Document:

Exhibit 10.4

 

Code word for this Charter Party

“SHELLTIME 4”

Issued December 1984

 

Time Charter Party

 

Hamilton, Bermuda LONDON  1 January 2004

 

IT IS THIS DAY
AGREED between

GRANITE SHIPPING COMPANY LIMITED. (hereinafter referred to as “Owners”), being owners of  the

 

good Motor Tanker                                                         called  FRONT GRANITE

(hereinafter
referred to as “the vessel”) described as per Clause  in Annex 1
hereof and

Frontline Shipping Limited, a Bermuda company 
(hereinafter referred to as “Charterers”)

 

Description and Condition of Vessel

 

1.             At the date of delivery of the
vessel under this charter

 

(a) she shall be classed: DNV – Tanker
for oil 1A1 ESP EO

 

(b) she shall be in every way fit to carry
crude petroleum and/or products:

 

(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 and radar) 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  at sea – fueloil as per RMG 35
specification with a maximum 380 CST viscosity for main propulsion and
auxiliary engines  at 50 degrees
Centigrade/any  commercial grade
of fueloil (“ACGFO”) for main propulsion, marine diesel oil/ACGFO for
auxiliaries. in port or water described by IMO and/or EC with fuel oil or
marine diesel which complies with specifications required to meet the
rules/regulations now existing or which may be imposed in the future –
marine diesel oil/ACGFO 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 Form B  Annex 1 appended hereto, provided however  that if there is any conflict between the provisions
of Form B  Annex 1 and any other provision, including this Clause 1, of
this charter such other provision shall govern.

 

Shipboard Personnel vessel and their Duties

 

2.             (a) At the date of delivery of the
vessel under this charter

 

(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 with 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, 19951978  as amended from time to time;

 

(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 therefrom to be carried out quickly and
efficiently.

 

(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 or any Maintain

 

3.             (i) Subject to Clause 51,
throughout the charter service Owners shall, whenever the passage of time, wear
and tear event (whether or not coming within Clause 27 hereof) requires steps
to be taken to maintain or restore the conditions stipulated in Clause 1 and
2(a), exercise due diligence so to maintain or restore the vessel.

 

(ii) 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 (ii) 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.

 

(iii) If Owners are in breach of their
obligation under Clause 3(i) 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(i), 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.

 

Furthermore,
at any time while the vessel is off-hire this Clause 3 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 from any
later date stated in such notice.  This
sub-Clause (iii) is without prejudice to any rights of Charterers or
obligations of Owners under this charter or otherwise (including without
limitation Charterers rights under Clause 21 hereof).

 

Period Trading Limits

 

4.             Owners agree to let and Charterers
agree to hire the vessel for a period of  ending December 31, 2014 and 

commencing
as of January 1, 2004 for the purpose of carrying all lawful merchandise
(subject always to Clause 28) including in particular  within the
trading limits agreed in Clause 43. 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.  Notwithstanding the foregoing, but subject to Clause 35,
Charterers may order the vessel to ice-bound waters or to any part of the world
outside such limits provided that Owners consent thereto  and that Charterers pay for any insurance
premium required by the vessel’s underwriters as a consequence of such order.

 

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, fairways, anchorage’s, 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 operation shall conform
to standards not less than those set out in the latest published edition of the
ICS/OCIMF Ship-to-Ship Transfer Guide, as may be amended from time to time.

 

The vessel shall be delivered by Owners at
a port in  or at sea world-wide at Owner’s  Charterer’s option and redelivered to
Owners at a major oil port in  world-wide at Charterer’s option.

 

Laydays/ Cancelling

 

5.             The vessel shall not be
delivered to Charterers
before                                           and
Charterers shall

have the option of cancelling this charter if the
vessel is not ready and at their disposal on or before

 

The delivery of the Vessel under this Charter shall be
deemed to have occurred and this Charter shall be effective (the “Effective
Date”) as of January 1, 2004.

 

Owners to
Provide

 

6.             Owners undertake to provide and to
pay for all provisions, wages, 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: 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 been compelled
to pay in respect of any such liability. 
Any amounts allowable in general average for wages and provisions and
store 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.             Charterers shall provide and pay
for all fuel (except fuel used for domestic services), towage and
pilotage and shall pay agency fees, port charges, commissions, expenses of
loading and unloading cargoes, canal dues 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 that any fuel used in
connection with a general average sacrifice or expenditure shall be paid for by
Owners.

