterly instalments on each Payment Date. |
| 36.6 | Charterhire shall be payable in arrears on the following dates (each a “Payment Date”): |
| (a) | on the date falling three (3) months after the Commencement Date (the “First Payment Date”), the first instalment of Charterhire shall be payable; and |
| (b) | on each date falling three (3) months thereafter during the Charter Period (other than the last day of the Charter Period), each subsequent instalment of Charterhire (other than the last instalment of Charterhire); and |
| (c) | on the last day of the Charter Period, the final instalment of Charterhire, such that there is a total of twenty eight (28) Payment Dates during the Charter Period. |
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| 36.7 | Payment of the Charterhire on any Payment Date shall be made in same day available funds and received by the Owners by not later than 4.00 pm (Beijing time). Any payment of Charterhire which is due to be made on a Payment Date which is not also a Business Day shall be made on the previous Business Day instead. |
| 36.8 | Time of payment of the Charterhire and any other payments by the Charterers under this Charter shall be of the essence of this Charter. |
| 36.9 | All payments of the Charterhire and any other moneys payable hereunder shall be made in Dollars. |
| 36.10 | All payments of the Charterhire and any other moneys payable hereunder shall be payable by the Charterers to the Owners’ designated bank account as the Owners may notify the Charterers in writing from time to time. |
| 36.11 | Payment of the Charterhire and any other amounts under this Charter shall be at the Charterers’ risk until receipt by the Owners. |
| 36.12 | The Vessel shall not at any time be deemed off-hire and the Charterers’ obligation to pay the Charterhire and any other amounts payable in this Charter (including but not limited to the Termination Sum) in Dollars shall be absolute and unconditional under any and all circumstances and shall not be affected by any circumstances of any nature whatsoever including but not limited to: |
| (a) | (except in the case of the Advance Charterhire) any set off, counterclaim, recoupment, defence, claim or other right which the Charterers may at any time have against the Owners or any other person for any reason whatsoever including, without limitation, any act, omission or breach on the part of the Owners under this Charter or any other agreement at any time existing between the Owners and the Charterers; |
| (b) | any change, extension, indulgence or other act or omission in respect of any indebtedness or obligation of the Charterers, or any sale, exchange, release or surrender of, or other dealing in, any security for any such indebtedness or obligation; |
| (c) | any title defect or encumbrance or any dispossession of the Vessel by title paramount or otherwise; |
| (d) | any defect in the seaworthiness, condition, value, design, merchantability, operation or fitness for use of the Vessel or the ineligibility of the Vessel for any particular trade, or for registration or documentation under the laws of any relevant jurisdiction; |
| (e) | the Total Loss or any damage to or forfeiture or court marshall’s or other sale of the Vessel if the Termination Sum or any part thereof remains due; |
| (f) | any libel, attachment, levy, detention, sequestration or taking into custody of the Vessel or any restriction or prevention of or interference with or interruption or cessation in, the use or possession thereof by the Charterers unless for such period where such arrest, detention or seizure is solely attributable to the fault of the Owners; |
| (g) | any insolvency, bankruptcy, reorganization, arrangement, readjustment, dissolution, liquidation or similar proceedings by or against the Charterers and any other Relevant Person; |
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| (h) | any invalidity, unenforceability, lack of due authorization or other defects, or any failure or delay in performing or complying with any of the terms and provisions of this Charter or any of the Leasing Documents by any party to this Charter or any other person; |
| (i) | any enforcement or attempted enforcement by the Owners of their rights under this Charter or any of the Leasing Documents executed or to be executed pursuant to this Charter; |
| (j) | any loss of use of the Vessel due to deficiency or default or strike of officers or crew, fire, breakdown, damage, accident, defective cargo or any other cause which would or might but for this provision have the effect of terminating or in any way affecting any obligation of the Charterers under this Charter; or |
| (k) | any prevention, delay, deviation or disruption in the use of the Vessel resulting from the wide outbreak of any viruses or any other highly infectious or contagious diseases (including the 2019 novel coronavirus), including but not limited to those caused by: |
| (i) | closure of ports; |
| (ii) | prohibitions or restrictions against the Vessel calling at or passing through certain ports; |
| (iii) | restriction in the movement of personnel and/or shortage of labour affecting the operation of the Vessel or the operation of the ports (including stevedoring operations); |
| (iv) | quarantine regulations affecting the Vessel, its cargo, the crew members or relevant port personnel; |
| (v) | fumigation or cleaning of the Vessel; or |
| (vi) | any claims raised by any Approved Sub-charterer or manager of the Vessel that a force majeure event or termination event (or any other analogous event howsoever called) has occurred under the relevant charter agreement or management agreement (as the case may be) of the Vessel as a result of the outbreak of such viruses. |
| 36.13 | All stamp duty, value added tax (for the avoidance of doubt, including without limitation, goods and services tax), withholding or other taxes and import and export duties and all other similar types of charges which may be levied or assessed on or in connection with: |
| (a) | the operation of this Charter in respect of the hire and all other payments to be made pursuant to this Charter and the remittance thereof to the Owners; and |
| (b) | the import, export, purchase, operation, delivery and re-delivery of the Vessel, |
shall be borne by the Charterers. The Charterers shall pay, if applicable, value added tax and other similar tax levied on any Charterhire and other payments payable under this Charter by addition to, and at the time of payment of, such amounts. If any such taxes arise as a result of (i) the Owners being incorporated in Hong Kong and (ii) the introduction or alteration after the date of this Charter of a law in Hong Kong or an alteration after the date of this Charter in the manner in which a law in Hong Kong is interpreted or applied (the “Tax Changes”). Provided that if after the Owners and the Charterers having exercised reasonable endeavours to mitigate the effect of the Tax Changes (at the cost of the Charterers) following notification from the Owners to the Charterers regarding the occurrence of the Tax Changes such Tax Changes continue to have the same effect, the Charterers shall have the option to pay the Mandatory Sale Price to the Owners within thirty (30) days following such notice by the Owners, and this Charter shall terminate in accordance with the procedures set out in Clause 50.4.
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CLAUSE 37 - DEFAULT INTEREST
| 37.1 | If the Charterers fail to make any payment due under this Charter on the due date, they shall pay additional interest on such late payment at a rate which is equal to one per cent. (1%) per annum above the applicable interest rate for the relevant Hire Period which shall apply prior to, during or following Delivery and shall accrue on a daily basis from the date on which such payment became due up to and excluding the date of payment thereof, and the Charterers and the Owners agree that such default rate is proportionate as to amount, having regard to the legitimate interest of the Owners, in protecting against the Owners’ risk of the Charterers failing to perform its obligations under this Charter. |
| 37.2 | All interest (including default interest) and any other payments under this Charter which are of an annual or periodic nature shall accrue from day to day and shall be calculated on the basis of the actual number of days elapsed and a three hundred and sixty (360) days’ year. |
CLAUSE 38 - POSSESSION OF VESSEL
| 38.1 | The Charterers shall not, without the prior written consent of the Owners, assign, mortgage or pledge the Vessel or any interest therein, its Earnings, Insurances and/or any Requisition Compensation and shall not permit the creation or existence of any Security Interest thereon (including for any monies paid in advance and not earned, and for any claims for damages arising from any breach by the Owners of this Charter and other amounts due to the Charterers under this Charter) except for the Permitted Security Interests. |
| 38.2 | The Charterers shall promptly notify any party (including, without limitation, the Trafigura Charterer or any other Approved Sub-charterer of the Vessel) (as the Owners may request) in writing that the Vessel is the property of the Owners and the Charterers shall provide the Owners with a copy of such written notification and satisfactory evidence to the opinion of the Owners that such party has received such written notification. |
| 38.3 | Subject to Clause 38.4, if the Vessel is arrested, seized, impounded, forfeited, detained or taken out of their possession or control (whether or not pursuant to any distress, execution or other legal process), the Charterers shall procure the immediate release of the Vessel (whether by providing bail or procuring the provision of security or otherwise do such lawful things as the circumstances may require) and shall immediately notify the Owners of such event and shall indemnify the Owners against all losses, costs or charges incurred by the Owners by reason thereof in re-taking possession or otherwise in re-acquiring the Vessel. Without prejudice to the generality of the foregoing and Clause 52 - , the Charterers agree to indemnify the Owners against all consequences or liabilities arising from the master, officers or agents signing bills of lading or other documents. |
| 38.4 | If the Vessel is arrested or otherwise detained solely because of the Owners’ direct actions or omissions and for reasons which are not in any part of a consequence of contributory negligence and/or wilful misconduct of any Approved Sub-charterer, a Relevant Person or any other member of the Group (or its affiliates), the Owners shall at their own expense take all reasonable steps to procure that the Vessel is released within a reasonable time. |
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| 38.5 | The Charterers shall pay and discharge or cause the Trafigura Charterer or any other sub-charterer of the Vessel to pay and discharge all obligations and liabilities whatsoever which have given or may give rise to liens on or claims enforceable against the Vessel. The Charterers shall take all steps to prevent (and shall procure that any sub-charterer of the Vessel shall take all steps to prevent) an arrest (threatened or otherwise) of the Vessel. |
CLAUSE 39 - INSURANCE
| 39.1 | The Charterers shall procure that the insurances for the Vessel are effected: |
| (a) | in Dollars; |
| (b) | in the case of fire and usual hull and machinery, marine risks and war risks (including blocking and trapping), on an agreed value basis of at least the higher of (i) one hundred per cent (100%) of then applicable Market Value of the Vessel and (ii) one hundred and twenty per cent (120%) of the then prevailing Owners’ Costs; |
| (c) | in the case of oil pollution liability risks for the Vessel, for an aggregate amount equal to the higher of (i) $1,000,000,000 and (ii) the highest level of cover from time to time available under protection and indemnity club entry and in the international marine insurance market; |
| (d) | in the case of protection and indemnity risks, in respect of the full tonnage of the Vessel and with a protection and indemnity club which is a member of the International Group of Protection and Indemnity Clubs; |
| (e) | with first class international insurers and/or underwriters acceptable to the Owners and having a Standard & Poor’s rating of BBB+ or above, a Moody’s rating of A or above or an AM Best rating of A- or above or otherwise acceptable to the Owners or, in the case of war risks through a protection and indemnity club which meets the requirements of paragraph (d) above; and |
| (f) | on terms and in form acceptable to the Owners and the Owners’ Financiers (if any). |
| 39.2 | In addition to the terms set out in Clause 13(a) (Insurance and Repairs), the Charterers shall procure that the Obligatory Insurances shall: |
| (a) | subject always to paragraph (b), name the Charterers, the Approved Manager and the Owners(and if applicable the Owners’ Financiers if so required by the Owners) as the only named assureds unless the interest of every other named assured or co-assured is limited: |
| (i) | in respect of any Obligatory Insurances for hull and machinery and war risks; |
| (A) | to any provable out-of-pocket expenses that they have incurred and which form part of any recoverable claim on underwriters; and |
| (B) | to any third party liability claims where cover for such claims is provided by the policy (and then only in respect of discharge of any claims made against them); and |
| (ii) | in respect of any Obligatory Insurances for protection and indemnity risks, to any recoveries they are entitled to make by way of reimbursement following discharge of any third party liability claims made specifically against them, and every other named assured or co-assured has undertaken in writing to the Owners or the Owners’ Financiers (in such form as they may require) that any deductible shall be apportioned between the Charterers and every other named assured or co-assured (save for the Owners or the Owners’ Financiers (if any)) in proportion to the gross claims made by or paid to each of them and that they shall do all things necessary and provide all documents, evidence and information to enable the Owners and the Owners’ Financiers (if any) in accordance with the terms of the loss payable clause, to collect or recover any moneys which at any time become payable in respect of the Obligatory Insurances; |
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| (b) | whenever the Owners’ Financiers (if any) require: |
| (i) | in respect of fire and other usual marine risks and war risks, name (or be amended to name) the same as additional named assured for their rights and interests, warranted no operational interest and with full waiver of rights of subrogation against such financiers, but without such financiers thereby being liable to pay (but having the right to pay) premiums, calls or other assessments in respect of such insurance; |
| (ii) | in relation to protection and indemnity risks, name (or be amended to name) the same as additional insured or co-assured for their rights and interests to the extent permissible under the relevant protection and indemnity club rules; and |
| (iii) | name the same and the Owners as respectively the first ranking loss payee and the second ranking loss payee (and in the absence of any financiers, the Owners as first ranking loss payee) in accordance with the terms of the relevant loss payable clauses approved by the Owners’ Financiers and the Owners with such directions for payment in accordance with the terms of such relevant loss payable clause, as the Owners and the Owners’ Financiers (if any) may specify; |
| (c) | provide that all payments by or on behalf of the insurers under the Obligatory Insurances to the Owners and/or the Owners’ Financiers (as applicable) shall be made without set-off, counterclaim, deductions or condition whatsoever; |
| (d) | provide that such Obligatory Insurances shall be primary without right of contribution from other insurances which may be carried by the Owners or the Owners’ Financiers (if any); |
| (e) | provide that the Owners and/or the Owners’ Financiers (if any) may make proof of loss if the Charterers fail to do so; and |
| (f) | provide that if any Obligatory Insurance is cancelled, or if any substantial change is made in the coverage which adversely affects the interest of the Owners and/or the Owners’ Financiers (if any), or if any Obligatory Insurance is allowed to lapse for non-payment of premium, such cancellation, change or lapse shall not be effective with respect to the Owners and/or the Owners’ Financiers (if any) for thirty (30) days after receipt by the Owners and/or the Owners’ Financiers (if any) of prior written notice from the insurers of such cancellation, change or lapse. |
| 39.3 | The Charterers shall: |
| (a) | at least fifteen (15) days prior to Delivery (or such shorter period agreed by the parties), notify in writing the Owners of the terms and conditions of all Insurances (copied to the Owners’ Financiers (if any) and the brokers or insurers with whom the Insurances are or will be placed); |
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| (b) | at least fifteen (15) days before the expiry of any obligatory insurance or otherwise before the change of appointment of any brokers (or other insurers) and any protection and indemnity or war risks association through which Obligatory Insurances are taken from time to time pursuant to this Clause 39 - (Insurance), notify the Owners (copied to the Owners’ Financiers (if any)) of the brokers (or other insurers) and any protection and indemnity or war risks association through or with whom the Charterers propose to renew or obtain that Obligatory Insurance and of the proposed terms of such renewed or new insurance cover and obtain the Owners’ approval to such matters; |
| (c) | at least seven (7) days before the expiry of any Obligatory Insurance, procure that such Obligatory Insurance is renewed or to be renewed on its expiry date in accordance with the provisions of this Charter; |
| (d) | procure that the approved brokers and/or the war risks and protection and indemnity associations with which such a renewal is effected shall promptly after the renewal or the effective date of the new insurance and protection and indemnity cover notify the Owners (copied to the Owners’ Financiers (if any)) in writing of the terms and conditions of the renewal; and |
| (e) | as soon as practicable after the expiry of any Obligatory Insurance and within thirty (30) days after such expiry, deliver to the Owners a letter of undertaking as required by this Charter in respect of such Insurances for the Vessel as renewed pursuant to Clause 39.3(c) (Insurance) together with copies of the relevant policies or cover notes or entry certificates duly endorsed with the interest of the Owners and/or the Owners’ Financiers (if any). |
| 39.4 | The Charterers shall ensure that all insurance companies and/or underwriters, and/or insurance brokers (if any) provide the Owners with copies (or upon the Owners’ request, originals) of policies, cover notes and certificates of entry relating to the Obligatory Insurances which they are to effect or renew and letter or letters of undertaking in a form required by the Owners and/or the Owners’ Financiers (if any) and including undertakings by the insurance companies and/or underwriters that: |
| (a) | they will have endorsed on each policy, immediately upon issuance, a loss payable clause and a notice of assignment complying with the provisions of this Charter and the Financial Instruments; |
| (b) | they will hold the benefit of such policies and such insurances, to the order of the Owners and/or the Owners’ Financiers (if any) and/or such other party in accordance with the said loss payable clause; |
| (c) | they will advise the Owners and the Owners’ Financiers (if any) promptly of any material change to the terms of the Obligatory Insurances of which they are aware; |
| (d) | (i) they will indicate in the letters of undertaking that they will immediately notify the Owners and the Owners’ Financiers (if any) when any cancellation, charge or lapse of the relevant obligatory insurance occur and (ii) following a written application from the Owners and/or the Owners’ Financiers (if any) not later than one (1) month before the expiry of the Obligatory Insurances they will notify the Owners and the Owners’ Financiers (if any) not less than fourteen (14) days before the expiry of the obligatory insurances, in the event of their not having received notice of renewal instructions from the Charterers and, in the event of their receiving instructions to renew, they will promptly notify the Owners and the Owners’ Financiers (if any) of the terms of the instructions; and |
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| (e) | if any of the Obligatory Insurances form part of any fleet cover, the Charterers shall procure that the insurance broker(s), or leading insurer, as the case may be, undertakes to the Owners and the Owners’ Financiers (if any) that such insurance broker or insurer will not set off against any sum recoverable in respect of a claim relating to the Vessel under such Obligatory Insurances any premiums due in respect of any other vessel under any fleet cover of which the Vessel forms a part or any premium due for other insurances, they waive any lien on the policies, or any sums received under them, which they might have in respect of such premiums, and they will not cancel such Obligatory Insurances by reason of non-payment of such premiums or other amounts, and will arrange for a separate policy to be issued in respect of the Vessel forthwith upon being so requested by the Owners and/or the Owners’ Financiers (if any) and where practicable. |
| 39.5 | The Charterers shall ensure that any protection and indemnity and/or war risks associations in which the Vessel is entered provides the Owners and the Owners’ Financiers (if any) with: |
| (a) | a copy of the certificate of entry for the Vessel as soon as such certificate of entry is issued; |
| (b) | a letter or letters of undertaking in such form as may be required by the Owners and the Owners’ Financiers (if any) or in such association’s standard form; and |
| (c) | a certified copy of each certificate of financial responsibility for pollution by oil or other Environmentally Sensitive Material issued by the relevant certifying authority in relation to the Vessel. |
| 39.6 | The Charterers shall ensure that all policies relating to Obligatory Insurances are deposited with the approved brokers (if any) through which the insurances are effected or renewed. |
| 39.7 | The Charterers shall procure that all premiums or other sums payable in respect of the Obligatory Insurances are punctually paid and produce all relevant receipts when so required by the Owners. |
| 39.8 | The Charterers shall ensure that any guarantees required by a protection and indemnity or war risks association are promptly issued and remain in full force and effect. |
| 39.9 | The Charterers shall neither do nor omit to do (nor permit to be done or not to be done) any act or thing which would or might render any Obligatory Insurance invalid, void, voidable or unenforceable or render any sum payable under an Obligatory Insurance repayable in whole or in part; and, in particular: |
| (a) | the Charterers shall procure that all necessary action is taken and all requirements are complied with which may from time to time be applicable to the Obligatory Insurances, and (without limiting the obligations contained in this Clause 39 - (Insurance)) ensure that the Obligatory Insurances are not made subject to any exclusions or qualifications to which the Owners have not given their prior approval (unless such exclusions or qualifications are made in accordance with the rules of a protection and indemnity association which is a member of the International Group of Protection And Indemnity Clubs); |
| (b) | the Charterers shall not make or permit any changes relating to the classification or the classification society of the Vessel or, subject to procuring the provision of a replacement manager’s undertaking in substantially the same form as the Manager’s Undertaking, any changes to the manager or operator of the Vessel unless such changes have, if required, first been approved by the underwriters of the Obligatory Insurances, the Owners and the Owners’ Financiers (if any); |
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| (c) | the Charterers shall procure that all quarterly or other voyage declarations which may be required by the protection and indemnity risks association in which the Vessel is entered to maintain cover for trading to the United States of America and Exclusive Economic Zone (as defined in the United States Oil Pollution Act 1990 or any other applicable legislation) are made and the Charterers shall promptly provide the Owners with copies of such declarations and a copy of its valid certificate of financial responsibility; and |
| (d) | the Charterers shall not employ the Vessel, nor allow it to be employed, otherwise than in conformity with the terms and conditions of the Obligatory Insurances, without first obtaining the consent of the insurers and complying with any requirements (as to extra premium or otherwise) which the insurers specify. |
| 39.10 | The Charterers shall not make or agree to any alteration to the terms of any Obligatory Insurance nor waive any right relating to any Obligatory Insurance without the prior written consent of the Owners and the Owners’ Financiers (if any). |
| 39.11 | The Charterers shall not settle, compromise or abandon any claim under any obligatory insurance for Total Loss or for a Major Casualty, and shall do all things necessary and provide all documents, evidence and information to enable the Owners to collect or recover any moneys which at any time become payable in respect of the Obligatory Insurances. |
| 39.12 | The Charterers shall provide the Owners upon written request (except that upon the occurrence of a Total Loss or a Major Casualty the Charterers shall provide the following immediately without the Owners’ making any request), copies of: |
| (a) | all communications between the Charterers and: |
| (i) | the approved brokers; |
| (ii) | the approved protection and indemnity and/or war risks associations; and/or |
| (iii) | the approved insurers and/or underwriters, which relate directly or indirectly to: |
| (A) | the Charterers’ obligations relating to the Obligatory Insurances including, without limitation, all requisite declarations and payments of additional premiums or calls; and |
| (B) | any credit arrangements made between the Charterers and any of the persons referred to in paragraphs (i) or (ii) above relating wholly or partly to the effecting or maintenance of the Obligatory Insurances; and |
| (b) | any communication with any party involved in case of a claim under any of the Vessel’s insurances. |
| 39.13 | The Charterers shall promptly provide the Owners (or any persons which they may designate) with: |
| (a) | any information which the Owners or the Owners’ Financiers (or any such designated person) request for the purpose of: |
| (i) | obtaining or preparing any report from an independent marine insurance broker as to the adequacy of the Obligatory Insurances effected or proposed to be effected; and/or |
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| (ii) | effecting, maintaining or renewing any such insurances as are referred to in Clause 13(a) (Insurance and Repairs) or Clause 39 - (Insurance) dealing with or considering any matters relating to any such insurances; and |
| (b) | copies of any communication between all parties involved in case of a claim under any of the Vessel’s insurances exceeding the Major Casualty amount. |
| 39.14 | If one or more of the Obligatory Insurances are not effected and maintained with first class international insurers or are effected with an insurance or captive Subsidiary of the Owners or the Charterers, then the Charterers shall procure, at their own expense, that the relevant insurers maintain in full force and effect facultative reinsurances with reinsurers and through brokers, in each case, of recognised standing and acceptable in all respects to the Owners. Any reinsurance policy shall include, if and when permitted by law, a cut-through clause in a form acceptable to the Owners and/or the Owners’ Financiers (if any). The Charterers shall procure that underwriters of the primary insurances assign each reinsurance to the relevant financiers in full, if required. |
| 39.15 | The Charterers shall upon demand fully indemnify the Owners (including if requested by the Owners, make direct payment to the relevant insurer or broker for the same) in respect of all premiums and other expenses which are incurred by: |
| (a) | the Owners in connection with or with a view to effecting, maintaining or renewing an innocent owners interest insurance and an innocent owners additional perils insurance or any similar protective shipowner insurance that is taken out in respect of the Vessel; and/or |
| (b) | the Owners’ Financiers (if any) in connection with or with a view to effecting, maintaining or renewing a mortgagee’s interest insurance, a mortgagee’s additional perils insurance, all protection and indemnity insurance that is taken out in respect of the Vessel subject to the Owners’ Financiers (if any) having provided to the Owners at the relevant time any form of loan facility to refinance the Vessel, |
in the case as referred to in paragraph (a), in an amount not exceeding one hundred and twenty per cent (120%) of the Owners’ Costs from time to time or in the case as referred to in paragraph (b), in an amount not exceeding one hundred and twenty per cent (120%) of the relevant outstanding loan amount from time to time and on such other terms, through such insurers and generally in such manner as the Owners or the Owners’ Financiers (as the case may be) may from time to time consider appropriate.
| 39.16 | The Charterers shall be solely responsible for and indemnify the Owners in respect of all loss or damage to the Vessel (insofar as the Owners shall not be reimbursed by the proceeds of any insurance in respect thereof) however caused occurring at any time or times before physical possession thereof is retaken by the Owners, with only reasonable wear and tear to the Vessel excepted. |
| 39.17 | The Charterers shall reimburse or indemnify the Owners for any expenses incurred or to be incurred by the Owners in obtaining a detailed report signed by an independent firm of marine insurance brokers approved by the Owners dealing with the Obligatory Insurances and stating the opinion of such firm as to the adequacy of the Obligatory Insurances: |
| (a) | when an agreed form of such detailed report satisfactory to the Owners is obtained as a condition precedent requirement under Schedule 2 of this Charter; |
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| (b) | when the Owners procure the issuance of such detailed report no more than once every calendar year, unless a Termination Event has occurred in which case such reports may be procured at the Charterer’s cost at any such time; and |
| (c) | further from time to time upon the Owners’ demand where, in the Owners’ opinion, at any time during the Charter Period there has been a material change in the terms of the Insurances and/or a change in the circumstances which would materially adversely affect the adequacy of the Obligatory Insurances. |
| 39.18 | The Charterers shall: |
| (a) | keep the Vessel insured at their expense against such other risks (other than loss of hire which shall be insured against upon an occurrence and during the continuance of a Termination Event) which the Owners or the Owners’ Financiers consider reasonable for a prudent shipowner or operator to insure against for trading, management, operational and/or safety purposes at the relevant time (as notified by the Owners and having regard to the then existing available insurance cover and standard practice in the operation of vessels of the same type as the Vessel) and which risks are, at that time, generally insured against by owners or operators of vessels similar to the Vessel or of the same type as the Vessel (excluding loss of hire); and |
| (b) | upon demand fully indemnify the Owners in respect of all premiums and other expenses incurred by the Owners in respect of any other insurances (other than loss of hire insurances which the Owners may take out upon an occurrence and during the continuance of a Termination Event) which the Owners deem necessary (having regard to the existing insurance cover and market practice for the trading, management, operation and safety of vessels of the same type) and takes out in respect of the Vessel. |
CLAUSE 40 - WARRANTIES RELATING TO VESSEL
| 40.1 | It is expressly agreed and acknowledged that the Owners are not the manufacturer or original supplier of the Vessel but that the Owners (in their capacity as buyers) have purchased the Vessel from the Charterers (in their capacity as sellers) pursuant to the MOA at the request of the Charterers, for the purpose of then chartering the Vessel to the Charterers hereunder and that no condition, term, warranty or representation of any kind is or has been given to the Charterers by or on behalf of the Owners in respect of the Vessel (or any part thereof). |
| 40.2 | All conditions, terms or warranties express or implied by the law relating to the specifications, quality, description, merchantability or fitness for any purpose of the Vessel (or any part thereof) or otherwise are hereby expressly excluded. |
| 40.3 | The Charterers agree and acknowledge that the Owners shall not be liable for any claim, loss, damage, expense or other liability of any kind or nature caused directly or indirectly by the Vessel or by any inadequacy thereof or the use or performance thereof or any repairs thereto or servicing thereof and the Charterers shall not by reason thereof be released from any liability to pay any Charterhire or other payment due under this Charter. |
| 40.4 | The Charterers further agree and acknowledge that the Owners are not operating the Vessel and the liability to surrender any Emission Allowances in respect of the Vessel under any applicable Emission Scheme shall lie with the Charterers and/or any other organisation or person whom the Charterers have contractually agreed to take over all duties and responsibilities (including any sub-charterer of the Vessel or the Approved Manager) imposed by the ISM Code, and the Charterers hereby agree that they shall promptly upon the Owners’ request, provide and submit a signed mandate letter in the form acceptable to the Owners (acting reasonably) and the relevant authority and any other information and documents as required by the relevant authority. |
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| 40.5 | Without prejudice to Clause 40.4, in relation to EU ETS: |
| (a) | the Charterers acknowledge that if the Vessel stops at ports in the European Union, they will incur liabilities under EU ETS and Fuel EU Maritime; |
| (b) | the Charterers acknowledge and agree that if they intend to sail the Vessel into ports in the European Union, the Charterers shall register the Vessel as part of a Shipping Company as required under the EU ETS and shall comply in all respects with the EU ETS and Fuel EU Maritime; |
| (c) | if required by the Owners, the Charterers shall provide a letter in a format to be agreed by the Owners confirming that they have assumed responsibility for the operation of the Vessel from the Owners (the “ETS and Fuel EU Maritime Letter”); and |
| (d) | the Charterers shall submit the ETS and Fuel EU Maritime Letter to the relevant administering authority upon registration of the Vessel pursuant to the EU ETS and shall provide the Owners with evidence of such registration within fourteen (14) days. |
CLAUSE 41 - TERMINATION, REDELIVERY AND TOTAL LOSS
Termination
| 41.1 | Upon termination of the leasing of the Vessel under this Charter pursuant to Clause 49.2, the Charterers shall be obliged to pay the Owners the Termination Sum on the Termination Date and it is hereby agreed by the parties hereto that: |
| (a) | without prejudice to Clause 41.10(b), the obligation to pay the Termination Sum is a continuing obligation and shall survive the termination of the leasing of the Vessel under this Charter and shall continue in full force and effect until irrevocably and unconditionally paid in full; |
| (b) | payment of the Termination Sum is deemed to be proportionate as to amount, having regard to the legitimate interest of the Owners, in protecting against the Owners’ risk of the Charterers failing to perform its obligations under this Charter; and |
| (c) | subject to clause 49.5, the Termination Sum shall, depending on the nature of the Termination Event(s) on the basis of which the Owners serve a Termination Notice, be either an obligation to pay damages following acceptance by the Owners of a breach of condition by the Charterers or an obligation to pay an agreed sum in specified circumstances which do not involve a breach of contract by the Charterers. |
| 41.2 | If the Charterers fail to make any payment of the Termination Sum on the Termination Date, Clause 37.1 shall apply and the Owners shall be entitled to exercise their rights under Clauses 41.10 and 41.11. |
| 41.3 | Concurrently with the unconditional and irrevocable payment of the Termination Sum in full pursuant to the terms of this Charter, this Charter shall terminate and the Owners shall (save in the event of Total Loss or in the event that the Vessel has been sold or contracted to be sold pursuant to Clauses 41.10 and 41.11), at the cost of the Charterers, transfer the legal and beneficial ownership of the Vessel on an “as is where is” basis to the Charterers or their nominees free from any registered mortgages, encumbrances, liens, debts or claims incurred or permitted by the Owners (save for those liens, encumbrances and debts incurred by the Charterers or arising out of or in connection with this Charter), and shall execute a bill of sale and a protocol of delivery and acceptance evidencing the same and such sale shall be completed otherwise in accordance with Clause 52.1. |
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| 41.4 | The Charterers hereby undertake to indemnify the Owners against any claims incurred in relation to the Vessel prior to such transfer of ownership. Any taxes, notarial, consular and other costs, charges and expenses connected with closing of the Owners’ register shall be for the Charterers’ account. |
| 41.5 | On natural expiration of this Charter, unless the Purchase Option Price or the Mandatory Sale Price is paid by the Charterers in accordance with Clause 51 - or Clause 50 - , the Charterers shall re-deliver the Vessel to the Owners in accordance with Clause 41.6 and shall ensure that they have fulfilled their obligations under this Charter and made payment of all Charterhire and all other moneys pursuant to the terms of this Charter. In such case, the Charterers shall give the Owners not less than 30/20/10/5 running days’ preliminary notice of expected date and port or place of redelivery and not less than 5/3/2/1/ running days’ definite notice of expected date and port or place of redelivery. Any changes thereafter in the Vessel’s position shall be notified immediately to the Owners. |
Redelivery
| 41.6 | If the Charterers are required to redeliver the Vessel to the Owners pursuant to the terms of this Charter, the Vessel shall be redelivered and taken over safely afloat at a safe and accessible berth or anchorage in such location as the Owners may require (which, for the avoidance of doubt, shall exclude any war listed area declared by the Joint War Committee). The Charterers shall ensure that, at the time of redelivery to the Owners, the Vessel: |
| (a) | be in an equivalent class as she was as at the Commencement Date and without any recommendation or condition and with valid, unextended certificates for not less than six (6) months and free of average damage affecting the Vessel’s classification and in the same or as good structure, state, condition and classification as that in which she was deemed on the Commencement Date, fair wear and tear not affecting the Vessel’s classification excepted; |
| (b) | has passed her 5-year special survey (if applicable), and subsequent second intermediate surveys and drydock at the Charterers’ time and expense without any recommendation or condition: |
| (c) | to the satisfaction of the Approved Classification Society; and |
| (d) | in the case of the 5-year special survey, to the reasonable satisfaction of an Owners’ Surveyor appointed at the cost of the Charterers; |
| (e) | has her survey cycles up-to-date and trading and class certificate valid for at least the number of months agreed in Box 17; |
| (f) | be re-delivered to the Owners together with all spare parts and spare equipment as were on board at the time of Delivery, and any such spare parts and spare equipment on board at the time of re-delivery shall be taken over by the Owners free of charge; |
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| (g) | be free of any cargo and Security Interest (save for the Security Interests granted pursuant to the Financial Instruments, if any); |
| (h) | be free of any crew and officers unless otherwise instructed by the Owners; |
| (i) | be free of any charter or other employment (unless the Owners wish to retain the continuance of any prevailing charter or as otherwise agreed by the Owners in their absolute discretion); and |
| (j) | have such amount of bunkers on board the Vessel as would be sufficient to enable the Vessel to sail to the nearest bunker port in compliance with all bunkering fuel content regulations then applicable in such place of redelivery, including without limitation, the global sulphur limit imposed by the International Maritime Organization (IMO). |
| 41.7 | The Charterers warrant that they will not permit (or request any sub-charterer not to permit) the Vessel to commence a voyage (including any preceding ballast voyage) which cannot reasonably be expected to be completed in time to allow redelivery of the Vessel within any time period required by Clause 41 - (Termination, Redelivery and Total Loss). If the time of actual redelivery is after the date on which redelivery is required to take place pursuant to Clause 41 - (the “Redelivery Date”), the Charterer shall, without prejudice to any other amounts payable under the Leasing Documents (including without limitation pursuant to Clause 41 - (Termination, Redelivery and Total Loss)) pay to the Owners, as from the first date following the Redelivery Date and for each day until the date on which the Vessel is redelivered in accordance with Clause 41.6, the rate of hire equivalent to the higher of: |
| (a) | the prevailing market rate for the bareboat chartering of vessels of a similar type as the Vessel (as determined by an Approved Valuer appointed by the Owners); and |
| (b) | the prevailing market rate for the chartering of vessels of a similar type as the Vessel on the Index. |
For the avoidance of doubt, all other terms, conditions and provisions of this Charter and the other Leasing Documents shall continue to apply during such period.
| 41.8 | The Charterers shall provide the Owners’ Surveyor with all such facilities and access to the Vessel as may be required to enable such Owners’ Surveyor to conduct its survey of the Vessel and shall take all such actions as may be reasonably recommended by the Owners’ Surveyor to ensure that the Vessel shall be redelivered in accordance with Clause 41.6. The Owners shall not be obliged to accept redelivery of the Vessel until the Owners are reasonably satisfied that all conditions for the redelivery of the Vessel under this Charter (including without limitation, Clause 41.6 and this Clause 41.8) are met, and the Vessel shall (if the redelivery is at the end of the Charter Period) continue to be on-hire under the terms of this Charter until such redelivery. The Owners reserve all rights to recover from the Charterers any costs, expense and/or liabilities incurred or suffered by them (including without limitation, the costs of any repairs which may be required to restore the Vessel to the condition required by Clause 41.6 as a result of the Vessel not being redelivered in accordance with the terms of this Charter). |
| 41.9 | The Owners shall, at the time of the redelivery of the Vessel, take over all bunkers, lubricating oil, unbroached provisions, paints, ropes, other consumable stores and spare parts in the Vessel (but, if (with the consent of the Owners) any time charter of the Vessel remains in place at the time of redelivery, excluding any bunkers or such other items owned by a third party time charterer, and in such case, the Charterers shall on demand reimburse the Owners for any amount the Owners have to pay to that time charterer for such bunkers or items) at no cost to the Owners. |
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Non-payment of Termination Sum
| 41.10 | Subject to the terms of any quiet enjoyment letter entered into with any sub charterers, the Charterers agree that should the Termination Sum not be paid on the Termination Date: |
| (a) | the Charterers’ right to possess and operate the Vessel shall immediately cease and (without in any way affecting the Charterers’ obligation to pay the Charterer the Termination Sum and comply with their other obligations under this Charter) the Charterers shall hold the Vessel as gratuitous bailee only to the Owners, the Charterers shall procure that the master and crew follow the orders and directions of the Owners and the Charterers shall, upon the Owners’ request (at Owners’ sole discretion), be obliged to immediately (and at the Charterers’ own cost) redeliver the Vessel to the Owners at such ready and nearest safe port or location as the Owners may require and for the avoidance of doubt, any such redelivery shall not extinguish the Owners’ right to recover the Termination Sum from the Charterers under this Charter; |
| (b) | the Owners shall be entitled (at Owners’ sole discretion) to operate the Vessel as they may require and may create whatsoever interests thereon, including without limitation short term charterparties or any other form of short term employment contracts provided such contracts do not interfere with the Vessel’s sale process, including relevant inspections, provided that the Earnings of the Vessel during such period less its operational expenses (which would include, without limitation, any costs in relation to the provision of bunkers and lubricating oils), (the “Net Trading Proceeds”) shall be applied against the Termination Sum and any other amounts payable under the Leasing Documents pursuant to Clause 64 - (General Application of Proceeds) provided, that if such use of the Vessel results in the Owners suffering a loss then such losses shall be included in the indemnities contained in Clause 53 - (Indemnities) and be added to the Termination Sum; and |
| (c) | the Owners shall be entitled (at Owners’ sole discretion) to immediately thereafter sell the Vessel to any third party on arm’s length terms taking into account the prevailing market conditions, provided that the Charterers may for a period not exceeding a total of sixty (60) days from the Termination Date (the “Nomination Period”) nominate or identify a purchaser for the Vessel (a “Nominated Purchaser”). During the Nomination Period the Owners and the Charterers shall use their reasonable endeavours to market the Vessel and the Owners shall sell the Vessel to a Nominated Purchaser and subject to all of the following conditions being satisfied: |
| (i) | the Nominated Purchaser is acceptable to the Owners (such acceptability not to be unreasonably withheld or delayed); and |
| (ii) | the price to be paid by the Nominated Purchaser (after deducting any commissions, taxes and other costs of sale) is equal to or more than the applicable Termination Sum (unless otherwise agreed by the Owners in their absolute discretion); |
and any net sale proceeds (after deducting all fees, taxes, disbursements and any other costs and expenses incurred or suffered by the Owners in connection with such sale) (the “Net Sales Proceeds”) derived from any such sale to a Nominated Purchaser or any other person shall be applied towards reduction of the Termination Sum in accordance with Clause 64 - (General Application of Proceeds). If the Net Sales Proceeds are not sufficient to settle the Termination Sum in full, the Charterers shall remain liable to pay the shortfall and default interest shall continue to accrue on the unpaid portion of the Termination Sum in accordance with Clause 37.1. Irrespective of any sales efforts, the Charterers have the right at all times, during the Nomination Period or until the Owners’ Purchase (as referred to in Clause 41.11) is concluded or until any third party’s sale is concluded, to purchase the vessel with priority by paying the Termination Sum.
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| 41.11 | The Owners may, by written notice to the Charterers at any time after the Nomination Period, inform the Charterers of the Owners’ intention to retain the Vessel instead of selling the Vessel under Clause 41.10(c) above, “Owners’ Purchase”, and in doing so, the Owners shall first obtain the Market Value of the Vessel (after deducting any commissions, taxes and costs which would be likely to be incurred in connection with a sale of the Vessel) and apply it towards the reduction of the Termination Sum calculated as of the day of the notice of the Owners’ Purchase. If the Market Value (less such deductions) of the Vessel as at the date of the notice of the Owners’ Purchase is less than the Termination Sum calculated as of the day of the notice of the Owners’ Purchase, the Charterers shall remain liable to pay the shortfall to the Owners and default interest shall continue to accrue on the unpaid portion of the Termination Sum. If the Market Value (less such deductions) of the Vessel as at the date of such nomination is more than the Termination Sum calculated as of the day of the notice of the Owners’ Purchase, the Owners shall pay the excess to Charterers within fifteen (15) days from the day of the notice of the Owners’ Purchase in accordance with Clause 64 - (General Application of Proceeds). |
Total Loss
| 41.12 | Throughout the Charter Period, the Charterer shall bear the full risk of any Total Loss of or any other damage to the Vessel howsoever arising. If the Vessel becomes a Total Loss after Delivery, the Charterer shall, subject to Clause 41.13, pay the Termination Sum to the Owners on the Total Loss Payment Date. Upon such receipt by the Owners of the Termination Sum, this Charter shall terminate (without prejudice to any provision of this Charter expressed to survive termination) but until such receipt, the Charterers shall remain liable to make all payments of Charterhire and all other amounts to the Owners under this Charter, notwithstanding that the Vessel has become a Total Loss. |
| 41.13 | Any Total Loss Proceeds unconditionally received by the Owners (or the Owners’ Financiers in accordance with the terms of the relevant loss payable clause) shall be applied in accordance with Clause 64 - (General Application of Proceeds) and shall satisfy the obligation of the Charterers to pay the Termination Sum to the extent received by the Owners (or the Owners’ Financiers in accordance with the terms of the relevant loss payable clause). The obligation of the Charterers to pay the Termination Sum shall remain unaffected and exist regardless of whether any of the insurers have agreed or refused to meet or has disputed in good faith, the claim for Total Loss. |
| 41.14 | If the Total Loss Proceeds unconditionally received by the Owners (or the Owners’ Financiers in accordance with the terms of the relevant loss payable clause) are less than the Termination Sum, the Charterers shall pay such shortfall to the Owner on the Total Loss Payment Date. |
| 41.15 | The Owners shall have no obligation to supply to the Charterers with a replacement vessel following the occurrence of a Total Loss. |
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CLAUSE 42 - FEES AND EXPENSES
| 42.1 | Without prejudice to any other rights of the Owners hereunder, the Charterers shall promptly pay to the Owners on written demand on a full indemnity basis all costs, charges and expenses incurred by the Owners in collecting any Charterhire or the Advance Charterhire or the Option Premium or other payments not paid on the due date under this Charter and in remedying any other failure of the Charterers to observe the terms and conditions of this Charter. |
| 42.2 | All documented costs and expenses (including, but not limited to, third party legal costs) incurred by the Owners or Owners’ legal counsel in the preparation, negotiation, finalisation and execution of all documentation in relation to this Charter or any other Leasing Document (including without limitation any registration or filing expenses, all documented costs incurred by the Owners and all third party legal costs, expenses and other disbursement incurred by the Owners’ legal counsels in connection with the same) shall be for the account of the Charterers (regardless of whether the transaction contemplated by the Leasing Documents actually completes). |
| 42.3 | All documented costs and expenses incurred by the Owners in relation to the acquisition, registration of title of the Vessel in the Owners’ name in the Flag State together with any and all fees (including but not limited to any vessel registration and tonnage fees and the Owners’ initial and ongoing annual registration and maintenance costs if required to be registered as a foreign maritime entity or the appointment of resident agents under the laws of the Flag State) payable by the Owners to register, maintain and/or renew such registration shall be for the account of the Charterers (regardless of whether the Vessel is delivered under the MOA and this Charter). Without prejudice to the foregoing, if the Flag State requires the Owners to establish a physical presence or office in the jurisdiction of such Flag State, all fees, costs and expenses payable by the Owners to establish and maintain such physical presence or office shall be for the account of the Charterers. The Charterers shall promptly provide the Owners with evidence of payment of the annual register/tonnage tax amounts payable to the Flag State or any other aforesaid costs, expenses and/or taxes when the same fall due. |
| 42.4 | All costs and expenses incurred by the Owners (including but not limited to legal fees) in relation to the transfer of title of the Vessel from the Owners to the Charterers and the re- delivery of the Vessel by the Charterers to the Owners pursuant to Clause 41 - (Termination, Redelivery and Total Loss) shall be for the account of the Charterers. |
| 42.5 | If: |
| (a) | the Charterers request an amendment, waiver or consent; or |
| (b) | the Charterers make a request to re-register the Vessel in another Flag State, |
the Charterers shall, on demand, reimburse the Owners for the amount of all documented costs and expenses (including third party legal fees) incurred by the Owners in responding to, evaluating, negotiating or complying with that request or requirement (including, for the avoidance of doubt, any amounts the Owners have to pay under the terms of the Financial Instruments).
| 42.6 | The Charterers shall, on demand, pay to the Owners the amount of all documented costs and expenses (including third party legal fees) incurred by the Owners in connection with the enforcement of, or the preservation of any rights under, any Leasing Document, including, without limitation, any action brought by the Owners to arrest or recover possession of the Vessel, and with any proceedings instituted by or against the Owners as a consequence of it entering into a Leasing Document or enforcing those rights. |
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| 42.7 | Notwithstanding anything to the contrary herein, the indemnities provided by the Charterers shall be provided in favour of the Owners and shall continue in full force and effect notwithstanding any breach of the terms of this Charter or termination of this Charter pursuant to the terms hereof. |
CLAUSE 43 - NO WAIVER OF RIGHTS
| 43.1 | No neglect, delay, act, omission or indulgence on the part of either party in enforcing the terms and conditions of this Charter or any other Leasing Document (to which they are party to) shall prejudice the strict rights of that party or be construed as a waiver thereof nor shall any single or partial exercise of any right of either party preclude any other or further exercise thereof. |
| 43.2 | No right or remedy conferred upon either party by this Charter or any other Leasing Document shall be exclusive of any other right or remedy provided for herein or by law and all such rights and remedies shall be cumulative. |
CLAUSE 44 - NOTICES
| 44.1 | Any notice, certificate, demand or other communication to be served, given made or sent under or in relation to this Charter shall be in English and in writing and (without prejudice to any other valid method or giving making or sending the same) shall be deemed sufficiently given or made or sent if sent by registered post or by email to the following respective address or email address: |
| (a) | to the Owners: | SEA 268 LEASING CO., LIMITED | |
| 21F, China Merchants Bank Building, No.1088, Lujiazui Ring Road, Shanghai, China | |||
| Attention: | |||
| Email: | |||
| Tel: |
| (b) | to the Charterers: | Julius Caesar Inc. | |
| c/o TOP SHIPS INC. | |||
| Attention: | |||
| Email: | |||
| Tel: | |||
| Fax: |
or, if a party hereto changes its address or email address, to such other address or email address as that party may notify to the other.
| 44.2 | Any such communication shall be deemed to have reached the party to whom it was addressed (a) when delivered (in case of a registered letter), or (b) when actually received in readable form (in case of an email). A notice or other such communication received on a non- working day or after 5.00 p.m. in the place of receipt shall be deemed to be served on the next following working day in such place. |
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CLAUSE 45 - REPRESENTATIONS AND WARRANTIES
| 45.1 | The Charterers represent and warrant to the Owners as of the date hereof, and on each day during the Security Period, as follows: |
| (a) | 100% of the issued and outstanding shares in the Charterers are legally, wholly and directly owned and controlled by the Guarantor and the Guarantor is controlled by companies affiliated with the family of Mr. Evangelos Pistiolis; |
| (b) | each Relevant Person or, to the best of its knowledge, the Approved Sub-charterer is duly incorporated and validly existing under the laws of its jurisdiction of its incorporation; |
| (c) | each Relevant Person or the Approved Sub-charterer has the corporate capacity, and has taken all corporate actions and obtained all consents, approvals, authorisations, licenses or permits necessary for it: |
| (i) | to execute each of the Leasing Documents to which it is a party; and |
| (ii) | to comply with and perform its obligations under each of the Leasing Documents to which it is a party; |
| (d) | all the consents, approvals, authorisations, licenses or permits referred to in Clause 45.1(c) (Representations and Warranties) remain in force and nothing has occurred which makes any of them liable to revocation; |
| (e) | each of the Leasing Documents and the Approved Sub-charter to which a Relevant Person or the Approved Sub-charterer is a party (as the case may be) constitutes such Relevant Person’s or the Approved Sub-charterer’s legal, valid and binding obligations enforceable against such party in accordance with its respective terms and any relevant insolvency laws affecting creditors’ rights generally; |
| (f) | the entry into and performance by each Relevant Person (and in the case of sub-paragraph (ii) below, the Approved Sub-charterer) of, and the transactions contemplated by, each Leasing Document to which it (and in the case of sub-paragraph (ii) below, the Approved Sub- charterer) is a party do not and will not conflict with: |
| (i) | any law or regulation applicable to it (including Anti-Money Laundering Laws, Business Ethics Laws, Sanctions or laws relating to anti-trust or collusion and laws relating to human rights violation); |
| (ii) | the constitutional documents of such Relevant Person; and |
| (iii) | any agreement or instrument binding upon it or any of its assets or constitute a default or termination event (however described) under any such agreement or instrument; |
| (g) | there are no outstanding notices or demands from any governmental, quasi-governmental or public authority or instrumentality or any other person claiming authority in respect of the Vessel requiring any work or other action to be taken or the expenditure of any money to be taken in respect of the Vessel or any part thereof; |
| (h) | the Vessel is free of encumbrances and liens except for the Permitted Security Interests; no third party has any Security Interest, other than the Permitted Security Interests, or any other interest, right or claim over, in or in relation to the Vessel, this Charter or any moneys payable hereunder and/or any of the other Leasing Documents; |
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| (i) | all payments which a Relevant Person is liable to make under any Leasing Document to which such Relevant Person is a party may be made by such party without deduction or withholding for or on account of any tax payable under the laws of its Relevant Jurisdiction; |
| (j) | no legal or administrative action involving a Relevant Person has been commenced or taken (including but not limited to actions involving any Environmental Claim); |
| (k) | each Relevant Person has paid all taxes applicable to, or imposed on or in relation to it, its business or if applicable, the Vessel, except for those being contested in good faith with adequate reserves; |
| (l) | it is not necessary under the laws of the Relevant Jurisdictions that this Charter or any other Leasing Document be registered, filed, recorded, notarized or enrolled with any court or other authority in that jurisdiction or that any stamp, registration, notarial or similar taxes or fees be paid on or in relation to the Leasing Documents to which it is a party or the transactions contemplated by those Leasing Documents; the choice of governing law as stated in each Leasing Document to which a Relevant Person is a party and the agreement by such party to refer disputes to the relevant courts or tribunals as stated in such Leasing Document are valid and binding against such Relevant Person; |
| (m) | no Relevant Person nor any of their assets are entitled to immunity on the grounds of sovereignty or otherwise from any legal action or proceeding (which shall include, without limitation, suit, attachment prior to judgment, execution or other enforcement); |
| (n) | the obligations of each Relevant Person under each Leasing Document to which it is a party, are the direct, general and unconditional obligations of such Relevant Person and rank at least pari passu with all other present and future unsecured and unsubordinated creditors of such Relevant Person save for any obligation which is mandatorily preferred by law and not by virtue of any contract; |
| (o) | each Leasing Document creates (or, once entered into, will create) the Security Interest which it is expressed to create with the ranking and priority it is expressed to have; |
| (p) | the Charterers and any other Relevant Person (i) are not US Tax Obligors and (ii) have not established a place of business in the United Kingdom or the United States of America; |
| (q) | no Relevant Person, Approved Manager, sub-charterer and no member of the Group: |
| (i) | is a Prohibited Person; |
| (ii) | is owned or controlled by or acting directly or indirectly on behalf of or for the benefit of, a Prohibited Person; |
| (iii) | owns or controls a Prohibited Person; or |
| (iv) | has a Prohibited Person serving as a director, officer or, to the best of its knowledge, employee; |
| (r) | no Relevant Person or any of their respective directors, officers, and employees or, to the best of its knowledge, the Approved Sub-charterer is in breach of applicable Sanctions laws, and none of them (i) has been or is currently being investigated on compliance with Sanctions, (ii) has received notice or is aware of any claim, action, suit or proceeding against any of them with respect to Sanctions and (iii) has taken any action to evade the application of Sanctions; |
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| (s) | no Relevant Person is in breach of any Anti-Money Laundering Laws, Anti-Terrorism Financing Laws and/or Business Ethics Laws and each Relevant Person has instituted and maintained systems, controls, policies and procedures designed to: |
| (i) | prevent and detect incidences of bribery and corruption, money laundering and terrorism financing; and |
| (ii) | promote and achieve compliance with Anti-Money Laundering Laws, Anti-Terrorism Financing Laws and or Business Ethics Laws including, but not limited to, ensuring thorough and accurate books and records, and utilization of best efforts to ensure that Affiliates acting on behalf of a Relevant Person shall act in compliance with Anti- Money Laundering Laws, Anti-Terrorism Financing Laws and Business Ethics Laws, |
| (t) | that in relation to any Approved Sub-Charter: |
| (i) | each copy of that Approved Sub-Charter provided to the Owners is a true and complete copy of such document and there have been no amendments, supplements or variations to the same; |
| (ii) | each of the Trafigura Charterer and any other Approved Sub-Charterer is fully aware of the transactions contemplated under the MOA and this Charter; and |
| (iii) | the Trafigura Charterer and any other Approved Sub-Charterer has consented to the assignment by the Charterers to the Owners of all their rights, interests and benefits in relation to the Trafigura Charter or, as the case may be, the relevant Approved Sub- Charter pursuant to the General Assignment; |
| (u) | the Vessel is not employed, operated or managed in any manner which (i) is contrary to any Sanctions and in particular, the Vessel is not used by or to benefit any party which is a target of Sanctions or trade to any area or country where trading the Vessel to such area or country would constitute a breach of any Sanctions or published boycotts imposed by any of the United Nations, the European Union, the United States of America, the United Kingdom or the People’s Republic of China (provided that operation or use of the Vessel by the Trafigura Charterer pursuant to the Trafigura Charter shall not in any case be deemed to be in breach or contrary to any published boycotts or sanctions imposed by the People’s Republic of China) or (ii) would trigger the operation of any sanctions limitation or exclusion clause in any insurance documentation; |
| (v) | none of the Relevant Persons nor any of their assets, in each case, has any right to immunity from set off, legal proceedings, attachment prior to judgment or other attachment or execution of judgement on the grounds of sovereign immunity or otherwise; |
| (w) | none of the Relevant Persons is insolvent, bankrupt or in liquidation, bankruptcy or administration or subject to any other formal or informal insolvency or bankruptcy procedure (including, without limitation, those referred to under Clause 49.1(g) and for the avoidance of doubt including the presentation of a petition for commencing such procedures), and no receiver, administrative receiver, administrator, liquidator, trustee or analogous officer has been appointed in respect of the any Relevant Person or all or material part of their assets; |
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| (x) | no Termination Event or Potential Termination Event is continuing or might reasonably be expected to result from the entry into and performance of this Charter or any other Leasing Document; |
| (y) | any factual information provided by any Relevant Person or the Trafigura Charterer (or on their behalf) to the Owners was true and accurate in all material respects as at the date it was provided or as at the date at which such information was stated; |
| (z) | none of the following events has occurred: |
| (i) | any default by the Charterers or the Trafigura Charterer under the terms of the Trafigura Charter; |
| (ii) | breach of any Sanctions by any Relevant Person; and |
| (iii) | upon and after the commencement of the Charter Period, any casualty or occurrence (including damage caused to the Vessel for any reason whatsoever which results, or may be expected to result, in repairs on the Vessel) which amounts to Major Casualty and which are not being dealt with in accordance with the Leasing Documents (including without limitation in accordance with Clause 38 - (Possession of Vessel) and the General Assignment); |
| (aa) | all Environmental Laws relating to the ownership, operation and management of the Vessel and the business of each Relevant Person (as now conducted and as reasonably anticipated to be conducted in the future) have been complied with; |
| (bb) | no Environmental Claim has been made or threatened against any Relevant Person or otherwise in connection with the Vessel which is either (i) in excess of US$5,000,000 or (ii) has or is reasonably likely to have a Material Adverse Effect; and |
| (cc) | no Environmental Incident has occurred and no person has claimed that an Environmental Incident has occurred. |
CLAUSE 46 - UNDERTAKINGS
| 46.1 | The Charterers undertake that they shall comply or procure compliance with the following undertakings during the Security Period: |
| (a) | the Charterers shall, on the Commencement Date, procure the delivery of the full legal and beneficial title (free of any Security Interests save for those created under a Leasing Document or Financial Instrument) in the Vessel to the Owners; |
| (b) | there shall be sent to the Owners: |
| (i) | as soon as possible, but in no event later than one hundred and fifty (150) days after the end of each financial year of the Charterers, the annual financial statement accounts of the Charterers for that financial year as referred to in the Guarantor’s audited consolidated annual financial statement accounts for that financial year to be delivered under Clause 46.1(b)(iii); |
| (ii) | as soon as possible, but in no event later than ninety (90) days after the end of each half-year, the unaudited semi-annual accounts of the Charterers for that half-year (as referred to in the Guarantor’s audited consolidated financial statement accounts); |
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| (iii) | as soon as possible, but in no event later than one hundred and fifty (150) days after the end of each financial year of the Guarantor, the audited consolidated annual financial statement accounts of the Guarantor for that financial year; and |
| (iv) | as soon as possible, but in no event later than ninety (90) days after the end of each half-year, the semi-annual consolidated unaudited accounts of the Guarantor for that half-year certified as to their correctness by at least one director of the Guarantor; |
and if any of the statements above are not in the English language then they shall be accompanied by an English translation and each set of financial statements delivered pursuant to this paragraph (b) shall be prepared using the generally accepted accounting principles in the United States and shall be certified by a duly authorised officer of the relevant company as giving a true and fair view (if audited) or fairly representing (if unaudited) its financial condition and operations as at the date as at which those financial statements were drawn;
| (c) | they shall provide to the Owners, at the same time as they are despatched, copies of all notices and minutes relating to any of their extraordinary shareholders’ meeting which are despatched to the Charterers’ or the Guarantor’s respective shareholders or creditors or any class of them, unless same are publicly available; |
| (d) | they will provide the Owners promptly upon becoming aware of them, the details of: |
| (i) | any litigation, arbitration or administrative proceedings or investigations relating to any alleged or actual breach of any Sanctions or Anti-Money Laundering Laws which are current or pending against any Relevant Person, Approved Manager, sub- charterer or other member of the Group; |
| (ii) | any litigation, arbitration or administrative proceedings or investigations relating to any other matters not referred to in paragraph (i) above (including proceedings or investigations relating to any alleged or actual breach of the ISM Code or of the ISPS Code) in relation to a Relevant Person; and |
| (iii) | any Termination Event or Potential Termination Event that has occurred (and the steps, if any, being taken to remedy it); |
| (e) | they will, promptly upon a request by the Owners, supply to the Owners a certificate signed by an officer on its behalf certifying that no Termination Event or Potential Termination Event has occurred (or if a Termination Event or Potential Termination Event has occurred, specifying the nature of the Potential Termination Event or Termination Event (and the steps, if any, being taken to remedy it)); |
| (f) | they shall, and shall procure that each other Relevant Person will, obtain and promptly renew or procure the obtainment or renewal of and provide copies of, from time to time, any necessary consents, approvals, authorisations, licenses or permits of any regulatory body or authority for the transactions contemplated under each Leasing Document to which it is a party (including without limitation to sell, charter and operate the Vessel); |
| (g) | they shall not, and shall procure that each other Relevant Person will not, create, assume or permit to exist any Security Interest (other than any Permitted Security Interest) of any kind upon any Leasing Document to which such Relevant Person is a party, and if applicable, the Vessel; |
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| (h) | they shall at their own cost and shall procure that each other Relevant Person will: |
| (i) | do all that such Relevant Person reasonably can to ensure that any Leasing Document to which such Relevant Person is a party validly creates the obligations and the Security Interests which such Relevant Person purports to create; and |
| (ii) | without limiting the generality of paragraph (i), promptly register, file, record or enroll any Leasing Document to which such Relevant Person is a party with any court or authority in all Relevant Jurisdictions, pay any stamp duty, registration or similar tax in all Relevant Jurisdictions in respect of any Leasing Document to which such Relevant Person is a party, give any notice or take any other step which, is or has become necessary or desirable for any such Leasing Document to be valid, enforceable or admissible in evidence or to ensure or protect the priority of any Security Interest which such Relevant Person creates; |
| (i) | they shall notify the Owners as soon as possible (but in any event no later than fifty nine (59) days prior to the expiry of the fixed period as per the Trafigura Charter), together with any evidence requested by the Owners, whether the Trafigura Charterer intends to and will (with irrevocable confirmation from the Trafigura Charterer) extend the charter period of the Trafigura Charter in accordance with the terms thereunder; |
| (j) | they shall, and shall procure that each other Relevant Person will (where applicable), notify the Owners as soon as they become aware of the occurrence of: |
| (i) | any default by either the Approved Sub-charterer or the Charterers of the terms of the Approved Sub-charter; |
| (ii) | an event of default or termination event howsoever called under the terms of any Approved Sub-charter entitling either the Charterers or the Approved Sub-charterer to terminate the Approved Sub-charter; |
| (iii) | breach of any Sanctions; or |
| (iv) | any Potential Termination Event or a Termination Event, |
and will keep the Owners fully up-to-date with all developments and the Charterers shall, if so requested by the Owners, provide any such certificate signed by at least one officer, confirming that there exists no Potential Termination Event or Termination Event;
| (k) | they shall, and shall procure that each other Relevant Person will, on the sixth month anniversary of the Commencement Date and at six-monthly intervals thereafter and otherwise upon the Owners’ and/or the Owners’ Financiers (if any) request (acting reasonably) from time to time and as soon as practicable after receiving such request, provide the Owners with any additional financial or other information relating: |
| (i) | to the Vessel (including, but not limited to the management, employment, condition, class records, location and pooling arrangement of the Vessel) and, to their best knowledge having made due enquiry, to the Trafigura Charterer; |
| (ii) | the terms and conditions of any sub-charter together with any other information relating to such sub-charter; and |
| (iii) | to any other matter (which include without limitation, to their best knowledge having made due enquiry, any other matters relating to the Trafigura Charterer) which may be reasonably requested by the Owners (or the Owners’ Financiers (if any)) at any time or which under the terms of the relevant Leasing Document may be sought from the person in possession of such information. |
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| (l) | without prejudice to Clause 46.1(t), comply, or procure compliance, and shall procure that each other Relevant Person will comply or procure compliance, with all laws or regulations relating to the Vessel and its construction, ownership, employment, operation, management and registration, including the ISM Code, the ISPS Code, all Environmental Laws and the laws of the Vessel’s registry and shall procure that the Technical Manager and the Commercial Manager and the Vessel to be in the possession of proper trading certificates and other vessel related documents and to comply with other relevant laws and regulations; |
| (m) | the Vessel shall be maintained in the highest standard and classed with the Approved Classification Society and shall be free of all overdue conditions, recommendations, qualifications and conditions; |
| (n) | they shall not and shall ensure that each of the Other Charterers and the Guarantor shall not enter into any form of merger, sub-division, amalgamation, demerger, reorganization, corporate reconstruction or change of ownership, or change of voting control, in the case of the Guarantor, unless it remains as the surviving entity after such merger, sub-division, amalgamation, demerger, reorganization, corporate reconstruction or change of ownership, or change of voting control and clause 11.14 of the Guarantee is complied with; |
| (o) | they will comply, and will procure that each other Relevant Person, each other member of the Group or, will use best endeavours to procure that, the Approved Sub-charterer will comply, with all Sanctions and all laws and regulations relating to such Relevant Person, the Vessel and its construction, ownership, employment, operation, management and registration, including the ISM Code, the ISPS Code (including the maintenance of an ISSC), all Environmental Laws, all Anti-Money Laundering Laws, Business Ethics Laws and the laws of the Vessel’s registry, and in particular, they shall effect and maintain a sanctions compliance policy which, inter alia, implements the recommendations of the Sanctions Advisory, to ensure compliance with all such laws and regulations implemented from time to time, including, without limitation they will, and will procure that (in the case of Approved Sub-charterer, use best endeavours to procure that) each other Relevant Person, each other member of the Group and the Approved Sub-charterer will: |
| (i) | conduct their activities in a manner consistent with US and UN sanctions, as applicable; |
| (ii) | have sufficient resources in place to ensure execution of and compliance with their own sanctions policies by their personnel, e.g., direct hires, contractors, and staff; |
| (iii) | ensure subsidiaries and affiliates comply with the relevant policies, as applicable; |
| (iv) | have relevant controls in place to monitor automatic identification system (AIS) transponders; |
| (v) | have controls in place to screen and assess onboarding or offloading cargo in areas they determine to present a high risk; |
| (vi) | have controls to assess authenticity of bills of lading, as necessary; and |
| (vii) | have controls in place consistent with the Sanctions Advisory; |
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| (p) | without limiting Clause 46.1(o), they will procure that: |
| (i) | the Vessel shall not be constructed, operated, employed, managed, used by or for the benefit of a Prohibited Person; |
| (ii) | the Vessel shall not be employed in trading with any Prohibited Person or in any manner contrary to Sanctions; |
| (iii) | notwithstanding any other provision of this paragraph (p), the Vessel shall not be permitted to call at any port in any Prohibited Country or any area or country where trading in such area or country would constitute or would be reasonably expected to constitute a breach of Sanctions; |
| (iv) | the Vessel shall not be traded in any manner which would trigger the operation of any sanctions limitation or exclusion clause (or similar) in the Insurances or in any manner which would result or would reasonably be expected to result in any Relevant Person or the Owners becoming a Prohibited Person; and |
| (v) | that each charterparty in respect of the Vessel shall contain, for the benefit of the Owners, language which gives effect to the provisions of Clause 46.1(p) as regards Sanctions and of this Clause and which permits refusal of employment or voyage orders if compliance would result in a breach of Sanctions and which prohibits trading to any Prohibited Country; |
| (vi) | it and any sub-charterer of the Vessel or the Approved Manager will cooperate and exchange all relevant data and information in a timely manner to facilitate compliance with any applicable Emission Scheme and enable each party to calculate the amount of Emission Allowances in respect of the Vessel that must be surrendered to the authorities of the applicable Emission Scheme for the Charter Period and that each relevant party will supply the relevant authority of such Emission Scheme with relevant mandating documents to surrender such allowances to ensure that the Charterers will be in compliance with all Environmental Laws; |
| (q) | they shall ensure that the Market Value of the Vessel will be tested at any of the following instances: |
| (i) | on or around the end of each calendar year starting from and including 31 December 2024 (each such date the “Market Value Test Date”) and the Charterers shall procure valuation reports issued by the Approved Valuers evidencing such Market Value applicable to a Market Value Test Date to be delivered to the Owners no later than 30 days after the Market Value Test Date; |
| (ii) | if, in the opinion of the Owners, any volatile market fluctuations occur that may affect the value of the Vessel or vessels of the similar type of the Vessel, at any time at the request of the Owners; |
| (iii) | at any time at the request of the Owners if the Owners have determined that the Market Value of the Vessel is likely to fall below an amount equal to 125% of the then applicable Owners’ Cost; and |
| (iv) | upon the occurrence of a Potential Termination Event or Termination Event, at any time at the request of the Owners, and in each case above, the Charterers shall bear the fees and expenses of the Approved Valuers arising in connection with conducting any such valuations or reimburse the same to the Owners (as the case may be). |
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| (r) | they shall notify the Owners immediately of: |
| (i) | as soon as they become aware, any Environmental Claim made against the Charterers or any sub-charter of the Vessel in connection with the Vessel or any Environmental Incident; |
| (ii) | arrest or detention of the Vessel; |
| (iii) | any exercise or purported exercise of any lien on that Vessel or its Earnings or any requisition of that Vessel for hire; |
| (iv) | any damage caused to or alteration of the Vessel for any reason whatsoever which results, or may be expected to result, in repairs on the Vessel which exceed $5,000,000; or |
| (v) | any casualty or occurrence as a result of which the Vessel has become or is, by the passing of time or otherwise, likely to become, a Major Casualty; |
| (s) | they shall not permit the sub-chartering of the Vessel other than pursuant to any Approved Sub-Charter provided that if: |
| (i) | any such Approved Sub-charter is terminated and/or rescinded; |
| (ii) | the Charterers comply with their obligations under Clause 46.1(aa)(iii); and |
| (iii) | with the consent of the Owners., |
then the Charterers shall be permitted to freely sub-charter the Vessel and as a condition of the Owners’ consent to the execution of any sub-charter, the Charterers shall:
| 1. | in case such sub-charter is a bareboat charter (irrespective of duration) or a time charter of a period exceeding or capable of exceeding twelve (12) months (taking into account any optional extension periods), assign all their rights and interests under such sub-charter and procure the sub-charterer of such sub-charter to give a written acknowledgment of such assignment and provide such documents as the Owners may reasonably require regarding the due execution of such sub-charter; and |
| 2. | in case such sub-charter is a bareboat charter (irrespective of duration), procure the sub-charterer of such sub-charter to execute a general assignment to assign their rights under the Insurances and Requisition Compensation in respect of the Vessel, in favour of the Owners, each in a form acceptable to the Owners; |
| (t) | they shall, and shall procure that each other Relevant Person will, comply with all applicable laws and regulations in respect of Sanctions, and in particular, the Charterers shall effect and maintain a sanctions compliance policy to ensure compliance with all such laws and regulations implemented from time to time; |
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| (u) | they shall, and shall procure that each other Relevant Person and their respective officers, directors and employees, will: |
| (i) | conduct its business in compliance with all Anti-Money Laundering Laws, Anti-Terrorism Financing Laws and/or Business Ethics Laws; |
| (ii) | maintain systems, controls, policies and procedures designed to promote and achieve ongoing compliance with Anti-Money Laundering Laws, Anti-Terrorism Financing Laws and/or Business Ethics Laws; |
| (iii) | in respect of the Charterers, not use, or permit or authorize any person to directly or indirectly use, the Opening Capital Balance for any purpose that would breach any Anti-Money Laundering Laws, Anti-Terrorism Financing Laws and/or Business Ethics Laws; |
| (iv) | not lend, invest, contribute or otherwise make available the Opening Capital Balance to or for any other person in a manner which would result in a violation of Anti-Money Laundering Laws, Anti-Terrorism Financing Laws and/or Business Ethics Laws. |
| (v) | they shall, and shall procure that that each other Relevant Person will, promptly notify the Owners and provide all information in relation to its business and operations which may be relevant for the purposes of ascertaining whether they are in compliance with all applicable laws and regulations relating to Sanctions, and in particular, the Charterers shall notify the Owners in writing immediately upon being aware that any of the Charterers’ shareholders, directors, officers or employees is a Prohibited Person or has otherwise become a target of Sanctions; |
| (w) | they shall not appoint or permit to be appointed any manager of the Vessel save for an Approved Manager on terms acceptable to the Owners and such Approved Manager has (prior to accepting its appointment entered into a Manager’s Undertaking); |
| (x) | if at any time; |
| (i) | the shares of the Guarantor cease to trade on the NASDAQ or Over the Counter (OTC); or |
| (ii) | pursuant to Clause 46.1(q), it is determined that the Market Value of the Vessel falls below the amount equivalent to one hundred and twenty five per cent (125%) of the then applicable Owners’ Costs (the “LTV Breach” and the said difference between the Market Value of the Vessel and one hundred and twenty five per cent (125)% of the then applicable Owners’ Costs shall be referred to as the “shortfall”), |
the Charterers shall, promptly and in any event no later than the date falling thirty (30) days from the Owners’ notice, at the Owners’ discretion, either:
| (A) | make payment in an amount such as to eliminate the shortfall which payment shall be deemed to be an advance payment of hire and credited against future instalment(s) of Fixed Charterhire (or part thereof) payable in inverse order of maturity; and/or |
| (B) | provide, or ensure that a third party has provided, additional Security Interests which, has a Market Value (in the case of a Security Interests over a vessel) or otherwise in the opinion of the Owners (in the case of Security Interests over any other asset) has a net realisable value at least equal to the shortfall and is acceptable to the Owners, and which is documented in such terms as the Owners may require; |
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| (y) | intentionally deleted; |
| (z) | save with the prior written consent of the Owners, they shall not, and shall procure that no other Relevant Person shall, agree or enter into any transaction, arrangement, document or do or omit to do anything which will have the effect of varying, amending, supplementing or waiving any term of the Trafigura Charter or any other Approved Sub-Charter; |
| (aa) | they shall ensure that: |
| (i) | all Earnings and any other amounts received by them in connection with the Vessel are paid into the Operating Account; |
| (ii) | all of their operating expenses in connection with the Vessel are paid from the Operating Account or via the monthly budget from the manager’s bank account which shall be credited from the Operating Account; and |
| (iii) | the credit balance in the Operating Account shall not at any time as from the Commencement Date, be less than $500,000. Provided that, the credit balance in the Operating Account to be maintained pursuant to this sub-paragraph (iii) shall be increased to $1,800,000 with effect on and from the earliest of the following dates upon occurrence of an event described in the relevant sub-paragraph below in relation to the Trafigura Charter or a Substitute Charter (as the Vessel may at the relevant time be sub-chartered thereunder): |
| (A) | in relation to Trafigura Charter, either: |
| (1) | the date on which the Trafigura Charter is terminated prior to the end of the relevant charter period; or |
| (2) | the date being one (1) month prior to the third anniversary (or, if such charter period extends beyond its third anniversary, the fourth anniversary) of the charter period commencement date of the Trafigura Charter (the “Notification Date”), in case the Trafigura Charterer does not exercise the optional extension of the Trafigura Charter and the Charterers do not enter into a Substitute Charter or provide evidence (to the satisfaction of the Owners) relating to the entry into, and validity of, such Substitute Charter by the Notification Date; or |
| (B) | in relation to a Substitute Charter, either: |
| (1) | the date on which such Substitute Charter is terminated prior to the end of the relevant charter period; or |
| (2) | the date being one (1) month prior to the expiry date of the fixed period under such Substitute Charter (in each case, a “New Notification Date”), in case the Charterers do not enter into a replacement Substitute Charter or provide evidence (to the satisfaction of the Owners) relating to the entry into, and validity of, such replacement Substitute Charter by the relevant New Notification Date, |
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in each case, such increased credit balance of $1,800,000 shall be maintained by the Charterers in the Operating Account until the Charterers (I) subsequently enter into a Substitute Charter or provide evidence (to the satisfaction of the Owners) relating to the entry into, and validity of, a Substitute Charter, and (II) the Vessel is delivered to, and accepted by the relevant sub-charterer in accordance with the terms of such Substitute Charter, whereupon the Charterers may request for the reinstatement of the $500,000 minimum credit balance requirement under sub-paragraph (iii) from the next immediate Payment Date;
| (bb) |
| (i) | they shall not: |
| (A) | purchase, cancel or redeem any of its share capital; |
| (B) | increase or reduce its authorised share capital; |
| (C) | issues any further shares; and |
they shall not, and shall procure that the Guarantor shall not, make or pay any dividend or other distribution (in cash or in kind) in respect of its issued shares (or any class of its shares including any preferred shares) following the occurrence of a Potential Termination Event or Termination Event;
| (cc) | the Vessel shall be registered under the Flag State at all times; |
| (dd) | they shall ensure that the Vessels to be maintained with all spare parts on board and on order and with all stores on board together with all records, logs, plans, operating manuals and drawings in relation to the Vessel or the Vessel’s operations and/or maintenance; and |
| (ee) | they shall, upon the request of the Owners and at the cost of the Charterers, on or before 31st July in each calendar year, supply or procure the supply to the Owners all information necessary in order for the Owners to comply with their or any Owners’ Financiers’ obligations under the Poseidon Principles in respect of the preceding year, including, without limitation, all ship fuel oil consumption data required to be collected and reported in accordance with Regulation 22A of Annex VI and any Statement of Compliance relating to the Vessel for the preceding calendar year and, for the avoidance of doubt, such information shall be “Confidential Information” for the purposes of Clause 56 - (Confidentiality) but the Charterers acknowledge that, in accordance with the Poseidon Principles, such information will form part of the information published regarding the Owners’ and/or Owners’ Financiers’ portfolio climate alignment. |
CLAUSE 47 - INSPECTION OF VESSEL
| 47.1 | Without prejudice to Clause 47.2 below, the Owners shall, after giving notice to the Charterers, be entitled to inspect or survey the Vessel or instruct a surveyor to carry out such survey on their behalf: |
| (a) | to ascertain the condition of the Vessel and satisfy themselves that the Vessel is being properly repaired and maintained; |
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| (b) | in dry-dock if the Charterers have not dry-docked the Vessel in accordance with Clause 10(g) (Periodical Dry-Docking); and |
| (c) | for any other reason they consider necessary, |
provided it does not unduly interfere with the operation of the Vessel.
| 47.2 | The Owners shall be entitled to exercise its rights of inspection or survey as described under Clause 47.1 once a year at the cost of the Charterers and at any other time at the cost of the Owners (and, except where inspection or survey is carried out pursuant to the following (a) or (b), without interference to the operation of the Vessel and in coordination with the Charterers), save that (a) upon the occurrence of a Termination Event or Potential Termination Event or the occurrence of any major insurance claims which exceeds the Major Casualty amount in respect of the Vessel, the Owners shall have the right to inspect or survey the Vessel or instruct a duly authorized surveyor to carry out such survey on their behalf at any time (and for the avoidance of doubt, more than once a year) without prior notice to, and at the cost of, the Charterers; and (b) the Owners shall have the right to inspect or survey the Vessel or instruct a duly authorized surveyor to carry out such survey on their behalf at any time prior to the Commencement Date. The Charterers shall procure that the Owners can fully exercise such rights of inspection and survey. |
| 47.3 | The Charterers shall also permit the Owners to inspect the Vessel’s log books whenever requested and shall whenever required by the Owners furnish them with full information regarding any casualties or other accidents or damage to the Vessel. |
| 47.4 | Except as otherwise provided under Clause 47.2, the documented costs and fees for any inspection and survey permitted under this Clause shall be paid by the Charterers. |
| 47.5 | All time used in respect of inspection, survey or repairs pursuant to this Clause shall be for the Charterers’ account and form part of the Charter Period. |
CLAUSE 48 - INTENTIONALLY DELETED
CLAUSE 49 - TERMINATION EVENTS
| 49.1 | The Owners and the Charterers hereby agree that any of the following events shall constitute a Termination Event: |
| (a) | any Relevant Person fails to make any payment on the due date or on demand in accordance with the terms of any Leasing Document to which it is a party, unless such non-payment is caused by administrative or technical error and the relevant payment is made within three (3) Business Days (in the case of payment of Charterhire) or five (5) Business Days (in the case of any other payment, other than Charterhire) of the relevant due date; |
| (b) | the Charterers breach or omit to observe or perform any of their undertakings in Clause 46.1 (a), (f), (g), (j)(iii), (l), (p), (t), (u), (v), (x) or (aa)(iii) or the Guarantor breaches or omits to observe or perform any of its undertakings or the financial covenants contained under clause 11.14 (Financial covenants) of the Guarantee; |
| (c) | the Charterers fail to obtain and/or maintain the Insurances required under Clause 39 - (Insurance) in accordance with the provisions thereof (or any insurer in respect of such Insurances cancels the Insurances or disclaims liability with respect thereto); |
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| (d) | any Relevant Person commits any other breach of, or omits to observe or perform, any of their other obligations or undertakings in this Charter or any Leasing Document (other than a breach referred to in paragraphs (a), (b) and (c) above) unless such breach or omission is in the opinion of the Owners, remediable and the Relevant Person remedies (or cause to remedy) such breach or omission to the satisfaction of the Owners within ten (10) Business Days of the occurrence of such breach or omission; |
| (e) | any representation or warranty made by any Relevant Person in or pursuant to any Leasing Document to which it is a party proves to be untrue or misleading when it is made; |
| (f) | any of the following occurs in relation to any Financial Indebtedness of any Relevant Person or any member of the Group: |
| (i) | any Financial Indebtedness of such entity is not paid when due or, if so payable, on demand after any applicable grace period has expired; |
| (ii) | any Financial Indebtedness of such entity becomes due and payable, or capable of being declared due and payable, prior to its stated maturity date as a consequence of any event of default and not as a consequence of the exercise of any voluntary right of prepayment; |
| (iii) | a lease, hire purchase agreement or charter creating any Financial Indebtedness of such entity is terminated by the lessor or owner as a consequence of any termination event or event of default (howsoever defined); or |
| (iv) | any overdraft, loan, note issuance, acceptance credit, letter of credit, guarantee, foreign exchange or other facility, or any swap or other derivative contract or transaction, relating to any Financial Indebtedness of such entity ceases to be available or becomes capable of being terminated or declared due and payable or cash cover is required or becomes capable of being required, as a result of any termination event or event of default (howsoever defined); |
provided that no Termination Event will occur under this paragraph (f) in respect of (A) the Guarantor if the aggregate amount of Financial Indebtedness falling within sub-paragraphs (i) to (iv) above is less than US$10,000,000 (or its equivalent in any other currency or currencies) or (B) a Relevant Person (other than the Guarantor) if the aggregate amount of Financial Indebtedness falling within sub-paragraphs (i) to (iv) above is less than US$1,000,000 (or its equivalent in any other currency or currencies) for such Relevant Person;
| (g) | any of the following occurs in relation to any Relevant Person or any member of the Group: |
| (i) | such entity becomes, in the opinion of the Owners, unable to pay their debts as they fall due; |
| (ii) | in respect of such entity, the value of its assets is less than its liabilities (taking into account contingent liabilities); |
| (iii) | any administrative or other receiver is appointed over all or a substantial part of the assets of such entity unless as part of a solvent reorganisation which has been approved by the Owners; |
| (iv) | such entity makes any formal declaration of bankruptcy or any formal statement to the effect that they are insolvent or likely to become insolvent, or a winding up or administration order is made in relation to such entity, or the members or directors of such entity pass a resolution to the effect that they should be wound up, placed in administration or cease to carry on business; |
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| (v) | a petition is presented in any Relevant Jurisdiction for the winding up or administration, or the appointment of a provisional liquidator, of such entity; |
| (vi) | such entity petitions a court, or presents any proposal for, any form of judicial or non-judicial suspension or deferral of payments, reorganisation of their debt (or certain of their debt) or arrangement with all or a substantial proportion (by number or value) of their creditors or of any class of them or with a minority proportion (by number or value) of their creditors or of any class of them which would reasonably likely to have a Material Adverse Effect or any such suspension or deferral of payments, reorganisation or arrangement is effected by court order, contract or otherwise; |
| (vii) | any meeting of the members or directors of such entity is summoned for the purpose of considering a resolution or proposal to authorise or take any action of a type described in paragraph (iii), (iv), (v) or (vi); |
| (viii) | in any jurisdiction, any event occurs or any procedure is commenced which, in the opinion of the Owners, is similar to any of the foregoing referred to in (ii) to and including (vii) above; or |
| (ix) | any expropriation, attachment, sequestration, distress or execution or any analogous process in any jurisdiction which affects any asset or assets of such entity which is not discharged within fourteen (14) days; |
| (h) | a Relevant Person suspends or ceases or threatens to suspend or cease carrying on its business; |
| (i) | any consent, approval, authorisation, license or permit necessary to enable the Charterers or the Approved Sub-charterer to operate or charter the Vessel or any Relevant Person to comply with any provision of Leasing Document (as the case may be) and/or to ensure that the obligations of any Relevant Person or the Approved Sub-charterer under any Leasing Document or the Approved Sub-charter (as applicable) are legal, valid, binding or enforceable (I) is not granted, (II) expires without being renewed, (III) is revoked or becomes liable to revocation or (IV) any condition of such a consent, approval, authorisation, license or permit is not fulfilled provided that, in the case of an Approved Sub-charter, this shall not constitute a “Termination Event” under this Clause 49.1(i) if (i) such Approved Sub-charter is replaced or remedied in the time required under and in accordance with Clauses 46.1(aa)(iii)(A) or 46.1(aa)(iii)(B) or (ii) the Charterers comply with their obligations under Clause 46.1(aa)(iii); |
| (j) | any event or circumstance occurs which (in the opinion of the Owners) has or is reasonably likely to have a Material Adverse Effect; |
| (k) | this Charter or any Leasing Document or any Security Interest created by a Leasing Document: |
| (i) | is cancelled, terminated, rescinded or suspended or otherwise ceases to remain in full force and effect for any reason or no longer constitutes valid, binding and enforceable obligations of any party to that document for any reason whatsoever; or |
| (ii) | is amended or varied without the prior written consent of the Owners; |
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| (l) | a Relevant Person or an Approved Sub-charterer rescinds or purports to rescind or repudiates or purports to repudiate a Leasing Document or an Approved Sub-charter (in the case of an Approved Sub-charter, (i) this is not replaced or remedied in the time required under and otherwise in accordance with Clauses 46.1(aa)(iii)(A) or 46.1(aa)(iii)(B) and (ii) the Charterers breach or omit to observe or perform their obligations under Clause 46.1(aa)(iii)); |
| (m) | the Security Interest constituted by any Leasing Document is in any way imperiled or in jeopardy; |
| (n) | any Termination Event (as defined in each Other Charter) occurs under such Other Charter; |
| (o) | the occurrence of any of the following events; |
| (i) | an event of default or termination event howsoever called under the terms of the Approved Sub-charter entitling either the Approved Sub-charterer or the Charterers to terminate the Approved Sub-charter and the Charterers breach or omit to observe or perform their obligations under Clause 46.1(aa)(iii); |
| (ii) | if any Relevant Person or the Approved Sub-charterer: |
| (A) | is or becomes a Prohibited Person; |
| (B) | is owned or controlled by or acting directly or indirectly on behalf of or for the benefit of, a Prohibited Person; |
| (C) | owns or controls a Prohibited Person; |
| (D) | has a Prohibited Person serving as a director, officer or employee; |
| (p) | Delivery does not occur on or prior to the Cancelling Date; |
| (q) | there is a merger, amalgamation, demerger or corporate reconstruction of any of the Charterers, the Other Charterers and the Guarantor without the Owners’ prior written consent; |
| (r) |
| (i) | the shares of the Guarantor cease to trade on the NASDAQ or Over the Counter (OTC), unless the Charterers comply with their obligations under Clause 46.1(x); or |
| (ii) | the Guarantor ceases being an entity reporting with the U.S. Securities and Exchange Commission; |
| (s) | there is a change in control of ownership or control of the Charterers or there is a change of voting control in the case of the Guarantor as set out in Clause 45 - (Representations and Warranties) unless prior written consent from the Owners has been obtained prior to such change; |
| (t) | there is any occurrence of any litigation, arbitration or administrative proceedings or investigations involving a Relevant Person which has been commenced or taken and has been adversely determined and which would have or is reasonably likely to have a Material Adverse Effect; |
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| (u) | any lease, hire purchase agreement, charter or any other financing arrangement in respect of any Associated Vessel (other than the Vessel and the Other Vessels) is terminated, cancelled or repudiated by the relevant lessor or owner or financier as a consequence of any termination event or event of default (howsoever defined therein); |
| (v) | save with the Owners’ consent, the “Purchase Option” under Existing Other Charter A is not exercised and completed on or before 31 January 2023. |
| 49.2 | Notwithstanding and without prejudice to Clause 33 - (Cancellation), upon the occurrence of any Termination Event, the Owners may issue a written notice to the Charterers terminating this leasing of the Vessel under this Charter and demanding payment of the Termination Sum (the “Termination Notice”), whereupon the Charterers shall be obliged to pay the Termination Sum to the Owners on the date specified by the Owners in their sole discretion in the Termination Notice (the “Termination Date”). |
| 49.3 | For the avoidance of doubt, notwithstanding any action taken by the Owners following a Termination Event, the Charterers shall remain liable for the outstanding obligations on their part to be performed under this Charter including but not limited to all insurance, operational and maintenance covenants until such time as the Vessel is redelivered to the Owners in accordance with Clause 41.6, or the title is transferred to the Charterers in accordance with Clause 41.3 the Vessel is sold in accordance with 41.10 or the Owners exercise the option set out in Clause 41.11. |
| 49.4 | Without limiting the generality of the foregoing or any other rights of the Owners or the Charterers, upon the occurrence of a Termination Event, the Charterers agree and acknowledge that the Owners shall have the sole and exclusive right and power to (i) settle, compromise, compound, adjust or defend any action, suit or proceeding relating to or pertaining to the Vessel and this Charter, (ii) make proof of loss, appear in and prosecute any action arising from any policy or policies of insurance maintained pursuant to this Charter, and settle, adjust or compromise any claims for loss, damage or destruction under, or take any other action in respect of, any such policy or policies and/or change or appoint a new manager for the Vessel and the appointment of any originally appointed manager may be terminated immediately without any recourse to the Owners. |
| 49.5 | Each Termination Event shall either be a breach of condition by the Charterers where it involves a breach of this Charter or any of the other Leasing Document by the Charterers or shall otherwise be an agreed terminating event, the occurrence of which gives rise to a right of the Owners to terminate the leasing of the Vessel under this Charter and to exercise its rights under this clause, provided that, in case of a breach of contract claim, the claim amount of the Owners should not exceed the applicable Termination Sum as at the relevant time. |
CLAUSE 50 - MANDATORY SALE
| 50.1 | If it becomes unlawful in any applicable jurisdiction for the Owners to perform any of their obligations as contemplated by this Charter or the MOA to perform their obligations under the Financial Instruments, the Owners shall notify the Charterers of this event and the Charterers shall be required to pay the Mandatory Sale Price to the Owners within thirty (30) days following such notice by the Owners or, if earlier, the date specified by the Owners in the notice delivered to the Charterers (being no earlier than the last day of any applicable grace period permitted by law), and this Charter shall terminate in accordance with the procedures set out in Clause 50.4. |
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| 50.2 | If it is or has become: |
| (a) | unlawful or prohibited, whether as a result of the introduction of a new law, an amendment to an existing law or a change in the manner in which an existing law is or will be interpreted or applied; or |
| (b) | contrary to, or inconsistent with, any regulation, |
for any Relevant Person to maintain or give effect to any of its obligations under this Charter or any of the other Leasing Documents to which it is a party in the manner it is contemplated under such Leasing Document or any of the obligations of such Relevant Person under any Leasing Document to which it is a party are not or cease to be legal, valid, binding and enforceable, the Charterers shall be required to pay the Mandatory Sale Price to the Owners within thirty (30) days following such occurrence or, if earlier, a date specified by the Owners (being no earlier than the last day of any applicable grace period permitted by law), and this Charter shall terminate in accordance with the procedures set out in Clause 50.4.
| 50.3 | If there is a breach of 46.1(j)(iii), 46.1(t), 46.1(u) or 46.1(v) in any such case on the basis that reference to “the People’s Republic of China” applies to the definition of “Prohibited Person” or paragraph (e) of the definition of “Sanctions Authority” applies to the definition of “Sanctions Authority”, the Charterers shall be required to pay the Mandatory Sale Price to the Owners within forty five (45) days following such occurrence or, if earlier, a date specified by the Owners (being no earlier than the last day of any applicable grace period permitted by law or the relevant official institution, agency or the government of the People’s Republic of China) and this Charter shall terminate in accordance with the procedures set out in Clause 50.4. |
| 50.4 | If the Mandatory Sale Price becomes payable in accordance with Clause 36.13 or Clause 50.1 or Clause 50.2 or Clause 50.3 or Clause 54.5, the same shall (in each such case) be payable in consideration of the purchase and transfer of the legal and beneficial title of the Vessel pursuant to Clause 52 - (Sale of the Vessel). The day on which the Mandatory Sale Price is paid pursuant to Clause 36.13 or Clause 50.1, Clause 50.2 or Clause 50.3 or Clause 54.5 is a “Mandatory Sale Date” and such transfer of Vessel provided therein is a “Mandatory Sale”. |
CLAUSE 51 - PURCHASE OPTION
| 51.1 | The Charterers shall have the option (the “Purchase Option”), on or after the first (1st) anniversary of the Commencement Date, to purchase the Vessel on any Purchase Option Date (as hereinafter defined) specified in the Purchase Option Notice (as hereinafter defined) at the applicable Purchase Option Price, subject to the other terms of this Clause 51 - (Purchase Option). |
| 51.2 | The Purchase Option shall be exercisable only: |
| (a) | upon the Charterers providing not less than sixty (60) days’ prior written notice (the “Purchase Option Notice”) to purchase the Vessel; |
| (b) | on any Payment Date which falls on or after the first (1st) anniversary of the Commencement Date or on the last day of the Charter Period (as the case may be) (unless otherwise agreed by the Owners) (the “Purchase Option Date”); and |
| (c) | in the absence of the occurrence of a Potential Termination Event or a Termination Event which is continuing on or prior to either the date of the Purchase Option Notice or the Purchase Option Date. |
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| 51.3 | The Purchase Option Notice shall be signed by a duly authorised officer or attorney of the Charterers and, once delivered to the Owners, will be irrevocable and the Charterers shall be bound to pay to the Owners the Purchase Option Price on the Purchase Option Date. |
| 51.4 | The sale of the Vessel pursuant to the Charterers’ exercise of the Purchase Option shall be conducted in accordance with Clause 52 - (Sale of the Vessel). |
| 51.5 | If the Charterers do not exercise the Purchase Option on or before the expiration of the Charter Period: |
| (a) | the Charterers shall pay the Option Premium to the Owners on the last day of the Charter Period; |
| (b) | the Charterers shall on the last day of the Charter Period re-deliver the Vessel to the Owners in accordance with Clause 41.6 and shall ensure that they have fulfilled their obligations under this Charter and made payment of the Option Premium, all Charterhire and all other moneys pursuant to the terms of this Charter; and |
| (c) | the Owners shall be entitled (at Owners’ sole discretion) to sell or operate the Vessel as they may require and may create whatsoever interests thereon, including without limitation sale and purchase agreements, charterparties or any other form of employment contracts. |
| 51.6 | For the avoidance of doubt, the Charterers agree that should the Option Premium not be paid or not be paid in full on its due date for payment under the terms of this Charter, any net proceeds deriving from the sale or operation of the Vessel by the Owners shall not be applied towards reduction of the unpaid Option Premium, Charterhire or any other moneys due pursuant to the terms of this Charter. |
CLAUSE 52 - SALE OF THE VESSEL
| 52.1 | The sale of the legal and beneficial interest and title in the Vessel pursuant to the Charterers’ payment of the Termination Sum under Clause 41 - (Termination, Redelivery and Total Loss), the Charterers’ exercise of the Charterers’ Purchase Option under Clause 51 - (Purchase Option) or the completion of the Mandatory Sale under Clause 50 - (Mandatory Sale) shall be on an “as is where is” basis and subject to the following terms and conditions: |
| (a) | no condition, warranty or representation of any kind is or has been given by or on behalf of the Owners in respect of the Vessel or any part thereof, and accordingly the Charterers confirm that they have not, in entering into this Charter, relied on any condition, warranty or representation by the Owners or any person on the Owners’ behalf, express or implied, whether arising by law or otherwise in relation to the Vessel or any part thereof, including, without limitation, warranties or representations as to the description, suitability, quality, merchantability, fitness for any purpose, value, state, condition, appearance, safety, durability, design or operation of any kind or nature of the Vessel or any part thereof, and the benefit of any such condition, warranty or representation by the Owners is hereby irrevocably and unconditionally waived by the Charterers to the extent permissible under applicable law; |
| (b) | the Charterers hereby also waive any rights which they may have in tort in respect of any of the matters referred to under paragraph (a) above and irrevocably agree that the Owners shall have no greater liability in tort in respect of any such matter than they would have in contract after taking account of all of the foregoing exclusions. No third party making any representation or warranty relating to the Vessel or any part thereof is the agent of the Owners nor has any such third party authority to bind the Owners thereby. Notwithstanding anything contained above, nothing contained herein is intended to obviate, remove or waive any rights or warranties or other claims relating thereto which the Charterers (or their nominee) or the Owners may have against the manufacturer or supplier of the Vessel or any third party; |
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| (c) | the Vessel shall be free from any registered mortgages incurred by the Owners; |
| (d) | the Purchase Option Price or the Termination Sum or the Mandatory Sale Price shall be paid by (or on behalf of) the Charterers to the Owners on the Purchase Option Date or the Termination Date or the Mandatory Sale Date (as the case may be) together with unpaid amounts of Charterhire and other moneys owing by or accrued or due from the Charterers under this Charter on or prior to the Purchase Option Date or the Termination Date or the Mandatory Sale Date (as the case may be) which remain unpaid; and |
| (e) | concurrently with the Owners receiving irrevocable payment of the Purchase Option Price or, as the case may be, the applicable Termination Sum or the applicable Mandatory Sale Price and all other moneys payable under this Charter in full pursuant to the terms of this Charter, the Owners shall (save in the event of Total Loss) (at the Charterer’s cost) transfer the legal and beneficial ownership of the Vessel on an “as is where is” basis to the Charterers or their nominees and shall (at the Charterers’ cost) execute a bill of sale and a protocol of delivery and acceptance evidencing the same and any other document strictly necessary to transfer the title of the Vessel to the Charterers or their nominees (and to the extent required for such purposes, the Vessel shall be deemed first to have been redelivered to the Owners), provided that the Owners shall not be obliged to transfer the legal and beneficial interest in the Vessel to the Charterers in any event unless the Owners are satisfied that no Termination Event has occurred and is continuing and all obligations, duties, liabilities and indemnities of the Charterers under the Leasing Documents have been fully performed and (if applicable) paid. |
CLAUSE 53 - INDEMNITIES
| 53.1 | The Charterers shall indemnify the Owners on their demand against all documented claims, expenses, liabilities, losses, fees (including but not limited to any vessel registration and tonnage fees or any tax incurred by the Owners as a result of the operation and/or trading of the Vessel) suffered or incurred by or imposed on the Owners arising from this Charter and any Leasing Document, including but not limited to (i) in connection with delivery, possession, performance, control, registration, repair, survey, insurance, maintenance, manufacture, purchase, ownership and operation of the Vessel by the Owners, (ii) costs related to the prevention or release of liens or detention of or requisition, use, operation or redelivery, sale or disposal of the Vessel or any part of it and (iii) enforcing the Owners’ rights under this Charter or any Leasing Document, in each case of paragraphs (i) to (iii), whether prior to, during or after termination of the leasing of this Charter and whether or not the Vessel is in the possession or the control of the Charterers or otherwise. Without prejudice to its generality, this Clause covers any claims, expenses, liabilities and losses which arise, or are asserted, under or in connection with any law relating to safety at sea, the ISM Code, the ISPS Code, the MARPOL Protocol, any Environmental Law, any Sanctions or any Anti- Money Laundering Laws, Anti-Terrorism Financing Laws or Business Ethics Laws. |
| 53.2 | The Charterers agree to indemnify the Owners against all consequences or liabilities arising from the Master, officers or agents signing Bills of Lading or other documents. |
| 53.3 | In consideration of the Charterers requesting the Other Owners to charter the Other Vessels to the Other Charterers under Existing Other Charter A and the Other Charters, the Charterers hereby irrevocably and unconditionally undertake to pay immediately on demand from the Other Owners such amounts in respect of all claims, expenses, liabilities, losses, fees of every kind and nature and all other moneys due, owing and/or payable the Other Owners under or in connection with Existing Other Charter A and the Other Charters, and to indemnify and hold the Other Owners harmless against all such moneys, costs, fees and expenses. |
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| 53.4 | All rights which the Charterers have at any time (whether in respect of this Charter or any other transaction) against the Other Charterers or any Relevant Person shall be fully subordinated to the rights of the Owners under the Leasing Documents and until the end of this Charter and unless the Owners otherwise direct, the Charterers shall not exercise any rights which it may have (whether in respect of this Charter or any other transaction) by reason of performance by it of its obligations under the Leasing Documents or by reason of any amount becoming payable, or liability arising, under this Clause: |
| (a) | to be indemnified by the Other Charterers or such Relevant Person; |
| (b) | to claim any contribution from any third party providing security for, or any other guarantor of, the Other Charterers’ or such Relevant Person’s obligations under the Leasing Documents; |
| (c) | to take any benefit (in whole or in part and whether by way of subrogation or otherwise) of any rights of the Other Charterers or such Relevant Person under the Leasing Documents or of any other guarantee or security taken pursuant to, or in connection with, the Leasing Documents by any of the aforesaid parties; |
| (d) | to bring legal or other proceedings for an order requiring the Other Charterers or such Relevant Person to make any payment, or perform any obligation, in respect of any Leasing Document; |
| (e) | to exercise any right of set-off against the Other Charterers or such Relevant Person; and/or |
| (f) | to claim or prove as a creditor of the Other Charterers or such Relevant Person, |
| (g) | and if the Charterers receive any benefit, payment or distribution in relation to such rights it shall hold that benefit, payment or distribution to the extent necessary to enable all amounts which may be or become payable to the Owners or the Other Owners by the Other Charterers or such Relevant Person under or in connection with the Leasing Documents to be repaid in full on trust for the Owners or the Other Owners and shall promptly pay or transfer the same to the Owners or the Other Owners as may be directed by the Owners. |
| 53.5 | The Charterers hereby irrevocably agree to indemnify and hold harmless the Owners against any claim, expense, liability or loss reasonably incurred by the Owners in liquidating or employing deposits from the Owners’ Financiers or third parties to fund the acquisition of the Vessel pursuant to the MOA. |
| 53.6 | Notwithstanding anything to the contrary herein (but subject and without prejudice to Clause 33 - (Cancellation) ) and without prejudice to any right to damages or other claim which the Charterers may have at any time against the Owners under this Charter, the indemnities provided by the Charterers in favour of the Owners shall continue in full force and effect notwithstanding any breach of the terms of this Charter or termination of this Charter pursuant to the terms hereof or termination of this Charter by the Owners. |
| 53.7 | The obligations of the Charterers under this Clause 53 - (Indemnities) and in respect of any Security Interest created pursuant to the Security Documents will not be affected or discharged by an act, omission, matter or thing which would reduce, release or prejudice any of its obligations under this Clause 53 - or in respect of any Security Interest created pursuant to the Security Documents (without limitation and whether or not known to it or any Relevant Person) including: |
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| (a) | any time, waiver or consent granted to, or composition with, any Relevant Person or other person; |
| (b) | the release of any other Relevant Person or any other person under the terms of any composition or arrangement with any creditor of a Relevant Person or any of its affiliates; |
| (c) | the taking, variation, compromise, exchange, renewal or release of, or refusal or neglect to perfect or delay in perfecting, or refusal or neglect to take up or enforce, or delay in taking or enforcing any rights against, or security over assets of, any Relevant Person or other person or any non-presentation or non-observance of any formality or other requirement in respect of any instrument or any failure to realise the full value of any security; |
| (d) | any incapacity or lack of power, authority or legal personality of or dissolution or change in the members or status of a Relevant Person or any other person; |
| (e) | any amendment, novation, supplement, extension, restatement (however fundamental and whether or not more onerous) or replacement of any Leasing Document or any other document or security; |
| (f) | any unenforceability, illegality or invalidity of any obligation of any person under any Security Document or any other document or security; or |
| (g) | any insolvency or similar proceedings. |
CLAUSE 54 - NO SET-OFF OR TAX DEDUCTION
| 54.1 | All Charterhire and any other payment made from the Charterers to enable the Owners to pay all amounts under a Leasing Document shall be paid punctually and: |
| (a) | without any form of set-off, cross-claim, condition or counterclaim; |
| (b) | made free and clear of all present and future taxes, levies, duties or deductions of any nature whatsoever, whether levied now or in the future, unless required by law; and |
| (c) | net of any bank charges or bank fees. |
| 54.2 | Without prejudice to Clause 54.1 (No Set-off or Tax Deduction), if the Owners are required by law to make a tax deduction from any payment: |
| (a) | the Owners shall notify the Charterers as soon as they become aware of the requirement; and |
| (b) | the amount due in respect of the payment shall be increased by the amount necessary to ensure that the Owners receive and retain (free from any liability relating to the tax deduction) a net amount which, after the tax deduction, is equal to the full amount which they would otherwise have received. |
| 54.3 | The Charterers shall (within three (3) Business Days of demand by Owners) pay to the Owners an amount equal to the loss, liability or cost which the Owners determine will be or has been (directly or indirectly) suffered for or on account of tax by the Owners in respect of a Leasing Document. |
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| 54.4 | Clause 54.3 shall not apply: |
| (a) | with respect to any tax assessed on the Owners under the law of the jurisdiction in which the Owners are incorporated or, if different, the jurisdiction (or jurisdictions) in which the Owners are treated as resident for tax purposes if that tax is imposed on or calculated by reference to the net income received or receivable (but not any sum deemed to be received or receivable) by the Owners; or |
| (b) | to the extent a loss, liability or cost is compensated for by an increased payment under Clauses 55.2 or 55.3. |
| 54.5 | Notwithstanding any other provision to this Charter, if any deduction or withholding or other tax is or will be required to be made by the Charterers or the Owners in respect of a payment to the Owners as a result of the Tax Changes, the Owners and the Charterers shall use reasonable endeavours to mitigate the effect of the Tax Changes and have the right to transfer their interest in the Vessel (and this Charter) to any person nominated by the Owners and all costs in relation to such mitigation or transfer shall be for the account of the Charterers. Provided that if after the Owners and the Charterers having exercised reasonable endeavours to mitigate the effect of the Tax Changes (at the cost of the Charterers) following notification from the Owners to the Charterers regarding the occurrence of the Tax Changes such Tax Changes continue to have the same effect, the Charterers shall have the option to pay the Mandatory Sale Price to the Owners within thirty (30) days following such notice by the Owners, and this Charter shall terminate in accordance with the procedures set out in Clause 50.4. |
| 54.6 | If the Charterers compensate the Owners by an increased payment pursuant to Clause 55.2 or 55.3 and the Owners determine that they have obtained and utilized a tax credit attributable to this increased payment, the Owners shall reimburse the Charterers that increased payment (or part thereof if the tax credit is attributable to only part of such increased payment). |
CLAUSE 55 - INCREASED COSTS
| 55.1 | This Clause 55 - (Increased Costs) applies if the Owners notify the Charterers that they (or their financiers) consider that as a result of: |
| (a) | the introduction or alteration after the date of this Charter of a law or an alteration after the date of this Charter in the manner in which a law is interpreted or applied (excluding any effect which relates to the application to payments under this Charter of a tax on the Owners’ overall net income); or |
| (b) | complying with any regulation (including any which relates to capital adequacy or liquidity controls or which affects the manner in which the Owners allocates capital resources to their obligations under this Charter) which is introduced, or altered, or the interpretation or application of which is altered, after the date of this Charter, |
the Owners or a parent company of them (if any) has incurred or will incur an “increased cost”.
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| 55.2 | In this Clause 55 - (Increased Costs), “increased cost” means, in relation to the Owners: |
| (a) | an additional or increased cost incurred as a result of, or in connection with, the Owners or the Owners’ parent company or the Owners’ Financiers (if any) having entered into, or being a party to, this Charter, of funding or financing the acquisition of the Vessel pursuant to the MOA or performing their obligations under this Charter; |
| (b) | a reduction in the amount of any payment to the Owners under this Charter or in the effective return which such a payment represents to the Owners (if any) on their capital; or |
| (c) | an additional or increased cost of funds relating to the acquisition of the Vessel pursuant to the MOA, |
and for the purposes of this Clause 55.2 the Owners may in good faith allocate or spread costs and/or losses among their assets and liabilities (or any class of their assets and liabilities) on such basis as they consider appropriate.
| 55.3 | Subject to the terms of Clause 55.1, the Charterers shall pay to the Owners, upon receipt of the Owners’ demand and any evidence thereto (where available to the Owners), the amounts which the Owners from time to time notify the Charterers to be necessary to compensate the Owners for the increased cost. |
| 55.4 | If any sum due from the Charterers to the Owners under this Charter or any other Leasing Document or under any order or judgment relating thereto has to be converted from the currency in which this Charter or such Leasing Document provided for the sum to be paid (the “Contractual Currency”) into another currency (the “Payment Currency”) for the purpose of: |
| (a) | making or lodging any claim or proof against the Charterers, whether in their liquidation, any arrangement involving them or otherwise; or |
| (b) | obtaining an order or judgment from any court or other tribunal; or |
| (c) | enforcing any such order or judgment; |
the Charterers shall indemnify the Owners against the loss arising when the amount of the payment actually received by the Owners is converted at the available rate of exchange into the Contractual Currency.
In this Clause 55.4, the “available rate of exchange” means the rate at which the Owners are able at the opening of business (Beijing time) on the Business Day after it receives the sum concerned to purchase the Contractual Currency with the Payment Currency.
CLAUSE 56 - CONFIDENTIALITY
| 56.1 | The Parties agree to keep the terms and conditions of this Charter and any other Leasing Documents (the “Confidential Information”) strictly confidential, provided that a Party may disclose Confidential Information in the following cases: |
| (a) | it is already known to the public or becomes available to the public other than through the act or omission of the disclosing Party; |
| (b) | it is required to be disclosed under the applicable laws of any Relevant Jurisdiction, Stock Market regulation, the US Securities and Exchange Commission’s rules or by a governmental order, decree, regulation or rule (provided that the disclosing Party shall give written notice of such required disclosure to the other Party prior to the disclosure); |
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| (c) | in filings with a court or arbitral body in proceedings in which the Confidential Information is relevant and in discovery arising out of such proceedings; |
| (d) | to (or through) whom a Party assigns or transfers (or may potentially assign or transfer) all or any of its rights and/or obligations under one or more Leasing Document (as permitted by the terms thereof), provided that such person receiving Confidential Information shall undertake that it would not disclose Confidential Information to any other party save for circumstances arising which are similar to those described under this Clause or such other circumstances as may be permitted by all Parties; |
| (e) | to any permitted sub-charterer of the Vessel provided that such person receiving Confidential Information shall undertake that it would not disclose Confidential Information to any other party save for circumstances arising which are similar to those described under this Clause or such other circumstances as may be permitted by all Parties; |
| (f) | to any of the following persons on a need to know basis: |
| (i) | a shareholder or an Affiliate of either Party or a party referred to in either paragraph (d) or (e) (including the employees, officers and directors thereof); |
| (ii) | professional advisers retained by a disclosing party; or |
| (iii) | persons advising on, providing or considering the provision of financing to the disclosing party or an Affiliate, |
provided that the disclosing party shall exercise due diligence to ensure that no such person shall disclose Confidential Information to any other party save for circumstances arising which are similar to those described under this Clause or such other circumstances as may be permitted by all Parties;
| (g) | with the prior written consent of all Parties; or |
| (h) | to any person which is a classification society or other entity which the Owners or the Owners’ Financiers have engaged to make the calculations necessary to enable the Owners and/or the Owners’ Financiers to comply with their reporting obligations under the Poseidon Principles. |
CLAUSE 57 - RIGHTS OF THIRD PARTIES
No term of this Charter is enforceable under the Contracts (Rights of Third Parties) Act 1999 by a person who is not party to this Charter, save that any of the Other Owners may rely on the rights conferred on them under Clause 53.3.
CLAUSE 58 - PARTIAL INVALIDITY
If, at any time, any provision of a Leasing Document is or becomes illegal, invalid or unenforceable in any respect under any law of any jurisdiction, neither the legality, validity or enforceability of the remaining provisions under the law of that jurisdiction nor the legality, validity or enforceability of such provision under the law of any other jurisdiction will in any way be affected or impaired.
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CLAUSE 59 - SETTLEMENT OR DISCHARGE CONDITIONAL
| 59.1 | Any settlement or discharge under any Leasing Document between the Owners and any Relevant Person shall be conditional upon no security or payment to the Owners by any Relevant Person or any other person being set aside, adjusted or ordered to be repaid, whether under any insolvency law or otherwise. |
| 59.2 | If the Owners consider that an amount paid or discharged by, or on behalf of, a Relevant Person or by any other person in purported payment or discharge of an obligation of that Relevant Person to the Owners under the Leasing Documents is capable of being avoided or otherwise set aside on the liquidation or administration of that Relevant Person or otherwise, then that amount shall not be considered to have been unconditionally and irrevocably paid or discharged for the purposes of the Leasing Documents. |
CLAUSE 60 - IMMUNITY
The Charterers waive any rights of sovereign immunity which they or any of their properties may enjoy in any jurisdiction and subjects itself to civil and commercial law with respect to their obligations under this Charter or any other Leasing Document.
CLAUSE 61 - COUNTERPARTIES
This Charter and each other Leasing Document may be executed in any number of counterparts, and this has the same effect as if the signatures on the counterparts were on a single copy of this Charter or that Leasing Document, as the case may be.
CLAUSE 62 - FATCA
| 62.1 | Defined terms |
For the purposes of Clause 54 - (No Set-off or Tax Deduction) and this Clause 62 - (FATCA), the following terms shall have the following meanings: "
Code" means the United States Internal Revenue Code of 1986, as amended.
"FATCA" means:
| (a) | sections 1471 to 1474 of the Code or any associated regulations; |
| (b) | any treaty, law or regulation of any other jurisdiction, or relating to an intergovernmental agreement between the US and any other jurisdiction, which (in either case) facilitates the implementation of any law or regulation referred to in paragraph (a) above; or |
| (c) | any agreement pursuant to the implementation of any treaty, law or regulation referred to in paragraphs (a) or (b) above with the IRS, the US government or any governmental or taxation authority in any other jurisdiction. |
"FATCA Deduction" means a deduction or withholding from a payment under this Charter or the Leasing Documents required by or under FATCA.
"FATCA Exempt Party" means a Relevant Party that is entitled under FATCA to receive payments free from any FATCA Deduction.
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"FATCA Non-Exempt Party" means any Relevant Party who is not a FATCA Exempt Party.
"IRS" means the United States Internal Revenue Service or any successor taxing authority or agency of the United States government.
"Relevant Party" means any of the parties to this Charter and the Leasing Documents (other than the Trafigura Charterer).