 

Rate of Hire

 

8.             Subject as herein provided,
Charterers shall pay for the use and hire of the vessel at the rate of  agreed in
Clause 44 per day, and pro rata for any part of a day, from the time
and date of her delivery (local Time  UTC) until the time and date
of her re-delivery (local time  UTC) to Owners.

 

Payment of Hire

 

9.             Subject to Clause 3(iii),
Payments of hire shall be made in immediately available funds to: a bank and
bank account as nominated by the Owners Account in in equal
monthly payments of 30 days hire (adjusted for leap years) in advance, less:

 

(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(ii) 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  caused by
Owners’ bank in crediting Owner’s 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 days of receipt of such notice pay to
Owners the amount due including interest, failing which Owners may terminate
this Charter Party or withdraw the vessel from the service of Charterers
without prejudice to any other rights Owners may have under this charter or
otherwise and Charterers shall ensure that in such case the Owners will be entitled to
assume Charterer’s position as disponent owner under any sub-charter of the
Vessel.

 

(b) Interest on any amount due but not paid
on the due date shall accrue from the day 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 
JP MorganChase in New York time 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 so 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 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                     tonnes at any time during
the charter period.

 

Overtime

 

11.           Overtime pay of the master, officers
and crew in accordance with ship’s articles shall be for Charterers’
account  when incurred, as a result of
complying with the request of Charterers or their agents, for loading,
discharging, heating of cargo, bunkering or tank cleaning.

 

Instructions and Logs

 

12.           Charterers shall from time to time
give the master all requisite instructions and sailing directions, and he 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’ their expense of any such documents which
are not provided by the master. All reports are to be made in English.

 

Bill 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) Notwithstanding the foregoing, Owners
shall not be obliged to comply with any orders from Charterers to discharge all
or part of the cargo.

 

(i)  at any place other than shown on the bill of
lading and/or

 

(ii) without
presentation of an original bill of lading unless they have received from Charterers
both written confirmation of such orders and an indemnity in a form acceptable
to Owners (See
Clause 52)

 

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 event communicate the result
of their investigation to Charterers as soon as possible.

 

Bunkers at Delivery and Redelivery

 

15.           Owners acknowledge that bunkers on
board at delivery are the property of Charterers. . 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 period or on
the earlier termination of this charter) accept and pay the Charterers for all
bunkers remaining on board, at the then-current market prices at the port of
delivery or redelivery, as the case may be, or if such prices are not
available payment shall be at the then-current market prices at the nearest
port at which such prices are available: provided that if delivery or
redelivery does not take place in a port payment shall be at the price paid
at the vessel’s last port of bunkering before delivery or redelivery. as
the case may be.  Owners shall give
Charterers the use and benefit of any fuel contracts they may have in force
from time to time, if so required by Charterers, provided suppliers agree.

 

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 servants
of Charterers their agents or any affiliated company): provided, however that

 

 

(i) 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

 

(ii) 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, and any loss of time resulting from such damage shall
not be considered off-hire,  to the
extent that Owners are unable by the exercise of due diligence to obtain
redress therefor from stevedores.

 

Supernumeraries

 

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 liquors.  Charterers paying at the rate
of                             per
day for each representative while on board the vessel.

 

Sub-letting

 

18.           Charterers may sub-let the vessel,
but shall always remain responsible to Owners for due fulfilment of this
charter. (See
Clause 56)

 

Final Voyage

 

19.           If when a payment of hire is due
hereunder Charterers reasonably expect to redeliver the vessel before the next
payment of hire would fall 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 due or reasonably expected to become due for

 

(i) disbursements on Owners’ behalf or
charges for Owners’ account pursuant to any provision hereof, and

 

(ii) bunkers on board at 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
terminate in accordance with Clause 4 the vessel is on a ballast voyage to a
port of redelivery or is upon a laden voyage, Charterers shall continue to have
the use of the vessel at the same rate and conditions as stand herein for as
long as necessary to complete such ballast voyage, or to complete such laden
voyage and return to a port of redelivery as provided by this charter, as the
case may be.