62.2 FATCA Information
| (a) | Subject to paragraph (c) below, each Relevant Party shall, on the date of this Charter, and thereafter within ten Business Days of a reasonable request by another Relevant Party: |
| (i) | confirm to that other party whether it is a FATCA Exempt Party or is not a FATCA Exempt Party; and |
| (ii) | supply to the requesting party (with a copy to all other Relevant Parties) such other form or forms (including IRS Form W-8 or Form W-9 or any successor or substitute form, as applicable) and any other documentation and other information relating to its status under FATCA (including its applicable "pass thru percentage" or other information required under FATCA or other official guidance including intergovernmental agreements) as the requesting party reasonably requests for the purpose of the requesting party’s compliance with FATCA. |
| (b) | If a Relevant Party confirms to any other Relevant Party that it is a FATCA Exempt Party or provides an IRS Form W-8 or W-9 showing that it is a FATCA Exempt Party and it subsequently becomes aware that it is not, or has ceased to be a FATCA Exempt Party, or that the said form provided has ceased to be correct or valid, that party shall so notify all other Relevant Parties or provide the relevant revised form, as applicable, reasonably promptly. |
| (c) | Nothing in this Clause shall oblige any Relevant Party to do anything which would or, in its reasonable opinion, might constitute a breach of any law or regulation, any policy of that party, any fiduciary duty or any duty of confidentiality, or to disclose any confidential information (including, without limitation, its tax returns and calculations); provided, however, that nothing in this paragraph shall excuse any Relevant Party from providing a true, complete and correct IRS Form W-8 or W-9 (or any successor or substitute form where applicable). Any information provided on such IRS Form W-8 or W-9 (or any successor or substitute forms) shall not be treated as confidential information of such party for purposes of this paragraph. |
| (d) | If a Relevant Party fails to confirm its status or to supply forms, documentation or other information requested in accordance with the provisions of this Charter or the provided information is insufficient under FATCA, then: |
| (i) | if that party failed to confirm whether it is (and/or remains) a FATCA Exempt Party then such party shall be treated for the purposes of this Charter and the Leasing Documents as if it is a FATCA Non-Exempt Party; and |
| (ii) | if that party failed to confirm its applicable passthru percentage then such party shall be treated for the purposes of this Charter and the Leasing Documents (and payments made thereunder) as if its applicable passthru percentage is 100%, until (in each case) such time as the party in question provides sufficient confirmation, forms, documentation or other information to establish the relevant facts. |
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| 62.3 | FATCA Deduction and gross-up by Relevant Party |
| (a) | If the representation made by the Charterers under Clause 45.1(p) (Representations and Warranties) proves to be untrue or misleading such that the Charterers are required to make a FATCA Deduction, the Charterers shall make the FATCA Deduction and any payment required in connection with that FATCA Deduction within the time allowed and in the minimum amount required by FATCA. |
| (b) | If the Charterers are required to make a FATCA Deduction then the Charterers shall increase the payment due from them to the Owners to an amount which (after making any FATCA Deduction) leaves an amount equal to the payment which would have been due if no FATCA Deduction had been required. |
| (c) | The Charterers shall promptly upon becoming aware that they must make a FATCA Deduction (or that there is any change in the rate or basis of a FATCA Deduction) notify the Owners accordingly. Within thirty (30) days of the Charterers making either a FATCA Deduction or any payment required in connection with that FATCA Deduction, the Charterers shall deliver to the Owners evidence satisfactory to the Owners that the FATCA Deduction has been made or (as applicable) any appropriate payment paid to the relevant governmental or taxation authority. |
| (d) | If the Owners are required to make a deduction or withholding from a payment under any Financial Instruments in respect of FATCA, and is required under such Financial Instrument to pay additional amounts in respect of such deduction or withholding, the amount of the payment due from the Charterers under this Charter shall be increased to an amount which, after such deduction or withholding and payment of additional amounts, leaves the Owners with an amount equal to the amount which it would have had remaining if it had not been required to pay additional amounts under such Financial Instruments. |
| 62.4 | FATCA Deduction by Owners |
The Owners may make any FATCA Deduction they are required by FATCA to make, and any payment required in connection with that FATCA Deduction, and the Owners shall not be required to increase any payment in respect of which they make such a FATCA Deduction or otherwise compensate the recipient for that FATCA Deduction.
| 62.5 | FATCA Mitigation |
Notwithstanding any other provision to this Charter, if a FATCA Deduction is or will be required to be made by any party under Clause 62.3 (FATCA) in respect of a payment to the Owners as a result of the Owners not being a FATCA Exempt Party, the Owners shall have the right to transfer their interest in the Vessel (and this Charter) to any person nominated by the Owners and all costs in relation to such transfer shall be for the account of the Charterers.
CLAUSE 63 - ASSIGNMENT AND TRANSFER
| 63.1 | The Charterers shall not assign this Charter except with the Owners’ prior consent in writing. |
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| 63.2 | The Owners may assign any of their rights or transfer by novation any of their rights and obligations under the Leasing Documents and/or sell and transfer title to of the Vessel to any third party with the prior written consent of the Charterers (such consent not to be unreasonably withheld) provided that such consent shall not be required if such assignment, transfer and/or sale is made: |
| (i) | at such time following the occurrence of a Termination Event which is continuing; or |
| (ii) | to an affiliate of the Owners. Provided always that, notwithstanding such assignment, transfer or sale, this Charter will continue (or will be novated to the applicable new owner) on identical terms (save for logical, consequential or mutually agreed amendments). |
| 63.3 | The Charterers shall remain liable to the aforesaid assignee, transferee or new owner of the Vessel (as the case may be) for its performance of all obligations under this Charter (where applicable, as novated) after any such assignment or transfer or any change of the registered ownership of the Vessel from the Owners to such new owner. The Charterers shall procure that any Relevant Person which is a party to a Leasing Document: |
| (a) | becomes liable to such assignee, transferee or new owner of the Vessel for its performance of all obligations pursuant to such Leasing Document; and |
| (b) | enters into all necessary documents or takes any necessary actions or provide all necessary assistance required for such Leasing Document and any Security Interest created thereunder remaining in full force and effect (or to be novated and/or executed) as from the completion of the relevant assignment, transfer or sale. |
| 63.4 | Without limiting the generality of Clause 63.2: |
| (a) | the Owners are entitled to enter into certain funding arrangements with their financier(s), including but not limited to, an affiliate of the Owners or any other banks and financial institutions acceptable to the Owners in their sole discretion (the "Mortgagee") provided that such funding arrangement shall not result in any adverse effect of the Charterers’ rights and obligations under the Leasing Documents; and |
| (b) | the Owners may do any of the following as security for the funding arrangements referred to in paragraph (a) above, in each case, without the prior consent of the Charterers: |
| (i) | execute a ship mortgage over the Vessel or any other Financial Instrument in favour of a Mortgagee (or its agent, trustee or nominee); |
| (ii) | assign their rights and interests to, in or in connection with this Charter or any other Leasing Documents in favour of a Mortgagee (or its agent, trustee or nominee); |
| (iii) | assign their rights and interests to, in or in connection with the Insurances, the Earnings and the Requisition Compensation of the Vessel in favour of the Mortgagee (or its agent, trustee or nominee); and |
| (iv) | enter into any other document or arrangement which is necessary to give effect to such financing arrangements; |
| (c) | the Charterers undertake to comply, and provide such information and documents and all necessary assistance required to enable the Owners to comply, with all such instructions or directions in regard to the employment, insurances, operation, repairs and maintenance of the Vessel as laid down in any Financial Instrument or as may be directed from to time during the currency of this Charter by the Mortgagee (or its agent, trustee or nominee) in conformity with any Financial Instrument. The Charterers further agree to acknowledge each Financial Instrument and such other documents as may be required pursuant to each such Financial Instrument that may be required by the Mortgagee (or its agent, trustee or nominee); and |
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| (d) | during the Charter Period a change in the registered or beneficial ownership of the Vessel or the Owners (by sale of shares in the Owners or other transactions having the same effect) may be effected without the Charterers’ consent, provided always that, in the event of change in the registered or beneficial ownership of the Vessel, notwithstanding such change, this Charter would continue on identical terms (save for logical, consequential or mutually agreed amendments). The Guarantor and the Charterers shall (where applicable) remain jointly and severally liable to the aforesaid new owner of the Vessel for its performance of all obligations pursuant to this Charter after change of the registered and/or beneficial ownership of the Vessel or the Owners from the Owners to such new owner and agree and undertake to enter into any such usual documents as the Owners shall reasonably require to complete or perfect the transfer of the Vessel (with the benefit and burden of this Charter) pursuant to this Clause. |
| (e) | All expenses arising out of assignment or transfer of this Charter as per Clause 63 - (Assignment and Transfer) shall be for the Owner’s account subject to no Termination Event or Potential Termination Event having occurred or being continuing at the relevant time. |
CLAUSE 64 - GENERAL APPLICATION OF PROCEEDS
Any Net Trading Proceeds, Net Sales Proceeds, Total Loss Proceeds, any proceeds realised by the Owners in connection with the enforcement of the Security Documents (unless otherwise specified in the Security Documents) and any proceeds received by the Owners from any Other Owner (as trustee for the Owners) shall be applied in the following order of application against amounts payable under the Leasing Documents:
| (a) | firstly, in or towards any amounts outstanding under the Leasing Documents other than the Termination Sum (including but not limited to any costs and expenses incurred in the enforcement of the Security Documents, to the extent these are not covered under the Termination Sum); |
| (b) | secondly, in or towards satisfaction of the Charterers’ obligation to pay the Termination Sum (or such portion of it that then remains unpaid) in any order of application in the amounts comprising the Termination Sum as the Owners may determine; and |
| (c) | thirdly, any amounts remaining after the application of 64(a) and 64(b) above, shall be paid to the Charterers, but subject always to the terms of the General Assignment. |
CLAUSE 65 - GOVERNING LAW AND ENFORCEMENT
| (a) | This Charter and any non-contractual obligations arising under or in connection with it, shall be governed by and construed in accordance with English law. |
| (b) | Any dispute arising out of or in connection with this Charter (including a dispute regarding the existence, validity or termination of this Charter or any non-contractual obligation arising out of or in connection with this Charter) (a "Dispute") shall be referred to and finally resolved by arbitration in London in accordance with the Arbitration Act 1996 or any statutory modification or re-enactment thereof save to the extent necessary to give effect to the provisions of this Clause 65 - (Governing Law and Enforcement). The arbitration shall be conducted in accordance with the London Maritime Arbitrators Association ("LMAA") Terms current at the time when the arbitration proceedings are commenced. |
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| (c) | The reference shall be to three arbitrators. A party wishing to refer a Dispute to arbitration shall appoint its arbitrator (who shall be either a full member of the LMAA, or a practising barrister of King’s Counsel who is also a member of the Commercial Bar Association, or a retired High Court Judge practising as an arbitrator, in each case who carries on business in London) and send notice of such appointment in writing to the other party requiring the other party to appoint its own arbitrator within fourteen (14) calendar days of that notice and stating that it will appoint its arbitrator as sole arbitrator unless the other party appoints its own arbitrator and gives notice that it has done so within the fourteen (14) days specified. If the other party does not appoint its own arbitrator and give notice that it has done so within the fourteen (14) days specified, the party referring a Dispute to arbitration may, without the requirement of any further prior notice to the other party, appoint its arbitrator as sole arbitrator and shall advise the other party accordingly. The award of a sole arbitrator shall be binding on both parties as if he or she had been appointed by agreement. Nothing herein shall prevent the parties agreeing in writing to vary these provisions to provide for the appointment of a sole arbitrator. If the two arbitrators so appointed are unable to agree on the appointment of the third arbitrator, they or either of them may by written notice request the President of the LMAA to appoint the third arbitrator within fourteen (14) days of such request. |
| (d) | Where the reference is to three arbitrators the procedure for making appointments shall be in accordance with the procedure for full arbitration stated above. |
| (e) | The language of the arbitration shall be English. |
| (f) | In cases where neither the claim nor any counterclaim exceeds the sum of US$100,000 (or such other sum as the Parties may agree) the arbitration shall be conducted in accordance with the LMAA Small Claims Procedure current at the time when the arbitration proceedings are commenced. |
CLAUSE 66 - ENTIRE AGREEMENT
| (a) | This Agreement, in conjunction with the other Leasing Documents, constitutes the entire agreement between the parties and supersedes all previous agreements, understandings and arrangements between them, whether in writing or oral, in respect of its subject matter. |
| (b) | Each Party acknowledges that it has not entered into this agreement or any other Leasing Document in reliance on, and shall have no remedies in respect of, any representation or warranty that is not expressly set out in this Agreement or in any other Leasing Document. |
CLAUSE 67 - DEFINITIONS
| 67.1 | In this Charter, unless as expressly defined otherwise, the following capitalized terms shall have the meanings ascribed to them below: |
"Acceptance Certificate" means a certificate substantially in the form set out in Schedule 1 (Acceptance Certificate) to be signed by the Charterers at Delivery.
"Account Bank" means Joh. Berenberg, Gossler & Co. KG of Neuer Jungfernstieg 20, 20354 Hamburg, Germany or another reputable bank acceptable to the Owners, in and/or through which all revenues and operating expenses of the Charterers shall be credited and/or transferred.
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"Account Security" means the document creating security over the Operating Account made or to be made between the Charterers and the Owners.
"Advance Charterhire" has the meaning as defined under Clause 36.2 (Charterhire and Advance Charterhire) of the Charter.
"Affiliate" means in relation to any person, a Subsidiary of that person or a Holding Company of that person or any other Subsidiary of that Holding Company.
"Annex VI" means Annex VI of the Protocol of 1997 to amend the International Convention for the Prevention of Pollution from Ships 1973 (Marpol), as modified by the Protocol of 1978 relating thereto.
"Anti-Money Laundering Laws" means all applicable financial record-keeping and reporting requirements, anti-money laundering statutes (including all applicable rules and regulations thereunder) and all applicable related or similar laws, rules, regulations or guidelines, of all jurisdictions including and without limitation, the United States of America, the European Union, the United Kingdom, the Republic of the Marshall Islands, Germany and the People’s Republic of China (including Hong Kong for the avoidance of doubt) and which in each case are (a) issued, administered or enforced by any governmental agency having jurisdiction over any Relevant Person or the Owners; (b) of any jurisdiction in which any Relevant Person or Owner conducts business; or (c) to which any Relevant Person or Owner is subjected or subject to.
"Anti-Terrorism Financing Laws" means all applicable anti-terrorism laws, rules, regulations or guidelines of any jurisdiction, including and not limited to the United States of America or the People’s Republic of China which are: (a) issued, administered or enforced by any governmental agency, having jurisdiction over any Relevant Person or the Owners; (b) of any jurisdiction in which any Relevant Person or the Owners conduct business; or (c) to which any Relevant Person or the Owners are subjected or subject to.
"Approved Classification Society" means Bureau Veritas, DNV or such other generally recognized first class international classification society which is a member of the International Association of Classification Societies and approved by the Owners in writing.
"Approved Manager" means the Commercial Manager or the Technical Manager.
"Approved Valuer" means Simpson Spence & Young, Clarksons Platou, Maersk Broker, Arrow Shipbrokers, Howe Robinson, Braemar ACM Ship Broking, Fearnleys or any other reputable shipbroker nominated by the Charterers and approved by the Owners from time to time.
"Approved Sub-charter" means the Trafigura Charter, the Substitute Charter or any other charter as may be approved by the Owners in writing in accordance with this Charter.
"Approved Sub-charterer" means the Trafigura Charterer and any sub-charterer under any other Approved Sub-charter.
"Associated Vessel" means any ship or vessel (including, but not limited to, the Vessel and the Other Vessels) from time to time wholly leased, hired, chartered or financed under any lease, hire purchase agreement, charter or any other financing arrangement by affiliates of the Owners and/or the Other Owners to subsidiaries or affiliates of the Guarantor.
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"Breakfunding Costs" means all breakfunding costs and expenses incurred or payable by the Owners pursuant to the relevant funding arrangement entered into by the Owners for the purpose of financing any part of the Purchase Price as a result of the receipt of an amount pursuant to this Charter on a day other than a Payment Date.
"Business Day" means a day on which banks are open for business in the principal business centres of Hong Kong, Shanghai, Germany and Greece and:
| (a) | in respect of a day on which a payment is required to be made or other dealing is due to take place under a Leasing Document in Dollars, also a day on which commercial banks are open in New York City; and |
| (b) | in relation to the fixing of an interest rate in relation to the Owners’ Costs, also a day which is a US Government Securities Business Day. |
"Business Ethics Law" means any laws, regulations and/or other legally binding requirements or determinations in relation to corruption, fraud, collusion, bid-rigging or anti-trust, human rights violations (including forced labour and human trafficking) which are issued, administered or enforced by the United States, United Kingdom, the European Union or applicable to any Relevant Person or the Owners or to any jurisdiction where activities are performed and which shall include but not be limited to (i) the United Kingdom Bribery Act 2010 and (ii) the United States Foreign Corrupt Practices Act 1977 and all rules and regulations under each of (i) and (ii).
"Cancelling Date" shall have the same meaning as defined under the MOA.
"Commencement Date" means the date on which Delivery takes place.
"Charter Period" means the period described in Clause 32.1 (Charter Period) unless it is terminated earlier in accordance with the provisions of this Charter.
"Charterhire" means each of, as the context may require, all of the instalments of hire payable hereunder on each applicable Payment Date comprising in each case both Fixed Charterhire and Variable Charterhire, based on an aggregate amount of $20,000 per day, as illustrated in the column entitled "Charterhire" in the Payment Schedule (or any replacement Payment Schedule).
"Commercial Manager" means Central Shipping Inc., a corporation incorporated under the laws of Marshall Islands with registration number 98339 or any reputable management company designated by the Charterers and approved by the Owners in writing from time to time as the commercial manager of the Vessel.
"Delivery" means the physical delivery of the Vessel from the Owners to the Charterers pursuant to the terms of this Charter.
"Dollars" and "$" and "US$" mean the lawful currency for the time being of the United States of America.
"Document of Compliance" shall have the same meaning as ascribed under the ISM Code.
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"Earnings" means all moneys whatsoever which are now, or later become, payable (actually or contingently) to the Charterers and which arise out of the use or operation of the Vessel, including (but not limited to):
| (a) | except to the extent that they fall within paragraph (b), |
| (i) | all freight, hire and passage moneys; |
| (ii) | any compensation payable in the event of requisition of the Vessel for hire; |
| (iii) | any remuneration for salvage and towage services; |
| (iv) | any demurrage and detention moneys; |
| (v) | damages for breach (or payments for variation or termination) of any charterparty or other contract for the employment of the Vessel; and |
| (vi) | all moneys which are at any time payable under any Insurances in respect of loss of hire (if any); and |
| (b) | if and whenever the Vessel is employed on terms whereby any moneys falling within paragraphs (a)(i) to (vi) are pooled or shared with any other person, that proportion of the net receipts of the relevant pooling or sharing arrangement which is attributable to the Vessel. |
"Emission Allowances" means an allowance, credit, quota, permit or equivalent, representing a right of a vessel to emit a specified quantity of greenhouse gas emissions recognised by the Emission Scheme.
"Emission Scheme" means a greenhouse gas emissions trading scheme which for the purposes of this Charter shall include the EU ETS and any other similar systems imposed by applicable lawful authorities that regulate the issuance, allocation, trading or surrendering of Emission Allowances.
"Environmental Claim" means:
| (a) | any claim by any governmental, judicial or regulatory authority or any other person which arises out of an Environmental Incident or an alleged Environmental Incident or which relates to any Environmental Law; or |
| (b) | any claim by any other person which relates to an Environmental Incident, |
and "claim" means a claim for damages, compensation, fines, penalties or any other payment; an order or direction to take, or not to take, certain action or to desist from or suspend certain action; and any form of enforcement or regulatory action, including the arrest or attachment of any asset.
"Environmental Incident" means:
| (a) | any release, emission, spill or discharge of Environmentally Sensitive Material whether within the Vessel or from the Vessel into any other vessel or into or upon the air, water, land or soils (including the seabed) or surface water; or |
| (b) | any incident in which Environmentally Sensitive Material is released, emitted, spilled or discharged into or upon the air, water, land or soils (including the seabed) or surface water from a vessel other than the Vessel and which involves a collision between the Vessel and such other vessel or some other incident of navigation or operation, in either case, in connection with which the Vessel is actually or potentially liable to be arrested, attached, detained or injuncted and/or the Vessel and/or any Relevant Person and/or any operator or manager of the Vessel is at fault or allegedly at fault or otherwise liable to any legal or administrative action; or |
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| (c) | any other incident in which Environmentally Sensitive Material is released, emitted, spilled or discharged into or upon the air, water, land or soils (including the seabed) or surface water otherwise than from the Vessel and in connection with which the Vessel is actually or potentially liable to be arrested and/or where any Relevant Person and/or any operator or manager of the Vessel is at fault or allegedly at fault or otherwise liable to any legal or administrative action. |
"Environmental Law" means any present or future law relating to pollution or protection of human health or the environment, to conditions in the workplace, to the carriage, generation, handling, storage, use, release or spillage of Environmentally Sensitive Material or to actual or threatened releases of Environmentally Sensitive Material including any law pertaining to any Emission Scheme.
"Environmentally Sensitive Material" means and includes all contaminants, oil, oil products, toxic substances and any other substance (including any chemical, gas or other hazardous or noxious substance) which is (or is capable of being or becoming) polluting, toxic or hazardous.
"EU ETS" means the European Union Emissions Trading System specifically applicable to shipping pursuant to the European Directive 2023/959 amending European Directive 2003/87/EC and Commission Implementing Regulation (EU) 2023/2599 of 22 November 2023 laying down rules for the application of Directive 2003/87/EC of the European Parliament and of the Council as regards the administration of shipping companies by administering authorities in respect of a shipping company.
"ETS and Fuel EU Maritime Letter" shall have the meaning as defined under Clause 40.5(c).
"Existing Other Charter A" means, the bareboat charterparty dated 23 November 2021 and entered into between Other Owner A and Other Charterer A, as amended and/or supplemented from time to time.
"Existing Charter" means, the bareboat charterparty dated 23 November 2021 and entered into between the Owners and the Charterers, as amended and/or supplemented from time to time.
"Existing Charters" means, collectively Existing Charter and Existing Other Charter A.
"Final Purchase Option Price" means an amount equal to sixty per cent. (60%) of the Opening Capital Balance.
"Financial Indebtedness" means, in relation to a person (the "debtor"), a liability of the debtor:
| (a) | for principal, interest or any other sum payable in respect of any moneys borrowed or raised by the debtor; |
| (b) | under any loan stock, bond, note or other security issued by the debtor; |
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| (c) | under any acceptance credit, guarantee or letter of credit facility made available to the debtor; |
| (d) | under a financial lease, a deferred purchase consideration arrangement (other than deferred payments for assets or services obtained on normal commercial terms in the ordinary course of business) or any other agreement having the commercial effect of a borrowing or raising of money by the debtor; |
| (e) | under any foreign exchange transaction, any interest or currency swap or any other kind of derivative transaction entered into by the debtor or, if the agreement under which any such transaction is entered into requires netting of mutual liabilities, the liability of the debtor for the net amount; or |
| (f) | under a guarantee, indemnity or similar obligation entered into by the debtor in respect of a liability of another person which would fall within paragraphs (a) to (e) if the references to the debtor referred to the other person. |
"Financial Instruments" means the applicable loan or facility agreement entered into between the Owners (or their affiliate) and the Owners’ Financiers and any mortgage, deed of covenants, assignment in respect of this Charter, assignment in respect of the Guarantees, assignment in respect of Earnings, Insurances and Requisition Compensation, manager’s undertaking and subordination (including assignment of manager’s interests in the Insurances) or any other financial security instruments (excluding interest rate swaps and similar interest rate hedging instruments) granted by the Owners to the Owners’ Financiers as security for the financing or refinancing of the Owners’ acquisition of the Vessel.
"Fixed Charterhire" means, in relation to a Payment Date, the capital component of Charterhire thereof, as illustrated in the column entitled "Fixed Charterhire" in the Payment Schedule (or any replacement Payment Schedule).
"Flag State" means the flag state named in Box 5 of this Charter or any other state or jurisdiction approved in writing by the Owners (whose approval shall not be unreasonably withheld).
"Fleet Vessel" means any ship or vessel (including but not limited to the Vessel and the Other Vessels) from time to time wholly owned, leased under a capital lease, operating lease with a purchase option at the end of the relevant charter period, vessels owned under a joint venture agreement where the relevant member of the Group owns no less than 50 per cent. of the issued shares of the jointly owned entity or controlled by the Guarantor (directly or indirectly) excluding, for the avoidance of doubt, any newbuilding vessels not delivered to the relevant member of the Group at the relevant time.
"Fuel EU Maritime" means Fuel EU Maritime Regulation 2023/1805 dated 13 September 2023 on the use of renewable and low-carbon fuels in maritime transport, and amending Directive 2009/16/EC.
"General Assignment" means the general assignment executed or to be executed between the Charterers and the Owners in respect of the Vessel, pursuant to which the Charterers shall, inter alia, assign its rights under the Insurances, Earnings and Requisition Compensation and any Approved Sub-Charter in respect of the Vessel, in favour of the Owners and in the agreed form agreed on or prior to signing of this Charter.
"Group" means the Guarantor and its Subsidiaries from time to time.
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"Guarantee" means the guarantee executed or to be executed by the Guarantor in favour of the Owners securing, amongst others, the Charterers’ obligations in connection with the Leasing Documents.
"Guarantor" means Top Ships Inc., a corporation incorporated under the laws of Marshall Islands and having its registered address at Trust Company Complex, Ajeltake Road, Ajeltake Islands, Majuro, Marshall Islands MH96960.
"Hire Period" means (i) in the case of the first Hire Period, the period commencing on the Commencement Date and ending on the First Payment Date; and (ii) in the case of each subsequent Payment Date, the period commencing on the last day of the preceding Hire Period and ending on the next occurring Payment Date.
"Holding Company" means, in relation to a person, any other person in relation to which it is a Subsidiary.
"IAPPC" means a valid international air pollution prevention certificate for the Vessel issued pursuant to the MARPOL Protocol.
"Index" means the Baltic Tanker Indices applicable to the Vessel.
"Initial Market Value" has the meaning given to that term in the MOA.
"Insurances" means:
| (a) | all policies and contracts of insurance, including entries of the Vessel in any protection and indemnity or war risks association, which are effected in respect of the Vessel or otherwise in relation to it whether before, on or after the date of this Charter; and |
| (b) | all rights and other assets relating to, or derived from, any of the foregoing, including any rights to a return of a premium and any rights in respect of any claim whether or not the relevant policy, contract of insurance or entry has expired on or before the date of this Charter. |
"ISM Code" means the International Safety Management Code (including the guidelines on its implementation), adopted by the International Maritime Organisation Assembly as Resolutions A.741 (18) and A.788 (19), as the same may be amended or supplemented from time to time.
"ISPS Code" means the International Ship and Port Security Code as adopted by the Conference of Contracting Governments to the Safety of Life at Sea Convention 1974 on 13 December 2002 and incorporated as Chapter XI-2 of the Safety of Life at Sea Convention 1974, as the same may be supplemented or amended from time to time (and the terms "safety management system", "Safety Management Certificate" and "Document of Compliance" have the same meanings as are given to them in the ISM Code).
"ISSC" means a valid international ship security certificate for the Vessel issued pursuant to the ISPS Code.
"Leasing Documents" means this Charter, the MOA and the Security Documents.
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"Major Casualty" means any casualty to the Vessel in respect of which the claim or the aggregate of the claims against all insurers, before adjustment for any relevant franchise or deductible, exceeds $5,000,000 or the equivalent in any other currency.
"Management Agreement" means:
| (a) | the technical and commercial management agreement made or to be made between the Approved Manager and the Charterers; or |
| (b) | such other management agreement subsequently entered into in respect of the Vessel as may be approved by the Owners (such approval not to be unreasonably withheld). |
"Manager’s Undertaking" means, in relation to an Approved Manager, the letter of undertaking from that Approved Manager subordinating the rights of such Approved Manager against the Vessel and the Charterers to the rights of the Owners under the Leasing Documents in an agreed form agreed on or prior to signing of this Charter.
"Mandatory Sale" has the meaning given to that term in Clause 50.4.
"Mandatory Sale Date" has the meaning given to that term in Clause 50.4.
"Mandatory Sale Price" means, in respect of the Mandatory Sale Date, the aggregate of:
| (a) | the Owners’ Costs prevailing as at the Mandatory Sale Date; |
| (b) | any Variable Charterhire accrued as at the date of payment of the Mandatory Sale Price; |
| (c) | (in case of Clause 36.13 or Clause 54.5) if the Mandatory Sale Date occurs on or before the third (3rd) anniversary of the Commencement Date, one per cent. (1.00%) of the Owners’ Costs as at the relevant date; |
| (d) | any Breakfunding Costs; |
| (e) | any properly documented legal or other costs incurred by the Owners in connection with the exercise of the Mandatory Sale; and |
aside from the amounts described under paragraphs (a) to (e) above, any other moneys due and owing under the Leasing Documents at the relevant Mandatory Sale Date.
"Market Value" means:
| (a) | subject to sub-paragraph (b) below, the arithmetic mean of the valuations shown by two (2) valuation reports prepared: |
| (i) | in Dollars; |
| (ii) | on a date no later than thirty (30) days after the relevant Market Value Test Date; |
| (iii) | with or without physical inspection of that Vessel; and |
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| (iv) | on the basis of a sale for prompt delivery for cash on normal arm’s length commercial terms as between a willing seller and a willing buyer, free of any existing charter or other contract of employment, |
and such reports shall be prepared by Approved Valuers one nominated by the Owners and one nominated by the Charterers (but addressed to the Owners); and
| (b) | if there is a discrepancy of five per cent. (5%) or more between the market valuations shown on the two valuation reports obtained pursuant to the above paragraph (using the higher valuation figure as the denominator), the arithmetic mean of the valuations shown by three (3) valuation reports each prepared on the same terms and conditions as set out under paragraph (a) above (except that the third valuation report additionally required under this paragraph (b) shall be prepared by an Approved Valuer nominated by the Owners). |
"Market Value Test Date" has the meaning given to it under Clause 46.1(q).
"MARPOL Protocol" means Annex VI (Regulations for the Prevention of Air Pollution from Ships) to the International Convention for the Prevention of Pollution from Ships 1973 (as amended in 1978 and 1997).
"Material Adverse Effect" means, in the opinion of the Owners, a material adverse effect on:
| (a) | the business, operations, property, condition (financial or otherwise) or prospects of any Relevant Person or the Guarantor and its Subsidiaries as a whole; |
| (b) | the ability of any Relevant Person to perform its obligations under any Leasing Document to which it is a party; or |
| (c) | the validity or enforceability of, or the effectiveness or ranking of any Security Interests granted pursuant to any of the Leasing Documents or the rights or remedies of the Owners under any of the Leasing Documents. |
"MOA" means the memorandum of agreement dated on or about the date of this Charter and made between the Owners (in their capacity as buyers) and the Charterers (in their capacity as sellers), pursuant to which the Charterers agree to sell and the Owners agree to purchase the Vessel upon the terms and conditions set out therein.
"Net Sales Proceeds" has the meaning given to it under Clause 41.10.
"Net Trading Proceeds" has the meaning given to it under Clause 41.10.
"Obligatory Insurances" means any insurances of the Vessel required to be effected by or on behalf of the Charterers pursuant to Clause 39 - (Insurance).
"Opening Capital Balance" means an amount which is equal to sixty two point five per cent. (62.5%) of the Purchase Price.
"Operating Account" means an account in the name of the Charterers with an Account Bank.
"Option Premium" means an amount of US$ 3,000,000 (where applicable, taking into account any payment made by the Charterers to the Owners in accordance with Clause 46.1(y)).
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"Original Financial Statements" means, (a) with respect to the Charterers, the annual financial statement accounts of the Charterers for that financial year as referred to in the Guarantor’s audited consolidated annual financial statement accounts; and (b) with respect to the Charterers, each of their financial statements (in the case of the Guarantor, audited) for the financial year ended 31 December 2022 (and if such statements are not in English, they shall be accompanied by a certified English translation).
"Original Jurisdiction" means, in relation to any Relevant Person, the jurisdiction under whose laws such Relevant Person incorporated or resided as at the date of this Charter.
"Other Charter A" means, the bareboat charterparty dated 11 January 2024 and entered into between Other Owner A and Other Charterer A, as amended and/or supplemented from time to time.
"Other Charter B" means, the bareboat charterparty dated 11 January 2024 and entered into between Other Owner B and Other Charterer B, as amended and/or supplemented from time to time.
"Other Charters" means Other Charter A and Other Charter B.
"Other Charterers" means, collectively:
| (a) | in relation to Other Vessel A, Legio X Inc., a corporation incorporated under the laws of the Republic of Marshall Islands whose registered address is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands, MH96960 ("Other Charterer A"); and |
| (b) | in relation to Other Vessel B, PCH Dreaming Inc., a corporation incorporated under the laws of the Republic of Marshall Islands whose registered address is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands, MH96960 ("Other Charterer B"). |
and, each or any of them, as the context may require, an "Other Charterer".
"Other Owners" means, collectively:
| (a) | in relation to Other Vessel A, Sea 269 Leasing Co. Limited, a company incorporated under the law of Hong Kong with company number 3053475 ("Other Owner A"); and |
| (b) | in relation to Other Vessel B, Sea 179 Leasing Co. Limited, a company incorporated under the law of Hong Kong with company number 2878380 ("Other Owner B"), |
and, each or any of them, as the context may require, an "Other Owner".
"Other Vessels" mean collectively:
| (a) | the very large crude carrier named Legio X Equestris with IMO number 9912256 ("Other Vessel A"); and |
| (b) | the 50,000 DWT scrubber fitted product tanker with IMO number 9798349 ("Other Vessel B"), |
and, each or any of them, as the context may require, an "Other Vessel".
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"Owners’ Costs" means, on any relevant date, the Opening Capital Balance minus the aggregate Fixed Charterhire which has been paid by the Charterers and received by the Owners as at such date (where applicable, taking into account any payments made by the Charterers to the Owners in accordance with Clauses 46.1(x) and/or 46.1(y)).
"Owners’ Financier" means any financier providing financing or refinancing facilities to the Owners or any affiliate of the Owners in respect of the Owners’ purchase and/or lease of the Vessel to the Charterers under the terms of the Leasing Documents.
"Owners’ Surveyor" means the surveyor appointed by the Owners in accordance with Clause 7.
"Party" means a party to this Charter, namely the Owners or the Charterers.
"Payment Date" means each of the dates upon which Charterhire is to be paid by the Charterers to the Owners pursuant to Clauses 36.2, 36.5, 36.6 and 36.7 (Charterhire).
"Payment Schedule" means the payment schedule under Schedule 3 (Payment Schedule) provided that the Owners may from time to time prepare a replacement schedule (taking into account the implied interest rate on which the original schedule was based) on the same basis as the original schedule, which replacement schedule when served on the Charterers will bind them save in the case of manifest error.
"Permitted Security Interest" means:
| (a) | any Security Interest created by a Security Document or a Financial Instrument; |
| (b) | prior to the completion of the "Purchase Option" (as defined under the Existing Charter), any Security Interest created by a "Security Document" (as defined under the Existing Charter); |
| (c) | any lien for unpaid master’s and crew’s wages in accordance with the ordinary course of operation of the Vessel or in accordance with usual reputable maritime practice; |
| (d) | any lien for salvage; |
| (e) | any lien for master’s disbursements incurred in the ordinary course of trading; |
| (f) | any other lien arising by operation of law or otherwise in the ordinary course of the operation, repair or maintenance of the Vessel provided such liens do not secure amounts more than thirty (30) days overdue; |
| (g) | any Security Interest created in favour of a plaintiff or defendant in any action of the court or tribunal before whom such action is brought as security for costs and expenses where the Owners are prosecuting or defending such action in good faith by appropriate steps; and |
| (h) | Security Interests arising by operation of law in respect of taxes which are not overdue or for payment of taxes which are overdue for payment but which are being contested by the Owners or the Charterers in good faith by appropriate steps and in respect of which adequate reserves have been made, provided that the foregoing have not arisen due to the default or omission of any Relevant Person. |
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"Poseidon Principles" means the financial industry framework for assessing and disclosing the climate alignment of ship finance portfolios published in June 2019 as the same may be amended or replaced to reflect changes in applicable law or regulation or the introduction of or changes to mandatory requirements of the International Maritime Organisation from time to time.
"Potential Termination Event" means, an event or circumstance which, with the expiry of a grace period, the giving of any notice, the lapse of time and/or a determination of the Owners and/or the satisfaction of any other condition, would constitute a Termination Event.
"Prepositioning Date" shall have the same meaning as defined under the MOA.
"Prohibited Countries" means those countries and territories subject to country-wide or territory-wide Sanctions and/or trade embargoes from time to time during the Charter Period, in particular but not limited to pursuant to the U.S.’s Office of Foreign Assets Control of the U.S. Department of Treasury ("OFAC") or the United Nations including at the date of this Charter, but without limitation, non-Ukrainian government controlled areas of Donetsk, Luhansk and Zaporizhzhia Regions, Cuba, Syria, Iran, North Korea, Crimea and Venezuela and any additional countries based on respective country-wide or territory-wide Sanctions being imposed by OFAC or any of the regulative bodies referred to in the definition of Prohibited Person.
"Prohibited Person" means any person, entity or any other party which is (i) located, domiciled, resident or incorporated in a Prohibited Country, and/or (ii) subject to any sanction administrated by the United Nations, the European Union, the United States and the U.S. Department of Treasury’s Office of Foreign Assets Control ("OFAC"), the United Kingdom, His Majesty’s Treasury ("HMT") and the Foreign and Commonwealth Office of the United Kingdom, the Special Administrative Region of Hong Kong, the People’s Republic of China and/or (iii) owned or controlled by or affiliated with persons, entities or any other parties as referred to in (i) and (ii).
"Purchase Option" means the purchase option referred to in Clause 51.1.
"Purchase Option Date" shall have the meaning ascribed thereto in Clause 51.2.
"Purchase Option Fee" means:
| (a) | if the Purchase Option is exercised on or after the first (1st) anniversary of the Commencement Date and before the second (2nd) anniversary of the Commencement Date, one point eight per cent. (1.80%) of the Owners’ Costs on the applicable Purchase Option Date; |
| (b) | if the Purchase Option is exercised on or after the second (2nd) anniversary of the Commencement Date and up to, inclusive, the third (3rd) anniversary of the Commencement Date, one point five per cent. (1.50%) of the Owners’ Costs on the applicable Purchase Option Date; |
| (c) | if the Purchase Option is exercised after the third (3rd) anniversary of the Commencement Date zero per cent. (0%) of the Owners’ Costs as at the applicable Purchase Option Date. |
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"Purchase Option Notice" shall have the meaning ascribed thereto in Clause 51.2.
"Purchase Option Price" means, in respect of any Purchase Option Date:
| (a) | if the Purchase Option Date falls on any Payment Date on or after the first (1st) anniversary of the Commencement Date but prior to the last day of the Charter Period, the aggregate of: |
| (i) | the Owners’ Costs prevailing as at the relevant Purchase Option Date; |
| (ii) | any Variable Charterhire accrued but unpaid as at the date of payment of the Purchase Option Price; |
| (iii) | any Purchase Option Fee; |
| (iv) | any Breakfunding Costs; |
| (v) | any documented legal or other costs incurred by the Owners in connection with the exercise of the Purchase Option under Clause 51 - (Purchase Option); and |
| (vi) | aside from the amounts described under paragraphs (i) to (v) above, any other moneys due and owing under the Leasing Documents at the relevant Purchase Option Date, |
| (b) | if the Purchase Option Date falls on the last day of the Charter Period, the aggregate of: |
| (i) | the Final Purchase Option Price; |
| (ii) | any Charterhire accrued but unpaid as at the date of payment of the Purchase Option Price; |
| (iii) | any documented legal or other costs incurred by the Owners in connection with the exercise of the Purchase Option under Clause 51 - (Purchase Option); and |
| (iv) | aside from the amounts described under paragraphs (i) to (iii) above, any other moneys due and owing under the Leasing Documents at the relevant Purchase Option Date. |
"Purchase Price" has the meaning given to it in the MOA.
"Relevant Jurisdiction" means, in relation to each Relevant Person:
| (a) | its Original Jurisdiction; |
| (b) | any jurisdiction where any property owned by it and charged under a Leasing Document is situated; |
| (c) | any jurisdiction where it conducts its business; and |
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| (d) | any jurisdiction whose laws govern the perfection of any of the Leasing Documents entered into by it creating a Security Interest. |
"Relevant Nominating Body" means any applicable central bank, regulator or other supervisory authority or a group of them, or any working group or committee sponsored or chaired by, or constituted at the request of, any of them or the Financial Stability Board.
"Relevant Person" means each of the Charterers (for the avoidance of doubt, reference to Charterers here include the Charterers acting in their capacities as sellers under the MOA), the Other Charterers, the Guarantor (in its capacity as the guarantor and the shareholder of the Charterers), any Approved Manager which is an entity within the Group, any sub-charterer which is an entity within the Group and any other party providing security to the Owners in respect of the Charterers’ obligations under this Charter pursuant to a Security Document (except any Approved Manager or sub-charterer which are not entities within the Group).
"Requisition Compensation" includes all compensation or other moneys payable by reason of any act or event such as is referred to in paragraph (b) of the definition of "Total Loss".
"Safety Management Certificate" shall have the same meaning as ascribed under the ISM Code.
"Sanctions" means any sanctions, embargoes, freezing provisions, prohibitions or other restrictions relating to trading, doing business, investment, exporting, financing or making assets available (or other activities similar to or connected with any of the foregoing):
| (a) | imposed by law or regulation of a Sanctions Authority, to the extent applicable to this transaction; or |
| (b) | otherwise imposed by any applicable law or regulation by which any Relevant Person is bound or to which it is subject. |
"Sanctions Authority" means:
| (a) | the United Nations or its Security Council; |
| (b) | the United States; |
| (c) | the European Union or the Council of the European Union; |
| (d) | the United Kingdom; |
| (e) | the People’s Republic of China (including for the avoidance of doubt, Hong Kong), provided that this paragraph (e) shall not apply to the Trafigura Charterer when the Vessel is chartered under the Trafigura Charter or the operation or use of the Vessel by the Trafigura Charterer (but not any further sub-lessee of the Vessel) when the Vessel is operated by the Trafigura Charterer (but not any further sub-lessee of the Vessel), in each case unless otherwise specified in Clause 50.3; and |
| (f) | the governments and official institutions or agencies of any of paragraphs (a) to (e) above, including the U.S. Department of the Treasury’s Office of Foreign Assets Control, the United States Department of State, the U.S. Department of Commerce and the Hong Kong Monetary Authority and His Majesty’s Treasury. |
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"Sanctions Advisory" means the Sanctions Advisory for the Maritime Industry, Energy and Metals Sectors, and Related Communities issued May 14, 2020 by the US Department of the Treasury, Department of State and Coast Guard, as may be amended or supplemented, and any similar future advisory.
"Secured Liabilities" means all present and future obligations and liabilities (whether actual or contingent and whether owed jointly or severally or in any other capacity whatsoever) of a Relevant Person to the Owners under or in connection with the Leasing Documents or any judgment relating to the Leasing Documents; and for this purpose, there shall be disregarded any total or partial discharge of these liabilities, or variation of their terms, which is effected by, or in connection with, any bankruptcy, liquidation, arrangement or other procedure under the insolvency laws of any country.
"Security Documents" means collectively the Guarantee, the Account Security, the Shares Security, the General Assignment, the Manager’s Undertaking and any other document whether or not it creates a Security Interest which is executed as security for the obligations of the Charterers under or in connection with this Charter.
"Security Period" means the period commencing on the date of this Charter and ending on the date on which the Owners are satisfied that the Secured Liabilities have been irrevocably and unconditionally paid and discharged in full.
"Security Interest" means:
| (a) | a mortgage, charge (whether fixed or floating) or pledge, lien, assignment, hypothecation or any other security interest of any kind or any other agreement or arrangement having the effect of conferring a security interest; |
| (b) | the security rights of a plaintiff under an action in rem; or |
| (c) | any other right which confers on a creditor or potential creditor a right or privilege to receive the amount actually or contingently due to it ahead of the general unsecured creditors of the debtor concerned; however this paragraph (c) does not apply to a right of set off or combination of accounts conferred by the standard terms of business of a bank or financial institution. |
"Shares Security" means the share charge executed or to be executed by the Guarantor (in its capacity as shareholder of the Charterers) creating a Security Interest over all its shares in the Charterers in favour of the Owners.
"Statement of Compliance" means a Statement of Compliance related to fuel oil consumption pursuant to regulations 6.6 and 6.7 of Annex VI.
"Subsidiary" means a subsidiary within the meaning of section 1159 of the UK Companies Act 2006.
"Substitute Charter" means a time charter with a duration not less than twelve (12) months, with a daily charterhire not less than US$26,000 and with a charterer approved by the Owners in writing.
"Technical Manager" means Central Shipping Inc., a corporation incorporated under the laws of Marshall Islands with registration number 98339, Central Mare Inc., a corporation incorporated under the laws of Marshall Islands with registration number 32656 or any reputable management company designated by the Charterers approved by Trafigura Charterer, while on time charter to Trafigura Charterer, and the Owners, thereafter, in writing from time to time as the technical manager of the Vessel.
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"Termination Event" means any event described in Clause 49.1.
"Termination Fee" means:
| (a) | if the Termination Sum is payable to the Owners before the second (2nd) anniversary of the Commencement Date, one point eight per cent. (1.80%) of the Owners’ Costs as at the relevant date; |
| (b) | if the Termination Sum is payable to the Owners on or after the second (2nd) anniversary of the Commencement Date and up to the third (3rd) anniversary, inclusive, of the Commencement Date, one point five per cent. (1.50%) of the Owners’ Costs as at the relevant date; and |
| (c) |
if the Termination Sum is payable after the third (3rd) anniversary of the Commencement Date, one per cent. (1.00%) of the Owners’ Costs as at the relevant date,
provided always that, if the Charterers’ obligation to pay the Termination Sum arises (solely and directly) as a result of any breach under Clause 45.1 (q)(iv), (y) and (z)(i), of Clauses 46.1 (j) and (o) or 49.1(o) caused by the Approved Sub-charterer’s acts or omissions, then the applicable Termination Fee shall be one per cent. (1.00%) of the Owners’ Costs as at the relevant date. |
"Termination Notice" has the meaning given to it under Clause 49.2 (Termination Events).
"Termination Sum" means, in respect of any date (such date being referred to as the "Relevant Date" for the purposes of this definition only), the aggregate of (without double counting amounts that may be included in more than one sub-paragraph below):
| (a) | the Owners’ Costs prevailing as at the Relevant Date; |
| (b) | any Variable Charterhire due and payable, but unpaid up to (and including) the date of payment of the Termination Sum; |
| (c) | the Termination Fee; |
| (d) | any Breakfunding Costs; |
| (e) | any and all evidenced and documented direct costs, losses and liabilities incurred by the Owners as a result of the early termination of the leasing under this Charter including but not limited to any legal costs, any agency or broker fees incurred in attempting to re-charter or otherwise dispose of the Vessel; |
| (f) | any and all documented costs, losses and liabilities incurred by the Owners in locating, repossessing, recovering, repositioning, berthing, insuring and maintaining the Vessel and/or in collecting any payments due under this Charter and/or in obtaining the due performance of the obligations of the Charterers under this Charter or the other Leasing Documents (including, but not limited to, for carrying out any works or modifications or repairs reasonably required to cause the Vessel to conform with the provisions relating to redelivery as required under Clause 41.6); and |
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| (g) | aside from the amounts described under paragraphs (a) to (f) above, any other moneys due and payable, but unpaid, under the Leasing Documents at the Relevant Date including any default interest on amounts under (a) to (f) above, |
"Total Loss" means:
| (a) | actual, constructive, compromised, agreed or arranged total loss of the Vessel; |
| (b) | any expropriation, confiscation, requisition or acquisition of the Vessel, whether for full consideration, a consideration less than its proper value, a nominal consideration or without any consideration, which is effected by any government or official authority or by any person or persons claiming to be or to represent a government or official authority (excluding a requisition for hire for a fixed period not exceeding one (1) year without any right to an extension) unless it is redelivered within twenty-one (21) days to the full control of the Owners or the Charterers; or |
| (c) | any arrest, capture, seizure or detention of the Vessel (including any hijacking or theft but excluding any event specified in paragraph (b) of this definition) unless it is redelivered within thirty (30) days to the full control of the Owners or the Charterers. |
"Total Loss Date" means, in relation to the Total Loss of the Vessel:
| (a) | in the case of an actual loss of the Vessel, the date on which it occurred; |
| (b) | in the case of a constructive, compromised, agreed or arranged total loss of the Vessel, the earlier of: |
| (i) | the date on which a notice of abandonment is given to the insurers; |
| (ii) | the date when the Vessel was last heard of; and |
| (iii) | the date of any compromise, arrangement or agreement made by or on behalf of the Charterers with the Vessel’s insurers in which the insurers agree to treat the Vessel as a Total Loss; and |
| (c) | in the case of any expropriation, confiscation, requisition or acquisition of the Vessel whether for full consideration, a consideration less than its proper value, a nominal consideration or without any consideration, which is effected by any government or official authority or by any person or persons claiming to be or to represent a government or official authority (excluding a requisition for hire for a fixed period not exceeding one (1) year without any right to an extension), on the date on which the expropriation, confiscation, requisition or, as the case may be, the acquisition of the Vessel is completed by delivery of the Vessel to the relevant government or official authority or the person or persons claiming to be or to represent the relevant government or official authority unless it is redelivered within twenty-one (21) days to the full control of the Owners or the Charterers; and |
| (d) | in the case of any arrest, condemnation, capture, seizure or detention of the Vessel (including any hijacking or theft), unless it is redelivered within thirty (30) days to the full control of the Owners or the Charterers, the date falling on the expiration of such days. |
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"Total Loss Payment Date" means, following the occurrence of a Total Loss, the earlier of:
| (a) | the date falling one hundred and twenty (120) days after the Total Loss Date or such later date as the Owners may agree; and |
| (b) | the date on which the Owners receive the Total Loss Proceeds. |
"Total Loss Proceeds" means the proceeds of any policy or contract of insurance or any Requisition Compensation in each case arising in respect of a Total Loss.
"Trafigura Charter" means a time charter entered into between the Charterers and the Trafigura Charterer as time charterer dated 15 December 2020 in relation to the Vessel, as amended and supplemented from time to time.
"Trafigura Charterer" means Trafigura Maritime Logistics Pte. Ltd. or any other nominee nominated as the charterers under the Trafigura Charter (which is acceptable to the Owners) in accordance with the terms of the Trafigura Charter.
"US" means the United States of America.
"US Government Securities Business Day" means any day other than:
| (a) | a Saturday or a Sunday; and |
| (b) | a day on which the Securities Industry and Financial Markets Association (or any successor organisation) recommends that the fixed income departments of its members be closed for the entire day for purposes of trading in US Government securities. |
"US Tax Obligor" means (a) a person which is resident for tax purposes in the United States of America or (b) a person some or all of whose payments under the Leasing Documents are from sources within the United States for United States federal income tax purposes.
"Variable Charterhire" means, in relation to a Payment Date, the interest component of Charterhire thereof applying the applicable interest rate (being the implied interest rate on which the initial Payment Schedule was based) to the Owners’ Costs on the immediately preceding Payment Date (or, in the case of the First Payment Date only, on the Commencement Date) for the relevant Hire Period ending on the relevant Payment Date by reference to the actual number of days elapsed, as illustrated in the column entitled "Variable Charterhire" in the Payment Schedule (or any replacement Payment Schedule).
"Vessel" means m.v. JULIUS CAESAR, the 300,000 DWT crude oil tanker with IMO number 9912244.
| 67.2 | Inconsistency between Charter provisions and Leasing Documents |
In the case of any conflict between the provisions or terms so of this Charter and the terms and provisions of a Leasing Document, the provisions of this Charter shall prevail.
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67.3 Construction
Unless a contrary indication appears, in this Charter:
the "Approved Manager", the "Charterers", the "Guarantor", any "Relevant Person", the "Owners", any "Other Charterer", any "Other Owner", or any other person shall be construed so as to include its successors in title, permitted assigns and permitted transferees to, or of, its rights and/or obligations under the Leasing Documents;
"agreed form" means, in relation to a document, such document in a form agreed in writing between the Owners and the Charterers and, if required by the Owners in their sole discretion, the Owners’ Financiers;
"asset" includes every kind of property, asset, interest or right, including any present, future or contingent right to any revenues or other payment;
"company" includes any partnership, joint venture and unincorporated association;
"consent" means:
| (a) | an authorisation, consent, approval, resolution, licence, exemption, filing, registration, notarisation and legalization; and |
| (b) | in relation to anything which will be prohibited or restricted by law if a governmental or official authority intervenes or acts in any way within a specified period after lodgment, filing, registration or notification, the expiry of that period without intervention or action. |
"contingent liability" means a liability which is not certain to arise and/or the amount of which remains unascertained;
"continuing" means, in relation to any Termination Event, a Termination Event which has not been waived by the Owners and in relation to any Potential Termination Event, a Potential Termination Event which has not been waived by the Owners or remedied to the satisfaction of the Owners;
"control" over a particular company means the power (whether by way of ownership of shares, proxy, contract, agency or otherwise) to:
| (a) | cast, or control the casting of, more than 51 per cent, of the maximum number of votes that might be cast at a general meeting of such company; |
| (b) | appoint or remove all, or the majority, of the directors or other equivalent officers of such company; or |
| (c) | give directions with respect to the operating and financial policies of such company with which the directors or other equivalent officers of such company are obliged to comply; |
"document" includes a deed; also a letter, fax or telex;
the Owners’ "cost of funds" in relation to the Owners’ Costs or any part thereof is a reference to the average cost (determined either on an actual or a notional basis) which the Owners would incur if they were to fund or finance, from whatever source(s) they may reasonably select, an amount equal to the amount of the Owners’ Costs or any part thereof for a period equal in length to the Hire Period of the Owners’ Costs or any part thereof;
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"expense" means any kind of cost, charge or expense (including all legal costs, charges and expenses) and any applicable value added or other tax;
"gross negligence" means a form of negligence which is distinct from ordinary negligence, in which the due diligence and care which are generally to be exercised have been disregarded to a particularly high degree, in which the plainest deliberations have not been made and that which should be most obvious to everybody has not been followed.
"law" includes any order or decree, any form of delegated legislation, any treaty or international convention and any regulation or resolution of the Council of the European Union, the European Commission, the United Nations or its Security Council;
"legal or administrative action" means any legal proceeding or arbitration and any administrative or regulatory action or investigation;
"liability" includes every kind of debt or liability (present or future, and including contingent liabilities only in the case of Clause 49.1(g)(ii), Clause 53 - (Indemnities) and the definition of "Financial Indebtedness"), whether incurred as principal or surety or otherwise;
"months" shall be construed in accordance with Clause 67.4 (Meaning of "month");
"person" includes any company; any state, political sub-division of a state and local or municipal authority; and any international organisation;
"policy", in relation to any insurance, includes a slip, cover note, certificate of entry or other document evidencing the contract of insurance or its terms;
"protection and indemnity risks" means the usual risks covered by a protection and indemnity association which is a member of the International Group of Protection And Indemnity Clubs including pollution risks, extended passenger cover and the proportion (if any) of any sums payable to any other person or persons in case of collision which are not recoverable under the hull and machinery policies by reason of the incorporation in them of clause 6 of the International Hull Clauses (1/11/02 or 1/11/03), clause 8 of the Institute Time Clauses (Hulls)(1/10/83) or clause 8 of the Institute Time Clauses (Hulls) (1/11/1995) or the Institute Amended Running Down Clause (1/10/71) or any equivalent provision;
"regulation" includes any regulation, rule, official directive, request or guideline whether or not having the force of law of any governmental, intergovernmental or supranational body, agency, department or regulatory, self-regulatory or other authority or organisation; and
"tax" includes any present or future tax, duty, impost, levy or charge of any kind which is imposed by any state, any political sub-division of a state or any local or municipal authority (including any such imposed in connection with exchange controls), and any connected penalty, interest or fine.
67.4 Meaning of "month"
A period of one or more "months" ends on the day in the relevant calendar month numerically corresponding to the day of the calendar month on which the period started ("the numerically corresponding day"), but:
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| (a) | on the Business Day following the numerically corresponding day if the numerically corresponding day is not a Business Day or, if there is no later Business Day in the same calendar month, on the Business Day preceding the numerically corresponding day; or |
| (b) | on the last Business Day in the relevant calendar month, if the period started on the last Business Day in a calendar month or if the last calendar month of the period has no numerically corresponding day; |
and "month" and "monthly" shall be construed accordingly.
| 67.5 | In this Charter: |
| (a) | references to a Leasing Document or any other document being in the form of a particular appendix or to any document referred to in the recitals include references to that form with any modifications to that form which the Owners and the Charterers approve; |
| (b) | references to, or to a provision of, a Leasing Document or any other document are references to it as amended or supplemented, whether before the date of this Charter or otherwise; |
| (c) | references to, or to a provision of, any law include any amendment, extension, re-enactment or replacement, whether made before the date of this Charter or otherwise; |
| (d) | words denoting the singular number shall include the plural and vice versa; and |
| (e) | references to a page or screen of an information service displaying a rate shall include: |
| (i) | any replacement page of that information service which displays that rate; and |
| (ii) | the appropriate page of such other information service which displays that rate from time to time in place of that information service, |
and, if such page or service ceases to be available, shall include any other page or service displaying that rate specified by the Owners after consultation with the Charterers.
67.6 Construction of Insurance terms
In this Charter:
"approved" means, for the purposes of Clause 39 - (Insurance), approved in writing by the Owners.
"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 its insured value being less than the value at which the Vessel is assessed for the purpose of such claims.
"obligatory insurances" means all insurances effected, or which the Charterers are obliged to effect, under Clause 39 - (Insurance) or any other provision of this Charter or another Leasing Document.
"policy" includes a slip, cover note, certificate of entry or other document evidencing the contract of insurance or its terms.
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"protection and indemnity risks" means the usual risks (including but not limited to freight, demurrage and defence cover) covered by a protection and indemnity association being a member of the International Group of Protection and Indemnity Clubs, including pollution risks and the proportion (if any) of any sums payable to any other person or persons in case of collision which are not recoverable under the hull and machinery policies by reason of the incorporation in them of clause 6 of the International Hull Clauses (1/11/02) (1/11/03), clause 8 of the Institute Time Clauses (Hulls) (1/10/83) (1/11/95) or the Institute Amended Running Down Clause (1/10/71) or any equivalent provision.
"war risks" includes the risk of mines and all risks excluded by clause 29 of the International Hull Clauses (1/11/02 or 1/11/03), clause 24 of the Institute Time Clauses (Hulls) (1/11/95) or clause 23 of the Institute Time Clauses (Hulls)(1/10/83).
67.7 Headings
In interpreting a Leasing Document or any provision of a Leasing Document, all clauses, subclauses and other headings in that and any other Leasing Document shall be entirely disregarded.
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SCHEDULE 1
ACCEPTANCE CERTIFICATE
Julius Caesar Inc. (the "Charterers") hereby acknowledges that at _________________ hours on _________________, there was delivered to, and accepted by, the Charterers the Vessel known as m.v. "JULIUS CAESAR ", registered in the name of SEA 268 LEASING CO. LIMITED (the "Owners") under the flag of the Marshall Islands with IMO number 9912244 under a bareboat charter dated _________________ (the "Charter") and made between the Owners and the Charterers and that Delivery (as defined in the Charter) thereupon took place and that, accordingly, the Vessel is and will be subject to all the terms and conditions contained in the Charter.
The Charterers warrant that the representations and warranties made by them in Clause 45 - (Representation and Warranties) of the Charter remain correct and that no Termination Event (as defined in the Charter) has occurred and is continuing at the date of this Acceptance Certificate.
Name:
Title:
for and on behalf of
JULIUS CAESAR INC.
Dated:
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SCHEDULE 2
PART A
The following are the documents referred to in Clause 34.2(e)(i):
| 1 | Corporate Authority |
| 1.1 | A copy of the constitutional documents of each Relevant Person (other than the Other Charterers). |
| 1.2 | If required, a copy of the resolutions of the board of directors (or equivalent) of each Relevant Person (other than the Other Charterers): |
| (a) | approving the terms of, and the transactions contemplated by, the Leasing Documents to which it is a party and resolving that it execute the Leasing Documents to which it is a party; |
| (b) | authorizing a specified person or persons to execute the Leasing Documents to which it is a party on its behalf; and |
| (c) | authorising a specified person or persons, on its behalf, to sign and/or dispatch all documents and notices to be signed and/or dispatched by it under, or in connection with, the Leasing Documents to which it is a party. |
| 1.3 | If required, an original of the power of attorney of any party to a Leasing Document authorising a specified person or persons to execute the Leasing Documents to which it is a party. |
| 1.4 | If required, a specimen of the signature of each person authorized by the resolution referred to in paragraph 1.2 above. |
| 1.5 | If required, a copy of the resolutions signed by all the holder(s) of the issued shares of any Relevant Person, approving the terms of, and the transactions contemplated by such Leasing Document. |
| 1.6 | A certificate of an officer or authorized signatory of each Relevant Person certifying that each copy document relating to it specified in this Part A of Schedule 2 is correct, complete and in full force and effect as at a date no earlier than the date of this Agreement. |
| 2 | Documents and other security |
| 2.1 | A duly executed original of each Leasing Document (except the Account Security, the Shares Security, the General Assignment and the Manager’s Undertaking) and of each document to be delivered under each of them. |
| 2.2 | Agreed forms of the Account Security, the Shares Security, the General Assignment and the Manager’s Undertaking and of each document to be delivered under each of them. |
| 2.3 | Evidence that the Charterers’ Operating Account have been opened and maintained with the Account Bank. |
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| 3 | Valuation of Vessel |
Valuation(s) of the Vessel, addressed to the Owners and dated not earlier than thirty (30) days before the Commencement Date indicating the Initial Market Value.
| 4 | Legal opinion |
| 4.1 | Agreed form of legal opinion by English legal advisers to the Owners on such matters on the laws of England in relation to the applicable documents listed in paragraphs 2.1 and 2.2 of Part A of this Schedule, in form and substance acceptable to the Owners. |
| 4.2 | Agreed forms of legal opinions by lawyers appointed by the Owners on such matters relating to the applicable documents listed in paragraphs 2.1 and 2.2 of Part A this Schedule, concerning the laws of the Republic of the Marshall Islands, Germany and such other relevant jurisdictions as the Owners may reasonably require, in form and substance acceptable to the Owners. |
| 5 | Vessel Insurances |
| 5.1 | Evidence that the Vessel is or will be on Delivery insured in the manner required under Clause 39 - (Insurance). |
| 5.2 | Agreed form of letters of undertaking and certificates of entry (as the case may be) relating to insurances as set out in Clause 39 - (Insurance) from the relevant insurer, insurance broker, protection and indemnity association or war risks association (as the case may be). |
| 5.3 | An insurance report by an insurance advisor appointed by the Owners (but at the cost of the Charterers) in an agreed form acceptable to the Owners. |
| 6 | Vessel Documents |
| 6.1 | A copy of the Management Agreement and any amendments thereto, establishing that the Vessel will, as from the Commencement Date, be managed by the relevant Approved Manager. |
| 6.2 | A copy of the Document of Compliance of the Technical Manager. |
| 6.3 | A copy of the Vessel’s class certificate evidencing that the Vessel maintains such classification. |
| 6.4 | Copies of the Vessel’s Safety Management Certificate (together with any other details of the applicable safety management system which the Owners may require) and of any other documents required under the ISM Code and the ISPS Code (including, without limitation, an ISSC and IAPPC). |
| 6.5 | Trafigura Charter |
| 6.6 | A copy of the executed Trafigura Charter (and any addendums thereto). |
| 6.7 | Evidence to the satisfaction of the Owners that the Trafigura Charterer consents to the sale and leaseback of the Vessel contemplated by the Leasing Documents. |
| 7 | Deed of Release |
An agreed form deed of release discharging, among other things, (i) all of the Charterers’ obligations under the Existing Charter and documents conferring Security Interests entered into in connection with the Existing Charter and (ii) all Security Interests encumbering the Vessel or any part thereof (if any), in such form as is satisfactory to the Owners.
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| 8 | Others |
| 8.1 | Evidence that any fees, costs and expenses then due from the Charterers to the Owners under the Leasing Documents have been paid and received by the Owners. |
| 8.2 | Copies of the Original Financial Statements. |
| 8.3 | Such evidence relating to the Relevant Person as the Owners may reasonably require for their (or their financiers) to be able to satisfy each of their "know your customer" or similar identification procedures in relation to the Leasing Documents. |
| 8.4 | A copy of any other consents, approvals, authorization or other document, opinion or assurance which the Owners consider to be reasonably desirable in connection with the entry into and performance of the transactions contemplated by any of the Leasing Documents or for the validity and enforceability of such documents. |
| 8.5 | If required, evidence that any process agent referred to under the Leasing Documents has accepted its appointment. |
| 8.6 | If required by the Flag State for purposes of registering the Vessel in the name of the Owners, evidence that the Owners have been registered as a foreign maritime entity under the laws of the Flag State (with such cost to be borne by the Charterers). |
| 8.7 | Such other documents as the Owners may require by giving notice to the Charterers. |
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PART B
The following are the documents referred to in Clause 34.2(e)(ii):
| 1 | Corporate Authorisations/Confirmation |
| 1.1 | A certificate of an authorized signatory of each Relevant Person (other than the Other Charterers) certifying that each copy document provided under paragraph 1 of Part A of Schedule 2 of the MOA remains correct, complete and in full force and effect as on the Commencement Date. |
| 1.2 | A certificate of an authorized signatory of the Charterers certifying that there is no Potential Termination Event or Termination Event has occurred and is continuing as of the Commencement Date. |
| 2 | Security Documents |
| 2.1 | Duly executed and dated copies of the Account Security, the Shares Security, the General Assignment and the Manager’s Undertaking and of each document to be delivered under it and evidence of their delivery within the timing prescribed under it. |
| 2.2 | Documentary evidence that the Security Interests intended to be created by each of the Security Documents have been duly perfected under applicable law or will be perfected under applicable law within the prescribed period contained in such Security Documents. |
| 3 | Delivery and title registration of the Vessel |
3.1 Documentary evidence that the Vessel is or will be:
| (a) | definitively and permanently registered in the name of the Owners under the flag of the Flag State; |
| (b) | in the absolute and unencumbered ownership of the Owners; |
| (c) | unconditionally delivered by the Charterers (in their capacity as sellers) to the Owners (in their capacity as buyers) pursuant to the terms of the MOA, where such documents shall include without limitation: |
| (i) | a certificate or transcript or an email confirmation issued by the competent authorities of the Flag State on the date of Delivery evidencing the Charterers’ ownership of the Vessel and that the Vessel is free from registered encumbrances and mortgages; |
| (ii) | where applicable, the original (if required by the Flag State) or a copy of the notarized and legalized (if required by the Flag State) copies of the bill of sale duly executed by the Charterers (and where executed by an attorney of the Charterers, together with such original or a copy of the notarized and legalised copies (if required by the Flag State) of the Charterers’ power of attorney); and |
| (iii) | where applicable, the original (if required by the Flag State) or a copy of the protocol of delivery and acceptance duly executed by the Charterers and the Owners; and |
| (d) | delivered to the Trafigura Charterer in accordance with the Trafigura Charter. |
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| 3.2 | The commercial invoice of the Vessel. |
| 4 | Legal opinions |
| 4.1 | A signed legal opinion of Watson Farley & Williams, legal advisers to the Owners on such matters on the laws of England as may be satisfactory to the Owners. |
| 4.2 | Signed legal opinions by lawyers appointed by the Owners on such matters on the laws of the Marshall Islands and Germany and any other jurisdictions as may be satisfactory to the Owners. |
| 5 | Others |
The Owners being satisfied that all conditions precedent or documents or evidence specified in Schedule 1 to the MOA have been satisfied or provided in form and substance satisfactory to the Owners.
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PART C
The following are the documents referred to in Clause 34.8:
| 1 | Security Interests |
Not later than five (5) Business Days after the Commencement Date, documentary evidence that the Security Interests intended to be created by each of the Security Documents have been duly perfected under applicable law (as applicable).
| 2 | Legal opinions |
Not later than three (3) Business Days after the Commencement Date, issued signed copies of the legal opinions referred to in paragraph 5 of Part B of Schedule 2 of this Charter.
| 3 | Insurances |
| 3.1 | Not later than five (5) Business Days after the Commencement Date, receipt of copies of the executed letters of undertaking and certificates of entry (as the case may be) relating to insurances as set out in Clause 39 - (Insurance) acknowledged by the relevant insurer, insurance broker, protection and indemnity association or war risks association (as the case may be), each in the agreed form under paragraph 5.2 of Part A of Schedule 2 of this Charter. |
| 3.2 | Not later than ten (10) Business Days after the Commencement Date, the signed insurance report in the form agreed under paragraph 5 of Part A of Schedule 2 of this Charter. |
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SCHEDULE 3
PAYMENT SCHEDULE
Currency: US$
|
Payment Period |
Payment Date* |
Fixed Charterhire |
Variable Charterhire |
Charterhire | Owners’ Cost |
| 0 | 1/18/2024 | 62,500,000.00 | |||
| 1 | 4/18/2024 | 694,434.57 | 1,125,565.43 | 1,820,000.00 | 61,805,565.43 |
| 2 | 7/18/2024 | 706,940.56 | 1,113,059.44 | 1,820,000.00 | 61,098,624.87 |
| 3 | 10/18/2024 | 719,671.77 | 1,120,328.23 | 1,840,000.00 | 60,378,953.10 |
| 4 | 1/18/2025 | 732,632.26 | 1,107,367.74 | 1,840,000.00 | 59,646,320.84 |
| 5 | 4/18/2025 | 745,826.15 | 1,054,173.85 | 1,800,000.00 | 58,900,494.69 |
| 6 | 7/18/2025 | 759,257.65 | 1,060,742.35 | 1,820,000.00 | 58,141,237.04 |
| 7 | 10/18/2025 | 772,931.04 | 1,067,068.96 | 1,840,000.00 | 57,368,306.00 |
| 8 | 1/18/2026 | 786,850.66 | 1,053,149.34 | 1,840,000.00 | 56,581,455.34 |
| 9 | 4/18/2026 | 801,020.97 | 998,979.03 | 1,800,000.00 | 55,780,434.37 |
| 10 | 7/18/2026 | 815,446.46 | 1,004,553.54 | 1,820,000.00 | 54,964,987.91 |
| 11 | 10/18/2026 | 830,131.75 | 1,009,868.25 | 1,840,000.00 | 54,134,856.16 |
| 12 | 1/18/2027 | 845,081.49 | 994,918.51 | 1,840,000.00 | 53,289,774.67 |
| 13 | 4/18/2027 | 860,300.47 | 939,699.53 | 1,800,000.00 | 52,429,474.20 |
| 14 | 7/18/2027 | 875,793.52 | 944,206.48 | 1,820,000.00 | 51,553,680.67 |
| 15 | 10/18/2027 | 891,565.59 | 948,434.41 | 1,840,000.00 | 50,662,115.08 |
| 16 | 1/18/2028 | 907,621.69 | 932,378.31 | 1,840,000.00 | 49,754,493.39 |
| 17 | 4/18/2028 | 923,966.95 | 896,033.05 | 1,820,000.00 | 48,830,526.44 |
| 18 | 7/18/2028 | 940,606.57 | 879,393.43 | 1,820,000.00 | 47,889,919.87 |
| 19 | 10/18/2028 | 957,545.84 | 882,454.16 | 1,840,000.00 | 46,932,374.03 |
| 20 | 1/18/2029 | 974,790.18 | 865,209.82 | 1,840,000.00 | 45,957,583.85 |
| 21 | 4/18/2029 | 992,345.06 | 807,654.94 | 1,800,000.00 | 44,965,238.78 |
| 22 | 7/18/2029 | 1,010,216.09 | 809,783.91 | 1,820,000.00 | 43,955,022.69 |
| 23 | 10/18/2029 | 1,028,408.96 | 811,591.04 | 1,840,000.00 | 42,926,613.73 |
| 24 | 1/18/2030 | 1,046,929.46 | 793,070.54 | 1,840,000.00 | 41,879,684.27 |
| 25 | 4/18/2030 | 1,065,783.50 | 734,216.50 | 1,800,000.00 | 40,813,900.77 |
| 26 | 7/18/2030 | 1,084,977.07 | 735,022.93 | 1,820,000.00 | 39,728,923.70 |
| 27 | 10/18/2030 | 1,104,516.30 | 735,483.70 | 1,840,000.00 | 38,624,407.41 |
| 28 | 1/18/2031 | 1,124,407.41 | 715,592.59 | 1,840,000.00 | 37,500,000.00 |
Notes:
| 1. | *The Payment Dates are determined pursuant to this Charter. |
| 2. | The figures set out above are for reference only, and are based on the assumption that the Commencement Date falls on 18 January 2024. |
| 3. | Following the Commencement Date, if applicable, the Owners will provide the Charterers with an updated Schedule 3 (Payment Schedule) containing the updated Payment Dates, Fixed Charterhires and Variable Charterhires. In the absence of manifest error, such replacement Schedule 3 (Payment Schedule) shall be conclusive as to the matters to which it relates and shall be deemed to automatically replace the existing Schedule 3 (Payment Schedule) and form part of this Charter. |
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EXECUTION PAGE
OWNERS
| SIGNED by | ) | ||
| duly authorized | ) | ||
| for and on behalf of | ) | /s/ CUI Wanying | |
| SEA 268 LEASING CO. LIMITED | ) | ||
| ) | CUI Wanying | ||
| in the presence of: | ) | Attorney-in-Fact | |
| Witness’ signature: /s/ So Yuei Sum Serena | ) | ||
| Witness’ name: So Yuei Sum Serena | ) | ||
| Witness’ address: Suites 4610-4619, Jardine House | ) | ||
| 1 Connaught Place, Hong Kong | |||
CHARTERERS
| SIGNED by ALEXANDROS TSIRIKOS | ) | ||
| duly authorized | ) | ||
| for and on behalf of | ) | ||
| Julius Caesar Inc. | ) | ||
| ) | |||
| in the presence of: | ) | /s/ Alexandros Tsirikos | |
| Witness’ signature: /s/ Dimitra Karkaletsi | ) | ||
| Witness’ name: DIMITRA KARKALETSI | ) | Title: Attorney-in-fact | |
| Witness’ address:1 Vasilissis Sofias Street | ) | ||
| & Meg. Alexandrou Street, | |||
| 15124 Maroussi-Athens, Greece | |||
CMBFL Top Ships II
BBC Additional Clauses (JULIUS CAESAR)
Exhibit 4.23
EXECUTION VERSION
Dated 11 January 2024
TOP SHIPS INC.
as Guarantor
and
SEA 268 LEASING CO. LIMITED
as Owner
GUARANTEE
relating to
a Bareboat Charter of the vessel m.v. Julius Caesar
dated 11 January 2024
Index
| Clause | Page | |
| 1 | Interpretation | 1 |
| 2 | Guarantee | 2 |
| 3 | Liability as Principal and Independent Debtor | 3 |
| 4 | Expenses | 3 |
| 5 | Adjustment of Transactions | 4 |
| 6 | Payments | 4 |
| 7 | Interest | 4 |
| 8 | Subordination | 5 |
| 9 | Enforcement | 5 |
| 10 | Representations and Warranties | 6 |
| 11 | Undertakings | 9 |
| 12 | Judgments and Currency Indemnity | 15 |
| 13 | Supplemental | 16 |
| 14 | Assignment | 18 |
| 15 | Notices | 18 |
| 16 | Invalidity of Bareboat Charter | 19 |
| 17 | Governing Law and Enforcement | 19 |
| Schedules | ||
| Schedule 1 Form of compliance Certificate | 21 | |
CMBFL Top Ships II
Guarantee (Julius Caesar)
THIS GUARANTEE is made on 11 January 2024
PARTIES
| (1) | TOP SHIPS INC., a corporation incorporated under the laws of the Marshall Islands whose registered address is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands, MH96960 (the “Guarantor”) |
| (2) | SEA 268 LEASING CO. LIMITED, a company incorporated under the laws of Hong Kong whose registered office is at 27/F, Three Exchange Square, 8 Connaught Place, Central, Hong Kong (the “Owner” which expression includes its successors and assigns) |
BACKGROUND
| (A) | By a bareboat charter dated 11 January 2024 (the “Bareboat Charter”) and made between (i) the Owner, as owner and (ii) JULIUS CAESAR INC., a corporation incorporated under the laws of the Marshall Islands whose registered address is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands, MH96960, as charterer (the “Charterer”), the Owner has agreed to bareboat charter one (1) oil/chemical tanker named m.v. “Julius Caesar " with IMO no. 9912244 (the "Vessel") to the Charterer pursuant to the terms and conditions contained therein. |
| (B) | The Guarantor is the shareholder of the Charterer and holds all of the issued and outstanding shares in the Charterer. |
| (C) | The execution and delivery to the Owner of this Guarantee is one of the conditions to the chartering of the Vessel under the Bareboat Charter. |
| (D) | This Guarantee is the Guarantee referred to in the Bareboat Charter. |
OPERATIVE PROVISIONS
| 1 | INTERPRETATION |
| 1.1 | Defined expressions |
Words and expressions defined in the Bareboat Charter shall have the same meanings when used in this Guarantee unless the context otherwise requires.
| 1.2 | Construction of certain terms |
In this Guarantee:
"bankruptcy" includes a liquidation, receivership or administration and any form of suspension of payments, arrangement with creditors or reorganisation under any corporate or insolvency law of any country.
"Compliance Certificate" means a certificate in the form set out in Schedule 1 or in any other form approved by the Owner.
"control" over a particular company means the power (whether by way of ownership of shares, proxy, contract, agency or otherwise) to:
CMBFL Top Ships II
Guarantee (Julius Caesar)
| (a) | cast, or control the casting of, more than 51 per cent, of the maximum number of votes that might be cast at a general meeting of such company; |
| (b) | appoint or remove all, or the majority, of the directors or other equivalent officers of such company; or |
| (c) | give directions with respect to the operating and financial policies of such company with which the directors or other equivalent officers of such company are obliged to comply. |
"Group" means the Guarantor and its subsidiaries from time to time.
"Party" means a party to this Guarantee.
"Relevant Person" means each "Relevant Person" as defined in the Bareboat Charter.
"Secured Liabilities" means all present and future obligations and liabilities (whether actual or contingent and whether owed jointly or severally or in any other capacity whatsoever) of the Charterer to the Owner under or in connection with any Leasing Documents or any judgment relating to any Leasing Documents, and for this purpose, there shall be disregarded any total or partial discharge of these liabilities, or variation of their terms, which is effected by, or in connection with, any bankruptcy, liquidation, arrangement or other procedure under the insolvency laws of any country.
"Security Period" means the period commencing on the date hereof and ending on the date on which the Owner is satisfied that the Secured Liabilities have been irrevocably and unconditionally paid and discharged in full.
| 2 | GUARANTEE |
| 2.1 | Guarantee and indemnity |
The Guarantor unconditionally and irrevocably:
| (a) | guarantees the due payment of all amounts payable by each other Relevant Person under or in connection to each Leasing Document to which such Relevant Person is a party; |
| (b) | undertakes to pay to the Owner on the Owner's demand any such amount which is not paid by that Relevant Person when due and payable under or in connection to that Leasing Document; |
| (c) | guarantees the punctual performance by that Relevant Person of all that Relevant Person's obligations under or in connection with that Leasing Document; and |
| (d) | fully indemnifies the Owner on its demand in respect of all claims, expenses, liabilities and losses which are made or brought against or incurred by the Owner as a result of or in connection with any obligation or liability guaranteed by the Guarantor being or becoming unenforceable, invalid, void or illegal; and the amount recoverable under this indemnity shall be equal to the amount which the Owner would otherwise have been entitled to recover. |
| 2.2 | No limit on number of demands |
The Owner may serve more than one demand under Clause 2.1 (Guarantee and indemnity).
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| 2.3 | Guarantee of whole amount |
This Guarantee shall be construed and take effect as a guarantee of all amounts due to the Owner under the Leasing Documents to which each other Relevant Person is a party.
| 3 | LIABILITY AS PRINCIPAL AND INDEPENDENT DEBTOR |
| 3.1 | Principal and independent debtor |
The Guarantor shall be liable under this Guarantee as a principal and independent debtor and accordingly it shall not have, as regards this Guarantee, any of the rights or defences of a surety.
| 3.2 | Waiver of rights and defences |
Without limiting the generality of Clause 3.1 (Principal and independent debtor), the Guarantor shall neither be discharged by, nor have any claim against the Owner in respect of:
| (a) | any amendment or supplement being made to the Bareboat Charter or any other Leasing Document; |
| (b) | any arrangement or concession (including a rescheduling or acceptance of partial payments) relating to, or affecting, the Bareboat Charter or any other Leasing Document; |
| (c) | any release or loss (even though negligent) of any right or Security Interest created by any Leasing Document; |
| (d) | any failure (even though negligent) promptly or properly to exercise or enforce any such right or Security Interest, including a failure to realise for its full market value an asset covered by such a Security Interest; or |
| (e) | the Bareboat Charter or any other Leasing Document now being or later becoming void, unenforceable, illegal or invalid or otherwise defective for any reason, including a neglect to register it. |
| 4 | EXPENSES |
| 4.1 | Costs of preservation of rights, enforcement etc |
The Guarantor shall pay to the Owner on its demand the amount of all documented expenses (including, without limitation, legal fees) incurred by the Owner in connection with the enforcement of, or the preservation of any rights under this Guarantee or any other Leasing Document, including any advice, claim or proceedings relating to such matters.
| 4.2 | Fees and expenses payable under Leasing Documents |
Clause 4.1 (Costs of preservation of rights, enforcement etc) is without prejudice to the Guarantor's liabilities in respect of any other Relevant Person's obligations under any Leasing Document to which it is a party.
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| 5 | ADJUSTMENT OF TRANSACTIONS |
| 5.1 | Reinstatement of obligation to pay |
The Guarantor shall pay to the Owner on its demand any amount which the Owner is required, or agrees, to pay pursuant to any claim by, or settlement with, a trustee in bankruptcy of any other Relevant Person on the ground that any Leasing Document to which that Relevant Person is a party, or a payment by that Relevant Person, was invalid or unenforceable or on any similar ground.
| 6 | PAYMENTS |
| 6.1 | Method of payments |
Any amount due under this Guarantee shall be paid:
| (a) | in immediately available funds; |
| (b) | to such account as the Owner may from time to time notify to the Guarantor; |
| (c) | without any form of set-off, cross-claim or condition; and |
| (d) | free and clear of any tax deduction or withholding for or on account of any tax payable under any law of relevant jurisdictions except a tax deduction which the Guarantor is required by law to make. |
| 6.2 | Grossing-up for taxes |
If the Guarantor is required by law to make a tax deduction, the amount due to the Owner shall be increased by the amount necessary to ensure that the Owner receives and retains a net amount which, after the tax deduction, is equal to the full amount that it would otherwise have received.
| 6.3 | Indemnity and evidence of payment of taxes |
The Guarantor shall fully indemnify the Owner on the Owner's demand in respect of all claims, expenses, liabilities and losses incurred by the Owner by reason of any failure of the Guarantor to make any tax deduction or by reason of any increased payment not being made on the due date for such payment in accordance with Clause 6.2 (Grossing-up for taxes). Within 30 days after making a tax deduction, that Guarantor shall deliver to the Owner any receipts, certificates or other documentary evidence satisfactory to the Owner that the tax had been paid to the appropriate taxation authority.
| 7 | INTEREST |
| 7.1 | Accrual of interest |
Any amount due under this Guarantee shall carry interest after the date on which the Owner demands payment of it until it is actually paid, unless interest on that same amount also accrues under the Bareboat Charter.
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| 7.2 | Calculation of interest |
Interest under this Guarantee shall be calculated and accrue (as well after as before judgment) at the rate described in clauses 37.1 and 37.2 of the Bareboat Charter and otherwise in accordance with the terms thereof.
| 8 | SUBORDINATION |
| 8.1 | Subordination of rights of Guarantor |
All rights which the Guarantor at any time has (whether in respect of this Guarantee or any other transaction) against each other Relevant Person or its assets shall be fully subordinated to the rights of the Owner under the Leasing Documents (or any of them), and in particular, the Guarantor shall not:
| (a) | claim, or in a bankruptcy of that Relevant Person prove for, any amount payable to the Guarantor by that Relevant Person, whether in respect of this Guarantee or any other transaction; |
| (b) | take or enforce any Security Interest for any such amount; |
| (c) | claim to set-off any such amount against any amount payable by the Guarantor to that Relevant Person; or |
| (d) | claim any subrogation or other right in respect of any Leasing Document or any sum received or recovered by the Owner under such Leasing Document. |
| 9 | ENFORCEMENT |
| 9.1 | No requirement to commence proceedings against other Relevant Person |
The Owner will not need to commence any proceedings under, or enforce any Security Interest created by, the Bareboat Charter or any other Leasing Document before claiming or commencing proceedings under this Guarantee.
| 9.2 | Conclusive evidence of certain matters |
However, as against the Guarantor:
| (a) | any final and unappealable judgment or order of a court in England or any Relevant Jurisdiction or award of an arbitration tribunal in London in connection with the Bareboat Charter or any other Leasing Document; and |
| (b) | any statement or admission of any other Relevant Person in connection with the Bareboat Charter or any other Leasing Document, |
shall be binding and conclusive as to all matters of fact and law to which it relates.
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| 10 | REPRESENTATIONS AND WARRANTIES |
| 10.1 | General |
The Guarantor represents and warrants to the Owner as of the date of this Guarantee, and on each day henceforth until the last day of the Security Period as follows.
| 10.2 | Status |
| (a) | The Guarantor is duly incorporated and validly existing and in good standing under the laws of the Marshall Islands. |
| (b) | The Guarantor is not a FATCA foreign financial institution ("FFI") or a US Tax Obligor. |
| 10.3 | Corporate power |
The Guarantor has the corporate capacity, and has taken all corporate action and obtained all consents necessary for it:
| (a) | to execute this Guarantee or any other Leasing Document to which it is a party; and |
| (b) | to make all the payments contemplated by, and to comply with, this Guarantee or any other Leasing Document to which it is a party. |
| 10.4 | Consents in force |
All the capacities, actions and consents referred to in Clause 10.3 (Corporate power) remain in full force and nothing has occurred which makes any of them liable to revocation.
| 10.5 | No conflicts |
The execution by the Guarantor of the Leasing Documents to which it is a party and its compliance with this Guarantee will not involve or lead to a contravention of:
| (a) | any law or regulation applicable to it; or |
| (b) | the constitutional documents of the Guarantor; or |
| (c) | any contractual or other obligation or restriction which is binding on the Guarantor or any of its assets. |
| 10.6 | Legal, valid and binding obligations |
This Guarantee and the Leasing Document to which it is a party do now or will upon execution and delivery constitute the Guarantor's legal, valid and binding obligations enforceable against it in accordance with its terms and any relevant insolvency laws affecting creditors' rights generally.
| 10.7 | Governing law |
The choice of governing law as stated in this Guarantee and the agreement by the Guarantor to refer disputes to the relevant courts or tribunals as stated herein are valid and binding against the Guarantor.
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| 10.8 | Immunity |
Neither the Guarantor nor any of its assets are entitled to immunity on the grounds of sovereignty or otherwise from any legal action or proceeding (which shall include, without limitation, suit, attachment prior to judgment, execution or other enforcement).
| 10.9 | Pari passu ranking |
The obligations of the Guarantor under this Guarantee, are the direct, general and unconditional obligations of the Guarantor and rank at least pari passu with all other present and future unsecured and unsubordinated creditors of the Guarantor save for any obligation which is mandatorily preferred by law and not by virtue of any contract.
| 10.10 | Legal or administrative action |
No legal or administrative action involving the Guarantor has been commenced or taken which would have required notification to the Owner under Clause 11.8 (Notification of legal or administrative action).
| 10.11 | No insolvency |
The Guarantor is not insolvent or in liquidation or administration or subject to any other formal or informal insolvency procedure, and no receiver, administrative receiver, administrator, liquidator, trustee or analogous officer has been appointed in respect of the Guarantor or all or material part of their assets.
| 10.12 | Tax obligor and place of business |
The Guarantor is not a US Tax Obligor, and has not established a place of business in the United Kingdom or the United States of America.
| 10.13 | No withholding taxes |
All payments which the Guarantor is liable to make under the Leasing Documents to which it is a party may be made without deduction or withholding for or on account of any tax payable under any law of relevant jurisdictions.
| 10.14 | Taxes paid |
The Guarantor has paid all taxes applicable to, or imposed on or in relation to it, its business or except for those being contested in good faith with adequate reserves.
| 10.15 | No default |
No Termination Event has occurred nor is continuing or might reasonably be expected to result from the entry into and performance of this Guarantee or any other Leasing Document.
| 10.16 | Information |
Any factual information provided by the Guarantor (or on its behalf) to the Owner was true and accurate in all material respects as at the date it was provided or as the date at which such information was stated; all accounts (audited and unaudited) delivered under Clause 11.3 (Provision of financial statements) satisfied the requirements of Clause 11.4 (Form of financial statements); and there has been no Material Adverse Effect on the Guarantor from its position disclosed in the latest of those accounts.
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| 10.17 | No litigation |
No legal or administrative action involving the Guarantor has been commenced or taken or, to the Guarantor's knowledge, is likely to be commenced or taken which, in either case, would be likely to have a Material Adverse Effect on the Guarantor.
| 10.18 | Sanctions |
| (a) | No Relevant Person, nor any of their respective directors, officers, or employees, is a Prohibited Person. |
| (b) | Each Relevant Person, and their respective directors, officers, and employees is in compliance with all Sanctions laws, and none of them have been or are currently being investigated on compliance with Sanctions, they have not received notice or are aware of any claim, action, suit or proceeding against any of them with respect to Sanctions and they have not taken any action to evade the application of Sanctions. |
| (c) | No Relevant Person is in breach of any Anti-Money Laundering Laws, Anti-Terrorism Financing Laws and/or Business Ethics Laws and, to the extent required by applicable law, has instituted and maintained systems, controls, policies and procedures designed to: |
| (i) | prevent and detect incidences of bribery and corruption, money laundering and terrorism financing; and |
| (ii) | promote and achieve compliance with Anti-Money Laundering Laws, Anti-Terrorism Financing Laws and/or Business Ethics Laws including, but not limited to, ensuring thorough and accurate books and records, and utilization of best efforts to ensure that Affiliates acting on behalf of a Relevant Person shall act in compliance with Anti-Money Laundering Laws, Anti-Terrorism Financing Laws and Business Ethics Laws. |
| 10.19 | Environmental Laws |
All Environmental Laws relating to the ownership, operation and management of the Vessel and the business of each Relevant Person (as now conducted and as reasonably anticipated to be conducted in the future) have been complied with.
| 10.20 | Environmental Claim |
No Environmental Claim has been made or threatened against any Relevant Person or otherwise in connection with the Vessel which is either (i) in excess of US$5,000,000 or (ii) has or is reasonably likely to have a Material Adverse Effect.
| 10.21 | Environmental Incident |
No Environmental Incident has occurred and no person has claimed that an Environmental Incident has occurred.
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| 10.22 | Ownership of the Charterer |
The Charterer is legally and beneficially and indirectly wholly owned and controlled by the Guarantor.
| 10.23 | Status of the Guarantor |
| (a) | Save for permitted under the Bareboat Charter, the shares of the Guarantor are traded on the NASDAQ or Over the Counter (OTC); and |
| (b) | the Guarantor is an entity reporting with the U.S. Securities and Exchange Commission. |
| 11 | UNDERTAKINGS |
| 11.1 | General |
The Guarantor undertakes with the Owner to comply with the following provisions of this Clause 11 (General) at all times during the Security Period, except as the Owner may otherwise permit.
| 11.2 | Information provided to be accurate |
All financial and other information which is provided by or on behalf of the Guarantor under or in connection with the Leasing Documents will be true and not misleading and will not omit any material fact or consideration.
| 11.3 | Provision of financial statements |
The Guarantor will send to the Owner:
| (a) | as soon as possible, but in no event later than one hundred and fifty (150) days after the end of each financial year of the Charterers, the audited annual financial statement accounts of the Charterers for that financial year as referred to in the Guarantor's audited consolidated annual financial statement accounts of the Guarantor for that financial year to be delivered under paragraph (c); |
| (b) | as soon as possible, but in no event later than ninety (90) days after the end of each half-year, the unaudited semi-annual accounts of the Charterers for that half-year; |
| (c) | as soon as possible, but in no event later than one hundred and fifty (150) days after the end of each financial year of the Guarantor, the audited consolidated annual financial statement accounts of the Guarantor for that financial year; and |
| (d) | as soon as possible, but in no event later than ninety (90) days after the end of each half-year, the semi-annual consolidated unaudited accounts of the Guarantor for that half-year certified as to their correctness by at least one director of the Guarantor. |
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| 11.4 | Form of financial statements |
All accounts (audited and unaudited) delivered under Clause 11.3 (Provision of financial statements) will:
| (a) | be prepared in accordance with all applicable laws and generally accepted accounting principles in the United States consistently applied; |
| (b) | give a true and fair view of (in respect of the audited accounts) or fairly representing (in the case of the management accounts) the state of affairs of the Group at the date of those accounts and of their profit for the period to which those accounts relate; |
| (c) | fully disclose or provide for all significant liabilities of the Group; and |
| (d) | If not in the English language, be accompanied by an English translation duly certified as to its correctness. |
| 11.5 | Shareholder and creditor notices |
The Guarantor will send the Owner, upon its request, copies of all communications which are despatched to the Guarantor's shareholders or creditors or any class of them.
| 11.6 | Consents |
The Guarantor will obtain and promptly renew and will procure that each other Relevant Person obtains and promptly renews or procure the obtainment or renewal of and provide copies of, from time to time, any necessary consents, approvals, authorisations, licenses or permits of any regulatory body or authority for the transactions contemplated under each Leasing Document to which it is a party.
| 11.7 | Valid obligations |
The Guarantor will at its own cost, and will procure that each other Relevant Person will:
| (a) | do all that such Relevant Person reasonably can to ensure that any Leasing Document to which such Relevant Person is a party validly creates the obligations and the Security Interests which such Relevant Person purports to create; and |
| (b) | without limiting the generality of paragraph (a), promptly register, file, record or enrol any Leasing Document to which such Relevant Person is a party with any court or authority in all Relevant Jurisdictions, pay any stamp duty, registration or similar tax in all Relevant Jurisdictions in respect of any Leasing Document to which such Relevant Person is a party, give any notice or take any other step which, is or has become necessary or desirable for any such Leasing Document to be valid, enforceable or admissible in evidence or to ensure or protect the priority of any Security Interest which such Relevant Person creates. |
| 11.8 | Notification of legal or administrative action |
The Guarantor will provide or will procure that each other Relevant Person provides the Owner with details of any legal or administrative action involving such Relevant Person or the Vessel that is likely to have a Material Adverse Effect as soon as such action is instituted or it becomes apparent is likely to be instituted and is likely to have a Material Adverse Effect.
| 11.9 | Notification of damage or default |
The Guarantor:
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| (a) | will, and will procure that each other Relevant Person will, notify the Owner immediately of the occurrence of any damage and/or alteration caused to the Vessel by any reason whatsoever which results, or may be expected to result, in repairs on the Vessel which exceed $5,000,000; and |
| (b) | will, and will procure that each other Relevant Person will, notify the Owner immediately of the occurrence of any Termination Event, |
and will keep the Owner fully up-to-date with all developments and the Guarantor will, if so requested by the Owner, provide any such certificate signed by its authorised signatory, confirming that there exists no Potential Termination Event or Termination Event.
| 11.10 | Additional information |
The Guarantor will, and will procure that each other Relevant Person will, as soon as practicable after receiving the request, provide the Owner with any additional financial or other information relating:
| (a) | to themselves and/or the Vessel (including, but not limited to the condition, location and employment status of the Vessel); or |
| (b) | to any other matter relevant to, or to any provision of any Leasing Document to which it is a party, |
which may be reasonably requested by the Owner (or their financiers (if any)) at any time, provided that, in the case of information on the employment status of the Vessel, such information shall be in form and substance satisfactory to the Owner and shall be provided by the Charterers to the Owner at least once every six-monthly period during each calendar year.
| 11.11 | Compliance with operational laws |
The Guarantor shall procure compliance, and will procure that each other Relevant Person will comply or procure compliance, with all laws or regulations relating to the Vessel and its construction, ownership, employment, operation, management and registration, including the ISM Code, the ISPS Code, all Environmental Laws and the laws of the Vessel's registry.
| 11.12 | Compliance with other laws |
| (a) | The Guarantor shall comply, and shall procure that each other Relevant Person will, comply with all applicable laws and regulations in respect of Sanctions, and in particular, the Charterers shall effect and maintain a sanctions compliance policy to ensure compliance with all such laws and regulations implemented from time to time. |
| (b) | The Guarantor: |
| (i) | shall, and shall procure that each other Relevant Person will, promptly notify the Owner of any non-compliance by any Relevant Person or their respective officers, directors, or employees with all laws and regulations relating to Sanctions, (including but not limited to notifying the Owner in writing immediately upon being aware that any Relevant Person or their respective shareholders, directors, officers or employees is a Prohibited Person or has otherwise become a target of Sanctions) as well as provide all information in relation to its business and operations which may be relevant for the purposes of ascertaining whether any of the aforesaid parties are in compliance with such laws. |
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| (ii) | shall, and will procure that each other Relevant Person will, promptly notify the Owner of any non-compliance by any Relevant Person or their respective officers, directors, or employees with all laws and regulations relating to Anti-Money Laundering Laws, Anti-Terrorism Financing Laws and/or Business Ethics Laws as well as provide all information (once available) in relation to its business and operations which may be relevant for the purposes of ascertaining whether any of the aforesaid parties are in compliance with such laws. |
| (c) | The Guarantor shall procure that the Vessel shall not be employed, operated or managed in any manner which (i) is contrary to any Sanctions and in particular, the Vessel is not used by or to benefit any party which is a target of Sanctions or trade to any area or country where trading the Vessel to such area or country would constitute a breach of any Sanctions or published boycotts imposed by any of the United Nations, the European Union, the United States of America, the United Kingdom or the People's Republic of China (provided that operation or use of the Vessel by the Trafigura Charterer pursuant to the Trafigura Charter shall not in any case be deemed to be in breach or contrary to any published boycotts or sanctions imposed by the People's Republic of China) or (ii) would trigger the operation of any sanctions limitation or exclusion clause in any insurance documentation. |
| (d) | The Guarantor shall, and shall procure that each other Relevant Person and their respective officers, directors and employees, will: |
| (i) | conduct its business in compliance with all Anti-Money Laundering Laws, Anti-Terrorism Financing Laws and/or Business Ethics Laws; |
| (ii) | maintain systems, controls, policies and procedures designed to promote and achieve ongoing compliance with Anti-Money Laundering Laws, Anti-Terrorism Financing Laws and/or Business Ethics Laws; |
| (iii) | in respect of the Charterers, not use, or permit or authorize any person to directly or indirectly use, the Opening Capital Balance for any purpose that would breach any Anti-Money Laundering Laws, Anti-Terrorism Financing Laws and/or Business Ethics Laws; and |
| (iv) | not lend, invest, contribute or otherwise make available the Opening Capital Balance to or for any other person in a manner which would result in a violation of Anti-Money Laundering Laws, Anti-Terrorism Financing Laws and/or Business Ethics Laws. |
| 11.13 | No Security Interests |
The Guarantor shall not, and shall procure that each other Relevant Person will not create, assume or permit to exist any Security Interest (other than any Permitted Security Interest) of any kind upon any Leasing Document to which such Relevant Person is a party, and if applicable, the Vessel.
| 11.14 | Financial covenants |
| (a) | The Guarantor shall ensure that, at any time during the Security Period, the Guarantor's Leverage Ratio shall not be more than seventy five per cent (75%). |
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| (b) | The Guarantor shall ensure that all time during the Security Period the Liquid Funds shall not be less than $500,000 multiplied by the number of the Fleet Vessels which are fully owned by the Guarantor ("100% Owned Vessels") or leased or operated (including those under a capital lease or operating lease with a purchase option at the end of the relevant charter period) by the Guarantor and/or any member of the Group. |
In this Guarantee:
"Leverage Ratio" means, at any date, the ratio (expressed as a percentage) of:
| (a) | the Total Net Debt; and |
| (b) | the aggregate Market Value of all Fleet Vessels adjusted, in each case, to reflect the percentage of ownership by the Guarantor of each such Fleet Vessel. |
"Liquid Funds" means, at any time, cash at bank and credited to an account in the name of any member of the Group and to which the Guarantor is solely (or together with other members of the Group) beneficially entitled and for so long as such cash has not been blocked due to the existence and/or enforcement of any Security Interest held by any bank or any other third party or otherwise unless such cash is held in such account charged, as the case may be, by way of a floating charge for the purposes of meeting minimum liquidity requirements in the context of any financing arrangement of the Group.
"Market Value" means, in relation to any Fleet Vessel at any relevant time (the "Market Value Test Date")
| (a) | subject to sub-paragraph (b) below, the arithmetic mean of the valuations shown by two (2) valuation reports prepared: |
| (i) | on a date no later than thirty (30) days after the Market Value Test Date; |
| (ii) | with or without physical inspection of that Vessel; |
| (iii) | on the basis of a sale for prompt delivery for cash on normal arm's length commercial terms as between a willing seller and a willing buyer, free of any existing charter or other contract of employment, |
and such valuation shall be prepared by Approved Valuers one nominated by the Owners and one nominated by the Charterers.
| (b) | if there is a discrepancy of five per cent. (5%) or more between the market valuations shown on the two valuation reports obtained pursuant to the above paragraph (using the lower valuation figure as the denominator), the arithmetic mean of the valuations shown by three (3) valuation reports each prepared on the same terms and conditions as set out under paragraph (b) above (except that the third valuation report additionally required under this sub-paragraph (b) shall be prepared by an Approved Valuer nominated by the Owners). |
"Total Net Debt" means, at any date, the aggregate Financial Indebtedness of the Group as per US GAAP as at such date, adjusted to include a percentage of the Financial Indebtedness of any joint venture with a minimum holding of 50 per cent by any member of the Group which is equal to the percentage of the Guarantor's ownership in such joint venture, minus the aggregate amount of all cash balances standing on such date to the credit of a bank account of any member of the Group, adjusted to include a percentage of the cash balances of any entity holding any Fleet Vessel (other than the 100% Owned Vessels) which is equal to the percentage of the Guarantor's and/or such member's ownership in that entity, but excluding any cash held by any bank or any other third party or otherwise which is subject to the existence and/or enforcement any Security Interest unless such cash is held in such account charged, as the case may be, by way of a floating charge for the purposes of meeting minimum liquidity requirements in the context of any financing arrangement of the Group.
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"US GAAP" means the generally accepted accounting principles in the United States.
| 11.15 | Compliance Certificate |
The Guarantor shall supply to the Owner, a Compliance Certificate setting out (in reasonable detail) computations as to compliance with Clause 11.14 (Financial covenants) on each testing date, being 31st December in each calendar year; and each Compliance Certificate shall be signed by the Co-Chief Financial Officer of the Guarantor.
| 11.16 | Negative Pledge |
The Guarantor shall:
| (a) | procure that the Charterers will not create or permit to arise any Security Interest over any of its assets present or future except for the Permitted Security Interests.; and |
| (b) | procure that its liabilities under this Guarantee will rank at least pari passu with all its other present and future unsecured liabilities, except for liabilities which are mandatorily preferred by law. |
| 11.17 | No disposal of assets, change of business |
The Guarantor will not, and shall (at all times) procure that no other Relevant Person shall:
| (a) | transfer, lease or otherwise dispose of all or a substantial part of their respective assets (or any of their assets, in the case of the Charterer), whether by one transaction or a number of transactions, whether related or not except in the usual course of their respective trading operations; or |
| (b) | make any substantial change (or any change, in the case of the Charterer) to the nature of their respective business or corporate structure from that existing as at the date of this Guarantee. |
| 11.18 | No merger etc |
The Guarantor shall not enter into any form of merger, sub-division, amalgamation, demerger, reorganization, corporate reconstruction or change of ownership, or change of voting control unless the Guarantor remains as the surviving entity after such merger, sub-division, amalgamation, demerger, reorganization, corporate reconstruction or change of ownership, or change of voting control and Clause 11.14 (Financial Covenants) has been complied with.
| 11.19 | FATCA |
The Guarantor shall not, and shall procure that no Relevant Person will become a FATCA FFI or US Tax Obligor.
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| 11.20 | No payment of dividend |
The Guarantor shall not declare, make or pay any dividend or other distribution (or interest on any unpaid dividend or other distribution) on or in respect of its share capital (whether in cash or in kind) upon the occurrence of a Termination Event described in clause 49 of the Bareboat Charter.
| 11.21 | Notification of Financial Indebtedness |
The Guarantor shall promptly notify the Owner if the Guarantor agrees to provide any new financial covenants to a creditor (or to amend existing ones such that they materially differ from the financial covenants under Clause 11.14 (Financial Covenants) of this Guarantee, placing such creditor in a position which is comparatively more favourable in terms of the financial covenants than the position of the Owner) under the agreements entered into or to be entered into in connection with any Financial Indebtedness owed by the Guarantor or Group member to such creditor and agrees that it will promptly enter into such necessary documentation as may be required to amend and supplement this Guarantee and any applicable Leasing Document so as to reflect and incorporate such more favourable financial covenants into this Guarantee and any applicable Leasing Document.
| 12 | JUDGMENTS AND CURRENCY INDEMNITY |
| 12.1 | Judgments relating to Bareboat Charter and other Leasing Documents |
This Guarantee shall cover any amount payable by any other Relevant Person under or in connection with any judgment or award relating to the Bareboat Charter and any other Leasing Document.
| 12.2 | Currency indemnity |
If any sum due from the Guarantor to the Owner under this Guarantee or under any order, judgment or award relating to this Guarantee has to be converted from the currency in which this Guarantee provided for the sum to be paid (the "Contractual Currency") into another currency (the "Payment Currency") for the purpose of:
| (a) | making or lodging any claim or proof against the Guarantor, whether in its liquidation, any arrangement involving it or otherwise; or |
| (b) | obtaining an order, judgment or award from any court or other tribunal; or |
| (c) | enforcing any such order, judgment or award; |
the Guarantor shall indemnify the Owner against the loss arising when the amount of the payment actually received by the Owner is converted at the available rate of exchange into the Contractual Currency.
In this Clause 12.2 (Currency indemnity), the "available rate of exchange" means the rate at which the Owners are able at the opening of business (Shanghai time) on the Business Day after it receives the sum concerned to purchase the Contractual Currency with the Payment Currency.
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| 13 | SUPPLEMENTAL |
| 13.1 | Continuing guarantee |
This Guarantee shall remain in force as a continuing security interest at all times during the Security Period.
| 13.2 | Rights cumulative, non-exclusive |
The Owner's rights under and in connection with this Guarantee are cumulative, may be exercised as often as appears expedient and shall not be taken to exclude or limit any right or remedy conferred by law.
| 13.3 | No impairment of rights under Guarantee |
If the Owner omits to exercise, delays in exercising or invalidly exercises any of its rights under this Guarantee, that shall not impair that or any other right of the Owner under this Guarantee.
| 13.4 | Severability of provisions |
If any provision of this Guarantee is or subsequently becomes void, illegal, unenforceable or otherwise invalid, that shall not affect the validity, legality or enforceability of its other provisions.
| 13.5 | Guarantee not affected by other Security Interests |
This Guarantee shall not impair, nor be impaired by, any other guarantee or any right of set-off or netting or to combine accounts which the Owner may now or later hold in connection with the Bareboat Charter or any other Leasing Document.
| 13.6 | Guarantor bound by Bareboat Charter and other Leasing Documents |
The Guarantor agrees with the Owner to be bound by all provisions of the Bareboat Charter and any other Leasing Document in the same way as if those provisions had been set out (with any necessary modifications) in this Guarantee.
| 13.7 | Applicability of provisions of Guarantee to other rights |
Clauses 3 (Liability as Principal and Independent Debtor) and 16 (Invalidity of Bareboat Charter) shall also apply to any right of set-off or netting or to combine accounts which the Guarantor creates by an agreement entered into at the time of this Guarantee or at any later time (notwithstanding that the agreement does not include provisions similar to Clauses 3 and 16), being an agreement referring to this Guarantee.
| 13.8 | Third party rights |
Other than the Other Owners, a person who is not a party to this Guarantee has no right under the Contracts (Rights of Third Parties) Act 1999 to enforce or to enjoy the benefit of any term of this Guarantee.
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| 13.9 | Counterpart |
This Guarantee may be executed in any number of counterparts, and this has the same effect as if the signatures on the counterparts were on a single copy of this Guarantee.
| 13.10 | FATCA Information |
| (a) | Subject to paragraph (c) below, each Party shall, on the date of the Bareboat Charter, and thereafter within ten (10) Business Days of a reasonable request by the other Party: |
| (i) | confirm to that other party whether it is a FATCA Exempt Party or is not a FATCA Exempt Party; and |
| (ii) | supply to the requesting party (with a copy to all other relevant parties) such other form or forms (including IRS Form W-8 or Form W-9 or any successor or substitute form, as applicable) and any other documentation and other information relating to its status under FATCA (including its applicable "pass thru percentage" or other information required under FATCA or other official guidance including intergovernmental agreements) as the requesting party reasonably requests for the purpose of the requesting party's compliance with FATCA. |
| (b) | If a Party confirms to any other Party that it is a FATCA Exempt Party or provides an IRS Form W-8 or W-9 showing that it is a FATCA Exempt Party and it subsequently becomes aware that it is not, or has ceased to be a FATCA Exempt Party, or that the said form provided has ceased to be correct or valid, that party shall so notify all other relevant parties or provide the relevant revised form, as applicable, reasonably promptly. |
| (c) | Nothing in this Clause shall oblige a Party to do anything which would or, in its reasonable opinion, might constitute a breach of any law or regulation, any policy of that party, any fiduciary duty or any duty of confidentiality, or to disclose any confidential information (including, without limitation, its tax returns and calculations); provided, however, that nothing in this paragraph shall excuse a Party from providing a true, complete and correct IRS Form W-8 or W-9 (or any successor or substitute form where applicable). Any information provided on such IRS Form W-8 or W-9 (or any successor or substitute forms) shall not be treated as confidential information of such party for purposes of this paragraph. |
| (d) | If a Party fails to confirm its status or to supply forms, documentation or other information requested in accordance with the provisions of this Charter or the provided information is insufficient under FATCA, then: |
| (i) | if that party failed to confirm whether it is (and/or remains) a FATCA Exempt Party then such party shall be treated for the purposes of this Charter and the Leasing Documents as if it is a FATCA Non-Exempt Party; and |
| (ii) | if that party failed to confirm its applicable passthru percentage then such party shall be treated for the purposes of this Charter and the Leasing Documents (and payments made thereunder) as if its applicable passthru percentage is 100%, |
until (in each case) such time as the party in question provides sufficient confirmation, forms, documentation or other information to establish the relevant facts.
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| 14 | ASSIGNMENT |
| 14.1 | Assignment by Owner |
Clause 63 of the Bareboat Charter shall apply to this Guarantee as if they were expressly incorporated herein with any necessary modifications including the references to "the Charterers" therein shall be references to "the Guarantor" when applied herein and references to "the Leasing Document" and "this Charter" therein shall be references to "this Guarantee" when applied herein.
| 14.2 | Assignment by Guarantor |
The Guarantor may not assign any of its rights or transfer any of its rights or obligations under this Guarantee.
| 15 | NOTICES |
| 15.1 | Notices to Guarantor |
Any notice or demand to the Guarantor under or in connection with this Guarantee shall be given by letter or email at:
TOP SHIPS INC.
Attention: Alexandros Tsirikos
Email:
Tel:
or to such other address or email address which the Guarantor may notify to the Owner.
| 15.2 | Validity of demands |
A demand under this Guarantee shall be valid notwithstanding that it is served:
| (a) | on the date on which the amount to which it relates is payable by the Relevant Person under the Leasing Document to which it is a party; |
| (b) | at the same time as the service of a notice under clause 44 of the Bareboat Charter; |
and a demand under this Guarantee shall (i) be in writing; (ii) be signed by a duly authorised officer of the Owner and delivered to the Guarantor pursuant to the provisions under this Guarantee; (iii) make reference to this Guarantee; (iv) specifically identify the Charterer or any other Relevant Person and the guaranteed obligations to be paid and/or performed (as the case may be); and (v) set forth payment instructions in respect of any amount or amounts payable to the Owner.
| 15.3 | Notices to Owner |
Any notice to the Owner under or in connection with this Guarantee shall be sent to the same address and in the same manner as notices to the Owner under clause 44 of the Bareboat Charter.
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| 16 | INVALIDITY OF BAREBOAT CHARTER |
| 16.1 | Invalidity of Bareboat Charter or other Leasing Documents |
In the event of:
| (a) | the Bareboat Charter or any other Leasing Document now being or later becoming, with immediate or retrospective effect, void, illegal, unenforceable or otherwise invalid for any other reason whatsoever, whether of a similar kind or not; or |
| (b) | without limiting the scope of paragraph (a), a bankruptcy of the Relevant Person party thereto, the introduction of any law or any other matter resulting in that Relevant Person being discharged from liability under the Bareboat Charter or other Leasing Document, or the Bareboat Charter or other Leasing Document ceasing to operate (for example, by interest ceasing to accrue); |
this Guarantee shall cover any amount which would have been or become payable under or in connection with the Bareboat Charter or other Leasing Document if the Bareboat Charter or other Leasing Document had been and remained entirely valid, legal and enforceable, or that Party had not suffered bankruptcy, or any combination of such events or circumstances, as the case may be, and the Charterer had remained fully liable under it for liabilities whether invalidly incurred or validly incurred but subsequently retrospectively invalidated; and references in this Guarantee to amounts payable by that Party under or in connection with the Bareboat Charter or other Leasing Document shall include references to any amount which would have so been or become payable as aforesaid.
| 17 | GOVERNING LAW AND ARBITRATION |
| 17.1 | Governing law |
This Guarantee and any non-contractual obligations arising out of or in connection with it are governed by English law.
| 17.2 | Arbitration |
| (a) | Any dispute arising out of or in connection with this Guarantee (including a dispute regarding the existence, validity or termination of this Guarantee or any non-contractual obligation arising out of or in connection with this Guarantee) (a "Dispute") shall be referred to and finally resolved by arbitration in London in accordance with the Arbitration Act 1996 or any statutory modification or re-enactment thereof save to the extent necessary to give effect to the provisions of this Clause 17 (Governing Law and Arbitration). The arbitration shall be conducted in accordance with the London Maritime Arbitrators Association ("LMAA") Terms current at the time when the arbitration proceedings are commenced. |
| (b) | The reference shall be to three arbitrators. A party wishing to refer a Dispute to arbitration shall appoint its arbitrator (who shall be either a full member of the LMAA, or a practising barrister of King's Counsel who is also a member of the Commercial Bar Association, or a retired High Court Judge practising as an arbitrator, in each case who carries on business in London) and send notice of such appointment in writing to the other party requiring the other party to appoint its own arbitrator within (fourteen) 14 calendar days of that notice and stating that it will appoint its arbitrator as sole arbitrator unless the other party appoints its own arbitrator and gives notice that it has done so within the (fourteen) 14 days specified. If the other party does not appoint its own arbitrator and give notice that it has done so within the (fourteen) 14 days specified, the party referring a Dispute to arbitration may, without the requirement of any further prior notice to the other party, appoint its arbitrator as sole arbitrator and shall advise the other party accordingly. The award of a sole arbitrator shall be binding on both parties as if he or she had been appointed by agreement. Nothing herein shall prevent the parties agreeing in writing to vary these provisions to provide for the appointment of a sole arbitrator. If the two arbitrators so appointed are unable to agree on the appointment of the third arbitrator, they or either of them may by written notice request the President of the LMAA to appoint the third arbitrator within fourteen (14) days of such request |
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| (c) | Where the reference is to three arbitrators the procedure for making appointments shall be in accordance with the procedure for full arbitration stated above. |
| (d) | The language of the arbitration shall be English. |
| (e) | In cases where neither the claim nor any counterclaim exceeds the sum of US$100,000 (or such other sum as the Parties may agree) the arbitration shall be conducted in accordance with the LMAA Small Claims Procedure current at the time when the arbitration proceedings are commenced. |
IN WITNESS WHEREOF this GUARANTEE has been executed as a DEED and delivered on the date stated at the beginning of this GUARANTEE.
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SCHEDULE 1
FORM OF COMPLIANCE CERTIFICATE
To:
SEA 268 LEASING CO. LIMITED
From:
TOP SHIPS INC.
Date: _______________
Guarantee dated [●] (the "Guarantee") in respect of a bareboat charter for m.v. Julius Caesar "
Dear Sirs
| 1 | We refer to the Guarantee. This is a Compliance Certificate. Terms defined in the Guarantee have the same meaning when used in this Compliance Certificate unless given a difference meaning in this Compliance Certificate. |
| 2 | We confirm that, as at the date hereof, no Termination Event has occurred and is continuing which has not been waived or remedied at the date hereof or if that is not the case, specifying the same and the steps, if any, being taken to remedy the same. |
| 3 | We confirm that, at any time during the Security Period, Leverage Ratio was not more than 75 per cent (75%). |
| 4 | We confirm that all time during the Security Period the Liquid Funds was not less than the aggregate of $500,000 multiplied by the number of the Fleet Vessels which are fully owned by the Guarantor or leased or operated (including those under a capital lease or operating lease with a purchase option at the end of the relevant charter period) by the Guarantor and/or any member of the Group. . |
Yours faithfully
Signed: ___________________________
Co-Chief Financial Officer of
TOP SHIPS INC.
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Guarantee – Julius Caesar
EXECUTION PAGE
| GUARANTOR | ||
| EXECUTED AS A DEED | ) | |
| by TOP SHIPS INC. | ) | |
| acting by ALEXANDROS TSIRIKOS | ) | |
| being an attorney-in-fact | ) | /s/ Alexandros Tsirikos |
| in the presence of: | ) | |
| ) | ||
| ) |
| Witness' signature: | /s/ Dimitra Karkaletsi | ) |
| Witness' name: | DIMITRA KARKALETSI | ) |
| Witness' address: |
1 Vasilissis Sofias Street & |
) |
|
Meg. Alexandrou Street, 15124 Maroussi-Athens, Greece |
||
| OWNER | ||
| SIGNED, SEALED AND DELIVERED | ) | /s/ CUI Wanying |
| by SEA 268 LEASING CO. LIMITED | ) | CUI Wanying |
| acting by | ) | Attorney-in-Fact |
| being an attorney-in-fact | ) | |
| ) | ||
| in the presence of: | ) | |
| ) | ||
| ) |
| Witness' signature: | /s/ So Yuei Sum Serena | ) |
| Witness' name: | So Yuei Sum Serena | ) |
| Witness' address: | Suites 4610-4619, Jardine House | ) |
| 1 Connaught Place, Hong Kong | ||
CMBFL Top Ships II
Signature page to Guarantee - Julius Caesar
Exhibit 4.24
1. Shipbroker 2. Place and date N/A 11 January 2024 3. Owners/Place of business (Cl. 1) 4. Bareboat Charterers/Place of business (Cl. 1) SEA 269 LEASING CO. LIMITED, a company incorporated LEGIO X INC., a corporation incorporated under the laws under the laws of Hong Kong with company number 3053427 of the Republic of the Marshall Islands, having its whose registered office is at 27/F, Three Exchange Square, 8 registered address at Trust Company Complex, Ajeltake Connaught Place, Central, Hong Kong Road, Ajeltake Island, Majuro, Marshall Islands MH96960 5. Vessel’s name, call sign and flag (Cl. 1 and 3) Legio X Equestris Call Sign: V7A4989 Flag: Marshall Islands or any other flag state of the Vessel as may be agreed in writing by the Owners and the Charterers. 6. Type of Vessel 7. GT/NT VERY LARGE CRUDE OIL CARRIER 154,449/106,663 8. When/Where built 9. Total DWT (abt.) in metric tons on summer freeboard Under construction 2022 300,000 Hyundai Heavy Industries Co., Ltd 10. Classification Society (Cl. 3) 11. Date of last special survey by the Vessel’s classification Bureau Veritas, DNV-GL or any other Approved society Classification Society N/A 12 Further particulars of Vessel (also indicate minimum number of months’ validity of class certificates agreed acc. to Cl. 3) IMO No.: 9912256 Length: 324.03 metres Breadth: 60.00 metres Depth: 26.72 metres 13. Port or Place of delivery (Cl. 3) 14. Time for delivery (Cl. 4) 15. Cancelling date (Cl. 5) Back to back with MOA delivery See Clause 34 (Delivery and See definition of Charter of Vessel) “Cancelling Date” and Clause 33 (Cancellation) 16. Port or Place of redelivery (Cl. 15) 17. No. of months’ validity of trading and class certificates See Clauses 41.6 (Termintion, Redelivery and Total Loss) upon redelivery (Cl. 15) Six (6) months 18. Running days’ notice if other than stated in Cl. 4 19. Frequency of dry-docking (Cl. 10(g)) N/A In accordance with Approved Classification Society or requirements of Flag State 20. Trading limits (Cl. 6) International Navigating Limits and excluding any war listed area declared by the Joint War Committee, see also Clause 46.1(t), 46.1(u) and 46.1(v) (Undertakings) 21. Charter period (Cl. 2) 22. Charter hire (Cl. 11) See Clause 32 (Charter Period) See Clause 36 (Charterhire and Advance Charterhire) 23. New class and other safety requirements (state percentage of Vessel’s insurance value acc. to Box 29)(Cl. 10(a)(ii)) N/A 24. Rate of interest payable acc. to Cl. 11 (f) and, if applicable, acc. 25. Currency and method of payment (Cl. 11) to PART IV Dollars/Bank transfer See Clause 37 (Changes to Interest Rate, Default Interest) 26. Place of payment; also state beneficiary and bank account (Cl. 27. Bank guarantee/bond (sum and place) (Cl. 24) (optional) 11) See Clause 24 See Clause 36 (Charterhire and Advance Charterhire); such account as the Owners may notify the Charterers from time to time 28. Mortgage(s), if any (state whether 12(a) or (b) applies; if 12(b) 29. Insurance (hull and machinery and war risks) (state value applies state date of Financial Instrument and name of acc. to Cl. 13(f) or, if applicable, acc. to Cl. 14(k)) (also Mortgagee(s)/Place of business) (Cl. 12) state if Cl. 14 applies) Copyright © 2001 BIMCO. All rights reserved. Any unauthorised copying, duplication, reproduction or distribution of this BIMCO SmartCon document will constitute an infringement of BIMCO’s copyright. Explanatory notes are available from BIMCO at www.bimco.org. First published in 1974 as BARECON A and B. Amalgamated and revised in 1989. Revised 2001.
N/A See Clause 39 (Insurance) - Clause 14 does not applv 30 . Additional insurance cover, if any, for Owners’ account limited 31. Additional insurance cover, if any, for Charterers’ account to (Cl. 13(b) or, if applicable. Cl. 14(g)) limited to (Cl. 13(b) or, if applicable. Cl. 14(g)) See Clause 39 (Insurance) See Clause 39 (Insurance) 32 . Latent defects (only to be filled in if period other than stated in 33. Brokerage commission and to whom payable (Cl. 27) Cl. 3) N/A 34 . Grace period (state number of clear banking days) (Cl. 28) 35. Dispute Resolution (state 30(a), 30(b) or 30(c); if 30(c) N/A agreed Place of Arbitration must be stated (Cl. 30) (c) Clause 30 not applicable. See Clause 65 (Governing Law and Enforcement) 36 . War cancellation (indicate countries agreed) (Cl. 26(f)) N/A 37 . Newbuilding Vessel (indicate with “yes” or “no” whether PART 38. Name and place of Builders (only to be filled in if PART III III applies) (optional) applies) N/A No 39 . Vessel’s Yard Building No. (only to be filled in if PART III applies) 40. Date of Building Contrart (only to be filled in if PART III N/A applies) HI A 41 . Liquidated damages and costs shall accrue to (state party acc. to CL 1) a) N/A b) N/A c) N/A 42 . Hire/Purchase agreement (indicate with “yes” or “no” whether 43. Bareboat Charter Registry (indicate with “yes” or “no” PART IV applies) (optional) whether PART V applies) (optional) No, Part IV does not apply No 44 . Flag and Country of the Bareboat Charter Registry (only to be 45. Country of the Underlying Registry (only to be filled in if filled in if PART V applies) PART V applies) H|A N/A 46 . Number of additional clauses covering special provisions, if agreed Clause 32 (Charter Period) to Clause 66 (Definitions) PREAMBLE - It is mutually agreed that this Contract shall be performed subject to the conditions contained in this Charter which shall Include PART I and PART II. In the event of a conflict of conditions, the provisions of PART I shall prevail over those of PART II to the extent of such conflict but no further. It Is further mutually agreed that PART III and/or PART IV and/or PART V shall only apply and only form part of this Charter if expressly agreed and stated in Boxes 37, 42 and 43. If PART III and/or PART IV and/or PART V apply, It is further agreed that in the event of a conflict of conditions, the provisions of PART I and PART II shall prevail over those of PART III and/or PART IV and/or PART V to the extent of such conflict but no further.
| Signature (owners) | Signature (Charterers) |
|
/s/ CUI Wanying
CUI Wanying Attorney-in-fact
|
/s/ Alexandros Tsirikos Alexandros Tsirikos Attorney-in-fact |
Copyright © 2001 BIMCO. All rights reserved. Any unauthorised copying, duplication, reprodurtion or distribution of this BIMCO SmartCon document will constitute an infringement of BIMCO’s copyright. Explanatory notes are available from BIMCO at www.bimco.org.
First published in 1974 as BARECON A and B. Amalgamated and revised in 1989. Revised 2001.
PART II BARECON 2001 Standard Bareboat Charter 1 1. Definitions 60 5. Cancelling (See Clause 33 (Cancellation)) 2 In this Charter, the following terms shall have the 61 (not applicable when Part III applies, as indicated in Box 37) 3 meanings hereby assigned to them: 62 (a) Should the Vessel not be delivered latest by the 4 “The Owners” shall mean the party identified in Box 3; 63 cancelling date indicated in Box 15, the Charterers shall 5 “The Charterers” shall mean the party identified in Box 4; 64 have the option of cancelling this Charter by giving the 6 “The Vessel” shall mean the vessel named in Box 5 and 65 Owners notice of cancellation within thirty-six (36) 7 with particulars as stated in Boxes 6 to 12. 66 running hours after the cancelling date stated in Box 8 “Financial Instruments” has the meaning ascribed to it 67 15, failing which this Charter shall remain in full force in Clause 66. means the mortgage, deed of 68 and effect. 9 covenant or other such financial security instrument as 69 (b) If it appears that the Vessel will be delayed beyond 10 annexed to this Charter and stated in Box 28. 70 the cancelling date, the Owners may, as soon as they 11 2 Charter Period 71 are in a position to state with reasonable certainty the 12 In consideration of the hire detailed in Box 22, 72 day on which the Vessel should be ready, give notice 13 the Owners have agreed to let and the Charterers have 73 thereof to the Charterers asking whether they will 14 agreed to hire the Vessel for the period stated in Box 21 74 exercise their option of cancelling, and the option must 15 (“The Charter Period”). See also Clause 32. 75 then be declared within one hundred and sixty-eight 16 3. Delivery 76 (168) running hours of the receipt by the Charterers of 17 (not applicable when Part III applies, as indicated in Box 37) 77 such notice or within thirty-six (36) running hours after 18 (a) The Owners shall before and at the time of delivery 78 the cancelling date, whichever is the earlier. If the 19 exercise due diligence to make the Vessel seaworthy 79 Charterers do not then exercise their option of cancelling, 20 And in every respect ready in hull, machinery and 80 the seventh day after the readiness date stated in the 21 equipment for service under this Charter. 81 Owners’ notice shall be substituted for the cancelling 22 Within Internatonal Navigating Limits TtThe Vessel 82 date indicated in Box 15 for the purpose of this Clause 5. shall be delivered by the Owners and taken 83 (c) Cancellation under this Clause 5 shall be without 23 over by the Charterers at the port or place indicated in 84 prejudice to any claim the Charterers may otherwise 24 Box 13. in such ready safe berth as the Charterers may 85 have on the Owners under this Charter. 25 direct. 86 6. Trading Restrictions (see also Clauses 46.1(t), 46.1(u) 26 (b) The Vessel shall be properly documented on and 46.1(v) (Undertakings)) 27 delivery in accordance with the laws of the flag State 87 The Vessel shall be employed in lawful trades for the 28 indicated in Box 5 and the requirements of the 88 carriage of suitable lawful merchandise within the trading 29 classification society stated in Box 10. The Vessel upon 89 limits indicated in Box 20. 30 delivery shall have her survey cycles up to date and 90 The Charterers undertake not to employ the Vessel or 31 trading and class certificates valid for at least the number 91 suffer the Vessel to be employed otherwise than in 32 of months agreed in Box 12. 92 conformity with the terms of the contracts of insurance 33 (c) The delivery of the Vessel by the Owners and the 93 (including any warranties expressed or implied therein) 34 taking over of the Vessel by the Charterers shall 94 without first obtaining the consent of the insurers to such 35 constitute a full performance by the Owners of all the 95 employment and complying with such requirements as 36 Owners’ obligations under this Clause 3, and thereafter 96 to extra premium or otherwise as the insurers may 37 the Charterers shall not be entitled to make or assert 97 prescribe. 38 any claim against the Owners on account of any 98 The Charterers also undertake not to employ the Vessel 39 conditions, representations or warranties expressed or 99 or suffer her employment in any trade or business which 40 implied with respect to the Vessel. but the Owners shall 100 is forbidden by the law of any country to which the Vessel 41 be liable for the cost of but not the time for repairs or 101 may sail or is otherwise illicit or in carrying illicit or 42 renewals occasioned by latent defects in the Vessel, 102 prohibited goods or in any manner whatsoever which 43 her machinery or appurtenances, existing at the time of 103 may render her liable to condemnation, destruction, 44 delivery under this Charter, provided such defects have 104 seizure or confiscation. 45 manifested themselves within twelve (12) months after 105 Notwithstanding any other provisions contained in this 46 delivery unless otherwise provided in Box 32. 106 Charter it is agreed that nuclear fuels or radioactive 47 4. Time for Delivery (See Clause 34 (Delivery and 107 products or waste are specifically excluded from the Charter of Vessel)) 108 cargo permitted to be loaded or carried under this 48 (not applicable when Part III applies, as indicated in Box 37) 109 Charter. This exclusion does not apply to radio-isotopes 49 The Vessel shall not be delivered before the date 110 used or intended to be used for any industrial, 50 indicated in Box 14 without the Charterers’ consent and 111 commercial, agricultural, medical or scientific purposes 51 the Owners shall exercise due diligence to deliver the 112 provided the Owners’ prior approval has been obtained 52 Vessel not later than the date indicated in Box 15. 113 to loading thereof. 53 Unless otherwise agreed in Box 18, the Owners shall 114 7. Surveys on Delivery and Redelivery 54 give the Charterers not less than thirty (30) running days’ 115 Provision on Delivery see Clause 47.2 (Inspection of 55 preliminary and not less than fourteen (14) running days’ 56 definite notice of the date on which the Vessel is Vessel)(not applicable when Part III applies, as indicated in 57 expected to be ready for delivery. Box 37) 58 The Owners shall keep the Charterers closely advised 116 The Owners and Charterers shall each appoint 59 of possible changes in the Vessel’s position. 117 surveyors for the purpose of determining and agreeing 118 in writing the condition of the Vessel at the time of Copyright © 2001 BIMCO. All rights reserved. Any unauthorised copying, duplication, reproduction or distribution of this BIMCO SmartCon document will constitute an infringement of BIMCO’s copyright. Explanatory notes are available from BIMCO at www.bimco.org. First published in 1974 as BARECON A and B. Amalgamated and revised in 1989. Revised 2001.
PART II BARECON 2001 Standard Bareboat Charter 119 delivery and redelivery pursuant to Clause 41.6 176 operating condition and in accordance with good (Termination, Redelivery and Total Loss) hereunder (if 177 commercial maintenance practice and, except as applicable) at the costs of the Charterers. The Owners 178 provided for in Clause 14(l), if applicable, at their shall 179 own expense they shall at all times keep the 120 bear all expenses of the On-hire Survey including loss 180 Vessel’s Classification Class fully up to date with the 121 of time, if any, and the Charterers shall bear all expenses Classification 122 of the Off-hire Survey including loss of time, if any, at 181 Society indicated in Box 10 and maintain all other 123 the daily equivalent to the rate of hire or pro rata thereof. 182 necessary certificates in force at all times. 124 8. Inspection (See Clause 47 (Inspection of Vessel)) 183 (ii) New Class and Other Safety Requirements - In the 125 The Owners shall have the right at any time after giving 184 event of any improvement, structural changes or 126 reasonable notice to the Charterers to inspect or survey 185 new equipment becoming necessary for the 127 the Vessel or instruct a duly authorised surveyor to carry 186 continued operation of the Vessel by reason of new 128 out such survey on their behalf:- 187 class requirements or by compulsory legislation, the the Charterers shall ensure that the same are complied 129 (a) to ascertain the condition of the Vessel and satisfy with and the time and costs of compliance shall be for 130 themselves that the Vessel is being properly repaired 131 and maintained. The costs and fees for such inspection the Charterers’ account. 132 or survey shall be paid by the Owners unless the Vessel 188 costing (excluding the Charterers’ loss of time) 133 is found to require repairs or maintenance in order to 189 more than the percentage stated in Box 23, or if 134 achieve the condition so provided; 190 Box 23 is left blank, 5 per cent. of the Vessel’s 191 insurance value as stated in Box 29, then the 135 (b) in dry-dock if the Charterers have not dry-docked 192 extent, if any, to which the rate of hire shall be varied 136 Her in accordance with Clause 10(g). The costs and fees 193 and the ratio in which the cost of compliance shall 137 for such inspection or survey shall be paid by the 194 be shared between the parties concerned in order 138 Charterers; and 195 to achieve a reasonable distribution thereof as 139 (c) for any other commercial reason they consider 196 between the Owners and the Charterers having 140 necessary (provided it does not unduly interfere with 197 regard, inter alia, to the length of the period 141 the commercial operation of the Vessel). The costs and 198 remaining under this Charter shall, in the absence 142 fees for such inspection and survey shall be paid by the 199 of agreement, be referred to the dispute resolution 143 Owners. 200 method agreed in Clause 30. 144 All time used in respect of inspection, survey or repairs 201 (iii) Financial Security - The Charterers shall maintain 145 shall be for the Charterers’ account and form part of the 202 financial security or responsibility in respect of third 146 Charter Period. 203 party liabilities as required by any government, 147 The Charterers shall also permit the Owners to inspect 204 including federal, state or municipal or other division 148 the Vessel’s log books whenever requested and shall 205 or authority thereof, to enable the Vessel, without 149 whenever required by the Owners furnish them with full 206 penalty or charge, lawfully to enter, remain at, or 150 information regarding any casualties or other accidents 207 leave any port, place, territorial or contiguous 151 or damage to the Vessel. 208 waters of any country, state or municipality in 209 performance of this Charter without any delay. This 152 9. Inventories, Oil and Stores (See Clause 34.7 (Delivery 210 obligation shall apply whether or not such and Charter of Vessel)) 211 requirements have been lawfully imposed by such 153 A complete inventory of the Vessel’s entire equipment, 212 government or division or authority thereof. 154 outfit including spare parts, appliances and of all 213 The Charterers shall make and maintain all arrange-155 consumable stores on board the Vessel shall be made 214 ments by bond or otherwise as may be necessary to 156 by the Charterers in conjunction with the Owners on 215 satisfy such requirements at the Charterers’ sole 157 delivery and again on redelivery of the Vessel. The 216 expense and the Charterers shall indemnify the Owners 158 Charterers and the Owners, respectively, shall at the 217 against all consequences whatsoever (including loss of 159 time of delivery and redelivery take over and pay for all 218 time) for any failure or inability to do so. 160 bunkers, lubricating oil, unbroached provisions, paints, 219 (b) Operation of the Vessel - The Charterers shall at 161 ropes and other consumable stores (excluding spare 220 their own expense and by their own procurement man, 162 parts) in the said Vessel at the then current market prices 221 victual, navigate, operate, supply, fuel and, whenever 163 at the ports of delivery and redelivery, respectively. The 222 required, repair the Vessel during the Charter Period 164 Charterers shall ensure that all spare parts listed in the 223 and they shall pay all charges and expenses of every 165 inventory and used during the Charter Period are 224 kind and nature whatsoever incidental to their use and 166 replaced at their expense prior to redelivery of the 225 operation of the Vessel under this Charter, including 167 Vessel. 226 annual flag State fees of the Flag State and any foreign 168 10. Maintenance and Operation general 169 (a)(i)Maintenance and Repairs - During the Charter 227 municipality and/or state taxes. The Master, officers 170 Period the Vessel shall be in the full possession 228 and crew of the Vessel shall be the servants of the Charterers 171 and at the absolute disposal for all purposes of the 229 for all purposes whatsoever, even if for any reason 172 Charterers and under their complete control in 230 appointed by the Owners. 173 every respect. The Charterers shall maintain the 231 Charterers shall comply with the regulations regarding 174 Vessel, her machinery, boilers, appurtenances and 232 officers and crew in force in the country of the Vessel’s 175 spare parts in a good state of repair, in efficient 233 flag or any other applicable law. Copyright © 2001 BIMCO. All rights reserved. Any unauthorised copying, duplication, reproduction or distribution of this BIMCO SmartCon document will constitute an infringement of BIMCO’s copyright. Explanatory notes are available from BIMCO at www.bimco.org. First published in 1974 as BARECON A and B. Amalgamated and revised in 1989. Revised 2001.
PART II BARECON 2001 Standard Bareboat Charter 234 (c) The Charterers shall keep the Owners and the 283 (g) Periodical Dry-Docking - The Charterers shall dry-235 mortgagee(s) advised of the intended employment, 284 dock the Vessel and clean and paint her underwater 236 planned dry-docking and major repairs of the Vessel, 285 parts whenever the same may be necessary, but not 237 as reasonably required. 286 less than once during the period stated in Box 19. or, if 238 (d) Flag and Name of Vessel – During the Charter 287 Box 19 has been left blank, every sixty (60) calendar 239 Period, the Charterers shall have the liberty to paint the 288 months after delivery or such other period as may be 240 Vessel in their own colours, install and display their 289 required by the Classification Society or flag State. 241 funnel insignia and fly their own house flag (with all fees, 290 11. Hire (See Clause 36 (Charterhire and Advance costs and expenses arising in relation thereto for the Charterhire)) Charterers’ account). The 291 (a) The Charterers shall pay hire due to the Owners 242 Charterers shall also have the liberty, with the Owners’ 292 punctually in accordance with the terms of this Charter 243 consent, which shall not be unreasonably withheld, to 293 in respect of which time shall be of the essence. 244 change the flag and/or the name of the Vessel during 294 (b) The Charterers shall pay to the Owners for the hire 245 the Charter Period (with all fees, costs and expenses 295 of the Vessel a lump sum in the amount indicated in arising in relation thereto for the Charterers’ 296 Box 22 which shall be payable not later than every thirty account). Painting and re-painting, instalment 297 (30) running days in advance, the first lump sum being 246 and re-instalment, registration and re-registration, if 298 payable on the date and hour of the Vessel’s delivery to 247 required by the Owners, shall be at the Charterers’ 299 the Charterers. Hire shall be paid continuously 248 expense and time. 300 throughout the Charter Period. 249 (e) Changes to the Vessel – Subject to Clause 10(a)(ii), 301 (c) Payment of hire shall be made in cash without 250 the Charterers shall make no structural changes in the 302 discount in the currency and in the manner indicated in 251 Vessel or changes in the machinery, boilers, appurten- 303 Box 25 and at the place mentioned in Box 26. 252 ances or spare parts thereof without in each instance 253 first securing the Owners’ approval thereof. If the Owners 304 (d) Final payment of hire, if for a period of less than 254 so agree, the Charterers shall, if the Owners so require, 305 thirty (30) running days, shall be calculated proportionally 255 restore the Vessel to its former condition before the 306 according to the number of days and hours remaining 256 termination of this Charter. 307 before redelivery and advance payment to be effected 257 (f) Use of the Vessel’s Outfit, Equipment and 308 accordingly. 258 Appliances - The Charterers shall have the use of all 309 (e) Should the Vessel be lost or missing, hire shall 259 outfit, equipment, and appliances on board the Vessel 310 cease from the date and time when she was lost or last 260 at the time of delivery, provided the same or their 311 heard of. The date upon which the Vessel is to be treated 261 substantial equivalent shall be returned to the Owners 312 as lost or missing shall be ten (10) days after the Vessel 262 on redelivery in the same good order and condition as 313 was last reported or when the Vessel is posted as 263 when received, ordinary wear and tear excepted. The 314 missing by Lloyd’s, whichever occurs first. Any hire paid 264 Charterers shall from time to time during the Charter 315 in advance to be adjusted accordingly. 265 Period replace, renew or substitute such items of 316 (f) Any delay in payment of hire shall entitle the equipment as shall be so 317 Owners to interest at the rate per annum as agreed 266 damaged or worn as to be unfit for use. The Charterers 318 in Box 24. If Box 24 has not been filled in, the three months 267 are to procure that all repairs to or replacement of any 319 Interbank offered rate in London (LIBOR or its successor) 268 damaged, worn or lost parts or equipment be effected 320 for the currency stated in Box 25, as quoted by the British 269 in such manner (both as regards workmanship and 321 Bankers’ Association (BBA) on the date when the hire 270 quality of materials) as not to diminish the value of the 322 fell due, increased by 2 per cent., shall apply. 271 Vessel. Title of any equipment so replaced, renewed or substituted shall vest in and remain with the 323 (g) Payment of interest due under sub-clause 11(f) Owners. The Charterers have the right to fit additional 324 shall be made within seven (7) running days of the date 272 equipment at their expense and risk (provided that no 325 of the Owners’ invoice specifying the amount payable permanent structural damage is caused to the Vessel 326 or, in the absence of an invoice, at the time of the next 327 hire payment date. by reason of such installation) and but the Charterers 273 shall, at their expenses, remove such equipment and 328 12. Mortgage (See Clause 63.3 (Assignment and make good any damage caused by the fitting or Transfer)) removal of such additional equipment before the 329 (only to apply if Box 28 has been appropriately filled in) Vessel is redelivered to the Owners. at the end of the 330 *) (a) The Owners warrant that they have not effected period if 331 any mortgage(s) of the Vessel and that they shall not 274 requested by the Owners. Any equipment including radio 332 effect any mortgage(s) without the prior consent of the 275 equipment on hire on the Vessel at time of delivery shall 333 Charterers, which shall not be unreasonably withheld. 276 be kept and maintained by the Charterers and the 334 *) (b) The Vessel chartered under this Charter is financed 277 Charterers shall assume the obligations and liabilities 335 by a mortgage according to the Financial Instrument. 278 of the Owners under any lease contracts in connection 336 The Charterers undertake to comply, and provide such 279 therewith and shall reimburse the Owners for all 337 information and documents to enable the Owners to 280 expenses incurred in connection therewith, also for any 338 comply, with all such instructions or directions in regard 281 new equipment required in order to comply with radio 339 to the employment, insurances, operation, repairs and 282 regulations. 340 maintenance of the Vessel as laid down in the Financial 341 Instrument or as may be directed from time to time during Copyright © 2001 BIMCO. All rights reserved. Any unauthorised copying, duplication, reproduction or distribution of this BIMCO SmartCon document will constitute an infringement of BIMCO’s copyright. Explanatory notes are available from BIMCO at www.bimco.org. First published in 1974 as BARECON A and B. Amalgamated and revised in 1989. Revised 2001.
PART II BARECON 2001 Standard Bareboat Charter 342 the currency of the Charter by the mortgagee(s) in 383 incurred thereby in respect of all other repairs not 343 conformity with the Financial Instrument. The Charterers 384 covered by the insurances and/or not exceeding any 344 confirm that, for this purpose, they have acquainted 385 possible franchise(s) or deductibles provided for in the 345 themselves with all relevant terms, conditions and 386 insurances. 346 provisions of the Financial Instrument and agree to 387 All time used for repairs under the provisions of sub-347 acknowledge this in writing in any form that may be 388 clause 13(a) and for repairs of latent defects according 348 required by the mortgagee(s). The Owners warrant that 389 to Clause 3(c) above, including any deviation, shall be 349 they have not effected any mortgage(s) other than stated 390 for the Charterers’ account. 350 in Box 28 and that they shall not agree to any 391 (b) If the conditions of the above insurances permit 351 amendment of the mortgage(s) referred to in Box 28 or 392 additional insurance to be placed by the parties, such 352 effect any other mortgage(s) without the prior consent 393 cover shall be limited to the amount for each party set 353 of the Charterers, which shall not be unreasonably 394 out in Box 30 and Box 31, respectively. The Owners or 354 withheld. 395 the Charterers as the case may be shall immediately 355 *) (Optional, Clauses 12(a) and 12(b) are alternatives; 396 furnish the other partyOwners with particulars of any 356 indicate alternative agreed in Box 28). additional (See also Clause 39 397 insurance effected, including copies of any cover notes 357 13. Insurance and Repairs 398 or policies and the written consent of the insurers of (Insurance)) 399 any such required insurance in any case where the 358 (a) Subject to Clause 39 (Insurance), dDuring the 400 consent of such insurers is necessary. The Charterers Charter Period the Vessel shall be kept 359 insured in accordance with Clause 39 (Insurance) by hereby undertake that any additional insurances that the Charterers at their expense against hull they arrange now or in the future will always be 360 and machinery, marine and (including blocking and trapping) war and Protection and Indemnity risks and compliant with the terms of the underlying hull and freight, demurrage and defence risks 361 (and any risks against which it is compulsory to insure machinery policies. 362 for the operation of the Vessel, including but not limited 401 (c) The Charterers shall upon the request of the to maintaining 402 Owners, provide information and promptly execute such 363 financial security in accordance with sub-clause 403 documents as may be required to enable the Owners to 364 10(a)(iii)) in such form as the Owners shall in writing 404 comply with the insurance provisions of the Financial 365 approve. During the Charter Period the Charterers 405 Instrument (if any). shall procure (at Charteres’ expense) that there are in 406 (d) Subject to the provisions of the Financial Instru-place innocent Owners’ interest insurance, lessor’s 407 ments and Clause 41.13 (Termination, Redelivery and additional perils (pollution) insurance and if Total Loss)3, if any, should the Vessel become a Total applicable, Mortgagees’ interest insurance and Loss, an actual, Mortgagees’ additional perils (pollution) insurance for 408 constructive, compromised or agreed total loss under an amount equal to at least one hundred and twenty 409 the insurances required under sub-clause 13(a), all percent. (120%) of the then Owners’ cost and shall 410 insurance payments for such loss shall be paid to the procure (at Charterers’ expense), which approval shall 411 Owners (or, if applicable, the Owners’ Financiers) in not be un-reasonably accordance with the agreedterms of the relevant loss 366 withheld. Such insurances shall be arranged by the payable clauses). who shall distribute the moneys 367 Charterers to protect the interests of both the Owners between the 368 and the Charterers and the Owners’ Financiers 412 Owners and the Charterers according to their respective mortgagee(s) (if any), and 413 interests. The Charterers undertake to notify the Owners 369 The Charterers shall be at liberty to protect under such and the Owners’ Financiers, 370 insurances the interests of any managers they may 414 and the mortgagee(s), if any, of any occurrences in 371 appoint provided such manager has entered into a 415 consequence of which the Vessel is likely to become a manager’s undertaking in form and substance 416 tTotal lLoss. as defined in this Clause. acceptable to the Owners and the Owners’ Financiers (if any) , the 417 (e) The Owners shall upon the request of the . Insurance policies shall cover the Owners 418 Charterers, promptly execute such documents as may mortgagee(s) (if any), and 419 be required to enable the Charterers to abandon the 372 the Charterers according to their respective interests. 420 Vessel to insurers and claim a constructive total loss. 373 Subject to the provisions of the agreed loss payable clauses, Financial Instrument, if 421 (f) For the purpose of insurance coverage against hull 374 any, and the approval of the Owners and the insurers, 422 and machinery and war risks under the provisions of 375 the Charterers shall effect all insured repairs and shall 423 sub-clause 13(a), the value of the Vessel is the sum 376 undertake settlement and reimbursement from the 424 indicated in Clause 39 (Insurance).Box 29. 377 insurers of all costs in connection with such repairs as 425 14. Insurance, Repairs and Classification 378 well as insured charges, expenses and liabilities to the 426 (Optional, only to apply if expressly agreed and stated 379 extent of coverage under the insurances herein provided 427 in Box 29, in which event Clause 13 shall be considered 380 for. 428 deleted). 381 The Charterers also to remain responsible for and to 429 (a) During the Charter Period the Vessel shall be kept 382 effect repairs and settlement of costs and expenses Copyright © 2001 BIMCO. All rights reserved. Any unauthorised copying, duplication, reproduction or distribution of this BIMCO SmartCon document will constitute an infringement of BIMCO’s copyright. Explanatory notes are available from BIMCO at www.bimco.org. First published in 1974 as BARECON A and B. Amalgamated and revised in 1989. Revised 2001.
PART II BARECON 2001 Standard Bareboat Charter 430 insured by the Owners at their expense against hull and 492 for such loss shall be paid to the Owners, who shall 431 machinery and war risks under the form of policy or 493 distribute the moneys between themselves and the 432 policies attached hereto. The Owners and/or insurers 494 Charterers according to their respective interests. 433 shall not have any right of recovery or subrogation 495 (i) If the Vessel becomes an actual, constructive, 434 against the Charterers on account of loss of or any 496 compromised or agreed total loss under the insurances 435 damage to the Vessel or her machinery or appurt-497 arranged by the Owners in accordance with sub-clause 436 enances covered by such insurance, or on account of 498 14(a), this Charter shall terminate as of the date of such 437 payments made to discharge claims against or liabilities 499 loss. 438 of the Vessel or the Owners covered by such insurance. 439 Insurance policies shall cover the Owners and the 500 (j) The Charterers shall upon the request of the 440 Charterers according to their respective interests. 501 Owners, promptly execute such documents as may be 502 required to enable the Owners to abandon the Vessel 441 (b) During the Charter Period the Vessel shall be kept 503 to the insurers and claim a constructive total loss. 442 insured by the Charterers at their expense against 443 Protection and Indemnity risks (and any risks against 504 (k) For the purpose of insurance coverage against hull 444 which it is compulsory to insure for the operation of the 505 and machinery and war risks under the provisions of 445 Vessel, including maintaining financial security in 506 sub-clause 14(a), the value of the Vessel is the sum 446 accordance with sub-clause 10(a)(iii)) in such form as 507 indicated in Box 29. 447 the Owners shall in writing approve which approval shall 508 (l) Notwithstanding anything contained in sub-clause 448 not be unreasonably withheld. 509 10(a), it is agreed that under the provisions of Clause 449 (c) In the event that any act or negligence of the 510 14, if applicable, the Owners shall keep the Vessel’s 450 Charterers shall vitiate any of the insurance herein 511 Class fully up to date with the Classification Society 451 provided, the Charterers shall pay to the Owners all 512 indicated in Box 10 and maintain all other necessary 452 losses and indemnify the Owners against all claims and 513 certificates in force at all times. 453 demands which would otherwise have been covered by 454 such insurance. 514 15. Redelivery (See Clause 41.6) 515 At the expiration of the Charter Period the Vessel shall 455 (d) The Charterers shall, subject to the approval of the 516 be redelivered by the Charterers to the Owners at a 456 Owners or Owners’ Underwriters, effect all insured 517 safe and ice-free port or place as indicated in Box 16, in 457 repairs, and the Charterers shall undertake settlement 518 such ready safe berth as the Owners may direct. The 458 of all miscellaneous expenses in connection with such 519 Charterers shall give the Owners not less than thirty 459 repairs as well as all insured charges, expenses and 520 (30) running days’ preliminary notice of expected date, 460 liabilities, to the extent of coverage under the insurances 521 range of ports of redelivery or port or place of redelivery 461 provided for under the provisions of sub-clause 14(a). 522 and not less than fourteen (14) running days’ definite 462 The Charterers to be secured reimbursement through 523 notice of expected date and port or place of redelivery. 463 the Owners’ Underwriters for such expenditures upon 524 Any changes thereafter in the Vessel’s position shall be 464 presentation of accounts. 525 notified immediately to the Owners. 465 (e) The Charterers to remain responsible for and to 526 The Charterers warrant that they will not permit the 466 effect repairs and settlement of costs and expenses 527 Vessel to commence a voyage (including any preceding 467 incurred thereby in respect of all other repairs not 528 ballast voyage) which cannot reasonably be expected 468 covered by the insurances and/or not exceeding any 529 to be completed in time to allow redelivery of the Vessel 469 possible franchise(s) or deductibles provided for in the 530 within the Charter Period. Notwithstanding the above, 470 insurances. 531 should the Charterers fail to redeliver the Vessel within 532 The Charter Period, the Charterers shall pay the daily 471 (f) All time used for repairs under the provisions of 533 equivalent to the rate of hire stated in Box 22 plus 10 472 sub-clauses 14(d) and 14(e) and for repairs of latent 534 per cent. or to the market rate, whichever is the higher, 473 defects according to Clause 3 above, including any 535 for the number of days by which the Charter Period is 474 deviation, shall be for the Charterers’ account and shall 536 exceeded. All other terms, conditions and provisions of 475 form part of the Charter Period. 537 this Charter shall continue to apply. 476 The Owners shall not be responsible for any expenses 538 Subject to the provisions of Clause 10, the Vessel shall 477 as are incident to the use and operation of the Vessel 539 be redelivered to the Owners in the same or as good 478 for such time as may be required to make such repairs. 540 structure, state, condition and class as that in which she 479 (g) If the conditions of the above insurances permit 541 was delivered, fair wear and tear not affecting class 480 additional insurance to be placed by the parties such 542 excepted. 481 cover shall be limited to the amount for each party set 543 The Vessel upon redelivery shall have her survey cycles 482 out in Box 30 and Box 31, respectively. The Owners or 544 up to date and trading and class certificates valid for at 483 the Charterers as the case may be shall immediately 545 least the number of months agreed in Box 17. 484 furnish the other party with particulars of any additional 546 16. Non-Lien 485 insurance effected, including copies of any cover notes 547 Save for Permitted Security Interest (if any), The 486 or policies and the written consent of the insurers of Charterers will not suffer, nor permit to be continued, 487 any such required insurance in any case where the 548 any lien or encumbrance incurred by them or their 488 consent of such insurers is necessary. 549 agents, which might have priority over the title and 489 (h) Should the Vessel become an actual, constructive, 550 interest of the Owners in the Vessel. The Charterers 490 compromised or agreed total loss under the insurances 551 further agree to fasten to the Vessel in a conspicuous 491 required under sub-clause 14(a), all insurance payments 552 place and to keep so fastened during the Charter Period Copyright © 2001 BIMCO. All rights reserved. Any unauthorised copying, duplication, reproduction or distribution of this BIMCO SmartCon document will constitute an infringement of BIMCO’s copyright. Explanatory notes are available from BIMCO at www.bimco.org. First published in 1974 as BARECON A and B. Amalgamated and revised in 1989. Revised 2001.
PART II BARECON 2001 Standard Bareboat Charter 553 a notice reading as follows: 609 (a) The Charterers shall not assign this Charter nor 554 “This Vessel is the property of (name of Owners). It is 610 sub-charter the Vessel on a bareboat basis except with 555 under charter to (name of Charterers) and by the terms 611 the prior consent in writing of the Owners, which shall 556 of the Charter Party neither the Charterers nor the 612 not be unreasonably withheld, and subject to such terms 557 Master have any right, power or authority to create, incur 613 and conditions as the Owners shall approve. 558 or permit to be imposed on the Vessel any lien 614 (b) The Owners shall not sell the Vessel during the 559 whatsoever.” or a notice in such analogous form as 615 currency of this Charter except with the prior written reasonably required by any Mortgagee(s). 616 consent of the Charterers, which shall not be unreason-617 ably withheld, and subject to the buyer accepting an 560 17. Indemnity (See Clauses 38.3 (Possession of Vessel), 618 assignment of this Charter. 39.16 (Insurance), 39.17 (Insurance), 39.18 619 23. Contracts of Carriage (Insurance), 41.4 (Termination, Redelivery and Total 620 *) (a) The Charterers are to procure that all documents Loss), 53 (Indemnities) and 55.4 (Increased Costs)) 621 issued during the Charter Period evidencing the terms 561 (a) The Charterers shall indemnify the Owners against 622 and conditions agreed in respect of carriage of goods 562 any loss, damage or expense incurred by the Owners 623 shall contain a paramount clause incorporating any 563 arising out of or in relation to the operation of the Vessel 624 legislation relating to carrier’s liability for cargo 564 by the Charterers, and against any lien of whatsoever 625 compulsorily applicable in the trade; if no such legislation 565 nature arising out of an event occurring during the 626 exists, the documents shall incorporate the Hague-Visby 566 Charter Period. If the Vessel be arrested or otherwise 627 Rules. The documents shall also contain the New Jason 567 detained by reason of claims or liens arising out of her 628 Clause and the Both-to-Blame Collision Clause. 568 operation hereunder by the Charterers, the Charterers 569 shall at their own expense take all reasonable steps to 629 *) (b) The Charterers are to procure that all passenger 570 secure that within a reasonable time the Vessel is 630 tickets issued during the Charter Period for the carriage 571 released, including the provision of bail. 631 of passengers and their luggage under this Charter shall 572 Without prejudice to the generality of the foregoing, the 632 contain a paramount clause incorporating any legislation 573 Charterers agree to indemnify the Owners against all 633 relating to carrier’s liability for passengers and their 574 consequences or liabilities arising from the Master, 634 luggage compulsorily applicable in the trade; if no such 575 officers or agents signing Bills of Lading or other 635 legislation exists, the passenger tickets shall incorporate 576 documents. 636 the Athens Convention Relating to the Carriage of 637 Passengers and their Luggage by Sea, 1974, and any 577 (b) If the Vessel be arrested or otherwise detained by 638 protocol thereto. 578 reason of a claim or claims against the Owners, the 639 *) Delete as applicable. 579 Owners shall at their own expense take all reasonable 580 steps to secure that within a reasonable time the Vessel 640 24. Bank Corporate Guarantee 581 is released, including the provision of bail. 641 (Optional, only to apply if Box 27 filled in) 582 In such circumstances the Owners shall indemnify the 642 The Charterers undertake to furnish, on or about the 583 Charterers against any loss, damage or expense date of this Charter, before delivery of 584 incurred by the Charterers (including hire paid under 643 the Vessel, a first class bank guarantee or bond in the 585 this Charter) as a direct consequence of such arrest or 644 sum and at the place as indicated in Box 27 as a corporate 586 detention. guarantee from the Guarantors as guarantee and the 587 18. Lien other Security Documents (if not already earlier 588 The Owners to shall have a lien upon all cargoes, sub-hires entered into) 589 and sub-freights belonging or due to the Charterers or 645 for full performance of their obligations under this 590 any sub-charterers and any Bill of Lading freight for all 646 Charter. 591 claims under this Charter., and the Charterers to have a 647 25. Requisition/Acquisition 592 lien on the Vessel for all moneys paid in advance and 648 (a) Subject to the provisions of the Financial 593 not earned. Instruments (if any) and the General Assignment, Iin 594 19. Salvage the event of the Requisition for Hire of the Vessel 595 All salvage and towage performed by the Vessel shall 649 by any governmental or other competent authority 596 be for the Charterers’ benefit and the cost of repairing 650 (hereinafter referred to as “Requisition for Hire”) 597 damage occasioned thereby shall be borne by the 651 irrespective of the date during the Charter Period when 598 Charterers. 652 “Requisition for Hire” may occur and irrespective of the 599 20. Wreck Removal 653 length thereof and whether or not it be for an indefinite 600 In the event of the Vessel becoming a wreck or 654 or a limited period of time, and irrespective of whether it 601 obstruction to navigation the Charterers shall indemnify 655 may or will remain in force for the remainder of the 602 the Owners against any sums whatsoever which the 656 Charter Period, this Charter shall not be deemed thereby 603 Owners shall become liable to pay and shall pay in 657 or thereupon to be frustrated or otherwise terminated 604 consequence of the Vessel becoming a wreck or 658 and the Charterers shall continue to pay the stipulated 605 obstruction to navigation. 659 hire in the manner provided by this Charter until the time 660 when the Charter would have terminated pursuant to 606 21. General Average 607 The Owners shall not contribute to General Average. 661 any of the provisions hereof. always provided however 662 that in the event of “Requisition for Hire” any Requisition 608 22. Assignment, Sub-Charter and Sale (See Clause 63 663 Hire or compensation received or receivable by the (Assignment and Transfer)) 664 Owners shall be payable to the Charterers during the Copyright © 2001 BIMCO. All rights reserved. Any unauthorised copying, duplication, reproduction or distribution of this BIMCO SmartCon document will constitute an infringement of BIMCO’s copyright. Explanatory notes are available from BIMCO at www.bimco.org. First published in 1974 as BARECON A and B. Amalgamated and revised in 1989. Revised 2001.
PART II BARECON 2001 Standard Bareboat Charter 665 remainder of the Charter Period or the period of the 714 Clause 14 is applicable, should require payment of 666 “Requisition for Hire” whichever be the shorter. 715 premiums and/or calls because, pursuant to the 667 (b) Subject to the other provisions of this Charter and 716 Charterers’ orders, the Vessel is within, or is due to enter the Financial Instruments (if any) Iin the event of the 717 and remain within, any area or areas which are specified Owners being deprived of their 718 by such insurers as being subject to additional premiums 668 ownership in the Vessel by any Compulsory Acquisition 719 because of War Risks, then such premiums and/or calls 669 of the Vessel or requisition for title by any governmental 720 shall be reimbursed by the Charterers to the Owners at 670 or other competent authority (hereinafter referred to as 721 the same time as the next payment of hire is due. 671 “Compulsory Acquisition”), then, irrespective of the date 722 (e) The Charterers shall have the liberty: 672 during the Charter Period when “Compulsory Acqui- 723 (i) to comply with all orders, directions, recommend-673 sition” may occur, this Charter shall be deemed 724 ations or advice as to departure, arrival, routes, 674 terminated as of the date of such “Compulsory 725 sailing in convoy, ports of call, stoppages, 675 Acquisition”. In such event Charter Hire to be considered 726 destinations, discharge of cargo, delivery, or in any 676 as earned and to shall be paid up to the date and time of 727 other way whatsoever, which are given by the 677 such “Compulsory Acquisition”. 728 Government of the Nation under whose flag the 678 26. War 729 Vessel sails, or any other Government, body or 730 group whatsoever acting with the power to compel 679 (a) Subject to the provisions of the Financial 731 compliance with their orders or directions; Instruments (if any) FfFor the purpose of this Clause, the words “War 732 (ii) to comply with the orders, directions or recom-680 Risks” shall include any war (whether actual or 733 mendations of any war risks underwriters who have 681 threatened), act of war, civil war, hostilities, revolution, 734 the authority to give the same under the terms of 682 rebellion, civil commotion, warlike operations, the laying 735 the war risks insurance; 683 of mines (whether actual or reported), acts of piracy, 736 (iii) to comply with the terms of any resolution of the 684 acts of terrorists, acts of hostility or malicious damage, 737 Security Council of the United Nations, any 685 blockades (whether imposed against all vessels or 738 directives of the European Community, the effective 686 imposed selectively against vessels of certain flags or 739 orders of any other Supranational body which has 687 ownership, or against certain cargoes or crews or 740 the right to issue and give the same, and with 688 otherwise howsoever), by any person, body, terrorist or 741 national laws aimed at enforcing the same to which 689 political group, or the Government of any state 742 the Owners are subject, and to obey the orders 690 whatsoever, which may be dangerous or are likely to be 743 and directions of those who are charged with their 691 or to become dangerous to the Vessel, her cargo, crew 744 enforcement. 692 or other persons on board the Vessel. 745 (f) In the event of outbreak of war (whether there be a 693 (b) The Vessel, unless the written consent of the 746 declaration of war or not) (i) between any two or more 694 Owners be first obtained and adequate insurances are 747 of the following countries: the United States of America; obtained (such adequacy to be deteremined by the 748 Russia; the United Kingdom; France; and the People’s Owners (acting reasonably)),unless trading within the 749 Republic of China, (ii) between any two or more of the limits and safe places in accordance with The 750 countries stated in Box 36, both the Owners and the Approved Sub-charter and the Charterer has effected 751 Charterers shall have the right to cancel this Charter, the additional premium required by the Vessels 752 whereupon the Charterers shall redeliver the Vessel to insurers and prior notice has been given to the 753 the Owners in accordance with Clause 15, if the Vessel Owners about the details of the itineary and the 754 has cargo on board after discharge thereof at 755 destination, or if debarred under this Clause from additional insurances of the Vessel, shall not continue 756 reaching or entering it at a near, open and safe port as to or go 757 directed by the Owners, or if the Vessel has no cargo 695 through any port, place, area or zone (whether of land 758 on board, at the port at which the Vessel then is or if at 696 or sea), or any waterway or canal, where it reasonably 759 sea at a near, open and safe port as directed by the 697 appears that the Vessel, her cargo, crew or other 760 Owners. In all cases hire shall continue to be paid in 698 persons on board the Vessel, in the reasonable 761 accordance with Clause 11 and except as aforesaid all 699 judgement of the Owners, may be, or are likely to be, 762 other provisions of this Charter shall apply until 700 exposed to War Risks. Should the Vessel be within any 763 redelivery the end of the Charter Period. 701 such place as aforesaid, which only becomes danger- 702 ous, or is likely to be or to become dangerous, after her 764 27. Commission 703 entry into it, the Owners shall have the right to require 765 The Owners to pay a commission at the rate indicated 704 the Vessel to leave such area. 766 in Box 33 to the Brokers named in Box 33 on any hire 705 (c) The Vessel shall not load contraband cargo, or to 767 paid under the Charter. If no rate is indicated in Box 33, 706 pass through any blockade, whether such blockade be 768 the commission to be paid by the Owners shall cover 707 imposed on all vessels, or is imposed selectively in any 769 the actual expenses of the Brokers and a reasonable 708 way whatsoever against vessels of certain flags or 770 fee for their work. 709 ownership, or against certain cargoes or crews or 771 If the full hire is not paid owing to breach of the Charter 710 otherwise howsoever, or to proceed to an area where 772 by either of the parties the party liable therefor shall 711 she shall be subject, or is likely to be subject to 773 indemnify the Brokers against their loss of commission. 712 a belligerent’s right of search and/or confiscation. 774 Should the parties agree to cancel the Charter, the 775 Owners shall indemnify the Brokers against any loss of 713 (d) If the insurers of the war risks insurance, when 776 commission but in such case the commission shall not Copyright © 2001 BIMCO. All rights reserved. Any unauthorised copying, duplication, reproduction or distribution of this BIMCO SmartCon document will constitute an infringement of BIMCO’s copyright. Explanatory notes are available from BIMCO at www.bimco.org. First published in 1974 as BARECON A and B. Amalgamated and revised in 1989. Revised 2001.
PART II BARECON 2001 Standard Bareboat Charter 777 exceed the brokerage on one year’s hire. 837 (d) Either party shall be entitled to terminate this 838 Charter with immediate effect by written notice to the 778 28. Termination (See Clauses 41 (Termination, 839 other party in the event of an order being made or Redelivery and Total Loss) and 49 (Termination 840 resolution passed for the winding up, dissolution, Events)) 841 liquidation or bankruptcy of the other party (otherwise 779 (a) Charterers’ Default 842 than for the purpose of reconstruction or amalgamation) 780 The Owners shall be entitled to withdraw the Vessel from 843 or if a receiver is appointed, or if it suspends payment, 781 the service of the Charterers and terminate the Charter 844 ceases to carry on business or makes any special 782 with immediate effect by written notice to the Charterers if: 845 arrangement or composition with its creditors. 783 (i) the Charterers fail to pay hire in accordance with 846 (e) The termination of this Charter shall be without 784 Clause 11. However, where there is a failure to 847 prejudice to all rights accrued due between the parties 785 make punctual payment of hire due to oversight, 848 prior to the date of termination and to any claim that 786 negligence, errors or omissions on the part of the 849 either party might have. 787 Charterers or their bankers, the Owners shall give 788 the Charterers written notice of the number of clear 850 29. Repossession (See also Clauses 41 (Termination, 789 banking days stated in Box 34 (as recognised at Redelivery and Total Loss) and 49 (Termination Events)) 790 the agreed place of payment) in which to rectify In the event the Vessel Is due for redelivery pursuant 791 the failure, and when so rectified within such to Clause 41.6 (Termination, Redelivery and Total 792 number of days following the Owners’ notice, the Loss) or Owners have made a request for redelivery 793 payment shall stand as regular and punctual. of the Vessel in accordance with the applicable 794 Failure by the Charterers to pay hire within the provisions of Clause 41.10 (Termination, Redelivery 795 number of days stated in Box 34 of their receiving and Total Loss), 796 the Owners’ notice as provided herein, shall entitle 851 In the event of the termination of this Charter in 797 the Owners to withdraw the Vessel from the service 852 accordance with the applicable provisions of Clause 28, 798 of the Charterers and terminate the Charter without 853 the Owners shall have the right to repossess the Vessel 799 further notice; 854 from the Charterers at her current or next port of call, or 800 (ii) the Charterers fail to comply with the requirements of: 855 at a port or place convenient to them without hindrance 801 (1) Clause 6 (Trading Restrictions) 856 or interference by the Charterers, courts or local 857 authorities. Pending physical repossession of the Vessel 802 (2) Clause 13(a) (Insurance and Repairs) 858 in accordance with this Clause 29, the Charterers shall 803 provided that the Owners shall have the option, by 804 written notice to the Charterers, to give the 859 hold the Vessel as gratuitous bailee only to the Owners and 805 Charterers a specified number of days grace within the Charterers shall procure that the master and crew 806 which to rectify the failure without prejudice to the follow the directions of the Owners (but always 807 Owners’ right to withdraw and terminate under this provided that the safety of the Vessel and Iits crew 808 Clause if the Charterers fail to comply with such shall not be materially and adversely compromised).. 809 notice; 860 The Owners shall arrange for an authorised represent-810 (iii) the Charterers fail to rectify any failure to comply 861 ative to board the Vessel as soon as reasonably 811 with the requirements of sub-clause 10(a)(i) 862 practicable following the termination of the Charter. The 812 (Maintenance and Repairs) as soon as practically 863 Vessel shall be deemed to be repossessed by the 813 possible after the Owners have requested them in 864 Owners from the Charterers upon the boarding of the 814 writing so to do and in any event so that the Vessel’s 865 Vessel by the Owners’ representative. All arrangements 815 insurance cover is not prejudiced. 866 and expenses relating to the settling of wages, 867 disembarkation and repatriation of the Charterers’ 816 (b) Owners’ Default 868 Master, officers and crew shall be the sole responsibility 817 If the Owners shall by any act or omission be in breach 869 of the Charterers. 818 of their obligations under this Charter to the extent that 819 the Charterers are deprived of the use of the Vessel 870 30. Dispute Resolution (See Clause 65 (Governing Law 820 and such breach continues for a period of fourteen (14) and Enforcement)) 821 running days after written notice thereof has been given 871 *) (a) This Contract shall be governed by and construed 822 by the Charterers to the Owners, the Charterers shall 872 in accordance with English law and any dispute arising 823 be entitled to terminate this Charter with immediate effect 873 out of or in connection with this Contract shall be referred 824 by written notice to the Owners. 874 to arbitration in London in accordance with the Arbitration 875 Act 1996 or any statutory modification or re-enactment 825 (c) Loss of Vessel 876 thereof save to the extent necessary to give effect to 826 This Charter shall be deemed to be terminated if the 877 the provisions of this Clause. 827 Vessel becomes a total loss or is declared as a 878 The arbitration shall be conducted in accordance with 828 constructive or compromised or arranged total loss. For 879 the London Maritime Arbitrators Association (LMAA) 829 the purpose of this sub-clause, the Vessel shall not be 880 Terms current at the time when the arbitration proceed-830 deemed to be lost unless she has either become an 881 ings are commenced. 831 actual total loss or agreement has been reached with 882 The reference shall be to three arbitrators. A party 832 her underwriters in respect of her constructive, 883 wishing to refer a dispute to arbitration shall appoint its 833 compromised or arranged total loss or if such agreement 884 arbitrator and send notice of such appointment in writing 834 with her underwriters is not reached it is adjudged by a 885 to the other party requiring the other party to appoint its 835 competent tribunal that a constructive loss of the Vessel 886 own arbitrator within 14 calendar days of that notice and 836 has occurred. Copyright © 2001 BIMCO. All rights reserved. Any unauthorised copying, duplication, reproduction or distribution of this BIMCO SmartCon document will constitute an infringement of BIMCO’s copyright. Explanatory notes are available from BIMCO at www.bimco.org. First published in 1974 as BARECON A and B. Amalgamated and revised in 1989. Revised 2001.
PART II BARECON 2001 Standard Bareboat Charter 887 stating that it will appoint its arbitrator as sole arbitrator 942 notice (the “Mediation Notice”) calling on the other 888 unless the other party appoints its own arbitrator and 943 party to agree to mediation. 889 gives notice that it has done so within the 14 days 944 (ii) The other party shall thereupon within 14 calendar 890 specified. If the other party does not appoint its own 945 days of receipt of the Mediation Notice confirm that 891 arbitrator and give notice that it has done so within the 946 they agree to mediation, in which case the parties 892 14 days specified, the party referring a dispute to 947 shall thereafter agree a mediator within a further 893 arbitration may, without the requirement of any further 948 14 calendar days, failing which on the application 894 prior notice to the other party, appoint its arbitrator as 949 of either party a mediator will be appointed promptly 895 sole arbitrator and shall advise the other party 950 by the Arbitration Tribunal (“the Tribunal”) or such 896 accordingly. The award of a sole arbitrator shall be 951 person as the Tribunal may designate for that 897 binding on both parties as if he had been appointed by 952 purpose. The mediation shall be conducted in such 898 agreement. 953 place and in accordance with such procedure and 899 Nothing herein shall prevent the parties agreeing in 954 on such terms as the parties may agree or, in the 900 writing to vary these provisions to provide for the 955 event of disagreement, as may be set by the 901 appointment of a sole arbitrator. 956 mediator. 902 In cases where neither the claim nor any counterclaim 903 exceeds the sum of US$50,000 (or such other sum as 957 (iii) If the other party does not agree to mediate, that 904 the parties may agree) the arbitration shall be conducted 958 fact may be brought to the attention of the Tribunal 905 in accordance with the LMAA Small Claims Procedure 959 and may be taken into account by the Tribunal when 906 current at the time when the arbitration proceedings are 960 allocating the costs of the arbitration as between 907 commenced. 961 the parties. 908 *) (b) This Contract shall be governed by and construed 962 (iv) The mediation shall not affect the right of either 909 in accordance with Title 9 of the United States Code 963 party to seek such relief or take such steps as it 910 and the Maritime Law of the United States and any 964 considers necessary to protect its interest. 911 dispute arising out of or in connection with this Contract 965 (v) Either party may advise the Tribunal that they have 912 shall be referred to three persons at New York, one to 966 agreed to mediation. The arbitration procedure shall 913 be appointed by each of the parties hereto, and the third 967 continue during the conduct of the mediation but 914 by the two so chosen; their decision or that of any two 968 the Tribunal may take the mediation timetable into 915 of them shall be final, and for the purposes of enforcing 969 account when setting the timetable for steps in the 916 any award, judgement may be entered on an award by 970 arbitration. 917 any court of competent jurisdiction. The proceedings 918 shall be conducted in accordance with the rules of the 971 (vi) Unless otherwise agreed or specified in the 919 Society of Maritime Arbitrators, Inc. 972 mediation terms, each party shall bear its own costs 920 In cases where neither the claim nor any counterclaim 973 incurred in the mediation and the parties shall share 921 exceeds the sum of US$50,000 (or such other sum as 974 equally the mediator’s costs and expenses. 922 the parties may agree) the arbitration shall be conducted 975 (vii) The mediation process shall be without prejudice 923 in accordance with the Shortened Arbitration Procedure 976 and confidential and no information or documents 924 of the Society of Maritime Arbitrators, Inc. current at 977 disclosed during it shall be revealed to the Tribunal 925 the time when the arbitration proceedings are commenced. 978 except to the extent that they are disclosable under 926 *) (c) This Contract shall be governed by and construed 979 the law and procedure governing the arbitration. 927 in accordance with the laws of the place mutually agreed 980 (Note: The parties should be aware that the mediation 928 by the parties and any dispute arising out of or in 981 process may not necessarily interrupt time limits.) 929 connection with this Contract shall be referred to 982 (e) If Box 35 in Part I is not appropriately filled in, sub-clause 930 arbitration at a mutually agreed place, subject to the 983 30(a) of this Clause shall apply. Sub-clause 30(d) shall 931 procedures applicable there. 984 apply in all cases. 932 (d) Notwithstanding (a), (b) or (c) above, the parties 985 *) Sub-clauses 30(a), 30(b) and 30(c) are alternatives; 933 may agree at any time to refer to mediation any 986 indicate alternative agreed in Box 35. 934 difference and/or dispute arising out of or in connection 935 with this Contract. 987 31. Notices (See Clause 44 (Notices)) 936 In the case of a dispute in respect of which arbitration 988 (a) Any notice to be given by either party to the other 937 has been commenced under (a), (b) or (c) above, the 989 party shall be in writing and may be sent by fax, telex, 938 following shall apply:- 990 registered or recorded mail or by personal service. 939 (i) Either party may at any time and from time to time 991 (b) The address of the Parties for service of such 940 elect to refer the dispute or part of the dispute to 992 communication shall be as stated in Boxes 3 and 4 941 mediation by service on the other party of a written 993 respectively. Copyright © 2001 BIMCO. All rights reserved. Any unauthorised copying, duplication, reproduction or distribution of this BIMCO SmartCon document will constitute an infringement of BIMCO’s copyright. Explanatory notes are available from BIMCO at www.bimco.org. First published in 1974 as BARECON A and B. Amalgamated and revised in 1989. Revised 2001.
PART III PROVISIONS TO APPLY FOR NEWBUILDING VESSELS ONLY (Optional, only to apply if expressly agreed and stated in Box 37) 1. Specifications and Building Contract 62 Builders have estimated that the Vessel will be ready for 2 (a) The Vessel shall be constructed in accordance with 63 delivery to the Owners as therein provided but the delivery 3 the Building Contract (hereafter called “the Building 64 date for the purpose of this Charter shall be the date when 4 Contract”) as annexed to this Charter, made between the 65 the Vessel is in fact ready for delivery by the Builders after 5 Builders and the Owners and in accordance with the 66 completion of trials whether that be before or after as 6 specifications and plans annexed thereto, such Building 67 indicated in the Building Contract. The Charterers shall not 7 Contract, specifications and plans having been counter- 68 be entitled to refuse acceptance of delivery of the Vessel 8 signed as approved by the Charterers. 69 and upon and after such acceptance, subject to Clause 70 1(d), the Charterers shall not be entitled to make any claim 9 (b) No change shall be made in the Building Contract or 71 against the Owners in respect of any conditions, 10 in the specifications or plans of the Vessel as approved by 72 representations or warranties, whether express or implied, 11 the Charterers as aforesaid, without the Charterers’ 73 as to the seaworthiness of the Vessel or in respect of delay 12 consent. 74 in delivery. 13 (c) The Charterers shall have the right to send their 75 (b) If for any reason other than a default by the Owners 14 representative to the Builders’ Yard to inspect the Vessel 76 under the Building Contract, the Builders become entitled 15 during the course of her construction to satisfy themselves 77 under that Contract not to deliver the Vessel to the Owners, 16 that construction is in accordance with such approved 78 the Owners shall upon giving to the Charterers written 17 specifications and plans as referred to under sub-clause 79 notice of Builders becoming so entitled, be excused from 18 (a) of this Clause. 80 giving delivery of the Vessel to the Charterers and upon 19 (d) The Vessel shall be built in accordance with the 81 receipt of such notice by the Charterers this Charter shall 20 Building Contract and shall be of the description set out 82 cease to have effect. 21 therein. Subject to the provisions of sub-clause 2(c)(ii) 83 (c) If for any reason the Owners become entitled under 22 hereunder, the Charterers shall be bound to accept the 84 the Building Contract to reject the Vessel the Owners shall, 23 Vessel from the Owners, completed and constructed in 85 before exercising such right of rejection, consult the 24 accordance with the Building Contract, on the date of 86 Charterers and thereupon 25 delivery by the Builders. The Charterers undertake that 26 having accepted the Vessel they will not thereafter raise 87 (i) if the Charterers do not wish to take delivery of the Vessel 27 any claims against the Owners in respect of the Vessel’s 88 they shall inform the Owners within seven (7) running days 28 performance or specification or defects, if any. 89 by notice in writing and upon receipt by the Owners of such 29 Nevertheless, in respect of any repairs, replacements or 90 notice this Charter shall cease to have effect; or 30 defects which appear within the first 12 months from 91 (ii) if the Charterers wish to take delivery of the Vessel 31 delivery by the Builders, the Owners shall endeavour to 92 they may by notice in writing within seven (7) running days 32 compel the Builders to repair, replace or remedy any defects 93 require the Owners to negotiate with the Builders as to the 33 or to recover from the Builders any expenditure incurred in 94 terms on which delivery should be taken and/or refrain from 34 carrying out such repairs, replacements or remedies. 95 exercising their right to rejection and upon receipt of such 35 However, the Owners’ liability to the Charterers shall be 96 notice the Owners shall commence such negotiations and/ 36 limited to the extent the Owners have a valid claim against 97 or take delivery of the Vessel from the Builders and deliver 37 the Builders under the guarantee clause of the Building 98 her to the Charterers; 38 Contract (a copy whereof has been supplied to the 39 Charterers). The Charterers shall be bound to accept such 99 (iii) in no circumstances shall the Charterers be entitled to 40 sums as the Owners are reasonably able to recover under 100 reject the Vessel unless the Owners are able to reject the 41 this Clause and shall make no further claim on the Owners 101 Vessel from the Builders; 42 for the difference between the amount(s) so recovered and 102 (iv) if this Charter terminates under sub-clause (b) or (c) of 43 the actual expenditure on repairs, replacement or 103 this Clause, the Owners shall thereafter not be liable to the 44 remedying defects or for any loss of time incurred. 104 Charterers for any claim under or arising out of this Charter 45 Any liquidated damages for physical defects or deficiencies 105 or its termination. 46 shall accrue to the account of the party stated in Box 41(a) 47 or if not filled in shall be shared equally between the parties. 106 (d) Any liquidated damages for delay in delivery under the 48 The costs of pursuing a claim or claims against the Builders 107 Building Contract and any costs incurred in pursuing a claim 49 under this Clause (including any liability to the Builders) 108 therefor shall accrue to the account of the party stated in 50 shall be borne by the party stated in Box 41(b) or if not 109 Box 41(c) or if not filled in shall be shared equally between 51 filled in shall be shared equally between the parties. 110 the parties. 52 2. Time and Place of Delivery 111 3. Guarantee Works 53 (a) Subject to the Vessel having completed her 112 If not otherwise agreed, the Owners authorise the 54 acceptance trials including trials of cargo equipment in 113 Charterers to arrange for the guarantee works to be 55 accordance with the Building Contract and specifications 114 performed in accordance with the building contract terms, 56 to the satisfaction of the Charterers, the Owners shall give 115 and hire to continue during the period of guarantee works. 57 and the Charterers shall take delivery of the Vessel afloat 116 The Charterers have to advise the Owners about the 58 when ready for delivery and properly documented at the 117 performance to the extent the Owners may request. 59 Builders’ Yard or some other safe and readily accessible 118 4. Name of Vessel 60 dock, wharf or place as may be agreed between the parties 119 The name of the Vessel shall be mutually agreed between 61 hereto and the Builders. Under the Building Contract the 120 the Owners and the Charterers and the Vessel shall be Copyright © 2001 BIMCO. All rights reserved. Any unauthorised copying, duplication, reproduction or distribution of this BIMCO SmartCon document will constitute an infringement of BIMCO’s copyright. Explanatory notes are available from BIMCO at www.bimco.org. First published in 1974 as BARECON A and B. Amalgamated and revised in 1989. Revised 2001.
PART III PROVISIONS TO APPLY FOR NEWBUILDING VESSELS ONLY (Optional, only to apply if expressly agreed and stated in Box 37) 121 painted in the colours, display the funnel insignia and fly 128 shall bear all survey expenses and all other costs, if any, 122 the house flag as required by the Charterers. 129 including the cost of docking and undocking, if required, 130 as well as all repair costs incurred. The Charterers shall 123 5. Survey on Redelivery 131 also bear all loss of time spent in connection with any 124 The Owners and the Charterers shall appoint surveyors 132 docking and undocking as well as repairs, which shall be 125 for the purpose of determining and agreeing in writing the 133 paid at the rate of hire per day or pro rata. 126 condition of the Vessel at the time of re-delivery. 127 Without prejudice to Clause 15 (Part II), the Charterers Copyright © 2001 BIMCO. All rights reserved. Any unauthorised copying, duplication, reproduction or distribution of this BIMCO SmartCon document will constitute an infringement of BIMCO’s copyright. Explanatory notes are available from BIMCO at www.bimco.org. First published in 1974 as BARECON A and B. Amalgamated and revised in 1989. Revised 2001.
PART IV HIRE/PURCHASE AGREEMENT (Optional, only to apply if expressly agreed and stated in Box 42) 1 On expiration of this Charter and provided the 27 shall be for Sellers’ account. Charterers 28 In exchange for payment of the last month’s hire 2 have fulfilled their obligations according to Part I and II 29 instalment the Sellers shall furnish the Buyers with a 3 as well as Part III, if applicable, it is agreed, that on 30 Bill of Sale duly attested and legalized, together with a 4 payment of the final payment of hire as per Clause 11 31 certificate setting out the registered encumbrances, if 5 the Charterers have purchased the Vessel with 32 any. On delivery of the Vessel the Sellers shall provide 6 everything belonging to her and the Vessel is fully paid 33 for deletion of the Vessel from the Ship’s Register and 7 for. 34 deliver a certificate of deletion to the Buyers. 8 In the following paragraphs the Owners are referred to 35 The Sellers shall, at the time of delivery, hand to the 9 as the Sellers and the Charterers as the Buyers. 36 Buyers all classification certificates (for hull, engines, 10 The Vessel shall be delivered by the Sellers and taken 37 anchors, chains, etc.), as well as all plans which may 11 over by the Buyers on expiration of the Charter. 38 be in Sellers’ possession. 12 The Sellers guarantee that the Vessel, at the time of 39 The Wireless Installation and Nautical Instruments, 13 delivery, is free from all encumbrances and maritime 40 unless on hire, shall be included in the sale without any 14 liens or any debts whatsoever other than those arising 41 extra payment. 15 from anything done or not done by the Buyers or any 42 The Vessel with everything belonging to her shall be at 16 existing mortgage agreed not to be paid off by the time 43 Sellers’ risk and expense until she is delivered to the 17 of delivery. Should any claims, which have been incurred 44 Buyers, subject to the conditions of this Contract and 18 prior to the time of delivery be made against the Vessel, 45 the Vessel with everything belonging to her shall be 19 the Sellers hereby undertake to indemnify the Buyers 46 delivered and taken over as she is at the time of delivery, 20 against all consequences of such claims to the extent it 47 after which the Sellers shall have no responsibility for 21 can be proved that the Sellers are responsible for such 48 possible faults or deficiencies of any description. 22 claims. Any taxes, notarial, consular and other charges 49 The Buyers undertake to pay for the repatriation of the 23 and expenses connected with the purchase and 50 Master, officers and other personnel if appointed by the 24 registration under Buyers’ flag, shall be for Buyers’ 51 Sellers to the port where the Vessel entered the Bareboat 25 account. Any taxes, consular and other charges and 52 Charter as per Clause 3 (Part II) or to pay the equivalent 26 expenses connected with closing of the Sellers’ register, 53 cost for their journey to any other place. Copyright © 2001 BIMCO. All rights reserved. Any unauthorised copying, duplication, reproduction or distribution of this BIMCO SmartCon document will constitute an infringement of BIMCO’s copyright. Explanatory notes are available from BIMCO at www.bimco.org. First published in 1974 as BARECON A and B. Amalgamated and revised in 1989. Revised 2001.
PART V PROVISIONS TO APPLY FOR VESSELS REGISTERED IN A BAREBOAT CHARTER REGISTRY (Optional, only to apply if expressly agreed and stated in Box 43) 1 1. Definitions 17 3. Termination of Charter by Default 2 For the purpose of this PART V, the following terms shall 18 If the Vessel chartered under this Charter is registered 3 have the meanings hereby assigned to them: 19 in a Bareboat Charter Registry as stated in Box 44, and 4 “The Bareboat Charter Registry” shall mean the registry 20 if the Owners shall default in the payment of any amounts 5 of the State whose flag the Vessel will fly and in which 21 due under the mortgage(s) specified in Box 28, the 6 the Charterers are registered as the bareboat charterers 22 Charterers shall, if so required by the mortgagee, direct 7 during the period of the Bareboat Charter. 23 the Owners to re-register the Vessel in the Underlying 8 “The Underlying Registry” shall mean the registry of the 24 Registry as shown in Box 45. 9 state in which the Owners of the Vessel are registered 25 In the event of the Vessel being deleted from the 10 as Owners and to which jurisdiction and control of the 26 Bareboat Charter Registry as stated in Box 44, due to a 11 Vessel will revert upon termination of the Bareboat 27 default by the Owners in the payment of any amounts 12 Charter Registration. 28 due under the mortgage(s), the Charterers shall have 29 the right to terminate this Charter forthwith and without 13 2. Mortgage 30 prejudice to any other claim they may have against the 14 The Vessel chartered under this Charter is financed by 31 Owners under this Charter. 15 a mortgage and the provisions of Clause 12(b) (Part II) 16 shall apply. Copyright © 2001 BIMCO. All rights reserved. Any unauthorised copying, duplication, reproduction or distribution of this BIMCO SmartCon document will constitute an infringement of BIMCO’s copyright. Explanatory notes are available from BIMCO at www.bimco.org. First published in 1974 as BARECON A and B. Amalgamated and revised in 1989. Revised 2001.
EXECUTION VERSION
ADDITIONAL CLAUSES TO BARECON 2001 DATED 11 January 2024
CLAUSE 32 - CHARTER PERIOD
| 32.1 | The period of this Charter (the “Charter Period”) shall, subject to the terms of this Charter, continue for a period of eighty-four (84) months starting from the Commencement Date. |
| 32.2 | Notwithstanding the fact that the Charter Period shall commence on the Commencement Date, this Charter shall be: |
| (a) | in full force and effect; and |
| (b) | valid, binding and enforceable against the parties hereto, |
with effect from the date hereof until the end of the Charter Period (subject to the terms of this Charter).
CLAUSE 33 - CANCELLATION
| 33.1 | If: |
| (a) | the Vessel is not delivered by the Charterers as sellers to the Owners as buyers under the MOA by the Cancelling Date (or such later date as the parties to the MOA may agree); or |
| (b) | the MOA expires, is cancelled, terminated, rescinded or suspended or otherwise ceases to remain in full force and effect for any reason (in whole or in part), |
| 33.2 | then this Charter shall immediately terminate and be cancelled (without prejudice to Clause 53 - (Indemnities) and without the need for either the Owners or the Charterers to take any action whatsoever), provided that the Owners shall be entitled to retain all fees and expenses paid by the Charterers pursuant to Clause 42 - (Fees and Expenses) (and without prejudice to Clause 42 - (Fees and Expenses) and any clause of the MOA, if such fees have not been paid, the Charterers shall forthwith pay such fees and expenses to the Owners in accordance with Clause 42 - (Fees and Expenses) and such payment shall be irrevocable and unconditional and is acknowledged by the Charterers to be proportionate as to amount, having regard to the legitimate interest of the Owners, in protecting against the Owners’ risk of the Charterers failing to perform its obligations under this Charter. For the avoidance of doubt, the termination of this Charter shall not prejudice the operation of any provision of any Leasing Document which is expressed to survive the termination or cancellation of this Charter). |
CLAUSE 34 - DELIVERY AND CHARTER OF VESSEL
| 34.1 | This Charter is part of a transaction involving the sale, purchase and charter back of the Vessel and constitutes one of the Leasing Documents. |
| 34.2 | The obligation of the Owners to charter the Vessel to the Charterers hereunder is subject to and conditional upon: |
| (a) | the delivery to and acceptance by the Owners as buyers of the Vessel under the MOA; |
| 1 | CMBFL Top Ships II |
BBC Additional Clauses (LEGIO X EQUESTRIS)
| (b) | no Potential Termination Event or Termination Event having occurred which is continuing from the date of this Charter to the last day of the Charter Period (inclusive); |
| (c) | the representations and warranties contained in Clause 45 - (Representations and Warranties) being true and correct on the date hereof and each day thereafter until and including the last date of the Charter Period; |
| (d) | the Delivery occurring on or before the Cancelling Date; and |
| (e) | the Owners having received from the Charterers: |
| (i) | on or before the date of the Payment Notice (or on a date otherwise specified thereunder), the documents or evidence set out in Part A of Schedule 2 in form and substance satisfactory to them; and |
| (ii) | on the Commencement Date and prior to or simultaneously with the Owners executing a dated and timed copy of the protocol of delivery and acceptance evidencing delivery of the Vessel under the MOA and a dated and timed copy of the Acceptance Certificate, the documents or evidence set out in Part B of Schedule 2 in form and substance satisfactory to them, |
and if any of the documents listed in Schedule 2 are not in the English language then, where required by the Owners, they shall be accompanied by a certified English translation.
| 34.3 | The conditions precedent specified in Clause 34.2(e) are inserted for the sole benefit of the Owners and may be waived or deferred in whole or in part and with or without conditions by the Owners. |
| 34.4 | On delivery to and acceptance by the Owners (in their capacity as buyers) of the Vessel from the Charterers (in their capacity as sellers) under the MOA, the Vessel shall be deemed to have been delivered to, and accepted without reservation by, the Charterers under this Charter and the Charterers shall become and be entitled to the possession and use of the Vessel on and subject to the terms and conditions of this Charter on the same day as the delivery date of the Vessel under the MOA. |
| 34.5 | On Delivery, as evidence of the commencement of the Charter Period, the Charterers shall sign and deliver to the Owners, the Acceptance Certificate. The Charterers shall be deemed to have accepted the Vessel under this Charter, and the commencement of the Charter Period having started, on Delivery even if, for whatever reason, the Acceptance Certificate is not signed and/or the Charterers do not take actual possession of the Vessel at that time. |
| 34.6 | The Charterers shall not be entitled for any reason whatsoever to refuse to accept delivery of the Vessel under this Charter once the Vessel has been delivered to and accepted by the Owners (in their capacity as buyers) from the Charterers (in their capacity as sellers) under the MOA, and the Owners shall not be liable for any losses, costs or expenses whatsoever or howsoever arising including without limitation, any loss of profit or any loss or otherwise: |
| (a) | resulting directly or indirectly from any defect or alleged defect in the Vessel (including but not limited to any deficiency in seaworthiness, merchantability, classification, condition, design, quality, operation, performance, capacity or fitness for use or the eligibility of the Vessel for any particular trade or operation) or any failure of the Vessel; or |
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| (b) | arising from any delay in the commencement of the Charter Period or any failure of the Charter Period to commence. |
| 34.7 | The Owners shall not be obliged to deliver the Vessel to the Charterers with any bunkers and unused lubricating oils and hydraulic oils and greases in storage tanks and unopened drums of the Vessel except for such items which are already on the Vessel on Delivery. The Owners shall not be responsible for the fitness, quality or quantity of any such bunkers and unused lubricating oils and hydraulic oils and greases and the Charterers shall make no claim against Owners in respect of the same. |
| 34.8 | The Charterers shall procure receipt by the Owners of the conditions subsequent set out in Part C of Schedule 2 in a form and substance satisfactory to the Owners within the time periods permitted therein. |
CLAUSE 35 - QUIET ENJOYMENT
| 35.1 | Provided that no Termination Event or Total Loss has occurred, the Owners hereby agree not to disturb or interfere with the Charterers’ lawful use, possession and quiet enjoyment of the Vessel during the Charter Period. |
CLAUSE 36 - CHARTERHIRE AND ADVANCE CHARTERHIRE
| 36.1 | In consideration of the Owners agreeing to charter the Vessel to the Charterers under this Charter at the request of the Charterers, the Charterers hereby irrevocably and unconditionally agree to pay to the Owners the Charterhire, the Advance Charterhire, the Option Premium and all other amounts payable under this Charter in accordance with the terms of this Charter. |
| 36.2 | The Charterers shall pay to the Owners on the Commencement Date, an amount which is equal to the difference between the Purchase Price and the Opening Capital Balance as of the Commencement Date (the “Advance Charterhire”). |
| 36.3 | The Charterers shall be deemed to have paid the Advance Charterhire to the Owners on the Commencement Date by the Owners (as buyers under the MOA) setting off an amount equal to the Advance Charterhire against a corresponding amount of the Purchase Price payable by the Owners to the Charterers (as sellers) under the MOA. |
| 36.4 | The Advance Charterhire shall not bear interest and shall be non-refundable. |
| 36.5 | Following Delivery and commencing from the Commencement Date, the Charterers shall pay the Charterhire in arrears in quarterly instalments on each Payment Date. |
| 36.6 | Charterhire shall be payable in arrears on the following dates (each a “Payment Date”): |
| (a) | on the date falling three (3) months after the Commencement Date (the “First Payment Date”), the first instalment of Charterhire shall be payable; and |
| (b) | on each date falling three (3) months thereafter during the Charter Period (other than the last day of the Charter Period), each subsequent instalment of Charterhire (other than the last instalment of Charterhire); and |
| (c) | on the last day of the Charter Period, the final instalment of Charterhire, such that there is a total of twenty eight (28) Payment Dates during the Charter Period. |
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| 36.7 | Payment of the Charterhire on any Payment Date shall be made in same day available funds and received by the Owners by not later than 4.00 pm (Beijing time). Any payment of Charterhire which is due to be made on a Payment Date which is not also a Business Day shall be made on the previous Business Day instead. |
| 36.8 | Time of payment of the Charterhire and any other payments by the Charterers under this Charter shall be of the essence of this Charter. |
| 36.9 | All payments of the Charterhire and any other moneys payable hereunder shall be made in Dollars. |
| 36.10 | All payments of the Charterhire and any other moneys payable hereunder shall be payable by the Charterers to the Owners’ designated bank account as the Owners may notify the Charterers in writing from time to time. |
| 36.11 | Payment of the Charterhire and any other amounts under this Charter shall be at the Charterers’ risk until receipt by the Owners. |
| 36.12 | The Vessel shall not at any time be deemed off-hire and the Charterers’ obligation to pay the Charterhire and any other amounts payable in this Charter (including but not limited to the Termination Sum) in Dollars shall be absolute and unconditional under any and all circumstances and shall not be affected by any circumstances of any nature whatsoever including but not limited to: |
| (a) | (except in the case of the Advance Charterhire) any set off, counterclaim, recoupment, defence, claim or other right which the Charterers may at any time have against the Owners or any other person for any reason whatsoever including, without limitation, any act, omission or breach on the part of the Owners under this Charter or any other agreement at any time existing between the Owners and the Charterers; |
| (b) | any change, extension, indulgence or other act or omission in respect of any indebtedness or obligation of the Charterers, or any sale, exchange, release or surrender of, or other dealing in, any security for any such indebtedness or obligation; |
| (c) | any title defect or encumbrance or any dispossession of the Vessel by title paramount or otherwise; |
| (d) | any defect in the seaworthiness, condition, value, design, merchantability, operation or fitness for use of the Vessel or the ineligibility of the Vessel for any particular trade, or for registration or documentation under the laws of any relevant jurisdiction; |
| (e) | the Total Loss or any damage to or forfeiture or court marshall’s or other sale of the Vessel if the Termination Sum or any part thereof remains due; |
| (f) | any libel, attachment, levy, detention, sequestration or taking into custody of the Vessel or any restriction or prevention of or interference with or interruption or cessation in, the use or possession thereof by the Charterers unless for such period where such arrest, detention or seizure is solely attributable to the fault of the Owners; |
| (g) | any insolvency, bankruptcy, reorganization, arrangement, readjustment, dissolution, liquidation or similar proceedings by or against the Charterers and any other Relevant Person; |
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| (h) | any invalidity, unenforceability, lack of due authorization or other defects, or any failure or delay in performing or complying with any of the terms and provisions of this Charter or any of the Leasing Documents by any party to this Charter or any other person; |
| (i) | any enforcement or attempted enforcement by the Owners of their rights under this Charter or any of the Leasing Documents executed or to be executed pursuant to this Charter; |
| (j) | any loss of use of the Vessel due to deficiency or default or strike of officers or crew, fire, breakdown, damage, accident, defective cargo or any other cause which would or might but for this provision have the effect of terminating or in any way affecting any obligation of the Charterers under this Charter; or |
| (k) | any prevention, delay, deviation or disruption in the use of the Vessel resulting from the wide outbreak of any viruses or any other highly infectious or contagious diseases (including the 2019 novel coronavirus), including but not limited to those caused by: |
| (i) | closure of ports; |
| (ii) | prohibitions or restrictions against the Vessel calling at or passing through certain ports; |
| (iii) | restriction in the movement of personnel and/or shortage of labour affecting the operation of the Vessel or the operation of the ports (including stevedoring operations); |
| (iv) | quarantine regulations affecting the Vessel, its cargo, the crew members or relevant port personnel; |
| (v) | fumigation or cleaning of the Vessel; or |
| (vi) | any claims raised by any Approved Sub-charterer or manager of the Vessel that a force majeure event or termination event (or any other analogous event howsoever called) has occurred under the relevant charter agreement or management agreement (as the case may be) of the Vessel as a result of the outbreak of such viruses. |
| 36.13 | All stamp duty, value added tax (for the avoidance of doubt, including without limitation, goods and services tax), withholding or other taxes and import and export duties and all other similar types of charges which may be levied or assessed on or in connection with: |
| (a) | the operation of this Charter in respect of the hire and all other payments to be made pursuant to this Charter and the remittance thereof to the Owners; and |
| (b) | the import, export, purchase, operation, delivery and re-delivery of the Vessel, |
shall be borne by the Charterers. The Charterers shall pay, if applicable, value added tax and other similar tax levied on any Charterhire and other payments payable under this Charter by addition to, and at the time of payment of, such amounts. If any such taxes arise as a result of (i) the Owners being incorporated in Hong Kong and (ii) the introduction or alteration after the date of this Charter of a law in Hong Kong or an alteration after the date of this Charter in the manner in which a law in Hong Kong is interpreted or applied (the “Tax Changes”). Provided that if after the Owners and the Charterers having exercised reasonable endeavours to mitigate the effect of the Tax Changes (at the cost of the Charterers) following notification from the Owners to the Charterers regarding the occurrence of the Tax Changes such Tax Changes continue to have the same effect, the Charterers shall have the option to pay the Mandatory Sale Price to the Owners within thirty (30) days following such notice by the Owners, and this Charter shall terminate in accordance with the procedures set out in Clause 50.4.
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CLAUSE 37 - DEFAULT INTEREST
| 37.1 | If the Charterers fail to make any payment due under this Charter on the due date, they shall pay additional interest on such late payment at a rate which is equal to one per cent. (1%) per annum above the applicable interest rate for the relevant Hire Period which shall apply prior to, during or following Delivery and shall accrue on a daily basis from the date on which such payment became due up to and excluding the date of payment thereof, and the Charterers and the Owners agree that such default rate is proportionate as to amount, having regard to the legitimate interest of the Owners, in protecting against the Owners’ risk of the Charterers failing to perform its obligations under this Charter. |
| 37.2 | All interest (including default interest) and any other payments under this Charter which are of an annual or periodic nature shall accrue from day to day and shall be calculated on the basis of the actual number of days elapsed and a three hundred and sixty (360) days’ year. |
CLAUSE 38 - POSSESSION OF VESSEL
| 38.1 | The Charterers shall not, without the prior written consent of the Owners, assign, mortgage or pledge the Vessel or any interest therein, its Earnings, Insurances and/or any Requisition Compensation and shall not permit the creation or existence of any Security Interest thereon (including for any monies paid in advance and not earned, and for any claims for damages arising from any breach by the Owners of this Charter and other amounts due to the Charterers under this Charter) except for the Permitted Security Interests. |
| 38.2 | The Charterers shall promptly notify any party (including, without limitation, the Trafigura Charterer or any other Approved Sub-charterer of the Vessel) (as the Owners may request) in writing that the Vessel is the property of the Owners and the Charterers shall provide the Owners with a copy of such written notification and satisfactory evidence to the opinion of the Owners that such party has received such written notification. |
| 38.3 | Subject to Clause 38.4, if the Vessel is arrested, seized, impounded, forfeited, detained or taken out of their possession or control (whether or not pursuant to any distress, execution or other legal process), the Charterers shall procure the immediate release of the Vessel (whether by providing bail or procuring the provision of security or otherwise do such lawful things as the circumstances may require) and shall immediately notify the Owners of such event and shall indemnify the Owners against all losses, costs or charges incurred by the Owners by reason thereof in re-taking possession or otherwise in re-acquiring the Vessel. Without prejudice to the generality of the foregoing and Clause 52 - , the Charterers agree to indemnify the Owners against all consequences or liabilities arising from the master, officers or agents signing bills of lading or other documents. |
| 38.4 | If the Vessel is arrested or otherwise detained solely because of the Owners’ direct actions or omissions and for reasons which are not in any part of a consequence of contributory negligence and/or wilful misconduct of any Approved Sub-charterer, a Relevant Person or any other member of the Group (or its affiliates), the Owners shall at their own expense take all reasonable steps to procure that the Vessel is released within a reasonable time. |
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| 38.5 | The Charterers shall pay and discharge or cause the Trafigura Charterer or any other sub- charterer of the Vessel to pay and discharge all obligations and liabilities whatsoever which have given or may give rise to liens on or claims enforceable against the Vessel. The Charterers shall take all steps to prevent (and shall procure that any sub-charterer of the Vessel shall take all steps to prevent) an arrest (threatened or otherwise) of the Vessel. |
CLAUSE 39 - INSURANCE
| 39.1 | The Charterers shall procure that the insurances for the Vessel are effected: |
| (a) | in Dollars; |
| (b) | in the case of fire and usual hull and machinery, marine risks and war risks (including blocking and trapping), on an agreed value basis of at least the higher of (i) one hundred per cent (100%) of then applicable Market Value of the Vessel and (ii) one hundred and twenty per cent (120%) of the then prevailing Owners’ Costs; |
| (c) | in the case of oil pollution liability risks for the Vessel, for an aggregate amount equal to the higher of (i) $1,000,000,000 and (ii) the highest level of cover from time to time available under protection and indemnity club entry and in the international marine insurance market; |
| (d) | in the case of protection and indemnity risks, in respect of the full tonnage of the Vessel and with a protection and indemnity club which is a member of the International Group of Protection and Indemnity Clubs; |
| (e) | with first class international insurers and/or underwriters acceptable to the Owners and having a Standard & Poor’s rating of BBB+ or above, a Moody’s rating of A or above or an AM Best rating of A- or above or otherwise acceptable to the Owners or, in the case of war risks through a protection and indemnity club which meets the requirements of paragraph (d) above; and |
| (f) | on terms and in form acceptable to the Owners and the Owners’ Financiers (if any). |
| 39.2 | In addition to the terms set out in Clause 13(a) (Insurance and Repairs), the Charterers shall procure that the Obligatory Insurances shall: |
| (a) | subject always to paragraph (b), name the Charterers, the Approved Manager and the Owners(and if applicable the Owners’ Financiers if so required by the Owners) as the only named assureds unless the interest of every other named assured or co-assured is limited: |
| (i) | in respect of any Obligatory Insurances for hull and machinery and war risks; |
| (A) | to any provable out-of-pocket expenses that they have incurred and which form part of any recoverable claim on underwriters; and |
| (B) | to any third party liability claims where cover for such claims is provided by the policy (and then only in respect of discharge of any claims made against them); and |
| (ii) | in respect of any Obligatory Insurances for protection and indemnity risks, to any recoveries they are entitled to make by way of reimbursement following discharge of any third party liability claims made specifically against them, |
and every other named assured or co-assured has undertaken in writing to the Owners or the Owners’ Financiers (in such form as they may require) that any deductible shall be apportioned between the Charterers and every other named assured or co-assured (save for the Owners or the Owners’ Financiers (if any)) in proportion to the gross claims made by or paid to each of them and that they shall do all things necessary and provide all documents, evidence and information to enable the Owners and the Owners’ Financiers (if any) in accordance with the terms of the loss payable clause, to collect or recover any moneys which at any time become payable in respect of the Obligatory Insurances;
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| (b) | whenever the Owners’ Financiers (if any) require: |
| (i) | in respect of fire and other usual marine risks and war risks, name (or be amended to name) the same as additional named assured for their rights and interests, warranted no operational interest and with full waiver of rights of subrogation against such financiers, but without such financiers thereby being liable to pay (but having the right to pay) premiums, calls or other assessments in respect of such insurance; |
| (ii) | in relation to protection and indemnity risks, name (or be amended to name) the same as additional insured or co-assured for their rights and interests to the extent permissible under the relevant protection and indemnity club rules; and |
| (iii) | name the same and the Owners as respectively the first ranking loss payee and the second ranking loss payee (and in the absence of any financiers, the Owners as first ranking loss payee) in accordance with the terms of the relevant loss payable clauses approved by the Owners’ Financiers and the Owners with such directions for payment in accordance with the terms of such relevant loss payable clause, as the Owners and the Owners’ Financiers (if any) may specify; |
| (c) | provide that all payments by or on behalf of the insurers under the Obligatory Insurances to the Owners and/or the Owners’ Financiers (as applicable) shall be made without set-off, counterclaim, deductions or condition whatsoever; |
| (d) | provide that such Obligatory Insurances shall be primary without right of contribution from other insurances which may be carried by the Owners or the Owners’ Financiers (if any); |
| (e) | provide that the Owners and/or the Owners’ Financiers (if any) may make proof of loss if the Charterers fail to do so; and |
| (f) | provide that if any Obligatory Insurance is cancelled, or if any substantial change is made in the coverage which adversely affects the interest of the Owners and/or the Owners’ Financiers (if any), or if any Obligatory Insurance is allowed to lapse for non-payment of premium, such cancellation, change or lapse shall not be effective with respect to the Owners and/or the Owners’ Financiers (if any) for thirty (30) days after receipt by the Owners and/or the Owners’ Financiers (if any) of prior written notice from the insurers of such cancellation, change or lapse. |
| 39.3 | The Charterers shall: |
| (a) | at least fifteen (15) days prior to Delivery (or such shorter period agreed by the parties), notify in writing the Owners of the terms and conditions of all Insurances (copied to the Owners’ Financiers (if any) and the brokers or insurers with whom the Insurances are or will be placed); |
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| (b) | at least fifteen (15) days before the expiry of any obligatory insurance or otherwise before the change of appointment of any brokers (or other insurers) and any protection and indemnity or war risks association through which Obligatory Insurances are taken from time to time pursuant to this Clause 39 - (Insurance), notify the Owners (copied to the Owners’ Financiers (if any)) of the brokers (or other insurers) and any protection and indemnity or war risks association through or with whom the Charterers propose to renew or obtain that Obligatory Insurance and of the proposed terms of such renewed or new insurance cover and obtain the Owners’ approval to such matters; |
| (c) | at least seven (7) days before the expiry of any Obligatory Insurance, procure that such Obligatory Insurance is renewed or to be renewed on its expiry date in accordance with the provisions of this Charter; |
| (d) | procure that the approved brokers and/or the war risks and protection and indemnity associations with which such a renewal is effected shall promptly after the renewal or the effective date of the new insurance and protection and indemnity cover notify the Owners (copied to the Owners’ Financiers (if any)) in writing of the terms and conditions of the renewal; and |
| (e) | as soon as practicable after the expiry of any Obligatory Insurance and within thirty (30) days after such expiry, deliver to the Owners a letter of undertaking as required by this Charter in respect of such Insurances for the Vessel as renewed pursuant to Clause 39.3(c) (Insurance) together with copies of the relevant policies or cover notes or entry certificates duly endorsed with the interest of the Owners and/or the Owners’ Financiers (if any). |
| 39.4 | The Charterers shall ensure that all insurance companies and/or underwriters, and/or insurance brokers (if any) provide the Owners with copies (or upon the Owners’ request, originals) of policies, cover notes and certificates of entry relating to the Obligatory Insurances which they are to effect or renew and letter or letters of undertaking in a form required by the Owners and/or the Owners’ Financiers (if any) and including undertakings by the insurance companies and/or underwriters that: |
| (a) | they will have endorsed on each policy, immediately upon issuance, a loss payable clause and a notice of assignment complying with the provisions of this Charter and the Financial Instruments; |
| (b) | they will hold the benefit of such policies and such insurances, to the order of the Owners and/or the Owners’ Financiers (if any) and/or such other party in accordance with the said loss payable clause; |
| (c) | they will advise the Owners and the Owners’ Financiers (if any) promptly of any material change to the terms of the Obligatory Insurances of which they are aware; |
| (d) | (i) they will indicate in the letters of undertaking that they will immediately notify the Owners and the Owners’ Financiers (if any) when any cancellation, charge or lapse of the relevant obligatory insurance occur and (ii) following a written application from the Owners and/or the Owners’ Financiers (if any) not later than one (1) month before the expiry of the Obligatory Insurances they will notify the Owners and the Owners’ Financiers (if any) not less than fourteen (14) days before the expiry of the obligatory insurances, in the event of their not having received notice of renewal instructions from the Charterers and, in the event of their receiving instructions to renew, they will promptly notify the Owners and the Owners’ Financiers (if any) of the terms of the instructions; and |
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| (e) | if any of the Obligatory Insurances form part of any fleet cover, the Charterers shall procure that the insurance broker(s), or leading insurer, as the case may be, undertakes to the Owners and the Owners’ Financiers (if any) that such insurance broker or insurer will not set off against any sum recoverable in respect of a claim relating to the Vessel under such Obligatory Insurances any premiums due in respect of any other vessel under any fleet cover of which the Vessel forms a part or any premium due for other insurances, they waive any lien on the policies, or any sums received under them, which they might have in respect of such premiums, and they will not cancel such Obligatory Insurances by reason of non-payment of such premiums or other amounts, and will arrange for a separate policy to be issued in respect of the Vessel forthwith upon being so requested by the Owners and/or the Owners’ Financiers (if any) and where practicable. |
| 39.5 | The Charterers shall ensure that any protection and indemnity and/or war risks associations in which the Vessel is entered provides the Owners and the Owners’ Financiers (if any) with: |
| (a) | a copy of the certificate of entry for the Vessel as soon as such certificate of entry is issued; |
| (b) | a letter or letters of undertaking in such form as may be required by the Owners and the Owners’ Financiers (if any) or in such association’s standard form; and |
| (c) | a certified copy of each certificate of financial responsibility for pollution by oil or other Environmentally Sensitive Material issued by the relevant certifying authority in relation to the Vessel. |
| 39.6 | The Charterers shall ensure that all policies relating to Obligatory Insurances are deposited with the approved brokers (if any) through which the insurances are effected or renewed. |
| 39.7 | The Charterers shall procure that all premiums or other sums payable in respect of the Obligatory Insurances are punctually paid and produce all relevant receipts when so required by the Owners. |
| 39.8 | The Charterers shall ensure that any guarantees required by a protection and indemnity or war risks association are promptly issued and remain in full force and effect. |
| 39.9 | The Charterers shall neither do nor omit to do (nor permit to be done or not to be done) any act or thing which would or might render any Obligatory Insurance invalid, void, voidable or unenforceable or render any sum payable under an Obligatory Insurance repayable in whole or in part; and, in particular: |
| (a) | the Charterers shall procure that all necessary action is taken and all requirements are complied with which may from time to time be applicable to the Obligatory Insurances, and (without limiting the obligations contained in this Clause 39 - (Insurance)) ensure that the Obligatory Insurances are not made subject to any exclusions or qualifications to which the Owners have not given their prior approval (unless such exclusions or qualifications are made in accordance with the rules of a protection and indemnity association which is a member of the International Group of Protection And Indemnity Clubs); |
| (b) | the Charterers shall not make or permit any changes relating to the classification or the classification society of the Vessel or, subject to procuring the provision of a replacement manager’s undertaking in substantially the same form as the Manager’s Undertaking, any changes to the manager or operator of the Vessel unless such changes have, if required, first been approved by the underwriters of the Obligatory Insurances, the Owners and the Owners’ Financiers (if any); |
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| (c) | the Charterers shall procure that all quarterly or other voyage declarations which may be required by the protection and indemnity risks association in which the Vessel is entered to maintain cover for trading to the United States of America and Exclusive Economic Zone (as defined in the United States Oil Pollution Act 1990 or any other applicable legislation) are made and the Charterers shall promptly provide the Owners with copies of such declarations and a copy of its valid certificate of financial responsibility; and |
| (d) | the Charterers shall not employ the Vessel, nor allow it to be employed, otherwise than in conformity with the terms and conditions of the Obligatory Insurances, without first obtaining the consent of the insurers and complying with any requirements (as to extra premium or otherwise) which the insurers specify. |
| 39.10 | The Charterers shall not make or agree to any alteration to the terms of any Obligatory Insurance nor waive any right relating to any Obligatory Insurance without the prior written consent of the Owners and the Owners’ Financiers (if any). |
| 39.11 | The Charterers shall not settle, compromise or abandon any claim under any obligatory insurance for Total Loss or for a Major Casualty, and shall do all things necessary and provide all documents, evidence and information to enable the Owners to collect or recover any moneys which at any time become payable in respect of the Obligatory Insurances. |
| 39.12 | The Charterers shall provide the Owners upon written request (except that upon the occurrence of a Total Loss or a Major Casualty the Charterers shall provide the following immediately without the Owners’ making any request), copies of: |
| (a) | all communications between the Charterers and: |
| (i) | the approved brokers; |
| (ii) | the approved protection and indemnity and/or war risks associations; and/or |
| (iii) | the approved insurers and/or underwriters, which relate directly or indirectly to: |
| (A) | the Charterers’ obligations relating to the Obligatory Insurances including, without limitation, all requisite declarations and payments of additional premiums or calls; and |
| (B) | any credit arrangements made between the Charterers and any of the persons referred to in paragraphs (i) or (ii) above relating wholly or partly to the effecting or maintenance of the Obligatory Insurances; and |
| (b) | any communication with any party involved in case of a claim under any of the Vessel’s insurances. |
| 39.13 | The Charterers shall promptly provide the Owners (or any persons which they may designate) with: |
| (a) | any information which the Owners or the Owners’ Financiers (or any such designated person) request for the purpose of: |
| (i) | obtaining or preparing any report from an independent marine insurance broker as to the adequacy of the Obligatory Insurances effected or proposed to be effected; and/or |
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| (ii) | effecting, maintaining or renewing any such insurances as are referred to in Clause 13(a) (Insurance and Repairs) or Clause 39 - (Insurance) dealing with or considering any matters relating to any such insurances; and |
| (b) | copies of any communication between all parties involved in case of a claim under any of the Vessel’s insurances exceeding the Major Casualty amount. |
| 39.14 | If one or more of the Obligatory Insurances are not effected and maintained with first class international insurers or are effected with an insurance or captive Subsidiary of the Owners or the Charterers, then the Charterers shall procure, at their own expense, that the relevant insurers maintain in full force and effect facultative reinsurances with reinsurers and through brokers, in each case, of recognised standing and acceptable in all respects to the Owners. Any reinsurance policy shall include, if and when permitted by law, a cut-through clause in a form acceptable to the Owners and/or the Owners’ Financiers (if any). The Charterers shall procure that underwriters of the primary insurances assign each reinsurance to the relevant financiers in full, if required. |
| 39.15 | The Charterers shall upon demand fully indemnify the Owners (including if requested by the Owners, make direct payment to the relevant insurer or broker for the same) in respect of all premiums and other expenses which are incurred by: |
| (a) | the Owners in connection with or with a view to effecting, maintaining or renewing an innocent owners interest insurance and an innocent owners additional perils insurance or any similar protective shipowner insurance that is taken out in respect of the Vessel; and/or |
| (b) | the Owners’ Financiers (if any) in connection with or with a view to effecting, maintaining or renewing a mortgagee’s interest insurance, a mortgagee’s additional perils insurance, all protection and indemnity insurance that is taken out in respect of the Vessel subject to the Owners’ Financiers (if any) having provided to the Owners at the relevant time any form of loan facility to refinance the Vessel, |
in the case as referred to in paragraph (a), in an amount not exceeding one hundred and twenty per cent (120%) of the Owners’ Costs from time to time or in the case as referred to in paragraph (b), in an amount not exceeding one hundred and twenty per cent (120%) of the relevant outstanding loan amount from time to time and on such other terms, through such insurers and generally in such manner as the Owners or the Owners’ Financiers (as the case may be) may from time to time consider appropriate.
| 39.16 | The Charterers shall be solely responsible for and indemnify the Owners in respect of all loss or damage to the Vessel (insofar as the Owners shall not be reimbursed by the proceeds of any insurance in respect thereof) however caused occurring at any time or times before physical possession thereof is retaken by the Owners, with only reasonable wear and tear to the Vessel excepted. |
| 39.17 | The Charterers shall reimburse or indemnify the Owners for any expenses incurred or to be incurred by the Owners in obtaining a detailed report signed by an independent firm of marine insurance brokers approved by the Owners dealing with the Obligatory Insurances and stating the opinion of such firm as to the adequacy of the Obligatory Insurances: |
| (a) | when an agreed form of such detailed report satisfactory to the Owners is obtained as a condition precedent requirement under Schedule 2 of this Charter; |
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| (b) | when the Owners procure the issuance of such detailed report no more than once every calendar year, unless a Termination Event has occurred in which case such reports may be procured at the Charterer’s cost at any such time; and |
| (c) | further from time to time upon the Owners’ demand where, in the Owners’ opinion, at any time during the Charter Period there has been a material change in the terms of the Insurances and/or a change in the circumstances which would materially adversely affect the adequacy of the Obligatory Insurances. |
| 39.18 | The Charterers shall: |
| (a) | keep the Vessel insured at their expense against such other risks (other than loss of hire which shall be insured against upon an occurrence and during the continuance of a Termination Event) which the Owners or the Owners’ Financiers consider reasonable for a prudent shipowner or operator to insure against for trading, management, operational and/or safety purposes at the relevant time (as notified by the Owners and having regard to the then existing available insurance cover and standard practice in the operation of vessels of the same type as the Vessel) and which risks are, at that time, generally insured against by owners or operators of vessels similar to the Vessel or of the same type as the Vessel (excluding loss of hire); and |
| (b) | upon demand fully indemnify the Owners in respect of all premiums and other expenses incurred by the Owners in respect of any other insurances (other than loss of hire insurances which the Owners may take out upon an occurrence and during the continuance of a Termination Event) which the Owners deem necessary (having regard to the existing insurance cover and market practice for the trading, management, operation and safety of vessels of the same type) and takes out in respect of the Vessel. |
CLAUSE 40 - WARRANTIES RELATING TO VESSEL
| 40.1 | It is expressly agreed and acknowledged that the Owners are not the manufacturer or original supplier of the Vessel but that the Owners (in their capacity as buyers) have purchased the Vessel from the Charterers (in their capacity as sellers) pursuant to the MOA at the request of the Charterers, for the purpose of then chartering the Vessel to the Charterers hereunder and that no condition, term, warranty or representation of any kind is or has been given to the Charterers by or on behalf of the Owners in respect of the Vessel (or any part thereof). |
| 40.2 | All conditions, terms or warranties express or implied by the law relating to the specifications, quality, description, merchantability or fitness for any purpose of the Vessel (or any part thereof) or otherwise are hereby expressly excluded. |
| 40.3 | The Charterers agree and acknowledge that the Owners shall not be liable for any claim, loss, damage, expense or other liability of any kind or nature caused directly or indirectly by the Vessel or by any inadequacy thereof or the use or performance thereof or any repairs thereto or servicing thereof and the Charterers shall not by reason thereof be released from any liability to pay any Charterhire or other payment due under this Charter. |
| 40.4 | The Charterers further agree and acknowledge that the Owners are not operating the Vessel and the liability to surrender any Emission Allowances in respect of the Vessel under any applicable Emission Scheme shall lie with the Charterers and/or any other organisation or person whom the Charterers have contractually agreed to take over all duties and responsibilities (including any sub-charterer of the Vessel or the Approved Manager) imposed by the ISM Code, and the Charterers hereby agree that they shall promptly upon the Owners’ request, provide and submit a signed mandate letter in the form acceptable to the Owners (acting reasonably) and the relevant authority and any other information and documents as required by the relevant authority. |
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| 40.5 | Without prejudice to Clause 40.4, in relation to EU ETS: |
| (a) | the Charterers acknowledge that if the Vessel stops at ports in the European Union, they will incur liabilities under EU ETS and Fuel EU Maritime; |
| (b) | the Charterers acknowledge and agree that if they intend to sail the Vessel into ports in the European Union, the Charterers shall register the Vessel as part of a Shipping Company as required under the EU ETS and shall comply in all respects with the EU ETS and Fuel EU Maritime; |
| (c) | if required by the Owners, the Charterers shall provide a letter in a format to be agreed by the Owners confirming that they have assumed responsibility for the operation of the Vessel from the Owners (the “ETS and Fuel EU Maritime Letter”); and |
| (d) | the Charterers shall submit the ETS and Fuel EU Maritime Letter to the relevant administering authority upon registration of the Vessel pursuant to the EU ETS and shall provide the Owners with evidence of such registration within fourteen (14) days. |
CLAUSE 41 - TERMINATION, REDELIVERY AND TOTAL LOSS
Termination
| 41.1 | Upon termination of the leasing of the Vessel under this Charter pursuant to Clause 49.2, the Charterers shall be obliged to pay the Owners the Termination Sum on the Termination Date and it is hereby agreed by the parties hereto that: |
| (a) | without prejudice to Clause 41.10(b), the obligation to pay the Termination Sum is a continuing obligation and shall survive the termination of the leasing of the Vessel under this Charter and shall continue in full force and effect until irrevocably and unconditionally paid in full; |
| (b) | payment of the Termination Sum is deemed to be proportionate as to amount, having regard to the legitimate interest of the Owners, in protecting against the Owners’ risk of the Charterers failing to perform its obligations under this Charter; and |
| (c) | subject to clause 49.5, the Termination Sum shall, depending on the nature of the Termination Event(s) on the basis of which the Owners serve a Termination Notice, be either an obligation to pay damages following acceptance by the Owners of a breach of condition by the Charterers or an obligation to pay an agreed sum in specified circumstances which do not involve a breach of contract by the Charterers. |
| 41.2 | If the Charterers fail to make any payment of the Termination Sum on the Termination Date, Clause 37.1 shall apply and the Owners shall be entitled to exercise their rights under Clauses 41.10 and 41.11. |
| 41.3 | Concurrently with the unconditional and irrevocable payment of the Termination Sum in full pursuant to the terms of this Charter, this Charter shall terminate and the Owners shall (save in the event of Total Loss or in the event that the Vessel has been sold or contracted to be sold pursuant to Clauses 41.10 and 41.11), at the cost of the Charterers, transfer the legal and beneficial ownership of the Vessel on an “as is where is” basis to the Charterers or their nominees free from any registered mortgages, encumbrances, liens, debts or claims incurred or permitted by the Owners (save for those liens, encumbrances and debts incurred by the Charterers or arising out of or in connection with this Charter), and shall execute a bill of sale and a protocol of delivery and acceptance evidencing the same and such sale shall be completed otherwise in accordance with Clause 52.1. |
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| 41.4 | The Charterers hereby undertake to indemnify the Owners against any claims incurred in relation to the Vessel prior to such transfer of ownership. Any taxes, notarial, consular and other costs, charges and expenses connected with closing of the Owners’ register shall be for the Charterers’ account. |
| 41.5 | On natural expiration of this Charter, unless the Purchase Option Price or the Mandatory Sale Price is paid by the Charterers in accordance with Clause 51 - or Clause 50 - , the Charterers shall re-deliver the Vessel to the Owners in accordance with Clause 41.6 and shall ensure that they have fulfilled their obligations under this Charter and made payment of all Charterhire and all other moneys pursuant to the terms of this Charter. In such case, the Charterers shall give the Owners not less than 30/20/10/5 running days’ preliminary notice of expected date and port or place of redelivery and not less than 5/3/2/1/ running days’ definite notice of expected date and port or place of redelivery. Any changes thereafter in the Vessel’s position shall be notified immediately to the Owners. |
Redelivery
| 41.6 | If the Charterers are required to redeliver the Vessel to the Owners pursuant to the terms of this Charter, the Vessel shall be redelivered and taken over safely afloat at a safe and accessible berth or anchorage in such location as the Owners may require (which, for the avoidance of doubt, shall exclude any war listed area declared by the Joint War Committee). The Charterers shall ensure that, at the time of redelivery to the Owners, the Vessel: |
| (a) | be in an equivalent class as she was as at the Commencement Date and without any recommendation or condition and with valid, unextended certificates for not less than six (6) months and free of average damage affecting the Vessel’s classification and in the same or as good structure, state, condition and classification as that in which she was deemed on the Commencement Date, fair wear and tear not affecting the Vessel’s classification excepted; |
| (b) | has passed her 5-year special survey (if applicable), and subsequent second intermediate surveys and drydock at the Charterers’ time and expense without any recommendation or condition: |
| (c) | to the satisfaction of the Approved Classification Society; and |
| (d) | in the case of the 5-year special survey, to the reasonable satisfaction of an Owners’ Surveyor appointed at the cost of the Charterers; |
| (e) | has her survey cycles up-to-date and trading and class certificate valid for at least the number of months agreed in Box 17; |
| (f) | be re-delivered to the Owners together with all spare parts and spare equipment as were on board at the time of Delivery, and any such spare parts and spare equipment on board at the time of re-delivery shall be taken over by the Owners free of charge; |
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| (g) | be free of any cargo and Security Interest (save for the Security Interests granted pursuant to the Financial Instruments, if any); |
| (h) | be free of any crew and officers unless otherwise instructed by the Owners; |
| (i) | be free of any charter or other employment (unless the Owners wish to retain the continuance of any prevailing charter or as otherwise agreed by the Owners in their absolute discretion); and |
| (j) | have such amount of bunkers on board the Vessel as would be sufficient to enable the Vessel to sail to the nearest bunker port in compliance with all bunkering fuel content regulations then applicable in such place of redelivery, including without limitation, the global sulphur limit imposed by the International Maritime Organization (IMO). |
| 41.7 | The Charterers warrant that they will not permit (or request any sub-charterer not to permit) the Vessel to commence a voyage (including any preceding ballast voyage) which cannot reasonably be expected to be completed in time to allow redelivery of the Vessel within any time period required by Clause 41 - (Termination, Redelivery and Total Loss). If the time of actual redelivery is after the date on which redelivery is required to take place pursuant to Clause 41 - (the “Redelivery Date”), the Charterer shall, without prejudice to any other amounts payable under the Leasing Documents (including without limitation pursuant to Clause 41 - (Termination, Redelivery and Total Loss)) pay to the Owners, as from the first date following the Redelivery Date and for each day until the date on which the Vessel is redelivered in accordance with Clause 41.6, the rate of hire equivalent to the higher of: |
| (a) | the prevailing market rate for the bareboat chartering of vessels of a similar type as the Vessel (as determined by an Approved Valuer appointed by the Owners); and |
| (b) | the prevailing market rate for the chartering of vessels of a similar type as the Vessel on the Index. |
For the avoidance of doubt, all other terms, conditions and provisions of this Charter and the other Leasing Documents shall continue to apply during such period.
| 41.8 | The Charterers shall provide the Owners’ Surveyor with all such facilities and access to the Vessel as may be required to enable such Owners’ Surveyor to conduct its survey of the Vessel and shall take all such actions as may be reasonably recommended by the Owners’ Surveyor to ensure that the Vessel shall be redelivered in accordance with Clause 41.6. The Owners shall not be obliged to accept redelivery of the Vessel until the Owners are reasonably satisfied that all conditions for the redelivery of the Vessel under this Charter (including without limitation, Clause 41.6 and this Clause 41.8) are met, and the Vessel shall (if the redelivery is at the end of the Charter Period) continue to be on-hire under the terms of this Charter until such redelivery. The Owners reserve all rights to recover from the Charterers any costs, expense and/or liabilities incurred or suffered by them (including without limitation, the costs of any repairs which may be required to restore the Vessel to the condition required by Clause 41.6 as a result of the Vessel not being redelivered in accordance with the terms of this Charter). |
| 41.9 | The Owners shall, at the time of the redelivery of the Vessel, take over all bunkers, lubricating oil, unbroached provisions, paints, ropes, other consumable stores and spare parts in the Vessel (but, if (with the consent of the Owners) any time charter of the Vessel remains in place at the time of redelivery, excluding any bunkers or such other items owned by a third party time charterer, and in such case, the Charterers shall on demand reimburse the Owners for any amount the Owners have to pay to that time charterer for such bunkers or items) at no cost to the Owners. |
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Non-payment of Termination Sum
| 41.10 | Subject to the terms of any quiet enjoyment letter entered into with any sub charterers, the Charterers agree that should the Termination Sum not be paid on the Termination Date: |
| (a) | the Charterers’ right to possess and operate the Vessel shall immediately cease and (without in any way affecting the Charterers’ obligation to pay the Charterer the Termination Sum and comply with their other obligations under this Charter) the Charterers shall hold the Vessel as gratuitous bailee only to the Owners, the Charterers shall procure that the master and crew follow the orders and directions of the Owners and the Charterers shall, upon the Owners’ request (at Owners’ sole discretion), be obliged to immediately (and at the Charterers’ own cost) redeliver the Vessel to the Owners at such ready and nearest safe port or location as the Owners may require and for the avoidance of doubt, any such redelivery shall not extinguish the Owners’ right to recover the Termination Sum from the Charterers under this Charter; |
| (b) | the Owners shall be entitled (at Owners’ sole discretion) to operate the Vessel as they may require and may create whatsoever interests thereon, including without limitation short term charterparties or any other form of short term employment contracts provided such contracts do not interfere with the Vessel’s sale process, including relevant inspections, provided that the Earnings of the Vessel during such period less its operational expenses (which would include, without limitation, any costs in relation to the provision of bunkers and lubricating oils), (the “Net Trading Proceeds”) shall be applied against the Termination Sum and any other amounts payable under the Leasing Documents pursuant to Clause 64 - (General Application of Proceeds) provided, that if such use of the Vessel results in the Owners suffering a loss then such losses shall be included in the indemnities contained in Clause 53 - (Indemnities) and be added to the Termination Sum; and |
| (c) | the Owners shall be entitled (at Owners’ sole discretion) to immediately thereafter sell the Vessel to any third party on arm’s length terms taking into account the prevailing market conditions, provided that the Charterers may for a period not exceeding a total of sixty (60) days from the Termination Date (the “Nomination Period”) nominate or identify a purchaser for the Vessel (a “Nominated Purchaser”). During the Nomination Period the Owners and the Charterers shall use their reasonable endeavours to market the Vessel and the Owners shall sell the Vessel to a Nominated Purchaser and subject to all of the following conditions being satisfied: |
| (i) | the Nominated Purchaser is acceptable to the Owners (such acceptability not to be unreasonably withheld or delayed); and |
| (ii) | the price to be paid by the Nominated Purchaser (after deducting any commissions, taxes and other costs of sale) is equal to or more than the applicable Termination Sum (unless otherwise agreed by the Owners in their absolute discretion); |
and any net sale proceeds (after deducting all fees, taxes, disbursements and any other costs and expenses incurred or suffered by the Owners in connection with such sale) (the “Net Sales Proceeds”) derived from any such sale to a Nominated Purchaser or any other person shall be applied towards reduction of the Termination Sum in accordance with Clause 64 - (General Application of Proceeds). If the Net Sales Proceeds are not sufficient to settle the Termination Sum in full, the Charterers shall remain liable to pay the shortfall and default interest shall continue to accrue on the unpaid portion of the Termination Sum in accordance with Clause 37.1. Irrespective of any sales efforts, the Charterers have the right at all times, during the Nomination Period or until the Owners’ Purchase (as referred to in Clause 41.11) is concluded or until any third party’s sale is concluded, to purchase the vessel with priority by paying the Termination Sum.
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| 41.11 | The Owners may, by written notice to the Charterers at any time after the Nomination Period, inform the Charterers of the Owners’ intention to retain the Vessel instead of selling the Vessel under Clause 41.10(c) above, “Owners’ Purchase”, and in doing so, the Owners shall first obtain the Market Value of the Vessel (after deducting any commissions, taxes and costs which would be likely to be incurred in connection with a sale of the Vessel) and apply it towards the reduction of the Termination Sum calculated as of the day of the notice of the Owners’ Purchase. If the Market Value (less such deductions) of the Vessel as at the date of the notice of the Owners’ Purchase is less than the Termination Sum calculated as of the day of the notice of the Owners’ Purchase, the Charterers shall remain liable to pay the shortfall to the Owners and default interest shall continue to accrue on the unpaid portion of the Termination Sum. If the Market Value (less such deductions) of the Vessel as at the date of such nomination is more than the Termination Sum calculated as of the day of the notice of the Owners’ Purchase, the Owners shall pay the excess to Charterers within fifteen (15) days from the day of the notice of the Owners’ Purchase in accordance with Clause 64 - (General Application of Proceeds). |
Total Loss
| 41.12 | Throughout the Charter Period, the Charterer shall bear the full risk of any Total Loss of or any other damage to the Vessel howsoever arising. If the Vessel becomes a Total Loss after Delivery, the Charterer shall, subject to Clause 41.13, pay the Termination Sum to the Owners on the Total Loss Payment Date. Upon such receipt by the Owners of the Termination Sum, this Charter shall terminate (without prejudice to any provision of this Charter expressed to survive termination) but until such receipt, the Charterers shall remain liable to make all payments of Charterhire and all other amounts to the Owners under this Charter, notwithstanding that the Vessel has become a Total Loss. |
| 41.13 | Any Total Loss Proceeds unconditionally received by the Owners (or the Owners’ Financiers in accordance with the terms of the relevant loss payable clause) shall be applied in accordance with Clause 64 - (General Application of Proceeds) and shall satisfy the obligation of the Charterers to pay the Termination Sum to the extent received by the Owners (or the Owners’ Financiers in accordance with the terms of the relevant loss payable clause). The obligation of the Charterers to pay the Termination Sum shall remain unaffected and exist regardless of whether any of the insurers have agreed or refused to meet or has disputed in good faith, the claim for Total Loss. |
| 41.14 | If the Total Loss Proceeds unconditionally received by the Owners (or the Owners’ Financiers in accordance with the terms of the relevant loss payable clause) are less than the Termination Sum, the Charterers shall pay such shortfall to the Owner on the Total Loss Payment Date. |
| 41.15 | The Owners shall have no obligation to supply to the Charterers with a replacement vessel following the occurrence of a Total Loss. |
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CLAUSE 42 - FEES AND EXPENSES
| 42.1 | Without prejudice to any other rights of the Owners hereunder, the Charterers shall promptly pay to the Owners on written demand on a full indemnity basis all costs, charges and expenses incurred by the Owners in collecting any Charterhire or the Advance Charterhire or the Option Premium or other payments not paid on the due date under this Charter and in remedying any other failure of the Charterers to observe the terms and conditions of this Charter. |
| 42.2 | All documented costs and expenses (including, but not limited to, third party legal costs) incurred by the Owners or Owners’ legal counsel in the preparation, negotiation, finalisation and execution of all documentation in relation to this Charter or any other Leasing Document (including without limitation any registration or filing expenses, all documented costs incurred by the Owners and all third party legal costs, expenses and other disbursement incurred by the Owners’ legal counsels in connection with the same) shall be for the account of the Charterers (regardless of whether the transaction contemplated by the Leasing Documents actually completes). |
| 42.3 | All documented costs and expenses incurred by the Owners in relation to the acquisition, registration of title of the Vessel in the Owners’ name in the Flag State together with any and all fees (including but not limited to any vessel registration and tonnage fees and the Owners’ initial and ongoing annual registration and maintenance costs if required to be registered as a foreign maritime entity or the appointment of resident agents under the laws of the Flag State) payable by the Owners to register, maintain and/or renew such registration shall be for the account of the Charterers (regardless of whether the Vessel is delivered under the MOA and this Charter). Without prejudice to the foregoing, if the Flag State requires the Owners to establish a physical presence or office in the jurisdiction of such Flag State, all fees, costs and expenses payable by the Owners to establish and maintain such physical presence or office shall be for the account of the Charterers. The Charterers shall promptly provide the Owners with evidence of payment of the annual register/tonnage tax amounts payable to the Flag State or any other aforesaid costs, expenses and/or taxes when the same fall due. |
| 42.4 | All costs and expenses incurred by the Owners (including but not limited to legal fees) in relation to the transfer of title of the Vessel from the Owners to the Charterers and the re-delivery of the Vessel by the Charterers to the Owners pursuant to Clause 41 - (Termination, Redelivery and Total Loss) shall be for the account of the Charterers. |
| 42.5 | If: |
| (a) | the Charterers request an amendment, waiver or consent; or |
| (b) | the Charterers make a request to re-register the Vessel in another Flag State, |
the Charterers shall, on demand, reimburse the Owners for the amount of all documented costs and expenses (including third party legal fees) incurred by the Owners in responding to, evaluating, negotiating or complying with that request or requirement (including, for the avoidance of doubt, any amounts the Owners have to pay under the terms of the Financial Instruments).
| 42.6 | The Charterers shall, on demand, pay to the Owners the amount of all documented costs and expenses (including third party legal fees) incurred by the Owners in connection with the enforcement of, or the preservation of any rights under, any Leasing Document, including, without limitation, any action brought by the Owners to arrest or recover possession of the Vessel, and with any proceedings instituted by or against the Owners as a consequence of it entering into a Leasing Document or enforcing those rights. |
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| 42.7 | Notwithstanding anything to the contrary herein, the indemnities provided by the Charterers shall be provided in favour of the Owners and shall continue in full force and effect notwithstanding any breach of the terms of this Charter or termination of this Charter pursuant to the terms hereof. |
CLAUSE 43 - NO WAIVER OF RIGHTS
| 43.1 | No neglect, delay, act, omission or indulgence on the part of either party in enforcing the terms and conditions of this Charter or any other Leasing Document (to which they are party to) shall prejudice the strict rights of that party or be construed as a waiver thereof nor shall any single or partial exercise of any right of either party preclude any other or further exercise thereof. |
| 43.2 | No right or remedy conferred upon either party by this Charter or any other Leasing Document shall be exclusive of any other right or remedy provided for herein or by law and all such rights and remedies shall be cumulative. |
CLAUSE 44 - NOTICES
| 44.1 | Any notice, certificate, demand or other communication to be served, given made or sent under or in relation to this Charter shall be in English and in writing and (without prejudice to any other valid method or giving making or sending the same) shall be deemed sufficiently given or made or sent if sent by registered post or by email to the following respective address or email address: |
| (a) | to the Owners: | SEA 269 LEASING CO., LIMITED |
21F, China Merchants Bank Building, No.1088, Lujiazui Ring Road,
Shanghai, China
Attention:
Email:
Tel:
| (b) | to the Charterers: | Legio X Inc. |
c/o TOP SHIPS INC.
Attention:
Email:
Tel:
Fax:
or, if a party hereto changes its address or email address, to such other address or email address as that party may notify to the other.
| 44.2 | Any such communication shall be deemed to have reached the party to whom it was addressed (a) when delivered (in case of a registered letter), or (b) when actually received in readable form (in case of an email). A notice or other such communication received on a non-working day or after 5.00 p.m. in the place of receipt shall be deemed to be served on the next following working day in such place. |
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CLAUSE 45 - REPRESENTATIONS AND WARRANTIES
| 45.1 | The Charterers represent and warrant to the Owners as of the date hereof, and on each day during the Security Period, as follows: |
| (a) | 100% of the issued and outstanding shares in the Charterers are legally, wholly and directly owned and controlled by the Guarantor and the Guarantor is controlled by companies affiliated with the family of Mr. Evangelos Pistiolis; |
| (b) | each Relevant Person or, to the best of its knowledge, the Approved Sub-charterer is duly incorporated and validly existing under the laws of its jurisdiction of its incorporation; |
| (c) | each Relevant Person or the Approved Sub-charterer has the corporate capacity, and has taken all corporate actions and obtained all consents, approvals, authorisations, licenses or permits necessary for it: |
| (i) | to execute each of the Leasing Documents to which it is a party; and |
| (ii) | to comply with and perform its obligations under each of the Leasing Documents to which it is a party; |
| (d) | all the consents, approvals, authorisations, licenses or permits referred to in Clause 45.1(c) (Representations and Warranties) remain in force and nothing has occurred which makes any of them liable to revocation; |
| (e) | each of the Leasing Documents and the Approved Sub-charter to which a Relevant Person or the Approved Sub-charterer is a party (as the case may be) constitutes such Relevant Person’s or the Approved Sub-charterer’s legal, valid and binding obligations enforceable against such party in accordance with its respective terms and any relevant insolvency laws affecting creditors’ rights generally; |
| (f) | the entry into and performance by each Relevant Person (and in the case of sub-paragraph (ii) below, the Approved Sub-charterer) of, and the transactions contemplated by, each Leasing Document to which it (and in the case of sub-paragraph (ii) below, the Approved Sub-charterer) is a party do not and will not conflict with: |
| (i) | any law or regulation applicable to it (including Anti-Money Laundering Laws, Business Ethics Laws, Sanctions or laws relating to anti-trust or collusion and laws relating to human rights violation); |
| (ii) | the constitutional documents of such Relevant Person; and |
| (iii) | any agreement or instrument binding upon it or any of its assets or constitute a default or termination event (however described) under any such agreement or instrument; |
| (g) | there are no outstanding notices or demands from any governmental, quasi-governmental or public authority or instrumentality or any other person claiming authority in respect of the Vessel requiring any work or other action to be taken or the expenditure of any money to be taken in respect of the Vessel or any part thereof; |
| (h) | the Vessel is free of encumbrances and liens except for the Permitted Security Interests; no third party has any Security Interest, other than the Permitted Security Interests, or any other interest, right or claim over, in or in relation to the Vessel, this Charter or any moneys payable hereunder and/or any of the other Leasing Documents; |
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| (i) | all payments which a Relevant Person is liable to make under any Leasing Document to which such Relevant Person is a party may be made by such party without deduction or withholding for or on account of any tax payable under the laws of its Relevant Jurisdiction; |
| (j) | no legal or administrative action involving a Relevant Person has been commenced or taken (including but not limited to actions involving any Environmental Claim); |
| (k) | each Relevant Person has paid all taxes applicable to, or imposed on or in relation to it, its business or if applicable, the Vessel, except for those being contested in good faith with adequate reserves; |
| (l) | it is not necessary under the laws of the Relevant Jurisdictions that this Charter or any other Leasing Document be registered, filed, recorded, notarized or enrolled with any court or other authority in that jurisdiction or that any stamp, registration, notarial or similar taxes or fees be paid on or in relation to the Leasing Documents to which it is a party or the transactions contemplated by those Leasing Documents; the choice of governing law as stated in each Leasing Document to which a Relevant Person is a party and the agreement by such party to refer disputes to the relevant courts or tribunals as stated in such Leasing Document are valid and binding against such Relevant Person; |
| (m) | no Relevant Person nor any of their assets are entitled to immunity on the grounds of sovereignty or otherwise from any legal action or proceeding (which shall include, without limitation, suit, attachment prior to judgment, execution or other enforcement); |
| (n) | the obligations of each Relevant Person under each Leasing Document to which it is a party, are the direct, general and unconditional obligations of such Relevant Person and rank at least pari passu with all other present and future unsecured and unsubordinated creditors of such Relevant Person save for any obligation which is mandatorily preferred by law and not by virtue of any contract; |
| (o) | each Leasing Document creates (or, once entered into, will create) the Security Interest which it is expressed to create with the ranking and priority it is expressed to have; |
| (p) | the Charterers and any other Relevant Person (i) are not US Tax Obligors and (ii) have not established a place of business in the United Kingdom or the United States of America; |
| (q) | no Relevant Person, Approved Manager, sub-charterer and no member of the Group: |
| (i) | is a Prohibited Person; |
| (ii) | is owned or controlled by or acting directly or indirectly on behalf of or for the benefit of, a Prohibited Person; |
| (iii) | owns or controls a Prohibited Person; or |
| (iv) | has a Prohibited Person serving as a director, officer or, to the best of its knowledge, employee; |
| (r) | no Relevant Person or any of their respective directors, officers, and employees or, to the best of its knowledge, the Approved Sub-charterer is in breach of applicable Sanctions laws, and none of them (i) has been or is currently being investigated on compliance with Sanctions, (ii) has received notice or is aware of any claim, action, suit or proceeding against any of them with respect to Sanctions and (iii) has taken any action to evade the application of Sanctions; |
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| (s) | no Relevant Person is in breach of any Anti-Money Laundering Laws, Anti-Terrorism Financing Laws and/or Business Ethics Laws and each Relevant Person has instituted and maintained systems, controls, policies and procedures designed to: |
| (i) | prevent and detect incidences of bribery and corruption, money laundering and terrorism financing; and |
| (ii) | promote and achieve compliance with Anti-Money Laundering Laws, Anti-Terrorism Financing Laws and or Business Ethics Laws including, but not limited to, ensuring thorough and accurate books and records, and utilization of best efforts to ensure that Affiliates acting on behalf of a Relevant Person shall act in compliance with Anti-Money Laundering Laws, Anti-Terrorism Financing Laws and Business Ethics Laws, |
| (t) | that in relation to any Approved Sub-Charter: |
| (i) | each copy of that Approved Sub-Charter provided to the Owners is a true and complete copy of such document and there have been no amendments, supplements or variations to the same; |
| (ii) | each of the Trafigura Charterer and any other Approved Sub-Charterer is fully aware of the transactions contemplated under the MOA and this Charter; and |
| (iii) | the Trafigura Charterer and any other Approved Sub-Charterer has consented to the assignment by the Charterers to the Owners of all their rights, interests and benefits in relation to the Trafigura Charter or, as the case may be, the relevant Approved Sub-Charter pursuant to the General Assignment; |
| (u) | the Vessel is not employed, operated or managed in any manner which (i) is contrary to any Sanctions and in particular, the Vessel is not used by or to benefit any party which is a target of Sanctions or trade to any area or country where trading the Vessel to such area or country would constitute a breach of any Sanctions or published boycotts imposed by any of the United Nations, the European Union, the United States of America, the United Kingdom or the People’s Republic of China (provided that operation or use of the Vessel by the Trafigura Charterer pursuant to the Trafigura Charter shall not in any case be deemed to be in breach or contrary to any published boycotts or sanctions imposed by the People’s Republic of China) or (ii) would trigger the operation of any sanctions limitation or exclusion clause in any insurance documentation; |
| (v) | none of the Relevant Persons nor any of their assets, in each case, has any right to immunity from set off, legal proceedings, attachment prior to judgment or other attachment or execution of judgement on the grounds of sovereign immunity or otherwise; |
| (w) | none of the Relevant Persons is insolvent, bankrupt or in liquidation, bankruptcy or administration or subject to any other formal or informal insolvency or bankruptcy procedure (including, without limitation, those referred to under Clause 49.1(g) and for the avoidance of doubt including the presentation of a petition for commencing such procedures), and no receiver, administrative receiver, administrator, liquidator, trustee or analogous officer has been appointed in respect of the any Relevant Person or all or material part of their assets; |
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| (x) | no Termination Event or Potential Termination Event is continuing or might reasonably be expected to result from the entry into and performance of this Charter or any other Leasing Document; |
| (y) | any factual information provided by any Relevant Person or the Trafigura Charterer (or on their behalf) to the Owners was true and accurate in all material respects as at the date it was provided or as at the date at which such information was stated; |
| (z) | none of the following events has occurred: |
| (i) | any default by the Charterers or the Trafigura Charterer under the terms of the Trafigura Charter; |
| (ii) | breach of any Sanctions by any Relevant Person; and |
| (iii) | upon and after the commencement of the Charter Period, any casualty or occurrence (including damage caused to the Vessel for any reason whatsoever which results, or may be expected to result, in repairs on the Vessel) which amounts to Major Casualty and which are not being dealt with in accordance with the Leasing Documents (including without limitation in accordance with Clause 38 - (Possession of Vessel) and the General Assignment); |
| (aa) | all Environmental Laws relating to the ownership, operation and management of the Vessel and the business of each Relevant Person (as now conducted and as reasonably anticipated to be conducted in the future) have been complied with; |
| (bb) | no Environmental Claim has been made or threatened against any Relevant Person or otherwise in connection with the Vessel which is either (i) in excess of US$5,000,000 or (ii) has or is reasonably likely to have a Material Adverse Effect; and |
| (cc) | no Environmental Incident has occurred and no person has claimed that an Environmental Incident has occurred. |
CLAUSE 46 - UNDERTAKINGS
| 46.1 | The Charterers undertake that they shall comply or procure compliance with the following undertakings during the Security Period: |
| (a) | the Charterers shall, on the Commencement Date, procure the delivery of the full legal and beneficial title (free of any Security Interests save for those created under a Leasing Document or Financial Instrument) in the Vessel to the Owners; |
| (b) | there shall be sent to the Owners: |
| (i) | as soon as possible, but in no event later than one hundred and fifty (150) days after the end of each financial year of the Charterers, the annual financial statement accounts of the Charterers for that financial year as referred to in the Guarantor’s audited consolidated annual financial statement accounts for that financial year to be delivered under Clause 46.1(b)(iii); |
| (ii) | as soon as possible, but in no event later than ninety (90) days after the end of each half-year, the unaudited semi-annual accounts of the Charterers for that half-year (as referred to in the Guarantor’s audited consolidated financial statement accounts); |
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| (iii) | as soon as possible, but in no event later than one hundred and fifty (150) days after the end of each financial year of the Guarantor, the audited consolidated annual financial statement accounts of the Guarantor for that financial year; and |
| (iv) | as soon as possible, but in no event later than ninety (90) days after the end of each half-year, the semi-annual consolidated unaudited accounts of the Guarantor for that half-year certified as to their correctness by at least one director of the Guarantor; |
and if any of the statements above are not in the English language then they shall be accompanied by an English translation and each set of financial statements delivered pursuant to this paragraph (b) shall be prepared using the generally accepted accounting principles in the United States and shall be certified by a duly authorised officer of the relevant company as giving a true and fair view (if audited) or fairly representing (if unaudited) its financial condition and operations as at the date as at which those financial statements were drawn;
| (c) | they shall provide to the Owners, at the same time as they are despatched, copies of all notices and minutes relating to any of their extraordinary shareholders’ meeting which are despatched to the Charterers’ or the Guarantor’s respective shareholders or creditors or any class of them, unless same are publicly available; |
| (d) | they will provide the Owners promptly upon becoming aware of them, the details of: |
| (i) | any litigation, arbitration or administrative proceedings or investigations relating to any alleged or actual breach of any Sanctions or Anti-Money Laundering Laws which are current or pending against any Relevant Person, Approved Manager, sub-charterer or other member of the Group; |
| (ii) | any litigation, arbitration or administrative proceedings or investigations relating to any other matters not referred to in paragraph (i) above (including proceedings or investigations relating to any alleged or actual breach of the ISM Code or of the ISPS Code) in relation to a Relevant Person; and |
| (iii) | any Termination Event or Potential Termination Event that has occurred (and the steps, if any, being taken to remedy it); |
| (e) | they will, promptly upon a request by the Owners, supply to the Owners a certificate signed by an officer on its behalf certifying that no Termination Event or Potential Termination Event has occurred (or if a Termination Event or Potential Termination Event has occurred, specifying the nature of the Potential Termination Event or Termination Event (and the steps, if any, being taken to remedy it)); |
| (f) | they shall, and shall procure that each other Relevant Person will, obtain and promptly renew or procure the obtainment or renewal of and provide copies of, from time to time, any necessary consents, approvals, authorisations, licenses or permits of any regulatory body or authority for the transactions contemplated under each Leasing Document to which it is a party (including without limitation to sell, charter and operate the Vessel); |
| (g) | they shall not, and shall procure that each other Relevant Person will not, create, assume or permit to exist any Security Interest (other than any Permitted Security Interest) of any kind upon any Leasing Document to which such Relevant Person is a party, and if applicable, the Vessel; |
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| (h) | they shall at their own cost and shall procure that each other Relevant Person will: |
| (i) | do all that such Relevant Person reasonably can to ensure that any Leasing Document to which such Relevant Person is a party validly creates the obligations and the Security Interests which such Relevant Person purports to create; and |
| (ii) | without limiting the generality of paragraph (i), promptly register, file, record or enroll any Leasing Document to which such Relevant Person is a party with any court or authority in all Relevant Jurisdictions, pay any stamp duty, registration or similar tax in all Relevant Jurisdictions in respect of any Leasing Document to which such Relevant Person is a party, give any notice or take any other step which, is or has become necessary or desirable for any such Leasing Document to be valid, enforceable or admissible in evidence or to ensure or protect the priority of any Security Interest which such Relevant Person creates; |
| (i) | they shall notify the Owners as soon as possible (but in any event no later than fifty nine (59) days prior to the expiry of the fixed period as per the Trafigura Charter), together with any evidence requested by the Owners, whether the Trafigura Charterer intends to and will (with irrevocable confirmation from the Trafigura Charterer) extend the charter period of the Trafigura Charter in accordance with the terms thereunder; |
| (j) | they shall, and shall procure that each other Relevant Person will (where applicable), notify the Owners as soon as they become aware of the occurrence of: |
| (i) | any default by either the Approved Sub-charterer or the Charterers of the terms of the Approved Sub-charter; |
| (ii) | an event of default or termination event howsoever called under the terms of any Approved Sub-charter entitling either the Charterers or the Approved Sub-charterer to terminate the Approved Sub-charter; |
| (iii) | breach of any Sanctions; or |
| (iv) | any Potential Termination Event or a Termination Event, |
and will keep the Owners fully up-to-date with all developments and the Charterers shall, if so requested by the Owners, provide any such certificate signed by at least one officer, confirming that there exists no Potential Termination Event or Termination Event;
| (k) | they shall, and shall procure that each other Relevant Person will, on the sixth month anniversary of the Commencement Date and at six-monthly intervals thereafter and otherwise upon the Owners’ and/or the Owners’ Financiers (if any) request (acting reasonably) from time to time and as soon as practicable after receiving such request, provide the Owners with any additional financial or other information relating: |
| (i) | to the Vessel (including, but not limited to the management, employment, condition, class records, location and pooling arrangement of the Vessel) and, to their best knowledge having made due enquiry, to the Trafigura Charterer; |
| (ii) | the terms and conditions of any sub-charter together with any other information relating to such sub-charter; and |
| (iii) | to any other matter (which include without limitation, to their best knowledge having made due enquiry, any other matters relating to the Trafigura Charterer) which may be reasonably requested by the Owners (or the Owners’ Financiers (if any)) at any time or which under the terms of the relevant Leasing Document may be sought from the person in possession of such information. |
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| (l) | without prejudice to Clause 46.1(t), comply, or procure compliance, and shall procure that each other Relevant Person will comply or procure compliance, with all laws or regulations relating to the Vessel and its construction, ownership, employment, operation, management and registration, including the ISM Code, the ISPS Code, all Environmental Laws and the laws of the Vessel’s registry and shall procure that the Technical Manager and the Commercial Manager and the Vessel to be in the possession of proper trading certificates and other vessel related documents and to comply with other relevant laws and regulations; |
| (m) | the Vessel shall be maintained in the highest standard and classed with the Approved Classification Society and shall be free of all overdue conditions, recommendations, qualifications and conditions; |
| (n) | they shall not and shall ensure that each of the Other Charterers and the Guarantor shall not enter into any form of merger, sub-division, amalgamation, demerger, reorganization, corporate reconstruction or change of ownership, or change of voting control, in the case of the Guarantor, unless it remains as the surviving entity after such merger, sub-division, amalgamation, demerger, reorganization, corporate reconstruction or change of ownership, or change of voting control and clause 11.14 of the Guarantee is complied with; |
| (o) | they will comply, and will procure that each other Relevant Person, each other member of the Group or, will use best endeavours to procure that, the Approved Sub-charterer will comply, with all Sanctions and all laws and regulations relating to such Relevant Person, the Vessel and its construction, ownership, employment, operation, management and registration, including the ISM Code, the ISPS Code (including the maintenance of an ISSC), all Environmental Laws, all Anti-Money Laundering Laws, Business Ethics Laws and the laws of the Vessel’s registry, and in particular, they shall effect and maintain a sanctions compliance policy which, inter alia, implements the recommendations of the Sanctions Advisory, to ensure compliance with all such laws and regulations implemented from time to time, including, without limitation they will, and will procure that (in the case of Approved Sub-charterer, use best endeavours to procure that) each other Relevant Person, each other member of the Group and the Approved Sub-charterer will: |
| (i) | conduct their activities in a manner consistent with US and UN sanctions, as applicable; |
| (ii) | have sufficient resources in place to ensure execution of and compliance with their own sanctions policies by their personnel, e.g., direct hires, contractors, and staff; |
| (iii) | ensure subsidiaries and affiliates comply with the relevant policies, as applicable; |
| (iv) | have relevant controls in place to monitor automatic identification system (AIS) transponders; |
| (v) | have controls in place to screen and assess onboarding or offloading cargo in areas they determine to present a high risk; |
| (vi) | have controls to assess authenticity of bills of lading, as necessary; and |
| (vii) | have controls in place consistent with the Sanctions Advisory; |
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| (p) | without limiting Clause 46.1(o), they will procure that: |
| (i) | the Vessel shall not be constructed, operated, employed, managed, used by or for the benefit of a Prohibited Person; |
| (ii) | the Vessel shall not be employed in trading with any Prohibited Person or in any manner contrary to Sanctions; |
| (iii) | notwithstanding any other provision of this paragraph (p), the Vessel shall not be permitted to call at any port in any Prohibited Country or any area or country where trading in such area or country would constitute or would be reasonably expected to constitute a breach of Sanctions; |
| (iv) | the Vessel shall not be traded in any manner which would trigger the operation of any sanctions limitation or exclusion clause (or similar) in the Insurances or in any manner which would result or would reasonably be expected to result in any Relevant Person or the Owners becoming a Prohibited Person; and |
| (v) | that each charterparty in respect of the Vessel shall contain, for the benefit of the Owners, language which gives effect to the provisions of Clause 46.1(p) as regards Sanctions and of this Clause and which permits refusal of employment or voyage orders if compliance would result in a breach of Sanctions and which prohibits trading to any Prohibited Country; |
| (vi) | it and any sub-charterer of the Vessel or the Approved Manager will cooperate and exchange all relevant data and information in a timely manner to facilitate compliance with any applicable Emission Scheme and enable each party to calculate the amount of Emission Allowances in respect of the Vessel that must be surrendered to the authorities of the applicable Emission Scheme for the Charter Period and that each relevant party will supply the relevant authority of such Emission Scheme with relevant mandating documents to surrender such allowances to ensure that the Charterers will be in compliance with all Environmental Laws; |
| (q) | they shall ensure that the Market Value of the Vessel will be tested at any of the following instances: |
| (i) | on or around the end of each calendar year starting from and including 31 December 2024 (each such date the “Market Value Test Date”) and the Charterers shall procure valuation reports issued by the Approved Valuers evidencing such Market Value applicable to a Market Value Test Date to be delivered to the Owners no later than 30 days after the Market Value Test Date; |
| (ii) | if, in the opinion of the Owners, any volatile market fluctuations occur that may affect the value of the Vessel or vessels of the similar type of the Vessel, at any time at the request of the Owners; |
| (iii) | at any time at the request of the Owners if the Owners have determined that the Market Value of the Vessel is likely to fall below an amount equal to 125% of the then applicable Owners’ Cost; and |
| (iv) | upon the occurrence of a Potential Termination Event or Termination Event, at any time at the request of the Owners, and in each case above, the Charterers shall bear the fees and expenses of the Approved Valuers arising in connection with conducting any such valuations or reimburse the same to the Owners (as the case may be). |
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| (r) | they shall notify the Owners immediately of: |
| (i) | as soon as they become aware, any Environmental Claim made against the Charterers or any sub-charter of the Vessel in connection with the Vessel or any Environmental Incident; |
| (ii) | arrest or detention of the Vessel; |
| (iii) | any exercise or purported exercise of any lien on that Vessel or its Earnings or any requisition of that Vessel for hire; |
| (iv) | any damage caused to or alteration of the Vessel for any reason whatsoever which results, or may be expected to result, in repairs on the Vessel which exceed $5,000,000; or |
| (v) | any casualty or occurrence as a result of which the Vessel has become or is, by the passing of time or otherwise, likely to become, a Major Casualty; |
| (s) | they shall not permit the sub-chartering of the Vessel other than pursuant to any Approved Sub-Charter provided that if: |
| (i) | any such Approved Sub-charter is terminated and/or rescinded; |
| (ii) | the Charterers comply with their obligations under Clause 46.1(aa)(iii); and |
| (iii) | with the consent of the Owners., |
then the Charterers shall be permitted to freely sub-charter the Vessel and as a condition of the Owners’ consent to the execution of any sub-charter, the Charterers shall:
| 1. | in case such sub-charter is a bareboat charter (irrespective of duration) or a time charter of a period exceeding or capable of exceeding twelve (12) months (taking into account any optional extension periods), assign all their rights and interests under such sub-charter and procure the sub-charterer of such sub-charter to give a written acknowledgment of such assignment and provide such documents as the Owners may reasonably require regarding the due execution of such sub-charter; and |
| 2. | in case such sub-charter is a bareboat charter (irrespective of duration), procure the sub-charterer of such sub-charter to execute a general assignment to assign their rights under the Insurances and Requisition Compensation in respect of the Vessel, in favour of the Owners, each in a form acceptable to the Owners; |
| (t) | they shall, and shall procure that each other Relevant Person will, comply with all applicable laws and regulations in respect of Sanctions, and in particular, the Charterers shall effect and maintain a sanctions compliance policy to ensure compliance with all such laws and regulations implemented from time to time; |
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| (u) | they shall, and shall procure that each other Relevant Person and their respective officers, directors and employees, will: |
| (i) | conduct its business in compliance with all Anti-Money Laundering Laws, Anti-Terrorism Financing Laws and/or Business Ethics Laws; |
| (ii) | maintain systems, controls, policies and procedures designed to promote and achieve ongoing compliance with Anti-Money Laundering Laws, Anti-Terrorism Financing Laws and/or Business Ethics Laws; |
| (iii) | in respect of the Charterers, not use, or permit or authorize any person to directly or indirectly use, the Opening Capital Balance for any purpose that would breach any Anti-Money Laundering Laws, Anti-Terrorism Financing Laws and/or Business Ethics Laws; |
| (iv) | not lend, invest, contribute or otherwise make available the Opening Capital Balance to or for any other person in a manner which would result in a violation of Anti-Money Laundering Laws, Anti-Terrorism Financing Laws and/or Business Ethics Laws. |
| (v) | they shall, and shall procure that that each other Relevant Person will, promptly notify the Owners and provide all information in relation to its business and operations which may be relevant for the purposes of ascertaining whether they are in compliance with all applicable laws and regulations relating to Sanctions, and in particular, the Charterers shall notify the Owners in writing immediately upon being aware that any of the Charterers’ shareholders, directors, officers or employees is a Prohibited Person or has otherwise become a target of Sanctions; |
| (w) | they shall not appoint or permit to be appointed any manager of the Vessel save for an Approved Manager on terms acceptable to the Owners and such Approved Manager has (prior to accepting its appointment entered into a Manager’s Undertaking); |
| (x) | if at any time; |
| (i) | the shares of the Guarantor cease to trade on the NASDAQ or Over the Counter (OTC); or |
| (ii) | pursuant to Clause 46.1(q), it is determined that the Market Value of the Vessel falls below the amount equivalent to one hundred and twenty five per cent (125%) of the then applicable Owners’ Costs (the “LTV Breach” and the said difference between the Market Value of the Vessel and one hundred and twenty five per cent (125)% of the then applicable Owners’ Costs shall be referred to as the “shortfall”), |
the Charterers shall, promptly and in any event no later than the date falling thirty (30) days from the Owners’ notice, at the Owners’ discretion, either:
| (A) | make payment in an amount such as to eliminate the shortfall which payment shall be deemed to be an advance payment of hire and credited against future instalment(s) of Fixed Charterhire (or part thereof) payable in inverse order of maturity; and/or |
| (B) | provide, or ensure that a third party has provided, additional Security Interests which, has a Market Value (in the case of a Security Interests over a vessel) or otherwise in the opinion of the Owners (in the case of Security Interests over any other asset) has a net realisable value at least equal to the shortfall and is acceptable to the Owners, and which is documented in such terms as the Owners may require; |
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| (y) | intentionally deleted; |
| (z) | save with the prior written consent of the Owners, they shall not, and shall procure that no other Relevant Person shall, agree or enter into any transaction, arrangement, document or do or omit to do anything which will have the effect of varying, amending, supplementing or waiving any term of the Trafigura Charter or any other Approved Sub-Charter; |
| (aa) | they shall ensure that: |
| (i) | all Earnings and any other amounts received by them in connection with the Vessel are paid into the Operating Account; |
| (ii) | all of their operating expenses in connection with the Vessel are paid from the Operating Account or via the monthly budget from the manager’s bank account which shall be credited from the Operating Account; and |
| (iii) | the credit balance in the Operating Account shall not at any time as from the Commencement Date, be less than $500,000. Provided that, the credit balance in the Operating Account to be maintained pursuant to this sub-paragraph (iii) shall be increased to $1,800,000 with effect on and from the earliest of the following dates upon occurrence of an event described in the relevant sub-paragraph below in relation to the Trafigura Charter or a Substitute Charter (as the Vessel may at the relevant time be sub-chartered thereunder): |
| (A) | in relation to Trafigura Charter, either: |
| (1) | the date on which the Trafigura Charter is terminated prior to the end of the relevant charter period; or |
| (2) | the date being one (1) month prior to the third anniversary (or, if such charter period extends beyond its third anniversary, the fourth anniversary) of the charter period commencement date of the Trafigura Charter (the “Notification Date”), in case the Trafigura Charterer does not exercise the optional extension of the Trafigura Charter and the Charterers do not enter into a Substitute Charter or provide evidence (to the satisfaction of the Owners) relating to the entry into, and validity of, such Substitute Charter by the Notification Date; or |
| (B) | in relation to a Substitute Charter, either: |
| (1) | the date on which such Substitute Charter is terminated prior to the end of the relevant charter period; or |
| (2) | the date being one (1) month prior to the expiry date of the fixed period under such Substitute Charter (in each case, a “New Notification Date”), in case the Charterers do not enter into a replacement Substitute Charter or provide evidence (to the satisfaction of the Owners) relating to the entry into, and validity of, such replacement Substitute Charter by the relevant New Notification Date, |
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in each case, such increased credit balance of $1,800,000 shall be maintained by the Charterers in the Operating Account until the Charterers (I) subsequently enter into a Substitute Charter or provide evidence (to the satisfaction of the Owners) relating to the entry into, and validity of, a Substitute Charter, and (II) the Vessel is delivered to, and accepted by the relevant sub-charterer in accordance with the terms of such Substitute Charter, whereupon the Charterers may request for the reinstatement of the $500,000 minimum credit balance requirement under sub-paragraph (iii) from the next immediate Payment Date;
(bb)
| (i) | they shall not: |
| (A) | purchase, cancel or redeem any of its share capital; |
| (B) | increase or reduce its authorised share capital; |
| (C) | issues any further shares; and |
they shall not, and shall procure that the Guarantor shall not, make or pay any dividend or other distribution (in cash or in kind) in respect of its issued shares (or any class of its shares including any preferred shares) following the occurrence of a Potential Termination Event or Termination Event;
| (cc) | the Vessel shall be registered under the Flag State at all times; |
| (dd) | they shall ensure that the Vessels to be maintained with all spare parts on board and on order and with all stores on board together with all records, logs, plans, operating manuals and drawings in relation to the Vessel or the Vessel’s operations and/or maintenance; and |
| (ee) | they shall, upon the request of the Owners and at the cost of the Charterers, on or before 31st July in each calendar year, supply or procure the supply to the Owners all information necessary in order for the Owners to comply with their or any Owners’ Financiers’ obligations under the Poseidon Principles in respect of the preceding year, including, without limitation, all ship fuel oil consumption data required to be collected and reported in accordance with Regulation 22A of Annex VI and any Statement of Compliance relating to the Vessel for the preceding calendar year and, for the avoidance of doubt, such information shall be “Confidential Information” for the purposes of Clause 56 - (Confidentiality) but the Charterers acknowledge that, in accordance with the Poseidon Principles, such information will form part of the information published regarding the Owners’ and/or Owners’ Financiers’ portfolio climate alignment. |
CLAUSE 47 - INSPECTION OF VESSEL
| 47.1 | Without prejudice to Clause 47.2 below, the Owners shall, after giving notice to the Charterers, be entitled to inspect or survey the Vessel or instruct a surveyor to carry out such survey on their behalf: |
| (a) | to ascertain the condition of the Vessel and satisfy themselves that the Vessel is being properly repaired and maintained; |
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| (b) | in dry-dock if the Charterers have not dry-docked the Vessel in accordance with Clause 10(g) (Periodical Dry-Docking); and |
| (c) | for any other reason they consider necessary, |
provided it does not unduly interfere with the operation of the Vessel.
| 47.2 | The Owners shall be entitled to exercise its rights of inspection or survey as described under Clause 47.1 once a year at the cost of the Charterers and at any other time at the cost of the Owners (and, except where inspection or survey is carried out pursuant to the following (a) or (b), without interference to the operation of the Vessel and in coordination with the Charterers), save that (a) upon the occurrence of a Termination Event or Potential Termination Event or the occurrence of any major insurance claims which exceeds the Major Casualty amount in respect of the Vessel, the Owners shall have the right to inspect or survey the Vessel or instruct a duly authorized surveyor to carry out such survey on their behalf at any time (and for the avoidance of doubt, more than once a year) without prior notice to, and at the cost of, the Charterers; and (b) the Owners shall have the right to inspect or survey the Vessel or instruct a duly authorized surveyor to carry out such survey on their behalf at any time prior to the Commencement Date. The Charterers shall procure that the Owners can fully exercise such rights of inspection and survey. |
| 47.3 | The Charterers shall also permit the Owners to inspect the Vessel’s log books whenever requested and shall whenever required by the Owners furnish them with full information regarding any casualties or other accidents or damage to the Vessel. |
| 47.4 | Except as otherwise provided under Clause 47.2, the documented costs and fees for any inspection and survey permitted under this Clause shall be paid by the Charterers. |
| 47.5 | All time used in respect of inspection, survey or repairs pursuant to this Clause shall be for the Charterers’ account and form part of the Charter Period. |
CLAUSE 48 - INTENTIONALLY DELETED
CLAUSE 49 - TERMINATION EVENTS
| 49.1 | The Owners and the Charterers hereby agree that any of the following events shall constitute a Termination Event: |
| (a) | any Relevant Person fails to make any payment on the due date or on demand in accordance with the terms of any Leasing Document to which it is a party, unless such non-payment is caused by administrative or technical error and the relevant payment is made within three (3) Business Days (in the case of payment of Charterhire) or five (5) Business Days (in the case of any other payment, other than Charterhire) of the relevant due date; |
| (b) | the Charterers breach or omit to observe or perform any of their undertakings in Clause 46.1 (a), (f), (g), (j)(iii), (l), (p), (t), (u), (v), (x) or (aa)(iii) or the Guarantor breaches or omits to observe or perform any of its undertakings or the financial covenants contained under clause 11.14 (Financial covenants) of the Guarantee; |
| (c) | the Charterers fail to obtain and/or maintain the Insurances required under Clause 39 - (Insurance) in accordance with the provisions thereof (or any insurer in respect of such Insurances cancels the Insurances or disclaims liability with respect thereto); |
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| (d) | any Relevant Person commits any other breach of, or omits to observe or perform, any of their other obligations or undertakings in this Charter or any Leasing Document (other than a breach referred to in paragraphs (a), (b) and (c) above) unless such breach or omission is in the opinion of the Owners, remediable and the Relevant Person remedies (or cause to remedy) such breach or omission to the satisfaction of the Owners within ten (10) Business Days of the occurrence of such breach or omission; |
| (e) | any representation or warranty made by any Relevant Person in or pursuant to any Leasing Document to which it is a party proves to be untrue or misleading when it is made; |
| (f) | any of the following occurs in relation to any Financial Indebtedness of any Relevant Person or any member of the Group: |
| (i) | any Financial Indebtedness of such entity is not paid when due or, if so payable, on demand after any applicable grace period has expired; |
| (ii) | any Financial Indebtedness of such entity becomes due and payable, or capable of being declared due and payable, prior to its stated maturity date as a consequence of any event of default and not as a consequence of the exercise of any voluntary right of prepayment; |
| (iii) | a lease, hire purchase agreement or charter creating any Financial Indebtedness of such entity is terminated by the lessor or owner as a consequence of any termination event or event of default (howsoever defined); or |
| (iv) | any overdraft, loan, note issuance, acceptance credit, letter of credit, guarantee, foreign exchange or other facility, or any swap or other derivative contract or transaction, relating to any Financial Indebtedness of such entity ceases to be available or becomes capable of being terminated or declared due and payable or cash cover is required or becomes capable of being required, as a result of any termination event or event of default (howsoever defined); |
provided that no Termination Event will occur under this paragraph (f) in respect of (A) the Guarantor if the aggregate amount of Financial Indebtedness falling within sub-paragraphs (i) to (iv) above is less than US$10,000,000 (or its equivalent in any other currency or currencies) or (B) a Relevant Person (other than the Guarantor) if the aggregate amount of Financial Indebtedness falling within sub-paragraphs (i) to (iv) above is less than US$1,000,000 (or its equivalent in any other currency or currencies) for such Relevant Person;
| (g) | any of the following occurs in relation to any Relevant Person or any member of the Group: |
| (i) | such entity becomes, in the opinion of the Owners, unable to pay their debts as they fall due; |
| (ii) | in respect of such entity, the value of its assets is less than its liabilities (taking into account contingent liabilities); |
| (iii) | any administrative or other receiver is appointed over all or a substantial part of the assets of such entity unless as part of a solvent reorganisation which has been approved by the Owners; |
| (iv) | such entity makes any formal declaration of bankruptcy or any formal statement to the effect that they are insolvent or likely to become insolvent, or a winding up or administration order is made in relation to such entity, or the members or directors of such entity pass a resolution to the effect that they should be wound up, placed in administration or cease to carry on business; |
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| (v) | a petition is presented in any Relevant Jurisdiction for the winding up or administration, or the appointment of a provisional liquidator, of such entity; |
| (vi) | such entity petitions a court, or presents any proposal for, any form of judicial or non-judicial suspension or deferral of payments, reorganisation of their debt (or certain of their debt) or arrangement with all or a substantial proportion (by number or value) of their creditors or of any class of them or with a minority proportion (by number or value) of their creditors or of any class of them which would reasonably likely to have a Material Adverse Effect or any such suspension or deferral of payments, reorganisation or arrangement is effected by court order, contract or otherwise; |
| (vii) | any meeting of the members or directors of such entity is summoned for the purpose of considering a resolution or proposal to authorise or take any action of a type described in paragraph (iii), (iv), (v) or (vi); |
| (viii) | in any jurisdiction, any event occurs or any procedure is commenced which, in the opinion of the Owners, is similar to any of the foregoing referred to in (ii) to and including (vii) above; or |
| (ix) | any expropriation, attachment, sequestration, distress or execution or any analogous process in any jurisdiction which affects any asset or assets of such entity which is not discharged within fourteen (14) days; |
| (h) | a Relevant Person suspends or ceases or threatens to suspend or cease carrying on its business; |
| (i) | any consent, approval, authorisation, license or permit necessary to enable the Charterers or the Approved Sub-charterer to operate or charter the Vessel or any Relevant Person to comply with any provision of Leasing Document (as the case may be) and/or to ensure that the obligations of any Relevant Person or the Approved Sub-charterer under any Leasing Document or the Approved Sub-charter (as applicable) are legal, valid, binding or enforceable (I) is not granted, (II) expires without being renewed, (III) is revoked or becomes liable to revocation or (IV) any condition of such a consent, approval, authorisation, license or permit is not fulfilled provided that, in the case of an Approved Sub-charter, this shall not constitute a “Termination Event” under this Clause 49.1(i) if (i) such Approved Sub-charter is replaced or remedied in the time required under and in accordance with Clauses 46.1(aa)(iii)(A) or 46.1(aa)(iii)(B) or (ii) the Charterers comply with their obligations under Clause 46.1(aa)(iii); |
| (j) | any event or circumstance occurs which (in the opinion of the Owners) has or is reasonably likely to have a Material Adverse Effect; |
| (k) | this Charter or any Leasing Document or any Security Interest created by a Leasing Document: |
| (i) | is cancelled, terminated, rescinded or suspended or otherwise ceases to remain in full force and effect for any reason or no longer constitutes valid, binding and enforceable obligations of any party to that document for any reason whatsoever; or |
| (ii) | is amended or varied without the prior written consent of the Owners; |
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| (l) | a Relevant Person or an Approved Sub-charterer rescinds or purports to rescind or repudiates or purports to repudiate a Leasing Document or an Approved Sub-charter (in the case of an Approved Sub-charter, (i) this is not replaced or remedied in the time required under and otherwise in accordance with Clauses 46.1(aa)(iii)(A) or 46.1(aa)(iii)(B) and (ii) the Charterers breach or omit to observe or perform their obligations under Clause 46.1(aa)(iii); |
| (m) | the Security Interest constituted by any Leasing Document is in any way imperiled or in jeopardy; |
| (n) | any Termination Event (as defined in each Other Charter) occurs under such Other Charter; |
| (o) | the occurrence of any of the following events; |
| (i) | an event of default or termination event howsoever called under the terms of the Approved Sub-charter entitling either the Approved Sub-charterer or the Charterers to terminate the Approved Sub-charter and the Charterers breach or omit to observe or perform their obligations under Clause 46.1(aa)(iii); |
| (ii) | if any Relevant Person or the Approved Sub-charterer: |
| (A) | is or becomes a Prohibited Person; |
| (B) | is owned or controlled by or acting directly or indirectly on behalf of or for the benefit of, a Prohibited Person; |
| (C) | owns or controls a Prohibited Person; |
| (D) | has a Prohibited Person serving as a director, officer or employee; |
| (p) | Delivery does not occur on or prior to the Cancelling Date; |
| (q) | there is a merger, amalgamation, demerger or corporate reconstruction of any of the Charterers, the Other Charterers and the Guarantor without the Owners’ prior written consent; |
(r)
| (i) | the shares of the Guarantor cease to trade on the NASDAQ or Over the Counter (OTC), unless the Charterers comply with their obligations under Clause 46.1(x); or |
| (ii) | the Guarantor ceases being an entity reporting with the U.S. Securities and Exchange Commission; |
| (s) | there is a change in control of ownership or control of the Charterers or there is a change of voting control in the case of the Guarantor as set out in Clause 45 - (Representations and Warranties) unless prior written consent from the Owners has been obtained prior to such change; |
| (t) | there is any occurrence of any litigation, arbitration or administrative proceedings or investigations involving a Relevant Person which has been commenced or taken and has been adversely determined and which would have or is reasonably likely to have a Material Adverse Effect; or |
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| (u) | any lease, hire purchase agreement, charter or any other financing arrangement in respect of any Associated Vessel (other than the Vessel and the Other Vessels) is terminated, cancelled or repudiated by the relevant lessor or owner or financier as a consequence of any termination event or event of default (howsoever defined therein). |
| 49.2 | Notwithstanding and without prejudice to Clause 33 - (Cancellation), upon the occurrence of any Termination Event, the Owners may issue a written notice to the Charterers terminating this leasing of the Vessel under this Charter and demanding payment of the Termination Sum (the “Termination Notice”), whereupon the Charterers shall be obliged to pay the Termination Sum to the Owners on the date specified by the Owners in their sole discretion in the Termination Notice (the “Termination Date”). |
| 49.3 | For the avoidance of doubt, notwithstanding any action taken by the Owners following a Termination Event, the Charterers shall remain liable for the outstanding obligations on their part to be performed under this Charter including but not limited to all insurance, operational and maintenance covenants until such time as the Vessel is redelivered to the Owners in accordance with Clause 41.6, or the title is transferred to the Charterers in accordance with Clause 41.3, the Vessel is sold in accordance with 41.10 or the Owners exercise the option set out in Clause 41.11. |
| 49.4 | Without limiting the generality of the foregoing or any other rights of the Owners or the Charterers, upon the occurrence of a Termination Event, the Charterers agree and acknowledge that the Owners shall have the sole and exclusive right and power to (i) settle, compromise, compound, adjust or defend any action, suit or proceeding relating to or pertaining to the Vessel and this Charter, (ii) make proof of loss, appear in and prosecute any action arising from any policy or policies of insurance maintained pursuant to this Charter, and settle, adjust or compromise any claims for loss, damage or destruction under, or take any other action in respect of, any such policy or policies and/or change or appoint a new manager for the Vessel and the appointment of any originally appointed manager may be terminated immediately without any recourse to the Owners. |
| 49.5 | Each Termination Event shall either be a breach of condition by the Charterers where it involves a breach of this Charter or any of the other Leasing Document by the Charterers or shall otherwise be an agreed terminating event, the occurrence of which gives rise to a right of the Owners to terminate the leasing of the Vessel under this Charter and to exercise its rights under this clause, provided that, in case of a breach of contract claim, the claim amount of the Owners should not exceed the applicable Termination Sum as at the relevant time. |
CLAUSE 50 - MANDATORY SALE
| 50.1 | If it becomes unlawful in any applicable jurisdiction for the Owners to perform any of their obligations as contemplated by this Charter or the MOA to perform their obligations under the Financial Instruments, the Owners shall notify the Charterers of this event and the Charterers shall be required to pay the Mandatory Sale Price to the Owners within thirty (30) days following such notice by the Owners or, if earlier, the date specified by the Owners in the notice delivered to the Charterers (being no earlier than the last day of any applicable grace period permitted by law), and this Charter shall terminate in accordance with the procedures set out in Clause 50.4. |
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| 50.2 | If it is or has become: |
| (a) | unlawful or prohibited, whether as a result of the introduction of a new law, an amendment to an existing law or a change in the manner in which an existing law is or will be interpreted or applied; or |
| (b) | contrary to, or inconsistent with, any regulation, |
for any Relevant Person to maintain or give effect to any of its obligations under this Charter or any of the other Leasing Documents to which it is a party in the manner it is contemplated under such Leasing Document or any of the obligations of such Relevant Person under any Leasing Document to which it is a party are not or cease to be legal, valid, binding and enforceable, the Charterers shall be required to pay the Mandatory Sale Price to the Owners within thirty (30) days following such occurrence or, if earlier, a date specified by the Owners (being no earlier than the last day of any applicable grace period permitted by law), and this Charter shall terminate in accordance with the procedures set out in Clause 50.4.
| 50.3 | If there is a breach of 46.1(j)(iii), 46.1(t), 46.1(u) or 46.1(v) in any such case on the basis that reference to “the People’s Republic of China” applies to the definition of “Prohibited Person” or paragraph (e) of the definition of “Sanctions Authority” applies to the definition of “Sanctions Authority”, the Charterers shall be required to pay the Mandatory Sale Price to the Owners within forty five (45) days following such occurrence or, if earlier, a date specified by the Owners (being no earlier than the last day of any applicable grace period permitted by law or the relevant official institution, agency or the government of the People’s Republic of China) and this Charter shall terminate in accordance with the procedures set out in Clause 50.4. |
| 50.4 | If the Mandatory Sale Price becomes payable in accordance with Clause 36.13 or Clause 50.1 or Clause 50.2 or Clause 50.3 or Clause 54.5, the same shall (in each such case) be payable in consideration of the purchase and transfer of the legal and beneficial title of the Vessel pursuant to Clause 52 - (Sale of the Vessel). The day on which the Mandatory Sale Price is paid pursuant to Clause 36.13 or Clause 50.1, Clause 50.2 or Clause 50.3 or Clause 54.5 is a “Mandatory Sale Date” and such transfer of Vessel provided therein is a “Mandatory Sale”. |
CLAUSE 51 - PURCHASE OPTION
| 51.1 | The Charterers shall have the option (the “Purchase Option”), on or after the first (1st) anniversary of the Commencement Date, to purchase the Vessel on any Purchase Option Date (as hereinafter defined) specified in the Purchase Option Notice (as hereinafter defined) at the applicable Purchase Option Price, subject to the other terms of this Clause 51 - (Purchase Option). |
| 51.2 | The Purchase Option shall be exercisable only: |
| (a) | upon the Charterers providing not less than sixty (60) days’ prior written notice (the “Purchase Option Notice”) to purchase the Vessel; |
| (b) | on any Payment Date which falls on or after the first (1st) anniversary of the Commencement Date or on the last day of the Charter Period (as the case may be) (unless otherwise agreed by the Owners) (the “Purchase Option Date”); and |
| (c) | in the absence of the occurrence of a Potential Termination Event or a Termination Event which is continuing on or prior to either the date of the Purchase Option Notice or the Purchase Option Date. |
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| 51.3 | The Purchase Option Notice shall be signed by a duly authorised officer or attorney of the Charterers and, once delivered to the Owners, will be irrevocable and the Charterers shall be bound to pay to the Owners the Purchase Option Price on the Purchase Option Date. |
| 51.4 | The sale of the Vessel pursuant to the Charterers’ exercise of the Purchase Option shall be conducted in accordance with Clause 52 - (Sale of the Vessel). |
| 51.5 | If the Charterers do not exercise the Purchase Option on or before the expiration of the Charter Period: |
| (a) | the Charterers shall pay the Option Premium to the Owners on the last day of the Charter Period; |
| (b) | the Charterers shall on the last day of the Charter Period re-deliver the Vessel to the Owners in accordance with Clause 41.6 and shall ensure that they have fulfilled their obligations under this Charter and made payment of the Option Premium, all Charterhire and all other moneys pursuant to the terms of this Charter; and |
| (c) | the Owners shall be entitled (at Owners’ sole discretion) to sell or operate the Vessel as they may require and may create whatsoever interests thereon, including without limitation sale and purchase agreements, charterparties or any other form of employment contracts. |
| 51.6 | For the avoidance of doubt, the Charterers agree that should the Option Premium not be paid or not be paid in full on its due date for payment under the terms of this Charter, any net proceeds deriving from the sale or operation of the Vessel by the Owners shall not be applied towards reduction of the unpaid Option Premium, Charterhire or any other moneys due pursuant to the terms of this Charter. |
CLAUSE 52 - SALE OF THE VESSEL
| 52.1 | The sale of the legal and beneficial interest and title in the Vessel pursuant to the Charterers’ payment of the Termination Sum under Clause 41 - (Termination, Redelivery and Total Loss), the Charterers’ exercise of the Charterers’ Purchase Option under Clause 51 - (Purchase Option) or the completion of the Mandatory Sale under Clause 50 - (Mandatory Sale) shall be on an “as is where is” basis and subject to the following terms and conditions: |
| (a) | no condition, warranty or representation of any kind is or has been given by or on behalf of the Owners in respect of the Vessel or any part thereof, and accordingly the Charterers confirm that they have not, in entering into this Charter, relied on any condition, warranty or representation by the Owners or any person on the Owners’ behalf, express or implied, whether arising by law or otherwise in relation to the Vessel or any part thereof, including, without limitation, warranties or representations as to the description, suitability, quality, merchantability, fitness for any purpose, value, state, condition, appearance, safety, durability, design or operation of any kind or nature of the Vessel or any part thereof, and the benefit of any such condition, warranty or representation by the Owners is hereby irrevocably and unconditionally waived by the Charterers to the extent permissible under applicable law; |
| (b) | the Charterers hereby also waive any rights which they may have in tort in respect of any of the matters referred to under paragraph (a) above and irrevocably agree that the Owners shall have no greater liability in tort in respect of any such matter than they would have in contract after taking account of all of the foregoing exclusions. No third party making any representation or warranty relating to the Vessel or any part thereof is the agent of the Owners nor has any such third party authority to bind the Owners thereby. Notwithstanding anything contained above, nothing contained herein is intended to obviate, remove or waive any rights or warranties or other claims relating thereto which the Charterers (or their nominee) or the Owners may have against the manufacturer or supplier of the Vessel or any third party; |
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| (c) | the Vessel shall be free from any registered mortgages incurred by the Owners; |
| (d) | the Purchase Option Price or the Termination Sum or the Mandatory Sale Price shall be paid by (or on behalf of) the Charterers to the Owners on the Purchase Option Date or the Termination Date or the Mandatory Sale Date (as the case may be) together with unpaid amounts of Charterhire and other moneys owing by or accrued or due from the Charterers under this Charter on or prior to the Purchase Option Date or the Termination Date or the Mandatory Sale Date (as the case may be) which remain unpaid; and |
| (e) | concurrently with the Owners receiving irrevocable payment of the Purchase Option Price or, as the case may be, the applicable Termination Sum or the applicable Mandatory Sale Price and all other moneys payable under this Charter in full pursuant to the terms of this Charter, the Owners shall (save in the event of Total Loss) (at the Charterer’s cost) transfer the legal and beneficial ownership of the Vessel on an “as is where is” basis to the Charterers or their nominees and shall (at the Charterers’ cost) execute a bill of sale and a protocol of delivery and acceptance evidencing the same and any other document strictly necessary to transfer the title of the Vessel to the Charterers or their nominees (and to the extent required for such purposes, the Vessel shall be deemed first to have been redelivered to the Owners), provided that the Owners shall not be obliged to transfer the legal and beneficial interest in the Vessel to the Charterers in any event unless the Owners are satisfied that no Termination Event has occurred and is continuing and all obligations, duties, liabilities and indemnities of the Charterers under the Leasing Documents have been fully performed and (if applicable) paid. |
CLAUSE 53 - INDEMNITIES
| 53.1 | The Charterers shall indemnify the Owners on their demand against all documented claims, expenses, liabilities, losses, fees (including but not limited to any vessel registration and tonnage fees or any tax incurred by the Owners as a result of the operation and/or trading of the Vessel) suffered or incurred by or imposed on the Owners arising from this Charter and any Leasing Document, including but not limited to (i) in connection with delivery, possession, performance, control, registration, repair, survey, insurance, maintenance, manufacture, purchase, ownership and operation of the Vessel by the Owners, (ii) costs related to the prevention or release of liens or detention of or requisition, use, operation or redelivery, sale or disposal of the Vessel or any part of it and (iii) enforcing the Owners’ rights under this Charter or any Leasing Document, in each case of paragraphs (i) to (iii), whether prior to, during or after termination of the leasing of this Charter and whether or not the Vessel is in the possession or the control of the Charterers or otherwise. Without prejudice to its generality, this Clause covers any claims, expenses, liabilities and losses which arise, or are asserted, under or in connection with any law relating to safety at sea, the ISM Code, the ISPS Code, the MARPOL Protocol, any Environmental Law, any Sanctions or any Anti- Money Laundering Laws, Anti-Terrorism Financing Laws or Business Ethics Laws. |
| 53.2 | The Charterers agree to indemnify the Owners against all consequences or liabilities arising from the Master, officers or agents signing Bills of Lading or other documents. |
| 53.3 | In consideration of the Charterers requesting the Other Owners to charter the Other Vessels to the Other Charterers under the Other Charters, the Charterers hereby irrevocably and unconditionally undertake to pay immediately on demand from the Other Owners such amounts in respect of all claims, expenses, liabilities, losses, fees of every kind and nature and all other moneys due, owing and/or payable the Other Owners under or in connection with the Other Charters, and to indemnify and hold the Other Owners harmless against all such moneys, costs, fees and expenses. |
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| 53.4 | All rights which the Charterers have at any time (whether in respect of this Charter or any other transaction) against the Other Charterers or any Relevant Person shall be fully subordinated to the rights of the Owners under the Leasing Documents and until the end of this Charter and unless the Owners otherwise direct, the Charterers shall not exercise any rights which it may have (whether in respect of this Charter or any other transaction) by reason of performance by it of its obligations under the Leasing Documents or by reason of any amount becoming payable, or liability arising, under this Clause: |
| (a) | to be indemnified by the Other Charterers or such Relevant Person; |
| (b) | to claim any contribution from any third party providing security for, or any other guarantor of, the Other Charterers’ or such Relevant Person’s obligations under the Leasing Documents; |
| (c) | to take any benefit (in whole or in part and whether by way of subrogation or otherwise) of any rights of the Other Charterers or such Relevant Person under the Leasing Documents or of any other guarantee or security taken pursuant to, or in connection with, the Leasing Documents by any of the aforesaid parties; |
| (d) | to bring legal or other proceedings for an order requiring the Other Charterers or such Relevant Person to make any payment, or perform any obligation, in respect of any Leasing Document; |
| (e) | to exercise any right of set-off against the Other Charterers or such Relevant Person; and/or |
| (f) | to claim or prove as a creditor of the Other Charterers or such Relevant Person, |
| (g) | and if the Charterers receive any benefit, payment or distribution in relation to such rights it shall hold that benefit, payment or distribution to the extent necessary to enable all amounts which may be or become payable to the Owners or the Other Owners by the Other Charterers or such Relevant Person under or in connection with the Leasing Documents to be repaid in full on trust for the Owners or the Other Owners and shall promptly pay or transfer the same to the Owners or the Other Owners as may be directed by the Owners. |
| 53.5 | The Charterers hereby irrevocably agree to indemnify and hold harmless the Owners against any claim, expense, liability or loss reasonably incurred by the Owners in liquidating or employing deposits from the Owners’ Financiers or third parties to fund the acquisition of the Vessel pursuant to the MOA. |
| 53.6 | Notwithstanding anything to the contrary herein (but subject and without prejudice to Clause 33 - (Cancellation) ) and without prejudice to any right to damages or other claim which the Charterers may have at any time against the Owners under this Charter, the indemnities provided by the Charterers in favour of the Owners shall continue in full force and effect notwithstanding any breach of the terms of this Charter or termination of this Charter pursuant to the terms hereof or termination of this Charter by the Owners. |
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| 53.7 | The obligations of the Charterers under this Clause 53 - (Indemnities) and in respect of any Security Interest created pursuant to the Security Documents will not be affected or discharged by an act, omission, matter or thing which would reduce, release or prejudice any of its obligations under this Clause 53 - or in respect of any Security Interest created pursuant to the Security Documents (without limitation and whether or not known to it or any Relevant Person) including: |
| (a) | any time, waiver or consent granted to, or composition with, any Relevant Person or other person; |
| (b) | the release of any other Relevant Person or any other person under the terms of any composition or arrangement with any creditor of a Relevant Person or any of its affiliates; |
| (c) | the taking, variation, compromise, exchange, renewal or release of, or refusal or neglect to perfect or delay in perfecting, or refusal or neglect to take up or enforce, or delay in taking or enforcing any rights against, or security over assets of, any Relevant Person or other person or any non-presentation or non-observance of any formality or other requirement in respect of any instrument or any failure to realise the full value of any security; |
| (d) | any incapacity or lack of power, authority or legal personality of or dissolution or change in the members or status of a Relevant Person or any other person; |
| (e) | any amendment, novation, supplement, extension, restatement (however fundamental and whether or not more onerous) or replacement of any Leasing Document or any other document or security; |
| (f) | any unenforceability, illegality or invalidity of any obligation of any person under any Security Document or any other document or security; or |
| (g) | any insolvency or similar proceedings. |
CLAUSE 54 - NO SET-OFF OR TAX DEDUCTION
| 54.1 | All Charterhire and any other payment made from the Charterers to enable the Owners to pay all amounts under a Leasing Document shall be paid punctually and: |
| (a) | without any form of set-off, cross-claim, condition or counterclaim; |
| (b) | made free and clear of all present and future taxes, levies, duties or deductions of any nature whatsoever, whether levied now or in the future, unless required by law; and |
| (c) | net of any bank charges or bank fees. |
| 54.2 | Without prejudice to Clause 54.1 (No Set-off or Tax Deduction), if the Owners are required by law to make a tax deduction from any payment: |
| (a) | the Owners shall notify the Charterers as soon as they become aware of the requirement; and |
| (b) | the amount due in respect of the payment shall be increased by the amount necessary to ensure that the Owners receive and retain (free from any liability relating to the tax deduction) a net amount which, after the tax deduction, is equal to the full amount which they would otherwise have received. |
| 54.3 | The Charterers shall (within three (3) Business Days of demand by Owners) pay to the Owners an amount equal to the loss, liability or cost which the Owners determine will be or has been (directly or indirectly) suffered for or on account of tax by the Owners in respect of a Leasing Document. |
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| 54.4 | Clause 54.3 shall not apply: |
| (a) | with respect to any tax assessed on the Owners under the law of the jurisdiction in which the Owners are incorporated or, if different, the jurisdiction (or jurisdictions) in which the Owners are treated as resident for tax purposes if that tax is imposed on or calculated by reference to the net income received or receivable (but not any sum deemed to be received or receivable) by the Owners; or |
| (b) | to the extent a loss, liability or cost is compensated for by an increased payment under Clauses 55.2 or 55.3. |
| 54.5 | Notwithstanding any other provision to this Charter, if any deduction or withholding or other tax is or will be required to be made by the Charterers or the Owners in respect of a payment to the Owners as a result of the Tax Changes, the Owners and the Charterers shall use reasonable endeavours to mitigate the effect of the Tax Changes and have the right to transfer their interest in the Vessel (and this Charter) to any person nominated by the Owners and all costs in relation to such mitigation or transfer shall be for the account of the Charterers. Provided that if after the Owners and the Charterers having exercised reasonable endeavours to mitigate the effect of the Tax Changes (at the cost of the Charterers) following notification from the Owners to the Charterers regarding the occurrence of the Tax Changes such Tax Changes continue to have the same effect, the Charterers shall have the option to pay the Mandatory Sale Price to the Owners within thirty (30) days following such notice by the Owners, and this Charter shall terminate in accordance with the procedures set out in Clause 50.4. |
| 54.6 | If the Charterers compensate the Owners by an increased payment pursuant to Clause 55.2 or 55.3 and the Owners determine that they have obtained and utilized a tax credit attributable to this increased payment, the Owners shall reimburse the Charterers that increased payment (or part thereof if the tax credit is attributable to only part of such increased payment). |
CLAUSE 55 - INCREASED COSTS
| 55.1 | This Clause 55 - (Increased Costs) applies if the Owners notify the Charterers that they (or their financiers) consider that as a result of: |
| (a) | the introduction or alteration after the date of this Charter of a law or an alteration after the date of this Charter in the manner in which a law is interpreted or applied (excluding any effect which relates to the application to payments under this Charter of a tax on the Owners’ overall net income); or |
| (b) | complying with any regulation (including any which relates to capital adequacy or liquidity controls or which affects the manner in which the Owners allocates capital resources to their obligations under this Charter) which is introduced, or altered, or the interpretation or application of which is altered, after the date of this Charter, |
the Owners or a parent company of them (if any) has incurred or will incur an “increased cost”.
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| 55.2 | In this Clause 55 - (Increased Costs), “increased cost” means, in relation to the Owners: |
| (a) | an additional or increased cost incurred as a result of, or in connection with, the Owners or the Owners’ parent company or the Owners’ Financiers (if any) having entered into, or being a party to, this Charter, of funding or financing the acquisition of the Vessel pursuant to the MOA or performing their obligations under this Charter; |
| (b) | a reduction in the amount of any payment to the Owners under this Charter or in the effective return which such a payment represents to the Owners (if any) on their capital; or |
| (c) | an additional or increased cost of funds relating to the acquisition of the Vessel pursuant to the MOA, |
and for the purposes of this Clause 55.2 the Owners may in good faith allocate or spread costs and/or losses among their assets and liabilities (or any class of their assets and liabilities) on such basis as they consider appropriate.
| 55.3 | Subject to the terms of Clause 55.1, the Charterers shall pay to the Owners, upon receipt of the Owners’ demand and any evidence thereto (where available to the Owners), the amounts which the Owners from time to time notify the Charterers to be necessary to compensate the Owners for the increased cost. |
| 55.4 | If any sum due from the Charterers to the Owners under this Charter or any other Leasing Document or under any order or judgment relating thereto has to be converted from the currency in which this Charter or such Leasing Document provided for the sum to be paid (the “Contractual Currency”) into another currency (the “Payment Currency”) for the purpose of: |
| (a) | making or lodging any claim or proof against the Charterers, whether in their liquidation, any arrangement involving them or otherwise; or |
| (b) | obtaining an order or judgment from any court or other tribunal; or |
| (c) | enforcing any such order or judgment; |
the Charterers shall indemnify the Owners against the loss arising when the amount of the payment actually received by the Owners is converted at the available rate of exchange into the Contractual Currency.
In this Clause 55.4, the “available rate of exchange” means the rate at which the Owners are able at the opening of business (Beijing time) on the Business Day after it receives the sum concerned to purchase the Contractual Currency with the Payment Currency.
CLAUSE 56 - CONFIDENTIALITY
| 56.1 | The Parties agree to keep the terms and conditions of this Charter and any other Leasing Documents (the “Confidential Information”) strictly confidential, provided that a Party may disclose Confidential Information in the following cases: |
| (a) | it is already known to the public or becomes available to the public other than through the act or omission of the disclosing Party; |
| (b) | it is required to be disclosed under the applicable laws of any Relevant Jurisdiction, Stock Market regulation, the US Securities and Exchange Commission’s rules or by a governmental order, decree, regulation or rule (provided that the disclosing Party shall give written notice of such required disclosure to the other Party prior to the disclosure); |
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| (c) | in filings with a court or arbitral body in proceedings in which the Confidential Information is relevant and in discovery arising out of such proceedings; |
| (d) | to (or through) whom a Party assigns or transfers (or may potentially assign or transfer) all or any of its rights and/or obligations under one or more Leasing Document (as permitted by the terms thereof), provided that such person receiving Confidential Information shall undertake that it would not disclose Confidential Information to any other party save for circumstances arising which are similar to those described under this Clause or such other circumstances as may be permitted by all Parties; |
| (e) | to any permitted sub-charterer of the Vessel provided that such person receiving Confidential Information shall undertake that it would not disclose Confidential Information to any other party save for circumstances arising which are similar to those described under this Clause or such other circumstances as may be permitted by all Parties; |
| (f) | to any of the following persons on a need to know basis: |
| (i) | a shareholder or an Affiliate of either Party or a party referred to in either paragraph (d) or (e) (including the employees, officers and directors thereof); |
| (ii) | professional advisers retained by a disclosing party; or |
| (iii) | persons advising on, providing or considering the provision of financing to the disclosing party or an Affiliate, |
provided that the disclosing party shall exercise due diligence to ensure that no such person shall disclose Confidential Information to any other party save for circumstances arising which are similar to those described under this Clause or such other circumstances as may be permitted by all Parties;
| (g) | with the prior written consent of all Parties; or |
| (h) | to any person which is a classification society or other entity which the Owners or the Owners’ Financiers have engaged to make the calculations necessary to enable the Owners and/or the Owners’ Financiers to comply with their reporting obligations under the Poseidon Principles. |
CLAUSE 57 - RIGHTS OF THIRD PARTIES
No term of this Charter is enforceable under the Contracts (Rights of Third Parties) Act 1999 by a person who is not party to this Charter, save that any of the Other Owners may rely on the rights conferred on them under Clause 53.3.
CLAUSE 58 - PARTIAL INVALIDITY
If, at any time, any provision of a Leasing Document is or becomes illegal, invalid or unenforceable in any respect under any law of any jurisdiction, neither the legality, validity or enforceability of the remaining provisions under the law of that jurisdiction nor the legality, validity or enforceability of such provision under the law of any other jurisdiction will in any way be affected or impaired.
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CLAUSE 59 - SETTLEMENT OR DISCHARGE CONDITIONAL
| 59.1 | Any settlement or discharge under any Leasing Document between the Owners and any Relevant Person shall be conditional upon no security or payment to the Owners by any Relevant Person or any other person being set aside, adjusted or ordered to be repaid, whether under any insolvency law or otherwise. |
| 59.2 | If the Owners consider that an amount paid or discharged by, or on behalf of, a Relevant Person or by any other person in purported payment or discharge of an obligation of that Relevant Person to the Owners under the Leasing Documents is capable of being avoided or otherwise set aside on the liquidation or administration of that Relevant Person or otherwise, then that amount shall not be considered to have been unconditionally and irrevocably paid or discharged for the purposes of the Leasing Documents. |
CLAUSE 60 - IMMUNITY
The Charterers waive any rights of sovereign immunity which they or any of their properties may enjoy in any jurisdiction and subjects itself to civil and commercial law with respect to their obligations under this Charter or any other Leasing Document.
CLAUSE 61 - COUNTERPARTIES
This Charter and each other Leasing Document may be executed in any number of counterparts, and this has the same effect as if the signatures on the counterparts were on a single copy of this Charter or that Leasing Document, as the case may be.
CLAUSE 62 - FATCA
| 62.1 | Defined terms |
For the purposes of Clause 54 - (No Set-off or Tax Deduction) and this Clause 62 - (FATCA), the following terms shall have the following meanings:
“Code” means the United States Internal Revenue Code of 1986, as amended.
“FATCA” means:
| (a) | sections 1471 to 1474 of the Code or any associated regulations; |
| (b) | any treaty, law or regulation of any other jurisdiction, or relating to an intergovernmental agreement between the US and any other jurisdiction, which (in either case) facilitates the implementation of any law or regulation referred to in paragraph (a) above; or |
| (c) | any agreement pursuant to the implementation of any treaty, law or regulation referred to in paragraphs (a) or (b) above with the IRS, the US government or any governmental or taxation authority in any other jurisdiction. |
“FATCA Deduction” means a deduction or withholding from a payment under this Charter or the Leasing Documents required by or under FATCA.
“FATCA Exempt Party” means a Relevant Party that is entitled under FATCA to receive payments free from any FATCA Deduction.
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“FATCA Non-Exempt Party” means any Relevant Party who is not a FATCA Exempt Party.
“IRS” means the United States Internal Revenue Service or any successor taxing authority or agency of the United States government.
“Relevant Party” means any of the parties to this Charter and the Leasing Documents (other than the Trafigura Charterer).
| 62.2 | FATCA Information |
| (a) | Subject to paragraph (c) below, each Relevant Party shall, on the date of this Charter, and thereafter within ten Business Days of a reasonable request by another Relevant Party: |
| (i) | confirm to that other party whether it is a FATCA Exempt Party or is not a FATCA Exempt Party; and |
| (ii) | supply to the requesting party (with a copy to all other Relevant Parties) such other form or forms (including IRS Form W-8 or Form W-9 or any successor or substitute form, as applicable) and any other documentation and other information relating to its status under FATCA (including its applicable “pass thru percentage” or other information required under FATCA or other official guidance including intergovernmental agreements) as the requesting party reasonably requests for the purpose of the requesting party’s compliance with FATCA. |
| (b) | If a Relevant Party confirms to any other Relevant Party that it is a FATCA Exempt Party or provides an IRS Form W-8 or W-9 showing that it is a FATCA Exempt Party and it subsequently becomes aware that it is not, or has ceased to be a FATCA Exempt Party, or that the said form provided has ceased to be correct or valid, that party shall so notify all other Relevant Parties or provide the relevant revised form, as applicable, reasonably promptly. |
| (c) | Nothing in this Clause shall oblige any Relevant Party to do anything which would or, in its reasonable opinion, might constitute a breach of any law or regulation, any policy of that party, any fiduciary duty or any duty of confidentiality, or to disclose any confidential information (including, without limitation, its tax returns and calculations); provided, however, that nothing in this paragraph shall excuse any Relevant Party from providing a true, complete and correct IRS Form W-8 or W-9 (or any successor or substitute form where applicable). Any information provided on such IRS Form W-8 or W-9 (or any successor or substitute forms) shall not be treated as confidential information of such party for purposes of this paragraph. |
| (d) | If a Relevant Party fails to confirm its status or to supply forms, documentation or other information requested in accordance with the provisions of this Charter or the provided information is insufficient under FATCA, then: |
| (i) | if that party failed to confirm whether it is (and/or remains) a FATCA Exempt Party then such party shall be treated for the purposes of this Charter and the Leasing Documents as if it is a FATCA Non-Exempt Party; and |
| (ii) | if that party failed to confirm its applicable passthru percentage then such party shall be treated for the purposes of this Charter and the Leasing Documents (and payments made thereunder) as if its applicable passthru percentage is 100%, until (in each case) such time as the party in question provides sufficient confirmation, forms, documentation or other information to establish the relevant facts. |
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| 62.3 | FATCA Deduction and gross-up by Relevant Party |
| (a) | If the representation made by the Charterers under Clause 45.1(p) (Representations and Warranties) proves to be untrue or misleading such that the Charterers are required to make a FATCA Deduction, the Charterers shall make the FATCA Deduction and any payment required in connection with that FATCA Deduction within the time allowed and in the minimum amount required by FATCA. |
| (b) | If the Charterers are required to make a FATCA Deduction then the Charterers shall increase the payment due from them to the Owners to an amount which (after making any FATCA Deduction) leaves an amount equal to the payment which would have been due if no FATCA Deduction had been required. |
| (c) | The Charterers shall promptly upon becoming aware that they must make a FATCA Deduction (or that there is any change in the rate or basis of a FATCA Deduction) notify the Owners accordingly. Within thirty (30) days of the Charterers making either a FATCA Deduction or any payment required in connection with that FATCA Deduction, the Charterers shall deliver to the Owners evidence satisfactory to the Owners that the FATCA Deduction has been made or (as applicable) any appropriate payment paid to the relevant governmental or taxation authority. |
| (d) | If the Owners are required to make a deduction or withholding from a payment under any Financial Instruments in respect of FATCA, and is required under such Financial Instrument to pay additional amounts in respect of such deduction or withholding, the amount of the payment due from the Charterers under this Charter shall be increased to an amount which, after such deduction or withholding and payment of additional amounts, leaves the Owners with an amount equal to the amount which it would have had remaining if it had not been required to pay additional amounts under such Financial Instruments. |
| 62.4 | FATCA Deduction by Owners |
The Owners may make any FATCA Deduction they are required by FATCA to make, and any payment required in connection with that FATCA Deduction, and the Owners shall not be required to increase any payment in respect of which they make such a FATCA Deduction or otherwise compensate the recipient for that FATCA Deduction.
| 62.5 | FATCA Mitigation |
Notwithstanding any other provision to this Charter, if a FATCA Deduction is or will be required to be made by any party under Clause 62.3 (FATCA) in respect of a payment to the Owners as a result of the Owners not being a FATCA Exempt Party, the Owners shall have the right to transfer their interest in the Vessel (and this Charter) to any person nominated by the Owners and all costs in relation to such transfer shall be for the account of the Charterers.
CLAUSE 63 - ASSIGNMENT AND TRANSFER
| 63.1 | The Charterers shall not assign this Charter except with the Owners’ prior consent in writing. |
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| 63.2 | The Owners may assign any of their rights or transfer by novation any of their rights and obligations under the Leasing Documents and/or sell and transfer title to of the Vessel to any third party with the prior written consent of the Charterers (such consent not to be unreasonably withheld) provided that such consent shall not be required if such assignment, transfer and/or sale is made: |
| (i) | at such time following the occurrence of a Termination Event which is continuing; or |
| (ii) | to an affiliate of the Owners. Provided always that, notwithstanding such assignment, transfer or sale, this Charter will continue (or will be novated to the applicable new owner) on identical terms (save for logical, consequential or mutually agreed amendments). |
| 63.3 | The Charterers shall remain liable to the aforesaid assignee, transferee or new owner of the Vessel (as the case may be) for its performance of all obligations under this Charter (where applicable, as novated) after any such assignment or transfer or any change of the registered ownership of the Vessel from the Owners to such new owner. The Charterers shall procure that any Relevant Person which is a party to a Leasing Document: |
| (a) | becomes liable to such assignee, transferee or new owner of the Vessel for its performance of all obligations pursuant to such Leasing Document; and |
| (b) | enters into all necessary documents or takes any necessary actions or provide all necessary assistance required for such Leasing Document and any Security Interest created thereunder remaining in full force and effect (or to be novated and/or executed) as from the completion of the relevant assignment, transfer or sale. |
| 63.4 | Without limiting the generality of Clause 63.2: |
| (a) | the Owners are entitled to enter into certain funding arrangements with their financier(s), including but not limited to, an affiliate of the Owners or any other banks and financial institutions acceptable to the Owners in their sole discretion (the “Mortgagee”) provided that such funding arrangement shall not result in any adverse effect of the Charterers’ rights and obligations under the Leasing Documents; and |
| (b) | the Owners may do any of the following as security for the funding arrangements referred to in paragraph (a) above, in each case, without the prior consent of the Charterers: |
| (i) | execute a ship mortgage over the Vessel or any other Financial Instrument in favour of a Mortgagee (or its agent, trustee or nominee); |
| (ii) | assign their rights and interests to, in or in connection with this Charter or any other Leasing Documents in favour of a Mortgagee (or its agent, trustee or nominee); |
| (iii) | assign their rights and interests to, in or in connection with the Insurances, the Earnings and the Requisition Compensation of the Vessel in favour of the Mortgagee (or its agent, trustee or nominee); and |
| (iv) | enter into any other document or arrangement which is necessary to give effect to such financing arrangements; |
| (c) | the Charterers undertake to comply, and provide such information and documents and all necessary assistance required to enable the Owners to comply, with all such instructions or directions in regard to the employment, insurances, operation, repairs and maintenance of the Vessel as laid down in any Financial Instrument or as may be directed from to time during the currency of this Charter by the Mortgagee (or its agent, trustee or nominee) in conformity with any Financial Instrument. The Charterers further agree to acknowledge each Financial Instrument and such other documents as may be required pursuant to each such Financial Instrument that may be required by the Mortgagee (or its agent, trustee or nominee); and |
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| (d) | during the Charter Period a change in the registered or beneficial ownership of the Vessel or the Owners (by sale of shares in the Owners or other transactions having the same effect) may be effected without the Charterers’ consent, provided always that, in the event of change in the registered or beneficial ownership of the Vessel, notwithstanding such change, this Charter would continue on identical terms (save for logical, consequential or mutually agreed amendments). The Guarantor and the Charterers shall (where applicable) remain jointly and severally liable to the aforesaid new owner of the Vessel for its performance of all obligations pursuant to this Charter after change of the registered and/or beneficial ownership of the Vessel or the Owners from the Owners to such new owner and agree and undertake to enter into any such usual documents as the Owners shall reasonably require to complete or perfect the transfer of the Vessel (with the benefit and burden of this Charter) pursuant to this Clause. |
| (e) | All expenses arising out of assignment or transfer of this Charter as per Clause 63 - (Assignment and Transfer) shall be for the Owner’s account subject to no Termination Event or Potential Termination Event having occurred or being continuing at the relevant time. |
CLAUSE 64 - GENERAL APPLICATION OF PROCEEDS
Any Net Trading Proceeds, Net Sales Proceeds, Total Loss Proceeds, any proceeds realised by the Owners in connection with the enforcement of the Security Documents (unless otherwise specified in the Security Documents) and any proceeds received by the Owners from any Other Owner (as trustee for the Owners) shall be applied in the following order of application against amounts payable under the Leasing Documents:
| (a) | firstly, in or towards any amounts outstanding under the Leasing Documents other than the Termination Sum (including but not limited to any costs and expenses incurred in the enforcement of the Security Documents, to the extent these are not covered under the Termination Sum); |
| (b) | secondly, in or towards satisfaction of the Charterers’ obligation to pay the Termination Sum (or such portion of it that then remains unpaid) in any order of application in the amounts comprising the Termination Sum as the Owners may determine; and |
| (c) | thirdly, any amounts remaining after the application of 64(a) and 64(b) above, shall be paid to the Charterers, but subject always to the terms of the General Assignment. |
CLAUSE 65 - GOVERNING LAW AND ENFORCEMENT
| (a) | This Charter and any non-contractual obligations arising under or in connection with it, shall be governed by and construed in accordance with English law. |
| (b) | Any dispute arising out of or in connection with this Charter (including a dispute regarding the existence, validity or termination of this Charter or any non-contractual obligation arising out of or in connection with this Charter) (a “Dispute”) shall be referred to and finally resolved by arbitration in London in accordance with the Arbitration Act 1996 or any statutory modification or re-enactment thereof save to the extent necessary to give effect to the provisions of this Clause 65 - (Governing Law and Enforcement). The arbitration shall be conducted in accordance with the London Maritime Arbitrators Association (“LMAA”) Terms current at the time when the arbitration proceedings are commenced. |
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| (c) | The reference shall be to three arbitrators. A party wishing to refer a Dispute to arbitration shall appoint its arbitrator (who shall be either a full member of the LMAA, or a practising barrister of King’s Counsel who is also a member of the Commercial Bar Association, or a retired High Court Judge practising as an arbitrator, in each case who carries on business in London) and send notice of such appointment in writing to the other party requiring the other party to appoint its own arbitrator within fourteen (14) calendar days of that notice and stating that it will appoint its arbitrator as sole arbitrator unless the other party appoints its own arbitrator and gives notice that it has done so within the fourteen (14) days specified. If the other party does not appoint its own arbitrator and give notice that it has done so within the fourteen (14) days specified, the party referring a Dispute to arbitration may, without the requirement of any further prior notice to the other party, appoint its arbitrator as sole arbitrator and shall advise the other party accordingly. The award of a sole arbitrator shall be binding on both parties as if he or she had been appointed by agreement. Nothing herein shall prevent the parties agreeing in writing to vary these provisions to provide for the appointment of a sole arbitrator. If the two arbitrators so appointed are unable to agree on the appointment of the third arbitrator, they or either of them may by written notice request the President of the LMAA to appoint the third arbitrator within fourteen (14) days of such request. |
| (d) | Where the reference is to three arbitrators the procedure for making appointments shall be in accordance with the procedure for full arbitration stated above. |
| (e) | The language of the arbitration shall be English. |
| (f) | In cases where neither the claim nor any counterclaim exceeds the sum of US$100,000 (or such other sum as the Parties may agree) the arbitration shall be conducted in accordance with the LMAA Small Claims Procedure current at the time when the arbitration proceedings are commenced. |
CLAUSE 66 - ENTIRE AGREEMENT
| (a) | This Agreement, in conjunction with the other Leasing Documents, constitutes the entire agreement between the parties and supersedes all previous agreements, understandings and arrangements between them, whether in writing or oral, in respect of its subject matter. |
| (b) | Each Party acknowledges that it has not entered into this agreement or any other Leasing Document in reliance on, and shall have no remedies in respect of, any representation or warranty that is not expressly set out in this Agreement or in any other Leasing Document. |
CLAUSE 67 - DEFINITIONS
| 67.1 | In this Charter, unless as expressly defined otherwise, the following capitalized terms shall have the meanings ascribed to them below: |
“Acceptance Certificate” means a certificate substantially in the form set out in Schedule 1 (Acceptance Certificate) to be signed by the Charterers at Delivery.
“Account Bank” means Joh. Berenberg, Gossler & Co. KG of Neuer Jungfernstieg 20, 20354 Hamburg, Germany or another reputable bank acceptable to the Owners, in and/or through which all revenues and operating expenses of the Charterers shall be credited and/or transferred.
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“Account Security” means the document creating security over the Operating Account made or to be made between the Charterers and the Owners.
“Advance Charterhire” has the meaning as defined under Clause 36.2 (Charterhire and Advance Charterhire) of the Charter.
“Affiliate” means in relation to any person, a Subsidiary of that person or a Holding Company of that person or any other Subsidiary of that Holding Company.
“Annex VI” means Annex VI of the Protocol of 1997 to amend the International Convention for the Prevention of Pollution from Ships 1973 (Marpol), as modified by the Protocol of 1978 relating thereto.
“Anti-Money Laundering Laws” means all applicable financial record-keeping and reporting requirements, anti-money laundering statutes (including all applicable rules and regulations thereunder) and all applicable related or similar laws, rules, regulations or guidelines, of all jurisdictions including and without limitation, the United States of America, the European Union, the United Kingdom, the Republic of the Marshall Islands, Germany and the People’s Republic of China (including Hong Kong for the avoidance of doubt) and which in each case are (a) issued, administered or enforced by any governmental agency having jurisdiction over any Relevant Person or the Owners; (b) of any jurisdiction in which any Relevant Person or Owner conducts business; or (c) to which any Relevant Person or Owner is subjected or subject to.
“Anti-Terrorism Financing Laws” means all applicable anti-terrorism laws, rules, regulations or guidelines of any jurisdiction, including and not limited to the United States of America or the People’s Republic of China which are: (a) issued, administered or enforced by any governmental agency, having jurisdiction over any Relevant Person or the Owners; (b) of any jurisdiction in which any Relevant Person or the Owners conduct business; or (c) to which any Relevant Person or the Owners are subjected or subject to.
“Approved Classification Society” means Bureau Veritas, DNV or such other generally recognized first class international classification society which is a member of the International Association of Classification Societies and approved by the Owners in writing.
“Approved Manager” means the Commercial Manager or the Technical Manager.
“Approved Valuer” means Simpson Spence & Young, Clarksons Platou, Maersk Broker, Arrow Shipbrokers, Howe Robinson, Braemar ACM Ship Broking, Fearnleys or any other reputable shipbroker nominated by the Charterers and approved by the Owners from time to time.
“Approved Sub-charter” means the Trafigura Charter, the Substitute Charter or any other charter as may be approved by the Owners in writing in accordance with this Charter.
“Approved Sub-charterer” means the Trafigura Charterer and any sub-charterer under any other Approved Sub-charter.
“Associated Vessel” means any ship or vessel (including, but not limited to, the Vessel and the Other Vessels) from time to time wholly leased, hired, chartered or financed under any lease, hire purchase agreement, charter or any other financing arrangement by affiliates of the Owners and/or the Other Owners to subsidiaries or affiliates of the Guarantor.
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“Breakfunding Costs” means all breakfunding costs and expenses incurred or payable by the Owners pursuant to the relevant funding arrangement entered into by the Owners for the purpose of financing any part of the Purchase Price as a result of the receipt of an amount pursuant to this Charter on a day other than a Payment Date.
“Business Day” means a day on which banks are open for business in the principal business centres of Hong Kong, Shanghai, Germany and Greece and:
| (a) | in respect of a day on which a payment is required to be made or other dealing is due to take place under a Leasing Document in Dollars, also a day on which commercial banks are open in New York City; and |
| (b) | in relation to the fixing of an interest rate in relation to the Owners’ Costs, also a day which is a US Government Securities Business Day. |
“Business Ethics Law” means any laws, regulations and/or other legally binding requirements or determinations in relation to corruption, fraud, collusion, bid-rigging or anti-trust, human rights violations (including forced labour and human trafficking) which are issued, administered or enforced by the United States, United Kingdom, the European Union or applicable to any Relevant Person or the Owners or to any jurisdiction where activities are performed and which shall include but not be limited to (i) the United Kingdom Bribery Act 2010 and (ii) the United States Foreign Corrupt Practices Act 1977 and all rules and regulations under each of (i) and (ii).
“Cancelling Date” shall have the same meaning as defined under the MOA.
“Commencement Date” means the date on which Delivery takes place.
“Charter Period” means the period described in Clause 32.1 (Charter Period) unless it is terminated earlier in accordance with the provisions of this Charter.
“Charterhire” means each of, as the context may require, all of the instalments of hire payable hereunder on each applicable Payment Date comprising in each case both Fixed Charterhire and Variable Charterhire, based on an aggregate amount of $20,000 per day, as illustrated in the column entitled “Charterhire” in the Payment Schedule (or any replacement Payment Schedule).
“Commercial Manager” means Central Shipping Inc., a corporation incorporated under the laws of Marshall Islands with registration number 98339 or any reputable management company designated by the Charterers and approved by the Owners in writing from time to time as the commercial manager of the Vessel.
“Delivery” means the physical delivery of the Vessel from the Owners to the Charterers pursuant to the terms of this Charter.
“Dollars” and “$” and “US$” mean the lawful currency for the time being of the United States of America.
“Document of Compliance” shall have the same meaning as ascribed under the ISM Code.
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“Earnings” means all moneys whatsoever which are now, or later become, payable (actually or contingently) to the Charterers and which arise out of the use or operation of the Vessel, including (but not limited to):
| (a) | except to the extent that they fall within paragraph (b), |
| (i) | all freight, hire and passage moneys; |
| (ii) | any compensation payable in the event of requisition of the Vessel for hire; |
| (iii) | any remuneration for salvage and towage services; |
| (iv) | any demurrage and detention moneys; |
| (v) | damages for breach (or payments for variation or termination) of any charterparty or other contract for the employment of the Vessel; and |
| (vi) | all moneys which are at any time payable under any Insurances in respect of loss of hire (if any); and |
| (b) | if and whenever the Vessel is employed on terms whereby any moneys falling within paragraphs (a)(i) to (vi) are pooled or shared with any other person, that proportion of the net receipts of the relevant pooling or sharing arrangement which is attributable to the Vessel. |
“Emission Allowances” means an allowance, credit, quota, permit or equivalent, representing a right of a vessel to emit a specified quantity of greenhouse gas emissions recognised by the Emission Scheme.
“Emission Scheme” means a greenhouse gas emissions trading scheme which for the purposes of this Charter shall include the EU ETS and any other similar systems imposed by applicable lawful authorities that regulate the issuance, allocation, trading or surrendering of Emission Allowances.
“Environmental Claim” means:
| (a) | any claim by any governmental, judicial or regulatory authority or any other person which arises out of an Environmental Incident or an alleged Environmental Incident or which relates to any Environmental Law; or |
| (b) | any claim by any other person which relates to an Environmental Incident, |
and “claim” means a claim for damages, compensation, fines, penalties or any other payment; an order or direction to take, or not to take, certain action or to desist from or suspend certain action; and any form of enforcement or regulatory action, including the arrest or attachment of any asset.
“Environmental Incident” means:
| (a) | any release, emission, spill or discharge of Environmentally Sensitive Material whether within the Vessel or from the Vessel into any other vessel or into or upon the air, water, land or soils (including the seabed) or surface water; or |
| (b) | any incident in which Environmentally Sensitive Material is released, emitted, spilled or discharged into or upon the air, water, land or soils (including the seabed) or surface water from a vessel other than the Vessel and which involves a collision between the Vessel and such other vessel or some other incident of navigation or operation, in either case, in connection with which the Vessel is actually or potentially liable to be arrested, attached, detained or injuncted and/or the Vessel and/or any Relevant Person and/or any operator or manager of the Vessel is at fault or allegedly at fault or otherwise liable to any legal or administrative action; or |
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| (c) | any other incident in which Environmentally Sensitive Material is released, emitted, spilled or discharged into or upon the air, water, land or soils (including the seabed) or surface water otherwise than from the Vessel and in connection with which the Vessel is actually or potentially liable to be arrested and/or where any Relevant Person and/or any operator or manager of the Vessel is at fault or allegedly at fault or otherwise liable to any legal or administrative action. |
“Environmental Law” means any present or future law relating to pollution or protection of human health or the environment, to conditions in the workplace, to the carriage, generation, handling, storage, use, release or spillage of Environmentally Sensitive Material or to actual or threatened releases of Environmentally Sensitive Material including any law pertaining to any Emission Scheme.
“Environmentally Sensitive Material” means and includes all contaminants, oil, oil products, toxic substances and any other substance (including any chemical, gas or other hazardous or noxious substance) which is (or is capable of being or becoming) polluting, toxic or hazardous.
“EU ETS” means the European Union Emissions Trading System specifically applicable to shipping pursuant to the European Directive 2023/959 amending European Directive 2003/87/EC and Commission Implementing Regulation (EU) 2023/2599 of 22 November 2023 laying down rules for the application of Directive 2003/87/EC of the European Parliament and of the Council as regards the administration of shipping companies by administering authorities in respect of a shipping company.
“ETS and Fuel EU Maritime Letter” shall have the meaning as defined under Clause 40.5(c).
“Existing Other Charter A” means, the bareboat charterparty dated 23 November 2021 and entered into between Other Owner A and Other Charterer A, as amended and/or supplemented from time to time.
“Existing Charter” means, the bareboat charterparty dated 23 November 2021 and entered into between the Owners and the Charterers, as amended and/or supplemented from time to time.
“Existing Charters” means, collectively Existing Charter and Existing Other Charter A.
“Final Purchase Option Price” means an amount equal to sixty per cent. (60%) of the Opening Capital Balance.
“Financial Indebtedness” means, in relation to a person (the “debtor”), a liability of the debtor:
| (a) | for principal, interest or any other sum payable in respect of any moneys borrowed or raised by the debtor; |
| (b) | under any loan stock, bond, note or other security issued by the debtor; |
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| (c) | under any acceptance credit, guarantee or letter of credit facility made available to the debtor; |
| (d) | under a financial lease, a deferred purchase consideration arrangement (other than deferred payments for assets or services obtained on normal commercial terms in the ordinary course of business) or any other agreement having the commercial effect of a borrowing or raising of money by the debtor; |
| (e) | under any foreign exchange transaction, any interest or currency swap or any other kind of derivative transaction entered into by the debtor or, if the agreement under which any such transaction is entered into requires netting of mutual liabilities, the liability of the debtor for the net amount; or |
| (f) | under a guarantee, indemnity or similar obligation entered into by the debtor in respect of a liability of another person which would fall within paragraphs (a) to (e) if the references to the debtor referred to the other person. |
“Financial Instruments” means the applicable loan or facility agreement entered into between the Owners (or their affiliate) and the Owners’ Financiers and any mortgage, deed of covenants, assignment in respect of this Charter, assignment in respect of the Guarantees, assignment in respect of Earnings, Insurances and Requisition Compensation, manager’s undertaking and subordination (including assignment of manager’s interests in the Insurances) or any other financial security instruments (excluding interest rate swaps and similar interest rate hedging instruments) granted by the Owners to the Owners’ Financiers as security for the financing or refinancing of the Owners’ acquisition of the Vessel.
“Fixed Charterhire” means, in relation to a Payment Date, the capital component of Charterhire thereof, as illustrated in the column entitled “Fixed Charterhire” in the Payment Schedule (or any replacement Payment Schedule).
“Flag State” means the flag state named in Box 5 of this Charter or any other state or jurisdiction approved in writing by the Owners (whose approval shall not be unreasonably withheld).
“Fleet Vessel” means any ship or vessel (including but not limited to the Vessel and the Other Vessels) from time to time wholly owned, leased under a capital lease, operating lease with a purchase option at the end of the relevant charter period, vessels owned under a joint venture agreement where the relevant member of the Group owns no less than 50 per cent. of the issued shares of the jointly owned entity or controlled by the Guarantor (directly or indirectly) excluding, for the avoidance of doubt, any newbuilding vessels not delivered to the relevant member of the Group at the relevant time.
“Fuel EU Maritime” means Fuel EU Maritime Regulation 2023/1805 dated 13 September 2023 on the use of renewable and low-carbon fuels in maritime transport, and amending Directive 2009/16/EC.
“General Assignment” means the general assignment executed or to be executed between the Charterers and the Owners in respect of the Vessel, pursuant to which the Charterers shall, inter alia, assign its rights under the Insurances, Earnings and Requisition Compensation and any Approved Sub-Charter in respect of the Vessel, in favour of the Owners and in the agreed form agreed on or prior to signing of this Charter.
“Group” means the Guarantor and its Subsidiaries from time to time.
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“Guarantee” means the guarantee executed or to be executed by the Guarantor in favour of the Owners securing, amongst others, the Charterers’ obligations in connection with the Leasing Documents.
“Guarantor” means Top Ships Inc., a corporation incorporated under the laws of Marshall Islands and having its registered address at Trust Company Complex, Ajeltake Road, Ajeltake Islands, Majuro, Marshall Islands MH96960.
“Hire Period” means (i) in the case of the first Hire Period, the period commencing on the Commencement Date and ending on the First Payment Date; and (ii) in the case of each subsequent Payment Date, the period commencing on the last day of the preceding Hire Period and ending on the next occurring Payment Date.
“Holding Company” means, in relation to a person, any other person in relation to which it is a Subsidiary.
“IAPPC” means a valid international air pollution prevention certificate for the Vessel issued pursuant to the MARPOL Protocol.
“Index” means the Baltic Tanker Indices applicable to the Vessel.
“Initial Market Value” has the meaning given to that term in the MOA.
“Insurances” means:
| (a) | all policies and contracts of insurance, including entries of the Vessel in any protection and indemnity or war risks association, which are effected in respect of the Vessel or otherwise in relation to it whether before, on or after the date of this Charter; and |
| (b) | all rights and other assets relating to, or derived from, any of the foregoing, including any rights to a return of a premium and any rights in respect of any claim whether or not the relevant policy, contract of insurance or entry has expired on or before the date of this Charter. |
“ISM Code” means the International Safety Management Code (including the guidelines on its implementation), adopted by the International Maritime Organisation Assembly as Resolutions A.741 (18) and A.788 (19), as the same may be amended or supplemented from time to time.
“ISPS Code” means the International Ship and Port Security Code as adopted by the Conference of Contracting Governments to the Safety of Life at Sea Convention 1974 on 13 December 2002 and incorporated as Chapter XI-2 of the Safety of Life at Sea Convention 1974, as the same may be supplemented or amended from time to time (and the terms “safety management system”, “Safety Management Certificate” and “Document of Compliance” have the same meanings as are given to them in the ISM Code).
“ISSC” means a valid international ship security certificate for the Vessel issued pursuant to the ISPS Code.
“Leasing Documents” means this Charter, the MOA and the Security Documents.
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“Major Casualty” means any casualty to the Vessel in respect of which the claim or the aggregate of the claims against all insurers, before adjustment for any relevant franchise or deductible, exceeds $5,000,000 or the equivalent in any other currency.
“Management Agreement” means:
| (a) | the technical and commercial management agreement made or to be made between the Approved Manager and the Charterers; or |
| (b) | such other management agreement subsequently entered into in respect of the Vessel as may be approved by the Owners (such approval not to be unreasonably withheld). |
“Manager’s Undertaking” means, in relation to an Approved Manager, the letter of undertaking from that Approved Manager subordinating the rights of such Approved Manager against the Vessel and the Charterers to the rights of the Owners under the Leasing Documents in an agreed form agreed on or prior to signing of this Charter.
“Mandatory Sale” has the meaning given to that term in Clause 50.4.
“Mandatory Sale Date” has the meaning given to that term in Clause 50.4.
“Mandatory Sale Price” means, in respect of the Mandatory Sale Date, the aggregate of:
| (a) | the Owners’ Costs prevailing as at the Mandatory Sale Date; |
| (b) | any Variable Charterhire accrued as at the date of payment of the Mandatory Sale Price; |
| (c) | (in case of Clause 36.13 or Clause 54.5) if the Mandatory Sale Date occurs on or before the third (3rd) anniversary of the Commencement Date, one per cent. (1.00%) of the Owners’ Costs as at the relevant date; |
| (d) | any Breakfunding Costs; |
| (e) | any properly documented legal or other costs incurred by the Owners in connection with the exercise of the Mandatory Sale; and |
aside from the amounts described under paragraphs (a) to (e) above, any other moneys due and owing under the Leasing Documents at the relevant Mandatory Sale Date.
“Market Value” means:
| (a) | subject to sub-paragraph (b) below, the arithmetic mean of the valuations shown by two (2) valuation reports prepared: |
| (i) | in Dollars; |
| (ii) | on a date no later than thirty (30) days after the relevant Market Value Test Date; |
| (iii) | with or without physical inspection of that Vessel; and |
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| (iv) | on the basis of a sale for prompt delivery for cash on normal arm’s length commercial terms as between a willing seller and a willing buyer, free of any existing charter or other contract of employment, |
and such reports shall be prepared by Approved Valuers one nominated by the Owners and one nominated by the Charterers (but addressed to the Owners); and
| (b) | if there is a discrepancy of five per cent. (5%) or more between the market valuations shown on the two valuation reports obtained pursuant to the above paragraph (using the higher valuation figure as the denominator), the arithmetic mean of the valuations shown by three (3) valuation reports each prepared on the same terms and conditions as set out under paragraph (a) above (except that the third valuation report additionally required under this paragraph (b) shall be prepared by an Approved Valuer nominated by the Owners). |
“Market Value Test Date” has the meaning given to it under Clause 46.1(q).
“MARPOL Protocol” means Annex VI (Regulations for the Prevention of Air Pollution from Ships) to the International Convention for the Prevention of Pollution from Ships 1973 (as amended in 1978 and 1997).
“Material Adverse Effect” means, in the opinion of the Owners, a material adverse effect on:
| (a) | the business, operations, property, condition (financial or otherwise) or prospects of any Relevant Person or the Guarantor and its Subsidiaries as a whole; |
| (b) | the ability of any Relevant Person to perform its obligations under any Leasing Document to which it is a party; or |
| (c) | the validity or enforceability of, or the effectiveness or ranking of any Security Interests granted pursuant to any of the Leasing Documents or the rights or remedies of the Owners under any of the Leasing Documents. |
“MOA” means the memorandum of agreement dated on or about the date of this Charter and made between the Owners (in their capacity as buyers) and the Charterers (in their capacity as sellers), pursuant to which the Charterers agree to sell and the Owners agree to purchase the Vessel upon the terms and conditions set out therein.
“Net Sales Proceeds” has the meaning given to it under Clause 41.10.
“Net Trading Proceeds” has the meaning given to it under Clause 41.10.
“Obligatory Insurances” means any insurances of the Vessel required to be effected by or on behalf of the Charterers pursuant to Clause 39 - (Insurance).
“Opening Capital Balance” means an amount which is equal to sixty two point five per cent. (62.5%) of the Purchase Price.
“Operating Account” means an account in the name of the Charterers with an Account Bank.
“Option Premium” means an amount of US$ 3,000,000 (where applicable, taking into account any payment made by the Charterers to the Owners in accordance with Clause 46.1(y)).
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“Original Financial Statements” means, (a) with respect to the Charterers, the annual financial statement accounts of the Charterers for that financial year as referred to in the Guarantor’s audited consolidated annual financial statement accounts; and (b) with respect to the Charterers, each of their financial statements (in the case of the Guarantor, audited) for the financial year ended 31 December 2022 (and if such statements are not in English, they shall be accompanied by a certified English translation).
“Original Jurisdiction” means, in relation to any Relevant Person, the jurisdiction under whose laws such Relevant Person incorporated or resided as at the date of this Charter.
“Other Charter A” means, the bareboat charterparty dated 11 January 2024 and entered into between Other Owner A and Other Charterer A, as amended and/or supplemented from time to time.
“Other Charter B” means, the bareboat charterparty dated 11 January 2024 and entered into between Other Owner B and Other Charterer B, as amended and/or supplemented from time to time.
“Other Charters” means Other Charter A and Other Charter B.
“Other Charterers” means, collectively:
| (a) | in relation to Other Vessel A, Julius Caesar Inc., a corporation incorporated under the laws of the Republic of Marshall Islands whose registered address is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands, MH96960 (“Other Charterer A”); and |
| (b) | in relation to Other Vessel B, PCH Dreaming Inc., a corporation incorporated under the laws of the Republic of Marshall Islands whose registered address is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands, MH96960 (“Other Charterer B”). |
and, each or any of them, as the context may require, an “Other Charterer”.
“Other Owners” means, collectively:
| (a) | in relation to Other Vessel A, Sea 268 Leasing Co. Limited, a company incorporated under the law of Hong Kong with company number 3053427 (“Other Owner A”); and |
| (b) | in relation to Other Vessel B, Sea 179 Leasing Co. Limited, a company incorporated under the law of Hong Kong with company number 2878380 (“Other Owner B”), |
and, each or any of them, as the context may require, an “Other Owner”.
“Other Vessels” mean collectively:
| (a) | the very large crude carrier named Julius Caesar with IMO number 9912244 (“Other Vessel A”); and |
| (b) | the 50,000 DWT scrubber fitted product tanker with IMO number 9798349 (“Other Vessel B”), |
and, each or any of them, as the context may require, an “Other Vessel”.
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“Owners’ Costs” means, on any relevant date, the Opening Capital Balance minus the aggregate Fixed Charterhire which has been paid by the Charterers and received by the Owners as at such date (where applicable, taking into account any payments made by the Charterers to the Owners in accordance with Clauses 46.1(x) and/or 46.1(y)).
“Owners’ Financier” means any financier providing financing or refinancing facilities to the Owners or any affiliate of the Owners in respect of the Owners’ purchase and/or lease of the Vessel to the Charterers under the terms of the Leasing Documents.
“Owners’ Surveyor” means the surveyor appointed by the Owners in accordance with Clause 7.
“Party” means a party to this Charter, namely the Owners or the Charterers.
“Payment Date” means each of the dates upon which Charterhire is to be paid by the Charterers to the Owners pursuant to Clauses 36.2, 36.5, 36.6 and 36.7 (Charterhire).
“Payment Schedule” means the payment schedule under Schedule 3 (Payment Schedule) provided that the Owners may from time to time prepare a replacement schedule (taking into account the implied interest rate on which the original schedule was based) on the same basis as the original schedule, which replacement schedule when served on the Charterers will bind them save in the case of manifest error.
“Permitted Security Interest” means:
| (a) | any Security Interest created by a Security Document or a Financial Instrument; |
| (b) | prior to the completion of the “Purchase Option” (as defined under the Existing Charter), any Security Interest created by a “Security Document” (as defined under the Existing Charter); |
| (c) | any lien for unpaid master’s and crew’s wages in accordance with the ordinary course of operation of the Vessel or in accordance with usual reputable maritime practice; |
| (d) | any lien for salvage; |
| (e) | any lien for master’s disbursements incurred in the ordinary course of trading; |
| (f) | any other lien arising by operation of law or otherwise in the ordinary course of the operation, repair or maintenance of the Vessel provided such liens do not secure amounts more than thirty (30) days overdue; |
| (g) | any Security Interest created in favour of a plaintiff or defendant in any action of the court or tribunal before whom such action is brought as security for costs and expenses where the Owners are prosecuting or defending such action in good faith by appropriate steps; and |
| (h) | Security Interests arising by operation of law in respect of taxes which are not overdue or for payment of taxes which are overdue for payment but which are being contested by the Owners or the Charterers in good faith by appropriate steps and in respect of which adequate reserves have been made, provided that the foregoing have not arisen due to the default or omission of any Relevant Person. |
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“Poseidon Principles” means the financial industry framework for assessing and disclosing the climate alignment of ship finance portfolios published in June 2019 as the same may be amended or replaced to reflect changes in applicable law or regulation or the introduction of or changes to mandatory requirements of the International Maritime Organisation from time to time.
“Potential Termination Event” means, an event or circumstance which, with the expiry of a grace period, the giving of any notice, the lapse of time and/or a determination of the Owners and/or the satisfaction of any other condition, would constitute a Termination Event.
“Prepositioning Date” shall have the same meaning as defined under the MOA.
“Prohibited Countries” means those countries and territories subject to country-wide or territory-wide Sanctions and/or trade embargoes from time to time during the Charter Period, in particular but not limited to pursuant to the U.S.’s Office of Foreign Assets Control of the U.S. Department of Treasury (“OFAC”) or the United Nations including at the date of this Charter, but without limitation, non-Ukrainian government controlled areas of Donetsk, Luhansk and Zaporizhzhia Regions, Cuba, Syria, Iran, North Korea, Crimea and Venezuela and any additional countries based on respective country-wide or territory-wide Sanctions being imposed by OFAC or any of the regulative bodies referred to in the definition of Prohibited Person.
“Prohibited Person” means any person, entity or any other party which is (i) located, domiciled, resident or incorporated in a Prohibited Country, and/or (ii) subject to any sanction administrated by the United Nations, the European Union, the United States and the U.S. Department of Treasury’s Office of Foreign Assets Control (“OFAC”), the United Kingdom, His Majesty’s Treasury (“HMT”) and the Foreign and Commonwealth Office of the United Kingdom, the Special Administrative Region of Hong Kong, the People’s Republic of China and/or (iii) owned or controlled by or affiliated with persons, entities or any other parties as referred to in (i) and (ii).
“Purchase Option” means the purchase option referred to in Clause 51.1.
“Purchase Option Date” shall have the meaning ascribed thereto in Clause 51.2.
“Purchase Option Fee” means:
| (a) | if the Purchase Option is exercised on or after the first (1st) anniversary of the Commencement Date and before the second (2nd) anniversary of the Commencement Date, one point eight per cent. (1.80%) of the Owners’ Costs on the applicable Purchase Option Date; |
| (b) | if the Purchase Option is exercised on or after the second (2nd) anniversary of the Commencement Date and up to, inclusive, the third (3rd) anniversary of the Commencement Date, one point five per cent. (1.50%) of the Owners’ Costs on the applicable Purchase Option Date; |
| (c) | if the Purchase Option is exercised after the third (3rd) anniversary of the Commencement Date zero per cent. (0%) of the Owners’ Costs as at the applicable Purchase Option Date. |
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“Purchase Option Notice” shall have the meaning ascribed thereto in Clause 51.2.
“Purchase Option Price” means, in respect of any Purchase Option Date:
| (a) | if the Purchase Option Date falls on any Payment Date on or after the first (1st) anniversary of the Commencement Date but prior to the last day of the Charter Period, the aggregate of: |
| (i) | the Owners’ Costs prevailing as at the relevant Purchase Option Date; |
| (ii) | any Variable Charterhire accrued but unpaid as at the date of payment of the Purchase Option Price; |
| (iii) | any Purchase Option Fee; |
| (iv) | any Breakfunding Costs; |
| (v) | any documented legal or other costs incurred by the Owners in connection with the exercise of the Purchase Option under Clause 51 - (Purchase Option); and |
| (vi) | aside from the amounts described under paragraphs (i) to (v) above, any other moneys due and owing under the Leasing Documents at the relevant Purchase Option Date, |
| (b) | if the Purchase Option Date falls on the last day of the Charter Period, the aggregate of: |
| (i) | the Final Purchase Option Price; |
| (ii) | any Charterhire accrued but unpaid as at the date of payment of the Purchase Option Price; |
| (iii) | any documented legal or other costs incurred by the Owners in connection with the exercise of the Purchase Option under Clause 51 - (Purchase Option); and |
| (iv) | aside from the amounts described under paragraphs (i) to (iii) above, any other moneys due and owing under the Leasing Documents at the relevant Purchase Option Date. |
“Purchase Price” has the meaning given to it in the MOA.
“Relevant Jurisdiction” means, in relation to each Relevant Person:
| (a) | its Original Jurisdiction; |
| (b) | any jurisdiction where any property owned by it and charged under a Leasing Document is situated; |
| (c) | any jurisdiction where it conducts its business; and |
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| (d) | any jurisdiction whose laws govern the perfection of any of the Leasing Documents entered into by it creating a Security Interest. |
“Relevant Nominating Body” means any applicable central bank, regulator or other supervisory authority or a group of them, or any working group or committee sponsored or chaired by, or constituted at the request of, any of them or the Financial Stability Board.
“Relevant Person” means each of the Charterers (for the avoidance of doubt, reference to Charterers here include the Charterers acting in their capacities as sellers under the MOA), the Other Charterers, the Guarantor (in its capacity as the guarantor and the shareholder of the Charterers), any Approved Manager which is an entity within the Group, any sub-charterer which is an entity within the Group and any other party providing security to the Owners in respect of the Charterers’ obligations under this Charter pursuant to a Security Document (except any Approved Manager or sub-charterer which are not entities within the Group).
“Requisition Compensation” includes all compensation or other moneys payable by reason of any act or event such as is referred to in paragraph (b) of the definition of “Total Loss”.
“Safety Management Certificate” shall have the same meaning as ascribed under the ISM Code.
“Sanctions” means any sanctions, embargoes, freezing provisions, prohibitions or other restrictions relating to trading, doing business, investment, exporting, financing or making assets available (or other activities similar to or connected with any of the foregoing):
| (a) | imposed by law or regulation of a Sanctions Authority, to the extent applicable to this transaction; or |
| (b) | otherwise imposed by any applicable law or regulation by which any Relevant Person is bound or to which it is subject. |
“Sanctions Authority” means:
| (a) | the United Nations or its Security Council; |
| (b) | the United States; |
| (c) | the European Union or the Council of the European Union; |
| (d) | the United Kingdom; |
| (e) | the People’s Republic of China (including for the avoidance of doubt, Hong Kong), provided that this paragraph (e) shall not apply to the Trafigura Charterer when the Vessel is chartered under the Trafigura Charter or the operation or use of the Vessel by the Trafigura Charterer (but not any further sub-lessee of the Vessel) when the Vessel is operated by the Trafigura Charterer (but not any further sub-lessee of the Vessel), in each case unless otherwise specified in Clause 50.3; and |
| (f) | the governments and official institutions or agencies of any of paragraphs (a) to (e) above, including the U.S. Department of the Treasury’s Office of Foreign Assets Control, the United States Department of State, the U.S. Department of Commerce and the Hong Kong Monetary Authority and His Majesty’s Treasury. |
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“Sanctions Advisory” means the Sanctions Advisory for the Maritime Industry, Energy and Metals Sectors, and Related Communities issued May 14, 2020 by the US Department of the Treasury, Department of State and Coast Guard, as may be amended or supplemented, and any similar future advisory.
“Secured Liabilities” means all present and future obligations and liabilities (whether actual or contingent and whether owed jointly or severally or in any other capacity whatsoever) of a Relevant Person to the Owners under or in connection with the Leasing Documents or any judgment relating to the Leasing Documents; and for this purpose, there shall be disregarded any total or partial discharge of these liabilities, or variation of their terms, which is effected by, or in connection with, any bankruptcy, liquidation, arrangement or other procedure under the insolvency laws of any country.
“Security Documents” means collectively the Guarantee, the Account Security, the Shares Security, the General Assignment, the Manager’s Undertaking and any other document whether or not it creates a Security Interest which is executed as security for the obligations of the Charterers under or in connection with this Charter.
“Security Period” means the period commencing on the date of this Charter and ending on the date on which the Owners are satisfied that the Secured Liabilities have been irrevocably and unconditionally paid and discharged in full.
“Security Interest” means:
| (a) | a mortgage, charge (whether fixed or floating) or pledge, lien, assignment, hypothecation or any other security interest of any kind or any other agreement or arrangement having the effect of conferring a security interest; |
| (b) | the security rights of a plaintiff under an action in rem; or |
| (c) | any other right which confers on a creditor or potential creditor a right or privilege to receive the amount actually or contingently due to it ahead of the general unsecured creditors of the debtor concerned; however this paragraph (c) does not apply to a right of set off or combination of accounts conferred by the standard terms of business of a bank or financial institution. |
“Shares Security” means the share charge executed or to be executed by the Guarantor (in its capacity as shareholder of the Charterers) creating a Security Interest over all its shares in the Charterers in favour of the Owners.
“Statement of Compliance” means a Statement of Compliance related to fuel oil consumption pursuant to regulations 6.6 and 6.7 of Annex VI.
“Subsidiary” means a subsidiary within the meaning of section 1159 of the UK Companies Act 2006.
“Substitute Charter” means a time charter with a duration not less than twelve (12) months, with a daily charterhire not less than US$26,000 and with a charterer approved by the Owners in writing.
“Technical Manager” means Central Shipping Inc., a corporation incorporated under the laws of Marshall Islands with registration number 98339, Central Mare Inc., a corporation incorporated under the laws of Marshall Islands with registration number 32656 or any reputable management company designated by the Charterers approved by Trafigura Charterer, while on time charter to Trafigura Charterer, and the Owners, thereafter, in writing from time to time as the technical manager of the Vessel.
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“Termination Event” means any event described in Clause 49.1.
“Termination Fee” means:
| (a) | if the Termination Sum is payable to the Owners before the second (2nd) anniversary of the Commencement Date, one point eight per cent. (1.80%) of the Owners’ Costs as at the relevant date; |
| (b) | if the Termination Sum is payable to the Owners on or after the second (2nd) anniversary of the Commencement Date and up to the third (3rd) anniversary, inclusive, of the Commencement Date, one point five per cent. (1.50%) of the Owners’ Costs as at the relevant date; and |
| (c) | if the Termination Sum is payable after the third (3rd) anniversary of the Commencement Date, one per cent. (1.00%) of the Owners’ Costs as at the relevant date, |
provided always that, if the Charterers’ obligation to pay the Termination Sum arises (solely and directly) as a result of any breach under Clause 45.1 (q)(iv), (y) and (z)(i), of Clauses 46.1 (j) and (o) or 49.1(o) caused by the Approved Sub-charterer’s acts or omissions, then the applicable Termination Fee shall be one per cent. (1.00%) of the Owners’ Costs as at the relevant date.
“Termination Notice” has the meaning given to it under Clause 49.2 (Termination Events).
“Termination Sum” means, in respect of any date (such date being referred to as the “Relevant Date” for the purposes of this definition only), the aggregate of (without double counting amounts that may be included in more than one sub-paragraph below):
| (a) | the Owners’ Costs prevailing as at the Relevant Date; |
| (b) | any Variable Charterhire due and payable, but unpaid up to (and including) the date of payment of the Termination Sum; |
| (c) | the Termination Fee; |
| (d) | any Breakfunding Costs; |
| (e) | any and all evidenced and documented direct costs, losses and liabilities incurred by the Owners as a result of the early termination of the leasing under this Charter including but not limited to any legal costs, any agency or broker fees incurred in attempting to re-charter or otherwise dispose of the Vessel; |
| (f) | any and all documented costs, losses and liabilities incurred by the Owners in locating, repossessing, recovering, repositioning, berthing, insuring and maintaining the Vessel and/or in collecting any payments due under this Charter and/or in obtaining the due performance of the obligations of the Charterers under this Charter or the other Leasing Documents (including, but not limited to, for carrying out any works or modifications or repairs reasonably required to cause the Vessel to conform with the provisions relating to redelivery as required under Clause 41.6); and |
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| (g) | aside from the amounts described under paragraphs (a) to (f) above, any other moneys due and payable, but unpaid, under the Leasing Documents at the Relevant Date including any default interest on amounts under (a) to (f) above, |
“Total Loss” means:
| (a) | actual, constructive, compromised, agreed or arranged total loss of the Vessel; |
| (b) | any expropriation, confiscation, requisition or acquisition of the Vessel, whether for full consideration, a consideration less than its proper value, a nominal consideration or without any consideration, which is effected by any government or official authority or by any person or persons claiming to be or to represent a government or official authority (excluding a requisition for hire for a fixed period not exceeding one (1) year without any right to an extension) unless it is redelivered within twenty-one (21) days to the full control of the Owners or the Charterers; or |
| (c) | any arrest, capture, seizure or detention of the Vessel (including any hijacking or theft but excluding any event specified in paragraph (b) of this definition) unless it is redelivered within thirty (30) days to the full control of the Owners or the Charterers. |
“Total Loss Date” means, in relation to the Total Loss of the Vessel:
| (a) | in the case of an actual loss of the Vessel, the date on which it occurred; |
| (b) | in the case of a constructive, compromised, agreed or arranged total loss of the Vessel, the earlier of: |
| (i) | the date on which a notice of abandonment is given to the insurers; |
| (ii) | the date when the Vessel was last heard of; and |
| (iii) | the date of any compromise, arrangement or agreement made by or on behalf of the Charterers with the Vessel’s insurers in which the insurers agree to treat the Vessel as a Total Loss; and |
| (c) | in the case of any expropriation, confiscation, requisition or acquisition of the Vessel whether for full consideration, a consideration less than its proper value, a nominal consideration or without any consideration, which is effected by any government or official authority or by any person or persons claiming to be or to represent a government or official authority (excluding a requisition for hire for a fixed period not exceeding one (1) year without any right to an extension), on the date on which the expropriation, confiscation, requisition or, as the case may be, the acquisition of the Vessel is completed by delivery of the Vessel to the relevant government or official authority or the person or persons claiming to be or to represent the relevant government or official authority unless it is redelivered within twenty-one (21) days to the full control of the Owners or the Charterers; and |
| (d) | in the case of any arrest, condemnation, capture, seizure or detention of the Vessel (including any hijacking or theft), unless it is redelivered within thirty (30) days to the full control of the Owners or the Charterers, the date falling on the expiration of such days. |
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“Total Loss Payment Date” means, following the occurrence of a Total Loss, the earlier of:
| (a) | the date falling one hundred and twenty (120) days after the Total Loss Date or such later date as the Owners may agree; and |
| (b) | the date on which the Owners receive the Total Loss Proceeds. |
“Total Loss Proceeds” means the proceeds of any policy or contract of insurance or any Requisition Compensation in each case arising in respect of a Total Loss.
“Trafigura Charter” means a time charter entered into between the Charterers and the Trafigura Charterer as time charterer dated 17 December 2020 in relation to the Vessel, as amended and supplemented from time to time.
“Trafigura Charterer” means Trafigura Maritime Logistics Pte. Ltd. or any other nominee nominated as the charterers under the Trafigura Charter (which is acceptable to the Owners) in accordance with the terms of the Trafigura Charter.
“US” means the United States of America.
“US Government Securities Business Day” means any day other than:
| (a) | a Saturday or a Sunday; and |
| (b) | a day on which the Securities Industry and Financial Markets Association (or any successor organisation) recommends that the fixed income departments of its members be closed for the entire day for purposes of trading in US Government securities. |
“US Tax Obligor” means (a) a person which is resident for tax purposes in the United States of America or (b) a person some or all of whose payments under the Leasing Documents are from sources within the United States for United States federal income tax purposes.
“Variable Charterhire” means, in relation to a Payment Date, the interest component of Charterhire thereof applying the applicable interest rate (being the implied interest rate on which the initial Payment Schedule was based) to the Owners’ Costs on the immediately preceding Payment Date (or, in the case of the First Payment Date only, on the Commencement Date) for the relevant Hire Period ending on the relevant Payment Date by reference to the actual number of days elapsed, as illustrated in the column entitled “Variable Charterhire” in the Payment Schedule (or any replacement Payment Schedule).
“Vessel” means m.v. LEGIO X EQUESTRIS, the 300,000 DWT crude oil tanker with IMO number 9912256.
| 67.2 | Inconsistency between Charter provisions and Leasing Documents |
In the case of any conflict between the provisions or terms so of this Charter and the terms and provisions of a Leasing Document, the provisions of this Charter shall prevail.
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| 67.3 | Construction |
Unless a contrary indication appears, in this Charter:
the “Approved Manager”, the “Charterers”, the “Guarantor”, any “Relevant Person”, the “Owners”, any “Other Charterer”, any “Other Owner”, or any other person shall be construed so as to include its successors in title, permitted assigns and permitted transferees to, or of, its rights and/or obligations under the Leasing Documents;
“agreed form” means, in relation to a document, such document in a form agreed in writing between the Owners and the Charterers and, if required by the Owners in their sole discretion, the Owners’ Financiers;
“asset” includes every kind of property, asset, interest or right, including any present, future or contingent right to any revenues or other payment;
“company” includes any partnership, joint venture and unincorporated association;
“consent” means:
| (a) | an authorisation, consent, approval, resolution, licence, exemption, filing, registration, notarisation and legalization; and |
| (b) | in relation to anything which will be prohibited or restricted by law if a governmental or official authority intervenes or acts in any way within a specified period after lodgment, filing, registration or notification, the expiry of that period without intervention or action. |
“contingent liability” means a liability which is not certain to arise and/or the amount of which remains unascertained;
“continuing” means, in relation to any Termination Event, a Termination Event which has not been waived by the Owners and in relation to any Potential Termination Event, a Potential Termination Event which has not been waived by the Owners or remedied to the satisfaction of the Owners;
“control” over a particular company means the power (whether by way of ownership of shares, proxy, contract, agency or otherwise) to:
| (a) | cast, or control the casting of, more than 51 per cent, of the maximum number of votes that might be cast at a general meeting of such company; |
| (b) | appoint or remove all, or the majority, of the directors or other equivalent officers of such company; or |
| (c) | give directions with respect to the operating and financial policies of such company with which the directors or other equivalent officers of such company are obliged to comply; |
“document” includes a deed; also a letter, fax or telex;
the Owners’ “cost of funds” in relation to the Owners’ Costs or any part thereof is a reference to the average cost (determined either on an actual or a notional basis) which the Owners would incur if they were to fund or finance, from whatever source(s) they may reasonably select, an amount equal to the amount of the Owners’ Costs or any part thereof for a period equal in length to the Hire Period of the Owners’ Costs or any part thereof;
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“expense” means any kind of cost, charge or expense (including all legal costs, charges and expenses) and any applicable value added or other tax;
“gross negligence” means a form of negligence which is distinct from ordinary negligence, in which the due diligence and care which are generally to be exercised have been disregarded to a particularly high degree, in which the plainest deliberations have not been made and that which should be most obvious to everybody has not been followed.
“law” includes any order or decree, any form of delegated legislation, any treaty or international convention and any regulation or resolution of the Council of the European Union, the European Commission, the United Nations or its Security Council;
“legal or administrative action” means any legal proceeding or arbitration and any administrative or regulatory action or investigation;
“liability” includes every kind of debt or liability (present or future, and including contingent liabilities only in the case of Clause 49.1(g)(ii), Clause 53 - (Indemnities) and the definition of “Financial Indebtedness”), whether incurred as principal or surety or otherwise;
“months” shall be construed in accordance with Clause 67.4 (Meaning of “month”);
“person” includes any company; any state, political sub-division of a state and local or municipal authority; and any international organisation;
“policy”, in relation to any insurance, includes a slip, cover note, certificate of entry or other document evidencing the contract of insurance or its terms;
“protection and indemnity risks” means the usual risks covered by a protection and indemnity association which is a member of the International Group of Protection And Indemnity Clubs including pollution risks, extended passenger cover and the proportion (if any) of any sums payable to any other person or persons in case of collision which are not recoverable under the hull and machinery policies by reason of the incorporation in them of clause 6 of the International Hull Clauses (1/11/02 or 1/11/03), clause 8 of the Institute Time Clauses (Hulls)(1/10/83) or clause 8 of the Institute Time Clauses (Hulls) (1/11/1995) or the Institute Amended Running Down Clause (1/10/71) or any equivalent provision;
“regulation” includes any regulation, rule, official directive, request or guideline whether or not having the force of law of any governmental, intergovernmental or supranational body, agency, department or regulatory, self-regulatory or other authority or organisation; and
“tax” includes any present or future tax, duty, impost, levy or charge of any kind which is imposed by any state, any political sub-division of a state or any local or municipal authority (including any such imposed in connection with exchange controls), and any connected penalty, interest or fine.
| 67.4 | Meaning of “month” |
A period of one or more “months” ends on the day in the relevant calendar month numerically corresponding to the day of the calendar month on which the period started (“the numerically corresponding day”), but:
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| (a) | on the Business Day following the numerically corresponding day if the numerically corresponding day is not a Business Day or, if there is no later Business Day in the same calendar month, on the Business Day preceding the numerically corresponding day; or |
| (b) | on the last Business Day in the relevant calendar month, if the period started on the last Business Day in a calendar month or if the last calendar month of the period has no numerically corresponding day; |
and “month” and “monthly” shall be construed accordingly.
| 67.5 | In this Charter: |
| (a) | references to a Leasing Document or any other document being in the form of a particular appendix or to any document referred to in the recitals include references to that form with any modifications to that form which the Owners and the Charterers approve; |
| (b) | references to, or to a provision of, a Leasing Document or any other document are references to it as amended or supplemented, whether before the date of this Charter or otherwise; |
| (c) | references to, or to a provision of, any law include any amendment, extension, re-enactment or replacement, whether made before the date of this Charter or otherwise; |
| (d) | words denoting the singular number shall include the plural and vice versa; and |
| (e) | references to a page or screen of an information service displaying a rate shall include: |
| (i) | any replacement page of that information service which displays that rate; and |
| (ii) | the appropriate page of such other information service which displays that rate from time to time in place of that information service, |
and, if such page or service ceases to be available, shall include any other page or service displaying that rate specified by the Owners after consultation with the Charterers.
| 67.6 | Construction of Insurance terms |
In this Charter:
“approved” means, for the purposes of Clause 39 - (Insurance), approved in writing by the Owners.
“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 its insured value being less than the value at which the Vessel is assessed for the purpose of such claims.
“obligatory insurances” means all insurances effected, or which the Charterers are obliged to effect, under Clause 39 - (Insurance) or any other provision of this Charter or another Leasing Document.
“policy” includes a slip, cover note, certificate of entry or other document evidencing the contract of insurance or its terms.
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“protection and indemnity risks” means the usual risks (including but not limited to freight, demurrage and defence cover) covered by a protection and indemnity association being a member of the International Group of Protection and Indemnity Clubs, including pollution risks and the proportion (if any) of any sums payable to any other person or persons in case of collision which are not recoverable under the hull and machinery policies by reason of the incorporation in them of clause 6 of the International Hull Clauses (1/11/02) (1/11/03), clause 8 of the Institute Time Clauses (Hulls) (1/10/83) (1/11/95) or the Institute Amended Running Down Clause (1/10/71) or any equivalent provision.
“war risks” includes the risk of mines and all risks excluded by clause 29 of the International Hull Clauses (1/11/02 or 1/11/03), clause 24 of the Institute Time Clauses (Hulls) (1/11/95) or clause 23 of the Institute Time Clauses (Hulls)(1/10/83).
| 67.7 | Headings |
In interpreting a Leasing Document or any provision of a Leasing Document, all clauses, sub-clauses and other headings in that and any other Leasing Document shall be entirely disregarded.
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SCHEDULE 1
ACCEPTANCE CERTIFICATE
Legio X Inc. (the “Charterers”) hereby acknowledges that at _________________ hours on _________________, there was delivered to, and accepted by, the Charterers the Vessel known as m.v. “ LEGIO X EQUESTRIS”, registered in the name of SEA 269 LEASING CO. LIMITED (the “Owners”) under the flag of the Marshall Islands with IMO number 9912256 under a bareboat charter dated _________________ (the “Charter”) and made between the Owners and the Charterers and that Delivery (as defined in the Charter) thereupon took place and that, accordingly, the Vessel is and will be subject to all the terms and conditions contained in the Charter.
The Charterers warrant that the representations and warranties made by them in Clause 45 - (Representation and Warranties) of the Charter remain correct and that no Termination Event (as defined in the Charter) has occurred and is continuing at the date of this Acceptance Certificate.
Name:
Title:
for and on behalf of
LEGIO X INC.
Dated:
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SCHEDULE 2
PART A
The following are the documents referred to in Clause 34.2(e)(i):
| 1 | Corporate Authority |
| 1.1 | A copy of the constitutional documents of each Relevant Person (other than the Other Charterers). |
| 1.2 | If required, a copy of the resolutions of the board of directors (or equivalent) of each Relevant Person (other than the Other Charterers): |
| (a) | approving the terms of, and the transactions contemplated by, the Leasing Documents to which it is a party and resolving that it execute the Leasing Documents to which it is a party; |
| (b) | authorizing a specified person or persons to execute the Leasing Documents to which it is a party on its behalf; and |
| (c) | authorising a specified person or persons, on its behalf, to sign and/or dispatch all documents and notices to be signed and/or dispatched by it under, or in connection with, the Leasing Documents to which it is a party. |
| 1.3 | If required, an original of the power of attorney of any party to a Leasing Document authorising a specified person or persons to execute the Leasing Documents to which it is a party. |
| 1.4 | If required, a specimen of the signature of each person authorized by the resolution referred to in paragraph 1.2 above. |
| 1.5 | If required, a copy of the resolutions signed by all the holder(s) of the issued shares of any Relevant Person, approving the terms of, and the transactions contemplated by such Leasing Document. |
| 1.6 | A certificate of an officer or authorized signatory of each Relevant Person certifying that each copy document relating to it specified in this Part A of Schedule 2 is correct, complete and in full force and effect as at a date no earlier than the date of this Agreement. |
| 2 | Documents and other security |
| 2.1 | A duly executed original of each Leasing Document (except the Account Security, the Shares Security, the General Assignment and the Manager’s Undertaking) and of each document to be delivered under each of them. |
| 2.2 | Agreed forms of the Account Security, the Shares Security, the General Assignment and the Manager’s Undertaking and of each document to be delivered under each of them. |
| 2.3 | Evidence that the Charterers’ Operating Account have been opened and maintained with the Account Bank. |
| 3 | Valuation of Vessel |
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Valuation(s) of the Vessel, addressed to the Owners and dated not earlier than thirty (30) days before the Commencement Date indicating the Initial Market Value.
| 4 | Legal opinion |
| 4.1 | Agreed form of legal opinion by English legal advisers to the Owners on such matters on the laws of England in relation to the applicable documents listed in paragraphs 2.1 and 2.2 of Part A of this Schedule, in form and substance acceptable to the Owners. |
| 4.2 | Agreed forms of legal opinions by lawyers appointed by the Owners on such matters relating to the applicable documents listed in paragraphs 2.1 and 2.2 of Part A this Schedule, concerning the laws of the Republic of the Marshall Islands, Germany and such other relevant jurisdictions as the Owners may reasonably require, in form and substance acceptable to the Owners. |
| 5 | Vessel Insurances |
| 5.1 | Evidence that the Vessel is or will be on Delivery insured in the manner required under Clause 39 - (Insurance). |
| 5.2 | Agreed form of letters of undertaking and certificates of entry (as the case may be) relating to insurances as set out in Clause 39 - (Insurance) from the relevant insurer, insurance broker, protection and indemnity association or war risks association (as the case may be). |
| 5.3 | An insurance report by an insurance advisor appointed by the Owners (but at the cost of the Charterers) in an agreed form acceptable to the Owners. |
| 6 | Vessel Documents |
| 6.1 | A copy of the Management Agreement and any amendments thereto, establishing that the Vessel will, as from the Commencement Date, be managed by the relevant Approved Manager. |
| 6.2 | A copy of the Document of Compliance of the Technical Manager. |
| 6.3 | A copy of the Vessel’s class certificate evidencing that the Vessel maintains such classification. |
| 6.4 | Copies of the Vessel’s Safety Management Certificate (together with any other details of the applicable safety management system which the Owners may require) and of any other documents required under the ISM Code and the ISPS Code (including, without limitation, an ISSC and IAPPC). |
| 6.5 | Trafigura Charter |
| 6.6 | A copy of the executed Trafigura Charter (and any addendums thereto). |
| 6.7 | Evidence to the satisfaction of the Owners that the Trafigura Charterer consents to the sale and leaseback of the Vessel contemplated by the Leasing Documents. |
| 7 | Deed of Release |
An agreed form deed of release discharging, among other things, (i) all of the Charterers’ obligations under the Existing Charter and documents conferring Security Interests entered into in connection with the Existing Charter and (ii) all Security Interests encumbering the Vessel or any part thereof (if any), in such form as is satisfactory to the Owners.
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| 8 | Others |
| 8.1 | Evidence that any fees, costs and expenses then due from the Charterers to the Owners under the Leasing Documents have been paid and received by the Owners. |
| 8.2 | Copies of the Original Financial Statements. |
| 8.3 | Such evidence relating to the Relevant Person as the Owners may reasonably require for their (or their financiers) to be able to satisfy each of their “know your customer” or similar identification procedures in relation to the Leasing Documents. |
| 8.4 | A copy of any other consents, approvals, authorization or other document, opinion or assurance which the Owners consider to be reasonably desirable in connection with the entry into and performance of the transactions contemplated by any of the Leasing Documents or for the validity and enforceability of such documents. |
| 8.5 | If required, evidence that any process agent referred to under the Leasing Documents has accepted its appointment. |
| 8.6 | If required by the Flag State for purposes of registering the Vessel in the name of the Owners, evidence that the Owners have been registered as a foreign maritime entity under the laws of the Flag State (with such cost to be borne by the Charterers). |
| 8.7 | Such other documents as the Owners may require by giving notice to the Charterers. |
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PART B
The following are the documents referred to in Clause 34.2(e)(ii):
| 1 | Corporate Authorisations/Confirmation |
| 1.1 | A certificate of an authorized signatory of each Relevant Person (other than the Other Charterers) certifying that each copy document provided under paragraph 1 of Part A of Schedule 2 of the MOA remains correct, complete and in full force and effect as on the Commencement Date. |
| 1.2 | A certificate of an authorized signatory of the Charterers certifying that there is no Potential Termination Event or Termination Event has occurred and is continuing as of the Commencement Date. |
| 2 | Security Documents |
| 2.1 | Duly executed and dated copies of the Account Security, the Shares Security, the General Assignment and the Manager’s Undertaking and of each document to be delivered under it and evidence of their delivery within the timing prescribed under it. |
| 2.2 | Documentary evidence that the Security Interests intended to be created by each of the Security Documents have been duly perfected under applicable law or will be perfected under applicable law within the prescribed period contained in such Security Documents. |
| 3 | Delivery and title registration of the Vessel |
| 3.1 | Documentary evidence that the Vessel is or will be: |
| (a) | definitively and permanently registered in the name of the Owners under the flag of the Flag State; |
| (b) | in the absolute and unencumbered ownership of the Owners; |
| (c) | unconditionally delivered by the Charterers (in their capacity as sellers) to the Owners (in their capacity as buyers) pursuant to the terms of the MOA, where such documents shall include without limitation: |
| (i) | a certificate or transcript or an email confirmation issued by the competent authorities of the Flag State on the date of Delivery evidencing the Charterers’ ownership of the Vessel and that the Vessel is free from registered encumbrances and mortgages; |
| (ii) | where applicable, the original (if required by the Flag State) or a copy of the notarized and legalized (if required by the Flag State) copies of the bill of sale duly executed by the Charterers (and where executed by an attorney of the Charterers, together with such original or a copy of the notarized and legalised copies (if required by the Flag State) of the Charterers’ power of attorney); and |
| (iii) | where applicable, the original (if required by the Flag State) or a copy of the protocol of delivery and acceptance duly executed by the Charterers and the Owners; and |
| (d) | delivered to the Trafigura Charterer in accordance with the Trafigura Charter. |
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| 3.2 | The commercial invoice of the Vessel. |
| 4 | Legal opinions |
| 4.1 | A signed legal opinion of Watson Farley & Williams, legal advisers to the Owners on such matters on the laws of England as may be satisfactory to the Owners. |
| 4.2 | Signed legal opinions by lawyers appointed by the Owners on such matters on the laws of the Marshall Islands and Germany and any other jurisdictions as may be satisfactory to the Owners. |
| 5 | Others |
The Owners being satisfied that all conditions precedent or documents or evidence specified in Schedule 1 to the MOA have been satisfied or provided in form and substance satisfactory to the Owners.
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PART C
The following are the documents referred to in Clause 34.8:
| 1 | Security Interests |
Not later than five (5) Business Days after the Commencement Date, documentary evidence that the Security Interests intended to be created by each of the Security Documents have been duly perfected under applicable law (as applicable).
| 2 | Legal opinions |
Not later than three (3) Business Days after the Commencement Date, issued signed copies of the legal opinions referred to in paragraph 5 of Part B of Schedule 2 of this Charter.
| 3 | Insurances |
| 3.1 | Not later than five (5) Business Days after the Commencement Date, receipt of copies of the executed letters of undertaking and certificates of entry (as the case may be) relating to insurances as set out in Clause 39 - (Insurance) acknowledged by the relevant insurer, insurance broker, protection and indemnity association or war risks association (as the case may be), each in the agreed form under paragraph 5.2 of Part A of Schedule 2 of this Charter. |
| 3.2 | Not later than ten (10) Business Days after the Commencement Date, the signed insurance report in the form agreed under paragraph 5 of Part A of Schedule 2 of this Charter. |
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SCHEDULE 3
PAYMENT SCHEDULE
Currency: US$
|
Payment Period |
Payment Date |
Fixed Charterhire |
Variable Charterhire |
Charterhire | Owners’ Cost |
| 0 | 1/25/2024 | 62,500,000.00 | |||
| 1 | 4/25/2024 | 694,434.57 | 1,125,565.43 | 1,820,000.00 | 61,805,565.43 |
| 2 | 7/25/2024 | 706,940.56 | 1,113,059.44 | 1,820,000.00 | 61,098,624.87 |
| 3 | 10/25/2024 | 719,671.77 | 1,120,328.23 | 1,840,000.00 | 60,378,953.10 |
| 4 | 1/25/2025 | 732,632.26 | 1,107,367.74 | 1,840,000.00 | 59,646,320.84 |
| 5 | 4/25/2025 | 745,826.15 | 1,054,173.85 | 1,800,000.00 | 58,900,494.69 |
| 6 | 7/25/2025 | 759,257.65 | 1,060,742.35 | 1,820,000.00 | 58,141,237.04 |
| 7 | 10/25/2025 | 772,931.04 | 1,067,068.96 | 1,840,000.00 | 57,368,306.00 |
| 8 | 1/25/2026 | 786,850.66 | 1,053,149.34 | 1,840,000.00 | 56,581,455.34 |
| 9 | 4/25/2026 | 801,020.97 | 998,979.03 | 1,800,000.00 | 55,780,434.37 |
| 10 | 7/25/2026 | 815,446.46 | 1,004,553.54 | 1,820,000.00 | 54,964,987.91 |
| 11 | 10/25/2026 | 830,131.75 | 1,009,868.25 | 1,840,000.00 | 54,134,856.16 |
| 12 | 1/25/2027 | 845,081.49 | 994,918.51 | 1,840,000.00 | 53,289,774.67 |
| 13 | 4/25/2027 | 860,300.47 | 939,699.53 | 1,800,000.00 | 52,429,474.20 |
| 14 | 7/25/2027 | 875,793.52 | 944,206.48 | 1,820,000.00 | 51,553,680.67 |
| 15 | 10/25/2027 | 891,565.59 | 948,434.41 | 1,840,000.00 | 50,662,115.08 |
| 16 | 1/25/2028 | 907,621.69 | 932,378.31 | 1,840,000.00 | 49,754,493.39 |
| 17 | 4/25/2028 | 923,966.95 | 896,033.05 | 1,820,000.00 | 48,830,526.44 |
| 18 | 7/25/2028 | 940,606.57 | 879,393.43 | 1,820,000.00 | 47,889,919.87 |
| 19 | 10/25/2028 | 957,545.84 | 882,454.16 | 1,840,000.00 | 46,932,374.03 |
| 20 | 1/25/2029 | 974,790.18 | 865,209.82 | 1,840,000.00 | 45,957,583.85 |
| 21 | 4/25/2029 | 992,345.06 | 807,654.94 | 1,800,000.00 | 44,965,238.78 |
| 22 | 7/25/2029 | 1,010,216.09 | 809,783.91 | 1,820,000.00 | 43,955,022.69 |
| 23 | 10/25/2029 | 1,028,408.96 | 811,591.04 | 1,840,000.00 | 42,926,613.73 |
| 24 | 1/25/2030 | 1,046,929.46 | 793,070.54 | 1,840,000.00 | 41,879,684.27 |
| 25 | 4/25/2030 | 1,065,783.50 | 734,216.50 | 1,800,000.00 | 40,813,900.77 |
| 26 | 7/25/2030 | 1,084,977.07 | 735,022.93 | 1,820,000.00 | 39,728,923.70 |
| 27 | 10/25/2030 | 1,104,516.30 | 735,483.70 | 1,840,000.00 | 38,624,407.41 |
| 28 | 1/25/2031 | 1,124,407.41 | 715,592.59 | 1,840,000.00 | 37,500,000.00 |
Notes:
| 1. | *The Payment Dates are determined pursuant to this Charter. |
| 2. | The figures set out above are for reference only, and are based on the assumption that the Commencement Date falls on 25 January 2024. |
| 3. | Following the Commencement Date, if applicable, the Owners will provide the Charterers with an updated Schedule 3 (Payment Schedule) containing the updated Payment Dates, Fixed Charterhires and Variable Charterhires. In the absence of manifest error, such replacement Schedule 3 (Payment Schedule) shall be conclusive as to the matters to which it relates and shall be deemed to automatically replace the existing Schedule 3 (Payment Schedule) and form part of this Charter. |
| 80 | CMBFL Top Ships II |
BBC Additional Clauses (LEGIO X EQUESTRIS)
EXECUTION PAGE
OWNERS
| SIGNED by | ) | ||
| duly authorized | ) | ||
| for and on behalf of | ) | /s/ CUI Wanying | |
| SEA 269L EASING CO. LIMITED | ) | ||
| ) | CUI Wanying | ||
| in the presence of: | ) | Attorney-in-Fact | |
| Witness’ signature: /s/ So Yuei Sum Serena | ) | ||
| Witness’ name: So Yuei Sum Serena | ) | ||
| Witness’ address: Suites 4610-4619, Jardine House | ) | ||
| 1 Connaught Place, Hong Kong | ) | ||
CHARTERERS
| SIGNED by ALEXANDROS TSIRIKOS | ) | ||
| duly authorized | ) | ||
| for and on behalf of | ) | ||
| Legio X Inc. | ) | ||
| in the presence of: | ) | /s/ Alexandros Tsirikos | |
| Witness’ signature: /s/ Dimitra Karkaletsi | ) | ||
| Witness’ name:DIMITRA KARKALETSI | ) | Title: Attorney-in-fact | |
| Witness’ address:1 Vasilissis Sofias Street | ) | ||
| & Meg. Alexandrou Street, | ) | ||
| 15124 Maroussi-Athens, Greece | ) | ||
CMBFL Top Ships II
BBC Additional Clauses (LEGIO X EQUESTRIS)
Exhibit 4.25
EXECUTION VERSION
Dated 11 January 2024
TOP SHIPS INC.
as Guarantor
and
SEA 269 LEASING CO. LIMITED
as Owner
GUARANTEE
relating to
a Bareboat Charter of the vessel m.v. Legio X Equestris
dated 11 January 2024
Index
| Clause | Page | |
| 1 | Interpretation | 1 |
| 2 | Guarantee | 2 |
| 3 | Liability as Principal and Independent Debtor | 3 |
| 4 | Expenses | 3 |
| 5 | Adjustment of Transactions | 4 |
| 6 | Payments | 4 |
| 7 | Interest | 4 |
| 8 | Subordination | 5 |
| 9 | Enforcement | 5 |
| 10 | Representations and Warranties | 6 |
| 11 | Undertakings | 9 |
| 12 | Judgments and Currency Indemnity | 15 |
| 13 | Supplemental | 16 |
| 14 | Assignment | 18 |
| 15 | Notices | 18 |
| 16 | Invalidity of Bareboat Charter | 19 |
| 17 | Governing Law and Enforcement | 19 |
| Schedules | ||
| Schedule 1 Form of compliance Certificate | 21 | |
CMBFL Top Ships II
Guarantee (Legio X Equestris)
THIS GUARANTEE is made on 11 January 2024
PARTIES
| (1) | TOP SHIPS INC., a corporation incorporated under the laws of the Marshall Islands whose registered address is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands, MH96960 (the “Guarantor”) |
| (2) | SEA 269 LEASING CO. LIMITED, a company incorporated under the laws of Hong Kong whose registered office is at 27/F, Three Exchange Square, 8 Connaught Place, Central, Hong Kong (the “Owner” which expression includes its successors and assigns) |
BACKGROUND
| (A) | By a bareboat charter dated 11 January 2024 (the “Bareboat Charter”) and made between (i) the Owner, as owner and (ii) LEGIO X INC., a corporation incorporated under the laws of the Marshall Islands whose registered address is at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands, MH96960, as charterer (the “Charterer”), the Owner has agreed to bareboat charter one (1) oil/chemical tanker named m.v. “Legio X Equestris” with IMO no. 9912256 (the “Vessel”) to the Charterer pursuant to the terms and conditions contained therein. |
| (B) | The Guarantor is the shareholder of the Charterer and holds all of the issued and outstanding shares in the Charterer. |
| (C) | The execution and delivery to the Owner of this Guarantee is one of the conditions to the chartering of the Vessel under the Bareboat Charter. |
| (D) | This Guarantee is the Guarantee referred to in the Bareboat Charter. |
OPERATIVE PROVISIONS
| 1 | INTERPRETATION |
| 1.1 | Defined expressions |
Words and expressions defined in the Bareboat Charter shall have the same meanings when used in this Guarantee unless the context otherwise requires.
| 1.2 | Construction of certain terms |
In this Guarantee:
“bankruptcy” includes a liquidation, receivership or administration and any form of suspension of payments, arrangement with creditors or reorganisation under any corporate or insolvency law of any country.
“Compliance Certificate” means a certificate in the form set out in Schedule 1 or in any other form approved by the Owner.
CMBFL Top Ships II
Guarantee (Legio X Equestris)
“control” over a particular company means the power (whether by way of ownership of shares, proxy, contract, agency or otherwise) to:
| (a) | cast, or control the casting of, more than 51 per cent, of the maximum number of votes that might be cast at a general meeting of such company; |
| (b) | appoint or remove all, or the majority, of the directors or other equivalent officers of such company; or |
| (c) | give directions with respect to the operating and financial policies of such company with which the directors or other equivalent officers of such company are obliged to comply. |
“Group” means the Guarantor and its subsidiaries from time to time.
“Party” means a party to this Guarantee.
“Relevant Person” means each “Relevant Person” as defined in the Bareboat Charter.
“Secured Liabilities” means all present and future obligations and liabilities (whether actual or contingent and whether owed jointly or severally or in any other capacity whatsoever) of the Charterer to the Owner under or in connection with any Leasing Documents or any judgment relating to any Leasing Documents, and for this purpose, there shall be disregarded any total or partial discharge of these liabilities, or variation of their terms, which is effected by, or in connection with, any bankruptcy, liquidation, arrangement or other procedure under the insolvency laws of any country.
“Security Period” means the period commencing on the date hereof and ending on the date on which the Owner is satisfied that the Secured Liabilities have been irrevocably and unconditionally paid and discharged in full.
| 2 | GUARANTEE |
| 2.1 | Guarantee and indemnity |
The Guarantor unconditionally and irrevocably:
| (a) | guarantees the due payment of all amounts payable by each other Relevant Person under or in connection to each Leasing Document to which such Relevant Person is a party; |
| (b) | undertakes to pay to the Owner on the Owner’s demand any such amount which is not paid by that Relevant Person when due and payable under or in connection to that Leasing Document; |
| (c) | guarantees the punctual performance by that Relevant Person of all that Relevant Person’s obligations under or in connection with that Leasing Document; and |
| (d) | fully indemnifies the Owner on its demand in respect of all claims, expenses, liabilities and losses which are made or brought against or incurred by the Owner as a result of or in connection with any obligation or liability guaranteed by the Guarantor being or becoming unenforceable, invalid, void or illegal; and the amount recoverable under this indemnity shall be equal to the amount which the Owner would otherwise have been entitled to recover. |
| 2.2 | No limit on number of demands |
The Owner may serve more than one demand under Clause 2.1 (Guarantee and indemnity).
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Guarantee – Legio X Equestris
| 2.3 | Guarantee of whole amount |
This Guarantee shall be construed and take effect as a guarantee of all amounts due to the Owner under the Leasing Documents to which each other Relevant Person is a party.
| 3 | LIABILITY AS PRINCIPAL AND INDEPENDENT DEBTOR |
| 3.1 | Principal and independent debtor |
The Guarantor shall be liable under this Guarantee as a principal and independent debtor and accordingly it shall not have, as regards this Guarantee, any of the rights or defences of a surety.
| 3.2 | Waiver of rights and defences |
Without limiting the generality of Clause 3.1 (Principal and independent debtor), the Guarantor shall neither be discharged by, nor have any claim against the Owner in respect of:
| (a) | any amendment or supplement being made to the Bareboat Charter or any other Leasing Document; |
| (b) | any arrangement or concession (including a rescheduling or acceptance of partial payments) relating to, or affecting, the Bareboat Charter or any other Leasing Document; |
| (c) | any release or loss (even though negligent) of any right or Security Interest created by any Leasing Document; |
| (d) | any failure (even though negligent) promptly or properly to exercise or enforce any such right or Security Interest, including a failure to realise for its full market value an asset covered by such a Security Interest; or |
| (e) | the Bareboat Charter or any other Leasing Document now being or later becoming void, unenforceable, illegal or invalid or otherwise defective for any reason, including a neglect to register it. |
| 4 | EXPENSES |
| 4.1 | Costs of preservation of rights, enforcement etc |
The Guarantor shall pay to the Owner on its demand the amount of all documented expenses (including, without limitation, legal fees) incurred by the Owner in connection with the enforcement of, or the preservation of any rights under this Guarantee or any other Leasing Document, including any advice, claim or proceedings relating to such matters.
| 4.2 | Fees and expenses payable under Leasing Documents |
Clause 4.1 (Costs of preservation of rights, enforcement etc) is without prejudice to the Guarantor’s liabilities in respect of any other Relevant Person’s obligations under any Leasing Document to which it is a party.
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Guarantee – Legio X Equestris
| 5 | ADJUSTMENT OF TRANSACTIONS |
| 5.1 | Reinstatement of obligation to pay |
The Guarantor shall pay to the Owner on its demand any amount which the Owner is required, or agrees, to pay pursuant to any claim by, or settlement with, a trustee in bankruptcy of any other Relevant Person on the ground that any Leasing Document to which that Relevant Person is a party, or a payment by that Relevant Person, was invalid or unenforceable or on any similar ground.
| 6 | PAYMENTS |
| 6.1 | Method of payments |
Any amount due under this Guarantee shall be paid:
| (a) | in immediately available funds; |
| (b) | to such account as the Owner may from time to time notify to the Guarantor; |
| (c) | without any form of set-off, cross-claim or condition; and |
| (d) | free and clear of any tax deduction or withholding for or on account of any tax payable under any law of relevant jurisdictions except a tax deduction which the Guarantor is required by law to make. |
| 6.2 | Grossing-up for taxes |
If the Guarantor is required by law to make a tax deduction, the amount due to the Owner shall be increased by the amount necessary to ensure that the Owner receives and retains a net amount which, after the tax deduction, is equal to the full amount that it would otherwise have received.
| 6.3 | Indemnity and evidence of payment of taxes |
The Guarantor shall fully indemnify the Owner on the Owner’s demand in respect of all claims, expenses, liabilities and losses incurred by the Owner by reason of any failure of the Guarantor to make any tax deduction or by reason of any increased payment not being made on the due date for such payment in accordance with Clause 6.2 (Grossing-up for taxes). Within 30 days after making a tax deduction, that Guarantor shall deliver to the Owner any receipts, certificates or other documentary evidence satisfactory to the Owner that the tax had been paid to the appropriate taxation authority.
| 7 | INTEREST |
| 7.1 | Accrual of interest |
Any amount due under this Guarantee shall carry interest after the date on which the Owner demands payment of it until it is actually paid, unless interest on that same amount also accrues under the Bareboat Charter.
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Guarantee – Legio X Equestris
| 7.2 | Calculation of interest |
Interest under this Guarantee shall be calculated and accrue (as well after as before judgment) at the rate described in clauses 37.1 and 37.2 of the Bareboat Charter and otherwise in accordance with the terms thereof.
| 8 | SUBORDINATION |
| 8.1 | Subordination of rights of Guarantor |
All rights which the Guarantor at any time has (whether in respect of this Guarantee or any other transaction) against each other Relevant Person or its assets shall be fully subordinated to the rights of the Owner under the Leasing Documents (or any of them), and in particular, the Guarantor shall not:
| (a) | claim, or in a bankruptcy of that Relevant Person prove for, any amount payable to the Guarantor by that Relevant Person, whether in respect of this Guarantee or any other transaction; |
| (b) | take or enforce any Security Interest for any such amount; |
| (c) | claim to set-off any such amount against any amount payable by the Guarantor to that Relevant Person; or |
| (d) | claim any subrogation or other right in respect of any Leasing Document or any sum received or recovered by the Owner under such Leasing Document. |
| 9 | ENFORCEMENT |
| 9.1 | No requirement to commence proceedings against other Relevant Person |
The Owner will not need to commence any proceedings under, or enforce any Security Interest created by, the Bareboat Charter or any other Leasing Document before claiming or commencing proceedings under this Guarantee.
| 9.2 | Conclusive evidence of certain matters |
However, as against the Guarantor:
| (a) | any final and unappealable judgment or order of a court in England or any Relevant Jurisdiction or award of an arbitration tribunal in London in connection with the Bareboat Charter or any other Leasing Document; and |
| (b) | any statement or admission of any other Relevant Person in connection with the Bareboat Charter or any other Leasing Document, |
shall be binding and conclusive as to all matters of fact and law to which it relates.
| 5 | CMBFL Top Ships II |
Guarantee – Legio X Equestris
| 10 | REPRESENTATIONS AND WARRANTIES |
| 10.1 | General |
The Guarantor represents and warrants to the Owner as of the date of this Guarantee, and on each day henceforth until the last day of the Security Period as follows.
| 10.2 | Status |
| (a) | The Guarantor is duly incorporated and validly existing and in good standing under the laws of the Marshall Islands. |
| (b) | The Guarantor is not a FATCA foreign financial institution (“FFI”) or a US Tax Obligor. |
| 10.3 | Corporate power |
The Guarantor has the corporate capacity, and has taken all corporate action and obtained all consents necessary for it:
| (a) | to execute this Guarantee or any other Leasing Document to which it is a party; and |
| (b) | to make all the payments contemplated by, and to comply with, this Guarantee or any other Leasing Document to which it is a party. |
| 10.4 | Consents in force |
All the capacities, actions and consents referred to in Clause 10.3 (Corporate power) remain in full force and nothing has occurred which makes any of them liable to revocation.
| 10.5 | No conflicts |
The execution by the Guarantor of the Leasing Documents to which it is a party and its compliance with this Guarantee will not involve or lead to a contravention of:
| (a) | any law or regulation applicable to it; or |
| (b) | the constitutional documents of the Guarantor; or |
| (c) | any contractual or other obligation or restriction which is binding on the Guarantor or any of its assets. |
| 10.6 | Legal, valid and binding obligations |
This Guarantee and the Leasing Document to which it is a party do now or will upon execution and delivery constitute the Guarantor’s legal, valid and binding obligations enforceable against it in accordance with its terms and any relevant insolvency laws affecting creditors’ rights generally.
| 10.7 | Governing law |
The choice of governing law as stated in this Guarantee and the agreement by the Guarantor to refer disputes to the relevant courts or tribunals as stated herein are valid and binding against the Guarantor.
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Guarantee – Legio X Equestris
| 10.8 | Immunity |
Neither the Guarantor nor any of its assets are entitled to immunity on the grounds of sovereignty or otherwise from any legal action or proceeding (which shall include, without limitation, suit, attachment prior to judgment, execution or other enforcement).
| 10.9 | Pari passu ranking |
The obligations of the Guarantor under this Guarantee, are the direct, general and unconditional obligations of the Guarantor and rank at least pari passu with all other present and future unsecured and unsubordinated creditors of the Guarantor save for any obligation which is mandatorily preferred by law and not by virtue of any contract.
| 10.10 | Legal or administrative action |
No legal or administrative action involving the Guarantor has been commenced or taken which would have required notification to the Owner under Clause 11.8 (Notification of legal or administrative action).
| 10.11 | No insolvency |
The Guarantor is not insolvent or in liquidation or administration or subject to any other formal or informal insolvency procedure, and no receiver, administrative receiver, administrator, liquidator, trustee or analogous officer has been appointed in respect of the Guarantor or all or material part of their assets.
| 10.12 | Tax obligor and place of business |
The Guarantor is not a US Tax Obligor, and has not established a place of business in the United Kingdom or the United States of America.
| 10.13 | No withholding taxes |
All payments which the Guarantor is liable to make under the Leasing Documents to which it is a party may be made without deduction or withholding for or on account of any tax payable under any law of relevant jurisdictions.
| 10.14 | Taxes paid |
The Guarantor has paid all taxes applicable to, or imposed on or in relation to it, its business or except for those being contested in good faith with adequate reserves.
| 10.15 | No default |
No Termination Event has occurred nor is continuing or might reasonably be expected to result from the entry into and performance of this Guarantee or any other Leasing Document.
| 10.16 | Information |
Any factual information provided by the Guarantor (or on its behalf) to the Owner was true and accurate in all material respects as at the date it was provided or as the date at which such information was stated; all accounts (audited and unaudited) delivered under Clause 11.3 (Provision of financial statements) satisfied the requirements of Clause 11.4 (Form of financial statements); and there has been no Material Adverse Effect on the Guarantor from its position disclosed in the latest of those accounts.
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Guarantee – Legio X Equestris
| 10.17 | No litigation |
No legal or administrative action involving the Guarantor has been commenced or taken or, to the Guarantor’s knowledge, is likely to be commenced or taken which, in either case, would be likely to have a Material Adverse Effect on the Guarantor.
| 10.18 | Sanctions |
| (a) | No Relevant Person, nor any of their respective directors, officers, or employees, is a Prohibited Person. |
| (b) | Each Relevant Person, and their respective directors, officers, and employees is in compliance with all Sanctions laws, and none of them have been or are currently being investigated on compliance with Sanctions, they have not received notice or are aware of any claim, action, suit or proceeding against any of them with respect to Sanctions and they have not taken any action to evade the application of Sanctions. |
| (c) | No Relevant Person is in breach of any Anti-Money Laundering Laws, Anti-Terrorism Financing Laws and/or Business Ethics Laws and, to the extent required by applicable law, has instituted and maintained systems, controls, policies and procedures designed to: |
| (i) | prevent and detect incidences of bribery and corruption, money laundering and terrorism financing; and |
| (ii) | promote and achieve compliance with Anti-Money Laundering Laws, Anti-Terrorism Financing Laws and/or Business Ethics Laws including, but not limited to, ensuring thorough and accurate books and records, and utilization of best efforts to ensure that Affiliates acting on behalf of a Relevant Person shall act in compliance with Anti-Money Laundering Laws, Anti-Terrorism Financing Laws and Business Ethics Laws. |
| 10.19 | Environmental Laws |
All Environmental Laws relating to the ownership, operation and management of the Vessel and the business of each Relevant Person (as now conducted and as reasonably anticipated to be conducted in the future) have been complied with.
| 10.20 | Environmental Claim |
No Environmental Claim has been made or threatened against any Relevant Person or otherwise in connection with the Vessel which is either (i) in excess of US$5,000,000 or (ii) has or is reasonably likely to have a Material Adverse Effect.
| 10.21 | Environmental Incident |
No Environmental Incident has occurred and no person has claimed that an Environmental Incident has occurred.
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Guarantee – Legio X Equestris
| 10.22 | Ownership of the Charterer |
The Charterer is legally and beneficially and indirectly wholly owned and controlled by the Guarantor.
| 10.23 | Status of the Guarantor |
| (a) | Save for permitted under the Bareboat Charter, the shares of the Guarantor are traded on the NASDAQ or Over the Counter (OTC); and |
| (b) | the Guarantor is an entity reporting with the U.S. Securities and Exchange Commission. |
| 11 | UNDERTAKINGS |
| 11.1 | General |
The Guarantor undertakes with the Owner to comply with the following provisions of this Clause 11 (General) at all times during the Security Period, except as the Owner may otherwise permit.
| 11.2 | Information provided to be accurate |
All financial and other information which is provided by or on behalf of the Guarantor under or in connection with the Leasing Documents will be true and not misleading and will not omit any material fact or consideration.
| 11.3 | Provision of financial statements |
The Guarantor will send to the Owner:
| (a) | as soon as possible, but in no event later than one hundred and fifty (150) days after the end of each financial year of the Charterers, the audited annual financial statement accounts of the Charterers for that financial year as referred to in the Guarantor’s audited consolidated annual financial statement accounts of the Guarantor for that financial year to be delivered under paragraph (c); |
| (b) | as soon as possible, but in no event later than ninety (90) days after the end of each half-year, the unaudited semi-annual accounts of the Charterers for that half-year; |
| (c) | as soon as possible, but in no event later than one hundred and fifty (150) days after the end of each financial year of the Guarantor, the audited consolidated annual financial statement accounts of the Guarantor for that financial year; and |
| (d) | as soon as possible, but in no event later than ninety (90) days after the end of each half-year, the semi-annual consolidated unaudited accounts of the Guarantor for that half-year certified as to their correctness by at least one director of the Guarantor. |
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Guarantee – Legio X Equestris
| 11.4 | Form of financial statements |
All accounts (audited and unaudited) delivered under Clause 11.3 (Provision of financial statements) will:
| (a) | be prepared in accordance with all applicable laws and generally accepted accounting principles in the United States consistently applied; |
| (b) | give a true and fair view of (in respect of the audited accounts) or fairly representing (in the case of the management accounts) the state of affairs of the Group at the date of those accounts and of their profit for the period to which those accounts relate; |
| (c) | fully disclose or provide for all significant liabilities of the Group; and |
| (d) | If not in the English language, be accompanied by an English translation duly certified as to its correctness. |
| 11.5 | Shareholder and creditor notices |
The Guarantor will send the Owner, upon its request, copies of all communications which are despatched to the Guarantor’s shareholders or creditors or any class of them.
| 11.6 | Consents |
The Guarantor will obtain and promptly renew and will procure that each other Relevant Person obtains and promptly renews or procure the obtainment or renewal of and provide copies of, from time to time, any necessary consents, approvals, authorisations, licenses or permits of any regulatory body or authority for the transactions contemplated under each Leasing Document to which it is a party.
| 11.7 | Valid obligations |
The Guarantor will at its own cost, and will procure that each other Relevant Person will:
| (a) | do all that such Relevant Person reasonably can to ensure that any Leasing Document to which such Relevant Person is a party validly creates the obligations and the Security Interests which such Relevant Person purports to create; and |
| (b) | without limiting the generality of paragraph (a), promptly register, file, record or enrol any Leasing Document to which such Relevant Person is a party with any court or authority in all Relevant Jurisdictions, pay any stamp duty, registration or similar tax in all Relevant Jurisdictions in respect of any Leasing Document to which such Relevant Person is a party, give any notice or take any other step which, is or has become necessary or desirable for any such Leasing Document to be valid, enforceable or admissible in evidence or to ensure or protect the priority of any Security Interest which such Relevant Person creates. |
| 11.8 | Notification of legal or administrative action |
The Guarantor will provide or will procure that each other Relevant Person provides the Owner with details of any legal or administrative action involving such Relevant Person or the Vessel that is likely to have a Material Adverse Effect as soon as such action is instituted or it becomes apparent is likely to be instituted and is likely to have a Material Adverse Effect.
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Guarantee – Legio X Equestris
| 11.9 | Notification of damage or default |
The Guarantor:
| (a) | will, and will procure that each other Relevant Person will, notify the Owner immediately of the occurrence of any damage and/or alteration caused to the Vessel by any reason whatsoever which results, or may be expected to result, in repairs on the Vessel which exceed $5,000,000; and |
| (b) | will, and will procure that each other Relevant Person will, notify the Owner immediately of the occurrence of any Termination Event, |
and will keep the Owner fully up-to-date with all developments and the Guarantor will, if so requested by the Owner, provide any such certificate signed by its authorised signatory, confirming that there exists no Potential Termination Event or Termination Event.
| 11.10 | Additional information |
The Guarantor will, and will procure that each other Relevant Person will, as soon as practicable after receiving the request, provide the Owner with any additional financial or other information relating:
| (a) | to themselves and/or the Vessel (including, but not limited to the condition, location and employment status of the Vessel); or |
| (b) | to any other matter relevant to, or to any provision of any Leasing Document to which it is a party, |
which may be reasonably requested by the Owner (or their financiers (if any)) at any time, provided that, in the case of information on the employment status of the Vessel, such information shall be in form and substance satisfactory to the Owner and shall be provided by the Charterers to the Owner at least once every six-monthly period during each calendar year.
| 11.11 | Compliance with operational laws |
The Guarantor shall procure compliance, and will procure that each other Relevant Person will comply or procure compliance, with all laws or regulations relating to the Vessel and its construction, ownership, employment, operation, management and registration, including the ISM Code, the ISPS Code, all Environmental Laws and the laws of the Vessel’s registry.
| 11.12 | Compliance with other laws |
| (a) | The Guarantor shall comply, and shall procure that each other Relevant Person will, comply with all applicable laws and regulations in respect of Sanctions, and in particular, the Charterers shall effect and maintain a sanctions compliance policy to ensure compliance with all such laws and regulations implemented from time to time. |
| (b) | The Guarantor: |
| (i) | shall, and shall procure that each other Relevant Person will, promptly notify the Owner of any non-compliance by any Relevant Person or their respective officers, directors, or employees with all laws and regulations relating to Sanctions, (including but not limited to notifying the Owner in writing immediately upon being aware that any Relevant Person or their respective shareholders, directors, officers or employees is a Prohibited Person or has otherwise become a target of Sanctions) as well as provide all information in relation to its business and operations which may be relevant for the purposes of ascertaining whether any of the aforesaid parties are in compliance with such laws. |
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Guarantee – Legio X Equestris
| (ii) | shall, and will procure that each other Relevant Person will, promptly notify the Owner of any non-compliance by any Relevant Person or their respective officers, directors, or employees with all laws and regulations relating to Anti-Money Laundering Laws, Anti-Terrorism Financing Laws and/or Business Ethics Laws as well as provide all information (once available) in relation to its business and operations which may be relevant for the purposes of ascertaining whether any of the aforesaid parties are in compliance with such laws. |
| (c) | The Guarantor shall procure that the Vessel shall not be employed, operated or managed in any manner which (i) is contrary to any Sanctions and in particular, the Vessel is not used by or to benefit any party which is a target of Sanctions or trade to any area or country where trading the Vessel to such area or country would constitute a breach of any Sanctions or published boycotts imposed by any of the United Nations, the European Union, the United States of America, the United Kingdom or the People’s Republic of China (provided that operation or use of the Vessel by the Trafigura Charterer pursuant to the Trafigura Charter shall not in any case be deemed to be in breach or contrary to any published boycotts or sanctions imposed by the People’s Republic of China) or (ii) would trigger the operation of any sanctions limitation or exclusion clause in any insurance documentation. |
| (d) | The Guarantor shall, and shall procure that each other Relevant Person and their respective officers, directors and employees, will: |
| (i) | conduct its business in compliance with all Anti-Money Laundering Laws, Anti- Terrorism Financing Laws and/or Business Ethics Laws; |
| (ii) | maintain systems, controls, policies and procedures designed to promote and achieve ongoing compliance with Anti-Money Laundering Laws, Anti-Terrorism Financing Laws and/or Business Ethics Laws; |
| (iii) | in respect of the Charterers, not use, or permit or authorize any person to directly or indirectly use, the Opening Capital Balance for any purpose that would breach any Anti-Money Laundering Laws, Anti-Terrorism Financing Laws and/or Business Ethics Laws; and |
| (iv) | not lend, invest, contribute or otherwise make available the Opening Capital Balance to or for any other person in a manner which would result in a violation of Anti-Money Laundering Laws, Anti-Terrorism Financing Laws and/or Business Ethics Laws. |
| 11.13 | No Security Interests |
The Guarantor shall not, and shall procure that each other Relevant Person will not create, assume or permit to exist any Security Interest (other than any Permitted Security Interest) of any kind upon any Leasing Document to which such Relevant Person is a party, and if applicable, the Vessel.
| 11.14 | Financial covenants |
| (a) | The Guarantor shall ensure that, at any time during the Security Period, the Guarantor’s Leverage Ratio shall not be more than seventy five per cent (75%). |
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| (b) | The Guarantor shall ensure that all time during the Security Period the Liquid Funds shall not be less than $500,000 multiplied by the number of the Fleet Vessels which are fully owned by the Guarantor (“100% Owned Vessels”) or leased or operated (including those under a capital lease or operating lease with a purchase option at the end of the relevant charter period) by the Guarantor and/or any member of the Group. |
In this Guarantee:
“Leverage Ratio” means, at any date, the ratio (expressed as a percentage) of:
| (a) | the Total Net Debt; and |
| (b) | the aggregate Market Value of all Fleet Vessels adjusted, in each case, to reflect the percentage of ownership by the Guarantor of each such Fleet Vessel. |
“Liquid Funds” means, at any time, cash at bank and credited to an account in the name of any member of the Group and to which the Guarantor is solely (or together with other members of the Group) beneficially entitled and for so long as such cash has not been blocked due to the existence and/or enforcement of any Security Interest held by any bank or any other third party or otherwise unless such cash is held in such account charged, as the case may be, by way of a floating charge for the purposes of meeting minimum liquidity requirements in the context of any financing arrangement of the Group.
“Market Value” means, in relation to any Fleet Vessel at any relevant time (the “Market Value Test Date”)
| (a) | subject to sub-paragraph (b) below, the arithmetic mean of the valuations shown by two (2) valuation reports prepared: |
| (i) | on a date no later than thirty (30) days after the Market Value Test Date; |
| (ii) | with or without physical inspection of that Vessel; |
| (iii) | on the basis of a sale for prompt delivery for cash on normal arm’s length commercial terms as between a willing seller and a willing buyer, free of any existing charter or other contract of employment, |
and such valuation shall be prepared by Approved Valuers one nominated by the Owners and one nominated by the Charterers.
| (b) | if there is a discrepancy of five per cent. (5%) or more between the market valuations shown on the two valuation reports obtained pursuant to the above paragraph (using the lower valuation figure as the denominator), the arithmetic mean of the valuations shown by three (3) valuation reports each prepared on the same terms and conditions as set out under paragraph (b) above (except that the third valuation report additionally required under this sub-paragraph (b) shall be prepared by an Approved Valuer nominated by the Owners). |
“Total Net Debt” means, at any date, the aggregate Financial Indebtedness of the Group as per US GAAP as at such date, adjusted to include a percentage of the Financial Indebtedness of any joint venture with a minimum holding of 50 per cent by any member of the Group which is equal to the percentage of the Guarantor’s ownership in such joint venture, minus the aggregate amount of all cash balances standing on such date to the credit of a bank account of any member of the Group, adjusted to include a percentage of the cash balances of any entity holding any Fleet Vessel (other than the 100% Owned Vessels) which is equal to the percentage of the Guarantor’s and/or such member’s ownership in that entity, but excluding any cash held by any bank or any other third party or otherwise which is subject to the existence and/or enforcement any Security Interest unless such cash is held in such account charged, as the case may be, by way of a floating charge for the purposes of meeting minimum liquidity requirements in the context of any financing arrangement of the Group.
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“US GAAP” means the generally accepted accounting principles in the United States.
| 11.15 | Compliance Certificate |
The Guarantor shall supply to the Owner, a Compliance Certificate setting out (in reasonable detail) computations as to compliance with Clause 11.14 (Financial covenants) on each testing date, being 31st December in each calendar year; and each Compliance Certificate shall be signed by the Co-Chief Financial Officer of the Guarantor.
| 11.16 | Negative Pledge |
The Guarantor shall:
| (a) | procure that the Charterers will not create or permit to arise any Security Interest over any of its assets present or future except for the Permitted Security Interests.; and |
| (b) | procure that its liabilities under this Guarantee will rank at least pari passu with all its other present and future unsecured liabilities, except for liabilities which are mandatorily preferred by law. |
| 11.17 | No disposal of assets, change of business |
The Guarantor will not, and shall (at all times) procure that no other Relevant Person shall:
| (a) | transfer, lease or otherwise dispose of all or a substantial part of their respective assets (or any of their assets, in the case of the Charterer), whether by one transaction or a number of transactions, whether related or not except in the usual course of their respective trading operations; or |
| (b) | make any substantial change (or any change, in the case of the Charterer) to the nature of their respective business or corporate structure from that existing as at the date of this Guarantee. |
| 11.18 | No merger etc |
The Guarantor shall not enter into any form of merger, sub-division, amalgamation, demerger, reorganization, corporate reconstruction or change of ownership, or change of voting control unless the Guarantor remains as the surviving entity after such merger, sub-division, amalgamation, demerger, reorganization, corporate reconstruction or change of ownership, or change of voting control and Clause 11.14 (Financial Covenants) has been complied with.
| 11.19 | FATCA |
The Guarantor shall not, and shall procure that no Relevant Person will become a FATCA FFI or US Tax Obligor.
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| 11.20 | No payment of dividend |
The Guarantor shall not declare, make or pay any dividend or other distribution (or interest on any unpaid dividend or other distribution) on or in respect of its share capital (whether in cash or in kind) upon the occurrence of a Termination Event described in clause 49 of the Bareboat Charter.
| 11.21 | Notification of Financial Indebtedness |
The Guarantor shall promptly notify the Owner if the Guarantor agrees to provide any new financial covenants to a creditor (or to amend existing ones such that they materially differ from the financial covenants under Clause 11.14 (Financial Covenants) of this Guarantee, placing such creditor in a position which is comparatively more favourable in terms of the financial covenants than the position of the Owner) under the agreements entered into or to be entered into in connection with any Financial Indebtedness owed by the Guarantor or Group member to such creditor and agrees that it will promptly enter into such necessary documentation as may be required to amend and supplement this Guarantee and any applicable Leasing Document so as to reflect and incorporate such more favourable financial covenants into this Guarantee and any applicable Leasing Document.
| 12 | JUDGMENTS AND CURRENCY INDEMNITY |
| 12.1 | Judgments relating to Bareboat Charter and other Leasing Documents |
This Guarantee shall cover any amount payable by any other Relevant Person under or in connection with any judgment or award relating to the Bareboat Charter and any other Leasing Document.
| 12.2 | Currency indemnity |
If any sum due from the Guarantor to the Owner under this Guarantee or under any order, judgment or award relating to this Guarantee has to be converted from the currency in which this Guarantee provided for the sum to be paid (the “Contractual Currency”) into another currency (the “Payment Currency”) for the purpose of:
| (a) | making or lodging any claim or proof against the Guarantor, whether in its liquidation, any arrangement involving it or otherwise; or |
| (b) | obtaining an order, judgment or award from any court or other tribunal; or |
| (c) | enforcing any such order, judgment or award; |
the Guarantor shall indemnify the Owner against the loss arising when the amount of the payment actually received by the Owner is converted at the available rate of exchange into the Contractual Currency.
In this Clause 12.2 (Currency indemnity), the “available rate of exchange” means the rate at which the Owners are able at the opening of business (Shanghai time) on the Business Day after it receives the sum concerned to purchase the Contractual Currency with the Payment Currency.
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| 13 | SUPPLEMENTAL |
| 13.1 | Continuing guarantee |
This Guarantee shall remain in force as a continuing security interest at all times during the Security Period.
| 13.2 | Rights cumulative, non-exclusive |
The Owner’s rights under and in connection with this Guarantee are cumulative, may be exercised as often as appears expedient and shall not be taken to exclude or limit any right or remedy conferred by law.
| 13.3 | No impairment of rights under Guarantee |
If the Owner omits to exercise, delays in exercising or invalidly exercises any of its rights under this Guarantee, that shall not impair that or any other right of the Owner under this Guarantee.
| 13.4 | Severability of provisions |
If any provision of this Guarantee is or subsequently becomes void, illegal, unenforceable or otherwise invalid, that shall not affect the validity, legality or enforceability of its other provisions.
| 13.5 | Guarantee not affected by other Security Interests |
This Guarantee shall not impair, nor be impaired by, any other guarantee or any right of set- off or netting or to combine accounts which the Owner may now or later hold in connection with the Bareboat Charter or any other Leasing Document.
| 13.6 | Guarantor bound by Bareboat Charter and other Leasing Documents |
The Guarantor agrees with the Owner to be bound by all provisions of the Bareboat Charter and any other Leasing Document in the same way as if those provisions had been set out (with any necessary modifications) in this Guarantee.
| 13.7 | Applicability of provisions of Guarantee to other rights |
Clauses 3 (Liability as Principal and Independent Debtor) and 16 (Invalidity of Bareboat Charter) shall also apply to any right of set-off or netting or to combine accounts which the Guarantor creates by an agreement entered into at the time of this Guarantee or at any later time (notwithstanding that the agreement does not include provisions similar to Clauses 3 and 16), being an agreement referring to this Guarantee.
| 13.8 | Third party rights |
Other than the Other Owners, a person who is not a party to this Guarantee has no right under the Contracts (Rights of Third Parties) Act 1999 to enforce or to enjoy the benefit of any term of this Guarantee.
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| 13.9 | Counterpart |
This Guarantee may be executed in any number of counterparts, and this has the same effect as if the signatures on the counterparts were on a single copy of this Guarantee.
| 13.10 | FATCA Information |
| (a) | Subject to paragraph (c) below, each Party shall, on the date of the Bareboat Charter, and thereafter within ten (10) Business Days of a reasonable request by the other Party: |
| (i) | confirm to that other party whether it is a FATCA Exempt Party or is not a FATCA Exempt Party; and |
| (ii) | supply to the requesting party (with a copy to all other relevant parties) such other form or forms (including IRS Form W-8 or Form W-9 or any successor or substitute form, as applicable) and any other documentation and other information relating to its status under FATCA (including its applicable “pass thru percentage” or other information required under FATCA or other official guidance including intergovernmental agreements) as the requesting party reasonably requests for the purpose of the requesting party’s compliance with FATCA. |
| (b) | If a Party confirms to any other Party that it is a FATCA Exempt Party or provides an IRS Form W-8 or W-9 showing that it is a FATCA Exempt Party and it subsequently becomes aware that it is not, or has ceased to be a FATCA Exempt Party, or that the said form provided has ceased to be correct or valid, that party shall so notify all other relevant parties or provide the relevant revised form, as applicable, reasonably promptly. |
| (c) | Nothing in this Clause shall oblige a Party to do anything which would or, in its reasonable opinion, might constitute a breach of any law or regulation, any policy of that party, any fiduciary duty or any duty of confidentiality, or to disclose any confidential information (including, without limitation, its tax returns and calculations); provided, however, that nothing in this paragraph shall excuse a Party from providing a true, complete and correct IRS Form W-8 or W-9 (or any successor or substitute form where applicable). Any information provided on such IRS Form W-8 or W-9 (or any successor or substitute forms) shall not be treated as confidential information of such party for purposes of this paragraph. |
| (d) | If a Party fails to confirm its status or to supply forms, documentation or other information requested in accordance with the provisions of this Charter or the provided information is insufficient under FATCA, then: |
| (i) | if that party failed to confirm whether it is (and/or remains) a FATCA Exempt Party then such party shall be treated for the purposes of this Charter and the Leasing Documents as if it is a FATCA Non-Exempt Party; and |
| (ii) | if that party failed to confirm its applicable passthru percentage then such party shall be treated for the purposes of this Charter and the Leasing Documents (and payments made thereunder) as if its applicable passthru percentage is 100%, |
until (in each case) such time as the party in question provides sufficient confirmation, forms, documentation or other information to establish the relevant facts.
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| 14 | ASSIGNMENT |
| 14.1 | Assignment by Owner |
Clause 63 of the Bareboat Charter shall apply to this Guarantee as if they were expressly incorporated herein with any necessary modifications including the references to “the Charterers” therein shall be references to “the Guarantor” when applied herein and references to “the Leasing Document” and “this Charter” therein shall be references to “this Guarantee” when applied herein.
| 14.2 | Assignment by Guarantor |
The Guarantor may not assign any of its rights or transfer any of its rights or obligations under this Guarantee.
| 15 | NOTICES |
| 15.1 | Notices to Guarantor |
Any notice or demand to the Guarantor under or in connection with this Guarantee shall be given by letter or email at:
TOP SHIPS INC.
Attention:
Email:
Tel:
or to such other address or email address which the Guarantor may notify to the Owner.
| 15.2 | Validity of demands |
A demand under this Guarantee shall be valid notwithstanding that it is served:
| (a) | on the date on which the amount to which it relates is payable by the Relevant Person under the Leasing Document to which it is a party; |
| (b) | at the same time as the service of a notice under clause 44 of the Bareboat Charter; |
and a demand under this Guarantee shall (i) be in writing; (ii) be signed by a duly authorised officer of the Owner and delivered to the Guarantor pursuant to the provisions under this Guarantee; (iii) make reference to this Guarantee; (iv) specifically identify the Charterer or any other Relevant Person and the guaranteed obligations to be paid and/or performed (as the case may be); and (v) set forth payment instructions in respect of any amount or amounts payable to the Owner.
| 15.3 | Notices to Owner |
Any notice to the Owner under or in connection with this Guarantee shall be sent to the same address and in the same manner as notices to the Owner under clause 44 of the Bareboat Charter.
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| 16 | INVALIDITY OF BAREBOAT CHARTER |
| 16.1 | Invalidity of Bareboat Charter or other Leasing Documents |
In the event of:
| (a) | the Bareboat Charter or any other Leasing Document now being or later becoming, with immediate or retrospective effect, void, illegal, unenforceable or otherwise invalid for any other reason whatsoever, whether of a similar kind or not; or |
| (b) | without limiting the scope of paragraph (a), a bankruptcy of the Relevant Person party thereto, the introduction of any law or any other matter resulting in that Relevant Person being discharged from liability under the Bareboat Charter or other Leasing Document, or the Bareboat Charter or other Leasing Document ceasing to operate (for example, by interest ceasing to accrue); |
this Guarantee shall cover any amount which would have been or become payable under or in connection with the Bareboat Charter or other Leasing Document if the Bareboat Charter or other Leasing Document had been and remained entirely valid, legal and enforceable, or that Party had not suffered bankruptcy, or any combination of such events or circumstances, as the case may be, and the Charterer had remained fully liable under it for liabilities whether invalidly incurred or validly incurred but subsequently retrospectively invalidated; and references in this Guarantee to amounts payable by that Party under or in connection with the Bareboat Charter or other Leasing Document shall include references to any amount which would have so been or become payable as aforesaid.
| 17 | GOVERNING LAW AND ARBITRATION |
| 17.1 | Governing law |
This Guarantee and any non-contractual obligations arising out of or in connection with it are governed by English law.
| 17.2 | Arbitration |
| (a) | Any dispute arising out of or in connection with this Guarantee (including a dispute regarding the existence, validity or termination of this Guarantee or any non-contractual obligation arising out of or in connection with this Guarantee) (a “Dispute”) shall be referred to and finally resolved by arbitration in London in accordance with the Arbitration Act 1996 or any statutory modification or re-enactment thereof save to the extent necessary to give effect to the provisions of this Clause 17 (Governing Law and Arbitration). The arbitration shall be conducted in accordance with the London Maritime Arbitrators Association (“LMAA”) Terms current at the time when the arbitration proceedings are commenced. |
| (b) | The reference shall be to three arbitrators. A party wishing to refer a Dispute to arbitration shall appoint its arbitrator (who shall be either a full member of the LMAA, or a practising barrister of King’s Counsel who is also a member of the Commercial Bar Association, or a retired High Court Judge practising as an arbitrator, in each case who carries on business in London) and send notice of such appointment in writing to the other party requiring the other party to appoint its own arbitrator within (fourteen) 14 calendar days of that notice and stating that it will appoint its arbitrator as sole arbitrator unless the other party appoints its own arbitrator and gives notice that it has done so within the (fourteen) 14 days specified. If the other party does not appoint its own arbitrator and give notice that it has done so within the (fourteen) 14 days specified, the party referring a Dispute to arbitration may, without the requirement of any further prior notice to the other party, appoint its arbitrator as sole arbitrator and shall advise the other party accordingly. The award of a sole arbitrator shall be binding on both parties as if he or she had been appointed by agreement. Nothing herein shall prevent the parties agreeing in writing to vary these provisions to provide for the appointment of a sole arbitrator. If the two arbitrators so appointed are unable to agree on the appointment of the third arbitrator, they or either of them may by written notice request the President of the LMAA to appoint the third arbitrator within fourteen (14) days of such request |
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| (c) | Where the reference is to three arbitrators the procedure for making appointments shall be in accordance with the procedure for full arbitration stated above. |
| (d) | The language of the arbitration shall be English. |
| (e) | In cases where neither the claim nor any counterclaim exceeds the sum of US$100,000 (or such other sum as the Parties may agree) the arbitration shall be conducted in accordance with the LMAA Small Claims Procedure current at the time when the arbitration proceedings are commenced. |
IN WITNESS WHEREOF this GUARANTEE has been executed as a DEED and delivered on the date stated at the beginning of this GUARANTEE.
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SCHEDULE 1
FORM OF COMPLIANCE CERTIFICATE
To:
SEA 269 LEASING CO. LIMITED
From:
TOP SHIPS INC.
Date:
Guarantee dated [●] (the “Guarantee”) in respect of a bareboat charter for m.v. “Legio X Equestris”
Dear Sirs
| 1 | We refer to the Guarantee. This is a Compliance Certificate. Terms defined in the Guarantee have the same meaning when used in this Compliance Certificate unless given a difference meaning in this Compliance Certificate. |
| 2 | We confirm that, as at the date hereof, no Termination Event has occurred and is continuing which has not been waived or remedied at the date hereof or if that is not the case, specifying the same and the steps, if any, being taken to remedy the same. |
| 3 | We confirm that, at any time during the Security Period, Leverage Ratio was not more than 75 per cent (75%). |
| 4 | We confirm that all time during the Security Period the Liquid Funds was not less than the aggregate of $500,000 multiplied by the number of the Fleet Vessels which are fully owned by the Guarantor or leased or operated (including those under a capital lease or operating lease with a purchase option at the end of the relevant charter period) by the Guarantor and/or any member of the Group. . |
Yours faithfully
Signed:
Co-Chief Financial Officer of
TOP SHIPS INC.
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Guarantee – Legio X Equestris
EXECUTION PAGE
GUARANTOR
| EXECUTED AS A DEED | ) | |
| by TOP SHIPS INC. | ) | |
|
acting byALEXANDROS TSIRIKOS |
) | |
| being an attorney-in-fact | ) | |
| in the presence of: | ) | /s/ Alexandros Tsirikos |
| Witness’ signature: /s/ Dimitra Karkaletsi | ) | |
| Witness’ name: Dimitra Karkaletsi | ) | |
| Witness’ address: 1 Vasilissis Sofias Street & | ) | |
| Meg. Alexandrou Street, 15124 Maroussi-Athens, Greece |
OWNER
|
SIGNED,SEALED AND DELIVERED |
) | ||
| by SEA 269 LEASING CO. LIMITED | ) | ||
|
acting by |
) | ||
| being an attorney-in-fact | ) | /s/ CUI Wanying | |
| in the presence of: | ) | CUI Wanying | |
| Attorney-in-fact | |||
| Witness’ signature: /s/ So Yuei Sum Serena | ) | ||
| Witness’ name: So Yuei Sum Serena | ) | ||
| Witness’ address: Suites 4610-4619, Jardine House | ) | ||
| 1 Connaught Place, Hong Kong | ) | ||
CMBFL Top Ships II
Signature page to Guarantee – Legio X Equestris
Exhibit 4.26
EXECUTION VERSION
FACILITY AGREEMENT
between
HSBC Private Bank (Suisse) SA
Quai des Bergues 9-17
1201 Geneva
Switzerland
(the “Lender”)
and
Top Ships Inc.
Trust Company Complex
Ajeltake Road
Ajeltake Island, Majuro
Marshall Islands, MH 96960
(the “Borrower”)
and
Julius Caesar Inc.
Trust Company Complex
Ajeltake Road
Ajeltake Island, Majuro
Marshall Islands, MH 96960
(the “Ship Co 1”)
and
Legio X Inc.
Trust Company Complex
Ajeltake Road
Ajeltake Island, Majuro
Marshall Islands, MH 96960
(the “Ship Co 2”)
and together with the Borrower, the Lender, and the Ship Co 1, the “Parties” and
each individually a “Party”)
dated 15 January 2024
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EXECUTION VERSION
| 1) | HSBC Private Bank (Suisse) SA is a company limited by shares incorporated in Switzerland whose registered office is at Quai des Bergues 9-17, 1201 Geneva, Switzerland. |
| 2) | Top Ships Inc. is a listed corporation incorporated in the Republic of the Marshall Islands whose registered office is Trust Company Complex Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands, MH 96960, and having registration number 3571. |
| 3) | Julius Caesar Inc. is a corporation incorporated in the Republic of the Marshall Islands whose registered office is Trust Company Complex Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands, MH 96960, and having registration number 104940. |
| 4) | Legio X Inc. is a corporation incorporated in the Republic of the Marshall Islands whose regis-tered office is Trust Company Complex Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands, MH 96960, and having registration number 107059. |
| 5) | This Agreement sets out the terms and conditions upon which the Lender has agreed to make the Facility available to the Borrower. |
NOW THEREFORE IT IS AGREED as follows:
| 1. | Definition and Construction |
| 1.1 | Definition |
| 1.1.1 | In addition to any definition elsewhere in this Agreement, words and expressions capitalized in this Agreement shall have the following meaning: |
“Account” means the account established and maintained by the Borrower with the Lender under number .
“Account Terms” means the account opening documents and terms and conditions applicable to the account(s) held by the Borrower and the Shareholder with the Lender, each as amended from time to time.
“Account Pledge” means, in respect of the Account, the Swiss law pledge creating Security by the Borrower in favor of the Lender, over its assets with the Lender, in a form approved by the Lender.
“Affiliate” means, in relation to any person, a person that, directly or indirectly through one (1) or more intermediaries, controls or is controlled by or is under common control with the person specified.
“Agreement” means this facility agreement, as the same may be amended, supplemented, novated, assigned or transferred from time to time.
“Applicable Laws” means (i) any national, international or supra-national conventions, treaties, laws, rules having the force of law, and regulations of the Relevant Jurisdictions then in full force, effect and enforcement, applicable to the Obligors and (ii) final judgments, orders, determinations or awards of any court, arbitral body, administrative body or tribunal of the Relevant Jurisdictions applicable to the Obligors from which there is no right of appeal or if there is a right of appeal such appeal is not pursued within the allowable time.
“Applicable Margin” means three percent (3%) per annum.
“Applicable Rate” means the percentage rate per annum which is the Term SOFR, calculated with the methodology and conventions for this Applicable Rate being established by the Lender in accordance with a methodology and the conventions for this Applicable Rate as generally applied by the Lender in a similar situation for determining the Term SOFR, provided that if the Term SOFR is less than zero, the Term SOFR shall be deemed to be zero.
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EXECUTION VERSION
“Availability Period” means the month of January 2024, unless otherwise agreed in writing by the Lender in its entire discretion.
“Break Costs” means the amount (if any) by which:
| a. | the amount of interest the Lender should have received from the prepayment date to the last day of the then current Interest Period, based on the rate of interest applicable to that Interest Period, exceeds |
| b. | the amount of interest which the Lender would be able to obtain by placing an amount equal to the prepaid amount with an acceptable counterparty being selected at the reasonable discretion of the Lender for a period starting on the Business Day following the prepayment date and ending on the last day of the then current Interest Period. |
For the avoidance of doubt, any such prepayment made on the last day of an Interest Period is not subject to Break Costs.
“Business Day” means any day (other than a Saturday, Sunday or public holidays) on which banks are open in Geneva, Switzerland and Hamburg, Germany.
“Change of Control” means, other than with the Lender’s prior written consent, any of the following events:
| a. | the Trustee, in its capacity as trustee of the Trust, ceasing to own directly one hundred percent (100%) of the issued shares of the Shareholder without the prior written consent of the Lender; |
| b. | the Shareholder ceasing to own directly sixty-three point thirty-five percent (63.35%) of the issued shares of the Borrower and the Personal Guarantor ceasing to own directly nine point sixty-four percent (9.64%) of the issued shares of the Borrower, without the prior written consent of the Lender; |
| c. | any change of Trustee or settlor or beneficiary of the Trust without the prior written consent of the Lender; |
| d. | the Borrower ceasing to directly own one hundred percent (100%) of any of the Ship Cos; or |
| e. | the transfer of any share, or the issuance of new shares (other than to the Trust), in the Shareholder, without the prior written consent of the Lender. |
“CMBFL” means China Merchants Bank Financial Leasing.
“Environmental Approval” means any present or future permit, ruling, variance or other Authorisation required under Environmental Law.
“Environmental Claim” means any claim by any governmental, judicial or regulatory authority or any other person which arises out of an Environmental Incident or an alleged Environmental Incident or which relates to any Environmental Law and, for this purpose, “claim” includes a claim for damages, compensation, contribution, injury, fines, losses and penalties or any other payment of any kind, including in relation to clean-up and removal, whether or not similar to the foregoing; an order or direction to take, or not to take, certain action or to desist from or suspend certain action; and any form of enforcement or regulatory action, including the arrest or attachment of any asset.
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EXECUTION VERSION
“Environmental Incident” means:
| a. | any release, emission, spill or discharge of Environmentally Sensitive Material whether within a Vessel or from a Vessel into any other vessel or into or upon the air, water, land or soils (including the seabed) or surface water; or |
| b. | any incident in which Environmentally Sensitive Material is released, emitted, spilled or discharged into or upon the air, water, land or soils (including the seabed) or surface water from a vessel other than a Vessel and which involves a collision between a Vessel and such other vessel or some other incident of navigation or operation, in either case, in connection with which a Vessel is actually or potentially liable to be arrested, attached, detained or injuncted and/or a Vessel and/or any Obligor and/or any operator or manager of a Vessel is at fault or allegedly at fault or otherwise liable to any legal or administrative action; or |
| c. | any other incident in which Environmentally Sensitive Material is released, emitted, spilled or discharged into or upon the air, water, land or soils (including the seabed) or surface water otherwise than from a Vessel and in connection with which a Vessel is actually or potentially liable to be arrested and/or where any Obligor and/or any operator or manager of a Vessel is at fault or allegedly at fault or otherwise liable to any legal or administrative action. |
“Environmental Law” means any present or future law relating to pollution or protection of human health or the environment, to conditions in the workplace, to the carriage, generation, handling, storage, use, release or spillage of Environmentally Sensitive Material or to actual or threatened releases of Environmentally Sensitive Material.
“Environmentally Sensitive Material” means and includes all contaminants, oil, oil products, toxic substances and any other substance (including any chemical, gas or other hazardous or noxious substance) which is (or is capable of being or becoming) polluting, toxic or hazardous.
“Extraordinary Event” means:
| a. | delisting: an announcement that the shares of the Borrower have or will be de-listed and are not immediately re-listed on an eligible exchange or quotation system to be agreed (triggered upon the announcement of a proposed delisting unless the shares of the Borrower are to be immediately re-listed, re-traded or re-quoted on an exchange or quotation system: (i) acceptable to the Lender, (ii) located in the same country as the current exchange of the Borrower’s shares, (iii) that imposes same disclosure requirements on the Borrower’s shares as the current exchange; |
| b. | nationalization: the Borrower’s shares are nationalised, expropriated or are otherwise required to be transferred to any governmental agency, authority or entity thereof; |
| c. | tender offer: a takeover offer, tender offer, exchange offer, solicitation, proposal or other event by any entity or person that results in such entity or person purchasing, or otherwise obtaining or (unless such offer or other event is terminated or withdrawn) having the right to obtain, by conversion or other means, greater than fifty percent (50%) and less than one hundred percent (100%) of the outstanding voting shares of the Borrower’s shares, as determined by the Lender (acting reasonably), based upon the making of filings with governmental or self-regulatory agencies or such other information as the Lender deems relevant. |
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EXECUTION VERSION
“Finance Documents” means:
| a. | this Agreement; |
| b. | any Security Document; |
| c. | the Account Terms; |
| d. | the Utilization Request; and |
| e. | any other document designated as such by the Lender and the Borrower, and any document amending and/or restating such documents and “Finance Document” means any of them. |
“Financial Indebtedness” means any indebtedness for or in respect of
| a. | debit balances at banks or other financial institutions and any monies borrowed; |
| b. | any amount raised pursuant to the issue of debentures, bonds, notes, loans or other securities; |
| c. | any acceptance credit; |
| d. | receivables sold or discounted (other than any receivables to the extent they are sold on a non-recourse basis); |
| e. | the acquisition cost of any asset to the extent payable before or after the time of acquisition or possession by the party liable where the advance or deferred payment is arranged primarily as admitted of raising finance or financing the acquisition of that asset; |
| f. | leases entered into primarily as a method of raising finance or financing the acquisition of the assets leased (financial leases according to IFRS). For the avoidance of doubt, this shall include any leasing facility agreement entered into by the Borrower and/or its Affiliates in respect of any vessels; |
| g. | currency swap or interest swap, cap or collar arrangements; |
| h. | any amount raised under any other transaction having the commercial effect of a borrowing or raising of money; |
| i. | any derivative transaction entered into in connection with protection against or benefit from fluctuation in any rate or price (and, when calculating the value of any derivative transaction, only the market to market value will be taken into account) and |
| j. | without double counting, any guarantee, private equity fund commitment, indemnity or similar assurance against financial loss of any person. |
“First Bridge” means the tranche of the Facility Amount to be applied for the completion of the New Leasing 1.
“Guarantee” means the guarantee created by each Ship Co under Clause 16 of this Agreement in accordance with the terms of article 111 of the Swiss Code of Obligations.
“Illegality Event” means:
| a. | it being or becoming illegal or unlawful without breaching any Applicable Law in any jurisdiction for any party to the Finance Documents to perform any of its obligations or to exercise any of its rights under the Finance Documents or it being or becoming illegal or unlawful for any party to continue as a party to the Finance Documents; or |
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EXECUTION VERSION
| b. | any Finance Document becoming invalid, ineffective or unenforceable, in whole or in substantial part, or ceasing to constitute the legally valid, binding, effective and enforceable obligations of the parties with the result that the primary interests of any party under the Finance Documents are adversely affected; or |
| c. | any Security Document ceasing to constitute perfected Security. |
“Material Adverse Effect” means a material adverse effect on:
| a. | the business, management, condition (financial or otherwise), assets, results of operations, prospects or properties which directly affects the actual ability of the relevant party to observe or perform any of their obligations under the Finance Documents; or |
| b. | the legality, validity or enforceability of any Finance Document; or |
| c. | the validity, legality, enforceability, effectiveness or ranking of any Security expressed to be created pursuant to any Security Document. |
“Material Non-Public Information” means any information (including without limitation any information regarding any material adverse change or prospective material adverse change in the condition of, or any actual, pending or threatened litigation, arbitration or similar proceeding involving, the Borrower’s shares) that is not described in the Borrower’s most recent annual report or subsequent public information releases and which, if it were made public, would be likely to have a significant effect on the price or value of the Borrower’s shares.
“Maturity Date” means:
| a. | for the First Bridge, the earliest of (i) eight (8) days from the utilization date of the First Bridge and (ii) the completion of a first sale and leaseback facility with CMBFL for USD sixty-two million five-hundred thousand (USD 62,500,000) (the “New Leasing 1”); and |
| b. | for the Second Bridge, the earliest of (i) eight (8) days from the utilization date of the Second Bridge, which can only occur upon complete repayment of the First Bridge, and ii) completion of a second sale and leaseback facility with CMBFL for USD sixty-two million five-hundred thousand (USD 62,500,000) (the “New Leasing 2”), |
upon repayment of the Second Bridge, the Facility shall be terminated.
“Obligors” means the Borrower, the Ship Cos, the Shareholder, the Personal Guarantor, the Trustee, in its capacity as trustee of the Trust, and any other party granting Security to the Lender in accordance with the Security Documents and the term “Obligor” means any of them.
“Perfection Requirements” means the delivery of physical possession, making or procuring of the appropriate registrations, filings, endorsements, notarisations, stampings and/or notifications of the Security Documents or the Security created thereunder (and payment of any associated fees, costs or expenses) as required by Applicable Laws.
“Personal Guarantor” means Mr. Evangelos Pistiolis, a Greek national and Swiss resident having his principal address at Via Arona 3, 7500 St. Moritz, Switzerland.
“Personal Guarantor Event” means that the Personal Guarantor (i) passes away or (ii) becomes incapable of managing and administrating his property and affairs. With regard to this second Personal Guarantor Event, it shall be deemed to occur on the earlier of:
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EXECUTION VERSION
| a. | the coming into force or use of a lasting or enduring power of attorney or similar arrangement granted by the Personal Guarantor to one (1) or more persons to cater for such circumstances described above; |
| b. | a person appointed as trustee or to manage the Personal Guarantor’s affairs under any lasting and enduring power of attorney or similar arrangement notifying the Lender of the occurrence of such a Personal Guarantor Event. |
“Private Banking Relationship” means the private banking relationship existing between the Lender and its Affiliates, on one hand, and the Borrower, the Personal Guarantor or entities beneficially owned and/or controlled by the Personal Guarantor, on the other hand, by the means of accounts opened with the Lender or its Affiliates.
“Relevant Jurisdiction” means, in relation to any Obligors:
| a. | its jurisdiction of incorporation; |
| b. | the listing jurisdiction of the Borrower’s shares; |
| c. | any jurisdiction where it conducts its business; and |
| d. | any jurisdiction where any asset subject to or intended to be subject to the Security to be created by it is situated. |
“Restricted Country” means any country or territory that is the subject from time to time of any Sanctions and/or trade embargos administered by any Sanctions Authority.
“Restricted Person” means any person, entity, or any other party, including without limitation, official or de facto authorities (i) located, domiciled, resident, incorporated or operating in a Restricted Country, or (ii) subject to any Sanctions lists administered by any Sanctions Authority, or (iii) owned or controlled by a person, entity or any other party as defined in (i) or (ii) hereinbefore.
“Sanctions” means the sanctions laws, regulations, embargoes or restrictive measures administered, enacted or enforced by any of the Sanctions Authorities.
“Sanctions Authority” means any authority issuing and/or administrating Sanctions and embargos in the United Nations, the European Union, Switzerland (e.g., the State Secretariat for Economic Affairs of Switzerland (SECO) and/or the Directorate of Public International Law), the United States of America (e.g., the Office of Foreign Asset Control of the US Department of Treasury (OFAC)), the United Kingdom and any authority issuing and/or administrating Sanctions and embargos.
“Second Bridge” means the tranche of the Facility Amount to be applied for the completion of the New Leasing 2.
“Security” means a security interest, mortgage, charge (whether fixed or floating), pledge, lien, encumbrance, assignment, hypothecation, right of set-off, or any other agreement or arrangements having the effect of conferring security.
“Security Period” means the period starting on the signing date of this Agreement and ending on the date on which all of the Secured Obligations have been irrevocably paid and discharged in full.
“Sensitive Zone” means the territorial waters and shores of Sudan, Iran, N. Korea, Crimea and Syria and any other country that is, or may be, the subject of Sanctions which are imposed by the Sanctions Authorities.
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EXECUTION VERSION
“Shareholder” means Family Trading Inc., a corporation incorporated in the Republic of the Marshall Islands whose registered address is Trust Company Complex Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands, MH 96960, and having registration number 79363.
“Shareholder Account” means the account established and maintained by the Shareholder with the Lender.
“Shareholder Account Pledge” means, in respect of the Shareholder Account, the Swiss law pledge creating Security by the Shareholder in favor of the Lender, over its assets with the Lender, in a form approved by the Lender.
“Shareholder Loans” means the shareholder loans granted by the Borrower to each Ship Co for an amount corresponding to the purchase price of the relevant Vessel, whose repayment by each Ship Co to the Borrower shall be approved before the utilization date and effected on or before the Maturity Date of the relevant Bridge Loan, and assigned to the Lender for security purposes pursuant to Clause 13 of this Agreement.
“Share Pledge Agreement” means the English law governed shares security agreement entered into between the Trustee, in its capacity as trustee of the Trust, as pledgor and the Lender as pledgee, in relation to the Shareholder’s shares.
“Ship Cos” means the Ship Co 1 and the Ship Co 2 and “Ship Co” means any of them.
“Ship Co’s Equity Contribution” means the portion of the purchase price to be paid by each Ship Co for the purchase of its own Vessel as follows:
| Ship Cos | Ship Co’s Equity Contribution | Portion of the purchase price financed by the Lender | Payment Date |
| Ship Co 1 | USD 26,000,000 | Up to USD 24,000,000 | On or before the utilization date of the First Bridge |
| Ship Co 2 | USD 38,000,000 | Up to USD 12,000,000 | On or before the utilization date of the Second Bridge |
“Trust” means The Lax Trust, an irrevocable and discretionary trust established under the laws of New Zealand.
“Trustee” means New Zealand Trust Corporation Ltd (company number 1202618), a company incorporated under the laws of New Zealand, whose registered office is at Floor 3, 32 Mahuhu Crescent, Auckland Central, Auckland, 1010 , New Zealand.
“USD” means the lawful currency in the United States of America.
“Vessel 1” means Julius Caesar VLCC (2022), having a purchase price of [USD fifty million (USD 50,000,000)], to be fully funded via the Account.
“Vessel 2” means Legio X VLCC (2022), having a purchase price of [USD fifty million (USD 50,000,000)], to be fully funded via the Account.
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EXECUTION VERSION
“Vessels” means together the Vessel 1 and the Vessel 2.
| 1.2 | Construction |
| 1.2.1 | Unless otherwise defined herein or except where the context otherwise requires, any reference in this Agreement to: |
| a. | any person shall be construed so as to include its and any subsequent successors and permitted assigns and permitted transferees in accordance with their respective interests; |
| b. | unless the context otherwise requires, words in the singular include the plural and vice versa; |
| c. | this Agreement, the Finance Documents or any other agreement or document shall be construed as a reference to this Agreement or the Finance Documents, as the case may be, such other agreement or document as the same may have been, or may from time to time be, amended, varied, novated or supplemented in accordance with the provisions hereof or thereof; |
| d. | a provision of law is a reference to that provision as amended or re-enacted; |
| e. | a Clause shall, subject to any contrary indication, be construed as a reference to a clause of this Agreement; |
| f. | a person shall be construed as a reference to any person, firm, company, corporation, government, state or agency of a state or any association or partnership (whether or not having separate legal personality) of two or more of the foregoing; |
| g. | a Schedule shall, subject to any contrary indication, be construed as a reference to a schedule to this Agreement; |
| h. | the winding-up, dissolution, administration or re-organization of a company or corporation shall be construed so as to include any equivalent or analogous proceedings under the applicable 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, reorganization, dissolution, administration, arrangement, adjustment, protection or relief of debtors. |
| 1.2.2 | Unless a contrary indication appears, a term used in any other Finance Document or in any notice given under or in connection with any Finance Document has the same meaning in that Finance Document or notice as in this Agreement. |
| 2. | Facility |
| 2.1.1 | Subject to the terms of this Agreement, the Lender makes available to the Borrower a facility (the “Facility”) up to a maximum amount of USD twenty-four million (USD 24,000,000) (the “Facility Amount”). |
| 2.1.2 | The Borrower shall apply the Facility Amount as follows: |
| a. | the First Bridge shall be applied to partially finance the purchase of the Vessel 1 by the Ship Co 1 up to an amount of USD twenty-four million (USD 24,000,000) in the context of the completion of the New Leasing 1; |
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EXECUTION VERSION
| b. | the Second Bridge shall be applied to partially finance the purchase of the Vessel 2 by the Ship Co 2 up to an amount of USD twelve million (USD 12,000,000) in the context of the completion of the New Leasing 2, |
(each a “Bridge Loan”).
| 2.1.3 | For the avoidance of doubt, the Second Bridge cannot be drawn until full repayment of the First Bridge. |
| 2.1.4 | The Facility shall be available to be drawn down in USD only. |
| 2.1.5 | The Lender is not bound to monitor or verify the application of any amount borrowed pursuant to this Agreement. |
| 2.1.6 | The granting of the Facility by the Lender will be conditional to (without limitation): (i) compliance with the conditions precedent set out in Schedule 1 (Conditions Precedents) in form and substance satisfactory to the Lender, (ii) the representations and warranties set out in Clause 8 being true and correct and not misleading and (iii) the irrevocable approval of the repayment of the Shareholder Loans to the Borrower. |
| 3. | Utilization |
| 3.1.1 | Subject to the terms and conditions of this Agreement, the Facility shall be available for utilization on any Business Day, provided that the Borrower delivers a formal request in writing to the Lender, using the form as used by the Lender at that time (the “Utilization Request”) substantially in the form set out in in Schedule 2 (Utilization Request). |
| 3.1.2 | The amounts drawn under the Utilization Request shall be transferred to the account indicated by the Borrower in the Utilization Request. |
| 3.1.3 | Each Bridge Loan shall be available to be drawn down in one (1) single utilization, and the Second Bridge shall only be made available to the Borrower upon complete repayment of the First Bridge, to the sole and entire satisfaction of the Lender. |
| 3.1.4 | In addition to the requirements of Clause 2.1.6, the Utilization Request may only be delivered provided that: |
| a. | it is received during the Availability Period; |
| b. | no Event of Default or Illegality Event has occurred or would result from the proposed utilization; and |
| c. | no event or series of events have occurred which in the reasonable opinion of the Lender might have a Material Adverse Effect. |
| 3.1.5 | The Utilization Request has to be delivered to the Lender at least one (1) Business Day before the proposed utilization date, at 11:00 a.m. (CET) at the latest, unless otherwise agreed by the Lender, and the proposed utilization date shall be on a Business Day in Geneva, Switzerland. |
| 3.1.6 | If for any reason a Bridge Loan has not been drawn down within the Availability Period, the unused portion of the Facility Amount shall be immediately cancelled at the end of the Availability Period. |
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EXECUTION VERSION
| 4. | Interest |
| 4.1 | Interest Period |
| 4.1.1 | The Interest Period shall be the following: |
| a. | Regarding the First Bridge, the Interest Period shall start on the utilization date of the First Bridge, and end upon the earliest of (i) the complete repayment of the First Bridge and (ii) eight (8) days; |
| b. | Regarding the Second Bridge, the Interest Period shall start on the utilization date of the Second Bridge, and end upon the earliest of (i) the complete repayment of the Second Bridge and (ii) eight (8) days, |
(each an “Interest Period”).
| 4.2 | Interest Rate |
| 4.2.1 | The interest rate applicable for each Interest Period (the “Interest Rate”) shall be the percentage rate per annum, which is the aggregate of (i) the Applicable Rate, (ii) the Applicable Margin and (iii) default interest as per Clause 4.4. |
| 4.3 | Payment of Interest |
| 4.3.1 | The Borrower shall pay the interest into the Account on the last day of the respective Interest Period up to and including the Maturity Date of each bridge. The Borrower hereby authorizes the Lender to debit the Account to pay any such accrued interest. |
| 4.4 | Interest for Late Payment |
| 4.4.1 | If the Borrower fails to pay any amount payable by it under this Agreement on the Maturity Date of the relevant Bridge Loan, interest will accrue on the outstanding Facility Amount from the due date up to the date of actual payment at the Interest Rate plus two percent (2%) per annum. Any interest accruing under this Clause will be immediately payable by the Borrower on demand by the Lender. |
| 5. | Repayment of the Facility |
| 5.1.1 | The Borrower shall repay each Bridge Loan on its respective Maturity Date. |
| 6. | Prepayment and Cancellation |
| 6.1 | Illegality |
| 6.1.1 | If an Illegality Event occurs, or the Lender reasonably considers that an Illegality Event will occur, or if it becomes unlawful or contrary to any Applicable Law for the Lender to make or fund the Facility, the Lender (i) shall promptly notify the Borrower upon becoming aware of that event and (ii) is entitled to cancel the Facility and (iii) to request from the Borrower the prepayment in full (including accrued interest thereon) of the outstanding Facility, together with any accrued interest and any other amounts due under this Agreement. |
| 6.2 | Mandatory prepayment |
| 6.2.1 | Upon the occurrence of a Mandatory Repayment Event (as defined below), the Lender may at any time, by a written notice to the Borrower, request the repayment in full of the outstanding Facility Amount, including any accrued interest, any Break Costs and any other amounts due under this Agreement, and the Borrower shall repay the outstanding Facility Amount, including any accrued interest, any Break Costs and any other amounts due under this Agreement, to the Lender on or before the mandatory repayment date indicated in the written notice, subject to relevant provisions of Clause 6.2.2 below. |
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EXECUTION VERSION
| 6.2.2 | Each of the following shall constitute a mandatory repayment event (each a “Mandatory Repayment Event”): |
| a. | if there is a Change of Control without the Lender’s prior written consent; |
| b. | an Extraordinary Event has occurred; |
| c. | if the shares of the Family Co are sold or donated; |
| d. | if there is any actual change of Applicable Law, regulation or practice which imposes actual or contingent liability on the Lender as lender or secured creditor or otherwise; or materially affects the rights of the Lender as secured creditor; |
| e. | if there is any actual change of law, regulation or practice which provides that any liability of the Borrower becomes secured on the Borrower’s assets, in priority to the Lender; |
| f. | if, by maintaining its commitment under this Agreement, the Lender is no longer able to comply with its legal and regulatory obligations; |
| g. | in respect of the First Bridge, if (i) the acquisition of the Vessel 1 by the ShipCo 1 is not completed within 5 days of the drawdown of the First Bridge and (ii) the facility granted for the purpose of the New Leasing 1 is terminated or cancelled or not drawn by the ShipCo 1 within its availability period; |
| h. | in respect of the Second Bridge, if (i) the acquisition of the Vessel 2 by the ShipCo 2 is not completed within 5 days of the drawdown of the Second Bridge and (ii) the facility granted for the purpose of the New Leasing 2 is terminated or cancelled or not drawn by the ShipCo 2 within its availability period; |
| i. | if the Account or the Shareholder Account is closed; |
| j. | if there is bankruptcy, insolvency, winding down, revocation, rehabilitative or regulatory jurisdiction of an Obligor; |
| k. | if there is a Personal Guarantor Event; |
| l. | if any assets subject to a Security created or to be created in favor of the Lender pursuant to the Security Documents or this Agreement is sold, disposed of, conveyed or transferred. |
| 6.2.3 | Any surplus funds following a full mandatory repayment as set out in this Clause shall be released to the Borrower after the reimbursement of the Break Costs and any other costs reasonably incurred and documented by the Lender. |
| 6.3 | Restriction and conditions |
| 6.3.1 | Any notice given by the Borrower under this Clause 6 shall be irrevocable and, unless a contrary indication appears in this Agreement, shall specify the date or dates upon which the relevant prepayment is to be made and the amount of that prepayment. |
| 6.3.2 | The Borrower may not re-borrow any part of the Facility which is repaid unless otherwise provided in this Agreement. |
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EXECUTION VERSION
| 7. | Break Costs |
| 7.1.1 | The Borrower shall, within five (5) Business Days of demand by the Lender, pay to the Lender its Break Costs attributable to all or any part of the Facility being paid by the Borrower on a day other than the last day of an Interest Period. |
| 8. | Arrangement Fee |
| 8.1.1 | On the signing date of this Agreement, the Borrower shall pay to the Lender an arrangement fee in an amount of USD one hundred ninety thousand (USD 190,000). |
| 8.1.1 | The Borrower acknowledges that the arrangement fee is non-refundable in any case. |
| 8.1.2 | For the avoidance of doubt, the arrangement fee shall be due even if the transaction as herein described fails to close. |
| 8.1.3 | Payment of the arrangement fee shall be made to the Account. |
| 9. | Representations and Warranties |
| 9.1.1 | On the signature date of this Agreement, on the date of the Utilization Request and on each day during which the obligations on the part of the Borrower are or remain outstanding under the Agreement, the Borrower represents and warrants in respect of the Borrower or, if specified, in respect of any other Obligors, that: |
| a. | the Borrower, the Ship Cos, the Shareholder and the Trustee, in its capacity as trustee of the Trust are corporations or companies (as applicable) duly incorporated and validly existing under the laws of their country of incorporation, have the requisite powers and authority, and have taken all necessary corporate, legal and other action, to enter into the Finance Documents to which they are parties with binding effect for the Borrower, the Ship Cos and the Shareholder; |
| b. | the obligations of each Obligor under the Finance Documents to which it/he is a party are validly entered into and are enforceable against it/him in accordance with their terms; |
| c. | the entering into and the performance by the Borrower, the Ship Cos and the Shareholder of the Finance Documents to which they are parties do not and will not conflict with the constitutional documents of the Borrower, the Ship Cos or the Shareholder (as the case may be), and will not conflict with any law, regulation, order, agreement or other document which is binding upon them; |
| d. | no Event of Default has occurred or will occur as a result of the utilization of the Facility hereunder; |
| e. | the obligation of each Obligor under Finance Documents to which it/he is a party rank, and will at all times, rank pari passu with all of its/his unsecured and unsubordinated Financial Indebtedness; |
| f. | the Personal Guarantor wholly and indirectly owns the Shareholder; |
| g. | the Trustee, in its capacity as trustee of the Trust, wholly and directly owns the Shareholder; |
| h. | the Shareholder directly owns sixty-three point thirty-five percent (63.35%) of the issued shares of the Borrower; |
| i. | the Borrower wholly and directly owns the Ship Cos and is the direct legal and beneficial owner of the Ship Cos; |
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EXECUTION VERSION
| j. | each Ship Co will be, upon purchase of its Vessel from CMBFL, the direct legal and beneficial owner of its Vessel and, upon completion of its relevant New Leasing, the sole and direct lessor of its Vessel; |
| k. | the only asset of ShipCo 1 is, upon its purchase from CMBFL, Vessel 1 and during the period the First Bridge is outstanding the Shipco 1 has no Financial Indebtedness; |
| l. | the only asset of ShipCo2 is, upon its purchase from CMBFL, Vessel 2 and during the period the Second Bridge is outstanding the Shipco 2 has no Financial Indebtedness; |
| m. | the only asset of the Shareholder is its shares in the Borrower and the Shareholder has no Financial Indebtedness until the complete repayment of the Facility; |
| n. | the Personal Guarantor is a natural person and there is no incapacity or limitation on his ability to enter into any Finance Document to which he is a party under any Applicable Law; |
| o. | the most recent financial statements of the Borrower, either Ship Co and the Shareholder have been prepared in accordance with relevant financial reporting standards, consistently applied, and fairly present the financial position and results as at the date they were drawn up, and there shall not have occurred since such date a material adverse change in the business, assets, liabilities, financial and other conditions, prospects or results of operations of the Borrower, the Ship Cos and the Shareholder; |
| p. | no litigation, arbitration or administrative proceedings are current or, to its knowledge, pending or threatened, which might, if adversely determined, have a Material Adverse Effect; |
| q. | any information, including without limitation any financial statements or any financial projections provided by or on behalf of the Borrower, the Ship Cos and the Shareholder including under any of the Finance Documents was true, complete and accurate in all respects as at the date it was provided or as at the date (if any) at which it was stated and nothing has been omitted or withheld that results in the information given being untrue or misleading; |
| r. | the Borrower, the Ship Co, the Shareholder and the Trustee, in its capacity as trustee of the Trust, have good, valid and marketable titles to, or valid leases or licenses of, and all appropriate material authorizations to use, the assets necessary to carry on their business as presently conducted; |
| s. | each Obligor has sought independent legal, financial and tax advice in relation to the Finance Documents and each Obligor has retained legal counsel to advise it/him in connection with the transactions contemplated under the Finance Documents, and fully understands the nature and extent of its/his obligations and liabilities under the Finance Documents and has acted independently and free from any undue influence of any person; |
| t. | the Obligors have not incurred, nor entered into, any financing agreement relating to the Vessels other than the Financial Indebtedness under the Finance Documents and the New Leasings with CMBFL; |
| u. | the repayment of the Shareholder Loans is not restricted or otherwise prohibited under any documents or circumstances including without limitation under the transaction documents of the existing leasings with CMBFL and the New Leasings with CMBFL; |
| v. | the Obligors are not in breach or default under any Applicable Law, which breach or default would be reasonably likely to have a Material Adverse Effect; |
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EXECUTION VERSION
| w. | each Obligor has complied in all respects with all tax laws and regulations applicable to it/him and its/his business and has filed or caused to be filed all tax reports and returns required to be filed by or on behalf of it/him; |
| x. | no insolvency proceeding in any form, including, without limitation, bankruptcy, receivership, administration, moratorium, rearrangement, judicial management, statutory proceeding for the restructuring of debt, reorganization, composition or arrangement with creditors, voluntary or involuntary, affecting the Borrower, the Ship Cos, the Shareholder or the Trustee, in its capacity as trustee of the Trust, or any of their assets or properties, is pending or threatened and the Borrower, the Ship Cos, the Shareholder and the Trustee, in its capacity as trustee of the Trust, have not taken any action in contemplation of, or that would constitute the basis for, the institution of any such insolvency proceedings; |
| y. | neither the Borrower, the Ship Cos, nor the Shareholder or the Personal Guarantor: |
| (i) | is in possession of any Material Non-Public Information relating to the Borrower’s shares which would (i) restrict its ability to deal in the Borrower’s shares or grant Security over the Borrower’s shares to the Lender, if required by the Lender, or (ii) affect its ability to enter into or perform its obligations under the Finance Documents; |
| (ii) | is or has engaged in market abuse (including insider dealing) or market manipulation in entering into and performing its obligations under the Finance Documents; or |
| (iii) | has made the decision to enter into the Finance Documents (or has been influenced in making such decision) on the basis of Material Non-Public Information; |
| z. | the Borrower, the Ship Cos, the Shareholder and the Trustee, in its capacity as trustee of the Trust, carry out all transactions with any person on arm’s length terms; |
| aa. | the choice of governing law specified in each of the Finance Documents will be recognized and enforced in its relevant jurisdictions; and |
| bb. | any judgment obtained from a court in relation to a Finance Document in the jurisdiction of the governing law of that Finance Document will be recognized and enforced in its relevant Jurisdictions. |
| 10. | Environmental and Sanctions’ Representations and Warranties |
| 10.1.1 | On the signature date of this Agreement, on the date of the Utilization Request and on each day during which the obligations on the part of the Borrower are or remain outstanding under the Agreement, the Borrower represents and warrants in respect of the Borrower or, if specified, in respect of any other Obligors, that: |
| a. | all Environmental Laws relating to the ownership, operation and management of the Vessels and the Ship Cos and the Borrower’s business (as now conducted and as reasonably anticipated to be conducted in the future) and the terms of all Environmental Approvals have been complied with; |
| b. | no Environmental Claim has been made or threatened against an Obligor or any Vessel; |
| c. | no Environmental Incident has occurred and no person has claimed that an Environmental Incident has occurred; |
| d. | the ownership and operation of the Vessels, is not intended to be and will not be within any Sensitive Zone and will furthermore not be prohibited or restricted by, and will not, directly or indirectly, expose the Lender, any of its Affiliates, or their agents and/or employees to Sanctions, prohibitions or restrictions under any applicable national or international laws, including rules and regulations of the Sanctions Authorities; |
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| e. | no Obligor, their directors, officers or to the best of their knowledge any Affiliate or employee of the Obligors is currently the target of Sanctions; |
| f. | each Obligor, their directors, officers or to the best of their knowledge any Affiliate or employee of the Obligors is in full compliance with all regulations and rules issued by any Sanctions Authority and has instituted and maintained policies and procedures designed to promote and achieve compliance with such rules and regulations; |
| g. | no Obligor, their directors, officers or to the best of their knowledge any Affiliate or employee of the Obligors: |
| (i) | is a Restricted Person or is engaging in or has engaged in any transaction or conduct that could result in it becoming a Restricted Person; |
| (ii) | has received notice of or is aware of any claim, action, suit, proceeding or investigation against it with respect to Sanctions by any Sanctions Authority; |
| (iii) | is engaging or has engaged in any transaction that evades or avoids, or has the purpose of evading or avoiding, or breaches or attempts to breach, directly or indirectly, any Sanctions applicable to it; |
| (iv) | has engaged or is engaging, directly or indirectly, in any trade, business or other activities with or for the benefit of any Restricted Person; or |
| (v) | is owned or controlled by, or acting directly or indirectly on behalf of or for the benefit of, a Restricted Person and none of such persons owns or controls a Restricted Person; |
| h. | the Borrower, the Ship Cos, the Shareholder, the Trustee, any director or officer or, to the knowledge of the Borrower, any employee, agent or Affiliate of the Borrower, the Ship Cos or the Shareholder or the Trustee is not an individual or entity that is, or is owned or controlled by persons that are, (i) Restricted Persons or (ii) organized or resident in a Restricted Country; |
| i. | no proceeds of the Facility shall be made available to any Affiliate, joint venture partner or any other person or entity, directly or indirectly for the purpose of financing the activities of a Restricted Person or otherwise shall be, directly or indirectly, applied in a manner or for a purpose prohibited by Sanctions; |
| j. | no Obligor, or to the relevant Obligor’s knowledge, their directors, officers or to the best of their knowledge any Affiliate or employee of the Obligors, has taken any action resulting in a violation by such persons of Sanctions or which constitutes or would constitute any such violations by any Obligor, the Lender or any Affiliate of the Lender; and |
| k. | no Obligor and none of their respective subsidiaries, directors or officers or to the best of its knowledge none of their Affiliates or employees has engaged in any activity or conduct which would violate any applicable anti-bribery, anti-corruption or anti-money laundering laws or regulations in any applicable jurisdiction or any HSBC Group policy and the Obligors have respectively instituted and maintained policies and procedures designated to prevent violation of such laws, regulations and rules. |
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| 11. | Information Undertakings |
| 11.1.1 | For so long as any obligations on the part of the Borrower are or remain outstanding under the Agreement, the Borrower shall: |
| a. | notify the Lender of any Event of Default (and in each case the steps, if any, being taken to remedy it) promptly upon becoming aware of its occurrence; |
| b. | regarding Material Non-Public Information: |
| (i) | the Borrower shall not provide the Lender with any Material Non-Public Information in any document or notice required to be delivered pursuant to this Agreement or communication in connection with this Agreement (each a “Communication”) without (i) first notifying the Lender in writing that the Communication that that the Borrower is about to deliver contains Material Non-Public Information, and (ii) the Lender giving written confirmation that it wishes to receive such information and instructing the Borrower to whom such information shall be delivered; |
| (ii) | absent such notification from the Borrower, the Borrower shall be deemed to have represented that such Communication contains no such Material Non-Public Information; |
| (iii) | the Borrower authorises and consents to the Lender (together with any person acting on the Lender’s behalf) disclosing to any person any Material Non-Public Information that the Lender considers necessary or desirable for the purposes of or in connection with any, or any potential, realisation or enforcement of any Security expressed to be created by any Security Document over all or any of the Shares; |
| c. | notify the Lender of any Environmental Claim made against the Borrower or a Ship Co or in connection with a Vessel, or any Environmental Incident; |
| d. | notify the Lender of circumstances which could give rise to a breach of any representation or undertaking in this Agreement, or any Event of Default, relating to Sanctions; |
| e. | notify the Lender of any notice, or the Borrower becoming aware, of any claim, action, suit, proceeding or investigation against it or any of its directors, officers, employees or agents with respect to Sanctions; |
| f. | upon the request of the Lender, make available to or procure the supply of, such documentation and other evidence as is reasonably requested by the Lender in order for it to conduct any “know your customer” or other similar procedures under Applicable Laws; and |
| g. | upon request of the Lender, make available to the Lender all other financial or other information on the Obligors and the Vessels (including their location, valuation, etc.) that the Lender may reasonably require or request. |
| 12. | General Undertakings |
| 12.1.1 | For so long as any obligations on the part of the Borrower are or remain outstanding under the Agreement: |
| a. | the Borrower shall not, directly or indirectly, use the proceeds of the Facility, or lend, contribute or otherwise make available such proceeds to any joint venture partner or other person, (i) to fund any activities or business of or with any Restricted Person, or in any country or territory, that, at the time of such funding, is a Restricted Country, or (ii) in any other manner that would result in a violation of Sanctions by any person; |
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| b. | the Obligors shall comply with all Applicable Laws; |
| c. | the Private Banking Relationship shall be maintained with the Lender; |
| d. | the Borrower, the Ship Cos, the Shareholder and the Trustee, in its capacity as trustee of the Trust, shall not make any substantial change to the general nature or scope of their business without the prior written consent of the Lender; |
| e. | the Obligors shall not create, incur, assume, suffer to exist or in any manner become or remain liable for any new Financial Indebtedness, other than the New Leasing 1 and the New Leasing 2, without the prior written approval of the Lender; |
f. the Borrower, the Ship Cos, the Shareholder and the Trustee, in its capacity as trustee of the Trust, shall not (i) enter into or permit to subsist any title retention arrangement or any security interests over any of its assets or (ii) enter into or permit to subsist any arrangement under which money or the benefit of a bank or other account may be applied, set-off or made subject to a combination of accounts, or enter into or permit to subsist any other preferential arrangement having a similar effect, in each case in circumstances where the arrangement or transaction is entered into primarily as a method of raising Financial Indebtedness or of financing the acquisition of an asset;
| g. | the Borrower, the Ship Cos and the Shareholder shall not declare, make or pay any dividends, reimburse any shareholder loans or make any other distributions of any kind to its shareholders, other than the repayment of the Shareholder Loans to the Borrower, without the prior written consent of the Lender if an Event of Default has occurred or would result from such dividends and/or distributions; |
| h. | each Ship Co shall approve the repayment of the Shareholder Loans to the Borrower on or before the utilization date of this Agreement and shall cause not to revoke such approval; |
| i. | the Borrower undertakes to transfer, upon receipt, and maintain thereafter the full repayment amount received under the Shareholder Loans to the Account; |
| j. | the Borrower, the Ship Cos and the Shareholder shall not redeem, repay, purchase, cancel or otherwise return, acquire or reduce all or any class or part of its issued shares; |
| k. | the Shareholder shall not, without the prior written consent of the Lender, maintain any other bank account, other than with the Lender; |
| l. | the Borrower and the Shareholder shall not close the Account, respectively the Shareholder Account, or any sub-account, without the prior written approval of the Lender; |
| m. | as from the occurrence of an Event of Default, the Borrower and the Shareholder shall not withdraw any amount from the Account, respectively from the Shareholder Account, without the Lender’s prior written consent provided that the Lender may and is irrevocably authorized by the Borrower and the Shareholder to (i) operate the Account, respectively the Shareholder Account and (ii) to withdraw from, and apply amounts standing to the credit of, the Account, respectively the Shareholder Account, in or towards any proper purpose for which moneys in any account may be applied as from the occurrence of an Event of Default; |
| n. | the Shareholder shall ensure that its share certificates, if any, representing all of its issued shares, if any, shall remain in the physical custody of the Lender; |
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| o. | the Shareholder and the Personal Guarantor shall ensure that their shares in the Borrower are held and maintained on the Shareholder Account, respectively on the account of the Personal Guarantor held with the Lender; |
| p. | the Shareholder and the Trustee, in its capacity as trustee of the Trust, shall not cause or permit the cancellation and/or replacement of any share certificates representing the issued shares of the Shareholder without the Lender’s prior written consent; |
| q. | each of the Borrower, the Ship Cos except if in relation the respective New Leasing, and the Shareholder shall not: (i) sell, transfer or dispose of any of its assets without the prior written approval of the Lender; (ii) hypothecate or mortgage any of its respective assets without the prior written approval of the Lender (acting in its sole discretion); (iii) create or permit to subsist any Security over any of its respective assets (other than pursuant to the Security Documents); and |
| r. | the Borrower, the Ship Cos, and the Shareholder shall not create or permit to subsist any security over any of their assets or their issued shares other than pursuant to the Securities Documents. |
| 12.1.2 | Any loan, credit or other interest- or non-interest bearing debt directly or indirectly granted to the Borrower by any direct or indirect shareholder, member or partner of the Borrower shall be at all times subordinated to any amounts due under this Agreement to the Lender, and the Borrower shall promptly supply the Lender with copies of all documents relating to such shareholder loans. |
| 13. | Environmental and Sanctions’ undertakings |
| 13.1.1 | For so long as any obligations on the part of the Borrower are or remain outstanding under the Agreement: |
| a. | the Borrower and the Ship Cos shall: |
| (i) | comply with all Environmental Laws (as applicable to the Vessels); |
| (ii) | obtain, maintain and ensure compliance with all requisite Environmental Approvals (as applicable to the Vessels); |
| (iii) | implement procedures to monitor compliance with and to prevent liability under any Environmental Law (as applicable to the Vessels), |
where failure to do so has or is reasonably likely to have a Material Adverse Effect;
| b. | the Borrower shall promptly upon becoming aware of the same, inform the Lender in writing of: |
| (i) | any Environmental Claim against it which is current, pending or threatened; and |
| (ii) | any facts or circumstances which are reasonably likely to result in any Environmental Claim being commenced or threatened against it, |
where the claim, if determined against it, has or is reasonably likely to have a Material Adverse Effect;
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| c. | the Borrower shall not do (or fail to do) or cause or permit another person to do (or omit to do) anything which is likely to: |
| (i) | make it unlawful or contrary to Sanctions for an Obligor to perform any of its obligations under the Finance Documents; |
| (ii) | cause any obligation of an Obligor under the Finance Documents to cease to be legal, valid, binding or enforceable; |
| (iii) | cause any Finance Document to cease to be in full force and effect; |
| (iv) | cause any Security Documents to rank after, or lose its priority to, any other Security; and |
| (v) | imperil or jeopardise the Security Documents; |
| d. | the Borrower undertakes and shall cause the Ship Cos to undertake that the ownership and operation of the Vessels, is not intended to be and will not be within any Sensitive Zone and will furthermore not be prohibited or restricted by, and will not, directly or indirectly, expose the Lender, any of its Affiliates, or their agents and/or employees to Sanctions, prohibitions or restrictions under any applicable national or international laws, including rules and regulations of the Sanctions Authorities. |
| e. | the Borrower undertakes and shall cause the Ship Cos to undertake to ensure that: |
| (i) | no Obligor, their directors, officers or to the best of their knowledge any Affiliate or employee of the Obligors is and will be the target of Sanctions; |
| (ii) | each Obligor, their directors, officers or to the best of their knowledge any Affiliate or employee of the Obligors is and will be in full compliance with all regulations and rules issued by any Sanctions Authority and has instituted and maintained policies and procedures designed to promote and achieve compliance with such rules and regulations; |
| (iii) | no Obligor, their directors, officers or to the best of their knowledge any Affiliate or employee of the Obligors: |
| a. | is a Restricted Person or is engaging in or has engaged in any transaction or conduct that could result in it becoming a Restricted Person; |
| b. | has received notice of or is aware of any claim, action, suit, proceeding or investigation against it with respect to Sanctions by any Sanctions Authority; |
| c. | is engaging or has engaged in any transaction that evades or avoids, or has the purpose of evading or avoiding, or breaches or attempts to breach, directly or indirectly, any Sanctions applicable to it; |
| d. | has engaged or is engaging, directly or indirectly, in any trade, business or other activities with or for the benefit of any Restricted Person; or |
| e. | is owned or controlled by, or acting directly or indirectly on behalf of or for the benefit of, a Restricted Person and none of such persons owns or controls a Restricted Person; |
| f. | the Borrower undertakes that no proceeds of the Facility shall be made available to any Affiliate, joint venture partner or any other person or entity, directly or indirectly for the purpose of financing the activities of a Restricted Person or otherwise shall be, directly or indirectly, applied in a manner or for a purpose prohibited by Sanctions; |
| g. | the Borrower shall ensure that no Obligor (or, to the Obligors’ knowledge, none of their respective directors, officers, employees, agents, Affiliates or representatives) shall take any action resulting in a violation by such persons of Sanctions or which constitutes or would constitute any such violations by any Obligor, the Lender or any Affiliate of the Lender; |
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| 14. | Further Assurance |
| 14.1.1 | Each Obligor will promptly take such steps as the Lender may deem necessary or appropriate to perfect, maintain and protect the interests of the Lender under the Finance Documents, including the execution of such additional documents as the Lender may reasonably require. |
| 15. | Financial Covenants |
| 15.1.1 | From the signing of this Agreement, the market value of the issued shares of the Borrower held by the Shareholder and the Personal Guarantor shall exceed at minimum one point five (1.5) times the outstanding Facility Amount. |
| 16. | Guarantee and Indemnity |
| 16.1 | Guarantee and Indemnity |
| 16.1.1 | Each Ship Co, up to the amount of its respective Bridge Loan received from the Borrower, herewith, irrevocably and unconditionally, guarantees to the Lender in accordance with the terms of article 111 of the Swiss Code of Obligations (“porte-fort”), as primary obligor (i.e. as a principal and independent debtor) and not merely in the form of a surety (the term surety being a translation for the purposes of the Guarantee as “cautionnement”) upon first written demand: |
| a. | the punctual performance by the Borrower of all the Borrower’s payment obligations under the Finance Documents; |
| b. | the payment of all Secured Obligations, within ten (10) Business Days of the first written demand from the Lender confirming that any amount when due (after taking into consideration any cure period, if applicable) has remained unpaid by the Borrower under this Agreement or any other Finance Document (and without requesting any further evidence of non-payment); |
and the amount recoverable under this Guarantee shall be equal to the amount which the Lender would otherwise have been entitled to recover.
| 16.1.2 | Each Ship Co, up to the amount of its respective Bridge Loan received from the Borrower, irrevocably and unconditionally agrees with the Lender that if any obligation guaranteed by it is or becomes unenforceable, invalid or illegal, it will, as an independent and primary obligation, indemnify the Lender within ten (10) Business Days upon demand against any cost, loss or liability it incurs as a result of any Obligor not paying any amount which would, but for such unenforceability, invalidity or illegality, have been payable by it under any Finance Document on the date when it would have been due (after taking into consideration any cure period, if applicable). The amount payable by the respective Ship Co under this indemnity will not exceed the amount it would have had to pay under this Clause 16 if the amount claimed had been recoverable on the basis of a guarantee. |
| 16.1.3 | The Lender may serve more than one demand under this Guarantee. |
| 16.1.4 | All payments made or to be made by the Ship Cos under this Guarantee shall be made in full without any set-off or counterclaim on account of any taxes or of any claim that the Ship Cos or any other Obligor may have against the Lender. |
| 16.2 | Reinstatement |
| 16.2.1 | If any discharge, release or arrangement (whether in respect of the obligations of any Obligor or any security for those obligations or otherwise) is made by the Lender in whole or in part on the basis of any payment, security or other disposition which is avoided or reduced or must be restored for any reason, including, without limitation, in insolvency, liquidation, administration or otherwise, then the liability of the Ship Cos under this Clause 16 will continue or be reinstated as if the discharge, release or arrangement had not occurred and the Lender shall be entitled to recover the value or amount of that payment from the Ship Cos, as if the payment, discharge, avoidance or reduction had not occurred. |
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| 16.3 | Waiver of defences |
| 16.3.1 | Each Ship Co hereby explicitly and irrevocably waives all rights of objection and defense arising from or under this Agreement or any other Finance Document, including but not limited to: |
| a. | any time, waiver or consent granted to, or composition with, any Obligor or other person; |
| b. | the release of any other Obligor or any other person under the terms of any composition or arrangement with any creditor of any other person; |
| c. | the taking, variation, compromise, exchange, renewal or release of, or refusal or neglect to perfect, take up or enforce, any rights against, or security over assets of, any Obligor or other person or any non-presentation or non-observance of any formality or other requirement in respect of any instrument or any failure to realise the full value of any security; |
| d. | any incapacity or lack of power, authority or legal personality of or dissolution or change in the members or status of an Obligor or any other person; |
| e. | any amendment, novation, supplement, extension, restatement (however fundamental and whether or not more onerous) or replacement of any Finance Document or any other document or security including without limitation any change in the purpose of any extension of or any increase in any facility or the addition of any new facility under any Finance Document or other document or security; |
| f. | any unenforceability, illegality or invalidity of any obligation of any person under any Finance Document or any other document or security; |
| g. | any insolvency or similar proceedings; |
| h. | the winding-down, dissolution, administration or reorganization of any Obligor or any change in its status, function, control or ownership; and |
| i. | this Agreement or any other Finance Document not being executed by or binding against any party |
| 16.3.2 | If the Lender omits to exercise, delays in exercising or invalidly exercises any of its rights under this Guarantee that shall not impair any other right of the Lender under this Agreement. |
| 16.4 | Immediate recourse |
| 16.4.1 | Each Ship Co waives any right it may have of first requiring the Lender to proceed against or enforce any other rights or security or claim payment from any person before claiming from the relevant Ship Co under this Clause 16. This waiver applies irrespective of any law or any provision of a Finance Document to the contrary. |
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| 16.4.2 | Without prejudice to the generality of Clause 16.4.1, the Lender shall not be obliged before exercising any of the rights, powers or remedies conferred upon it by this Guarantee or by law: |
| a. | to make any demand of any other Obligor; |
| b. | to take any action or obtain judgment in any court against any other Obligor; or |
| c. | to make or file any claim or proof in a winding-up or dissolution of any other Obligor. |
| 16.5 | Appropriations |
| 16.5.1 | Until Secured Obligations have been irrevocably paid in full, the Lender may: |
| a. | refrain from applying or enforcing any other moneys, security or rights held or received by the Lender in respect of those amounts, or apply and enforce the same in such manner and order as it sees fit (whether against those amounts or otherwise) and the Ship Cos shall not be entitled to the benefit of the same; and |
| b. | hold in an interest bearing suspense account any moneys received from the Ship Cos or on account of the Ship Cos’ liability under this Clause 16. |
| 16.6 | Deferral of Ship Cos’ rights |
| 16.6.1 | Until all the Secured Obligations have been irrevocably paid in full and unless the Lender otherwise directs, the Ship Cos will not exercise any rights which it may have by reason of performance by it of its obligations under the Finance Documents or by reason of any amount being payable, or liability arising, under this Clause 16: |
| a. | to be indemnified by an Obligor; |
| b. | to claim any contribution from any other Obligor for any Obligor’s obligations under the Finance Documents; |
| c. | to take the benefit (in whole or in part and whether by way of subrogation or otherwise) of any rights of the Lender under the Finance Documents or of any other guarantee or security taken pursuant to, or in connection with, the Finance Documents by the Lender; |
| d. | to exercise any right of set-off against any Obligor; and/or |
| e. | to claim or prove as a creditor of any Obligor in competition with the Lender. |
| 16.6.2 | If any Ship Co receives any benefit, payment or distribution in relation to such rights it shall hold that benefit, payment or distribution to the extent necessary to enable all amounts which may be or become payable to the Lender by the Obligors under or in connection with the Finance Documents to be repaid in full for the Lender and shall promptly pay or transfer the same to the Lender or as the Lender may direct for application in accordance with this Agreement. |
| 16.7 | Ship Cos’ intent |
| 16.7.1 | Prior to signing this Agreement, each Ship Co has sought independent advice from a Swiss lawyer and confirms that it has been informed of and fully understands the nature and extent of its obligations and liabilities under this Agreement as well as the difference between this Guarantee (“porte-fort”), which is an independent guarantee, and a dependent guarantee (“cautionnement”, hereafter referred to as a “surety”) or any other non-independent guarantee and in particular the fact that the undertakings made and obligations taken under this Guarantee are fully independent from those of the Borrower and thus will remain valid and enforceable regardless of the validity and enforceability of the obligations of the Borrower whose performance it is guaranteeing. On the other hand, the validity and enforceability of the surety is linked to that of the Borrower and that thus if such obligations are not valid and enforceable the dependent guarantee will not be either. |
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| 16.7.2 | For the avoidance of doubt, each Ship Co agrees that its intention is to grant an independent guarantee and not a surety or any other non-independent guarantee. Furthermore, each Ship Co confirms that with regards to the payments obligations under the Finance Documents its intent is to be a direct debtor of the Lender to the same extent as if it was itself the Borrower. |
| 16.7.3 | Without prejudice to the generality of Clause 16.3, each Ship Co expressly confirms that it intends that this Guarantee shall extend from time to time to any variation, increase, extension or addition of or to any of the Finance Documents and/or any facility or amount made available under any of the Finance Documents and any variation, extension fees, costs and/or expenses associated with any of the foregoing. |
| 16.8 | Security provisions |
| 16.8.1 | This Guarantee and the Security hereby created shall be a continuing security and shall, save as herein provided, cover any sum or sums of money or other liability and obligations which constitute the Secured Obligations during the Security Period |
| 16.8.2 | The obligations of the Ship Cos contained in this Agreement are cumulative and shall be in addition to and independent of every other security which the Lender may at any time hold in relation to any of the Secured Obligations. |
| 16.9 | Duration of the Guarantee |
| 16.9.1 | The Guarantee shall remain in full force during the Security Period. |
| 17. | Assignment of the Shareholder Loans |
| 17.1 | Undertaking to assign and assignment |
| 17.1.1 | The Borrower hereby agrees to assign and hereby assigns for security purposes the full legal and beneficial ownership of the Shareholder Loans to the Lender, effective as from the utilization date of the First Bridge, in order to secure the prompt and complete payment, discharge and performance of any and all Secured Obligations (as defined in Clause 18.1.2), irrespective of any intermediate discharge of any but not all of the Secured Obligations (the “Assignment”). The Assignment shall serve as a continuing security, free and clear of any Security of any nature. |
| 17.1.2 | The repayment amount received under the assigned Shareholder Loans shall be, upon receipt, immediately transferred by the Borrower on the Account. |
| 17.2 | Unconditional Assignment |
| 17.2.1 | The Borrower and the Lender hereby expressly confirm their will and intention that the Assignment under this Agreement becomes immediately effective as from the utilization date of the First Bridge. |
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| 17.3 | Realization of the Shareholder Loans |
| 17.3.1 | Upon the occurrence of an Event of Default, the Lender shall be entitled, but not obliged, without any prior notice or communication to the Borrower (except where such notice or communication is required by mandatory applicable law), to enforce the Assignment by: |
| a. | undertaking on its own initiative any acts it deems appropriate to obtain the repayment of the Shareholder Loans directly from the relevant Ship Co; and/or |
| b. | realizing the Shareholder Loans in full or in part through private sale, a voluntary public auction pursuant to article 229 of the Swiss Code of Obligations (“CO”) and/or acquisition (at a reasonably determined value) of full ownership and/or entitlement of the Shareholder Loans, in each case and to the extent permitted by law without having to initiate proceedings under, and without regard to the formalities provided in, the Swiss Federal Debt Enforcement and Bankruptcy Act (“DEBA”), and applying the proceeds thereof to the discharge of the relevant Secured Obligations. For the purpose of such realization, the Lender shall be entitled to execute such third-party notifications as it deems necessary. |
| 17.3.2 | Notwithstanding the foregoing and notwithstanding the provisions of article 41 DEBA, the Lender shall be entitled to institute or pursue the enforcement of the applicable Secured Obligations pursuant to regular debt enforcement proceedings against the Borrower without having first to institute proceedings for the enforcement of the Assignment. |
| 17.3.3 | The Parties agree in advance that a sale according to article 130 DEBA shall be admissible. |
| 17.3.4 | The Lender shall, upon the occurrence of an Event of Default, have full discretion as to manner, time and place of enforcement of the Assignment, except that it shall enforce the Assignment in accordance with the terms of this Agreement. |
| 17.4 | Release of the Assignment |
| 17.4.1 | The present assignment or, in case of realization, the remainder thereof (including any remainder of the proceeds), shall be released and reassigned to the Borrower at the Borrower’s cost and risk (i) upon the date on which the Secured Obligations have been unconditionally and irrevocably paid and discharged in full in accordance with the Finance Documents, or (ii) as otherwise provided by the Finance Documents. |
| 17.5 | Duration of the Assignment |
| 17.5.1 | The Assignment shall remain in full force during the Security Period. |
| 18. | Security |
| 18.1.1 | In order to secure any obligations arising out of or related to the Finance Documents, in addition to the Assignment under Clause 17 above, the Borrower hereby agrees and undertakes to (or cause to) grant the following Securities prior to the Utilization of the First Bridge (the “Security Documents”): |
| a. | the Account Pledge; |
| b. | the Shareholder Account Pledge; |
| c. | the Share Pledge Agreement; |
| d. | a Swiss law governed personal guarantee entered into between the Personal Guarantor and the Lender as beneficiary; and |
| e. | any other document evidencing or creating (or expressed to evidence or create) Security over any asset to secure any obligation of the Borrower to the Lender under the Finance Documents. |
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| 18.1.2 | For the sake of clarify, each Security Document shall secure all present and future moneys, debts and liabilities due, owing or incurred by an Obligor to the Lender under or in connection with any Finance Document (in each case, whether alone, jointly, jointly and severally or with any other person, whether actual or contingent and whether as principal, surety or otherwise) (the “Secured Obligations”). |
| 19. | Events of Default |
| 19.1.1 | Each of the following events or circumstances constitutes an event of default (an “Event of Default”): |
| a. | any Obligor does not pay any amount payable by it under the Finance Documents to which it/he is a party on the due date or, if such failure is due to technical or administrative difficulties and such difficulty is immediately communicated to the Lender in writing, within one (1) Business Day of its due date for payment; |
| b. | any Obligor fails to comply with any other provision of the Finance Documents to which it/he is a party and such failure (if capable of remedy) is not remedied within two (2) Business Days; |
| c. | any representation or warranty made or deemed to be made by any Obligor in the Finance Documents, is or proves to have been incorrect, incomplete or misleading in any respect when made or deemed to be repeated; |
| d. | in respect of the Borrower and/or any of its Affiliates including without limitation both Ship Cos: |
| (i) | any Financial Indebtedness in excess of an aggregate of USD five hundred thousand (USD 500,000) is not paid when due; |
| (ii) | any Financial Indebtedness in excess of an aggregate of USD five hundred thousand (USD 500,000) is placed on demand or is declared to be or otherwise becomes due and payable or capable of being declared due and payable prior to its specified maturity as a result of an event of default (howsoever described); |
| (iii) | any commitment for any Financial Indebtedness in excess of an aggregate of USD five hundred thousand (USD 500,000) is cancelled or suspended by a creditor of any Obligor as a result of an event of default (however described) of such Obligor; or |
| (iv) | any creditor becomes entitled to declare any Financial Indebtedness in excess of an aggregate of USD five hundred thousand (USD 500,000) of any Obligor due and payable prior to its specified maturity as a result of an event of default (however described) of such Obligor; |
| e. | in respect of the Borrower, the Ship Cos, the Shareholder, the Personal Guarantor or any Affiliates, the Borrower, the Ship Cos, the Shareholder, the Personal Guarantor or any Affiliates is in default under any agreement existing between such person or entity and the Lender or any entity of the HSBC Group; |
| f. | the Personal Guarantor or any entity, which is directly or indirectly owned or controlled by the Personal Guarantor, and of which the Personal Guarantor has been identified by the Lender or the custodian of the entity’s assets as being the beneficial owner or the beneficiary under the relevant legislation, is in default for breach of its obligations under any arrangement existing between that entity and the Lender; |
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| g. | any Obligor becomes insolvent, is declared bankrupt by a court, applies for bankruptcy or reorganization, becomes subject to any administration, moratorium, rearrangement, judicial management, statutory proceeding for the restructuring of debt, dissolution, has a resolution passed for its winding-up or liquidation or suspends its business operations or any similar events; |
| h. | any Obligor makes or proposes a general assignment, arrangement or composition with or for the benefit of its creditors, or enters into negotiations with one or more of its Financial Indebtedness’ creditors aiming at a restructuring, readjustment or rescheduling of any part of its Financial Indebtedness as a consequence of an unwillingness or inability to pay by such company; |
| i. | any expropriation, attachment, sequestration, distress or execution affecting any asset or assets of an Obligor, which is not discharged within two (2) Business Days; |
| j. | any Obligor suspends or ceases or threatens to suspend or ceases to carry on all or a substantial part of its business other than for the purpose of a reorganization, the terms of which have received the prior written consent of the Lender; |
| k. | any security constituted by any mortgage or charge or encumbrance over or assignment of the proceeds of any assets of the Borrower becomes enforceable and steps are taken to enforce the same or any analogous event occurs; |
| l. | any Obligor fails to comply with any Applicable Law applicable to it/him, or any action as the Lender may reasonably require to remedy such non-compliance; |
| m. | any financial crime, as defined in the Account Terms as updated from time to time, occurs with respect to the Borrower; |
| n. | any litigation or proceeding, which is likely to result in an adverse ruling or judgment against an Obligor, is current or pending (i) to restrain the exercise of rights or performance of an Obligor’s obligations under the Finance Documents, (ii) in relation to any of the Security Documents, the Facility or the transactions contemplated in the Finance Documents; |
| o. | the Borrower fails to comply with or pay any sum due from it under any final judgment or any final order made or given by any court of competent jurisdiction within the period specified in the relevant judgment or if no period is specified within ten (10) Business Days of such final judgment being issued; |
| p. | any Obligor or any other person claiming by or through such Obligor challenges the existence, validity, enforceability or priority of the rights of the Borrower as owner or the Lender as pledgee, assignee or mortgagee; |
| q. | any Obligor repudiates any Finance Document; |
| r. | the auditors of the Borrower render a qualified audit opinion in respect of any financial statements; |
| s. | any part of the Vessels is arrested, destroyed, damaged or subject to any expropriation, attachment or sequestration measure; |
| t. | any part of the Vessels is compulsorily purchased or the applicable local authority makes an order for the compulsory purchase of all or any part of the Vessels; |
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| u. | an event or series of event occur and might have a Material Adverse Effect on the Borrower in the reasonable opinion of the Lender. |
| 19.1.2 | Upon the occurrence of an Event of Default, the Lender shall have the right, at its discretion, |
| a. | to cancel the Facility with immediate effect; and/or |
| b. | to declare that the Facility, together with accrued interest thereon, becomes immediately due and payable; and/or |
| c. | to declare that any Break Costs and any other sum outstanding under this Agreement or otherwise in relation to any Facility granted hereunder becomes immediately due and payable; and/or |
| d. | take such steps as the Lender considers necessary or desirable to preserve, protect and enforce its rights under the Agreement or any Security constituted by any Security Documents. |
| 20. | Payments, Set-off and Taxes |
| 20.1.1 | All payments of principal and interest (including interest for late payment and default and any Break Costs) shall be made into the Account, or at such other place as may be designated in writing by the Lender. |
| 20.1.2 | All payments to be made by the Borrower under this Agreement shall be calculated and be made without (and free and clear of any deduction for) set-off or counterclaim. |
| 20.1.3 | The Lender may at any time set off any matured obligation due from the Borrower against any obligation (whether matured or not) owed by the Lender to the Borrower, regardless of the place of payment, booking branch or currency of either obligation. If the obligations are in different currencies, the Lender may convert either of them at its sole discretion at the Spot Rate of Exchange for the purpose of such set-off. |
| 20.1.4 | Payment of principal and interest (including interest for late payment and default) shall be made without any deduction of any taxes, imposts, penalties, duties, assessments or governmental charges of any kind, present or future (the “Taxes”), except to the extent that the Borrower is required by law to withhold or deduct any Taxes. If the Borrower is required by law to deduct any Taxes from: |
| a. | any interest amount payable or paid by the Borrower pursuant to this Agreement, the Interest Rate shall be increased; or |
| b. | any other amounts payable or paid by the Borrower pursuant to the Agreement, the Borrower shall pay such additional amounts |
as may be necessary to ensure that the Lender receives a net amount equal to the full amount which it would have received, had payment not been made subject to the Taxes, provided that the Lender shall promptly pay to the Borrower any tax credits which the Lender may receive in respect of such Taxes.
| 21. | Assignment |
| 21.1.1 | The Borrower shall not be entitled to assign or transfer all or any of its rights, benefits and/or obligations under the Agreement or any agreement related to it to any third party, without the prior written consent of the Lender. |
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| 21.1.2 | The Lender is entitled to assign or transfer all or any of its rights, benefits and/or obligations under the Agreement or any agreement related to it to any third party, with the prior written consent of the Borrower, such consent not to be unreasonably withheld. |
| 22. | Costs and Expenses |
| 22.1 | Costs and Expenses |
| 22.1.1 | The Borrower shall, within five (5) Business Days upon presentation of the respective invoice or documentary evidence, pay on behalf of the Lender, all reasonable and documented fees and disbursements incurred in connection with the preparation, execution, registration and perfection of the Finance Documents and the other agreements contemplated therein together with any value added or similar Tax thereon incurred by the Lender (including but not limited to any notarial fees) (such fees and disbursements being referred to together as the “Fees”). The Lender shall submit to the Borrower estimates of these Fees for the Borrower’s prior approval, such approval not to be unreasonably withheld. For the avoidance of doubt, Fees shall be incurred even if the transaction as herein documented fails to close. |
| 22.1.2 | The Borrower shall, within five (5) Business Days of demand, pay to the Lender the amount of all costs and expenses (including documented legal fees and out-of-pocket expenses) reasonably incurred by the Lender in connection with the enforcement of, or the preservation of (or, as applicable, attempts to enforce or preserve) any rights under the Finance Documents or the administration or release of any Security created under any Security Document. |
| 22.1.3 | The Lender shall be irrevocably authorized to debit the Account to pay such Fees. |
| 22.2 | Indemnity for Costs |
| 22.2.1 | The Borrower will indemnify the Lender from and against all documented losses and expenses which it may suffer, sustain, incur or pay (the “Costs”) as a consequence of: |
| a. | the occurrence of an Event of Default or the declaration that any amount utilized under this Agreement is immediately due and payable; |
| b. | the failure by the Borrower to make any drawing after having delivered a Utilization Request; |
| c. | any amendment, variation or supplement of the Finance Documents required by any party to them with the exception of cost relating to an assignment / transfer of the Facility by the Lender to another party; |
| d. | the enforcement of, or the preservation of (or, as applicable, attempts to enforce or preserve) any rights under the Finance Documents or the administration or release of any Security created under any Security Documents; or |
| e. | the prepayment of any amount utilized hereunder otherwise than on its due date for payment or repayment, |
including, but not limited to, all Costs incurred in liquidating or employing deposits acquired to effect or maintain any drawing made hereunder. The Lender shall be irrevocably authorized to debit the Account to pay such Costs.
| 22.3 | Increased Costs |
| 22.3.1 | The Borrower shall, within ten (10) Business Days of a demand by the Lender, such demand to also include explanation and evidence of the Increased Costs incurred by the Lender, pay for the account of the Lender any Increased Costs incurred by the Lender as a result of |
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| a. | the introduction of or any change in (or in the interpretation or application of) any law or regulation; or |
| b. | compliance with any law or regulation made after the date of this Agreement. |
| 22.3.2 | In this Agreement “Increased Costs” means: |
| a. | a reduction in the rate of return from the Facility or on the Lender’s overall capital; |
| b. | an additional or increased cost; or |
| c. | a reduction of any amount due and payable under the Finance Documents, |
which is incurred or suffered by the Lender to the extent that it is attributable to the Lender having entered into its commitment or funding or performing its obligations under any Finance Document.
| 22.3.3 | Clause 22.3.1 does not apply to any Increased Costs (i) compensated for under Clause 20.1.4; or (ii) attributable to the willful breach by the Lender of any provision of any law or regulation. |
| 22.4 | Currency Indemnity |
| 22.4.1 | If for the purpose of obtaining or enforcing any judgment or for any other purpose it becomes necessary for any amount due from the Borrower hereunder to be converted from one currency (the “Contractual Currency”) into any other currency (the “Relevant Currency”) and the amount received on such conversion in the Relevant Currency shall be insufficient (when converted into the Contractual Currency) to discharge the amount due in the Contractual Currency, the Borrower shall pay to the Lender such additional amounts as may be necessary to ensure that the total amount paid in the Relevant Currency when converted at the Spot Rate of Exchange of the Lender prevailing on the date of payment or any other conversion date chosen by the Lender to the Lender will produce the amount then due under the Agreement in the Contractual Currency. |
| 22.4.2 | All conversion costs shall be borne by the Borrower and the Borrower waives any right it may have in any jurisdiction to pay any amount under the Finance Documents in a currency or currency unit other than that in which it is expressed to be payable. |
| 22.5 | Other Indemnity |
| 22.5.1 | The Borrower shall, within 15 days of demand (or, such earlier time period as may be applicable by law), indemnify the Lender against any cost, loss or liability incurred by the Lender in any jurisdiction: |
| a. | arising or asserted under or in connection with any law relating to any Environmental Law or any Sanctions; or |
| b. | in connection with any Environmental Claim. |
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| 23. | Confidentiality |
| 23.1.1 | Each Party must keep confidential any information supplied to it by or on behalf of the other party or any of the Obligors in connection with the Finance Documents. However, each Party is entitled to disclose information: |
| a. | which is publicly available, other than as a result of a breach by a Party of this Clause 23 (Confidentiality); |
| b. | on a need-to-know basis, to their directors, officers, employees, professional advisers; |
| c. | if obliged to do so under any law or stock market or other regulation; |
| d. | if obliged by а governmental, banking, taxation or other regulatory authority; |
| e. | in enforcing any of the rights of the Lender under any of the Finance Documents; |
| f. | after anonymization (to the extent required), to any other person, with the prior written consent of the other Party or, if such information relates to the Personal Guarantor, with the prior written consent of the Personal Guarantor; |
| g. | with respect to the Lender only, to any HSBC entity and its employees which can provide assistance to the Lender with regards to the approval, underwriting and the monitoring of the Facility or enforcement of the Securities; |
| h. | with respect to the Lender only, to any external counsel appointed by the Lender; and |
| i. | to the Personal Guarantor. |
| 23.1.2 | The Borrower releases the Lender, only to the extent strictly required for this Clause 23 to operate in accordance with its terms, from its secrecy obligations under the Swiss Law on Banks and Savings Institutions and the Swiss Data Protection Act. |
| 24. | Sub-Participation |
| 24.1.1 | The Borrower is aware, agrees, and informed the Obligors accordingly, that the Lender might wish to grant a participation in the Facility to any of the Lender’s Affiliates. Accordingly, the Borrower acknowledges that such Lender’s Affiliates in accordance with its financial crime compliance obligations and the regulatory credit disclosure requirements applicable to it may request to be provided by the Lender with the personal data of the Borrower (including related banking documentation as the case may be) as well as personal data of the Borrower or the other Obligor and any of their respective beneficial owner (the “Confidential Information”). |
| 24.1.2 | The Borrower hereby authorizes the Lender to provide such Lender’s Affiliates with any Confidential Information that the Lender has currently in its possession and has from time to time at its disposal concerning the Borrower. In authorizing the above-mentioned release of information, the Borrower acknowledges and agrees to release the Lender to the extent required of its confidentiality obligations under the Swiss Federal Banks and Savings Banks Act. Pursuant to the Swiss Data Protection Act, the Borrower further consents to the transfer of the data outside Switzerland. The Borrower hereby acknowledges and agrees that in such case, the Confidential Information shall be subject to the laws and regulations of the country of such Lender’s Affiliates and that accordingly, the law of such country may require the disclosure of such information to any local authorities including, but not limited to, the supervisory, prosecuting, civil, administrative or tax authority. |
| 25. | General Provisions |
| 25.1.1 | The Account Terms of the Lender shall form an integral part of this Agreement. In case of a discrepancy between such Account Terms and this Agreement the provisions of this Agreement shall prevail. |
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| 25.1.2 | All notices, requests, demands and other communications under this Agreement shall be in writing by letter or email and shall be addressed to: |
| if to the Lender: |
| Name: | HSBC Private Bank (Suisse) SA |
| Address: | Quai des Bergues 9-17, 1201 Geneva, Switzerland |
| Attention: |
| Email: |
| if to the Borrower: |
| Name: | Top Ships Inc. |
| Address: | 1 Vas. Sofias & Meg. Alexandrou Street 15124, Athens, Greece |
| Attention: |
| Email: |
| if to the Ship Cos: |
| Name: | Julius Caesar Inc. / Legio X Inc. |
| Address: | 1 Vas. Sofias & Meg. Alexandrou Street 15124, Athens, Greece |
| Attention: |
| Email: |
| 25.1.3 | Any notice to be given hereunder shall be given prior to the expiry of a term or deadline set forth in this Agreement or by Applicable Law, or the notice shall be deemed null and void. All notices, communications, documents or other information shall be effective upon receipt by the Party to whom it is addressed irrespective of whether received prior to or after the expiry of such term or deadline (provided that the notice was timely and duly given in accordance with this Clause). |
| 25.1.4 | This Agreement may only be modified or amended by a document signed by both Parties. Any provision contained in this Agreement may only be waived by a document signed by the Party waiving such provision. |
| 25.1.5 | If any provision of this Agreement shall be unenforceable or invalid under Applicable Law, such provision shall be ineffective only to the extent of such unenforceability or invalidity and the remaining provisions of this Agreement shall continue to be binding and in full force and effect. Such unenforceable or invalid provision shall be replaced by such valid and enforceable provision, which the Parties consider, in good faith, to match as closely as possible the invalid or unenforceable provision and attaining the same or a similar economic effect. |
| 25.1.6 | This Agreement may be executed in a number of counterparts, each of which shall for all purposes be deemed to be an original and both of which shall constitute the same instrument. |
| 26. | Governing Law and Jurisdiction |
| 26.1.1 | This Agreement shall be governed by and construed in accordance with the substantive laws of Switzerland (excluding its conflict of laws’ provisions). |
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| 26.1.2 | Any dispute, controversy or claim arising out of or in relation to this Agreement, including the validity, invalidity, breach or termination thereof, shall be subject to the exclusive jurisdiction of the courts of Geneva, Switzerland, with the right to appeal to the Swiss Federal Court. |
This Agreement has been entered into on the date stated at the beginning of this Agreement.
[Signature page follows]
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SIGNATURE PAGE
| Top Ships Inc. |
| By: | /s/ Alexandros Tsirikos | By: |
| Name: | A. Tsirikos | Name: |
| Function: | Director | Function: |
| Julius Caesar Inc. |
| By: | /s/ Alexandros Tsirikos | By: |
| Name: | A. Tsirikos | Name: |
| Function: | Director | Function: |
| Legio X Inc. |
| By: | /s/ Alexandros Tsirikos | By: |
| Name: | A. Tsirikos | Name: |
| Function: | Director | Function: |
| HSBC Private Bank (Suisse) SA |
| By: | /s/ Jean-Louis Guiderdoni | By: | /s/ Jeremy Poilleaux |
| Name: | Jean-Louis Guiderdoni | Name: | Jeremy Poilleaux |
| Function: | Managing Director | Function: | Associate Director |
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Schedule 1 – Conditions Precedent
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Schedule 2 – Utilization Request
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Schedule A – Transfer instructions
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| IT IS THIS DAY AGREED between South California Inc. of Marshall Islands (hereinafter referred to as "Owners"), being owners of the good motor/steam* vessel called Eco Bel Air (ex. Hull S874) - IMO No. 9794056 (hereinafter referred to as "the vessel") described as per Clause 1 hereof and Trafigura Maritime Logistics Pte. Ltd. of Singapore (hereinafter referred to as "Charterers") |
| Description and Condition of Vessel |
1. |
At the date of delivery of the vessel under this charter and throughout the charter period:
(a) she shall be classed by a Classification Society which is a member of the InternationalAssociation of Classification Societies; |
|
(b) |
she shall be in every way fit to carry THREE (3) grades of cargo alwayswithin vessel's natural segregation, Crude Petroleum Products, Crude condensate, Fuel oil(s) and DirtyPetroleum Products, excluding any heated cargo, Carbon Black Feedstock, Low Sulphur Waxy ResiduesBitumen, Orlmulsion, Asphalt and or Asphalt residue and always consistent with vessel's certification andDesign capabilities.Charts have the right to load five (5) grades , always in compliance with Ship'sLoadicator and Trim and Stability Booklet and Owner will not to be held responsible for any kind of contamination between such compatible grades. Charterersresponsibility to confirm cargo grades compatibility. |
| Charterers shall have the option load and carry CPP (including but not limited to gasoil/ulsd/gasoline/jet) without LOI until such a time where a DPP cargo is
loaded onboard the ship after which charterers shall no longer have the option to trade the vessel in CPP. Always in compliance with the attached vessel's "Tank Coating Resistance List" provided by Paint Manufacturer and
Shipyard (Vessel's PSPC COT – Certified Coasting System is BANNOH 1500 (QD)). In such case, if any fresh water rinsing / tank cleaning . preparation for such cargoes, including any time (if needed) will be for charterers account. |
|
(c) |
she shall be tight, staunch, strong, in good order and condition, and in every way fit for the service, with her machinery, boilers, hull and other equipment (excluding but not limited to hull stress calculator, radar, computers and computer systems) in a good and efficient state: |
|
|
(d) |
her tanks, valves and pipelines shall be oil-tight; |
|
|
(e) |
she shall be in every way fitted for burning, in accordance with the grades specified in Clause 29 hereof: |
|
| (i) at sea, fuel oil for main propulsion and fuel oil/marine gasoil * for auxiliaries; | ||
| (ii) in port, fuel oil/marine gasoil * for auxiliaries; |
|
(f) |
she shall comply with the regulations in force so as to enable her to pass through the Suez and Panama Canals by day and night without delay; |
|
|
(g) |
she shall have on board all certificates, documents and equipment required from time to time by any applicable law to enable her to perform the charter service without delay; |
|
|
(h) |
she shall comply with the description in the OCIMF Harmonised Vessel Particulars Questionnaire appended hereto as Appendix A, provided however that if there is any conflict between the provisions of this questionnaire and any other provision, including this Clause 1, of this charter such other provisions shall govern; |
|
| (i) | her ownership structure, flag, registry, classification society and management company shall not be changed without Charterers prior consent which not to be unreasonably withheld; | |
| Safety | (j) | Owners will operate: |
| Management | ||
| (i) a safety management system certified to comply with the International Safety Management Code (ISM Code) for the Safe operation of Ships and for Pollution Prevention; |
| (ii) a documented safe working procedures system (including procedures for the identification and mitigation of risks); | |
| (iii) a documented environmental management system; | |
| (iv) documented accident/incident report system compliance with flag state requirements |
| Charterers may at any time request an inspection of the relevant compliance documentation and/or safety management certificate and upon receipt of such a request the Owners shall forthwith provide the same. |
|
(l) |
Owners shall maintain Health Safety Environment (HSE) records sufficient to demonstrate compliance with the requirements of their HSE system and of this charter, Charterers reserve the right to confirm compliance with HSE requirements by audit of Owners. |
|
|
(m) |
Owners will arrange at their expense for a SIRE inspection to be carried out at intervals of minimum 150 days provided vessel's trading patterns permit and SIRE inspectors are available and SIRE regulations permit. Owners ensure that the vessel is always to have 6 months valid sire. SUCH SIRE INSPECTION ALWAYS TO BE A PHYSICAL DISCHARGE SIRE INSPECTION PROVIDED VESSEL TRADING PATTERN PERMITS THIS. OWNERS ALWAYS TO CONSULT CHARTERERS AND OBTAIN CHARTERERS CONSENT PRIOR TO DOING ANY OTHER SIRE INSPECTION THAN A PHYSICAL DISCHARGE INSPECTION. Owners will grant access of q88.com upon delivery of vessel to Charterers. |
|
| VESSEL 2+3 (ECO BEVERLY HILLS AND ECO BELL AIR) – BOTH VESSELS TO BE DELIVERED WITH VALID PHYSICAL DISCHARE SIRE INSPECTIONS MAXIMUM 4 MONTHS OLD ON DELIVERY |
| Shipboard | 2. | (a) | At the date of delivery of the vessel under this charter and throughout the charter period: |
Personnel
| and their Duties |
(i) |
she shall have a full and efficient complement of master, officers and crew for a vessel of her tonnage, who shall in any event be not less than the number requiredby the laws of the flag state and who shall be trained to operate the vessel and her equipment competently and safely; |
|
(ii) |
all shipboard personnel shall hold valid certificates of competence in accordance within the requirements of the law of the flag state; |
|
|
(iii) |
all shipboard personnel shall be trained in accordance with the relevant provisions of the International Convention on Standards of Training, Certification and Watchkeeping for Seafarers 1995 or any additional, modifications or subsequent versions thereof; |
|
|
(iv) |
there shall be on board sufficient personnel with a good working knowledge of the English language to enable cargo operations at loading and discharging places to be carried out efficiently and safely and to enable communications between the carried out quickly and efficiently. |
|
|
(v) |
the terms of employment of the vessels staff and crew will always remain acceptable to The International Transport Workers Federation and the vessel will at all times carry a Blue Card; |
|
|
(vi) |
the nationality of the vessels officers given int eh OCIMF Vessel Particulars Questionnaire referred to in Clause 1(h) will not change without Charterers prior agreement. |
|
(b) |
Owners guarantee that throughout the charter service the master shall with the vessel's officers and crew, unless otherwise ordered by Charterers; |
| (i) | prosecute all voyages with the utmost despatch; | |
| (ii) | render all customary assistance; and | |
| (iii) | load and discharge cargo as rapidly as possible when required by Charterers or their agents to do so, by night or by day, but always in accordance with the laws of the place of loading or discharging (as the case may be) and in each case in accordance with any applicable laws of the flag state. |
| Duty to Maintain | 3. | (a) throughout the charter service Owners shall, whenever the passage of time, wear and tear or any event (whether or not coming within Clause 27 hereof) requires steps to be taken to maintain or restore the condition stipulated in Clauses 1 and 2(a), exercise due diligence so to maintain or restore the vessel. |
|
(b) |
If at any time whilst the vessel is on hire under this charter the vessel fails to comply with the requirements of Clauses 1, 2(a) or
10 then hire shall be reduced to the extent necessary to indemnify Charterers for such failure. If and to the extent that such failure affects the time taken by the vessel to perform any services under this charter, hire shall be
reduced by an amount equal to the value, calculated at the rate of hire, of the time so lost. |
|
|
(c) |
If Owners are in breach of their obligation under Clause 3(a), Charterers may so notify Owners in writing and if, after the expiry of 30 days following the receipt by Owners of any such notice, Owners have failed to demonstrate to Charterers' reasonable satisfaction the exercise of due diligence as required in Clause 3(a), the vessel shall be off-hire, and no further hire payments shall be due, until Owners have so demonstrated that they are exercising such due diligence, |
|
|
(d) |
Owners shall advise Charterers immediately, in writing should the vessel fail an inspection by, but not limited to, a government and/or port state authority, and/or terminal and/or major charter or similar tonnage, Owners shall simultaneously advise Charterers of their proposed course of action to remedy the defects which has caused the failure of such inspection. |
|
|
(e) |
If, in Charterers reasonably held view; |
| (i) | failure of an inspection, or, | |
| (ii) | any serious finding of an inspection, | |
| referred to in Clause 3(d), prevents normal commercial operations then Charterers have the option to place the vessel off-hire 30 days after the date and time that the vessel fails such inspection, or becomes commercially inoperable, until the date and time that the vessel passes a re-inspection provided vessel's trading patterns permit a re-inspection and providing SIRE regulations permit by , or becomes commercially operable, which shall be in a position no less favourable to Charterers than at which she went off-hire. Charterers to make best endeavours to load one single voyage to enable Owners to carry out inspection concurrent with discharge. |
| (f) | Furthermore, at any time while the vessel is off-hire for a period of more than 15 continuous days under this Clause 3 (with the exception of Clause 3 (d) and (e), Charterers have the option to terminate this charter by giving notice in writing with effect from the date on which such notice of termination is received by Owners or from any later date stated in such notice. This sub-Clause (f) is without prejudice to any rights of Charterers or obligations of Owners under this Charter or otherwise (including without limitation Charterers' right under Clause 21 hereof). |
| Period Trading Limits and Safe Places |
4. |
(a) Owners agree to let and Charterers agree to hire the vessel for a period of minimum 20 months to maximum 26 months in Charterers option . Optional period of balance period until 10th December 2025 with Charterers option +15/-30 days from this date. Optional period to be declared latest 60 days before 26 months expires. Commencing from the time and date of delivery of the vessel, for the purpose of carrying all lawful merchandise including in particular; As per vessels COF, Class and coasting resistance table in any part of the world, as Charterers shall direct, subject to the limits of the current British Institute Warranties and any subsequent amendments thereof.
Trading area: trading worldwide, always within INL and any subsequent amendments thereof, excluding , Iran, Lake Maracaibo, Orinoco River, North Korea, Somalia, or Syria, Turkish occupied Cyprus, war and warlike areas, . The charterer warrants that they shall not utilise the vessel or permit the vessel to be utilised in any trade: (a) which is unlawful AND/OR VIOLATES ANY UN/US/EU SACTIONS OR UN/US/EU BOYCOTT |
| If sanctions are lifted against Venezuela or Iran, owners will consider calling but cannot confirm it nor guarantee it. The parties to discuss openly. Owners confirm no premiums will be asked to add Venezuela and/or Iran if/when sanctions are lifted provided P&I /Class / Flag allows to re-instate these countries in the trading range. | |||
| Notwithstanding the foregoing, but subject to Clause 35, Charterers may not order the vessel to ice-bound waters Vessel shall not be required to force ice, nor follow ice-breaker(s). Vessel to trade always within INL and shall not be required to enter any ice bond port, or any port where lights or lightships have been or are about to be withdrawn by reason of ice, or where there is risk in the ordinary cause of things the vessel will not be able on account of ice to safely enter the port or to depart after having completed loading or discharging or to any part of the world outside such limits provided that Owners consent thereto (such consent not to be unreasonably withheld) and that Charterers pay for any insurance premium required by the Vessel's underwriters as a consequence of such order. |
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(b) |
Any time during which the vessel if off-hire under this charter may be added to the charter period in Charterers option up to the total amount of time spent off-hire. In such cases the rate of hire will be that prevailing at the time the vessel would, but for the provisions of this Clause, have been redelivered. Charterer's to declare whether or not they will exercise this option a minimum of 1 month day prior to the intended redelivery date or anniversary date of the charter, whichever occurs first. |
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(c) |
Charterers shall use due diligence to ensure that the vessel is only employed between and at safe places (which expression when used in this charter shall include ports, berths, wharves, docks, anchorages, submarine lines, alongside vessels or lighters, and other locations including locations at sea) where she can safely lie always afloat. Notwithstanding any contained in this or any other clause of this charter, Charterers do not warrant the safety of any place to which they order the vessel and shall be under no liability in respect thereof except for loss or damage caused by their failure to exercise due diligence as aforesaid. Subject as above, the vessel shall be loaded and discharged at any places as Charterers may direct, provided that Charterers shall exercise due diligence to ensure that any ship-to-ship transfer operations shall conform to standard not less than those set out in the latest published edition of the ICS/OCIMF Ship-to-Ship Transfer Guide. |
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(d) |
Unless otherwise agreed, the vessel shall be delivered by Owners dlosp one safe port Uke/med/usg/caribs/ag-korea range at Owner's option and redelivered to Owners WW excl Australia/NZ if redelivery after firm period. IF OPTIONAL PERIOD DECLARED THE REDEL TO BE USAC/USG/UKC/SING-JAPAN RANGE. At Charterer's option always within trading limits. |
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(e) |
The vessel will deliver with virgin tanks (VSL NO 2+3 WILL DELIVER WITH COTs free of last DPP cargo) AND FREE OF SLOPS and will redeliver with last 3 cargo(es) DPP either Fuel oil or Crude Oil, or Crude condensate in all tanks including slops, free of slops and washing generated by Charterer's trading of the vessel. |
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| (f) | Owners are required to give Charterers 30/20/15 approximate and then definite 10/7/5/3/2/1 days prior notice of delivery including port and last cargoes. Charterers are required to give Owners 30/20/15 approximate days notice of re-delivery and then 10/7/5/3/2/1 definite days prior notice of redelivery including port and last 3 cargoes. |
| Laydays/ Cancelling | 5. | The vessel shall not be delivered to Charterers before 12th March 2022. And Charterers shall have the option of cancelling this charter if the vessel is not ready and at their disposal on or before 30th May 2022. |
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| Owners to Provide | 6. | Owners undertake to provide and to pay for all provisions, wages (including but not limited to all overtime payments). And shipping and discharging fees and all other expenses of the master, officers and crew; also, except as provided in Clauses 4 and 34 hereof, for all insurance on the vessel, for all deck, cabin and engine-rooms stores, and for water except fresh water used for cleaning of tanks between cargoes and/or for Charterers purpose. Charterers to provide fresh water if vessel doing coastal voyage or if vessel unable to generate fresh water due to Charterer trading patterns; for all drydocking, overhaul, maintenance and repairs to the vessel; and for all fumigation expenses and de-rate certificates. Owners' obligations under this Clause 6 extend to all liabilities for customs or import duties arising at any time during the performance of this charter in relation to the personal effects of the master, officers and crew, and in relation to the stores, provisions and other matter aforesaid which Owners are to provide and pay for and Owners shall refund to Charterers any sums Charterers or their agents may have paid or been compelled to pay in respect of such liability, Any amounts allowable in general average for wages and provisions and stores shall be credited to Charterers insofar as such amounts are in respect of a Period when the vessel is on-hire. | |
| Charterers to Provide |
7. |
(a) Charterers shall provide and pay for all fuel , towage and pilotage (whether compulsory or not. For the safety of navigation adequately qualified Deep Sea Pilots in the North Sea, English Channel, Skagerrak (IMO Resolution A.1080(28)) and Malnecca strait in laden condition (IMO SC/Circ.198) to be employed and be paid by the charterers even when not compulsory) and shall pay agency fees, port changes, commissions, expenses of loading and unloading cargoes, canal dues, tank cleaning chemicals, fresh water for tank cleaning (also, in case of prolonged anchor stay were vessel won't be able to produce GW by using the exhaust gas boiler/economiser, then fuel used for production of FW to be charts account or charts to provide FW on their expense) cargo and cargo tank clean slops disposals, any and all taxes including withholding taxes and/or dues on hire payments, sub-hires, freight, sub-freights, vessel and cargoes however arising including from Charterers' employment of vessel and all charges other than those payable by Owners in accordance with Clause 6 hereof, provided that all charges for the said items shall be for Owners' account when such items are consumed, employed or incurred for Owners' purposes or while the vessel is off-hire (unless such items reasonably relate to any service given or distance made good and taken into account under Clause 21 or 22); and provided further than any fuel used in connection with a general average sacrifice or expenditure shall be paid for by Owners. |
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(b) |
in respect of bunkers consumed for Owners purposes these will be charges on each occasion by Charterers on first-in-first-out basis valued on the prices actually paid by Charterers. |
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(c) |
If the trading limits of this charter including ports in the United States of America and/or its protectorates then Charterers shall reimburse Owners for port specific chargers relation to additional premium charged by provider of oil pollution cover, when incurred by the vessel calling at ports in the United States of America and/or its protectorates in accordance with Charterers orders. |
| Rate of Hire | 8. | Subject as herein provided. Charters shall pay for the use and hire of the vessel at the rate of United States Dollar GROSS 24,000 for the firm period and USD 24,000 for optional period, from the time and date of her delivery ( UTC) to Charterers until the time and date of redelivery ( UTC) to Owners. Commission: 0,7% to Arrow Tankers payable by Owners. No addcom. 1.25% to CENTRAL Ship Chartering Inc. payable by owners / Bare Boat Charterers. | |
| Payment of Hire | 9. | Subject to Clause 3 (c) and 3 (e) payment of hire shall be made in immediately available funds to: Account: TBA in United States Dollars per calendar month on the last business days of the previous month free of bank charges, less: Except for 1st Hire Payment which is to be remitted within two (2) business days or receiving vessel's delivery certificate from Owners, including bunkers ROB, and to cover time from delivery until end of month in progress." |
| (i) | any hire paid which Charterers reasonably estimate to relate to off-hire periods, and | |
| (ii) | any amounts disbursed on Owners' behalf, any advances and commission thereon, and charges which are for Owners' account pursuant to any provision hereof, and | |
| (iii) | any amounts due or reasonably estimated to become due to Charterers under Clause 3 (c) or 24 hereof, | |
| any such adjustments to be made at the due date for the next monthly payment after the facts have been ascertained. Charterers shall not be responsible for any delay or error by Owners' bank in crediting Owners' account provided that Charterers have made proper and timely payment, In default of such proper and timely payment, |
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(a) |
Owners shall notify Charterers of such default and Charterers of such default and Charterers shall within seven working days of receipt of such notice pay to Owners the amount due including interest, failing which Owners may withdraw the vessel from the service of Charterers without prejudice to any other rights Owner may have under this charter or otherwise; and |
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| (b) | Interest on any amount due but not paid on the due date shall accrue from the date after that date up to and including the day when payment is made, at a rate per annum which shall be 1% above the U.S. Prime Interest Rate as published by the Chase Manhattan Bank in New York at 12.00 New York time on the due date, or, if no such interest rate is published on that day, the interest rate published on the next preceding day on which such a rate was published, computed on the basis of a 360 day year of twelve 30-day months, compounded semi-annually. |
| Space Available to Charterers | 10. | The whole reach, barthen and decks of the vessel and any passenger accommodation (including Owners’ suite) shall be at Charterers’ disposal, reserving only proper and sufficient space for the vessel’s master, officers, crew, tackle, apparel, furniture, provisions and stores, provided that the weight of stores on board shall not, unless specially agreed, exceed 400 metric tonnes at any time during the charter period. |
| Segregated Ballast |
11. |
In connection with the Council of the European Union Regulation on the Implementation of IMO Resolution A747(18) Owners will ensure that the following entry is made on the International Tonnage Certificate (1969) under the section headed “remarks”: |
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| “The segregated ballast tanks comply with the Regulation 13 of Annex 1 of the International Conversion for the prevention of pollution from ships, 1973 as modified by the Protocol of 1978 relating thereto, and the total tonnage of such tanks exclusively used for the carriage of segregated water ballast is *TBA*. The reduced gross tonnage which should be used for the calculation of tonnage based fees is *TBA*”. | |||
| Instructions and Logs | 12. | Charterers shall from time to time give the master all requisite instructions and sailing directions, and the master shall keep a full and correct log of the voyage or voyages, which Charterers or their agents may inspect as required. The master shall when required furnish Charterers or their agents wish a true copy of such log and wish properly completed loading and discharging port sheets and voyage reports for each voyage and other returns as charterers may require. Charterers shall be entitled to take copies at Owners expense of any such documents which are not provided by the master. | |
| Bills of Lading | 13. | (a) The master (although appointed by Owners) shall be under the orders and direction of charterers as regards employment of the vessel, agency and other arrangements, and shall sign Bills of Lading as Charterers or their agents may direct (Subject always to Clauses 35(a) and 40) without prejudice to this charter. Charterers hereby indemnify Owners against all consequences or liabilities that may arise; |
| (i) | From signing Bills of Lading in accordance with the directions of Charterers, or their agents, to the extent that the terms of such Bills of Lading fail to conform to the requirements of this charter, or (except as provided in Clause 13(b) from the master otherwise complying with Charterers or their agents orders. |
| (ii) | from any irregularities in papers supplied by Charterers or their agents. | |
| (b) If Charterers by telex, facsimile or other form of written communication that specifically refers to this Clause request Owners to discharge a quantity of
cargo either without Bills of Lading and/or at a discharge place other than that' named in a Bill of Lading and/or that is different from the Bill of Lading quantity, then Owners shall discharge such cargo in accordance with
Charterers’ instructions and consideration of receiving the following indemnity which shall be deemed to be given by an authorised officer of the Charterers on each and every such occasion SEE
ADDITIONAL CLAUSES 5, 6 & 7 |
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| See Additional Clause 14 - Letter of Indemnity to be Given for Carrying one original of each set of bills of Lading on board. |
| Conduct of Vessel's Personnel | 14. | If Charterers complain of the conduct of the master or any of the officers or crew, Owners shall immediately investigate the complaint. If the complaint proves to be well founded, Owner shall, without delay, make a change in the appointments and Owners shall in any event communicated the result of their investigations to Charterers as soon as possible. | |
| Bunkers at Delivery and Redelivery |
15. |
Charters gel accept and pay for all bunkers on board at the time of delivery, and owners shall on redelivery whether it occurs at the end of the charter
or on the blank termination of this charter and accept and pay for all blank remaining on boards, at the price actually paid, on a first in first out basis. Such prices are to be supported by Payton voices. |
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| Stevedores, Pilots, Tugs | 16. | Stevedores when required shall be employed and paid by charterers, but this shall not believe owners from responsibility at all times for progress to which, which must be controlled by the master shall keep a straight account of all cargo loaded and discharged. All owners hereby indemnified charterers, their servants and agents against all losses, claims, responsibilities and liabilities arising in anyway whatsoever from the employment of pilots, tugboats or Steve doors, who although employed by charterers shall be deemed to be the servants of and in the service of Owners and under their instructions (Even after such pilots, tugboat personnel or stevedores are in fact the servants of charterers their agents or any affiliated company); provided, however, that |
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(a) |
the foregoing indemnity shall not exceed the amount to which owners would have been entitled to limit their liability if they had themselves employed such pilots, tugboats or stevedores, and |
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| (b) | Charterers shall be liable for any damage to the vessel caused by or arising out of the use of stevedores, fair wear and tear acceptance, to the extent the owners are unable by the exercise of due diligence to obtain redress therefore from stevedores. |
| Super-Numeraries | 17. | Charterers may send representatives in the vessel’s available accommodation upon any voyage made under this charter, owners finding provisions and all requisites are supplied to officers, except alcohol. Charters paying at the rate of United States dollars $30.00 per day for each representative while on board the vessel. Subject to accommodation at their own risk and expense. The representative shall act as observers only and should not interfere with the operation of the vessel. Upon boarding the vessel the representatives shall be required to sign owners indemnity wording. | |
| Sub-Letting/ Assignment/ Novation | 18. | Chargers may sublet the vessel, but shall always remain responsible to owners for dear fulfilment of this charter. | |
| Final Voyage |
19. |
If when a payment of hire is due here under charterers reasonably expect to redeliver the vessel before the last sufficient hires would follow due, the hire to be paid shall be assessed on charterers reasonable estimate of the time necessary to complete charterers programme up to redelivery, and from which estimate charterers may deduct amounts to or reasonably expected to become due for, |
| (a) | Disbursements on owners’ Behalf or charges for owners account pursuant to any provision here of, and | |
| (b) | Bunkers on board as redelivery pursuant to Clause 15. | |
| Promptly after redelivery any overpayment shall be refunded by owners or any underpayment made good by Charterers. If at the time this charter would otherwise terminates in accordance with Clause 4 the vessel is on a ballast voyage to a port of redelivery or as upon a laden voyage, charterers shall continue to have the use of the vessel at the same rate and conditions as stand here in for as long as necessary to complete such ballast voyage , or to complete such laden voyage and return to a portal redelivery as provided by this charter, as the case may be provided that when the charterers issue the vessel final voyage orders at is reasonable to calculate that official will complete the voyage within the Charter Party period. |
| Loss of Vessel | 20. | Should the vessel be lost, this charter shall terminate and higher Chelsea's at noon on the day of her loss; should the vessel be a constructive total loss this chapter shall terminate and hire shall cease at noon on the day on which the vessels under writers agree that the vessel is a constructive total loss; Should the vessel be missing, this charter shall terminate and higher shall cease at noon on the day on which she was last heard of. Any higher paid in advance and not errant shall be returned to charterers and owners shall reimburse charterers fixed the value of the estimated quantity of bunkers on board at the time of termination, at the price paid by charterers at the last bunkering port. | |
| Off-hire |
21. |
(a) On each and every occasion that there is loss of time (whether by way of interruption and the vessel service or comment from production and the vessels performance, or in any other manner); |
| (i) | due to deficiency of personnel or stores; Repairs; Gas freezing for repairs; Time and aren't waiting to enter dry dock for repairs; Breakdown (whether partial or total) of machinery, boilers or other parts of the vessel or her equipment (including without limitation tank coatings); overall, maintenance or survey; Collision, stranding, accident or damage to the vessel; or any other similar cause preventing the efficient working of the vessel; and Search lost continues for more than five consecutive hours (if resulting from interruption and the vessel’s service) or accumulates to more than five hours (if resulting from partial loss of service); or | |
| (ii) | due to industrial action, refusal to sail, breach or orders or neglect of duty on the part of the master, officers or crew; or | |
| (iii) | for the purpose of obtaining medical advice or treatment for or lending any sick or injured person (other than a charterers representative carried under Clause 17 hereof) or for the purpose of landing the body of any person (other than a Charterers' representative), and such loss continues for more than five consecutive hours; or; | |
| (iv) | Due to any delay in quarantine (excepting cases of Ebola) arising from the master, officers or crew having had communication with the shore at any infected area without the written consent or instructions of charterers or their agents, or to any detention by customs or other authorities caused by smuggling or other infraction of local law on the part of the master, officers, or crew; or | |
| (v) | due to the tension of the vessel by authorities at home or abroad attributable to legal action against or breach of regulations by the vessel , the vessels owners, or owners (unless brought about act or neglect of Charterers); then; Without prejudice to charterers rights under clause 3 or to any other rights of charterers here under or otherwise, the vessel shall be off-hire from the commencement of such loss of time until she is again ready and in an efficient state to resume her service from a position not less favourable to charterers than that at which such loss of time commenced; Provided, however, that any service given or distance made good by the vessel whilst off-hire shall be taken into account and assessing the amount to be deducted from hire |
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(b) |
if the vessel fails to proceed at any guaranteed speed pursuant to Clause 24, and such failure arises wholly or partly from any of the causes set out and Clause 21(a) above, then the period for which the vessel shall be off-hire under this Clause 21 shall the difference between; |
| (i) | The time the vessel would have required to perform at the relevant service at such guaranteed speed, and | |
| (ii) | the time actually taken to perform such service (including any loss of time arising from interruption in the performance of such service). for the avoidance of doubt, all time included under (ii) above shall be excluded from any computation under Clause 24. |
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(c) |
Further and without prejudice to the foregoing, in the event of the vessel deviating (which expression includes without limitation putting back, or putting into any port other than that to which she is bound under the instructions of charterers) for any cause or purpose mentioned in Clause 21(a), the vessel shall be off-hire from the commencement of such deviation until the time when she is again ready and an unofficial state to resume her service from a position not less favourable to charterers than that at which the deviation commenced, provided however, that any service given or distance made good by the vessel which so off-hire shall be taken into I count then assessing the amount to be deducted from hire. S vessel, for any cause or purpose mentioned in Clause 21(a), puts into any port other than the ports to which she is bound on the instructions of charterers, the port charges, pilotage and other expenses at such ports shall be borne by owners. shut the vessel be driven into any port or anchorage by stress of weather hire shall continue to be due and payable during anytime lost at thereby. |
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(d) |
If the vessels flag states becomes engaged in International hostilities, and charters in consequence of such hostilities find it commercially impracticable to employ the vessel and have given owners written notice thereof then from the date of receipt by owners of such notice until the termination of such commercial impracticability the vessel shall be off-hire and owners shall have the rights to employ the vessel on their own account. |
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(e) |
Time during which the vessel is off higher under this charter shall count as part of the charter. Except where charter is declared their option to add off hire periods under Clause 4(b). |
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| (f) | All references to time in this charter party shall be references to local time except where otherwise stated. |
| Periodical Drydocking |
22. |
(a) Owners have the right and obligation to dry dock the vessel at regular intervals of as deemed appropriate by owners and vessels classification society that is at least once within a 5 year period |
| On each occasion owners shall propose to charterers update on which they wish to dried up the vessel, not less than 90 60 days before such date, and charterers shall offer a port for such periodical try talking and she'll take all reasonable steps to make the vessel available as near to such date as practicable. | ||||
| Owners shall put the vessel in dry dock at their expense as soon as practicable after charterers placed the vessel at owner's disposal clear of cargo and cargo slops tank washings and residues, owner shall be responsible for and pay for the disposal into reception facilities of such tank washings and residues and shall have the right to retain any monies received therefor, without prejudice to any claims for loss of cargo under any Bill of Lading or this charter. | ||||
| (b) | If a periodical drydocking is carried out in the port offered by charterers (which must have suitable accommodation for the purpose and reception facilities for tank washings and residues), the vessel shall be off-hire from the time she arrives at such port until drydocking is completed and she is in every way ready to resume charterers service and is at the position at which she went off-hire or a position at no less favourable to charterers, whichever she first attains. However, |
| (i) | provided that owner exercise due diligence in gas-freeing, anytime lost in gas-freeing to the standard required for entry into dry dock for cleaning and painting at the hull shall not count as off-hire, whether lost on passage to the dry docking port or after arrival there (notwithstanding Clause 21), and | |
| (ii) | any additional time lost in further gas-freeing to meet the standard required for hot work or entry to cargo tanks shall count as off-hire, whether lost on passage to the drydocking port or after arrival there. | |
| Any time which, but for sub-Clause (i) above, would it be off higher, shall not be included in any calculation under Clause 24. The expenses of gas-freeing, including without limitation at the cost of bunkers, shall be for Owners account. |
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(c) |
If Owners require the vessel, instead of proceeding to the offered ports, to carry out periodical drydocking at a special port selected by them, the vessel shall be off higher from the time when she is released to proceeds to the special port until she next presents for loading in accordance with charterers instructions, provided, however, that charterers shall credit owners with the time which would have been taken on passage at the service speed had the vessel not proceeded to drydock. all feel consumed shall be paid for by owners but Charterers shall credit owners what's the value of the fuel which would have been used on such national passage calculated out of the guaranteed daily consumption for the service speed, and shall further credit Owners with any benefit to making and purchasing bunkers at the special port. |
| (d) | Charterers shall, insofar as cleaning for periodical drydocking may have reduced the amount of tank-cleaning necessary to meet charterers requirements, credit owners with the value of any bunkers which Charterers calculate to have been saved thereby, whether the vessel dry docks as an offered or special port. |
| Ship Inspection |
23. |
Charterers shall have the right at any time during the charter period to make such inspection of the vessel as they may consider necessary. This right may be exercised as often at that such intervals as charterers in their absolute discretion may determine whether the vessel is in port or on passage, owners affording all necessary co-operation and accommodation on board provided, however, |
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(a) |
That's neither the exercise nor than an exercise, nor anything done or not done in the exercise or non-exercise, by Charterers of such right shell in anyway reduced the masters or owners authority over, or responsibility to Charterers or third parties for , the vessel and every aspect of her operation, nor increased Charterers’ responsibilities to owners or third parties for the same; and; |
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| (b) | That Charterers shall not be liable for any act, neglect or default by themselves, their servants or agents in the exercise or non-exercise of the aforesaid right. |
| Detailed Description and Performance |
24. |
Owners guarantee that the speed and consumption of the vessel shall be as follows:- |
| PER VESSEL DESCRIPTION PROVIDED FOR EACH SHIP | |
| S/c as per attached (ABOVE) which includes consumption for scrubber. | |
| Owner will guarantee consumptions as per attached for 13 knots laden and ballast AND 12.5 + 13.5 KTS LADEN AND BALLAST. | |
| FOLLOWING TO APPLY TO FIGURES IN CONSUMPTION TABLES: | |
| All speed/consumption figures (12.5, 13, 13.5) are to be considered as WARRANTED FIGURES but about (+/- 0.5 knot for speed and +/- 5% for consumption) and always subject to no MORE THAN 0.5 KTS adverse currents mas up to and including Beaufort force 4 and max sea state Douglas 3. |
| (ie delete reference to no swell, and delete “good weather and smooth seas” from table as these parameters are already defined as up to and including a bf4 and DSS3 and max 0.5kts adverse currents) | |
| The average speeds on bunker consumptions shall for the purposes of this Clause 24 be calculated by reference to the observed distance from fill away on sea passage (FAOSP) till end of sea passage (EOSP) on all sea passages over 2 four hours during each. Stipulated and Clause 24(c), but excluding anytime during which the vessel is or but for Clause 22(b)(i) would be off-hire and also excluding adverse weather periods, being (i) any periods during which reduction of speed as necessary for safety and congested waters or in poor visibility and/or transitioning canals, and/or when complying with slow steaming instructions that may have been assured by charterers (ii) any days, noon to noon, when winds exceed force 4 on the Beaufort scale for more than 12 hours. | |
| If at any time following the date upon which the vessel enters into service under this charter the performance of the vessel falls below the performance guaranteed in Clause 24 (a) as amended then if such shortfall results. |
| (i) | From a reduction in the average speed of the vessel, compared to the speed guaranteed and close to 4A then an amount equal to the value at the hire rate of that I'm so lost, shall be deducted fromthe hire paid; | |
| (ii) | from an increase in the total bunkers consumed, compared to the total bunkers which would have been consumed had the vessel performed as guaranteed in Clause 24 (a), an amount equivalent to the value of the additional bunkers consumed based on the average price paid by charterers for the vessel’s bunkers in such period, shall be deducted from the hire paid. | |
| The deduction from hire so calculated for laden and ballast mileage respectively shall be adjusted to take into account the mileage steamed and each such condition during Adverse Weather Periods, by dividing such deduction by the number of miles over which the Performance has been calculated and multiplying by the same number of miles plus the mile steamed during the adverse weather periods, and order to establish the total deduction from a higher to be made for such period. Any over performance to be credited against any underperformance if any. | ||
| Reduction of hire under the foregoing sub-Clause (b) shall be without prejudice to any other remedy available to Charterers. |
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(b) |
calculations under this Clause 24 shall be made for the yearly periods terminating on each successive anniversary of the date on which the vessel enters service, and for the periods between the last such anniversary and the date of termination of this charter if less than a year. Claims in respect of reduction of hire arising under this clause during the final year or part year of the charter period shall in the first instance be settled in accordance with Charterers' estimate made latest two months after the end of the charter period. Any necessary adjustments after this charter terminates shall be made by payment by Owners to Charterers |
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| Over-performance not to be claimed by the Owners. | ||
| Above consumptions exclude manoeuvring within harbours, inland waterways, canals, exceptional. Or under national or international rules or regulations and are basis wind force not exceeding Beaufort 4. | ||
| And shall be pro-rated between the speeds shown. | ||
| The service speed of the vessel is 13.0 knots laden and 13 knots in ballast and in the absence of Charterers' orders to the contrary the vessel shall proceed at the service speed. However if more than one laden and one ballast speed are shown in the table above Charterers shall have the right to order the vessel to steam at any speed within the range set out in the table (the "ordered speed"). | ||
| Salvage |
25. |
Subject to the provisions of Clause 21 hereof, all loss of time and all expenses (excluding any damage to or loss of the vessel or tortious liabilities to third parties) incurred in saving or attempting to save life or in successful or unsuccessful attempts at salvage shall be borne equally by Owners and Charterers provided that Charterers shall not be liable to contribute toward any salvage payable by Owners arising in any way out of services rendered under this Clause 25. |
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| All salvage and all proceeds from derelicts shall be divided equally between Owners and Charterers after deducting the master's, officers' and crews' share. | |||
| Lien | 26. | Owners shall have a lien upon all cargoes and all sub-hires freights, sub-freights and demurrage for any amounts due under this charter; and Charterers shall have a lien on the vessel for all monies paid in advance and not earned, and for all proven claims for damages arising from any breach by Owners of this charter. | |
| Exceptions |
27. |
(a) The vessel, her master and Owners shall not, unless otherwise in this charter expressly provided, be liable for any loss or damage or delay or failure arising or resulting from any act, neglect or default of the master, pilots, mariners or other servants of Owners in the navigation or management of the vessel; fire, unless caused by the actual fault or provity of Owners; collision or stranding; dangers and accidents of the sea; explosion, bursting of boilers, breaking of shafts or any latent defect in hull, equipment or machinery; provided, however, that Clauses 1, 2, 3 and 24 hereof shall be unaffected by the foregoing. Further, neither the vessel her master or owners, nor Charterers shall, unless otherwise in this charter expressly provided, be liable for any loss or damage or delay or failure in performance hereunder arising or resulting from act of God, act of war, seizure under legal process, quarantine restrictions, strikes, lock-outs, riots, restraints of labour, civil commotions or arrest or restraint of princes, rulers or people. |
|
(b) |
The vessel shall have liberty to sail with or without pilots, to tow or to go to the assistance of vessels in distress and to deviate for the purpose of saving life or property. |
|
|
(c) |
Clause 27(a) shall not apply to, or affect any liability of Owners or the vessel or any other relevant person in respect of; |
| (i) | loss or damage caused to any berth, jetty, dock, dolphin, buoy, mooring line, pipe or crane or other works or equipment whatsoever at or near any place to which the vessel may proceed under this charter, whether or not such works or equipment belong to Charterers, or | |
| (ii) |
any claim (whether brought by Charterers or any other person) arising out of any loss of or damage to or in connection with cargo. All such claims shall be subject to the Hague – Visby Rules or the Hague Rules or the Hamburg Rules, as the case may be, which ought pursuant to Clause 38 hereof to have been incorporated in the relevant Bill of Lading (whether or not such Rules were so incorporated) or, if no such Bill of Lading is issued, to the Hague – Visby Rules unless the Hamburg Rules compulsorily apply in which case to the Hamburg Rules. |
| (d) | In particular and without limitation, the foregoing subsections (a) and (b) of this Clause shall not apply to or in any way affect any provision in this charter relating to off-hire or to reduction of hire. |
| Injurious Cargoes | 28. | No acids, explosives or cargoes injurious to the vessel shall be shipped and without prejudice to the foregoing any damage to the vessel caused by the shipment of any such cargo, and the time taken to repair such damage, shall be for Charterers' account. No voyage shall be undertaken, nor any goods or cargoes loaded, that would expose the vessel to capture or seizure by rulers or governments. | |
| Grade of Bunkers |
29. |
Charterers shall supply fuel oil with a maximum viscosity of 380 centistokes at 50 degrees centigrade and/or marine gasoil for main propulsion and fuel oil with a maximum viscosity of 380 centistokes at 50 degrees centigrade and/or gasoil for the auxiliaries. If Owners require the vessel to be supplied with more expensive bunkers they shall be liable for the extra cost thereof. |
|
| Charterers warrant that all bunkers provided by them in accordance herewith shall be of a quality complying with the latest ISO Standard 8217 for Marine Residual Fuels and Marine Distillate Fuels as Applicable PROVIDED AVAILABLE. IF NOT THEN CHARTERERS SHALL BE ALLOWED TO DELIVERY LESSER SPECS. OWNERS AGREE TO ASSESS BIO BUNKERS ON A CASE BY CASE BASIS IN GOOTH FAITH AND ALLOW CHARTERERS TO SUPPLY BIO FUELS PRIVIDED TECHNICALLY AND REGULATORY FEASIBLE. | |||
| Disbur-sements | 30. | Should the master require advances for ordinary disbursements at any port. Charterers or their agents shall make such advances to him, in consideration of which Owners shall pay a commission of two and a half per cent, and all such advances and commission shall be deducted from hire. | |
| Laying-up | |||
| Requisition | 32. | Should the vessel be requisitioned by any government, de facto or de jure, during the period of this charter, the vessel shall be off-hire during the period of such requisition, and any hire paid by such Governments in respect of such requisition period shall be for Owners' account. Any such requisition period shall count as part of the charter period. | |
| Outbreak of War |
33. |
If war or hostilities break out between any THREE or more of the following countries: U.S.A., the countries or republics having been party of the former U.S.S.R. (except that declaration or war or hostilities solely between any THREE or more of the countries or republics having been part of the former USSR shall be exempted), P.R.C., U.K., , Singapore, Greece then both Owners and Charterers shall have the right to cancel this charter. |
| Additional War Expenses |
34. |
If the vessel is ordered to trade in areas where there is war (de facto or de jure) or threat of war or if the area including transit thereof is subject to an additional premium by vessels underwriters, Charterers shall reimburse Owners for any additional insurance premia, against Owners written documentation, including but not limited to AWRP, War Loss of Hire, Kidnap and Ransom, crew bonuses and other expenses which are reasonably incurred by Owners as a consequence of such orders, provided that Charterers are given notice of such expenses as soon as practicable and in any event before such expenses are incurred, and provided further that Owners obtain from their insurers a waiver or any subrogated rights against Charterers in respect of any claims by Owners under their war risk insurance arising out of compliance with such orders. |
|
|
Any payments by Charterers under this clause will only be made against proven documentation. Any discount or rebate refunded to Owners, for whatever reason, in respect of additional war risk premium shall be passed on to Charterers. |
|||
| With reference to the Bimco war risk clause herein, it is understood and agreed that any payments made to the owners by underwriters for loss of hire in case of seizure by pirates, shall be offset against any hire payments made by charts. | |||
| List of requested documents below: | |||
| - Copy of proof for insured value i.e. certificate or similar showing same | |||
| - Original invoice from underwriters or insurance broker's invoice showing amount charged | |||
| - Proof of discount granted or no claims bonus | |||
| War Risks | 35. | (a) The master shall not be required or bound to sign Bills of Lading for any place in which his or Owners' reasonable opinion is dangerous or impossible for the vessel to enter or reach owing to any blockade, war, hostilities, warlike operations, civil war, civil commotions or revolutions. |
|
(b) |
If in the reasonable opinion of the master or Owners it becomes, for any of the reasons set out in Clause 35(a) or by the operation of international law, dangerous, impossible or prohibited for the vessel to reach or enter, or to load or discharge cargo at, any place to which the vessel has been ordered pursuant to this charter (a "place of peril"), then Charterers or their agents shall be immediately notified in writing or by radio messages, and the Charterers shall thereupon have the right to order the cargo, or such part of it as may be affected, to be loaded or discharged, as the case may be, at any other place within the trading limits of this charter (provided such other place is not itself a place of peril). If any place of discharge is or becomes a place of peril, and no orders have been received from Charterers or their agents within 48 hours after dispatch of such messages, then Owners shall be at liberty to discharge the cargo or such part of it as may be affected at any place which they or the master may in their or his discretion select within the trading limits of this charter and such discharge shall be deemed to be due fulfilment of Owners' obligations under this charter so far as cargo so discharged is concerned. |
|
|
(c) |
The vessel shall have liberty to comply with any directions or recommendations as to departure, arrival, routes, ports of call, stoppages, destinations, zones, waters, delivery or in any other wise whatsoever given by the government of the state under whose flag the vessel sails or any other government or local authority or by any person or body acting or purporting to act as or with the authority of any such government or local authority including any de facto government or local authority or by any person or body acting or purporting to act as or with the authority of any such government or local authority or by any committee or person having under the terms of the war risks insurance on the vessel the right to give any such directions or recommendations. If by reason of or in compliance with any such directions or recommendations anything is done or is not done, such shall not be deemed a deviation. If any reason of or in compliance with any such direction or recommendation the vessel does not proceed to any place of discharge to which she has been ordered pursuant to this charter, the vessel may proceed to any place which the master or Owners in his or their discretion select and there discharge the cargo or such part of it as may be affected. Such discharge shall be deemed to be due fulfilment of Owners obligations under this charter so far as cargo so discharged is concerned. |
|
| Charterers shall procure that all Bills of Lading issued under this charter shall contain the Provisions of Conwartime 2013. |
| Both to |
36. |
If the liability for any collision in which the vessel is involved while performing this charter falls to be determined in accordance with the laws of the United States of America, the following provision shall apply: |
|
| Blame | |||
| Collision Clause | "If the ship comes into collision with another ship as a result of the negligence of the other ship and any act, neglect or default of the master, mariner, pilot or the servants of the carrier in the navigation or in the management of the ship, the owners of the cargo carried hereunder will indemnify the carrier against all loss, or liability to the other non-carrying ship or her owners in so far as such loss or liability represents loss of, or damage to, or any claim whatsoever of the owners of the said cargo and set off, recouped or recovered by the other non-carrying ship or her owners to the owners of the said cargo and set off, recouped or recovered by the other or non-carrying ship or her owners as part of their claim against the carrying ship or carrier." | ||
| "The foregoing provisions shall also apply where the owners, operators or those in charge of any ship or ships or objects other than, or in addition to, the colliding ships or objects are at fault in respect of a collision or contact." | |||
| Charterers shall procure that all Bills of Lading issued under this charter shall contain a provision in the foregoing terms to be applicable where the liability for any collision in which the vessel is involved falls to be determined in accordance with the laws of the United States of America. | |||
| New Jason Clause | 37. | General average contributions shall be payable according to the York/Antwerp Rues 1994, as amended from time to time, and shall be adjusted in London in accordance with English law and practice but should adjustment be made in accordance with the law and practice of the United States of America, the following provision shall apply: | |
| "In the event of accident, danger, damage or disaster before or after the commencement of the voyage, resulting from any cause whatsoever, whether due to negligence or not, for which, or for the consequence of which, the carrier is not responsible by statute, contract or otherwise, the cargo, shippers, consignees or owners of the cargo shall contribute with the carrier in general average to the payment of any sacrifices, losses or expenses of a general average nature that may be made or incurred and shall pay salvage and special charges incurred in respect of the cargo." | |||
| "If a salving ship is owned or operated by the carrier, salvage shall be paid for as fully as if the said salving ship or ships belonged to strangers. Such deposit as the carrier or his agents may deem sufficient to cover the estimated contribution of the cargo and any salvage ad special charges thereon shall, if required, be made by the cargo, shippers, consignees or owners of the cargo to the carrier before delivery." | |||
| Charterers shall procure that all Bills of Lading issued under this charter shall contain a provision in the foregoing terms, to be applicable where adjustment of general average is made in accordance with the laws and practice of the United States of America. | |||
| Clause | 38. | Charterers shall procure that all Bills of Lading issued pursuant to this charter shall contain the following: | |
| Paramount | |||
| "(1) Subject to sub-clause (2) or (3) hereof, this Bill of Lading shall be governed by, and have effect subject to, the rules contained in the International Convention for the Unification of Certain Rules relating to Bills of Lading signed at Brussels on 25th August 1924 (hereafter the "Hague Rules") as amended by the Protocol signed at Brussels on 23rd February 1968 (hereafter the "Hague – Visby Rules"), Nothing contained herein shall be deemed to be either a surrender by the carrier of any of his rights or immunities or any increase of any of his responsibilities or liabilities under the "Hague-Visby Rules." | |||
| "(2) If there is a governing legislation which applies the Hague Rules compulsorily to this Bill of Lading, to the exclusion of the Hague-Visby Rules, then this Bill of Lading shall have effect subject to the Hague Rules. Nothing herein contained shall be deemed to be either a surrender by the carrier of any of his rights or immunities or an increase of any of his responsibilities or liabilities under the Hague Rules." |
| "(3) If there is a governing legislation which applies the United Nations Convention on the Carriage of Goods by Sea 1978 (hereafter the Hamburg Rules) compulsorily to this Bill of Lading, to the exclusion of the Hague-Visby Rules, then Bill of Lading shall have the effect subject to the Hamburg Rules. Noting therein contained shall be deemed to be either a surrender by the carrier of any of his rights or immunities or an increase of any of his responsibilities or liabilities under the Hamburg Rules." | |||
| "(4) If any term of this Bill of Lading is repugnant to the Hague-Visby Rules, or Hague Rules, or Hamburg Rules, as applicable, such term shall be void to that extent but no further." | |||
| "Nothing in this Bill of Lading shall be construed as in any way restricting, excluding or waiving the right of any relevant party or person to limit his liability under any available legislation and/or law." This Charter shall be subject to Clause Paramount. | |||
| Insurance/ ITOPF | 39. | Owners warrant that the vessel is now, and will, throughout the duration of the charter: | |
| (a) | be owned or demise chartered by a member of the International Tanker Owners Pollution Federation Limited. | ||
| (b) | be properly entered in BRITANNIA P&I Club P and I Club, being a member of the International Group of P and I Clubs; | ||
| (c) | have in place insurance cover for oil pollution for the maximum on offer through the International Group of P&I Clubs but always a minimum of United States Dollars 1,00,000,000 (one thousand million); | ||
| (d) | have in full force and effect Hull and Machinery insurance placed through reputable brokers on Institute Time Clauses or equivalent for the value of United States Dollars TBA as from time to time may be amended with Charterers approval, which shall not be unreasonably withheld. | ||
| Owners will provide, within a reasonable time following a request from Charterers to do so, documented evidence of compliance with the warranties given in this Clause 39. | |||
| Export | 40. | The master shall not be required or bound to sign Bills of Lading for the carriage of cargo to any place to which export of such cargo is prohibited under the laws, rules or regulations of the country in which the cargo was produced and/or shipped. | |
Restrictions
| Charterers shall procure that all Bills of Lading issued under this charter shall contain the following clause: | |||
| "If any laws rules or regulations applied by the government of the country in which the cargo was produced and/or shipped, or any relevant agency thereof, impose a prohibition on export of the cargo to the place of discharge designated in or ordered under this Bill of Lading, carriers shall be entitled to require cargo owners forthwith to nominate an alternative discharge place for the discharge of the cargo, or such party of it as may be affected, which alternative place shall not be subject to the prohibition, and carriers shall be entitled to accept orders from cargo owners to proceed to and discharge at such alternative place. If cargo owners fail to nominate an alternative place within 72 hours after they or their agents have received from carriers such notice of such prohibition, carriers shall be at liberty to discharge the cargo or any such part of it as may be affected by the prohibition at any safe place on which they or the master may in their or his absolute discretion decide and which is not subject to the prohibition, and such discharge shall constitute due performance of the contract contained in this Bill of Lading so far as the cargo so discharged is concerned", | |||
| The foregoing provision shall apply mutates mutandis to this charter, the references to a Bill of Lading being deemed to be references to this charter. | |||
| Business Principles | |||
| Drugs and Alcohol | 42. | (a) Owners warrant that they have in force an active policy covering the vessel which meets or exceeds the standards set out in the "Guidelines for the Control of Drugs and Alcohol On Board Ship" as published by the Oil Companies International Marine Forum (OCIMF) dated January 1990 (or any subsequent modification, version, or variation of these guidelines) and that this policy will remain in force throughout the charter period, and Owners will exercise due diligence to ensure the policy is complied with. | |
| (b) Owners warrant that the current policy concerning drugs and alcohol on board is acceptable to ExxonMobil and will remain so throughout the charter period. | |||
| Oil Major |
Acceptability
| Pollution and | 44. | Owners are to advise Charterers of organisational details and names of Owners personnel together with their relevant telephone/facsimile/e-mail/telex numbers, including the names and contact details of Qualified Individuals for OPA 90 response, who may be contacted on a 24 hour basis in the event of oil spills or emergencies. |
Emergency
Response
| ISPS Code/ US MTSA 2002 |
45. |
(a) (i) From the date of coming into force of the International Code for the Security of Ships and of Port Facilities and the relevant amendments to Chapter XI of SOLAS (ISPS Code) and the US Maritime Transportation Security Act 2002 (MTSA) in relation to the Vessel and thereafter during the currency of this charter, Owners shall procure that both the Vessel and "the Company" (as defined by the ISPS Code) and the owner (as defined by the MTSA) shall comply with the requirements of the ISPS Code relating to the Vessel and "the Company" and the requirements of MTSA relating to the vessel and the owner. Upon request Owners shall provide documentary evidence of compliance with this Clause 45(a)(i). |
|
| (ii) Except as otherwise provided in this charter, loss, damage, expense or delay, caused by failure on the part of the Owners or "the Company"/owner to comply with the requirements of the ISPS Code/MTSA or this Clause shall be for Owners' account. |
|
(b) |
(i) Charterers shall provide Owners/Master with their full style contact details and shall ensure that the contact details of all sub-charterers are likewise provided to Owners/Master. Furthermore, Charterers shall ensure that all sub-charter parties they enter into during the period of this charter contain the following provision: |
|
| "The Charterers shall provide the Owners with their full style contact details and, where sub-letting is permitted under the terms of the charter party, shall ensure that the contact details of all sub-charterers are likewise provided to the Owners". | ||
| (ii) Except as otherwise provided in this charter, loss, damage, expense or delay caused by failure on the part of the Charterers to comply with this sub-Clause 45(b) shall be for Charterers' account. | ||
|
(c) |
Notwithstanding anything else contained in this charter costs or expenses related to country regulations or measures required by the port facility or any relevant authority in accordance with the ISPS Code MTSA including, but not limited to, security guards, launch services, tug escorts, port security fees or taxes and inspections, shall be for Charterers' account, unless such costs or expenses result solely from Owners' negligence in which case such costs or expenses shall be for Owners account. All measures required by Owners to comply with the security plan required by the ISPS Code MTSA shall be for Owners' account. |
|
|
(d) |
Notwithstanding any other provision of this charter, the vessel shall not be off-hire where there is a loss of time caused by Charterers failure to comply with the ISPS Code MTSA (when in force). |
|
|
(e) |
If either party makes any payment which is for the other party's account according to this Clause, the other party shall indemnify the paying party. |
| Law and Litigation |
46. |
(a) This charter shall be construed and the relations between the parties determined in accordance with the laws of England. |
| (b) | All dispute arising under this charter shall be referred to Arbitration in London in accordance with the Arbitration Act 1996 (or any re-enactment or modification thereof for the time being in force) subject to the following appointment procedure: |
| (i) | The parties shall jointly appoint a sole arbitrator not later than 28 days after service of a request in writing by either party to do so. | |
| (ii) | If the parties are unable or unwilling to agree the appointment of a sole arbitrator in accordance with (i) then each party shall appoint one arbitrator, in any event not later than 14 days after receipt of a further request in writing by either party to do so. The two arbitrators so appointed shall appoint a third arbitrator before any substantive hearing or forthwith if they cannot agree on a matter relating to the arbitration. | |
| (iii) | If a party fails to appoint an arbitrator within the time specified in (ii) (the Party in Default), the party who has duly appointed his arbitrator shall give notice in writing to the Party in Default that he proposes to appoint his arbitrator to act as sole arbitrator. | |
| (iv) | If the Party in Default does not within 7 days of the notice given pursuant to (iii) make the required appointment and notify the other party that he has done so the other party may appoint his arbitrator as sole arbitrator whose award shall be binding on both parties as if he had so appointed by agreement. | |
| (v) | Any Award of the arbitrator(s) shall be final and binding | |
| (vi) | For the purposes of this clause 46(b) any requests or notices in writing shall be sent by fax, e-mail or telex and shall be deemed received on the day of transmission. |
| (c) | It shall be a condition precedent to the right of any party to a stay of any legal proceedings in which maritime property has been, or may be, arrested in connection with a dispute under this Charter, that that party furnishes to the other party security to which that other party would have been entitled in such legal proceedings in the absence of a stay. |
| Confidentiality | 47. | All terms and conditions of this charter arrangement shall be kept private and confidential. | |
| Construction |
48. |
The side headings have been included in this charter for convenience of reference and shall in no way affect the construction hereof. |
|
| Appendix A: OCIMF Vessel Particulars Questionnaire for the vessel, as attached, shall be incorporated herein. | |||
| Additional Clauses: As attached, shall be incorporated herein. |
|
SIGNED FOR OWNERS
South California Inc.
FULL NAME
/s/Evangelos Ikonomou
POSITION
Attorney in Fact |
SIGNED FOR CHARTERERS
Trafigura Maritime Logistics PTE Ltd
FULL NAME
/s/V Georgopoulos
POSITION
|
M.T. "Eco Bel Air"
DATED 14th February 2022
Table of Content
| A. | GENERAL TERMS | 3 |
| B. | TRAFIGURA ADDITIONAL TERMS TO SHELLTIME 4 | 3 |
| 49. | ON HIRE/OFF HIRE SURVEYS | 3 |
| 50. | INSPECTIONS | 3 |
| 51. | INSTRUCTIONS | 4 |
| 52. | CONTACT DETAILS | 5 |
| 5 | ||
| 54. | OFF HIRE PROVISIONS | 5 |
| 55. | PUMPING CLAUSE | 5 |
| 56. | DRUG AND ALCOHOL CLAUSE | 6 |
| 57. | SHIP-TO-SHIP LIGHTERING | 6 |
| 58. | BUNKERS | 7 |
| 59. | ETA/TRACKING | 8 |
| 60. | ELIGIBILITY AND COMPLIANCE | 9 |
| 61. | OIL MAJORS APPROVAL | 10 |
| 62. | INERT GAS SYSTEM | 11 |
| 63. | BALLAST CLAUSE | 11 |
| 64. | BROKERAGE COMMISSION CLAUSE | 11 |
| 65. | IN-TRANSIT LOSS CLAUSE | 12 |
| 66. | RETURN INSURANCE CLAUSE | 12 |
| 67. | CARGO RETENTION CLAUSE | 12 |
| 68. | HEATING CLAUSE | 12 |
| 69. | DELETED | 13 |
| 70. | CHARTERPARTY ADMINISTRATION | 13 |
| 71. | CARGO OPERATIONS | 13 |
| 72. | VESSEL MANAGEMENT CLAUSE | 13 |
| 73. | AMS CLAUSE | 14 |
| 74. | EU Advance Cargo Declaration Clause For Time Charter Parties | 14 |
| 75. | SBT Clause | 15 |
| C. | OWNERS ADDITIONAL CLAUSES | 16 |
| 1. | ISPS CLAUSE FOR TIME CHARTER PARTIES | 16 |
| 2. | BUNKER QUALITY & SUPPLY | 17 |
RIDER CLAUSES TO TIME CHARTER PARTY
M.T. "Eco Bel Air"
DATED 14th February 2022
| 3. | BUNKER FUEL SULPHUR CONTENT CLAUSE: | 18 |
| 4. | SANCTIONS RELATED TRADING EXCLUSION: | 19 |
| 5. | Trafigura Sanctions Clause For Time Charterparties | 19 |
| 6. | BIMCO Designated Entities Clause | 22 |
| 7. | Gulf Of Guinea HRA | 23 |
| 8. | STORAGE & UNDERWATER CLEANING CLAUSE | 25 |
| 9. | WAR RISKS / PIRACY | 25 |
| 10. | EBOLA CLAUSE | 28 |
| 11. | ICE CLAUSE | 29 |
| 12. | ANTI-BRIBERY, ANTI-CORRUPTION CLAUSE (ABC) | 29 |
| 13. | SCRUBBER CLAUSE / EXHAUST GAS CLEANING SYSTEM | 29 |
| 14. | BIMCO COVID-19 CREW CHANGE CLAUSE FOR TIME CHARTER PARTIES 2020: | 30 |
| 15. | INFECTIOUS DISEASE CLAUSE | 31 |
| 16. | OWNERS UNDER KEEL CLEARANCE AND AIR CLEARANCE POLICY | 33 |
| 17. | AGM Clause | 33 |
| 18. | AIRDRAFT | 33 |
| 19. | KYC | 34 |
| 20. | LOIs | 34 |
RIDER CLAUSES TO TIME CHARTER PARTY
M.T. "Eco Bel Air"
DATED 14th February 2022
TRAFIGURA ADDITIONAL CLAUSES AND AMENDMENTS TO SHELLTIME 4
(AS AMENDED DECEMBER 2003)
|
A. |
GENERAL TERMS |
|
1. |
Charter to be based on Shelltime 4 Charter Party deleting any references to Shell International Trading and Shipping Company Limited and replacing with Trafigura Maritime Logistics Pte Ltd. |
|
2. |
All negotiations and details of this Charter are to remain private and confidential by all parties concerned, except so far as concerns such information as is required to be disclosed by either party to its employees, auditors, lawyers and affiliates who have a need to know such information in connection with the performance of this Charter, to any court or governmental authority requiring such, or to any other appropriate third party to the extent necessary to comply with any legal or governmental requirement or to give commercial effect to the Charter. |
|
3. |
In the event of a conflict of terms, the provisions of these Additional Clauses and Amendments to Shelltime 4 shall prevail over those of the standard Shelltime 4 form to the extent of such conflict but no further. |
|
4. |
In each and every case where there is reference in this Charter to correspondence by "telex", it shall be read as correspondence by "e-mail or telex". |
|
B. |
TRAFIGURA ADDITIONAL TERMS TO SHELLTIME 4 |
|
49. |
ON HIRE/OFF HIRE SURVEYS |
If required by the Charterers joint on hire/off hire surveys are to be carried out at the delivery and redelivery ports respectively by an independent surveyor acceptable to both parties to inspect the Vessel's condition and to ascertain the quantity of bunkers on board. The cost of and any time lost by reason of the surveys shall be shared equally between the Owners and the Charterers.
|
50. |
INSPECTIONS |
50.1 In addition to the joint on hire/off hire surveys and further to their rights of inspection as set out in clause 23 of this charterparty the
Charterers' right to make such inspection of the Vessel as they may consider necessary includes but is not limited to the right to place on board the Vessel an inspector, surveyor and/or representative to inspect and/or test:
(i) The Vessel's hull, machinery and equipment and living spaces;
(ii) The Vessel's operational procedures both in port and at sea; and
(iii) The Vessel's certificates, records and documents
to determine whether the Owners are complying in all respects with their obligations and that the Vessel is in full compliance with international, national, state or local conventions, laws, regulations and ordinances currently in force or which may
come into force in respect of the waters and trading areas to which the Vessel may be ordered during the charter period. Any delay caused by such inspection or test will be for the Charterers' account but any repair or delay by reason of the Owners'
non-compliance will be for the Owners' account.
RIDER CLAUSES TO TIME CHARTER PARTY
M.T. "Eco Bel Air"
DATED 14th February 2022
50.2 The Charterers shall also have the right to require inspection of the Vessel's tanks at loading and/or discharging ports to ascertain the condition of the tanks, the quality of the cargo, water and residues on board. In that respect the Charterers' inspector, surveyor and/or representative has the right to ullage, inspect and take samples from the Vessel's cargo tanks, bunker tanks, void spaces and other non-cargo tanks. Depressurisation of the tanks to permit such inspection and/or ullaging shall be carried out under the supervision of the Vessel's Master in accordance with the recommendations in the latest edition of the International Safety Guide for Oil Tankers and Terminals.
50.3 The Charterers are further entitled from time to time during the charter period on reasonable notice to arrange for their representative(s) to attend the Owner's offices or the offices of the Owners' managers or managing agents as the case may be in order to audit, asses and/or investigate the Owners' policy, management, crewing and operations in relation to the services to be provided by the Vessel under this charter.
50.4 Any deficiencies determined by the Charterers, their representative(s), surveyor and/or inspector following any of the above audits, investigations,
inspections and/or tests shall be corrected by the Owners at the Owners' time and expense within 30 days of the Charterers giving the Owners notice in writing of the deficiency. If the Owners do not correct the deficiency after the said 30
days the Charterers have the option to place the Vessel off hire until she is restored to or the Owners' policy, management, crewing and operations conform to the Charterers' reasonable satisfaction.
Any deficiencies identified basis above should be in accordance with Flag, Class, OCIMF standards. This is a quality assurance clause and will not be used for commercial purposes by the charterers.
50.5 Whether or not the Charterers exercise their rights under this clause, no action or inaction on their part shall be deemed to be a waiver of their rights and shall be without prejudice to any other remedy available to the Charterers.
|
51. |
INSTRUCTIONS |
51.1 Charterers will give the Master specific telexed or email instructions for each loading/discharging operation. These instructions will always include agents. All instructions will be signed by the Charterers' authorised person(s) and the Master will only take instructions from the Charterers by telex/email, or, if verbally, on receipt of telex confirmation by an authorised person. If the Master receives instructions either verbally or telexed from any person other than authorised by the Charterers, then the Master will contact the Charterers' authorised person(s) and report the situation verbally in the first instance, but always accompanied with a telex. If the Master is unable to reach the Charterers' authorised person(s) the Master will maintain the Vessel's position and keep trying to contact the Charterers' authorised person(s) until reached. On contact, the authorised person(s) will advise the Master verbally followed by telex how to proceed.
RIDER CLAUSES TO TIME CHARTER PARTY
M.T. "Eco Bel Air"
DATED 14th February 2022
|
52. |
CONTACT DETAILS |
The Master and Vessel may be contacted at any time using the following numbers and procedures:
[insert details]
|
54. |
OFF HIRE PROVISIONS |
54.1 The Owners guarantee that prior to presentation of the Vessel and for the duration of this Charter Party, the officers and crew of the Vessel are employed under conditions acceptable to the ITF or equivalent
54.2 Without prejudice to the generality of that guarantee and the Charterers' right to seek damages in respect of its breach, in the event that the Vessel is boycotted, blockaded, blacklisted, subject to interference, subject to strike (legal or illegal), subject to stoppage of labour in any type or form, be it ship or shore labour, or denied or restricted in the use of port and/or discharging facilities and/or tug or pilotage assistance, all or any such events on account of ITF non-acceptability as aforesaid or otherwise, the Vessel's flag, registry, ownership, management, manning, wages or conditions of employment of her officers and/or crew or because of the previous trading of the Vessel or any other Vessel as aforesaid, hire shall cease for the time thereby lost, and the Owners will be responsible for and shall pay in the first instance all extra direct expenses, incurred arising therefrom, including but not limited to proceeding to an alternative berth or port and/or transhipping or otherwise forwarding any cargo to it place of delivery.
|
55. |
PUMPING CLAUSE |
The Owners warrant that throughout the charter period the Vessel will either discharge a full homogeneous cargo within 24 hours (or pro rate time for part thereof) or maintain an average of 100 psi at the Vessel's manifold and the Owners warrant such minimum performance provided the receiving facilities permit and subject always to an obligation on the Owners to perform the Vessel's service with utmost despatch, always excluding drainage and stripping max 3 hours lines blowing and COW but max 3 hours per each grade. The discharge terminal has the right to gauge line pressure. If the Vessel fails to comply with the above warranties, the Charterers have the right to order the Vessel to be withdrawn from the berth in which case all time and expenses incurred are for the Owners' account until the Vessel re-berths and resumes discharge operations. Further, and alternatively, any delay by reason of the Vessel's failure to comply with the above warranties and any direct expenses arising therefrom including but not limited to terminal charges for berth occupancy shall be for the Owners' account. All pumping logs must be noted by the Vessel in the event of any restrictions imposed by the receiving terminal restricting/slowing discharge, duly signed by the Master and terminal and sent directly by the Vessel to the Charterers within one business day.
RIDER CLAUSES TO TIME CHARTER PARTY
M.T. "Eco Bel Air"
DATED 14th February 2022
The above pumping performance should always be subject to:
A sufficient and adequate number / size of arms / hoses.
Homogeneous cargo and not multiple berths or barge discharge.
The cargo at discharge temperature does not have (i) kinematic viscosity exceeding 250 degrees Centistokes, or (ii) volatility which adversely affects the required net positive suction head of vessel's cargo pumps, or (iii) density exceeding
1,000 KG/m3.
|
56. |
DRUG AND ALCOHOL CLAUSE |
For the purposes of clause 42 of the Shelltime 4 form and the OCIMF Guidelines, alcohol impairment shall be defined as blood alcohol content of 40mg/100ml or greater; the appropriate seafarers to be tested shall all be Vessel's officers and the drug/alcohol testing and screening shall include random or unannounced testing in addition to routine medical examinations. An object of the policy shall be that the frequency of the random/unannounced testing is adequate to act as an effective abuse deterrent, and that all officers are tested at least once a year through a combined programme of random/unannounced testing and routine medical examinations. The Owners further warrant that if required by Charterers a full declaration has been passed on to the Exxon/Exxon affiliate which confirms that the Vessel operates under a Drug and Alcohol Policy which meets or exceeds the OCIMF Guidelines.
|
57. |
SHIP-TO-SHIP LIGHTERING |
57.1 The Charterers have the option to load or discharge the Vessel via ship-to-ship transfer either partially or totally at sea or at anchor or underway off any port that the Charterers may direct Vessel not to be employed in a continuous lighterage service unless agreed with Owners, which not to be unreasonably withheld.
57.2 The Owners warrant the Vessel is and will remain fully suitable for such lightering operations and that the operations shall be carried out in accordance with all applicable conventions, laws, regulations, rules and the like of any international, national, state or local government entity and in accordance with the procedures set out in the latest revised edition of the International Chamber of Shipping Oil Companies International Marine Forum Ship-to-Ship Transfer Guide (Petroleum) ("ICS/OCIMF Guidelines").
57.3 The Owners agree to allow supervisory personnel on board including but not limited to a Mooring Master to advise on the performance of the ship-to-ship transfer operation. It is understood, however, that the Master of the Vessel shall be responsible for the safe operation of the Vessel at all times throughout the transfer operation and for assuring that the requirements of any conventions, laws, regulations and rules, the ICS/OCIMF Guidelines and prudent seamanship are met. It is further understood and agreed that the crew of the Vessel will assist in handling fenders and cargo hoses as well as mooring and unmooring as required by the Mooring Master at no cost to the Charterers.
RIDER CLAUSES TO TIME CHARTER PARTY
M.T. "Eco Bel Air"
DATED 14th February 2022
57.4 The Owners guarantee that the Vessel is capable of and will maintain a safe and reasonable stability during and after the lightering operation.
57.5 The Charterers will provide all fenders, hoses and any other equipment necessary to perform a safe lightering operation as per procedures set out in the latest revised edition of the International Chamber of Shipping Oil Companies International Marine Forum Ship-to-Ship Transfer Guide (Petroleum) ("ICS/OCIMF Guidelines") at the Charterers' time and expense.
|
58. |
BUNKERS |
58.1 The Charterers have the option to bunker the Vessel before delivery provided this does not interfere with the discharge operation or delay delivery.
58.2 delete already covered in shelltime
58.3 At the time of delivery of the Vessel the Owners shall provide the Charterers with the bunker delivery note(s) of any fuels on board and shall place at the disposal of the Charterers any samples relating to the fuels on board.
58.4 Throughout the charter period the Charterers shall ensure that bunker delivery notes are presented to the Vessel on the delivery of fuel(s) and the Owners shall ensure that continuous drip samples are taken at the Vessel's bunker manifolds during the entire bunkering operation and sealed in the presence of competent representatives of the suppliers, the Charterers (at Charterers' option) and the owners one sample to be retained of each of the fuels supplied on the Vessel and two samples to be retained by the suppliers.
58.5 The samples shall be securely sealed and provided with labels showing the Vessel's name, identity of delivery facility, product name, delivery date and place and seal number, authenticated with the Vessel's stamp and signed by the suppliers' representative and the Master of the Vessel of his authorised representative.
58.6 The fuel samples shall be retained by the suppliers and the Vessel for 60 (sixty) days after the date of delivery or for whatever periods necessary in case a claim for any defect in the quality of the fuels is brought to the Charterers' attention prior to the expiry of that 60 (sixty) day period. In that respect any claim for any defect in quality of the fuels must be brought to the Charterers' attention immediately and in any event, within 60 days of delivery together with full details of the claim with supporting evidence failing which any such claim shall be deemed waived and shall be time barred regardless of whether the Owners were unaware of the grounds for a claim until a later date.
58.7 One sample will immediately after delivery be sent by Vessel's Master to the nearest DNV or similar well recognised laboratory for analysis, clearly identifying that the request for analysis comes from the Charterers. Any dispute regarding the quality of the fuels shall be settled by that analysis, the findings of which shall be conclusive evidence as to conformity or otherwise with the bunker fuel specification(s).
RIDER CLAUSES TO TIME CHARTER PARTY
M.T. "Eco Bel Air"
DATED 14th February 2022
58.8 The Owners shall ensure that an Owners' representative witnesses bunker soundings and measurement of bunker quantities before and after delivery whether at the manifold, on shore or at the bunker barge tanks as determined by the suppliers and any complaint of an incorrect measurement of the quantity of fuel(s) delivered must be made both orally and in writing at the time of delivery and notified to all parties concerned immediately after delivery and noted in the delivery receipt at the time of delivery, failing which the suppliers' determination of quantity shall be final and conclusive and any claim to the contrary is deemed to be waived and absolutely barred.
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59. |
ETA/TRACKING |
59.1 The Owners undertake that, unless the Charterers require otherwise, the Master shall email/telex, in the format provided by the Charterers, his noon position on every day during the currency of this charter. Furthermore, the Master will keep the Charterers fully advised of the Vessel's ETA of more than 6 hours immediately be notified to the Charterers.
59.2 Owners undertake that, unless the Charterers require otherwise, the Master shall advise Charterers:
|
i. |
Immediately on leaving the final port of call on the previous voyage of the time and date of the vessel's expected arrival at the first loading port and shall further advise Charterers 72, 48, 36 and 24 hours before the expected arrival time/date. |
|
ii. |
Immediately after departure from the final loading port, of the vessel's expected time of arrival at the first discharging port or the area at sea to which the vessel has been instructed to proceed for wireless orders, and confirm or amend such advice not later than 72, 48, 36 and 24 hours before the vessel is due at such port or area; |
|
iii. |
Immediately of any variation of more than six hours from expected times of arrival at loading or discharging ports, Quoin Island or such area at sea to Charterers; |
|
iv. |
Immediately if any situation occurs after the date of this charter party which may result in tendering later than the cancelling date, or in damage to the vessel or cargo, or in tardy performance of the voyage. |
59.3 For clause 59.2, of the loading range is Arabian Gulf, load port is defined as arrival off Quoin Island 59.7 The Charterers nay from time to time throughout the charter period employ an Inmarsat C trading system on the Vessel provided this does not interfere with the Vessel's navigational system.
59.4 The Owners further undertake that unless the Charterers require otherwise, the Master will follow all lawful voyage orders issued by the Charterers.
59.5 The Owners shall be responsible for any consequences or additional expenses arising as a result of non-compliance with this clause.
59.6 Charterer's communication details:
RIDER CLAUSES TO TIME CHARTER PARTY
M.T. "Eco Bel Air"
DATED 14th February 2022
[insert details]
All registration and communication costs relating to this tracking system will be for the Charterers' account. The Charterers will advise when the system is operative and confirm termination on completion of the charter. The Owners will supply the following information, which will form part of this clause:
Inmarsat C number (9 digits beginning with 4): [number to be inserted]
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60. |
ELIGIBILITY AND COMPLIANCE |
60.1 Owners warrant that the Vessel is and shall remain throughout the duration of this charter in all respects eligible under all applicable conventions, laws, regulations, rules, ordinances, decrees, conventions and any other applicable directives of the country of the Vessel registry and of any international, national, state or local government entity including without limitation port and customs authorities for trading to and from any port or place within the trading limits set out in clause 4 of this charterparty. For the avoidance of doubt and without limitation such compliance includes compliance with the rules of the International Convention for the Prevention of Pollution from Ships (MARPOL 1973/1978) as amended, the International Convention of the Safety of Lives at Sea (SOLAS 1974/1978/1983) as amended, the US Oil Pollution Act of 1990 (OPA 90) as amended, the Comprehensive Environmental Response Compensation and Liability Act (CERCLA) as amended, the National Convention of Civil Liability for Oil Pollution Damage of 1992 as amended, the US Port and Safe Tanker Safety Act as amended and the US Federal Water Pollution Control Act as amended.
60.2 Owners warrant that from the date of delivery and throughout the charter period the Vessel shall have on board for inspection by the appropriate authorities all certificates, records, compliance letters and other documents required for the performance of this charterparty, including but not limited to, a US Coastguard Certificate of Financial Responsibility (Oil Pollution) (COFR) and the certificate required by Article VII of the International Convention on Civil Liability for Oil Pollution Damage 1992, as amended.
60.3 In the interest of safety, the owners warrant that the Master will observe recommendations as to traffic, separation and routing as issued from time to time by the International Maritime Organisation (IMO) or as promulgated by the state of the flag of the Vessel and/or the state in which the effective management of the Vessel is exercised.
60.4 Without prejudice to the Charterers' rights to terminate this charterparty for breach of any warranty set out in the above, the Vessel shall be off hire for any time lost during which she is not fully and freely available to the Charterers as a result of any failure to comply with this clause and any proven and direct losses, expenses or damages arising as a result of such failure shall be for the Owners' account.
USCG compliance
RIDER CLAUSES TO TIME CHARTER PARTY
M.T. "Eco Bel Air"
DATED 14th February 2022
All time lost and all costs for obtaining and maintaining valid uscg coc to be for owners account PROVIDED CHARTERERS HAVE ISSUES ORDERS TIMELY as per local port USCG requirements.
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61. |
OIL MAJORS APPROVAL |
61.1 The Owners acknowledge that to trade effectively an oil tanker today, acceptance of the Vessel under the SIRE Vessel Inspections Programme by the major oil companies is essential and for a [gas or] chemical tanker acceptance also under the CDI Vessel Inspections Programme is essential. As such, it is a condition of this charterparty that on the day of delivery, unless a new build, the Vessel has been inspected under the SIRE Vessel Inspection Programme and by the major oil and chemical companies as required (separately and together "Inspection(s)") and to the best of Owners belief and knowledge is not unacceptable to any major oil company.
61.2 If the Vessel is a new build then it is a condition of this charterparty that the Owners shall arrange such Inspection(s) and obtain at least one CDI and / or SIRE report acceptable to the major oil and chemical companies as required within three weeks after delivery. Charterers to decide which inspection will be perform first. Such inspections always to be subject to the vessel's trading patterns, availability of inspectors and subject to OCIMF SIRE rules.
61.3 The Owners shall arrange such Inspections to maintain such acceptances for their account. Such Inspections will be co-ordinated between the Owners, the Charterers and relevant inspectors and, at the minimum, will be carried out within the intervals required in lines 42-43 of the Shelltime 4 form or any lesser intervals as required following inspection whichever is the lesser period.
61.4 If one (1) further Inspection is required in order to perform a contemplated voyage or for the Vessel to be eligible for contemplated business then such Inspection will be arranged by the Owners and co-ordinated between the Owners, the Charterers and the relevant inspectors and shall be for the Charterers account and it shall be the Owners' responsibility to ensure insofar as is physically possible that such Inspection takes place as required by the Charterers always subject to availability of inspectors, the Vessel's trading patterns and OCIMF SIRE rules.
61.5 The Owners shall on receipt of an Inspection report promptly make their appropriate investigation for the incurred observations and then provide comments on such report and the report itself available to the Charterers and arrange to have their comments entered into the respective databases.
61.6 In respect of a breach of paragraphs 61.1 and 61.2 above, in the event that the Vessel fails or ceases to be accepted following any such Inspections, the Owners shall forthwith rectify the situation to make the Vessel acceptable and arrange the Vessel's re-inspection within a maximum of four weeks, always subject to the vessel's trading patterns, availability of inspectors and subject to OCIMF SIRE rules, the cost of which shall be for the owners' account. The Vessel shall be off hire from 30 days after the time of such rejection and/or failure or cessation of acceptance until again acceptable . In the event the Vessel is not acceptable within that four week period, the Charterers shall have the right to terminate the charter whether or not the Vessel has previously been acceptable to any oil major or chemical company.
RIDER CLAUSES TO TIME CHARTER PARTY
M.T. "Eco Bel Air"
DATED 14th February 2022
61.7 If the vessel is placed off-hire by Charterers, Owners have the right to trade the vessel for their own account until the vessel again complies with this Clause. Thereafter the vessel shall go on-hire in a position not less favourable to Charterers than the position in which she went off-hire.
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62. |
INERT GAS SYSTEM |
62.1 The Owners warrant that the Vessel is equipped with a fully functional, efficient and certified Inert Gas System ("IGS") which is in use on the date of delivery of the Vessel and shall so remain during the period of the charter and that the officers and crew on board on delivery and throughout the period of the charter are and will be experienced in the operation of the system. The Owners further warrant that the Vessel will arrive at load ports with cargo tanks inerted and that the tanks will remain inerted throughout the voyage and during discharge.
62.2 The Master may be requested by terminal personnel or independent inspectors to breach the IGS for the purposes of gauging, sampling, temperature determination and/or determining the quantity of cargo remaining on board after discharge. The Master shall comply with these requests consistent with the safe operation of the Vessel and all applicable laws, rules and regulations and the vessel shall remain on hire throughout.
62.3 Any proven and direct costs, delays or expenses resulting from non-compliance with this clause shall be for the Owners' account and the Vessel shall be off hire for any time so lost.
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63. |
BALLAST CLAUSE |
The Owners warrant that the Vessel is able to ballast/deballast concurrently with cargo operations. Any time lost by the Vessel being unable to ballast/deballast concurrently with cargo operations will be for the Owners' account and deducted from hire unless such ballasting/deballasting concurrently with cargo operations is prohibited by local regulations.
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64. |
BROKERAGE COMMISSION CLAUSE |
0.7%to Arrow Tankers payable by Owners. No addcom.
1.25% to CENTRAL Ship Chartering Inc.
RIDER CLAUSES TO TIME CHARTER PARTY
M.T. "Eco Bel Air"
DATED 14th February 2022
|
65. |
IN-TRANSIT LOSS CLAUSE |
Payable by owners / Bare Boat Charterers In addition to any other rights which the Charterers may have, the Owners will be responsible for the full amount of any in-transit loss if in-transit loss exceeds 0.3% and the Charterers shall have the right to deduct from freight an amount equal to the FOB port of loading value of such lost cargo plus freight and insurance due with respect thereto provided Charterers can prove that they have suffered a corresponding loss and are the party with title to the cargo. In-transit loss is defined as the difference between net vessel volumes after loading at the loading port and before unloading at the discharge port based on ship's figures. Calculation is always to be based on same cargo temperature.
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66. |
RETURN INSURANCE CLAUSE |
The Charterers are to have the benefit of any return insurance premium received by the Owners from underwriters (as and when received from underwriters) by reason of the vessel being in port for a minimum period of 30 days provided the Vessel is on hire.
|
67. |
CARGO RETENTION CLAUSE |
In the event that any cargo remains on board upon completion of discharge, the Charterers shall have the right to deduct from hire an amount equal to the FOB port loading value of such cargo plus voyage freight due with respect thereto, provided that the volume of cargo remaining on board is liquid pumpable and reachable by the Vessel's fixed pumps as determined by a mutually agreeable independent surveyor and further provided that Charterers can prove that they have suffered a corresponding loss and are the party with title to the cargo. Any action or lack of action in accordance with this provision shall be without prejudice to any rights or obligations of the Charterers.
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68. |
HEATING CLAUSE |
The Owners warrant that the Vessel is fully fitted with tight and functioning heating coils in all cargo tanks and is capable of increasing cargo temperature and maintaining on passage, at the discharge port and during discharge the cargo at the loaded or increased temperature as agreed in this charterparty.
Vessel is capable of loading/discharging cargo at a max temperature of 74 degrees Centigrade.
Vessel can maintain loaded temperature, or raise cargo temperature up to max.
60 degrees Centigrade.
All consumptions for heating for charterers account.
RIDER CLAUSES TO TIME CHARTER PARTY
M.T. "Eco Bel Air"
DATED 14th February 2022
|
69. |
DELETED |
|
70. |
CHARTERPARTY ADMINISTRATION |
A formal Charter Party shall be prepared and signed by Owners and Charterers. The Owners' broker shall prepare a Charter Party in the format similar to Shelltime 4, as modified by the recap fixture telex/email and bearing the same date.
This should be completed with 30 (thirty) working days after date of fixture.
|
71. |
CARGO OPERATIONS |
The vessel may be required to carry out one or more of the following cargo operations as Charterers may reasonably require from time to time, always provided that the vessel is capable of such operations and provided that any such operations are always in accordance with prevailing IMO/MARPOL legislation, OCIMF rules or regulations, any dyes/additives are in accordance with the vessel's tank coating manufacturers resistance list and guidelines, and vessel's specifications and characteristics, Charterers shall have the option at their time risk and expense to:
|
i. |
Blend and/or circulate cargo onboard |
|
ii. |
Load dyed cargo, provided the dye is customarily used or is suitable for use in said cargo |
|
iii. |
Dye the cargo onboard the vessel provided this is carried out or supervised by qualified personnel |
|
iv. |
Blend additives to the cargo at any point during the voyage, provided that the additive is one which is customarily used or is suitable for use in said cargo and carried out or supervised by qualified personnel |
|
v. |
Carry on board the vessel drums or other suitable containers of additive |
|
vi. |
To breach vessel's natural segregation |
|
vii. |
To load and discharge freshwater or seawater shore line flush/plug before, during or after a loading operation |
Upon receipt of Charterers' written instructions in respect of the foregoing, a Letter of Indemnity in the form of Owners P&I Club wording – See Additional Clause 14
|
72. |
VESSEL MANAGEMENT CLAUSE |
Throughout the period of this Charter Party the Vessel's ownership structure, flag, registry, classification society, management company and nationality of officers shall not be changed, unless expressly agreed in writing by the Charterer which is not to be unreasonably withheld.
RIDER CLAUSES TO TIME CHARTER PARTY
M.T. "Eco Bel Air"
DATED 14th February 2022
Owners shall notify Charterers of any proposed changes in writing at least 90 days prior to proposed implementation date.
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73. |
AMS CLAUSE |
(a) If the Vessel loads or carries cargo destined for the US or passing through US ports in transit, the Charterers shall comply with the current US Customs regulations (19 CFR 4.7) or any subsequent amendments thereto and shall undertake the role of carrier for the purposes of such regulations and shall, in their own name, time and expense:
i. Have in place a SCAC (Standard Carrier Alpha Code);
ii. Have in place an ICB (International Carrier Bond); and
|
iii. |
Submit a cargo declaration by AMS (Automated Manifest System) to the US Customs. |
(b) The Owners shall provide all necessary information to the Charterers and/or their agents to enable the timely and accurate cargo declaration.
The Charterers shall assume liability for and shall indemnify, defend and hold harmless the owners against any loss and/or damage whatsoever (including consequential loss and/or damage) and/or any expenses, fines, penalties and all other claims of whatsoever nature, including but not limited to legal costs, arising from the Charterers' failure to comply with any of the provisions of this sub-clause. Should such failure result in any delay then, notwithstanding any provision in this Charter Party to the contrary, the vessel shall remain on hire.
(c) The assumption of the role of carrier by the Charterer pursuant to this Clause and for the purpose of the US Customs Regulations (19 CFR 4.7) shall be without prejudice to the identity of carrier under any bill of lading, other contract, law or regulation.
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74. |
EU ADVANCE CARGO DECLARATION CLAUSE FOR TIME CHARTER PARTIES |
(a) If the Vessel loads cargo in any EU port or place destined for a port or place outside the EU or loads cargo outside the EU destined for an EU port or place, the Charterers shall comply with the current EU Advance Cargo Declaration Regulations (the Security Amendment to the Community Customs Code, Regulations 648/2005; 1875/2006; and 312/2009) or any subsequent amendments thereto and shall undertake the role of carrier for the purposes of such regulations and in their own name, time and expense shall:
|
(i) |
Have in place an EORI number (Economic Operator Registration and Identification; |
|
(ii) |
Provide the Owners with a timely confirmation of (i) above as appropriate; and |
RIDER CLAUSES TO TIME CHARTER PARTY
M.T. "Eco Bel Air"
DATED 14th February 2022
|
(iii) |
Submit an ENS (Entry Summary Declaration) cargo declaration electronically to the EU Member States' Customs and provide the Owners at the same time with a copy thereof. |
(b) The Charterers assume liability for and shall indemnify, defend and hold harmless the Owners against any direct loss and/or damage) and/or any expenses, fines, penalties and all other claims of whatsoever nature, including but not limited to legal costs, arising from the Charterers' failure to comply with any of the provisions pf sub-clause (a). Should such failure result in any delay then, notwithstanding any provision in this Charter Party to the contrary, the Vessel shall remain on hire.
(c) The assumption of the role of carrier by the Charterers pursuant to this Clause and for the purpose of the EU Advance Cargo Declaration Regulations shall be without prejudice to the identity of carrier under any bill of lading, other contract, law or regulation.
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75. |
SBT CLAUSE |
Owners warrant that the vessel complies with the Council of the European Union Regulation on the Implementation of IMO Resolution A747(18) which requires that the following entry is made on the International Tonnage Certificate (1969) under the section headed "remarks":-
"The segregated ballast tanks comply with the Regulation 13 of Annex 1 of the International Convention for the prevention of pollution from ships, 1973, as modified by the Protocol of 1978 relating thereto, and the total tonnage of such tanks exclusively used for the carriage of segregated water ballast is TBA.
The reduced gross tonnage which should be used for the calculations of tonnage fees is TBA".
RIDER CLAUSES TO TIME CHARTER PARTY
M.T. "Eco Bel Air"
DATED 14th February 2022
|
C. |
OWNERS ADDITIONAL CLAUSES |
|
1. |
ISPS CLAUSE FOR TIME CHARTER PARTIES: |
1. The Owners shall procure that both the Vessel and "the Company" (as defined by the International Code for the Security of Ships and of Port Facilities and the relevant amendments to Chapter XI of SOLAS ("the ISPS Code")) and the "Owner" (as defined by the US Maritime Transportation Security Act 2002 ("MTSA")) shall comply with the requirements of the ISPS Code relating to the Vessel and "the Company" and the requirements of the MTSA, if applicable, relating to the Vessel and the "Owner". Upon request the Owners shall provide a copy of the relevant International Ship Security Certificate (or the Interim International Ship Security Certificate) to the Charterers. The Owners shall provide the Charterers with the full style contact details of the Company Security Officer (CSO).
2. Except as otherwise provided in this Charter Party, proven loss, damage, expense, hire payable or any time lost, excluding consequential loss, caused by failure on the part of the Owners or "the Company" to comply with the requirements of the ISPS Code or the MTSA if applicable, or this Clause shall be for the Owners' account.
3. The Charterers shall provide the CSO and the Ship Security Officer (SSO)/Master with their full style contact details and any other information the owners require to comply with the ISPS and the MTSA if applicable. Additionally, where sub-letting is permitted under the terms of this Charter Party, Charterers shall ensure that the contact details of all sub-charterers are likewise provided to the SCO and the SSO/Master. Furthermore, the Charterers shall ensure that all sub-charter parties they enter into during the period of this Charter Party contain the following provision:
"The Charterers shall provide the Owners with their full style contact details, and where sub-letting is permitted under the terms of the charter party, shall ensure that the contact details of all sub-charterers are likewise provided to the Owners".
4. Except as otherwise provided in this Charter Party, loss, damage, expense, hire or delay, excluding consequential loss, caused by failure on the part of the Charterers to comply with this Clause shall be for the Charterers' account.
5. All time lost, costs, hire or expenses related to security regulations or measures required by the port facility or any relevant authority in accordance with the ISPS Code/MTSA including, but not limited to, security guards, launch services, tug escorts, port security fees or taxes and inspections, shall be shared equally between Owners and Charterers except where:-
5.1 Such costs or expenses are imposed, or hire as a result of Owners' or Charterers' failure to comply with clauses 6.1 and 6.3, (in which case the party whose failure to comply has caused such costs or expenses to be incurred or hire shall bear these), or
5.2 Unless such costs or expenses or hire result solely from the Owners' negligence (in which case the costs, expenses or hire shall be for Owners' account). All measures required by the Owners to comply with the Ship Security Plan shall be for the Owners' account.
RIDER CLAUSES TO TIME CHARTER PARTY
M.T. "Eco Bel Air"
DATED 14th February 2022
6. If either party makes any payment which is for the other party's account according to this Clause, the other party shall indemnify the paying party.
|
2. |
BUNKER QUALITY & SUPPLY |
The Charterer is to provide bunkers conforming to ISO8217 (2010) provided available and to make best endeavours to provide bunkers conforming to any later versions of ISO8217 where available and feasible.
Charterer to always have right to load High Sulphur bunkers to use only in Main and Auxiliary Engines, in conjunction with Sox Scrubber after implementation date established by IMO for the entry into force of the 0.5% global sulfur cap as described in MARPOL Annex VI (expected 1 January 2020).
1. The Charterers shall supply bunkers of a quality suitable for burning in the Vessel's engines and auxiliaries and which conform to the specification(s) mutually agreed as set out at the top of this clause and under this Charter;
2. In areas of the world where such bunkers are not available, ISO standards are exceeded or ISO standards cannot be guaranteed (for example in countries where local state oil company specifications apply), the Charterers must supply bunkers as available locally. In such circumstances the local bunker specifications are to meet with the Owners', or the Master's approval that is not to be unreasonably withheld. Any such bunkers are to be supplied at a minimum quantity for vessel to reach the next available bunkering port with suitable safety margin.
3. At the time of delivery of the vessel, the Owners shall place at the disposal of the Charterers, the bunker delivery note(s) and any samples relating to the fuels existing on board.
4. During the currency of the Charter, the Charterers shall ensure that bunker delivery notes are presented to the vessel on delivery of fuel(s) and that during bunkering, representative samples of the fuel(s) supplied shall be taken, including at the Vessel's bunkering manifold and sealed in the presence of competent representatives of the Vessel.
5. The fuel samples shall be retained by the Vessel for 90 (ninety) days after the date of delivery or for whatever period necessary in the case of a prior dispute and any dispute as to whether the bunker fuels conform to the agreed specification(s) shall be settled by a joint analysis of a representative sample, which has been witnessed and signed by the bunkering ship or barge representative, at a laboratory acceptable to Owners and Charterers. The sample for testing shall be the sample which was collected at the Vessel's manifold and has its seal number endorsed on the Bunker Delivery Receipt. Th findings of this analysis shall be conclusive evidence as to conformity or otherwise with the bunker fuels specification(s).
6. The Owner reserves its right to make a claim against the Charterer such to be time-barred unless notified by Owners to Charterers within 60 days of supply for any damage to the main engines or the auxiliaries caused by the use of unsuitable fuels or fuels not complying with the agreed specification(s) under this Charter. Additionally, if bunker fuels supplied do not conform with the mutually agreed specification(s) or otherwise prove unsuitable for burning on the ship's engines or auxiliaries the Owner shall not be held responsible for any reduction in the Vessel's speed performance and/or increased bunker consumption nor for any time lost and any other consequences.
RIDER CLAUSES TO TIME CHARTER PARTY
M.T. "Eco Bel Air"
DATED 14th February 2022
Unless necessary for the safe operation of the vessel, fresh bunkers are not to be used and to be kept segregated onboard until quality test results are received by Owners.
Charterer is to supply bunkers always in conformity with sulphur content regulations worldwide.
|
3. |
BUNKER FUEL SULPHUR CONTENT CLAUSE: |
|
a. |
Without prejudice to anything else contained in the Charter Party, the Charterer shall supply fuels each of such specification and grades to permit the vessel, at all times, to comply with the maximum sulphur content requirements of any emissions control zone, when the vessel is ordered to trade within that zone. |
The Charterer also warrants that any bunker suppliers, bunker craft operators and bunker surveyors used by the Charterer to supply such fuels shall comply with Regulations 14 and 18 of MARPOL, Annex VI, including the Guidelines in respect of sampling and the provision of bunker delivery notes.
The Charterer shall indemnify, defend and hold harmless the Owner in respect of any loss, liability, delay, fines, costs or expenses arising or resulting from the Charterer's failure to comply with this Sub-clause (a).
|
b. |
Provided always that the Charterer has fulfilled its obligation in respect of the supply of fuels in accordance with Sub-clause (a) the Owner shall warrant that: |
|
i) |
The Vessel shall comply with Regulations 14 and 18 of Marpol Annex VI and with the requirements of any emission control zone; and |
|
ii) |
The Vessel shall be able to consume fuels of the required sulphur content when ordered by Charterer to trade within any such zone subject to having supplied the Vessel with fuels in accordance with Sub-clause (a), the Charterer shall not otherwise be liable for any loss, delay, fines, costs or expenses arising or resulting from the Vessel's failure to comply with Regulations 14 and 18 of MARPOL Annex VI. |
|
c. |
For purposes of the Clause, "emission control zone" shall mean zones as stipulated in MARPOL Annex VI and/or zones regulated by regional and/or national authorities such as, but not limited to, the EU and the US Environment Protection Agency. |
|
d. |
However, it is understood that while Charterers is to make best efforts to supply RMG 380, if unavailable then RMF 25 is acceptable in South Africa but maximum 300 metric tons IFO per each bunkering in South Africa. Additionally, Charterers may also bunker RMF 25 at other ports where similar circumstances apply subject to Owners' prior approval which shall not be unreasonably withheld. |
RIDER CLAUSES TO TIME CHARTER PARTY
M.T. "Eco Bel Air"
DATED 14th February 2022
|
4. |
SANCTIONS RELATED TRADING EXCLUSION: |
The Charterer warrants that they shall not utilise the Vessel or permit the Vessel to be utilised in any trade that violates us/un/eu sanctions, Should sanctions on certain countries be terminated then such countries to be allowed in the trading range subject to not being in breach of the terms defined in the clause.
|
5. |
Trafigura Sanctions Clause for Time Charterparties |
|
1.1 |
Owners and Charterers respectively warrant that at the date of this fixture they are not and undertake that throughout the duration of this Charterparty they will not be: |
(a) the subject of Sanctions; or
|
(b) |
an Affiliate of, or owned or controlled (whether individually or jointly) by a party or parties, which is/are the subject of Sanctions. |
|
1.2 |
Each party warrants that, for the duration of the Charterparty, it shall comply with Sanctions applicable to it. |
|
1.3 |
Notwithstanding anything in this clause to the contrary, neither Owners nor Charterers shall be required to do or omit to do anything which constitutes a violation of or would be in contravention of, or expose it to the Vessel to risk of designation pursuant to Sanctions applicable to it. |
|
1.4 |
Owners warrant that: |
(a) As at the date of this Charterparty:
|
(i) |
Owners are able to accept the instructions and perform all obligations contemplated under this Charterparty; and |
|
(ii) |
the vessel is able to accept the instructions and perform the services contemplated under this Charterparty. |
RIDER CLAUSES TO TIME CHARTER PARTY
M.T. "Eco Bel Air"
DATED 14th February 2022
|
(b) |
the vessel shall before and at the beginning of this Charterparty and throughout the duration of this Charterparty not be the target of Sanctions, nor be owned or controlled (whether individually or jointly) by any party or parties which is/are the subject of Sanctions. |
|
1.5 |
If at any time during the performance of this Charterparty any Sanctions are changed, or new Sanctions or other trade restrictions are imposed or become effective, or there is a change in the interpretation of Sanctions, which would result in performance of this Charterparty contravening the provisions of Clause 1.2 or 1.3 then: |
|
(a) |
either party shall be entitled to immediately suspend any affected performance obligation, providing the other party with written notification of the same, and, if appropriate, request for issue (as the case may be) alternative voyage orders, which shall be given promptly by Charterers, and |
|
(i) |
Charterers and Owners shall each be liable for 50% of all time for a period of up to 7 (seven) days following such written notification, pending receipt of Charterers' alternative voyage orders; |
|
(ii) |
thereafter, Charterers shall continue to pay hire and any additional costs that may be due as a result of any change in discharge port(s); and |
|
(b) |
if the circumstances resulting in such suspension continue for more than 7 (seven) days from the date of such written notice and provided that: |
(i) such circumstances are continuing; and
|
(ii) |
the nature of the circumstances are such that they go to the root of the parties' ongoing obligations under this Charterparty, rendering it impossible for the parties to continue to perform their ongoing obligations under this Charterparty, and which cannot be overcome by the parties taking reasonable measures, whether by issuing revised voyage orders or otherwise, always provided such measures are not in contravention of Sanctions, |
then either party shall be entitled to terminate the Charterparty with immediate effect on written notice to the other, save that if cargo is on board then, prior to such termination, the Vessel shall, provided such is not in contravention of Sanctions, be directed to a safe [port/place/terminal/berth] and there discharge the cargo (with termination effective on completion of discharge). Upon termination there shall be no further liability on either party save for any accrued rights or remedies including under this clause.
|
1.6 |
If at any time during the performance of this Charterparty, Owners become aware that Charterers are in breach of the warranties set out in Clause 1.1 and/or 1.2 (whether or not as a result of any action and/or omission) then: |
RIDER CLAUSES TO TIME CHARTER PARTY
M.T. "Eco Bel Air"
DATED 14th February 2022
|
(a) |
Owners shall be entitled to immediately suspend any affected performance obligation, providing Charterers with written notification of the same, and, if appropriate, request alternative voyage orders which shall be given promptly by Charterers, and |
|
(i) |
Charterers shall be liable for all time pending Owners' receipt of Charterers' alternative voyage orders; |
|
(ii) |
thereafter, Charterers shall continue to pay hire and shall be liable for any losses that Owners suffer as a result of any change in discharge port(s); and |
|
(b) |
if the circumstances resulting in such suspension continue for more than 7 days from the date of Owners' written notice then, provided such circumstances are continuing, Owners shall be entitled to terminate the Charterparty with immediate effect on written notice to Charterers, save that of cargo is on board, then, prior to such termination, the Vessel shall, provided such is not in contravention of Sanctions, be directed to a safe port and there discharge the cargo (with termination effective on completion of discharge). Upon termination there shall be no further liability on either party save for any accrued rights or remedies including under this clause. |
|
1.7 |
If at any time during the performance of this Charterparty, Charterers become aware that Owners are in breach of the warranties set out in Clause 1.1, 1.2 and/or 1.4 (whether or not as a result of any action and/or omission) then: |
|
(a) |
Charterers shall be entitled to immediately suspend any affected performance obligation, providing Charterers with written notification of the same, and, if appropriate, promptly issue alternative voyage orders to Owners, and: |
|
(i) |
Charterers shall not be obliged to pay hire pending issuance of Charterers' alternative voyage orders; |
|
(ii) |
thereafter, Charterers shall continue to pay hire and Owners shall be liable for any losses that Charterers suffer as a result of any change in discharge port(s); and |
|
(b) |
if the circumstances resulting in such suspension continue for more than 7 days from the date of Charterers' written notice then, provided such circumstances are continuing, Charterers shall be entitled to terminate the Charterparty with immediate effect on written notice to Owners, save that if cargo is on board, then prior to such termination, the Vessel shall, provided such is not in contravention of Sanctions, be directed to a safe port and there discharge the cargo (with termination effective on completion of discharge). Upon termination there shall be no further liability on either party save for any accrued rights or remedies including under this clause. |
RIDER CLAUSES TO TIME CHARTER PARTY
M.T. "Eco Bel Air"
DATED 14th February 2022
|
1.8 |
To the extent any payment would be in violation of or otherwise prohibited by Sanctions applicable to a party, any payment obligations arising prior to termination of the Charterparty (including but not limited to hire) which have been incurred but not yet paid shall continue to be suspended in compliance with Clause 1.3 above, and shall not be affected by such termination. |
|
1.9 |
In the event that a payment arising pursuant to this Charterparty cannot be made in United States Dollars due to applicable laws or Sanctions, the parties shall review and mutually agree in writing the applicable payment settlement currency and the relative rate of exchange provided such does not contravene any Sanctions or applicable law, regulation or decree binding upon a party and shall amend or procure the amendment of the Charterparty accordingly. The rate of exchange is to be fixed using an internationally recognized and tradable daily fixation, the date of which shall be mutually agreed by the parties. If payment cannot be made in any currency by reason of Sanctions, the paying party shall place the amount of funds in an interest bearing account until it is able to remit such funds to the receiving party, and the paying party shall account to the receiving party for any interest earned on such funds. |
|
1.10 |
For the purposes of this clause: |
"Affiliate" means in relation to either party, any undertaking (as defined in section 1161 of the Companies Act 2006) which is a subsidiary undertaking or a parent undertaking (including the ultimate parent undertaking) of that party and any undertaking which is a subsidiary of such parent undertaking (subsidiary undertaking and parent undertaking are as defined in section 1162 of the Companies Act 2006).
"Sanctions" means economic or financial sanctions or trade embargoes or similar or equivalent restrictive measures imposed, administered, enacted or enforced from time to time by a government or governmental or inter-governmental body or organisation or other relevant sanctions authority (including but not limited to, those imposed by the UN, EU, Singapore or the US to the extent applicable).
"Sanctioned Entity" means any entity or individual appearing on any "specially designated nationals" or "blocked persons" lists, or any equivalent list(s) maintained and imposed by the relevant bodies and organisations of the United Nations, the European Union, the United Kingdom, the United States or any other jurisdiction applicable to a party.
|
6. |
BIMCO Designated Entities |
|
a) |
The provisions of this clause shall apply in relation to any sanction, prohibition or restriction imposed on any specified persons, entities or bodies including the designation of specified vessels or fleets under United Nations Resolutions or trade or economic sanctions, laws or regulations of the European Union or the United States of America. |
|
(b) |
Owners and Charterers respectively warrant for themselves (and in the case of any sublet, Charterers further warrant in respect of any sub-charterers, shippers, receivers, or cargo interests) that at the date of this fixture and throughout the duration of this Charter Party they are not subject to any of the sanctions, prohibitions, restrictions or designation referred to in Sub-clause (a) which prohibit or render unlawful any performance under this Charter Party or any sublet or any Bills of Lading. Owners further warrant that the nominated vessel, or any substitute, is not a designated vessel. |
RIDER CLAUSES TO TIME CHARTER PARTY
M.T. "Eco Bel Air"
DATED 14th February 2022
|
(c) |
If at any time during the performance of this Charter Party either party becomes aware that the other party is in breach of warranty as aforesaid, the party not in breach shall comply with the laws and regulations of any Government to which that party or the Vessel is subject and follow any orders or directions which may be given by any body acting with powers to compel compliance, including where applicable the Owners' flag state. In the absence of any such orders, directions, laws or regulations, the party not in breach may, in its option, terminate the Charter Party forthwith or, if cargo is on board, direct the Vessel to any safe port of that party's choice and there discharge the cargo or part thereof. |
|
(d) |
If, in compliance with the provisions of this Clause, anything is done or is not done, such shall not be deemed a deviation but shall be considered due fulfilment of this Charter Party. |
|
(e) |
Notwithstanding anything in this Clause to the contrary, Owners or Charterers shall not be required to do anything which constitutes a violation of the laws and regulations of any State to which either of them is subject. |
|
(f) |
Owners or Charterers shall be liable to indemnify the other party against any and all claims, losses, damage, costs and fines whatsoever suffered by the other party resulting from any breach of warranty as aforesaid. |
|
(g) |
Charterers shall procure that this Clause is incorporated into all sub-charters, contracts of carriage and Bills of Lading issued pursuant to this Charter Party. |
|
7. |
Gulf of Guinea HRA |
|
(a) |
Unless the local Terminal where the Vessel will berth is a private Terminal where no armed guards are allowed or the Terminal have their own security procedure personnel and equipment and/or patrol boats. Owners shall retain the option to place local armed personnel together with unarmed security advisors from a Private Military and Security Company (a "PMSC") on board their vessel whilst she remains at berth and/or whilst she performs an STS operation. The local armed personnel shall be provided on board by the local military forces of the relevant littoral State with the assistance of the PMSC and the relevant costs for employing the PMSC advisors and the local armed guards shall be for Charterers' account. The PMSC shall be chosen and appointed by the Owners after they obtain the necessary approvals from their insurance underwriters and their flag state. Reasonable Costs to be market competitive and discussed with Trafigura prior to being required, unless dictated by terminal or government. |
|
(b) |
Charterers shall be liable to pay for all and any applicable AP's including War, War LoH up to 90 days and K&R AP's arising potentially under Owners' insurance policies, all possible crew bonuses and expenses for hardening materials and other anti-piracy materials, and any other expenses arising in connection with the vessel's call in the Gulf of Guinea HRA; |
RIDER CLAUSES TO TIME CHARTER PARTY
M.T. "Eco Bel Air"
DATED 14th February 2022
|
(c) |
BMP4 and the IMO Interim guidelines for Piracy in WAF shall be followed at all times; |
|
(d) |
Vessel will not anchor in Nigerian except within Lagos port limits or in waters of neighbouring countries; |
|
(e) |
If required to wait for berthing or for the STS operation, vessel will proceed out to sea and wait drift in a location off the HRA, i.e. at 200NW from the coast approximately unless there is a secure terminal area where vessel can anchor close to the terminal. Master will shift her drifting position frequently to avoid being a target of pirates; 200 miles |
|
(f) |
Vessel will berth / un-berth and/or will proceed in-ward/outward for the STS operation and to take onboard the armed guards only during day-light hours: |
|
(g) |
Since waiting period at Nigerian ports or the littoral states' ports can be very long, Charterer's must provide sufficient bunkers in advance; |
|
(h) |
Similarly, vessel must be provided with sufficient provision and fresh water to wait for approx. period of 1 months, while drifting; |
|
(i) |
Vessel will proceed in-ward only when the pilot is ready to board vessel and takes her to a designated berth and/or when the STS operation is about to commence; |
|
(j) |
If the cargo operations at berth or the STS operation is suspended for any reason and/or the vessel is asked to vacate berth, vessel to proceed to sea again, off the HRA at 200 NM from the coast approx.; 200 miles |
|
(k) |
Otherwise, the War Risks/Piracy clause as contained herein shall fully apply. |
For Niger delta river ports within the Lagos to Ikang range, not including Lagos itself, Owners will arrange, through local port agents, armed patrol boats to assist and escort the vessel from the agreed position within territorial waters to the berth and from the berth to the agreed position within territorial waters.
Armed patrol boats will be regulated and approved by local and/or national naval and/or coastguard authorities. Charterers agree to reimburse these reasonable costs, in line with industry norms, to Owners upon Charterers receiving documented evidence and Owners invoice in relation to the same.
For Abidjan, Tema anchorage, provided that situation remains safe as of now with no Piracy incidents as per the feedback of Owners and Charterers independent security advisors,
Owners accept no guards needed and no reason to go 200 nm off.
The situation should be re-evaluated within the charter period each and every time Charterers would request the vessel to proceed in the area.
For Lome and Cotonou as long as security is arranged ship to stay at anchorage.
RIDER CLAUSES TO TIME CHARTER PARTY
M.T. "Eco Bel Air"
DATED 14th February 2022
Owners to have the right to use armed guards and/or armed escort gunboat for any off-shore or port call within HRA however owners confirm that they do not need a dedicated escort boat to remain with vessel while loading at terminals in Nigeria or while waiting at a secure anchorage area by a terminal, provided the Terminal have their own security procedure personnel and equipment and/or patrol boats that will protect the vessel.
The armed gunboat to escort the vessel from entering of EEZ (approx. 200nm from nearest coast) until exit of EEZ (approx. 200nm from nearest coast). Reasonable and proportionate Costs always to be competitive and paid by the Charterers but to be discussed and agreed before it is arranged including a provider of arm guards and/or gunboat. Vessel will not enter HRA without such arm guards and/or gunboat arrangement and in place and will always remain on hire.
If there is no firm berthing schedule received from a local agent/terminal. Charterers can instruct the ship to remain outside of the HRA. However vessel always to follow charterers and local terminal instructions provided safe and in accordance with Clause 9 below.
|
8. |
STORAGE & UNDERWATER CLEANING CLAUSE |
CHARTERERS MAY USE THE VESSEL FOR STORAGE. ALWAYS AT A SAFE LOCATION AND WITHIN THE CHARTER PATY LIMITS, but excluding any War Risk Area or any Piracy Area where additional insurance premiums are charged by the Vessel's insurance underwriters.
WAFR and Fujairah is always to be included but any additional premiums to be for charterers account. However Clause 7. Gulf of Guinea HRA and 9. WAR RISKS / PIRACY always to apply. If applicable. OWNERS/MASTER TO HAVE THE RIGHT TO MOVE THE VESSEL AT CHARTERERS TIME AND COST FOR ANY REASON IF REQUIRED, INCLUDING FOR VICTUALLING, AND OTHER REQUIRED OWNER'S MATTERS PROVIDED CHARTERER IS ADVISED IN A TIMELY MANNER AND CONFIRMS THEIR AGREEMENT WHICH SHALL NOT BE UNREASONABLY WITHHELD IF VESSEL IS ORDERED IN TO STORAGE, CHARTERERS TO ARRANGE AND PAY FOR SUPPLY OF FRESH WATER AS THE VESSEL MAY REQUIRE FROM TIME TO TIME.
IF STORAGE IN ANY ONE LOCATION SHOULD BE LONGER THAN 30 DAYS, charterers shall HAVE THE RIGHT TO ALLOW THE VESSEL TO SAIL FOR A MAXIMUM OF 15 HRS FOR THE NOTIONAL REMOVAL OF HULL FOULING. DEPENDING ON THE LENGTH OF THE STORAGE PERIOD THIS SHALL BE ALLOWED MORE THAN ONCE AS REQUIRED. TIMING FOR SAMEALWAYS TO BE MUTUALLY AGREED BETWEEN OWNERS AND CHARTERERS at charterers time and expense.
IF VESSEL IS IDLE OR STORAGE AT ANY ONE LOCATION SHOULD BE LONGER THAN 25 CONSECUTIVE DAYS (TIME NOT TO RE-START IF THE VESSEL SAILS), THE SPEED AND CONSUMPTION WARRANTIES THEREAFTER SHALL NOT APPLY UNTIL OWNERS HAVE ARRANGED AT CHARTERERS' TIME AND EXPENSE FOR THE HULL TO BE SCRUBBED AND PROPELLER POLISHED IF DEEMED NECESSARY BY AN INDEPENDENT UNDERWATER SURVEY.
RIDER CLAUSES TO TIME CHARTER PARTY
M.T. "Eco Bel Air"
DATED 14th February 2022
|
9. |
WAR RISKS / PIRACY |
(A) THE VESSEL UNLESS THE WRITTEN CONSENT OF THE OWNERS BE FIRST OBTAINED, SHALL NOT BE ORDERED TO OR REQUIRED TO CONTINUE TO OR THROUGH, ANY PORT, PLACE, AREA OR ZONE (WHETHER OF LAND OR SEA), OR ANY WATERWAY OR CANAL, WHERE IT APPEARS THAT THE VESSEL, HER CARGO, CREW OR OTHER PERSONS ON BOARD THE VESSEL, IN THE REASONABLE JUDGEMENT OF THE MASTER AND/OR THE OWNERS, MAY BE OR ARE LIKELY TO BE EXPOSED TO ANY ACTUAL, THREATENED OR REPORTED ACTS OF PIRACY, WHETHER SUCH RISK OF PIRACY EXISTED AT THE TIME OF ENTERING INTO THIS CHARTER PARTY OR OCURRED THEREAFTER. SHOULD THE VESSEL BE WITHIN ANY SUCH PLACE AS AFORESAID, WHICH ONLY BECOMES DANGEROUS, OR IS LIKELY TO BE OR BECOME DANGEROUS, AFTER HER ENTRY INTO IT, SHE SHALL BE AT LIBERTY TO LEAVE IT.
(B) IF THE OWNERS DO NOT GIVE THEIR CONSENT THEY SHALL IMMEDIATELY INFORM THE CHARTERERS AND THE CHARTERERS SHALL BE OBLIGED TO ISSUE ALTERNATIVE VOYAGE ORDERS and any time lost due to compliance with such orders shall not be considered off-hire. THE CHARTERERS SHALL INDEMNIFY THE OWNERS FOR ANY CLAIMS FROM HOLDERS OF BILLS OF LADING OR THIRD PARTIES CAUSED BY SUCH ORDERS.
Owners represent that they shall give consideration to known piracy risks inherent in customary trading routes, including Indian Ocean, Suez Canal transit and West Africa and Owners will always make best endeavours to proceed on customary routes in accordance with prevailing trade patterns always without prejudice to owners' rights under this clause, including owners' risk assessment of the particular customary route and the prevailing trade pattern.
(C) IF THE OWNERS CONSENT OR IF THE VESSEL PROCEEDS TO OR THROUGH AN AREA EXPOSED TO RISK OF PIRACY THE OWNERS SHALL HAVE THE LIBERTY:
(I) TO TAKE REASONABLE PREVENTIVE MEASURES TO PROTECT THE VESSEL, HER CREW AND CARGO INCLUDING BUT NOT LIMITED TO TAKING A REASONABLE ALTERNATIVE ROUTE, PROCEEDING IN CONVOY, USING ESCORTS, AVOIDING DAY OR NIGHT NAVIGATION, ADJUSTING SPEED OR COURSE, OR ENGAGING SECURITY PERSONNEL OR EQUIPMENT ON OR ABOUT THE VESSEL.,
(II) TO COMPLY WITH THE ORDERS, DIRECTIONS OR RECOMMENDATIONS OF ANY UNDERWRITERS WHO HAVE THE AUTHORITY TO GIVE THE SAME UNDER THE TERMS OF THE INSURANCE;
RIDER CLAUSES TO TIME CHARTER PARTY
M.T. "Eco Bel Air"
DATED 14th February 2022
(III) TO COMPLY WITH ALL ORDERS, DIRECTIONS, RECOMMENDATIONS OR ADVICE GIVEN BY THE GOVERNMENT OF THE NATION UNDER WHOSE FLAG THE VESSEL SAILS, OR OTHER GOVERNMENT TO WHOSE LAWS THE OWNERS ARE SUBJECT, OR ANY OTHER GOVERNMENT, BODY OR GROUP, INCLUDING MILITARY AUTHORITIES, WHATSOEVER ACTING WITH THE POWER TO COMPEL, COMPLIANCE WITH THEIR ORDERS OR DIRECTIONS;
(IV) TO COMPLY WITH THE TERMS OF ANY RESOLUTION OF THE SECURITY COUNCIL OF THE UNITED NATIONS, THE EFFECTIVE ORDERS OF ANY OTHER SUPRANATIONAL BODY WHICH HAS THE RIGHT TO ISSUE AND GIVE THE SAME, AND WITH NATIONAL LAWS AIMED AT ENFORCING THE SAME TO WHICH THE OWNERS ARE SUBJECT, AND TO OBEY THE ORDERS AND DIRECTIONS OF THOSE WHO ARE CHARGED WITH THEIR ENFORCEMENT, AND THE CHARTERERS SHALL INDEMNIFY THE OWNERS FOR ANY CLAIMS FROM HOLDERS OF BILLS OF LADING OR THIRD PARTIES CAUSED BY SUCH ORDERS.
(D) COSTS
(I) IF THE VESSEL PROCEEDS TO OR THROUGH AN AREA WHERE DUE TO RISK OF PIRACY ADDITIONAL COSTS WILL BE INCURRED INCLUDING BUT NOT LIMITED TO ADDITIONAL INSURANCE, ADDITIONAL PERSONNEL, SECURITY PERSONNEL AND EQUIPMENT, AND PREVENTATIVE MEASURES TO AVOID PIRACY ATTACKS, SUCH COSTS SHALL BE FOR THE CHARTERERS' ACCOUNT. ANY TIME LOST WAITING FOR CONVOYS, FOLLOWING RECOMMENDED ROUTEING, TIMING, OR REDUCING SPEED OR TAKING MEASURES TO MINIMISE RISK, SHALL BE FOR THE CHARTERERS, AACOUNT AND THE VESSEL SHALL REMAIN ON HIRE;
(II) IF THE OWNERS BECOME LIABLE UNDER THE EXISTING TERMS OF EMPLOYMENT TO PAY TO THE CREW ANY BONUS OR ADDITIONAL WAGES IN RESPECT OF SAILING INTO AN AREA WHICH IS DANGEROUS IN THE MANNER DEFINED BY THE SAID TERMS, THEN THE ACTUAL BONUS OR ADDITIONAL WAGES PAID SHALL BE REIMBURSED TO THE OWNERS BY THE CHARTERERS AT THE SAME TIME AS THE NEXT PAYMENT OF HIRE IS DUE, OR UPON REDELIVERY, WHICHEVER OCCURS FIRST;
(III) IF THE UNDERWRITERS OF THE OWNERS' INSURANCES SHOULD REQUIRE PAYMENT OF ADDITIONAL PREMIUMS AND/OR CALLS BECAUSE, PURSUANT TO THE CHARTERERS' ORDERS, THE BESSEL IS WITHIN OR IS DUE TO ENTER AND REMAIN WITHIN, OR PASS THROUGH ANY AREA OR AREAS WHICH ARE SPECIFIED BY SUCH UNDERWRITERS AS BEING SUBJECT TO ADDITIONAL PREMIUMS BECAUSE OF PIRACY RISKS, THEN THE ACTUAL ADDITIONAL PREMIUMS including war risks, war loss of hire up to 180 days and kidnap and ransom premiums AND/OR CALLS PAID SHALL BE REIMBURSED BY THE CHARTERERS TO THE OWNERS AT THE SAME TIME AS THE NEXT PAYMENT OF HIRE IS DUE, OR UPON REDELIVERY, WHICHEVER OCCURS FIRST.
(E) If the Vessel is attacked or seized by pirates any time lost shall be for the account of the Charterers and the Vessel shall remain on hire throughout
the 181ST day when hire will cease to be paid. If the Vessel is seized the Owners shall keep the Charterers closely informed of the efforts made to have the Vessel released.
RIDER CLAUSES TO TIME CHARTER PARTY
M.T. "Eco Bel Air"
DATED 14th February 2022
(F) If in compliance with this Clause anything is done or not done, such shall not be deemed a deviation, but shall be considered as due fulfilment of this Charter Party.
(G) CHARTERERS WARRANT THAT THE TERMS OF THIS CLAUSE WILL BE INCORPORATED EFFECTIVELY INTO ANY BILL OF LADING PURSUANT TO THIS CHARTERPARTY.
OWNERS AND CHARTERERS ARE TO LIAISE 5 (FIVE) DAYS IN ADVANCE PRIOR TO PROCEEDING OF THE VESSEL TO A TRANSIT OF THE GULF OF ADEN, TO ESTABLISH OWNERS' REQUIREMENTS, WHICH MAY INCLUDE, BUT NOT BE LIMITED TO JOINING A CONVOY SYSTEM OR DEVIATING OR ALTERING THE TIMING OF THE VESSEL'S PASSAGE. VESSEL TO REMAIN ONHIRE, AND VESSEL PERFORMANCE CALCULATIONS ARE TO BE BASED ON ACTUAL MILES STEAMED, WITH ANY PERIODS OF ALTERED SPEED OR WAITING TIME UNDER THIS CLAUSE NOT TO BE INCLUDED IN PERFORMANCE CALCULATIONS. ANY EXTRA INSURANCE PREMIUM CLEARLY STATED AS ABOVE ARE FOR CHARTERERS ACCOUNT.
|
10. |
EBOLA CLAUSE |
a) The Vessel shall not be obliged to proceed to or continue to or through or remain at any port, place, area or country (hereinafter "Affected Area") if in the reasonable opinion of the Owners the Affected Area may place the Vessel and crew or other persons on board the Vessel at risk by reason of the Ebola virus.
b) If in accordance with and subject to the requirements of sub-clause (a) the Owners decide that the Vessel shall not proceed or continue to or through or remain in an Affected Area they must immediately inform the Charterers in writing. In that event the Charterers shall issue alternative voyage orders and shall indemnify the Owners in respect of any expenses arising therefrom and any claims from holders of the Bills of Lading, as a consequence of waiting for and/or performance of such orders. During any time waiting for or complying with such orders the vessel shall remain on hire.
c) If notwithstanding their liberty to refuse to do so, Owners agree to or continue to or through or remain at any Affected Area, Owners shall not be deemed to have waived any of their existing rights under this charter party, save that where owners have agreed to proceed to or continue to or through or remain at an affected area under para (a) above, owners shall not be entitled to later refuse to do so unless there has been a material change in the risks faced.
d) The Vessel shall have liberty to comply with all orders, directions, recommendations or advice of competent authorities and/or the Flag State of the
Vessel in respect of arrival routes, ports of call, destinations, discharge of cargo, delivery, or in any other respect whatsoever relating to issues arising as a result of the Vessel being ordered to an Affected Area.
RIDER CLAUSES TO TIME CHARTER PARTY
M.T. "Eco Bel Air"
DATED 14th February 2022
e) Any additional costs and expenses incurred during the currency of the chapter directly resulting from the Vessel visiting an Affected Area such as screening, cleaning, fumigating and/or quarantining the Vessel and its crew for such diseases either in the Affected Area or at subsequent ports of call under the Charter and including the obtaining of medical treatment for any infected crew, shall be for the Charterers' account and the vessel shall remain on hire during periods of delay caused thereby in the affected area or any subsequent ports.
f) If in compliance with this Clause anything is done or not done, such shall not be deemed a deviation, but shall be considered as due fulfilment of this Charter Party. In the event of a conflict between the provisions of this Clause and any implied or express provision of the Charter Party, this Clause shall prevail to the extent of such conflict but no further.
Any costs or delays from an infection arising from events prior to delivery on this charter or from owners matter and/or crew change always to be for owners account.
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11. |
ICE CLAUSE |
Deleted
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12. |
ANTI-BRIBERY, ANTI-CORRUPTION CLAUSE (ABC) |
1.1 each party
(i) shall comply with all applicable anti-corruption laws and regulations, including without Limitation the us foreign corrupt practices act and the uk bribery act of 2010; and
(ii) undertakes and warrants to the other party that, it has in place adequate procedures to ensure that, and its officers, directors, shareholders, employees, agents and other intermediaries, and any other person acting directly or indirectly on its behalf, shall not, directly or through third parties, give, promise or attempt to give, or approve or authorise the giving of, anything of value to any person or any entity for the purpose of:
|
(i) |
securing any improper advantage in relation to this charterparty; or |
(ii) inducing or influencing a public official to take action or refrain from taking action in order for either party to obtain or retain business for either party; or
(iii) inducing or influencing a public official to use his/her influence with any government or public international organization for such purpose; and
1.2 represents and warrants to the other that, having in place the necessary adequate procedures, it and its officers, directors, shareholders, employees, agents and other intermediaries, and any other person acting directly or indirectly on its behalf have not, prior to the date of this charterparty, been proven to have engaged in bribery or corruption in order to secure and/or retain any business for themselves or the other party, whether in connection with this charterparty or otherwise; and
1.3 each party agrees that it will not take or knowingly permit any action to be taken that would cause the other party to be in violation of any applicable anti-money laundering laws; and
1.4 shall have and shall maintain in place throughout the term of this agreement adequate policies and procedures to ensure compliance with the undertakings
of this clause (including but not limited to including a suitable anti-corruption clause in sub-charterparties), and will enforce them where appropriate.
RIDER CLAUSES TO TIME CHARTER PARTY
M.T. "Eco Bel Air"
DATED 14th February 2022
Any costs or delays from an infection arising from events prior to delivery on this charter or from owners matter and/or crew change always to be for owners account.
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13. |
SCRUBBER CLAUSE / EXHAUST GAS CLEANING SYSTEM |
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1.1 |
Without prejudice to the generality of clause 6, the Vessel shall be delivered with fully functional Certified EGC Technology for her Main and Auxiliary Engines The vessel to always follow local legislation and regulations related to the use of the Exhaust Gas Cleaning System and Owners shall maintain the Certified EGC Technology in a thoroughly efficient state for and during the Charter Period. After 1st January 2020 any amount of sludge quantities generated as a result of higher than 0.5% Sulphur content in HFO supplied by charterers, to be disposed to shore facilities at charterers' cost and time. |
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1.2 |
In the event of a Breakdown: |
|
a. |
Owners shall immediately inform Charterers, advising the extent and expected duration of the Breakdown, and shall during the continuance of the Breakdown, provide the Charterer with reasonable updates. |
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b. |
Charterers shall, of necessary and at Owners' written request, supply at the next convenient bunkering port fuel of such specification and grade that enables the Vessel's compliance with MARPOL Annex VI without use of the Certified EGC Technology. Such specification and grade to be notified in writing by Owners and to be in accordance the description in PART 1, Section 1. |
|
c. |
Owners shall indemnify Charterers in respect of any liability, loss damage or expense of whatsoever nature arising out of and/or in connection with any Breakdown, including (but not in any way limited to) any increased costs relating to fuel (whether pursuant to clause 18.2(b), or as a result of the Vessel burning more fuel or more fuel of a certain specification than would have been the case had there been no Breakdown). |
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d. |
If any Breakdown continues or is expected to continue for 45 days, then without prejudice to any other rights Charterers may have under this Charter, Charterers shall have the option of terminating this Charter by giving notice in writing to Owners. Termination shall take effect from the date on which such notice is received by Owners or from any later date stated in such notice. |
|
e. |
Upon termination in accordance with this Clause, Owners shall forthwith remit to Charterers and hire paid in advance and not earned as at the date of termination and any other monies owing, including but not limited to the cost of bunkers on board at the time the Breakdown first occurred. |
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f. |
For the purposes of this clause and clause 31, "Breakdown" means any situation where the Certified EGC Technology breaks down, becomes unusable, loses certification or no longer conforms to the relevant requirements of regulation 4 MARPOL Annex VI or such other Flag state accreditation or fails to provide effective equivalence to the requirements of regulations 14.1 of MARPOL Annex VI when burning fuel her Main and Auxiliary Engines with sulphur content in excess of 0.5%. |
RIDER CLAUSES TO TIME CHARTER PARTY
M.T. "Eco Bel Air"
DATED 14th February 2022
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14. |
BIMCO COVID-19 CREW CHANGE CLAUSE FOR TIME CHARTER PARTIES 2020: |
(a) In addition to any other right to deviate under this contract, If Owners need to deviate a ship for crew change at the ports or places to which the vessel has been ordered or within the scheduled period of call, Owners always have to inform Charterers of intended crew changes in advance at least two weeks in advance prior to vessel departure a last discharge port including a name of port/place and details of crew to join a ship and requires charterers consent prior to it is arranged. Any cost including but not limited to port changes, bunker consumed is to be for Owners account and vessel is to be remained off-hire. (comments: in laden passage, it is beyond of our control to make a deviation to be made for crew change, hence, we are not in position to have this kind of commitment)
(b) Owners shall exercise the right under subclause (a) above with due regard to Charterers' interests and shall notify Charterers in writing as soon as reasonably possible of any intended deviation for crew change purposes but always not later than two weeks in advance as described in (a)
(c)
(d) During the period of such deviation the Vessel shall:
(e) While the Vessel is at the port of deviation all port changes, pilotage and other expenses arising out of such crew changes shall be for the Owners' account.
*(d)(i) and (d)(ii) are alternatives. Delete whichever is not applicable. In the absence of deletions alternative (d)(i) shall apply.
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15. |
INFECTIOUS DISEASE CLAUSE |
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(a) |
For the purposes of this Clause, the words: |
RIDER CLAUSES TO TIME CHARTER PARTY
M.T. "Eco Bel Air"
DATED 14th February 2022
"Disease" means a highly infectious or contagious disease that is seriously harmful to human health and/or which has been declared by the World Health Organisation to be a Public Health Emergency of International Concern (PHEIC).
"Affected Area" means any port or place where due to the previous occurrence of the Disease in the affected port, has been assessed by the World Health Organisation as "high" risk and there is a serious risk of exposure to the crew or other persons on board to the Disease and/or to a serious risk of quarantine or other restrictions being imposed in connection with the Disease.
(b) The Vessel shall not be obliged to proceed to or continue to or remain at any place which, , is deemed to be confirmed as an Affected Area as defined by Clause (a).
(c) If the Owners decide in accordance with Sub-clause (b) that the Vessel shall not proceed or continue to an Affected Area they shall immediately notify the Charterers.
(d) If the Vessel is at any place that has become an Affected Area, the Vessel may leave immediately, with or without cargo on board, after notifying and agreed by the Charterers. Vessel is to proceed to an alternative location as directed by the Charterers within 3 working days of receipt of the Owners' notification. The Vessel shall remain on hire throughout and the Charterers shall be responsible for all additional costs, expenses and liabilities incurred in connection with such orders/delivery of cargo.
(e)
(f)
(g) The Charterers shall indemnify the Owners for any direct costs, expenses or liabilities incurred by the Owners, including claims from holders of bills of lading, as a consequence of the Vessel waiting for and/or complying with the alternative voyage orders.
(h) If, notwithstanding Sub-clauses (b) to (f), the Vessel does proceed to or continue to or remain at an Affected Area:
(i) The Owners shall notify the Charterers of their decision but the Owners shall not be deemed to have waived any of their rights under this Charter Party.
(ii) The Owners shall endeavour to take such reasonable measures in relation to the Disease as may from time to time be recommended by the
World Health Organisation.
RIDER CLAUSES TO TIME CHARTER PARTY
M.T. "Eco Bel Air"
DATED 14th February 2022
(iii) Any direct additional costs, expenses or liabilities whatsoever arising out of the Vessel visiting or having visited an Affected Area as per Charterers instruction, including but not limited to screening, cleaning, fumigating and/or quarantining the Vessel and its crew, shall be for the Charterers' account and the Vessel shall remain on hire throughout unless otherwise it was caused by crew or crew's misconduct.
(i) The Vessel shall have liberty to comply with all orders, directions, recommendations or advice of competent authorities and/or the Flag State of the Vessel in respect of arrival, routes, ports of call, destinations, discharge of cargo, delivery or in any other respect whatsoever relating to issues arising as a result of the Vessel being or having been ordered to an Affected Area but always has to be discussed and agreed by Charterers in advance which is not to be unreasonably withheld. If there will be any fine, additional cost, penalty, loss of time, for vessel's compliance with Charterers orders against authorities instructions, etc as per above, same will be for Charterers Account.
(j) If in compliance with this Clause anything is done or not done, such shall not be deemed a deviation, nor shall it be or give rise to an off-hire event, but shall be considered as due fulfilment of this Charter Party. In the event of a conflict between the provisions of this Clause and any implied or express provision of this Charter Party, this Clause shall prevail to the extent of such conflict, but no further.
(k) The Charterers shall indemnify the Owners if after the currency of this Charter Party any direct delays, costs, expenses or liabilities whatsoever are incurred as a result of the Vessel having visited an Affected Area during the currency of this Charter Party by Charterer's instructions.
(l) The Charterers will make best efforts to shall procure that this Clause shall be incorporated into all sub-charters and bills of lading, waybills or other documents evidencing contracts of carriage issued pursuant to this Charter Party.
Any costs or delays from an infection arising from events prior to delivery on this charter or from owners matter and/or crew change always to be for owners account.
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16. |
OWNERS UNDER KEEL CLEARANCE AND AIR CLEARANCE POLICY |
Please see the attached Appendix 1.
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17. |
AGM Clause |
In case vessel has called the past 2 years in a country that has been identified as source of Asian Gypsy Moth (AGM), owners are responsible to obtain relevant inspection certificate which has to state that vessel is free of AGM. In case vessel will call at such a country during the chartered period, owners will arrange for relevant inspection but associated costs will be on charts account.
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18. |
AIRDRAFT |
Owners confirm Eco oceano Ca will be delivered with collapsible mast and max air draft 136ft in ballast condition
RIDER CLAUSES TO TIME CHARTER PARTY
M.T. "Eco Bel Air"
DATED 14th February 2022
For Eco Bel air and Eco Beverly Hills owners confirm that they within maximum 6 months from delivery owners will install collapsible mast their time and expensive to permanently comply easily with max 136 air draft in ballast condition. Until such modifications are made, owners do confirm both vessels will be able to comply with max 136ft air draft in ballast condition regardless via trim.
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19. |
KYC |
TRAFIGURA KYC CLAUSE: OWNERS SHALL PROVIDE ALL KYC DOCUMENTATION REQUESTED BY TRAFIGURA UNDER POINT 1-4 HEREBELOW PROMPTLY UPON REQUEST. IF OWNERS DO NOT PASS TRAFIGURA KYC REQUIREMENTS TO TRAFIGURA'S SATISFACTION, OR FAIL TO PROVIDE ALL REQUESTED DOCUMENTATION, TRAFIGURA SHALL HAVE THE RIGHT (BUT NOT THE OBLIGATION) TO WITHHOLD PAYMENTS OF FRIEGHT / HIRE WITHOUT ANY LIABILITY UNTIL THE KYC REQUIREMENTS ARE MET.
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20. |
LOIs |
LETTER OF INDEMNITY FOR BLENDING
To: [Insert name of Owners] [insert date]
The Owners of the [insert name of ship]
[insert address]
Dear Sirs
Ship: [insert name of ship]
Charter Party: [insert details & date]
Voyage: [insert load and discharge ports as stated in the bill of lading]
Cargo(es): [quantity & type]
Bill of lading: No. _______ dated_______ issued at _______
Bill of lading: No. _______ dated _______ issued at _______
The above ship, under our charter & commercial operation, and in line with our instructions shall load/has loaded the following cargoes:
(i) [Cargo quantity & type] in cargo tanks [number, location] shipped by [insert name of shipper] and consigned to [insert name of consignee or party to whose order the bill of lading is made out, as appropriate] for delivery at the port of [insert name of discharge port stated in the bill of lading]
(ii) [Cargo quantity & type] in cargo tanks [number, location] shipped by [insert name of shipper] and consigned to [insert name of consignee or party to whose order the bill of lading is made out, as appropriate] for delivery at the port of [insert name of discharge port stated in the bill of lading]
We have requested you to blend the cargo loaded on the Vessel at …… and …… in the above tanks and we warrant and confirm that such operation shall be subject to compliance with relevant safety rules and the technical characteristics of the Vessel.
We warrant that the cargoes to be blended on board shall be stable and compatible and that no precipitation of solid deposits in cargo tanks, pipelines, pumps or valves will occur.
RIDER CLAUSES TO TIME CHARTER PARTY
M.T. "Eco Bel Air"
DATED 14th February 2022
We undertake to return all three (3) original copies of all bills of lading issued in respect of the cargoes to be blended to Owners for cancellation. Upon return of the original bills of lading as aforesaid, Owners will issue replacement bills of lading in respect of the blended cargo, which state on their face:
i. the details from the bill(s) of lading pursuant to which the cargoes were originally loaded, including the nature of the cargo, the original quantity loaded and the date and place of loading; and
ii. the place and date that the blending took place.
In consideration of your complying with our request as aforesaid ("the Requested Activity"), we hereby agree as follows:
1. To indemnify you, your servants and agents and to hold all of your harmless in respect of any liability, loss, damage or expense of whatsoever nature and howsoever arising which you may sustain by reason of the Requested Activity as per our request and express instruction.
2. In the event of any proceedings being commenced against you, the vessel or any of your servants or agents in connection with or by reason of the Requested Activity as per our request and express instruction as aforesaid, to provide you or them on demand with sufficient fund to defend the same.
3. If, in connection with or by reason of the Requested Activity, the ship or any other ship or property in the same or associated ownership, management, possession or control, should be arrested or detained or should the arrest or detention thereof be threatened, or should there be any interference in the use or trading of the vessel (whether by virtue of a caveat being entered on the ship's registry or otherwise howsoever), to provide on demand such bail or other security as may be required to prevent such arrest or detention or to secure the release of such ship or property or to remove such interference and to indemnify you in respect of any liability, loss, damage or expense caused by such arrest or detention or threatened arrest or detention or such interference may be justified.
4. If, in connection with or by reason of the Requested Activity as aforesaid, the ship should be arrested or detained or should the arrest or detention thereof be threated, or should there be any interference in the use or trading of the vessel (whether by virtue of caveat being entered on the ship's registry or otherwise howsoever) to continue to pay all sums, dues, disbursements and expenses contractually required of us under the subject Charter Party dated ____ throughout any such period of delay whatsoever and we confirm vessel shall always remain on-hire throughout any and all such periods.
5. For the avoidance of doubt and without any limitation whatsoever, in the event that damage or discolouration of or to the cargo tank and/or pipeline coatings occurs or if as a result of incompatibility of either the cargoes being blended and/or any cargo residues present in the tanks, precipitation or lay down of solids arises; to indemnify you in respect of any and/or all costs incurred in repair and/or re-coating and/or cleaning of the tank and/or pipeline coatings.
6. The liability of each and every person under this indemnity shall be joint and several and shall not be conditional upon your proceedings first against and person, whether or not such person is part to or liable under this indemnity.
7. This indemnity shall be governed by and construed in accordance with English Law and each and every person liable under this indemnity shall at your request
submit to the jurisdiction of the High Court of Justice of England. We therefore undertake that we will within 14 days of the receipt from you of a request so to do, instruct and authorise solicitors forthwith to accept on our behalf hereunder
service of any proceedings that may be commenced by you, your servants, employees and agents against the requestor hereunder or any related company, employee, entity or asset thereof under the terms of this indemnity.
RIDER CLAUSES TO TIME CHARTER PARTY
M.T. "Eco Bel Air"
DATED 14th February 2022
[Signed] ………….
For and on behalf of Charterers
RIDER CLAUSES TO TIME CHARTER PARTY
M.T. "Eco Bel Air"
DATED 14th February 2022
LETTER OF INDEMNITY FOR ADDITIVES OR DYE CARGO
To: [insert name of Owners] [insert date]
The Owners of the [insert name of ship]
[insert address]
Dear Sirs
Ship: [insert name of ship]
Charter Party: [insert details & date]
Voyage: [insert load and discharge ports as stated in the bill of lading]
Cargo(es): [quantity & type]
Bill of lading: No._______ dated _______ issued at _______
The above ship, under our charter & commercial operation, and in line with our instructions shall load/has loaded the following cargoes:
(i) [Cargo quantity & type] in cargo tanks [number, location] shipped by [insert name of shipper] and consigned to [insert name of consignee or party to whose order the bill of lading is made out, as appropriate] for delivery at the port of [insert name of discharge port stated in the bill of lading]
(ii) [Cargo quantity & type] in cargo tanks [number, location] shipped by [insert name of shipper] and consigned to [insert name of consignee or party to whose order the bill of lading is made out, as appropriate] for delivery at the port of [insert name of discharge port stated in the bill of lading]
We have requested you to permit our representative/surveyor to add, or dye [insert details] to the cargo in the tanks at [location] ("the Requested Activity"), and in consideration of your agreement to the agreement to the requested we hereby agree as follows:
We warrant that any cargo into which additives, or dye shall be introduced, shall be stable and compatible and that no precipitation of solid deposits in cargo tanks, pipes, pumps, valves will occur, and that any such additivisation, or dye shall be always in strict compliance with safety rules, and subject to the technical characteristics of the Vessel; and that any additional costs incurred as a result of additivisation, or dye operations shall be for our account.
In consideration of your complying with our request as aforesaid ("the Requested Activity"), we hereby agree as follows:
1. To indemnify you, your servants and agents and to hold all of you harmless in respect of any liability, loss, damage or expense of whatsoever nature which you may sustain by reason of the Requested Activity as per our request and express instruction.
2. In the event of any proceedings being commenced against you, the vessel or any of your servants or agents in connection with or by reason of the Requested Activity as per our request and express instruction as aforesaid, to provide you or them on demand with sufficient funds to defend the same.
3. If, in connection with or by reason of the Requested Activity, the ship, or any other ship or property in the same or associated ownership, management,
possession or control, should be arrested or detained or should the arrest or detention thereof be threatened, or should there be any interference in the use or trading of the vessel (whether by virtue of a caveat being entered on the ship's registry
or otherwise howsoever), to provide on demand such bail or other security as may be required to prevent such arrest or detention or to secure the release of such ship or property or to remove such interference and to indemnify you in respect of any
liability, loss, damage or expense caused by such arrest or detention or threatened arrest or detention or such interference, whether or not such arrest or detention or threatened arrest or detention or such interference may be justified.
RIDER CLAUSES TO TIME CHARTER PARTY
M.T. "Eco Bel Air"
DATED 14th February 2022
4. If, in connection with or by reason of the Requested Activity as aforesaid, the ship should be arrested or detailed or should the arrest or detention
thereof be threatened, or should there be any interference in the use or trading of the vessel (whether by virtue of caveat being entered on the ship's registry or otherwise howsoever) to continue to pay all sums, dues, disbursements and expenses
contractually required of us under the subject Charter Part dated_______ throughout any such period of delay whatsoever and we confirm vessel shall always remain on-hire throughout any and all such period.
5. For the avoidance of doubt and without any limitation whatsoever, in the event that damage or discolouration of or to the cargo tank and/or pipeline coatings occurs, to indemnify you in respect of any and/or all costs incurred in repair and/or all
costs incurred in repair and/or re-coating and/or cleaning of the tank and/or pipeline coatings.
6. The liability of each and every person under this indemnity shall be joint and several and shall not be conditional upon your proceeding first against any person, whether or not such person is party to or liable under this indemnity.
7. This indemnity shall be governed by and construed in accordance with English Law and each and every person liable under this indemnity shall at your request submit to the jurisdiction of the High Court of Justice of England. We therefore undertake
that we will within 14 days of the receipt from you of a request so to do, instruct and authorise solicitors forthwith to accept on our behalf hereunder service of any proceedings that may be commenced by you, your servants, employees and agents
against the requestor hereunder or any related company, employee, entity or asset thereof under the terms of this indemnity.
[Signed]………………
For and on behalf of Charterers
RIDER CLAUSES TO TIME CHARTER PARTY
M.T. "Eco Bel Air"
DATED 14th February 2022
LETTER OF INDEMNITY FOR CARRYING ADDITIVES/DYE DRUMS ON DECK
To: [insert name of Owners] [insert date]
The Owners of the [insert name of ship]
[insert address]
Dear Sirs
Ship: [insert name of ship]
Charter Party: [insert details & date]
Voyage: [insert load and discharge ports as stated in the bill of lading]
Cargo(es): [quantity & type]
Bill of lading: No._______ dated _______ issued at _______
Bill of lading: No. _______ dated _______ issued at _______
The above ship, under our charter & commercial operation, and in line with our instructions shall load/has loaded the following cargoes:
(i) [Cargo quantity & type] in cargo tanks [number, location] shipped by [insert name of shipper] and consigned to [insert name of consignee or party to whose order the bill of lading is made out, as appropriate] for delivery at the port of [insert name of discharge port stated in the bill of lading]
(ii) [Cargo quantity & type] in cargo tanks [number, location] shipped by [insert name of shipper] and consigned to [insert name of consignee or party to whose order the bill of lading is made out, as appropriate] for delivery at the port of [insert name of discharge port stated in the bill of lading]
We, [insert name of the requestor] , have requested you to carry the [insert details of additive/dye] additive or dye in drums/pales [insert number of pales/drums] that sum up to [insert total quantity in litters] on deck from load port to discharge port.
We hereby request you to follow our instructions and allow us and/or our agents and/or our servants and/or the shippers to load the above drums/pales onto the vessel and your crew to safely and properly stow them.
All appropriate shipping documents and MSDS will be delivered to the vessel.
In consideration of your complying with our request as aforesaid (“the Requested Activity”), we hereby agree as follows:
1. To indemnify you, your servants and agents and to hold all of you harmless in respect of any liability, loss, damage or expense of whatsoever nature which you may sustain by reason of the Requested Activity as per our request and express instruction.
2. In the event of any proceedings being commenced against you, the vessel or any of your servants or agents in connection with or by reason of the Requested Activity as per our request and express instruction as aforesaid, to provide you or them on demand with sufficient funds to defend the same.
3. If, in connection with or by reason of the Requested Activity, the ship, or any other ship or property in the same or associated ownership, management,
possession or control, should be arrested or detained or should the arrest or detention thereof be threatened, or should there be any interference in the use or trading of the vessel (whether by virtue of a caveat being entered on the ship's registry
or otherwise howsoever), to provide on demand such bail or other security as may be required to prevent such arrest or detention or to secure the release of such ship or property or to remove such interference and to indemnify you in respect of any
liability, loss, damage or expense caused by such arrest or detention or threatened arrest or detention or such interference, whether or not such arrest or detention or threatened arrest or detention or such interference may be justified.
RIDER CLAUSES TO TIME CHARTER PARTY
M.T. "Eco Bel Air"
DATED 14th February 2022
4. If, in connection with or by reason of the Requested Activity as aforesaid, the ship should be arrested or detailed or should the arrest or detention thereof be threatened, or should there be any interference in the use or trading of the vessel (whether by virtue of caveat being entered on the ship's registry or otherwise howsoever) to continue to pay all sums, dues, disbursements and expenses contractually required of us under the subject Charter Part dated _____________ throughout any such period of delay whatsoever and we confirm vessel shall always remain on-hire throughout any and all such periods.
5. For the avoidance of doubt and without any limitation whatsoever, in the event that the drums/pales will damage by any cause and anyhow vessel’s equipment, to indemnify you in respect of any and/or all costs incurred in repair and/or re-coating and/or cleaning of the rails and/or deck and/or bulkheads and/or pipeline coatings. Owners will not be held liable for any damage by any cause on the drums/pales.
6. The liability of each and every person under this indemnity shall be joint and several and shall not be conditional upon your proceeding first against any person, whether or not such person is party to or liable under this indemnity.
7. This indemnity shall be governed by and construed in accordance with English Law and each and every person liable under this indemnity shall at your request submit to the jurisdiction of the High Court of Justice of England. We therefore undertake that we will within 14 days of the receipt from you of a request so to do, instruct and authorise solicitors forthwith to accept on our behalf hereunder service of any proceedings that may be commenced by you, your servants, employees and agents against the requestor hereunder or any related company, employee, entity or asset thereof under the terms of this indemnity.
[Signed]………………
For and on behalf of Charterers
RIDER CLAUSES TO TIME CHARTER PARTY
M.T. "Eco Bel Air"
DATED 14th February 2022
LETTER OF INDEMNITY FOR SINGLE VALVE SEGREGATION
To: [insert name of Owners] [insert date]
The Owners of the [insert name of ship]
[insert address]
Dear Sirs
Ship: [insert name of ship]
Charter Party: [insert details & date]
Voyage: [insert load and discharge ports as stated in the bill of lading]
Cargo(es): [quantity & type]
Bill of lading: No. _______ dated _______ issued at _______
The above ship, under our charter & commercial operation, and in line with our instructions shall load/has loaded the following cargoes:
(i) [Cargo quantity & type] in cargo tanks [number, location] shipped by [insert name of shipper] and consigned to [insert name of consignee or party to whose order the bill of lading is made out, as appropriate] for delivery at the port of [insert name of discharge port stated in the bill of lading]
(ii) [Cargo quantity & type] in cargo tanks [number, location] shipped by [insert name of shipper] and consigned to [insert name of consignee or party to whose order the bill of lading is made out, as appropriate] for delivery at the port of [insert name of discharge port stated in the bill of lading]
Although the cargoes shall be loaded always within the vessel's natural segregation, we hereby irrevocable acknowledge and accept that the above ship shall only maintain single valve segregation between the cargo tanks mentioned above and along the corresponding cargo line, during and throughout all cargo operations and all such time the above mentioned cargoes remain on-board the vessel.
Nonetheless we, [insert name of the requestor], hereby, request you to follow our instructions and allow us and/or our agents and/or our servants and/or the shippers to load, stow and discharge the above cargoes in and from the above referenced cargo tanks, despite the fact that only single valve segregation shall be maintained throughout such operations and the course of the voyage.
In consideration of your complying with our request as aforesaid ("the Requested Activity"), we hereby agree as follows:
1. To indemnify you, your servants and agents and to hold all of you harmless in respect of any liability, loss, damage or expense of whatsoever nature which you may sustain by reason of the Requested Activity as per our request and express instruction.
2. In the event of any proceedings being commenced against you, the vessel or any of your servants or agents in connection with or by reason of the Requested Activity as per our request and express instruction as aforesaid, to provide you or them on demand with sufficient funds to defend the same.
3. If, in connection with or by reason of the Requested Activity, the ship, or any other ship or property in the same or associated ownership, management, possession or control, should be arrested or detained or should the arrest or detention thereof be threatened, or should there be any interference in the use or trading of the vessel(whether by virtue of a caveat being entered on the ship's registry or otherwise howsoever), to provide on demand such bail or other security as may be required to prevent such arrest or detention or to secure the release of such ship or property or to remove such interference and to indemnify you in respect of any liability, loss, damage or expense or expense caused by such arrest or detention or threatened arrest or detention or such interference, whether or not such arrest or detention or threatened arrest or detention or such interference may be justified
RIDER CLAUSES TO TIME CHARTER PARTY
M.T. "Eco Bel Air"
DATED 14th February 2022
4. If, in connection with or by reason of the Requested Activity as aforesaid, the ship should be arrested or detained or should the arrest or detention thereof be threatened, or should there be any interference in the use of trading of the vessel (whether by virtue of caveat being entered on the ship's registry or otherwise howsoever) to continue to pay all sums, dues, disbursements and expenses contractually required of us under the subject Charter Party dated _______ throughout any such period of delay whatsoever and we confirm vessel shall always remain on-hire throughout any and all such periods.
5. For the avoidance of doubt and without any limitation whatsoever, in the event that damage or discolouration of or to the cargo tank and/or pipeline coatings occurs, to indemnify you in respect of any and/or all costs incurred in repair and/or re-coating and/or cleaning of the tank and/or pipeline coatings.
6. The liability of each and every person under this indemnity shall be joint and several and shall not be conditional upon your proceeding first against any person, whether or not such person is party to or liable under this indemnity.
7. This indemnity shall be governed by and construed in accordance with English Law and each and every person liable under this indemnity shall at your request submit to the jurisdiction of the High Court of Justice of England. We therefore undertake that we will within 14 days of the receipt so to do, instruct and authorise solicitors forthwith to accept on our behalf hereunder service of any proceedings that may be commenced by you, your servants, employees and agents against the requestor hereunder or any related company, employee, entity or asset thereof under the terms of this indemnity.
[Signed]……………………..
For and on behalf of Charterers
RIDER CLAUSES TO TIME CHARTER PARTY
M.T. "Eco Bel Air"
DATED 14th February 2022
LETTER OF INDEMNITY FOR LINE SHARING
To: [insert name of Owners] [insert date]
The Owners of the [insert name of ship]
[insert address]
Dear Sirs
Ship: [insert name of ship]
Charter Party: [insert details & date]
Voyage: [insert load and discharge ports as stated in the bill of lading]
Cargo(es): [quantity & type]
Bill of lading: No. _______ dated _______ issued at _______
The above ship, under our charter & commercial operation, and in line with our instructions shall load/has loaded the following cargoes:
(i) [Cargo quantity & type] in cargo tanks [number, location] shipped by [insert name of shipper] and consigned to [insert name of consignee or party to whose order the bill of lading is made out, as appropriate] for delivery at the port of [insert name of discharge port stated in the bill of lading]
(ii) [Cargo quantity & type] in cargo tanks [number, location] shipped by [insert name of shipper] and consigned to [insert name of consignee or party to whose order the bill of lading is made out, as appropriate] for delivery at the port of [insert name of discharge port stated in the bill of lading]
Although the cargoes shall be loaded always within the vessel's natural segregation, we [insert name of the requestor], hereby request that the above cargo be loaded onboard into the ships cargo tanks [insert cargo tanks] by using same line [insert line no] from vessel's manifold until the vessel's cross over and we accept that there is a possibility of contamination between the above parcels (The Request).
In consideration of your complying with our request as aforesaid ("the Requested Activity"), were hereby agree as follows:
1. To indemnify you, your servants and agents and to hold all of you harmless in respect of any liability, loss, damage or expense of whatsoever nature which you may sustain by reason of the Requested Activity as per our request and express instruction.
2. In the event of any proceedings being commenced against you, the vessel or any of your servants or agents in connection with or by reason of the Requested Activity as per our request and express instruction as aforesaid, to provide you or them on demand with sufficient funds to defend the same.
3. If, in connection with or by reason of the Requested Activity, the ship, or any other ship or property in the same or associated ownership, management, possession or control, should be arrested or detained or should the arrest or detention thereof be threatened, or should there be any interference in the use or trading of the vessel(whether by virtue of a caveat being entered on the ship's registry or otherwise howsoever), to provide on demand such bail or other security as may be required to prevent such arrest or detention or to secure the release of such ship or property or to remove such interference and to indemnify you in respect of any liability, loss, damage or expense or expense caused by such arrest or detention or threatened arrest or detention or such interference, whether or not such arrest or detention or threatened arrest or detention or such interference may be justified.
RIDER CLAUSES TO TIME CHARTER PARTY
M.T. "Eco Bel Air"
DATED 14th February 2022
4. If, in connection with or by reason of the Requested Activity as aforesaid, the ship should be arrested or detained or should the arrest or detention thereof be threatened, or should there be any interference in the use of trading of the vessel
(whether by virtue of caveat being entered on the ship's registry or otherwise howsoever) to continue to pay all sums, dues, disbursements and expenses contractually required of us under the subject Charter Party dated _________ throughout any such
period of delay whatsoever and we confirm vessel shall always remain on-hire throughout any and all such periods.
5. For the avoidance of doubt and without any limitation whatsoever, in the event that damage or discolouration of or to the cargo tank and/or pipeline coatings occurs, to indemnify you in respect of any and/or all costs incurred in repair and/or
re-coating and/or cleaning of the tank and/or pipeline coatings.
6. The liability of each and every person under this indemnity shall be joint and several and shall not be conditional upon your proceeding first against any person, whether or not such person is party to or liable under this indemnity.
7. This indemnity shall be governed by and construed in accordance with English Law and each and every person liable under this indemnity shall at your request submit to the jurisdiction of the High Court of Justice of England. We therefore undertake that we will within 14 days of the receipt so to do, instruct and authorise solicitors forthwith to accept on our behalf hereunder service of any proceedings that may be commenced by you, your servants, employees and agents against the requestor hereunder or any related company, employee, entity or asset thereof under the terms of this indemnity.
[Signed]……………………..
For and on behalf of Charterers
RIDER CLAUSES TO TIME CHARTER PARTY
M.T. "Eco Bel Air"
DATED 14th February 2022
LETTER OF INDEMNITY FOR SHORE LINE FLUSHING/PLUGGING
To: [insert name of Owners] [insert date]
The Owners of the [insert name of ship]
[insert address]
Dear Sirs
Ship: [insert name of ship]
Charter Party: [insert details & date]
Voyage: [insert load and discharge ports as stated in the bill of lading]
Cargo(es): [quantity & type]
Bill of lading: No. _______ dated _______ issued at _______
The above ship, under our charter & commercial operation, and in line with our instructions shall load/has loaded the following cargoes:
(i) [Cargo quantity & type] in cargo tanks [number, location] shipped by [insert name of shipper] and consigned to [insert name of consignee or party to whose order the bill of lading is made out, as appropriate] for delivery at the port of [insert name of discharge port stated in the bill of lading]
(ii) [Cargo quantity & type] in cargo tanks [number, location] shipped by [insert name of shipper] and consigned to [insert name of consignee or party to whose order the bill of lading is made out, as appropriate] for delivery at the port of [insert name of discharge port stated in the bill of lading]
We have requested the Vessel to comply with the requirement of the Terminal and undertake line flushing and/or plugging at the commencement and/or end of cargo operations, which may extend to the receipt of shore line contents onto the Vessel and/or the discharge of seawater into the shore line ("the Requested Activity") and in consideration of your agreement to the requested activity we hereby agree as follows:
1. To indemnify you, your servants and agents and to hold all of you harmless in respect of any liability, loss, damage or expense of whatsoever nature which you may sustain by reason of the Requested Activity as per our request and express instruction.
2. In the event of any proceedings being commenced against you, the vessel or any of your servants or agents in connection with or by reason of the Requested Activity as per our request and express instruction as aforesaid, to provide you or them on demand with sufficient funds to defend the same.
3. If, in connection with or by reason of the Requested Activity, the ship, or any other ship or property in the same or associated ownership, management, possession or control, should be arrested or detained or should the arrest or detention thereof be threatened, or should there be any interference in the use or trading of the vessel(whether by virtue of a caveat being entered on the ship's registry or otherwise howsoever), to provide on demand such bail or other security as may be required to prevent such arrest or detention or to secure the release of such ship or property or to remove such interference and to indemnify you in respect of any liability, loss, damage or expense or expense caused by such arrest or detention or threatened arrest or detention or such interference, whether or not such arrest or detention or threatened arrest or detention or such interference may be justified.
4. If, in connection with or by reason of the Requested Activity as aforesaid, the ship should be arrested or detained or should the arrest or detention
thereof be threatened, or should there be any interference in the use of trading of the vessel (whether by virtue of caveat being entered on the ship's registry or otherwise howsoever) to continue to pay all sums, dues, disbursements and expenses
contractually required of us under the subject Charter Party dated _______ throughout any such period of delay whatsoever and we confirm vessel shall always remain on-hire throughout any and all such periods.
RIDER CLAUSES TO TIME CHARTER PARTY
M.T. "Eco Bel Air"
DATED 14th February 2022
5. For the avoidance of doubt and without any limitation whatsoever, in the event that damage or discolouration of or to the cargo tank and/or pipeline coatings occurs, to indemnify you in respect of any and/or all costs incurred in repair and/or
re-coating and/or cleaning of the tank and/or pipeline coatings.
6. The liability of each and every person under this indemnity shall be joint and several and shall not be conditional upon your proceeding first against any person, whether or not such person is party to or liable under this indemnity.
7. This indemnity shall be governed by and construed in accordance with English Law and each and every person liable under this indemnity shall at your request submit to the jurisdiction of the High Court of Justice of England. We therefore undertake that we will within 14 days of the receipt so to do, instruct and authorise solicitors forthwith to accept on our behalf hereunder service of any proceedings that may be commenced by you, your servants, employees and agents against the requestor hereunder or any related company, employee, entity or asset thereof under the terms of this indemnity.
[Signed] …………………….
For and on behalf of Charterers
RIDER CLAUSES TO TIME CHARTER PARTY
M.T. "Eco Bel Air"
DATED 14th February 2022
LETTER OF INDEMNITY FOR COMMINGLING
To: [insert name of Owners] [insert date]
The Owners of the [insert name of ship]
[insert address]
Dear Sirs
Ship: [insert name of ship]
Charter Party: [insert details & date]
Voyage: [insert load and discharge ports as stated in the bill of lading]
Cargo(es): [quantity & type]
Bill of lading: No. _______ dated _______ issued at _______
Bill of lading: No. _______ dated _______ issued at _______
The above ship, under our charter & commercial operation, and in line with our instructions shall load/has loaded the following cargoes:
(i) [Cargo quantity & type] in cargo tanks [number, location] shipped by [insert name of shipper] and consigned to [insert name of consignee or party to whose order the bill of lading is made out, as appropriate] for delivery at the port of [insert name of discharge port stated in the bill of lading]
(ii) [Cargo quantity & type] in cargo tanks [number, location] shipped by [insert name of shipper] and consigned to [insert name of consignee or party to whose order the bill of lading is made out, as appropriate] for delivery at the port of [insert name of discharge port stated in the bill of lading]
We have requested you to comingle the cargo loaded on the Vessel at …….and……. in the above tanks and we warrant and confirm that such operation shall be subject to compliance with relevant safety rules and the technical characteristics of the Vessel.
We warrant that the cargoes to be comingled on board shall be stable and compatible and that no precipitation of solid deposits in cargo tanks, pipelines, pumps or valves will occur.
We undertake to return all three (3) original copies of all bills of lading issued in respect of the cargoes to be comingled to Owners for cancellation. Upon return of the original bills of lading as aforesaid, Owners will issue replacement bills of lading in respect of the comingled cargo, which state on their face:
i. the details from the bill(s) of lading pursuant to which the cargoes were originally loaded, including the nature of the cargo, the original quantity loaded and the date and place of loading; and
ii. the place and date that the comingling took place.
In consideration of your complying with our request as aforesaid ("the Requested Activity"), we hereby agree as follows:
1. To indemnify you, your servants and agents and to hold all of you harmless in respect of any liability, loss, damage or expense of whatsoever nature which you may sustain by reason of the Requested Activity as per our request and express instruction.
2. In the event of any proceedings being commenced against you, the vessel or any of your servants or agents in connection with or by reason of the Requested Activity as per our request and express instruction as aforesaid, to provide you or them on demand with sufficient funds to defend the same.
RIDER CLAUSES TO TIME CHARTER PARTY
M.T. "Eco Bel Air"
DATED 14th February 2022
3. If, in connection with or by reason of the Requested Activity, the ship, or any other ship or property in the same or associated ownership, management, possession or control, should be arrested or detained or should the arrest or detention thereof
be threatened, or should there be any interference in the use or trading of the vessel(whether by virtue of a caveat being entered on the ship's registry or otherwise howsoever), to provide on demand such bail or other security as may be required to
prevent such arrest or detention or to secure the release of such ship or property or to remove such interference and to indemnify you in respect of any liability, loss, damage or expense or expense caused by such arrest or detention or threatened
arrest or detention or such interference, whether or not such arrest or detention or threatened arrest or detention or such interference may be justified.
4. If, in connection with or by reason of the Requested Activity as aforesaid, the ship should be arrested or detained or should the arrest or detention thereof be threatened, or should there be any interference in the use of trading of the vessel
(whether by virtue of caveat being entered on the ship's registry or otherwise howsoever) to continue to pay all sums, dues, disbursements and expenses contractually required of us under the subject Charter Party dated _____ throughout any such
period of delay whatsoever and we confirm vessel shall always remain on-hire throughout any and all such periods.
5. For the avoidance of doubt and without any limitation whatsoever, in the event that damage or discolouration of or to the cargo tank and/or pipeline coatings occurs, to indemnify you in respect of any and/or all costs incurred in repair and/or re-coating and/or cleaning of the tank and/or pipeline coatings.
6. The liability of each and every person under this indemnity shall be joint and several and shall not be conditional upon your proceeding first against any person, whether or not such person is party to or liable under this indemnity.
7. This indemnity shall be governed by and construed in accordance with English Law and each and every person liable under this indemnity shall at your request submit to the jurisdiction of the High Court of Justice of England. We therefore undertake that we will within 14 days of the receipt so to do, instruct and authorise solicitors forthwith to accept on our behalf hereunder service of any proceedings that may be commenced by you, your servants, employees and agents against the requestor hereunder or any related company, employee, entity or asset thereof under the terms of this indemnity.
[Signed] …………………….
For and on behalf of Charterers
RIDER CLAUSES TO TIME CHARTER PARTY
M.T. "Eco Bel Air"
DATED 14th February 2022
INT GROUP A
STANDARD FORM LETTER OF INDEMNITY TO BE GIVEN IN RETURN FOR DELIVERING CARGO WITHOUT PRODUCTION OF THE ORIGINAL BILL OF LADING
To: [insert name of Owners] [insert date]
The Owners of the [insert name of ship]
[insert address]
Dear Sirs
Ship: [insert name of ship]
Voyage: [insert load and discharge ports as stated in the bill of lading]
Cargo: [insert description of cargo]
Bill of lading [insert identification numbers, date and place of issue]
The above cargo was shipped on the above ship by [insert name of shipper] and consigned to [insert name of consignee or party to whose order the bill of lading is made out, as appropriate] for delivery at the port of [insert name of discharge port stated in the bill of lading] but the bill of lading has not arrived and we, [insert name of party requesting delivery], hereby request you to deliver the said cargo to "X [name of the specific party] or to such party as you believe to be or to represent X" or to be acting on behalf of X" at [insert place where delivery is to be made] without production of the original bill of lading.
In consideration of your complying with our above request, we hereby agree as follows:
|
1. |
To indemnify you, your servant and agents and to hold all of you harmless in respect of any liability, loss, damage or expense of whatsoever nature which you may sustain by reason of delivery the cargo in accordance with our request. |
|
2. |
In the event of any proceedings being commenced against you or any of your servants or agents in connection with the delivery of the cargo as aforesaid, to provide you or them on demand with sufficient funds to defend the same. |
|
3. |
If, in connection with the delivery of the cargo as aforesaid, the ship, or any other ship or property in the same or associated ownership, management or control, should be arrested or detained or should the arrest or detention thereof be threatened, or should there be any interference in the use or trading of the vessel (whether by virtue of a caveat being entered on the ship's registry or otherwise howsoever), to provide on demand such bail or other security as may be required to prevent such arrest or detention or to secure the release of such shup or property or to remove such interference and to indemnify you in respect of any liability, loss, damage or expense caused by such arrest or detention or threatened arrest or detention or such interference may be justified. |
|
4. |
If the place at which we have asked you to make delivery is a bulk liquid or gas terminal or facility or another ship, lighter or barge, then delivery to such terminal,
facility, ship, lighter or barge shall be deemed to be delivery to the party to whom we have requested you to make such delivery. |
RIDER CLAUSES TO TIME CHARTER PARTY
M.T. "Eco Bel Air"
DATED 14th February 2022
|
5. |
As soon as all original bills of lading for the above cargo shall have come into our possession, to deliver the same to you, or otherwise to cause all original bills of lading to be delivered to you, whereupon our liability hereunder shall cease. |
|
6. |
The liability of each and every person under this indemnity shall be joint and several and shall not be conditional upon your proceeding first against any person, whether or not such person is part to or liable under this indemnity. |
|
7. |
This indemnity shall be governed by and construed in accordance with English law and each and every person liable under this indemnity shall at your request submit to the jurisdiction of the High Court of Justice of England. |
Yours faithfully
For and on behalf of
[insert name of Requestor]
The Requestor
……………………………………..
Signature
RIDER CLAUSES TO TIME CHARTER PARTY
M.T. "Eco Bel Air"
DATED 14th February 2022
INT GROUP B
STANDARD FORM LETTER OF INDEMNITY TO BE GIVEN IN RETURN FOR DELIVERING CARGO AT A PORT OTHER THAN THAT STATED IN THE BILL OF LADING
To: [insert name of Owners] [insert date]
The Owners of the [insert name of ship]
[insert address]
Dear Sirs
Ship: [insert name of ship]
Voyage: [insert load and discharge ports as stated in the bill of lading]
Cargo: [insert description of cargo]
Bill of lading [insert identification numbers, date and place of issue]
The above cargo was shipped on the above ship by [insert name of shipper] and consigned to [insert name of consignee or party to whose order the bill of lading is made out, as appropriate] for delivery at the port of [insert name of discharge port stated in the bill of lading] but we, [insert name of party requesting substituted delivery], hereby request you to order the ship to proceed and deliver the said cargo at [insert name of substitute port or place of delivery] ["X [name of the specific party] or to such party as you believe to be or to represent X"] against production of at least one original bill of lading.
In consideration of your complying with our above request, we hereby agree as follows:
1. To indemnify you, your servants and agents and to hold all of you harmless in respect of any liability, loss, damage or expense of whatsoever nature which you may sustain by reason of the ship proceeding and giving delivery of the cargo against production of at least one original bill of lading in accordance with our request.
2. In the event of any proceeding being commenced against you or any of your servants or agents in connection with ship proceeding and giving delivery of the cargo as aforesaid, to provide you or them on demand with sufficient funds to defend the same.
3. If, in connection with the delivery of the cargo as aforesaid, the ship, or any other ship or property in the same or associated ownership, management or
control, should be arrested or detained or should the arrest or detention thereof be threatened, or should there be any interference in the use or trading of the vessel (whether by virtue of a caveat being entered on the ship's registry or otherwise
howsoever), to provide on demand such bail or other security as may be required to prevent such arrest or detention or to secure the release of such ship or property or to remove such interference and to indemnify you in respect of any liability,
loss, damage or expense caused by such arrest or detention or threatened arrest or detention or such interference may be justified.
RIDER CLAUSES TO TIME CHARTER PARTY
M.T. "Eco Bel Air"
DATED 14th February 2022
4. The liability of each and every person under this indemnity shall be joint and several and shall not be conditional upon your proceeding first against and person, whether or not such person is party to or liable under this indemnity.
5. This indemnity shall be governed by and construed in accordance with English law and each and every person liable under this indemnity shall at your request submit to the jurisdiction of the High Court of Justice of England.
Yours faithfully
For and on behalf of
[insert name of Requestor]
The Requestor
……………………………….
Signature
RIDER CLAUSES TO TIME CHARTER PARTY
M.T. "Eco Bel Air"
DATED 14th February 2022
INT GROUP C
STANDARD FORM LETTER OF INDEMNITY TO BE GIVEN IN RETURN FOR DELIVERING CARGO AT A PORT OTHER THAN THAT STATED IN THE BILL OF LADING AND WITHOUT PRODUCTION OF THE ORIGINAL BILL OF LADING
To: [insert name of Owners] [insert date]
The Owners of the [insert name of ship]
[insert address]
Dear Sirs
Ship: [insert name of ship]
Voyage: [insert load and discharge ports as stated in the bill of lading]
Cargo: [insert description of cargo]
Bill of lading [insert identification numbers, date and place of issue]
The above cargo was shipped on the above ship by [insert name of shipper] and consigned to [insert name of consignee or party to whose order the bill of lading is made out, as appropriate] for delivery at the port of [insert name of discharge port stated in the bill of lading] but we, [insert name of party requesting substituted delivery], hereby request you to order the ship to proceed and deliver the said cargo at [insert name of substitute port or place of delivery] ["X [name of the specific party] or to such party as you believe to be or to represent X or to be acting on behalf of X"] without production of the original bill of lading.
In consideration of your complying with our above request, we hereby agree as follows:
1. To indemnify you, your servants and agents and to hold all of you harmless in respect of any liability, loss, damage or expense of whatsoever nature which you may sustain by reason of the ship proceeding and giving delivery of the cargo in accordance with our request.
2. In the event of any proceedings being commenced against you or any of your servants or agents in connection with the ship proceeding and giving delivery of the cargo as aforesaid, to provide you or them on demand with sufficient funds to defend the same.
3. If, in connection with the delivery of the cargo as aforesaid, the ship, or any other ship or property in the same or associated ownership, management or control, should be arrested or detained or should the arrest or detention thereof be threatened, or should there be any interference in the use of trading of the vessel (whether by virtue of a caveat being entered on the ship's registry or otherwise howsoever), to provide on demand such bail or other security as nay be required to prevent such arrest or detention or to secure the release of such ship or property or to remove such interference and to indemnify you in respect of any liability, loss damage or expense caused by such arrest or detention or threatened arrest or detention or such interference, whether or not such arrest or detention or threatened arrest or detention or such interference may be justified. If the place at which we have asked you to make delivery is a bulk liquid or gas terminal or facility, or another ship, lighter or barge, then delivery to such terminal, facility, ship, lighter or barge shall be deemed to be delivery to the party to whom we have requested you to make delivery.
RIDER CLAUSES TO TIME CHARTER PARTY
M.T. "Eco Bel Air"
DATED 14th February 2022
4. As soon as all original bills of lading for the above cargo shall have come into our possession, to deliver the same to you, or otherwise to cause all original bills of lading to be delivered to you.
5. The liability of each and every person under this indemnity shall be joint and several and shall not be conditional upon your proceeding first against any person, whether or not such person is party to or liable under this indemnity.
6. This indemnity shall be governed by and construed in accordance with English law and each and every person liable under this indemnity shall at your request submit to the jurisdiction of the High Court of Justice in England.
Yours faithfully For and on behalf of [insert name of Requestor] The Requestor To:________________ [insert name of owners] of the ___ [insert name of the vessel]
.......................................................
Signature
RIDER CLAUSES TO TIME CHARTER PARTY
M.T. "Eco Bel Air"
DATED 14th February 2022
LETTER OF INDEMNITY TO BE GIVEN FOR CARRYING ONE ORIGINAL OF EACH SET OF BILLS OF LADING ON BOARD
Dear Sirs,
Ship:
Charterparty:
Voyage:
Cargo:
Bills of lading:
Date:
***
The above cargo was shipped on the above vessel by ______ and consigned to _______ for delivery at __________. We, ______________ , have allowed, through our loadport agents, for one original of each set of the aforementioned bills of lading (copies of which are attached to this LoI) to be placed on board this ship, retained by the Master and carried to the discharge port on board the ship.
We hereby request you therefore to instruct the Master to deliver the original bills of lading kept on board to our local discharge port agent, Messrs ________ , who will have such bills of lading endorsed by the lawful bill of lading holders, Messrs ____________ , and presented back to the Master for delivery of the cargo against the original bills of lading duly endorsed by the lawful holders. This request is deemed to also represent the instructions of each of the shippers under the aforementioned bills of lading.
In consideration of your complying with our above requests, we hereby agree, undertake, represent and warrant the following:
1. That the reason for requesting you to carry one original of each set of the bills of lading on board the ship and to deliver same to our local discharge port agents as aforesaid is to facilitate prompt delivery of the cargo to the receivers at the discharge port(s).
2. That we will ensure that lawful title to the cargo is properly passed to any intermediate buyers and/or holders of the bills of lading and/or the receivers at the discharge port(s), notwithstanding that one original of each set of the bills of lading has been retained on board the ship and delivered to our local discharge port agents as aforesaid.
3. That we will take the utmost care in assisting the Master in identifying the party(ies) to whom the original of each set of the bills of lading should be delivered at the discharge port(s).
RIDER CLAUSES TO TIME CHARTER PARTY
M.T. "Eco Bel Air"
DATED 14th February 2022
4. To indemnify you, your servants and agents and to hold all of you harmless in respect of any liability, loss, damage or expense of whatsoever nature which you may sustain by reason of the ship proceeding and giving delivery of the cargo in accordance with our above request, including any mis-delivery claims and/or claims in respect of the title to the cargo.
5. In the event of any proceedings being commenced against you or any of your servants or agents in connection with the ship proceeding and giving delivery of the cargo as aforesaid, to provide you or them on demand with sufficient funds to defend the same.
6. If, in connection with the delivery of the cargo as aforesaid, the ship, or any other ship or property in the same or associated ownership, management or control should be arrested or detained or should the arrest or detention thereof be threatened, or should there be any interference in the use or trading of the vessel (whether by virtue of a caveat being entered on the ship's registry or otherwise howsoever), to provide on demand such bail or other security as may be required to prevent such arrest or detention or to secure the release of such ship or property or to remove such interference and to indemnify you in respect of any liability, loss, damage or expense caused by such arrest or detention or threatened arrest or detention or such interference may be justified.
7. To deliver all original bills of lading for the above cargo to you, or otherwise to cause all original bills of lading to be delivered to you.
8. The liability of each and every person under this indemnity shall be joint and several and shall not be conditional upon your proceeding first against any person, whether or not such person is party to or liable under this indemnity.
9. This indemnity shall be governed by and construed in accordance with English law and the arbitration/jurisdiction clause of the Charterparty shall be incorporated herein with logical amendments.
Yours faithfully
For and on behalf of
[insert name of requestor]
The Requestor
........................................................
Signature
18
Exhibit 4.28
Code word for this Charter Party
"SHELLTIME 4"
Issued December 1984 amended December 2003
Time Charter Party
LONDON – 14th February 2022
IT IS THIS DAY AGREED between Malibu Warrior Inc.
of Marshall Islands (hereinafter referred to as "Owners"), being owners of the
good motor/stream* vessel called Eco Beverly Hills (ex. Hull S875) – IMO No. 9794068
(hereinafter referred to as "the Vessel") described as per Clause 1 hereof and Trafigura Maritime Logistics Pte Ltd.
of Singapore (hereinafter referred to as "Charterers"):
| Description and Condition of Vessel |
1 |
As the date of delivery of the vessel under this charter and throughout the charter period: |
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| (a) | she shall be classed by a Classification Society which is a member of the International Association of Classification Societies; | ||
| (b) | she shall be in every way fit to carry THREE (3) grades of cargo always within vessel's natural segregation, Crude Petroleum Products, Crude condensate, Fuel oil(s) and/Dirty Petroleum Products, excluding , Carbon Black Feedstock, Low Sulphur Waxy Residues, Bitumen, Orimulsion, Asphalt and or Asphalt residue and always consistent with vessel's certification and design capabilities. | ||
| Charts have the right to load five (5) grades of , always in compliance with Ship's Loadicator and Trim and Stability Booklet, and Owner will not be held responsible for any kind of contamination between such compatible grades. Charterers responsibility to confirm cargo grades compatibility. |
Charterers shall have the option to load and carry CPP (including but not limited to gasoil/ulsd /gasoline/jet) without option to trade the vessel in CPP. Always in compliance with the attached vessel's "Tank Coating Resistance List" provided by Paint Manufacturer and Shipyard (Vessel's PSPC COT – Certified Coating System is BANNOH 1500 (QD)).
In such case, if any fresh water rinsing/ tank cleaning/ preparation for such cargoes, including any time (if needed) will be for charterers account.
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(c) |
she shall be tight, staunch, strong, in good order and condition, and in every way fit for the service, with her machinery, boilers, hull and other equipment (including but not limited to hull stress calculator, radar, computers and computer systems) in a good and efficient state: |
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(d) |
her tanks, valves and pipelines shall be oil-tight; |
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(e) |
she shall be in every way fitted for burning, in accordance with the grades specified in Clause 29 hereof: |
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(i) |
at sea, fuel oil for main propulsion and fuel oil/marine gasoil for auxiliaries; |
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(ii) |
in port, fuel oil/marine gasoil for auxiliaries; |
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(f) |
she shall comply with the regulations in force so as to enable her to pass through the Suez and Panama Canals by day and night without delay; |
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(g) |
she shall have on board all certificates, documents and equipment required from time to time by any applicable law to enable her to perform the charter service without delay; |
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(h) |
she shall comply with the description in the OCIMF Harmonised Vessel Particulars Questionnaire appended hereto as Appendix A, provided however that if there is any conflict between the provisions of this questionnaire and any other provision, including this Clause 1, of this charter such other provisions shall govern; |
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| (i) | her ownership structure, flag, registry, classification society and management company shall not be changed without Charterers prior consent which not to be unreasonably withheld: |
| Safety Management |
(j) |
Owners will operate: |
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| (i) | a safety management system certified to comply with the International Safety Management Code (ISM Code) for the Safe operation of Ships and for Pollution Prevention; | |||
| (ii) | a documented safe working procedures system (including procedures for the identification and mitigation of risks); | |||
| (iii) | a documented environmental management system; | |||
| (iv) | documented accident/incident reporting system complaint with flag state requirements; | |||
Code word for this Charter Party
"SHELLTIME 4"
Issued December 1984 amended December 2003
Charterers may at any time request an inspection of the relevant compliance documentation and/or safety management certificate and upon receipt of such a request the Owners shall forthwith provide the same.
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(k) |
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(l) |
Owners shall maintain Health Safety Environmental (HSE) records sufficient to demonstrate compliance with the requirements of their HSE system and of this charter. Charterers reserve the right to confirm compliance with HSE requirements by audit of Owners. |
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(m) |
Owners will arrange at their expense for a SIRE inspection to be carried out at intervals of minimum every 150 days . |
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| provided vessel's trading patterns permit and SIRE Inspectors are available and SIRE regulations permit. Owners ensure that the vessel is always to have 6 months valid sire. SUCH SIRE INSPECTION ALWAYS TO BE A PHYSICAL DISCHARGE SIRE INSPECTION PROVIDED VESSEL TRADING PATTERN PERMITS THIS. OWNERS ALWAYS TO CONSULT CHARTERERS AND OBTAIN CHARTERERS CONSENT PRIOR TO DOING ANY OTHER SIRE INSPECTION THAN A PHYSICAL DISCHARGE INSPECTION, Owners will grant access of q88.com upon delivery of vessel to Charterers. | ||
| VESSEL 2 – 3 (ECO BEVERLY HILLS AND ECO BELL AIR) – BOTH VESSELS TO BE DELIVERED WITH VALID PHYSICAL DISCHARGE SIRE INSPECTIONS MAXIMUM 4 MONTHS OLD ON DELIVERY. |
| Shipboard Personnel and their Duties |
2 |
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| (a) | At the date of delivery of the vessel under this charter and throughout the charter period: | |||
| (i) | she shall have a full and efficient complement of master, officers and crew for a vessel of her tonnage, who shall in any event be not less than the number required by the laws of the flag state and who shall be trained to operate the vessel and her equipment competently and safely; | |||
| (ii) | all shipboard personnel shall hold valid certificates of competence in accordance within the requirements of the law of the flag state; | |||
| (iii) | all shipboard personnel shall be trained in accordance with the relevant provisions of the International Convention on Standards of Training, Certification and Watchkeeping for Seafarers, 1995 or any additions, modifications or subsequent versions thereof; | |||
| (iv) | there shall be on board sufficient personnel with a good working knowledge of the English language to enable cargo operations at loading and discharging places to be carried out efficiently and safely and to enable communications between the vessel and those loading the vessel or accepting discharge there from to be carried out quickly and efficiently. | |||
| (v) | the terms of employment of the vessels staff and crew will always remain acceptable to The International Transport Workers Federation and the vessel will at all times carry a Blue Card; | |||
| (vi) | the nationality of the vessels officers given in the OCIMF Vessel Particulars. Questionnaire referred to in Clause 1 (h) will not change without Charterers prior agreement. | |||
| (b) | Owners guarantee that throughout the charter service the master shall with the vessel's officers and crew, unless otherwise ordered by Charterers; | |||
| (i) | prosecute all voyages with the utmost despatch; | |||
| (ii) | render all customary assistance; and | |||
| (iii) | load and discharge cargo as rapidly as possible when required by Charterers or their agents to do so, by night or by day, but always in accordance with the laws of the place of loading or discharging (as the case may be) and in each case in accordance with any applicable laws of the flag state. | |||
Code word for this Charter Party
"SHELLTIME 4"
Issued December 1984 amended December 2003
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Duty to Maintain |
3 | |||
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(a) |
Throughout the charter service Owners shall, whenever the passage of time, wear and tear or any event (whether or not coming within Clause 27 hereof) requires steps to be taken to maintain or restore the conditions stipulated in Clauses 1 and 2(a) exercise due diligence so to maintain or restore the vessel, |
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| (b) | If at any time whilst the vessel is on hire under this charter the vessel fails to comply with the requirements of Clauses 1.2(a) or 10 then hire shall be reduced to the extent necessary to indemnify Charterers for such failure. If and to the extent that such failure affects the time taken by the vessel to perform any services under this charter, hire shall be reduced by an amount equal to the value, calculated at the rate of hire, of the time so lost. | |||
| Any reduction of hire under this sub-Clause (b) shall be without prejudice to any other remedy available to Charterers, but where such reduction of hire is in respect of time lost, such time shall be excluded from any calculation under Clause 24. | ||||
| (c) | If Owners are in breach of their obligation under Clause 3(a). Charterers may so notify Owners in writing and if, after the expiry of 30 days following the receipt by Owners of any such notice, Owners have failed to demonstrate to Charterers' reasonable satisfaction the exercise of due diligence as required in Clause 3(a), the vessel shall be off-hire, and no further hire payments shall be due, until Owners have so demonstrated that they are exercising such due diligence. | |||
| (d) | Owners shall advise Charterers immediately, in writing, should the vessel fail an inspection by, but not limited to, a government and/or port state authority, and /or terminal and/or major charter or similar tonnage, Owners shall simultaneously advise Charterers of their proposed course of action to remedy the defects which have caused the failure of such inspection. | |||
| (e) | If, in Charterers reasonably held view: | |||
| (i) | failure of an inspection, or, | |||
| (ii) | any serious finding of an inspection, | |||
| referred to in Clause 3 (d) prevents normal commercial operations then Charterers have the option to place the vessel off-hire 30 days after from the date and time that the vessel fails such inspection, or becomes commercially inoperable, until the date and time that the vessel passes a re-inspection provided vessel's trading patterns permit a re-inspection and providing SIRE regulation permit , or becomes commercially operable, which shall be in a position no less favourable to Charterers than at which she went off-hire. Charterers to make best endeavours to load one single voyage to enable Owners to carry out inspection concurrent with discharge. | ||||
| (f) | Furthermore, at any time while the vessel is off-hire for a period of more than 15 continuous days under this Clause 3 (with the exception of Clause 3 (d) and (e) , Charterers have the option to terminate this charter by giving notice in writing with effect from the date on which such notice of termination is received by Owners or from any later date stated in such notice. This sub-Clause (f) is without prejudice to any rights of Charterers or obligations of Owners under this Charter or otherwise (including without limitation Charterers' right under Clause 21 hereof). | |||
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Period Trading Limits and Safe Places |
4 |
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| (a) | Owners agree to let and Charterers agree to hire the vessel for a period of minimum 20 months to maximum 26 months in Charterers option Optional period of balance period until 1st December 2025 with Charterers option +15/-30 days from this date. Optional period to be declared latest 60 days before 26 months expires, commencing from the time and date of delivery of the vessel, for the purpose of carrying all lawful merchandise () including in particular; As per vessels COF, Class and coating resistance table. | ||
| In any part of the world, as Charterers shall direct, subject to the limits of the current British Institute Warranties and any subsequent amendments thereof. |
Code word for this Charter Party
"SHELLTIME 4"
Issued December 1984 amended December 2003
Trading area: trading worldwide, always within INL and any subsequent amendments thereof, excluding IranLake Maracaibo,Orinoco River, North Korea, Somalia, South Sudan, Sudan or Syria, Turkish occupied Cyprus, war and warlike areas, The Charter warrants that they shall not utilise the vessel or permit the vessel to be utilised in any trade: (a) which is unlawful AND/OR VIOLATES ANY US/US/EU SANCTIONS OR UN/US/EU BOYCOTT.
If sanctions are lifted against Venezuela or Iran, owners will consider calling but cannot confirm it nor guarantee it. The parties to discuss openly. Owners confirm no premiums will be asked to add Venezuela and/or Iran if/when sanctions are lifted provided P&I / Class / Flag allows to re-instate these countries in the trading range.
Notwithstanding the foregoing, but subject to Clause 35, Charterers may not order the vessel to ice-bound waters. Vessel shall not be required to force ice, nor follow ice-breaker(s). Vessel to trade always within INL and shall not be required to enter any Ice bond port, or any port where lights or lightships have been or are about to be withdrawn by reason of ice, or where there is risk in the ordinary cause of things the vessel will not be able on account of ice to safely enter the port or to depart after having completed loading or discharging or to any part of the world outside such limits provided that Owners consent thereto (such consent not to be unreasonably withheld) and that Charterers pay for any insurance premium required by the Vessel's underwriters as a consequence of such order.
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(b) |
Any time during which the vessel is off-hire under this charter may be added to the charter period in Charterers option up to the total amount of time spent off-hire. In such cases the rate of hire will be that prevailing at the time the vessel would, but for the provisions of this Clause, have been redelivered. Charterer's to declare whether or not they will exercise this option a minimum of 1 month prior to the intended redelivery date or anniversary date of the charter, whichever occurs first. |
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(c) |
Charterers shall use due diligence to ensure that the vessel is only employed between and at safe places (which expression when used in this charter shall include parts, berths, wharves, docks, anchorages, submarine lines, alongside vessels or lighters, and other locations including locations at sea) where she can safely lie always afloat. Notwithstanding anything contained in this or any other clause of this charter. Charterers do not warrant the safety of any place to which they order the vessel and shall be under no liability in respect thereof except for loss or damage caused by their failure to exercise due diligence as aforesaid. Subject as above, the vessel shall be loaded and discharged at any places as Charterers may direct, provided that Charterers shall exercise due diligence to ensure that any ship-to-ship transfer operations shall conform to standards not less than those set out in the latest published edition of the ICS/OCIMF Ship to Ship Transfer Guide. |
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(d) |
Unless otherwise agreed, the vessel shall be delivered by Owners dlosp one safe port Uke/med/usg/caribs/ag-korea range at Owners' option and redelivered to Owners WW excl Australia/NZ if redelivered after firm period. IF OPTIONAL PERIOD DECLARED THE REDEL TO BE USAC/USG/UKC/MED/AG/SING-JAPAN RANGE as Charterers' option always within trading limits. |
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(e) |
The vessel will deliver with virgin tanks (VSL. NO 2+3 WILL DELIVER WITH COTs free of last DPP cargo) AND FREE OF SLOPS and will redeliver with last 3 cargoes. DPP in all tanks including slops, free of slops and washings generated by Charterers' trading of the vessel. |
Code word for this Charter Party
"SHELLTIME 4"
Issued December 1984 amended December 2003
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(f) |
Owners are required to give Charterers 30/20/15 approximate and then definite 10/7/5/3/2/1 days prior notice of delivery including port and last 3 cargoes. Charterers are required to give Owners 30/20/15 approximate days notice of re-delivery and then 10/7/5/3/2/1 definite days prior notice of redelivery including port and last 3 cargoes. |
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Laydays/ Cancelling |
5 |
The vessel shall not be delivered to Charterers before 14th April 2022.
And Charterers shall have the option of cancelling this carter if the vessel is not ready and as their disposal on or before 30th June 2022. |
| Owners to Provide |
6 | Owners undertake to provide and to pay for all provisions, wages (including but not limited to all overtime payments), and shipping and discharging fees and all other expenses of the master, officers and crew; also, except as provided in Clauses 4 and 34 hereof, for all insurance on the vessel, for all deck, cabin and engine-room stores, and for water except fresh water used for cleaning of tanks between cargoes and/or for Charterers purpose. Charterers to provide fresh water if vessel doing coastal voyage or if vessel unable to generate fresh water due to Charterers trading patterns; for all drydocking overhaul, maintenance and | |
| repairs to the vessel; and for all fumigation expenses and de-rat certificates. Owners' obligations under this Clause 6 extend to all liabilities for customs or import duties arising at any time during the performance of this charter in relation to the personal effects of the master, officers and crew, and in relation to the stores, provisions and other matters aforesaid which Owners are to provide and pay for and Owners shall refund to Charterers any sums Charterers or their agents may have paid or have been compelled to pay in respect of any such liability. Any amounts allowable in general average for wages and provisions and stores shall be credited to Charterers in so far as such amounts are in respect of a Period when the vessel is co-hire. |
| Charterers to Provide |
7 | ||
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(a) |
Charterers shall provide and pay for all fuel towage and pilotage (whether compulsory or not. For the safety of navigation adequately qualified Deep Sea Pilots in the North Sea, English Channel, Skagerrak (IMO Resolution A. 1080(28)) and Malacca strait in laden condition (IMO SC/Cire.198) to be employed and be paid by the charterers even when not compulsory) and shall pay agency fees, port charges, commissions, expenses of loading and unloading cargoes, canal dues, tank cleaning chemicals, fresh water for tank cleaning (also, in case of prolonged anchor stay were vessel won't be able to produce FW by using the exhaust gas boiler/economiser, then fuel used for production of FW to be on charts account or charts to provide FW on their expense) cargo and cargo tank clean slop disposals, any and all taxes including withholding taxes and/or dues on hire payments, sub-hires, freight, sub-freights, vessel and cargoes however arising including from Charterers' employment of the vessel and all charges other than those payable by Owners in |
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| accordance with Clause 6 hereof, provided that all charges for the said items shall be for Owners' account when such items are consumed, employed or incurred for Owners' purposes or while the vessel is off-hire (unless such items reasonably relate to any service given or distance made good and taken into account under Clause 21 or 22); and provided further that any fuel used in connection with a general average sacrifice or expenditure shall be paid for by Owners. | |||
| (b) | In respect of bunkers consumed for Owners purposes these will be charged on each occasion by Charterers on a first-in-first-out basis valued on the prices actually paid by Charterers. | ||
| (c) | If the trading limits of this charter include ports in the United States of America and/or its protectorates then Charterers shall reimburse Owners for port specific charges relating to additional premiums charged by providers of oil pollution cover, when incurred by the vessel calling at ports in the United States of America and/or its protectorates in accordance with Charterers orders. |
Code word for this Charter Party
"SHELLTIME 4"
Issued December 1984 amended December 2003
| Rate of Hire |
8 |
Subject as herein provided, Charterers shall pay for the use and hire of the vessel at the rate of United States Dollars GROSS 24,000 for the firm period and USD 24,000 for the optional period, from time and date of her delivery ( UTC) to Charterers until the time and date of redelivery ( UTC) to Owners. Commission: 0,7% to Arrow Tankers payable by Owners. No addcom, 1.25% to CENTRAL Ship Chartering Inc. payable by owners/ Bare Boat Charterers. |
| Payment of Hire |
9 |
Subject to Clause 3 (c) and 3 (e), payment of hire shall be made in immediately available founds to: |
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| Account: | ||||
| TBA in United States Dollars per calendar month in advance on the last business day of the previous month free of bank charges, less: Except for 1st payment which is to be remitted within two (2) business days of receiving vessel's delivery certificate from Owners, including bankers ROB, and to cover time from delivery until end of month in progress." | ||||
| (i) | any hire paid which Charterers reasonably estimate to relate to off-hire periods, and | |||
| (ii) | any amounts disbursed on Owners' behalf, any advances and commission thereon, and charges which are for Owners' account pursuant to any provision hereof, and | |||
| (iii) | any amount due or reasonably estimated to become due to Charterers under Clause 3 (c) or 24 hereof, | |||
| any such adjustments to be made at the due date for the next monthly payment after the facts have been ascertained. Charterers shall not be responsible for any delay or error by Owners' bank in crediting Owners' account provided that Charterers have made proper and timely payment. | ||||
| In default of such proper and timely payment: | ||||
| (a) | Owners shall notify Charterers of such default and Charterers shall within seven working days of such notice pay to Owners the amount due including interest, failing which Owners may withdraw the vessel from the service of Charterers without prejudice to any other rights Owners may have under this charter or otherwise; and | |||
| (b) | Interest on any amount due but not paid on the due date shall accrue from the date after that date up to and including the day when payment is made, at a rate per annum which shall be 1% above the U.S. Prime Interest Rate as published by the Chase Manhattan Bank in New York at 12.00 New York time on the due date, or, if no such interest rate is published on that day, the interest rate published on the next proceeding day on which such a rate was published, computed on the basis of a 360 day year of twelve 30-day months, compounded semi-annually. | |||
| Space Available to Charterers |
10 |
The whole reach, burthen and decks of the vessel and any passenger accommodation (including Owner's suite) shall be at Charterers' disposal, reserving only proper and sufficient space for the vessel's master, officer, crew, tackle, apparel, furniture provisions and stores, provided that the weight of stores on board shall not, unless specially agreed, 400 metric tonnes at any time during the charter period. |
| Segregated Ballast |
11 |
In connection with the Council of the European Union Regulation on the Implementation of IMO resolution a747(18) Owners will ensure that the following entry is made on the International Tonnage Certification (1969) under the section headed "remarks"; |
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| "The segregated ballast tanks comply with the Regulation 13 of Annex 1 of the International Convention for the prevention of pollution from ships, 1973 as modified by the Protocol of relating thereto, and the total tonnage of such tanks exclusively used for the carriage of segregated water ballast is *TBA*. The reduced gross tonnage which should be used for the calculation of tonnage based fees is *TBA*". |
Code word for this Charter Party
"SHELLTIME 4"
Issued December 1984 amended December 2003
| Instructions And Logs |
12 |
Charterers shall from time to time give the master all requisite instructions and sailing directions, and the master shall keep a full and correct log of the voyage or voyages, which Charterers or their agents may inspect as required. The master shall when required furnish Charterers or their agents with a true copy of such log and with properly completed loading and discharging port sheets and voyage reports for each voyage and other returns as Charterers may require. Charterers shall be entitled to take copies at Owners' expense of any such documents which are not provided by the master. |
| Bills of Lading | 13 | ||||
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(a) |
The master (although appointed by Owners) shall be under the orders and direction of Charterers as regards employment of the vessel, agency and other arrangements, and shall sign Bills of Lading as Charterers or their agents may direct (subject always to Clause 35(a) and 40) without prejudice to this charter, Charterers hereby indemnify Owners against all consequences or liabilities that may arise; |
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| (i) | From signing Bills of Lading in accordance with the directions of Charterers, or their agents, to the extent that the terms of such Bills of Lading fail to conform to the requirements of this charter, or (except as provided in Clause 13(b) from the master otherwise complying with Charterers or their agents order. | ||||
| (ii) | from any irregularities in papers supplied by Charterers or their agents. | ||||
| (b) If Charterers by telex, facsimile or other form of written communication that specifically refers to this Clause request Owners to discharge a quantity of cargo either without Bills of Lading and/or at a discharge place other than that named in a Bill of Lading and/or that is different from the Bill of Lading quantity, then Owner shall discharge such cargo in accordance with Charterer's instructions in consideration of receiving the following indemnity which shall be deemed to be given by an authorised officer of the Charterers on each and every such occasion in SEE ADDITIONAL CLAUSES 5,6 & 7 | |||||
Code word for this Charter Party
"SHELLTIME 4"
Issued December 1984 amended December 2003
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| Conduct of Vessel's Personnel |
14 |
If Charterers complain of the conduct of the master or any of the officers or crew, Owners shall immediately investigate the complaint. If the complaint proves to be well founded, Owners shall, without delay, make a change in the appointments and Owners shall in any even communicate the result of their investigations to Charterers as soon as possible. |
| Bunkers at Delivery and Redelivery |
15 |
Charterers shall accept and pay for all bunkers on board at the time of delivery, and Owners shall on redelivery (whether it occurs at the end of the charter or on the earlier termination of this charter) accept and pay for all bunkers remaining on board, at the price actually paid, on a first-in-first-out basis. Such prices are to be supported by paid invoices. | ||
| Vessel to be delivered to and redelivered from the charter with, at least, a quantity of bunkers on board sufficient to Reach the nearest main bunkering port including safety margin. Notwithstanding anything contained in the charter unless otherwise agreed between Owners and Charterers all bunkers on board the vessel shall, throughout the duration of this charter, remain the property of Charterers and can only be purchased on the terms specified in the charter at the end of the charter period or, if earlier, at the termination of the Charter. | ||||
| Stevedores, Pilots, Tugs |
16 | Stevedores when required shall be employed and paid by Charterers, but this shall not relieve Owners from responsibility at all times for proper stowage, which must be controlled by the master who shall keep a strict account of all cargo loaded and discharged, Owners hereby indemnify Charterers, their servants and agents against all losses, claims, responsibilities and liabilities arising in any way whatsoever from the employment of pilots, tugboats or stevedores, who although employed by Charterers shall be deemed to be the servants of and in the service of Owners and under their instructions (even if such pilots, tugboat personnel or stevedores are in fact the servant of Charterers their agents or any affiliated company); provided, however, that | ||
| (a) | the foregoing indemnity shall not exceed the amount to which Owners would have been entitled to limit their liability if they had themselves employed such pilots, tugboats or stevedores, and | |||
| (b) | Charterers shall be liable for any damage to the vessel caused by or arising out of the use of stevedores, fair wear and tear excepted, to the extent that Owners are unable by the exercise of due diligence to obtain redress therefore from stevedores. | |||
| Super- Numeraries |
17 | Charterers may send representatives in the vessel's available accommodation upon any voyage made under this charter, Owners finding provisions and all requisites as supplied to officers, except alcohol. Charterers paying at the rate of United States Dollars $30.00 per day for each representative | ||
| on board the vessel. Subject to accommodation at their own risk and expense. The representatives shall act as observers only and shall not interfere with the operation of the vessel. Upon boarding the vessel the representatives shall be required to sign owners indemnity wording. | ||||
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Sub-letting/ Novation |
18 | Charterers may sub-let the vessel, but shall always remain responsible to Owners for due fulfilment of this charter. Royal Dutch | ||
| Final Voyage |
19 | If when a payment of hire is due hereunder Charterers reasonably expect to redeliver the vessel before the last sufficient hires next payment of hire would fall due, the fire to be paid shall be assessed on Charterers' reasonable estimate of the time necessary to complete Charterers' programme up to redelivery, and from which estimate Charterers may deduct amounts due or reasonably expected to become due for; | ||
Code word for this Charter Party
"SHELLTIME 4"
Issued December 1984 amended December 2003
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(a) |
disbursements on Owners' behalf or charges for Owners' account pursuant to any provision hereof, and |
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(b) |
bunkers on board at redelivery pursuant to Clause 15. |
| Loss of Vessel |
20 | Should the Bessel be lost, this charter shall terminate and hire shall cease at noon on the day of her loss; should the vessel be a constructive total loss, this charter shall terminate and hire shall cease at noon on the day on which the vessel's underwriters agree that the vessel is a constructive total loss; should the vessel be missing, this charter shall terminate and hire shall cease at noon on the day on which she was last heard of. Any hire paid in advance and not earned shall be returned to Charterers and Owners shall reimburse Charterers for the value of the estimated quantity of bunkers on board at the time of termination, at the price paid by Charterers at the last bunkering port. | |
| Off-hire | 21 | ||
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(a) |
On each and every occasion that there is loss of time (whether by way of interruption in the Vessel's service or, from reduction in the vessel's performance, or in any other manner); |
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(i) |
due to deficiency of personnel or stores; repairs; gas-freeing for repairs; time in and waiting to enter dry dock for repairs; breakdown (whether partial or total) of machinery, boilers or other parts of the vessel or her equipment (including without limitation tank coatings); overhaul, maintenance or survey; collision, stranding, accident or damage to the vessel; or any other similar cause preventing the efficient working of the vessel; and such loss continues for more than five consecutive hours (if resulting from interruption in the vessel's service) or cumulates to more than five hours (if resulting from partial loss of service); or |
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(ii) |
due to industrial action, refusal to sail, breach or orders or neglect of duty on the part of the master, officers or crew; or |
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(iii) |
for the purpose of obtaining medical advice or treatment for or landing any sick or injured person (other than a Charterers' representative carried under Clause 17 hereof) or for the purpose of landing the body of any person (other than a Charterers' representative), and such loss continues for more than five consecutive hours, or; |
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(iv) |
due to any delay in quarantine (excepting cases of Ebola) arising from the master, officers or crew having had communication with the shore at any infected area without the written consent or instructions of Charterers or their agents, or to any detention by customs or other authorities caused by smuggling or other infraction of local law on the part of the master, officers, or crew; or |
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(v) |
due to detention of the vessel by authorities at home or abroad attributable to legal action against or breach of regulations by the vessel, the vessel's owners, or Owners (unless brought about the act or neglect of Charterers); then; |
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| Without prejudice to Charterers' rights under Clause 3 or to any other rights of Charterers hereunder or otherwise, the vessel shall be off-hire from the commencement of such loss of time until she is again ready and in an efficient state to resume her service from a position not less favourable to Charterers than that at which such loss of time commenced; provided, however, that any service given or distance made good by the vessel whilst off-hire shall be taken into account in assessing the amount to be deducted from hire . |
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(b) |
If the vessel fails to proceed at any guaranteed speed pursuant to Clause 24, and such failure arises wholly or partly from any of the causes set out in Clause 21 (a) above, then the period for which the vessel shall be off-hire under this Clause 21 shall be the difference between; |
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| (i) | the time the vessel would have required to perform the relevant service at such guaranteed speed, and | ||
| (ii) | the time actually taken to perform such service (including any loss of time arising from interruption in the performance of such service). | ||
| For the avoidance of doubt, all time included under (ii) above shall be excluded from any computation under Clause 24. | |||
Code word for this Charter Party
"SHELLTIME 4"
Issued December 1984 amended December 2003
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(c) |
Further and without prejudice to the foregoing, in the event of the vessel deviating (which expression includes without limitation putting back, or putting into any port other than that to which she is bound under the instructions of Charterers) for any cause or purpose mentioned in Clause 21 (a), the vessel shall be off-hire from the commencement of such deviation until the time when she is again ready and in an efficient state to resume her service from a position not less favourable to Charterers than that at which the deviation commenced, provided, however, that any service given or distance made good by the vessel whilst so off-hire shall be taken into account in accessing the amount to be deducted from hire. If vessel, for any cause or purpose mentioned in Clause 21 (a), puts into any port other than the port to which she is bound on the instructions of Charterers, the port charges, pilotage and other expenses at such port shall be borne by Owners. Should the vessel be driven into any port or anchorage by stress of weather hire shall continue to be due and payable during any time lost thereby. |
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|
(d) |
If the vessel's flag state becomes engaged in International hostilities, and Charterers in consequence of such |
|
| Hostilities find it commercially impracticable to employ the vessel and have given Owners written notice thereof then from the date of receipt by Owners of such notice until the termination of such commercial impracticability the vessel shall be off-hire and Owners shall have the right to employ the vessel on their own account. | ||
| Time during which the vessel is off-hire under this charter shall count as part of the charter period except where Charterers declare their option to add off-hire periods under Clause 4 (b). | ||
| (e) | Time during which the vessel is off-hire under this charter shall count as part of the charter period except where Charterers declare their option to add off-hire periods under Clause 4 (b). | |
| (f) | All references to time in this charter party shall be references to local time except where otherwise stated. |
|
Periodical Drydocking |
22 | |||
|
(a) |
Owners have the right and obligation to drydock the vessel at regular intervals of as deemed appropriate by Owners and vessel's classification society that is at least once within a 5 year period. |
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| On each occasion Owners shall propose to Charterers a date on which they wish to drydock the vessel, not less than 90 days before such date, and Charterers shall offer a port for such periodical drydocking and shall take all reasonable steps to make the vessel available as near to such date as practicable. | ||||
| Owners shall put the vessel in drydock as their expense as soon as practicable after Charterers place the vessel at Owners' disposal clear of cargo and cargo stops tank washings and residues. Owners shall be responsible for and pay for the disposal into reception facilitates of such tank washings and residues and shall have the right to retain any monies received therefor, without prejudice to any claim for loss or cargo under any Bill of Lading on this charter, | ||||
| (b) | If a periodical drydocking is carried out in the port offered by Charterers (which must have suitable accommodation for the purpose and reception facilities for tank washings and residues), the vessel shall be off-hire from the time she arrives at such port until drydocking is completed and she is in every way ready to resume Charterers' service and is at the position at which she went off-hire or a position no less favourable to Charterers, whichever she first attains. However, | |||
| (i) | provided that Owner exercise due diligence in gas-freeing, any time lost in gas-freeing to the standard required for entry into drydock for cleaning and painting the hull shall not count as off-hire, whether lost on passage to the drydocking port or after arrival there (notwithstanding Clause 21), and | |||
| (ii) | any additional time lost in further gas-freeing to meet the standard required for hot work or entry to cargo tanks shall count as off-hire, whether lost on passage to the drydocking port or after arrival there. | |||
| Any time which, but for sub-Clause (i) above, would be off-hire, shall not be included in any calculation under Clause 24. | ||||
| The expenses of gas-freeing, including without limitation the cost of bunkers, shall be for Owners account. | ||||
Code word for this Charter Party
"SHELLTIME 4"
Issued December 1984 amended December 2003
|
(c) |
If Owners require the vessel, instead of proceeding to be offered port, to carry out periodical drydocking at a special port selected by them, the vessel shall be off-hire from the time when she is released to proceed to the special port until she next presents for loading in accordance with Charterers' instructions, provided, however, that Charterers shall credit Owners with the time which would have been taken on passage at the service speed had the vessel not proceeded to drydock. All fuel consumed shall be paid for by Owners but Charterers shall credit Owners with the value of the fuel which would have been used on such notional passage calculated at the guaranteed daily consumption for the service speed, and shall further credit Owners wish any benefit they may gain in purchasing bunkers at the special port. |
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| (d) | Charterers shall, insofar as cleaning for periodical drydocking may have reduced the amount of tank-cleaning necessary to meet Charterers' requirements, credit Owners with the value of any bunkers which Charterers calculate to have been saved thereby, whether the vessel drydocks at an offered or a special port. |
| Ship Inspection |
23 |
Charterers shall have the right at any time during the charter period to make such inspection of the vessel as they may consider necessary. This right may be exercised as often and at such intervals as Charterers in their absolute discretion may determine and whether the vessel is in port or on passage. Owners affording all necessary co-operation and accommodation on board provided, however; |
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| (a) | that neither the exercise nor the non-exercise, nor anything done or not done in the exercise or non-exercise, by Charterers of such right shall in any way reduce the master's or Owner's authority over, or responsibility to Charterers or third parties for, the vessel and every aspect of her operation, nor increase Charterers' responsibilities to Owners or third parties for the same; and; | ||||
| (b) | that Charterers shall not be liable for any act, neglect or default by themselves their servants or agents in the exercise or non-exercise of the aforesaid right. | ||||
|
Detailed Descriptionand Performances |
24 | ||||
| (a) | Owners guarantee that the Speed and consumption of the vessel shall be as follows: | ||||
Code word for this Charter Party
"SHELLTIME 4"
Issued December 1984 amended December 2003
 |
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|
PER VESSEL DESCRIPTION PROVIDED FOR EACH SHIP
S/c as per attached (ABOVE) which includes consumption for scrubber.
Owner will guarantee consumptions as per attached for 13 knots laden and ballast AND 12.5+13.5 KTS LADEN and BALLAST.
FOLLOWING TO APPLY TO FIGURES IN CONSUMPTION TABLES:
All speed/consumption figures (12.5, 13, 13.5) are to be considered as WARRANTED FIGURES but about (+/- 0.5 knot for speed and +/- 5% for consumption) and always subject to no MORE THAN 0.5 KTS adverse currents max up to and including Beaufort force 4 and max sea state Douglas 3.
(ie delete reference to no swell, and delete "good weather and smooth seas" from table as these parameters are already defined as up to and including bf4 and dss3 and max 0.5kts adverse currents)
The average speeds and bunker consumptions shall for the purposes of this Clause 24 be calculated by reference to the observed distance from full away on sea passage (FAOSP) till end of sea passage (EOSP) on all sea passages over 24 hours during each period stipulated in Clause 24 (c), but excluding any time during which the vessel is (or but for Clause 22 (b) (i) would be) off-hire and also excluding "Adverse Weather Periods", being (i) any periods during which reduction of speed is necessary for safety in congested waters or in poor visibility and/ or transiting canals, and/ or when complying with slow steaming instructions that may have been issued by Charterers (ii) any days, noon to noon, when winds exceed force 8.4 on the Beaufort Scale for more than 12 hours.
If at any time following the date upon which the vessel enters into service under this charter the performance of the vessel falls below the performance guaranteed in Clause 24 (a) as amended then if such shortfall results. |
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| (i) | from a reduction in the average speed of the vessel, compared to the speed guaranteed in Clause 24 (a), then an amount equal to the value at the hire rate of the time so lost , shall be deducted from the hire paid; | |||
| (ii) | from an increase in the total bunkers consumed, compared to the speed guaranteed in Clause 24 (a) then an amount equal to the value at the hire rate of the time so lost or gained, as the case may be, shall be deducted from or added to the hire paid. | |||
| The deduction from hire so calculated for laden and ballast mileage respectively shall be adjusted to take into account the mileage steamed in each such condition during Adverse Weather Periods, by dividing such deduction by the number of miles over which the performance has been calculated and multiplying by the same number of miles plus the miles steamed during the Adverse Weather Periods, in order to establish the total deduction from hire to be made for such period. Any overperformance to be credited against any underperformance if any. | ||||
Code word for this Charter Party
"SHELLTIME 4"
Issued December 1984 amended December 2003
| Reduction of hire under the foregoing sub-Clause (b) shall be without prejudice to any other remedy available to Charterers. | ||||
| (c) | Calculations under this Clause 24 shall be made for the yearly periods terminating on each successive anniversary of the date on which the vessel enters service, and for the period between the last such anniversary and the date of termination of this charter if less than a year. Claims in respect of reduction of hire arising under this Clause during the final year or part year of the charter period shall in the first instance be settled in accordance with Charterers' estimate made latest two months after the end of the charter period. Any necessary adjustment after this charter terminates shall be made by payment to Owners to Charterers. | |||
|
Over-performance not to be claimed by the Owners.
Above consumptions exclude manoeuvring within harbours, inland waterways, canals, etc. or under national lor international rules or regulations and are basis wind force not exceeding Beaufort 4.
and shall be pro-prated between the speeds shown.
The service speed of the vessel is 13.0 knots laden and 13 knots in ballast and in the absence of Charterers' orders to the contrary the vessel shall proceed at the service speed. However if more than one laden and one ballast speed are shown I the table above Charterers shall have the right to order the vessel to steam at any speed within the range set out in the table (the "ordered speed").
|
||||
Code word for this Charter Party
"SHELLTIME 4"
Issued December 1984 amended December 2003
| Salvage |
25 |
Subject to the provisions of Clause 21 hereof, all loss of time and all expenses (excluding any damage to or loss of the vessel or tortious liabilities to third parties) incurred in saving or attempting to save life or in successful or unsuccessful attempts at salvage shall be borne equally by Owners and Charterers provided that Charterers shall not be liable to contribute towards any salvage payable by Owners arising in any way out of services rendered under this Clause 25. |
|
| All salvage and all proceeds from derelicts shall be divided equally between Owners and Charterers after deducting the master's, officers' and crew's share. | |||
| Lien | 26 | Owners shall have a lien upon all cargoes and all sub-hires freights, sub-freights and demurrage for any amounts due under this charter; and Charterers shall have a lien on the vessel for all monies paid in advance and not earned, and for all proven claims for damages arising from any breach by Owners of this charter. | |
| Exceptions | 27 |
|
(a) |
The vessel, her master and Owners shall not, unless otherwise in this charter expressly provided, be liable for any loss or damage or delay or failure arising or resulting from any act, neglect or default of the master, pilots, mariners or other servants of Owners in the navigation or management of the vessel; fire, unless caused by the actual fault or privity of Owners; collision or stranding; dangers and accidents of the sea; explosion, bursting of boilers, breakage of shafts or any latent defect in hull, equipment or machinery; provided, however, that Clause 1, 2, 3 and 24 hereof shall be unaffected by the foregoing. Further, neither the vessel, her master or owners, nor Charterers shall, unless otherwise in this charter expressly provided, be liable for any loss or damage or delay or failure in performance hereunder arising or resulting from act of God, act of war, seizure under legal process, quarantine restrictions, strikes, lock-outs, riots, restraints of labour, civil commotions or arrest or restraint of princes, rulers or people. |
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|
(b) |
The vessel shall have liberty to sail with or without pilots, to tow or go to the assistance of vessels in distress and to deviate for the purpose of saving life or property. |
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|
(c) |
Clause 27 (a) shall not apply to, or affect any liability of Owners or the vessel or any other relevant person in respect of; |
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| (i) | loss or damage caused to any berth, jetty, dock, dolphin, buoy, mooring line, pipe or crane or other works or equipment whatsoever at or near any place to which the vessel may proceed under this charter, whether or not such works or equipment belong to Charterers, or | ||
| (ii) | any claim (whether brought by Charterers or any other person) arising out of any loss of or damage to or in connection with cargo. All such claims shall be subject to the Hague – Visby Rules or the Hague Rules or the Hamburg Rules, as the case may be, which ought pursuant to Clause 38 hereof to have been incorporated to the relevant Bill of Lading (whether or not such Rules were so incorporated) or, if no such Bill of Lading is issued, to the Hague – Visby Rules unless the Hamburg Rules compulsorily apply in which case to the Hamburg Rules. | ||
| (d) | In particular and without limitation, the foregoing subsections (a) and (b) of this Clause shall not apply to or in any way affect any provisions in this charter relating to off-hire or to reduction of hire. | ||
| Injurious Cargoes |
28 |
No acids, explosives or cargoes injurious to the vessel shall be shipped and without prejudice to the foregoing any damage to the vessel caused by the shipment of any such cargo, and the time taken to repair such damage, shall be for Charterers' account. No voyage shall be undertaken, nor any goods or cargoes loaded, that would expose the vessel to capture or seizure by rulers or governments. |
Code word for this Charter Party
"SHELLTIME 4"
Issued December 1984 amended December 2003
| Grade of Bunkers |
29 |
Charterers shall supply fuel oil with a maximum viscosity of 380 centistokes at 50 degrees centigrade and/or marine gasoil for main propulsion and fuel oil with a maximum viscosity of 380 centistokes at 50 degrees centigrade and/or gasoil for the auxiliaries. If Owners require the vessel to be supplied with more expensive bunkers they shall be liable for the extra cost thereof. |
|
| Charterers warrant that all bunkers provided by them in accordance herewith shall be of a quality complying with the latest ISO Standard 8217 for Marine Residual Fuels and Marine Distillate Fuels as Applicable PROVIDED AVAILABLE, IF NOT THEN CHARTERERS SHALL BE ALLOWED TO DELIVERY LESSER SPECS. OWNERS AGREE TO ASSESS BIO BUNKERS ON A CASE BY CASE BASIS IN GOOD FAITH AND ALLOW CHARTERERS TO SUPPLY BIO FUELS PROVIDED TECHNICALLY AND REGULATORY FEASIBLE. | |||
| Disbursements | 30 | Should the master require advances for ordinary disbursements at any port, Charterers or their agents shall make such advances to him, in consideration of which Owners shall pay a commission of two and a half per cent, and all such advances and commission shall be deducted from hire. | |
| Laying-up | 31 | – | |
| Requisition | 32 | Should the vessel be requisitioned by any government, de facto or de jure, during the period of this charter, the vessel shall be off-hire during the period of such requisition and may hire paid by such Governments in respect of such requisition period shall be for Owners' account. Any such requisition period shall count as part of the charter period. | |
| Outbreak of War |
33 | If war or hostilities break out between any THREE or more of the following countries: U.S.A, the countries or republics have been part of the former U.S.S.R (except the declaration of war or hostilities solely between any THREE or more of the countries or republics having been part of former USSR shall be exempted), P.R.C., U.K., Netherlands, Singapore, Greece then both Owners and Charterers shall have the right to cancel this charter | |
| Additional War Expenses |
34 | If the vessel is ordered to trade in areas where there is war (de facto or de jure) or threat of war or if the area including transit thereof is subject to an additional premium by vessels underwriters, Charterers shall reimburse Owners for any additional insurance premia, against Owners written documentation, including but not limited to AWRP, War Loss of Hire, Kidnap and Ransom, crew bonuses and other expenses which are reasonably incurred by Owners as a consequence of such orders, provided that Charterers are given notice of such expenses as soon as practicable and in any event before such expenses are incurred, and provided further that Owners obtain from their insurers a waiver or any subrogated rights against Charterers in respect of any claims by Owners under their war risk insurance arising out of compliance with such orders. | |
| Any payments by Charterers under this clause will only be made against proven documentation. Any discount or rebate refunded to Owners, for whatever reason, in respect of additional war risk premium shall be passed on to Charterers. | |||
| “ “” “” “” “” “”’ |
Code word for this Charter Party
"SHELLTIME 4"
Issued December 1984 amended December 2003
| With reference to the Bimco war risk clause herein, it is understood and agreed that any payments made to owners by underwriters for loss of hire in case of seizure by pirates, shall be offset against any hire payments made by charts. | ||||
| List of requested documents below: | ||||
| - | Copy of proof for insured value i.e. certificate or similar showing same | |||
| - | Original invoice from underwriters or insurance broker’s invoice showing amount charged | |||
| - | Proof of discount granted or no claims bonus | |||
| War Risks | 35 | |||
| (a) | The master shall not be required or bound to sign Bills of Lading for any place which in his or Owners’ reasonable opinion is dangerous or impossible for the vessel to enter or reach owing to any blockade, war, hostilities, warlike operations, civil war, civil commotions or revolutions. | |||
| (b) | If in the reasonable opinion of the master of Owners it becomes, for any of the reasons set out in Clause 35(a) or by the operation of international law, dangerous, impossible or prohibited for the vessel to reach or enter, or to load or discharge cargo at, any place to which the vessel has been ordered pursuant to this charter (a “place of peril”), then Charterers or their agents shall be immediately notified in writing or by radio messages, and Charterers shall thereupon have the right to order the cargo, or such part of it as may be affected, to be loaded or discharged, as the case may be, at any other place within the trading limits of this charter (provided such other place is not itself a place of peril). If any place of discharge is or becomes a place of peril, and no orders have been received from Charterers or their agents within 48 hours after dispatch of such messages, then Owners shall be at liberty to discharge the cargo or such part of it as may be affected at any place which they or the master may in their or his discretion select within the trading limits of this charter and such discharge shall be deemed to be due fulfilment of Owners’ obligations under this charter so far as cargo so discharged is concerned. | |||
| (c) | The vessel shall have liberty to comply with any directions or recommendations as to departure, arrival, routes, ports of call, stoppages, destinations, zones, waters, delivery or in any other wise whatsoever given by the government of the state under whose flag the vessel sails or any other government or local authority or by any person or body acting or purporting to act as or with the authority of any such government or local authority including any de facto government or local authority or by any person or body acting or purporting to act as or with the authority of such government or local authority or by any committee or person having under the terms of the war risks insurance on the vessel the right to give any such directions or recommendations. If by reason of or in compliance with any such directions or recommendations anything is done or is not done, such shall not be deemed a deviation. If by reason of or in compliance with any such direction or recommendation the vessel does not proceed to any place of discharge to which she has been ordered pursuant to this charter, the vessel may proceed to any place which the master or Owners in his or their discretion select and there discharge the cargo or such part of it as may be affected. Such discharge shall be deemed to be due fulfilment of Owners obligations under this charter so far as cargo or discharged is concerned. | |||
| Charterers shall procure that all Bills of Lading issued under this charter shall contain the Provisions of Conwartime 2013. | ||||
| Both to Blame Collision Clause |
36 | If the liability for any collision in which the vessel is involved while performing this charter falls to be determined in accordance with the laws of the United States of America, the following provision shall apply: | ||
| "If the ship comes into collision with another ship as a result of the negligence of the other ship and any act, neglect or default of the master, mariner, pilot or the servants of the carrier in the navigation or in the management of the ship, the owners of the cargo carried hereunder will indemnify the carrier against all loss, or liability to the other or non-carrying ship or her owners in so far as such loss or liability represents loss of, or damage to, or any claim whatsoever of the owners of the said cargo, paid or be payable by the other non-carrying ship or her owners to the owners of the said cargo and set off, recouped or recovered by the other non-carrying ship or her owners as part of their claim against the carrying ship or carrier." | ||||
Code word for this Charter Party
"SHELLTIME 4"
Issued December 1984 amended December 2003
| "The foregoing provisions shall also apply where the owners, operators or those in charge of any ship or ships or objects other than, or in addition to, the colliding ships or objects are at fault in respect of a collision or contact." | ||||
| Charterers shall procure that all Bills of Lading issued under this charter shall contain a provision in the foregoing terms to be applicable where the liability for any collision in which the vessel is involved falls to be determined in accordance with the laws of the United States of America. | ||||
| New Jason Clause |
37 | General average contributions shall be payable according to the York/Antwerp Rules, 1994, as amended from time to time, and shall be adjusted in London in accordance with English law and practice but should adjustment be made in accordance with the law and practice of the United States of America, the following provision shall apply: | ||
| "In the event of accident, danger, damage or disaster before or after the commencement of the voyage, resulting from any cause whatsoever, whether due to negligence or not, for which, or for the consequence of which, the carrier is not responsible by statute, contract or otherwise, the cargo shippers, consignees or owners of the cargo shall contribute with the carrier in general average to the payment of any sacrifices, losses or expenses of a general average nature that may be made or incurred and shall pay salvage and special charges incurred in respect of the cargo." | ||||
| If a salving ship is owned or operated by the carrier, salvage shall be paid for as fully as if the said salving ship or ships belonged to strangers. Such deposit as the carrier or his agents may deem sufficient to cover the estimated contribution of the cargo and any salvage and special charges thereon shall, if required, be made by the cargo, shippers, consignees or owners of the cargo to the carrier before delivery." | ||||
| Charterers shall procure that all Bills of Lading issued under this charter shall contain a provision in the foregoing terms, to be applicable where adjustment of general average is made in accordance with the laws and practice of the United States of America. | ||||
| Clause Paramount |
38 | Charterers shall procure that all Bills of Lading issued pursuant to this charter shall contain the following: | ||
|
"(1) Subject to sub-clause (2) or (3) hereof, this Bill of Lading shall be governed by, and have effect subject to, the rules contained in the International Convention for the Unification of Certain Rules relating to Bills of Lading signed at Brussels on 25th August 1924 (hereafter the "Hague Rules") as amended by the Protocol signed at Brussels on 23rd February 1968 (hereafter the "Hague-Visby Rules"). Nothing contained herein shall be deemed to be either a surrender by the carrier of any of his rights or immunities or any increase of any of his responsibilities or liabilities under the "Hague-Visby Rules".
"(2) If there is a governing legislation which applies to the Hague Rules compulsorily to this Bill of Lading to the exclusion of the Hague-Visby Rules, then this Bill of Lading shall have effect subject to the Hague Rules. Nothing herein contained shall be deemed to be either a surrender by the carrier of any of his rights or immunities or an increase of any of his responsibilities or liabilities under the Hague Rules."
"(3) If there is governing legislation which applies the United Nations Convention on the Carriage of Goods by Sea 1978 (hereafter the Hamburg Rules) compulsorily to this Bill of Lading, to the exclusion of the Hague-Visby Rules, then Bill of Lading shall have effect subject to the Hamburg Rules. Nothing therein contained shall be deemed to be either a surrender by the carrier of any of his rights or immunities or an increase of any of his responsibilities or liabilities under the Hamburg Rules."
"(4) If any term of this Bill of Lading is repugnant to the Hague-Visby Rules, or Hague Rules, or Hamburg Rules, as applicable, such term shall be void to that extent but no further." "Nothing in this Bill of Lading shall be construed as in any way restricting, excluding or waiving the right of any relevant party or person to limit his liability under any available legislation and/or law." This Charter shall be subject to Clause Paramount. |
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| Insurance/ ITOPF |
39 | Owners warrant that the vessel is now, and will, throughout the duration of the charter: | ||
| (a) | be owned or demise chartered by a member of the International Tanker Owners Pollution Federation Limited. | |||
Code word for this Charter Party
"SHELLTIME 4"
Issued December 1984 amended December 2003
| (b) | be properly entered in BRITANNIA P&I Club P and I Club, being a member of the International Group of P and I Clubs; | ||||
| (c) | have in place insurance cover for oil pollution for the maximum on offer through the International Group of P&I Clubs but always a minimum of United States Dollars 1,000,000,000 (one thousand million); | ||||
| (d) | have in full force and effect Hull and Machinery insurance placed through reputable brokers on Institute Time Clauses or equivalent for the value of United States Dollars TBA as from time to time may be amended with Charterers approval, which shall not be unreasonably withheld. | ||||
|
Owners will provide, within a reasonable time following a request from Charterers to do so, documented evidence of compliance with the warranties given in this Clause 39. |
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| Export Restrictions |
40 | The master shall not be required or bound to sign Bills of Lading for the carriage of cargo to any place to which export of such cargo is prohibited under the laws, rules or regulations of the country in which the cargo was produced and/or shipped. | |||
| Charterers shall procure that all Bills of Lading issued under this charter shall contain the following clause: | |||||
| "If any laws, rules or regulations applied by the government of the country in which the cargo was produced and/or shipped, or any relevant agency thereof, impose a prohibition on export of the cargo to the place of discharge designated in or ordered under this Bill of Lading, carriers shall be entitled to require cargo owners forthwith to nominate an alternative discharge place for the discharge of the cargo, or such part of it as may be affected, which alternative place shall not be subject to the prohibition, and carriers shall be entitled to accept orders from cargo owners to proceed to and discharge at such alternative place. If Cargo owners fail to nominate an alternative place within 72 hours after they or their agents have received from carriers notice of such prohibition, carriers shall be at liberty to discharge the cargo or such part of it as may be affected by the prohibition at any safe place on which they or the master may in their or his absolute discretion decide and which is not subject to the prohibition, and such discharge shall constitute due performance of the contract contained in this Bill of Lading so far as the cargo so discharged is concerned". | |||||
| The foregoing provision shall apply mutates mutandis to this charter, the references to a Bill of Lading being deemed to be references to this charter. | |||||
| Business Principles |
41 | ||||
| Drugs and Alcohol |
42 | ||||
| (a) | Owners warrant that they have in force an active policy covering the vessel which meets or exceeds the standards set out in the "Guidelines for the Control of Drugs and Alcohol on Board Ship" as published by the Oil Companies International Marine Forum (OCIMF) dated January 1990 (or any subsequent modification, version, or variation of these guidelines) and that this policy will remain in force throughout the charter period, and owners will exercise due diligence to ensure the policy is complied with. | ||||
| (b) | Owners warrant that the current policy concerning drugs and alcohol on board is acceptable to ExxonMobil and will remain so throughout the charter period. | ||||
| Oil Major Acceptability |
43 | ||||
| Pollution and Emergency Response |
44 | Owners are to advise Charterers or organizational details and names of Owners personnel together with their relevant telephone/facsimile/e-mail/telex numbers, including the names and contact details of Qualified Individuals for OPA 90 response, who may be contacted on a 24 hour basis in the event of oil spills or emergencies. | |||
Code word for this Charter Party
"SHELLTIME 4"
Issued December 1984 amended December 2003
| ISPS Code/US MTSA 2002 |
45 | ||||
| (a) | |||||
| (i) | From the date of coming into force of the International Code for the Security of Ships and of Port Facilities and the relevant amendments to Chapter XI of SOLAS (ISPS Code) and the US Maritime Transportation Security Act 2002 (MTSA) in relation to the Vessel and thereafter during the currency of this charter, Owners shall procure that both the Vessel and "the Company" (as defined by the ISPS Code) and the owner (as defined by the MTSA) shall comply with the requirements of the ISPS Code relating to the Vessel and "the Company" and the requirements of MTSA relating to the vessel and the owner. Upon request Owners shall provide documentary evidence of compliance with this Clause 45(a)(i). | ||||
| (ii) | Except as otherwise provided in this charter, loss, damage, expense or delay, caused by failure on the part of Owners or "the Company"/owner to comply with the requirements of the ISPS Code/MTSA or this Clause shall be for Owners' account. | ||||
| (b) | |||||
| (i) | Charterers shall provide Owners/Master with their full style contact details and shall ensure that the contact details of all sub-charterers are likewise provided to Owners/Master. Furthermore, Charterers shall ensure that all sub-charter parties they enter into during the period of this charter contain the following provision: | ||||
| "The Charterers shall provide the Owners with their full style contact details and, where sub-letting is permitted under the terms of the charter party, shall ensure that the contact details of all sub-charterers are likewise provided to the Owners". | |||||
| (ii) | Except as otherwise provided in this charter, loss, damage, expense or delay, caused by failure on the part of Charterers to comply with this sub-Clause 45(b) shall be for Charterers' account. | ||||
| (c) | Notwithstanding anything else contained in this charter cost or expenses related to security regulations or measures required by the port facility or any relevant authority in accordance with the ISPS Code/MTSA including, but not limited to, security guards, launch services, tug escorts, port security fees or taxes and inspections, shall be for Charterers' account, unless such costs or expenses result solely from Owners' negligence in which case such costs or expenses shall be for Owners account. All measures required by Owners to comply with the security plan required by the ISPS Code/MTSA shall be for Owners' account. | ||||
| (d) | Notwithstanding any other provision of this charter, the vessel shall not be off-hire where there is a loss of time caused by Charterers failure to comply with the ISPS Code/MTSA (when in force). | ||||
| (e) | If either party makes any payment which is for the other party's account according to this Clause, the other party shall indemnify the paying party. | ||||
| Law and Litigation |
46 | (a) | This charter shall be construed and the relations between the parties determined in accordance with the laws of England. | ||
| (b) | All dispute arising under this charter shall be referred to Arbitration in London in accordance with the Arbitration Act 1996 (or any re-enactment or modification thereof for the time being in force) subject to the following appointment procedure: | ||||
| (i) | The parties shall jointly appoint a sole arbitrator not later than 28 days after service of a request in writing by either party to do so. | ||||
| (ii) | If the parties are unable or unwilling to agree the appointment of a sole arbitrator in accordance with (i) then each party shall appoint one arbitrator, in any event not later than 14 days after receipt of a further request in writing by either party to do so. The two arbitrators so appointed shall appoint a third arbitrator before any substantive hearing or forthwith if they cannot agree on a matter relating to the arbitration. | ||||
Code word for this Charter Party
"SHELLTIME 4"
Issued December 1984 amended December 2003
| (iii) | If a party fails to appoint an arbitrator within the time specified in (ii) (the Party in Default), the party who has duly appointed his arbitrator shall give notice in writing to the Party in Default that he proposes to appoint his arbitrator to act as sole arbitrator. | ||||
| (iv) | If the Party in Default does not within 7 days of the notice given pursuant to (iii) make the required appointment and notify the other party that he has done so the other party may appoint his arbitrator as sole arbitrator whose award shall be binding on both parties as if he had so appointed by agreement | ||||
| (v) | Any Award of the arbitrator(s) shall be final and binding | ||||
| (vi) | For the purposes of this clause 46(b) any requests or notices in writing shall be sent by fax, e-mail or telex and shall be deemed received on the day of transmission. | ||||
| (c) | It shall be a condition precedent to the right of any party to a stay of any legal proceedings in which maritime property has been, or may be, arrested in connection with a dispute under this Charter, that that party furnishes to the other party security to which that other party would have been entitled in such legal proceedings in the absence of a stay. | ||||
| Confidentiality | 47 | All terms and conditions of this charter arrangement shall be kept private and confidential. | |||
| Construction | 48 | The side headings have been included in this charter for convenience of reference and shall in no way affect the construction hereof. | |||
| Appendix A: | OCIMF Vessel Particulars Questionnaire for the vessel, as attached, shall be incorporated herein. | |
| Additional Clauses: | As attached, shall be incorporated herein. |
|
SIGNED FOR OWNERS |
SIGNED FOR CHARTERERS | |||
| Malibu Warrior Inc. | Trafigura Maritime Logistics PTE Ltd. | |||
|
FULL NAME |
FULL NAME | |||
| Evangelos Ikonomou | ||||
| POSITION | POSITION | |||
| Attorney in fact | ||||
| /s/ Evangelos Iokomou | /s/ V. Georgopoulos | |||
|
A.
|
GENERAL TERMS
|
3
|
|
B.
|
TRAFIGURA ADDITIONAL TERMS TO SHELLTIME 4
|
3
|
|
49.
|
ON HIRE/OFF HIRE SURVEYS
|
3
|
|
50.
|
INSPECTIONS
|
3
|
|
51.
|
INSTRUCTIONS
|
4
|
|
52.
|
CONTACT DETAILS
|
4
|
|
53.
|
5
|
|
|
54.
|
OFF HIRE PROVISIONS
|
5
|
|
55.
|
PUMPING CLAUSE
|
5
|
|
56.
|
DRUG AND ALCOHOL CLAUSE
|
6
|
|
57.
|
SHIP-TO-SHIP LIGHTERING
|
6
|
|
58.
|
BUNKERS
|
7
|
|
59.
|
ETA/TRACKING
|
8
|
|
60.
|
ELIGIBILITY AND COMPLIANCE
|
9
|
|
61.
|
OIL MAJORS APPROVAL
|
10
|
|
62.
|
INERT GAS SYSTEM
|
11
|
|
63.
|
BALLAST CLAUSE
|
11
|
|
64.
|
BROKERAGE COMMISSION CLAUSE
|
11
|
|
65.
|
IN-TRANSIT LOSS CLAUSE
|
12
|
|
66.
|
RETURN INSURANCE CLAUSE
|
12
|
|
67.
|
CARGO RETENTION CLAUSE
|
12
|
|
68.
|
HEATING CLAUSE
|
12
|
|
69.
|
DELETED
|
13
|
|
70.
|
CHARTERPARTY ADMINISTRATION
|
13
|
|
71.
|
CARGO OPERATIONS
|
13
|
|
72.
|
VESSEL MANAGEMENT CLAUSE
|
13
|
|
73.
|
AMS CLAUSE
|
14
|
|
74.
|
EU Advance Cargo Declaration Clause for Time Charter Parties
|
14
|
|
75.
|
SBT Clause
|
15
|
|
C.
|
OWNERS ADDITIONAL CLAUSES
|
16
|
|
1.
|
ISPS CLAUSE FOR TIME CHARTER PARTIES
|
16
|
|
2.
|
BUNKER QUALITY & SUPPLY
|
17
|
|
3.
|
BUNKER FUEL SULPHUR CONTENT CLAUSE
|
18
|
|
4.
|
SANCTIONS RELATED TRADING EXCLUSION
|
19
|
|
5.
|
Trafigura Sanctions Clause for Time Charterparties
|
19
|
|
6.
|
BIMCO Designated Entities Clause
|
22
|
|
7.
|
Gulf Of Guinea HRA
|
23
|
|
8.
|
STORAGE & UNDERWATER CLEANING CLAUSE
|
25
|
|
9.
|
WAR RISKS / PIRACY
|
26
|
|
10.
|
EBOLA CLAUSE
|
28
|
|
11.
|
ICE CLAUSE
|
29
|
|
12.
|
ANTI- BRIBERY, ANTI-CORRUPTION CLAUSE (ABC)
|
29
|
|
13.
|
SCRUBBER CLAUSE / EXHAUST GAS CLEANING SYSTEM
|
30
|
|
14.
|
BIMCO COVID-19 CREW CHANGE CLAUSE FOR TIME CHARTER PARTIES 2020:
|
31
|
|
15.
|
INFECTIOUS DISEASE CLAUSE
|
31
|
|
16.
|
OWNERS UNDER KEEL CLEARANCE AND AIR CLEARANCE POLICY
|
33
|
|
17.
|
AGM Clause
|
33
|
|
18
|
AIRDRAFT
|
33
|
|
19
|
KYC
|
34
|
|
20
|
LOIs
|
34
|
|
|
1. |
Charter to be based on Shelltime 4 Charter Party deleting any references to Shell International Trading and Shipping Company Limited and replacing with Trafigura Maritime Logistics Pte Ltd.
|
|
|
2. |
All negotiations and details of this Charter are to remain private and confidential by all parties concerned, except so far as concerns such information as is required to be disclosed by
either party to its employees, auditors, lawyers and affiliates who have a need to know such information in connection with the performance of this Charter, to any court or governmental authority requiring such, or to any other appropriate
third party to the extent necessary to comply with any legal or governmental requirement or to give commercial effect to the Charter.
|
|
|
3. |
In the event of a conflict of terms, the provisions of these Additional Clauses and Amendments to Shelltime 4 shall prevail over those of the standard Shelltime 4 form to the extent of such
conflict but no further.
|
|
|
4. |
In each and every case where there is reference in this Charter to correspondence by “telex”, it shall be read as correspondence by “e-mail or telex”.
|
| 49. |
ON HIRE/OFF HIRE SURVEYS
|
| 50. |
INSPECTIONS
|
| (i) |
The Vessel's hull, machinery and equipment and living spaces;
|
| (ii) |
The Vessel's operational procedures both in port and at sea; and
|
| (iii) |
The Vessel's certificates, records and documents
|
| 51. |
INSTRUCTIONS
|
| 52. |
CONTACT DETAILS
|
| 53. |
TANK CLEANING
|
| 54. |
OFF HIRE PROVISIONS
|
| 55. |
PUMPING CLAUSE
|
| 56. |
DRUG AND ALCOHOL CLAUSE
|
| 57. |
SHIP-TO-SHIP LIGHTERING
|
| 58. |
BUNKERS
|
| 59. |
ETA/TRACKING
|
| i. |
Immediately on leaving the final port of call on the previous voyage of the time and date of the vessel's expected arrival at the first loading port and shall further advise Charterers 72,
48, 36, and 24 hours before the expected arrival time/date.
|
|
|
ii. |
Immediately after departure from the final loading port, of the vessel's expected time of arrival at the first discharging port or the area at sea to which the vessel has been instructed to
proceed for wireless orders, and confirm or amend such advice not later than 72, 48, 36 and 24 hours before the vessel is due at such port or area;
|
|
|
iii. |
Immediately of any variation of more than six hours from expected times of arrival at loading or discharging ports, Quoin Island or such area at sea to Charterers;
|
|
|
iv. |
Immediately if any situation occurs after the date of this charter party which may result in tendering later than the cancelling date, or in damage to the vessel or cargo, or in tardy
performance of the voyage
|
| 60. |
ELIGIBILITY AND COMPLIANCE
|
| 61. |
OIL MAJORS APPROVAL
|
| 62. |
INERT GAS SYSTEM
|
| 63. |
BALLAST CLAUSE
|
| 64. |
BROKERAGE COMMISSION CLAUSE
|
| 65. |
IN-TRANSIT LOSS CLAUSE
|
| 66. |
RETURN INSURANCE CLAUSE
|
| 67. |
CARGO RETENTION CLAUSE
|
| 68. |
HEATING CLAUSE
|
| 69. |
DELETED
|
| 70. |
CHARTERPARTY ADMINISTRATION
|
| 71. |
CARGO OPERATIONS
|
|
|
i. |
Blend and/or circulate cargo onboard
|
|
|
ii. |
Load dyed cargo, provided the dye is customarily used or is suitable for use in said cargo
|
|
|
iii. |
Dye the cargo onboard the vessel provided this is carried out or supervised by qualified personnel
|
|
|
iv. |
Blend additives to the cargo at any point during the voyage, provided that the additive is one which is customarily used or is suitable for use in said cargo and carried out or supervised
by qualified personnel
|
|
|
v. |
Carry on board the vessel drums or other suitable containers of additive
|
|
|
vi. |
To breach vessel’s natural segregation
|
|
|
vii. |
To load and discharge freshwater or seawater shore line flush/plug before, during or after a loading operation
|
| 72. |
VESSEL MANAGEMENT CLAUSE
|
| 73. |
AMS CLAUSE
|
|
|
i. |
Have in place a SCAC (Standard Carrier Alpha Code);
|
|
|
ii. |
Have in place an ICB (International Carrier Bond); and
|
|
|
iii. |
Submit a cargo declaration by AMS (Automated Manifest System) to the US Customs.
|
| 74. |
EU Advance Cargo Declaration Clause for Time Charter Parties
|
| 75. |
SBT Clause
|
| 1. |
ISPS CLAUSE FOR TIME CHARTER PARTIES:
|
| 2. |
BUNKER QUALITY & SUPPLY:
|
| 3. |
BUNKER FUEL SULPHUR CONTENT CLAUSE:
|
| 4. |
SANCTIONS RELATED TRADING EXCLUSION:
|
| 5. |
Trafigura Sanctions Clause for Time Charterparties
|
| 1.1 |
Owners and Charterers respectively warrant that at the date of this fixture they are not and undertake that throughout the duration of this Charterparty they will not be:
|
| (a) |
the subject of Sanctions; or
|
|
|
(b) |
an Affiliate of, or owned or controlled (whether individually or jointly) by a party or parties, which is/are the subject of Sanctions.
|
| 1.2 |
Each party warrants that, for the duration of the Charterparty, it shall comply with Sanctions applicable to it.
|
| 1.3 |
Notwithstanding anything in this clause to the contrary, neither Owners nor Charterers shall be required to do or omit to do anything which constitutes a violation of or would be in
contravention of, or expose it or the Vessel to risk of designation pursuant to Sanctions applicable to it.
|
| 1.4 |
Owners warrant that:
|
|
|
(a) |
As at the date of this Charterparty:
|
|
|
(i) |
Owners is able to accept the instructions and perform all obligations contemplated under this Charterparty; and
|
|
|
(ii) |
the vessel is able to accept the instructions and perform the services contemplated under this Charterparty.
|
|
|
(b) |
the vessel shall before and at the beginning of this Charterparty and throughout the duration of this Charterparty not be the target of Sanctions, nor be owned or controlled (whether
individually or jointly) by any party or parties, which is/are the subject of Sanctions.
|
| 1.5 |
If at any time during the performance of this Charterparty any Sanctions are changed, or new Sanctions or other trade restrictions are imposed or become effective, or there is a change in
the interpretation of Sanctions, which would result in performance of this Charterparty contravening the provisions of Clause 1.2 or 1.3 then:
|
|
|
(a) |
either party shall be entitled to immediately suspend any affected performance obligation, providing the other party with written notification of the same, and, if appropriate, request or
issue (as the case may be) alternative voyage orders, which shall be given promptly by Charterers, and:
|
|
|
(i) |
Charterers and Owners shall each be liable for 50% of all time for a period of up to 7 (seven) days following such written notification, pending receipt of Charterers' alternative voyage
orders;
|
|
|
(ii) |
thereafter, Charterers shall continue to pay hire and any additional costs that may be due as a result of any change in discharge port(s); and
|
|
|
(b) |
if the circumstances resulting in such suspension continue for more than 7 (seven) days from the date of such written notice and provided that:
|
|
|
(i) |
such circumstances are continuing; and
|
|
|
(ii) |
the nature of the circumstances are such that they go to the root of the parties’ ongoing obligations under this Charterparty, rendering it impossible for the parties to continue to perform
their ongoing obligations under this Charterparty, and which cannot be overcome by the parties taking reasonable measures, whether by issuing revised voyage orders or otherwise, always provided such measures are not in contravention of
Sanctions,
|
| 1.6 |
If at any time during the performance of this Charterparty, Owners become aware that Charterers are in breach of the warranties set out in Clause 1.1 and/or 1.2 (whether or not as a result
of any action and/or omission) then:
|
|
|
(a) |
Owners shall be entitled to immediately suspend any affected performance obligation, providing Charterers with written notification of the same, and, if appropriate, request alternative
voyage orders which shall be given promptly by Charterers, and:
|
|
|
(i) |
Charterers shall be liable for all time pending Owners’ receipt of Charterers’ alternative voyage orders;
|
|
|
(ii) |
thereafter, Charterers shall continue to pay hire and shall be liable for any losses that Owners suffer as a result of any change in discharge port(s); and
|
|
|
(b) |
if the circumstances resulting in such suspension continue for more than 7 days from the date of Owners’ written notice then, provided such circumstances are continuing, Owners shall be
entitled to terminate the Charterparty with immediate effect on written notice to Charterers, save that if cargo is on board, then, prior to such termination, the Vessel shall, provided such is not in contravention of Sanctions, be directed
to a safe port and there discharge the cargo (with termination effective on completion of discharge). Upon termination there shall be no further liability on either party save for any accrued rights or remedies including under this clause.
|
| 1.7 |
If at any time during the performance of this Charterparty, Charterers become aware that Owners are in breach of the warranties set out in Clause 1.1, 1.2 and/or 1.4 (whether or not as a
result of any action and/or omission) then:
|
|
|
(a) |
Charterers shall be entitled to immediately suspend any affected performance obligation, providing Charterers with written notification of the same, and, if appropriate, promptly issue
alternative voyage orders to Owners, and:
|
|
|
(i) |
Charterers shall not be obliged to pay hire pending issuance of Charterers’ alternative voyage orders;
|
|
|
(ii) |
thereafter, Charterers shall continue to pay hire and Owners shall be liable for any losses that Charterers suffer as a result of any change in discharge port(s); and
|
|
|
(b) |
if the circumstances resulting in such suspension continue for more than 7 days from the date of Charterers’ written notice then, provided such circumstances are continuing, Charterers
shall be entitled to terminate the Charterparty with immediate effect on written notice to Owners, save that if cargo is on board, then, prior to such termination, the Vessel shall, provided such is not in contravention of Sanctions, be
directed to a safe port and there discharge the cargo (with termination effective on completion of discharge). Upon termination there shall be no further liability on either party save for any accrued rights or remedies including under this
clause.
|
| 1.8 |
To the extent any payment would be in violation of or otherwise prohibited by Sanctions applicable to a party, any payment obligations arising prior to termination of the Charterparty
(including but not limited to hire) which have been incurred but not yet paid shall continue to be suspended in compliance with Clause 1.3, above, and shall not be affected by such termination.
|
| 1.9 |
In the event that a payment arising pursuant to this Charterparty cannot be made in United States Dollars due to applicable laws or Sanctions, the parties shall review and mutually agree in
writing the applicable payment settlement currency and the relative rate of exchange provided such does not contravene any Sanctions or applicable law, regulation or decree binding upon a party and shall amend, or procure the amendment of the
Charterparty accordingly. The rate of exchange is to be fixed using an internationally recognized and tradable daily fixation, the date of which shall be mutually agreed by the parties. If payment cannot be made in any currency by reason of
Sanctions, the paying party shall place the amount of funds in an interest bearing account until it is able to remit such funds to the receiving party, and the paying party shall account to the receiving party for any interest earned on such
funds.
|
| 1.10 |
For the purposes of this clause:
|
| 6. |
BIMCO Designated Entities Clause
|
| 7. |
Gulf Of Guinea HRA
|
| 8. |
STORAGE & UNDERWATER CLEANING CLAUSE:
|
| 9. |
WAR RISKS / PIRACY:
|
| 10. |
EBOLA CLAUSE:
|
| 11. |
ICE CLAUSE
|
| 12. |
ANTI- BRIBERY, ANTI-CORRUPTION CLAUSE (ABC)
|
| 13. |
SCRUBBER CLAUSE / EXHAUST GAS CLEANING SYSTEM
|
| 1.1 |
Without prejudice to the generality of clause 6, the Vessel shall be delivered with fully functional Certified EGC Technology for her Main and Auxiliary Engines The vessel to always follow
local legislation and regulations related to the use of the Exhaust Gas Cleaning System and Owners shall maintain the Certified EGC Technology in a thoroughly efficient state for and during the Charter Period. After 1st January 2020 any amount of sludge quantities generated as a result of higher than 0.5% Sulphur content in HFO supplied by charterers, to be disposed to shore facilities at charterers’ cost and time.
|
|
|
1.2 |
In the event of a Breakdown:
|
| a. |
Owners shall immediately inform Charterers, advising the extent and expected duration of the Breakdown, and shall during the continuance of the Breakdown, provide the Charterer with
reasonable updates.
|
|
|
b. |
Charterers shall, if necessary and at Owners’ written request, supply at the next convenient bunkering port fuel of such specification and grade that enables the Vessel’s compliance with
MARPOL Annex VI without use of the Certified EGC Technology. Such specification and grade to be notified in writing by Owners and to be in accordance the description in PART 1, Section I.
|
|
|
c. |
Owners shall indemnify Charterers in respect of any liability, loss, damage or expense of whatsoever nature arising out of and/or in connection with any Breakdown, including (but not in any
way limited to) any increased costs relating to fuel (whether pursuant to clause 18.2(b), or as a result of the Vessel burning more fuel or more fuel of a certain specification than would have been the case had there been no Breakdown).
|
|
|
d. |
If any Breakdown continues or is expected to continue for 45 days, then, without prejudice to any other
rights Charterers may have under this Charter, Charterers shall have the option of terminating this Charter by giving notice in writing to Owners. Termination shall take effect from the date on which such notice is received by Owners or from
any later date stated in such notice.
|
|
|
e. |
Upon termination in accordance with this Clause, Owners shall forthwith remit to Charterers any hire paid in advance and not earned as at the date of termination and any other monies owing,
including but not limited to the cost of bunkers on board at the time the Breakdown first occurred.
|
|
|
f. |
For the purposes of this clause and clause 31, “Breakdown” means any situation where the Certified EGC Technology breaks down, becomes unusable, loses certification or no longer conforms to
the relevant requirements of regulation 4 MARPOL Annex VI or such other Flag state accreditation, or fails to provide effective equivalence to the requirements of regulations 14.1 of MARPOL Annex VI when burning fuel her Main and Auxiliary
Engines with sulphur content in excess of 0.5%.
|
| 14. |
BIMCO COVID-19 CREW CHANGE CLAUSE FOR TIME CHARTER PARTIES 2020:
|
| 15. |
INFECTIOUS DISEASE CLAUSE:
|
| 16. |
OWNERS UNDER KEEL CLEARANCE AND AIR CLEARANCE POLICY
|
| 17. |
AGM Clause
|
| To : | [insert name of Owners] | [insert date] |
|
|
The Owners of the [insert name of ship] | |
|
|
[insert address]
|
|
|
|
|
|
| Dear Sirs |
|
|
| Ship: | [insert name of ship] | |
| Charter Party: |
[insert details & date]
|
|
| Voyage: |
[insert load and discharge ports as stated in the bill of lading] | |
| Cargo(es): |
[quantity & type] | |
| Bill of lading: | No. _______ dated ______ issued at ______ |
|
| Bill of lading: | No. _______ dated ______ issued at ______ | |
|
|
i. |
the details from the bill(s) of lading pursuant to which the cargoes were originally loaded, including the nature of the cargo, the original quantity loaded and the date and place of
loading; and
|
|
|
ii. |
the place and date that the blending took place.
|
| To : |
[insert
name of Owners] |
[insert date] |
|
|
The Owners of the [insert name of ship] | |
|
|
[insert address]
|
|
| Dear Sirs |
|
|
| Ship: |
[insert name of ship] | |
| Charter Party: | [insert details & date] | |
| Voyage: | [insert load and discharge ports as stated in the bill of lading] | |
| Cargo(es): | [quantity & type] | |
| Bill of lading: | No. _______ dated _______ issued at _______ |
|
| To : | [insert name of Owners] | [insert date] |
|
|
The Owners of the [insert name of ship] | |
|
|
[insert address] | |
|
|
|
|
| Dear Sirs |
|
|
| Ship: | [insert name of ship] | |
| Charter Party: | [insert details & date] | |
| Voyage: | [insert
load and discharge ports as stated in the bill of lading] |
|
| Cargo(es): |
[quantity & type] | |
| Bill of lading: | No. ________ dated ______ issued at ______ |
|
| Bill of lading: | No. ________ dated ______ issued at ______ | |
| To : | [insert name of Owners] | [insert date] |
|
|
The Owners of the [insert name of ship] | |
|
|
[insert address] | |
|
|
|
|
| Dear Sirs |
|
|
| Ship: | [insert name of ship] | |
| Charter Party: | [insert details & date] | |
| Voyage: | [insert
load and discharge ports as stated in the bill of lading] |
|
| Cargo(es): |
[quantity & type] | |
| Bill of lading: | No. ________ dated ______ issued at ______ |
|
| To : | [insert name of Owners] | [insert date] |
|
|
The Owners of the [insert name of ship] | |
|
|
[insert address] | |
|
|
|
|
| Dear Sirs |
|
|
| Ship: | [insert name of ship] | |
| Charter Party: | [insert details & date] | |
| Voyage: | [insert load and discharge ports as stated in the bill of lading] |
|
| Cargo(es): |
[quantity & type] | |
| Bill of lading: | No. ________ dated ______ issued at ______ |
|
| To : | [insert name of Owners] | [insert date] |
|
|
The Owners of the [insert name of ship] | |
|
|
[insert address] | |
|
|
|
|
| Dear Sirs |
|
|
| Ship: | [insert name of ship] | |
| Charter Party: | [insert details & date] | |
| Voyage: | [insert load and discharge ports as stated in the bill of lading] |
|
| Cargo(es): |
[quantity & type] | |
| Bill of lading: | No. ________ dated ______ issued at ______ |
|
| To : | [insert name of Owners] | [insert date] |
|
|
The Owners of the [insert name of ship] | |
|
|
[insert address] | |
|
|
|
|
| Dear Sirs |
|
|
| Ship: | [insert name of ship] | |
| Charter Party: | [insert details & date] | |
| Voyage: | [insert load and discharge ports as stated in the bill of lading] |
|
| Cargo(es): |
[quantity & type] | |
| Bill of lading: | No. ________ dated ______ issued at ______ |
|
| Bill of lading: | No. ________ dated ______ issued at ______ | |
|
i.
|
the details from the bill(s) of lading pursuant to which the cargoes were originally loaded, including the nature of the cargo, the original quantity loaded
and the date and place of loading; and
|
|
ii.
|
the place and date that the comingling took place.
|
| To : | [insert name of Owners] | [insert date] |
|
|
The Owners of the [insert name of ship] | |
|
|
[insert address] | |
|
|
|
|
| Dear Sirs |
|
|
|
|
||
| Ship: | [insert name of ship] | |
|
|
||
| Voyage: | [insert load and discharge ports as stated in the bill of lading] |
|
|
|
||
| Cargo: |
[insert description of cargo]
|
|
| Bill of lading: |
[insert identification numbers, date and place of
issue]
|
|
| 1. |
To indemnify you, your servants and agents and to hold all of you harmless in respect of any liability, loss, damage or expense of whatsoever nature which you may sustain by reason of
delivering the cargo in accordance with our request.
|
| 2. |
In the event of any proceedings being commenced against you or any of your servants or agents in connection with the delivery of the cargo as aforesaid, to provide you or them on demand
with sufficient funds to defend the same.
|
| 3. |
If, in connection with the delivery of the cargo as aforesaid, the ship, or any other ship or property in the same or associated ownership, management or control, should be arrested or
detained or should the arrest or detention thereof be threatened, or should there be any interference in the use or trading of the vessel (whether by virtue of a caveat being entered on the ship’s registry or otherwise howsoever), to
provide on demand such bail or other security as may be required to prevent such arrest or detention or to secure the release of such ship or property or to remove such interference and to indemnify you in respect of any liability, loss,
damage or expense caused by such arrest or detention or threatened arrest or detention or such interference, whether or not such arrest or detention or threatened arrest or detention or such interference may be justified.
|
| 4. |
If the place at which we have asked you to make delivery is a bulk liquid or gas terminal or facility, or another ship, lighter or barge, then delivery to such terminal, facility, ship,
lighter or barge shall be deemed to be delivery to the party to whom we have requested you to make such delivery.
|
| 5. |
As soon as all original bills of lading for the above cargo shall have come into our possession, to deliver the same to you, or otherwise to cause all original bills of lading to be
delivered to you, whereupon our liability hereunder shall cease.
|
| 6. |
The liability of each and every person under this indemnity shall be joint and several and shall not be conditional upon your proceeding first against any person, whether or not such
person is party to or liable under this indemnity.
|
| 7. |
This indemnity shall be governed by and construed in accordance with English law and each and every person liable under this indemnity shall at your request submit to the jurisdiction of
the High Court of Justice of England.
|
| To : | [insert name of Owners] | [insert date] |
|
|
The Owners of the [insert name of ship] | |
|
|
[insert address] | |
|
|
|
|
| Dear Sirs |
|
|
|
|
||
| Ship: | [insert name of ship] | |
|
|
||
| Voyage: | [insert load and discharge ports as stated in the bill of lading] |
|
|
|
||
| Cargo: |
[insert description of cargo]
|
|
| Bill of lading: |
[insert identification number, date and place of
issue]
|
|
| 1. |
To indemnify you, your servants and agents and to hold all of you harmless in respect of any liability, loss, damage or expense of whatsoever nature which you may sustain by reason of the
ship proceeding and giving delivery of the cargo against production of at least one original bill of lading in accordance with our request.
|
| 2. |
In the event of any proceedings being commenced against you or any of your servants or agents in connection with the ship proceeding and giving delivery of the cargo as aforesaid, to
provide you or them on demand with sufficient funds to defend the same.
|
| 3. |
If, in connection with the delivery of the cargo as aforesaid, the ship, or any other ship or property in the same or associated ownership, management or control, should be arrested or
detained or should the arrest or detention thereof be threatened, or should there be any interference in the use or trading of the vessel (whether by virtue of a caveat being entered on the ship’s registry or otherwise howsoever), to
provide on demand such bail or other security as may be required to prevent such arrest or detention or to secure the release of such ship or property or to remove such interference and to indemnify you in respect of any liability, loss,
damage or expense caused by such arrest or detention or threatened arrest or detention or such interference, whether or not such arrest or detention or threatened arrest or detention or such interference may be justified.
|
| 4. |
The liability of each and every person under this indemnity shall be joint and several and shall not be conditional upon your proceeding first against any person, whether or not such
person is party to or liable under this indemnity.
|
| 5. |
This indemnity shall be governed by and construed in accordance with English law and each and every person liable under this indemnity shall at your request submit to the jurisdiction of
the High Court of Justice of England.
|
| To : | [insert name of Owners] | [insert date] |
|
|
The Owners of the [insert name of ship] | |
|
|
[insert address] | |
|
|
|
|
| Dear Sirs |
|
|
|
|
||
| Ship: | [insert name of ship] | |
|
|
||
| Voyage: | [insert load and discharge ports as stated in the bill of lading] |
|
|
|
||
| Cargo: |
[insert description of cargo]
|
|
| Bill of lading: |
[insert identification number, date and place of
issue]
|
|
| 1. |
To indemnify you, your servants and agents and to hold all of you harmless in respect of any liability, loss, damage or expense of whatsoever nature which you may sustain by reason of the
ship proceeding and giving delivery of the cargo in accordance with our request.
|
| 2. |
In the event of any proceedings being commenced against you or any of your servants or agents in connection with the ship proceeding and giving delivery of the cargo as aforesaid, to
provide you or them on demand with sufficient funds to defend the same.
|
| 3. |
If, in connection with the delivery of the cargo as aforesaid, the ship, or any other ship or property in the same or associated ownership, management or control, should be arrested or
detained or should the arrest or detention thereof be threatened, or should there be any interference in the use or trading of the vessel (whether by virtue of a caveat being entered on the ship’s registry or otherwise howsoever), to
provide on demand such bail or other security as may be required to prevent such arrest or detention or to secure the release of such ship or property or to remove such interference and to indemnify you in respect of any liability, loss,
damage or expense caused by such arrest or detention or threatened arrest or detention or such interference, whether or not such arrest or detention or threatened arrest or detention or such interference may be justified.If the place at
which we have asked you to make delivery is a bulk liquid or gas terminal or facility, or another ship, lighter or barge, then delivery to such terminal,
facility, ship, lighter or barge shall be deemed to be delivery to the party to whom we have requested you to make such delivery.
|
| 4. |
As soon as all original bills of lading for the above cargo shall have come into our possession, to deliver the same to you, or otherwise to cause all original bills of lading to be
delivered to you.
|
| 5. |
The liability of each and every person under this indemnity shall be joint and several and shall not be conditional upon your proceeding first against any person, whether or not such
person is party to or liable under this indemnity.
|
| 6. |
This indemnity shall be governed by and construed in accordance with English law and each and every person liable under this indemnity shall at your request submit to the jurisdiction of
the High Court of Justice of England.
|
| To : ______________ [insert name of owners] of the ______ [insert name of the vessel] | |
|
|
|
| Dear Sirs, |
|
|
|
|
| Ship: |
|
|
Charterparty:
|
|
| Voyage: |
|
| Cargo: |
|
| Bills of lading: |
|
|
Date:
|
|
|
***
|
|
| 1. |
That the reason for requesting you to carry one original of each set of the bills of lading on board the ship and to deliver same to our local discharge port agents as aforesaid is to
facilitate prompt delivery of the cargo to the receivers at the discharge port(s).
|
| 2. |
That we will ensure that lawful title to the cargo is properly passed to any intermediate buyers and/or holders of the bills of lading and/or the receivers at the discharge port(s),
notwithstanding that one original of each set of the bills of lading has been retained on board the ship and delivered to our local discharge port agents as aforesaid.
|
| 3. |
That we will take the utmost care in assisting the Master in identifying the party(ies) to whom the original of each set of the bills of lading should be delivered at the discharge
port(s).
|
| 4. |
To indemnify you, your servants and agents and to hold all of you harmless in respect of any liability, loss, damage or expense of whatsoever nature which you may sustain by reason of the
ship proceeding and giving delivery of the cargo in accordance with our above request, including any mis-delivery claims and/or claims in respect of the title to the cargo.
|
| 5. |
In the event of any proceedings being commenced against you or any of your servants or agents in connection with the ship proceeding and giving delivery of the cargo as aforesaid, to
provide you or them on demand with sufficient funds to defend the same.
|
| 6. |
If, in connection with the delivery of the cargo as aforesaid, the ship, or any other ship or property in the same or associated ownership, management or control, should be arrested or
detained or should the arrest or detention thereof be threatened, or should there be any interference in the use or trading of the vessel (whether by virtue of a caveat being entered on the ship’s registry or otherwise howsoever), to
provide on demand such bail or other security as may be required to prevent such arrest or detention or to secure the release of such ship or property or to remove such interference and to indemnify you in respect of any liability, loss,
damage or expense caused by such arrest or detention or threatened arrest or detention or such interference may be justified.
|
| 7. |
To deliver all original bills of lading for the above cargo to you, or otherwise to cause all original bills of lading to be delivered to you.
|
| 8. |
The liability of each and every person under this indemnity shall be joint and several and shall not be conditional upon your proceeding first against any person, whether or not such
person is party to or liable under this indemnity.
|
| 9. |
This indemnity shall be governed by and construed in accordance with English law and the arbitration/jurisdiction clause of the Charterparty shall be incorporated herein with logical
amendments.
|
|
Name of Subsidiary
|
Place of Incorporation
|
|
Top Tanker Management Inc.
|
Marshall Islands
|
|
Monte Carlo Seven Shipping Company Limited
|
Marshall Islands
|
|
Monte Carlo 39 Shipping Company Limited
|
Marshall Islands
|
|
PCH Dreaming Inc.
|
Marshall Islands
|
|
South California Inc.
|
Marshall Islands
|
|
Malibu Warrior Inc.
|
Marshall Islands
|
|
Augustus Enterprises Inc.
|
Marshall Islands
|
|
Roman Empire Inc.
|
Marshall Islands
|
|
Athenian Empire Inc.
|
Marshall Islands
|
|
Julius Caesar Inc.
|
Marshall Islands
|
|
Legio X Inc.
|
Marshall Islands
|
|
Eco Oceano Ca Inc.
|
Marshall Islands
|
|
California 19 Inc.
|
Marshall Islands
|
|
California 20 Inc.
|
Marshall Islands
|
|
Rubico Inc.
|
Marshall Islands
|
Exhibit 11.1
|
TOP SHIPS INC.
CORPORATE CODE OF BUSINESS ETHICS AND CONDUCT
1, VASILISSIS SOFIAS STR. &
MEGALOU ALEXANDROU STR., GR 15124 ATHENS, GREECE |
TABLE OF CONTENTS
| TITLE | PAGE |
| 1. | Compliance with Laws, Rules and Regulations | 3 |
| 2. | Honest and Fair Dealing | 3 |
| 3. | Conflict of Interest and Corporate Opportunity | 3 |
| 4. | Confidentiality and Privacy | 3 |
| 5. | Proper Use of Company Assets | 4 |
| 6. | Corporate communications policy | 4 |
| 7. | Securities Trading | 4 |
| 8. | Drugs and Alcohol | 5 |
| 9. | Policies against Discrimination and Harassment | 5 |
| 10. | Electronic communication | 6 |
| 11. | Integrity of Corporate Records | 6 |
| 12. | Entertainment, Gifts, Payments and Bribery | 6 |
| 13. | Compliance with Anti-Trust Laws | 7 |
| 14. | Health, Safety and Environmental Protection | 7 |
Page 2 of 7
| 1. | Compliance with Laws, Rules and Regulations |
All Employees are responsible for complying with the various laws, rules and regulations of the countries and regulatory authorities that affect the Company’s business. Questions with respect to your duties under the law should be directed to your manager.
| 2. | Honest and Fair Dealing |
Employees must endeavor to deal honestly, ethically and fairly with the Company’s customers, suppliers, competitors and employees. No Employee should take unfair advantage of anyone through manipulation, concealment, abuse of privilege information, misrepresentation of material facts, or any other unfair-dealing practice.
| 3. | Conflict of Interest and Corporate Opportunity |
Employees must (a) avoid any interest that conflicts or appears to conflict with the interests of the Company or that could reasonably be determined to harm the Company’s reputation and (b) report any actual or potential conflict of interest (including any material transaction or relationship that reasonably could be expected to give rise to such conflict) immediately to a manager or an Audit Committee member and adhere to instructions concerning how to address such conflict of interest. A conflict of interest exists if actions by any Employee are, or could reasonably appear to be, influenced directly or indirectly by personal considerations, duties owed to persons or entities other than the Company, or by actual or potential personal benefit or gain.
Employees owe a duty to advance the legitimate interests of the Company when the opportunities to do so arise. Employees may not take for themselves personally opportunities that are discovered through the use of corporate property, information or position.
| 4. | Confidentiality and Privacy |
It is important that you protect the confidentiality of Company information. Employees may have access to proprietary and confidential information concerning the Company’s business, clients and suppliers. Confidential information includes such items as non-public information concerning the Company’s business, financial results and prospects and potential corporate transactions. Employees are required to keep such information confidential during employment as well as thereafter, and not to use, disclose, or communicate that confidential information other than in the course of employment. The consequences to the Company and the Employee concerned can be severe where there is unauthorized disclosure of any non-public, privileged or proprietary information.
Page 3 of 7
To ensure the confidentiality of any personal information collected and to comply with applicable laws, any Employee in possession of non-public, personal information about the Company’s customers, potential customers, or Employees, must maintain the highest degree of confidentiality and must not disclose any personal information.
| 5. | Proper Use of Company Assets |
The Company’s assets are only to be used for legitimate business purposes and only by authorized Employees or their designees. This applies to tangible assets (such as office equipment, telephone, copy machines, etc.) and intangible assets (such as trade secrets and confidential information). Employees have a responsibility to protect the Company’s assets from theft and loss and to ensure their efficient use. Theft, carelessness and waste have a direct impact on the Company’s profitability. If you become aware of theft, waste or misuse of the Company’s assets you should report this to your manager.
| 6. | Corporate communications policy |
Only certain designated Employees may discuss the Company with the news media, securities analysts and investors. All inquiries from regulatory authorities or government representatives should be referred to the appropriate manager. Employees exposed to media contact when in the course of employment must not comment on rumors or speculation regarding the Company’s activities.
| 7. | Securities Trading |
Because we are a public company we are subject to a number of laws concerning the purchase of our shares and other publicly traded securities. Company policy prohibits Employees and their family members from trading securities while in possession of material, non-public information relating to the Company or any other company, including a customer or supplier that has a significant relationship with the Company.
Information is “material” when there is a substantial likelihood that a reasonable investor would consider the information important in deciding whether to buy, hold or sell securities. In short, any information that could reasonably affect the price of securities is material. Information is considered to be “public” only when it has been released to the public through appropriate channels and enough time has elapsed to permit the investment market to absorb and evaluate the information. If you have any doubt as to whether you possess material nonpublic information, you should contact a manager and the advice of legal counsel may be sought.
Page 4 of 7
Investment by Employees in Top Ships Inc securities is encouraged. In order to protect the Company and its Employees from liability that could result from a violation of legal requirements, the Company requires Employees to engage in purchases or sales of the Company’s stock only during “Window Periods”. Window Periods begin at the opening of trading on the second full trading day following the public release of quarterly or annual financial results. In case the release is announced before the opening of the market, then this day to be accounted for. Window Periods end three (3) calendar weeks prior to the public release of quarterly or annual financial results. No person may buy or sell Top Ships Inc securities, even during Window Periods, if such person is in possession of material, non-public information.
At any time, the Board of Directors has authority to designate a “blackout period” over all trading in Top Ships Inc securities (even during a Window Period). A blackout period compels all trading in the securities affected to cease immediately for the period designated by the Board of Directors. A blackout period may be exercised over securities of companies with which the Company does or may do business or in which the Company invests or may invest. No one may disclose to any outside third party that a blackout period has been designated.
Failure to comply with the Company’s securities trading policy may subject Employees or Employees’ family members to criminal or civil penalties, as well as to disciplinary action by the Company up to and including termination for cause. Responsibility for complying with applicable laws as well as the Company’s policy rests with Employees individually.
| 8. | Drugs and Alcohol |
Company policy prohibits the illegal use, sale, purchase, transfer, possession or consumption of controlled substances, other than medically prescribed drugs, while on the Company premises. Company policy also prohibits the use, sale, purchase, transfer or possession of alcoholic beverages by Employees while on Company premises, except as authorized by the Company. This policy requires that the company must abide by applicable laws and regulations relative to the use of alcohol or other controlled substances. The Company, in its discretion, reserves the right to randomly test Employees for the use of alcohol or other controlled substances unless prohibited by prevailing local law.
| 9. | Policies against Discrimination and Harassment |
The Company prohibits discrimination against any Employee or prospective Employee on the basis of sex, race, color, age, religion, sexual preference, marital status, national origin, disability, ancestry, political opinion, or any other basis prohibited by the laws that govern its operations.
Page 5 of 7
The Company prohibits unlawful harassment. Employees are expected to treat one another with respect. “Harassment” includes any conduct likely to cause offense or humiliation to any person or that might, on reasonable grounds, be perceived by a reasonable person to place a condition on employment or on any opportunity for training or promotion.
| 10. | Electronic communication |
Electronic communications include all aspects of voice, video, and data communications, such as voice mail, e-mail, fax, and Internet. Employees should use electronic communications for business purposes and refrain from personal use. Among other things, you should not participate in any online forum where the business of the Company or its customers or suppliers is discussed: this may give rise to a violation of the Company’s confidentiality policy or subject the Company to legal action for defamation. The Company reserves the right to inspect all electronic communications involving the use of the Company’s equipment, software, systems, or other facilities (“Systems”) within the confines of applicable local law and Employees should not have an expectation of privacy when using Company Systems.
| 11. | Integrity of Corporate Records |
All business records, expense accounts, vouchers, bills, payrolls, service records, reports to government agencies and other reports must accurately reflect the facts. Without limiting the foregoing, all reports and documents filed with the U.S. Securities and Exchange Commission, as well as other public communications should be full, fair, accurate and understandable.
The books and records of Top Ships Inc. must be prepared with care and honesty and must accurately reflect our transactions. All corporate funds and assets must be recorded in accordance with Company procedures. No undisclosed or unrecorded funds or assets shall be established for any purpose.
The Company’s accounting personnel must provide the independent public accountants and the Audit Committee with all information they request. Employees must not, and must not direct others to, take any action to fraudulently influence, coerce, manipulate or mislead independent public accountants engaged in the audit or review of the Company’s financial statements for the purpose of rendering those financial statements materially misleading.
| 12. | Entertainment, Gifts, Payments and Bribery |
Decisions by the Company and its agents relating to the procurement and provision of goods and services should always be free from even a perception that favorable treatment was sought, received or given as the result of furnishing or receiving gift, favors, hospitality, entertainment or other similar gratuity. The giving or receiving of anything of value to induce such decisions is prohibited. You should never solicit a gift or favor from those with whom we do business. Providing or receiving gifts or entertainment of nominal value motivated by commonly accepted business courtesies is permissible, but not if such gifts or entertainment would reasonably be expect to cause favoritism or a sense of obligation.
Page 6 of 7
No bribes or other similar payments and benefits, directly or indirectly, shall be paid to employees of suppliers or customers.
| 13. | Compliance with Anti-Trust Laws |
The Company’s business may be subject to United States, European Union and other foreign government anti-trust and similar laws. All Employees must comply with such laws and you should confer with your manager whenever you have a question with respect to the possible anti-competitive effect of particular transactions.
| 14. | Health, Safety and Environmental Protection |
The Company will conduct its business in a manner designed to protect the health and safety of its Employees, its customers, the public, and the environment. The Company’s policy is to operate its business and its vessels in accordance with all applicable safety, environmental and safety laws and regulations so as to ensure the protection of the environment and the Company’s personnel and property. All Employees should conduct themselves in a manner that is consistent with this policy. Any departure or suspected departure from this policy must be reported promptly.
All Employees are expected to comply with the Company’s policy and ethical requirements as hereinabove described. Failure to do so shall result in the Company imposing such disciplinary measures as it, in its sole discretion, may deem fit, up to and including termination of employment for cause, in accordance with the applicable local laws.
Page 7 of 7
Exhibit 12.1
CERTIFICATION OF THE PRINCIPAL EXECUTIVE OFFICER
I, Evangelos J. Pistiolis, certify that:
1. I have reviewed this annual report on Form 20-F of TOP Ships Inc. (the “Company”);
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this report;
4. The Company’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Company and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the Company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the Company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting; and
5. The Company’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Company’s auditors and the audit committee of the Company’s board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Company’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal control over financial reporting.
Date: March 29, 2024
/s/ Evangelos J. Pistiolis
Evangelos J. Pistiolis
President, Chief Executive Officer and Director (Principal Executive Officer)
Exhibit 12.2
CERTIFICATION OF THE PRINCIPAL FINANCIAL OFFICER
I, Alexandros Tsirikos, certify that:
1. I have reviewed this annual report on Form 20-F of TOP Ships Inc. (the “Company”);
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this report;
4. The Company’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Company and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the Company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the Company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting; and
5. The Company’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Company’s auditors and the audit committee of the Company’s board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Company’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal control over financial reporting.
Date: March 29, 2024
/s/ Alexandros Tsirikos
Alexandros Tsirikos
Chief Financial Officer (Principal Financial Officer)
Exhibit 13.1
PRINCIPAL EXECUTIVE OFFICER CERTIFICATION
PURSUANT TO 18 U.S.C. SECTION 1350
In connection with this annual report of TOP Ships Inc. (the “Company”) on Form 20-F for the year ended December 31, 2023 as filed with the Securities and Exchange Commission (the “SEC”) on or about the date hereof (the “Report”), I, Evangelos J. Pistiolis, President, Chief Executive Officer and Director of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
(1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
A signed original of this written statement has been provided to the Company and will be retained by the Company and furnished to the SEC or its staff upon request.
Date: March 29, 2024
/s/ Evangelos J. Pistiolis
Evangelos J. Pistiolis
President, Chief Executive Officer and Director (Principal Executive Officer)
Exhibit 13.2
PRINCIPAL FINANCIAL OFFICER CERTIFICATION
PURSUANT TO 18 U.S.C. SECTION 1350
In connection with this annual report of TOP Ships Inc. (the “Company”) on Form 20-F for the year ended December 31, 2023 as filed with the Securities and Exchange Commission (the “SEC”) on or about the date hereof (the “Report”), I, Alexandros Tsirikos, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
(1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
A signed original of this written statement has been provided to the Company and will be retained by the Company and furnished to the SEC or its staff upon request.
Date: March 29, 2024
/s/ Alexandros Tsirikos
Alexandros Tsirikos
Chief Financial Officer (Principal Financial Officer)
Exhibit 15.1
Consent of Independent Registered Public Accounting Firm
We consent to the incorporation by reference in Registration Statement Nos. 333-267170 and 333-268475 on Form F-3 and the post-effective Amendment to Form F-1 in the Registration Statement on Form F-3 (File No. 333-267545) of our report dated March 29, 2024, relating to the consolidated financial statements of Top Ships Inc. appearing in this Annual Report on Form 20-F for the year ended December 31, 2023.
/s/ Deloitte Certified Public Accountants S.A.
Athens, Greece
March 29, 2024
Exhibit 97.1
TOP SHIPS INC.
Policy for the Recovery of Erroneously Awarded Incentive Compensation
Adopted Date: November 28, 2023
| 1. | Introduction |
The Board of Directors (the “Board”) of Top Ships Inc. (the “Company”) has adopted this policy (the “Policy”), which provides for recoupment, otherwise referred to as “clawback,” of certain Erroneously Awarded Incentive Compensation from Covered Executives in the event of an Accounting Restatement resulting from material noncompliance with financial reporting requirements under the federal securities laws.
This Policy is designed to comply with Section 10D, as implemented by Rule 10D-1, of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and is made in accordance with the applicable listing rules (the “Nasdaq Rules”) of the Nasdaq Stock Market (“Nasdaq”).
| 2. | Covered Executives |
This Policy applies to each individual who is (i) a current or former executive officer, as determined by the Committee in accordance with Section 10D and Rule 10D-1 of the Exchange Act and the Nasdaq Rules; (ii) a current or former employee who is classified by the Committee as an executive officer of the Company, which includes without limitation any of the Company’s president, principal financial officer, principal accounting officer (or if there is no such accounting officer, the controller), vice president in charge of a principal business unit, division or function (such as sales, administration or finance), and any other person who performs policy-making functions for the Company (including executive officers of a parent or subsidiary if they perform policy-making functions for the Company); and (iii) an employee who may from time to time be deemed subject to this Policy by the Committee (“Covered Executives”). For the avoidance of doubt, the identification of an executive officer for purposes of this Policy shall include each executive officer who is or was identified pursuant to Item 401(b) of Regulation S-K or Item 6.A of Form 20-F, as applicable.
This Policy shall be binding and enforceable against all Covered Executives, as described herein, and, to the extent required by applicable law or guidance from the United States Securities and Exchange Commission (the “SEC”) or Nasdaq, Covered Executives’ beneficiaries, heirs, executors, administrators or other legal representatives.
| 3. | Recovery of Erroneously Awarded Incentive Compensation |
In the event the Company is required to prepare an Accounting Restatement of its financial statements, the Compensation Committee (if composed entirely of independent directors, or in the absence of such a committee, a majority of independent directors serving on the Board) (the “Committee”) will determine the amount of Erroneously Awarded Incentive Compensation (defined below) and the Company will promptly provide each Covered Executive who received Erroneously Awarded Incentive Compensation with a written notice containing the amount of Erroneously Awarded Incentive Compensation received by such Covered Executive and shall require the forfeiture, repayment, or return, as applicable, of not less than the full amount of any Erroneously Awarded Incentive Compensation received or deemed received by any Covered Executive, except to the extent determined impracticable in Section 7 below.
(a) Cash Awards. With respect to cash awards, the Erroneously Awarded Incentive Compensation is the difference between the amount of the cash award (whether payable as a lump sum or over time) that was received and the amount that should have been received applying the restated Financial Reporting Measure.
(b) Cash Awards Paid from Bonus Pools. With respect to cash awards paid from bonus pools, the Erroneously Awarded Incentive Compensation is the pro rata portion of any deficiency that results from the aggregate bonus pool that is reduced based on applying the restated Financial Reporting Measure.
(c) Equity Awards. With respect to equity awards, if the shares, options or SARs are still held at the time of recovery, the Erroneously Awarded Incentive Compensation is the number of such securities received in excess of the number that should been received applying the restated Financial Reporting Measure (or the value in excess of that number). If the options or SARs have been exercised, but the underlying shares have not been sold, the Erroneously Awarded Incentive Compensation is the number of shares underlying the excess options or SARs (or the value thereof). If the underlying shares have already been sold, then the Committee and/or Board shall determine the amount which most reasonably estimates the Erroneously Awarded Incentive Compensation.
(d) Compensation Based on Stock Price or Total Shareholder Return. For Incentive Compensation based on (or derived from) stock price or total shareholder return, where the amount of Erroneously Awarded Incentive Compensation is not subject to mathematical recalculation directly from the information in the applicable Accounting Restatement, (i) the amount shall be determined by the Committee and/or Board based on a reasonable estimate of the effect of the Accounting Restatement on the stock price or total shareholder return upon which the Incentive Compensation was received; and (ii) the Committee and/or Board shall maintain documentation of such determination of that reasonable estimate and provide such documentation to the Exchange in accordance with applicable listing standards.
Incentive Compensation shall be deemed “received” in the Company’s fiscal period during which the Financial Reporting Measure specified in the Incentive Compensation award is attained, even if (a) the payment or grant of the Incentive Compensation to the Covered Executive occurs after the end of that period or (b) the Incentive Compensation remains contingent and subject to further conditions thereafter, such as time-based vesting.
Any recovery under this Policy shall be made reasonably promptly and in accordance with the Exchange Act and Nasdaq Rules.
| 4. | Incentive Compensation and Financial Reporting Measures |
For purposes of this Policy:
“Accounting Restatement” means an accounting restatement due to the material noncompliance of the Company with any financial reporting requirement under the securities laws, including any required accounting restatement to correct an error in previously issued financial statements that is material to the previously issued financial statements (a “Big R” restatement), or that would result in a material misstatement if the error were corrected in the current period or left uncorrected in the current period (a “little r” restatement). For the avoidance of doubt, in no event will a restatement of the Company’s financial statements that is not due in whole or in part to the Company’s material noncompliance with any financial reporting requirement under applicable law (including any rule or regulation promulgated thereunder) be considered an Accounting Restatement under this Policy. For example, a restatement due exclusively to a retrospective application of any one or more of the following will not be considered an Accounting Restatement under this Policy: (i) a change in accounting principles; (ii) revision to reportable segment information due to a change in the structure of the Company’s internal organization; (iii) reclassification due to a discontinued operation; (iv) application of a change in reporting entity, such as from a reorganization of entities under common control; (v) adjustment to provisional amounts in connection with a prior business combination (but only if the Company is an International Financial Reporting Standards (“IFRS”) filer); and (vi) revision for stock splits, reverse stock splits, stock dividends or other changes in capital structure.
“Financial Reporting Measures” are measures that are determined and presented in accordance with the accounting principles used in preparing the Company’s financial statements, and all other measures that are derived wholly or in part from such measures. Share price and total shareholder return (and any measures that are derived wholly or in part from share price or total shareholder return) shall, for purposes of this Policy, be considered Financial Reporting Measures. For the avoidance of doubt, a Financial Reporting Measure need not be presented in the Company’s financial statements or included in a filing with the SEC.
“Incentive Compensation” means any compensation that is granted, earned, or vested based wholly or in part on the attainment of a Financial Reporting Measure.
For purposes of this Policy, specific examples of Incentive Compensation include, but are not limited to:
(a) Non-equity incentive plan awards that are earned based, wholly or in part, based on satisfaction of a Financial Reporting Measure performance goal;
(b) Bonuses paid from a “bonus pool,” the size of which is determined, wholly or in part, based on satisfaction of a Financial Reporting Measure performance goal;
(c) Other cash awards based on satisfaction of a Financial Reporting Measure performance goal;
(d) Restricted stock, restricted stock units, performance share units, stock options and SARs that are granted or become vested, wholly or in part, on satisfaction of a Financial Reporting Measure performance goal; and (e) Proceeds received upon the sale of shares acquired through an incentive plan that were granted or vested based, wholly or in part, on satisfaction of a Financial Reporting Measure performance goal.
For purposes of this Policy, Incentive Compensation excludes:
(a) Any base salaries (except with respect to any salary increases earned, wholly or in part, based on satisfaction of a Financial Reporting Measure performance goal);
(b) Bonuses paid solely at the discretion of the Committee or Board that are not paid from a “bonus pool” that is determined by satisfying a Financial Reporting Measure performance goal;
(c) Bonuses paid solely upon satisfying one or more subjective standards and/or completion of a specified employment period;
(d) Non-equity incentive plan awards earned solely upon satisfying one or more strategic measures (e.g., consummating a merger or divestiture) or operational measures (e.g., completion of a project, [acquiring a specified number of vessels,] attainment of a certain market share); and
(e) Equity awards that vest solely based on the passage of time and/or satisfaction of one or more non-Financial Reporting Measures (e.g., a time-vested award, including time-vesting stock options or restricted share rights).
“Incentive Compensation Eligible for Recovery” means Incentive Compensation received by a Covered Executive:
(a) after beginning service as a Covered Executive;
(b) who served as a Covered Executive at any time during the performance period for the applicable Incentive Compensation (regardless of whether such individual is serving as a Covered Executive at the time the Erroneously Awarded Incentive Compensation is required to be repaid);
(c) while the Company had a class of securities listed on a national securities exchange or a national securities association;
(d) during the applicable Recovery Period; and
(e) on or after the effective date of the applicable Nasdaq Rules (i.e., October 2, 2023).
“Recovery Period” means, with respect to any Accounting Restatement, the three (3) completed fiscal years of the Company immediately preceding the Restatement Date and, if the Company changes its fiscal year, any transition period of less than nine months within or immediately following those three (3) completed fiscal years.
“Restatement Date” means the earlier to occur of (i) the date the Board, a committee of the Board or the officers of the Company authorized to take such action if Board action is not required, concludes, or reasonably should have concluded, that the Company is required to prepare an Accounting Restatement, or (ii) the date a court, regulator or other legally authorized body directs the Company to prepare an Accounting Restatement.
| 5. | Erroneously Awarded Incentive Compensation – Amount Subject to Recovery |
The amount to be recovered will be, with respect to each Covered Executive in connection with an Accounting Restatement, the amount of the Incentive Compensation Eligible for Recovery based on the erroneous data that exceeds the Incentive Compensation Eligible for Recovery that otherwise would have been received by the Covered Executive had it been determined based on the restated results (calculated without regard to any taxes paid), as determined by the Committee (the “Erroneously Awarded Incentive Compensation”).
For Incentive Compensation based on (or derived from) stock price, total shareholder return, or similar metric where the amount of Erroneously Awarded Incentive Compensation is not subject to mathematical recalculation directly from the information in the applicable Accounting Restatement, the amount shall be determined by the Committee based on a reasonable estimate of the effect of the Accounting Restatement on the stock price, total shareholder return, or other such metric upon which the Incentive Compensation was received. The Company shall maintain documentation of the determination of such reasonable estimate, and, if required by applicable law, regulation or Nasdaq Rule, provide the relevant documentation to Nasdaq.
The Company shall promptly provide each Covered Executive with a written notice containing the amount of any Erroneously Awarded Incentive Compensation and a demand for repayment or return of such compensation, as applicable.
| 6. | Method of Recovery |
The Committee will determine, in its sole discretion, the method for recouping Erroneously Awarded Incentive Compensation hereunder which may include, without limitation, any of the following or combination thereof:
(a) requiring reimbursement of cash Incentive Compensation Eligible for Recovery previously paid;
(b) seeking recovery of any gain realized on the vesting, exercise, settlement, sale, transfer, or other disposition of any equity-based awards;
(c) offsetting the recouped amount from any compensation otherwise owed by the Company to the Covered Executive;
(d) cancelling outstanding vested or unvested equity awards; and/or
(e) taking any other remedial and recovery action permitted by law, as determined by the Committee.
Except as set forth in Section 7 below, in no event may the Company accept an amount that is less than the amount of Erroneously Awarded Incentive Compensation in satisfaction of a Covered Executive’s obligations hereunder. To the extent that a Covered Executive fails to repay all Erroneously Awarded Incentive Compensation to the Company when due, the Company shall take all actions reasonable and appropriate to recover such Erroneously Awarded Incentive Compensation from the applicable Covered Executive. The applicable Covered Executive shall be required to reimburse the Company for any and all expenses reasonably incurred (including legal fees) by the Company in recovering such Erroneously Awarded Incentive Compensation in accordance with the immediately preceding sentence.
To the extent that the Covered Executive has already reimbursed the Company for any Erroneously Awarded Incentive Compensation received under any duplicative recovery obligations established by the Company or applicable law, it shall be appropriate for any such reimbursed amount to be credited to the amount of Erroneously Awarded Incentive Compensation that is subject to recovery under this Policy. To the extent that the Erroneously Awarded Incentive Compensation is recovered under a foreign recovery regime, the recovery would meet the obligations of Rule 10D-1.
| 7. | Impracticality |
The Company shall recover any Erroneously Awarded Incentive Compensation in accordance with this Policy, unless such recovery would be duplicative of compensation recovered by the Company from the Covered Executive pursuant to Section 304 of the Sarbanes-Oxley Act or would be impracticable, as determined by the Committee in accordance with Rule 10D-1 of the Exchange Act and the Nasdaq Rules, and any of the following conditions are satisfied:
(a) The Committee has determined that the direct expenses paid to a third party to assist in enforcing the Policy would exceed the amount to be recovered. Before making this determination, the Company must make a reasonable attempt to recover the Erroneously Awarded Incentive Compensation, documented such attempt(s) and provide such documentation to Nasdaq; or
(b) Recovery would violate home country law where that law was adopted prior to November 28, 2022, provided that, before determining that it would be impracticable to recover any amount of Erroneously Awarded Incentive Compensation based on violation of home country law, the Company has obtained an opinion of home country counsel, acceptable to Nasdaq, that recovery would result in such a violation and a copy of the opinion is provided to Nasdaq; or
(c) Recovery would likely cause an otherwise tax-qualified retirement plan, under which benefits are broadly available to employees of the Company, to fail to meet the requirements of Section 401(a)(13) or Section 411(a) of the Internal Revenue Code of 1986, as amended, and regulations thereunder.
| 8. | No Indemnification |
The Company shall not insure or indemnify any Covered Executive against the loss of any Erroneously Awarded Incentive Compensation that is repaid, returned or recovered in accordance with the terms of this Policy, or for any claims relating to the Company’s enforcement of any of its rights under this Policy.
The Company shall not enter into any agreement or arrangement that exempts any Incentive Compensation that is granted, paid or awarded to any Covered Executive from the application of this Policy or that waives the Company’s right to recover any Incentive Compensation Eligible for Recovery, and this Policy shall supersede any such agreement (whether entered into before, on or after the Effective Date of this Policy). While a Covered Executive may purchase a third-party insurance policy to fund potential recovery obligations under this Policy, the Company may not pay or reimburse the Covered Executive for premiums for such an insurance policy.
| 9. | Other Recovery Rights |
The Committee intends that this Policy will be applied to the fullest extent required by applicable law. Any employment agreement, equity award agreement, compensatory plan or any other agreement or arrangement with a Covered Executive shall be deemed to include, as a condition to the grant of any benefit thereunder, an agreement by the Covered Executive to abide by the terms of this Policy.
The Committee may require that any employment agreement, equity award agreement, or similar agreement entered into on or after the Effective Date shall, as a condition to the grant of any benefit thereunder, require a Covered Executive to agree to abide by the terms of this Policy.
Any right of recovery under this Policy is in addition to, and not in lieu of, any other remedies or rights of recovery that may be available to the Company under applicable law, regulation or rule or pursuant to the terms of any similar policy in any employment agreement, equity award agreement, or similar agreement and any other legal remedies available to the Company.
| 10. | Disclosure Requirements |
The Company shall file all disclosures with respect to this Policy required by applicable SEC filings and rules.
| 11. | Interpretation |
The Committee is authorized to interpret and construe this Policy and to make all determinations necessary, appropriate, or advisable for the administration of this Policy, and for the Company’s compliance with Nasdaq Rules, Section 10D, Rule 10D-1 and any other applicable law, regulation, rule or interpretation of the SEC or Nasdaq promulgated or issued in connection therewith. It is intended that this Policy be interpreted in a manner that is consistent with the requirements of Section 10D and Rule 10D-1 of the Exchange Act and any applicable rules or standards adopted by the SEC or Nasdaq.
| 12. | Amendment and Termination |
The Committee may amend or terminate this Policy from time to time in its discretion; provided that, no amendment or termination of this Policy shall be effective if such amendment or termination would cause the Company to violate any applicable federal securities laws, SEC rule or Nasdaq Rule.
| 13. | Effective Date |
This Policy shall be effective as of December 1, 2023 (the “Effective Date”) and shall apply to Incentive Compensation that is approved, awarded or granted to Covered Executives on or after October 2, 2023.
| 14. | Policy Administration |
This Policy shall be administered by the Committee, and any determinations made by the Committee shall be final and binding on all affected individuals.
ANNEX A
Top Ships Inc.
Policy for the Recovery of Erroneously Awarded Incentive Compensation
Acknowledgement Form
9