 

Loss of Vessel

 

20.           Should the vessel be lost, this
charter shall terminate and hire shall cease at noon UTC 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 UTC on the day on which she was
last heard of.  Upon the receipt of any
insurance proceeds by the Owners with respect to any loss or constructive total
loss, any hire paid in advance and not earned shall be returned to Charterers
and Owners shall reimburse Charterers for the value of the estimate 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 in the vessel’s service
or, from reduction in the vessel’s performance, or in any other manner)

 

(i) due
to deficiency of personnel or stores (except any loss of time resulting
from  the provision of inadequate or
poor fuel by the Charterers pursuant to Clauses 7 and 29);  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); 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 three consecutive hours (if
resulting from interruption in the vessel’s service); or

 

(ii)
due to industrial action, refusal to sail, breach of 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 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 three consecutive hours; or

 

(iv)
due to any delay in quarantine 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 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 by the act or neglect of Charterers);
then

 

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.

 

(b) 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 assessing the amount to be deducted from hire.  If the 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.

 

(c) If
the vessel’s flag state becomes engaged in 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.

 

(d)
Time during which the vessel is off-hire under 
this charter shall count as part of the charter period.

 

Periodical Drydocking

 

22.           (a) Owners have the right and
obligation to drydock the vessel at regular intervals of  as agreed by
Charterers. On each occasion Owners shall propose to Charterers a
date on which they wish to drydock the vessel, not less than two months 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 at their expense as soon as practicable after
Charterers place the vessel at Owners’ disposal clear of cargo sediments and gasfree.other than tank washings and residues.  Owners shall be

 

Charterers shall be

 

responsible
for and pay for the disposal into reception facilities of such tanks
washings and tank 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 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 no less
favourable to Charterers, whichever she first attains. However

 

(i) provided that Owners exercise due
diligence in gas-freeing, any time lost in gas-freeing to the standard required
for entry into drydocking 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 Charterers’ Owners account.

 

(c) If  Owners require the vessel, instead of
proceeding to the 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 with any benefit they may gain in 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 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,

 

(i)      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 Owners’ authority over, or
responsibility  to Charterers or  third parties for, the vessel and every
aspect of her operation, or increase 
Charterers  responsibilities to
Owners or third parties for the same

 

(ii)
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.           (a) Owners guarantee that the speed
and consumption of the vessel shall be as follows:-

 

	
  Average
  speed

  	
   

  	
   

  	
   

  	
  Maximum
  average bunker consumption

  	
   

  
	
  in knots

  	
   

  	
   

  	
   

  	
  main
  propulsion

  	
  —

  	
  auxiliaries

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  fuel
  oil/diesel oil

  	
   

  	
  fuel
  oil/diesel oil

  	
   

  
	
  Laden

  	
   

  	
  13,25

  	
   

  	
  50

  	
   tonnes 

  	
  3

  	
  tonnes

  
	
  Ballast

  	
   

  	
  14,25

  	
   

  	
  47

  	
   

  	
   

  	
   

  

 

The
foregoing bunker consumption are for all purposes except cargo heating,
inerting and tank cleaning and shall be pro-rated between the speeds shown.

 

The service
speed of the vessel is knots laden and 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”).

 

If the
vessel is ordered to proceed at any speed other than the highest speed shown in
the table, and the average speed actually attained by the vessel during the
currency of such order exceeds such ordered 

 

 

speed plus 0.5
knots (the “maximum recognised speed”), then for the purpose of calculating any
increase or decrease of hire under  this
Clause 24 the maximum recognised speed shall be used in place of the average
speed actually attained.

 

For the
purpose of this charter the “guaranteed speed” at any  time shall be the then-current ordered speed or the service
speed, as the case may be

 

The
average speeds and bunker consumption shall for the purposes of this Clause 24
be calculated by reference to the observed distance from pilot station to pilot
station on all sea passages during each period stipulated in Clause 24 (c), but
excluding any time during which the vessel is (or but for Clause 26 (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, for navigational reasons or in poor visibility (ii) any days, noon to
noon, when winds exceed force 5 on the Beaufort Scale.

 

(b) If
during any year from the date on which the vessel enters service (anniversary
to anniversary) the vessel falls below or exceeds the performance
guaranteed in Clause 24(a) then if such shortfall or excess results:

 

(i)
from a reduction or an increase 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 or gained, as the case may be,
shall be deducted from or added to the hire paid.

 

(ii)
from an increase or a decrease 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 or the bunkers saved, as the case may be, based on the
average price paid by Charterers for the vessel’s bunkers in such  period, shall be deducted from or added
to the hire paid.

 

The addition
to or 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 addition or
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 addition to or
deduction from hire to be made for such period.

 

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 two months before the end of the
charter period.  Any necessary
adjustment after this charter terminates shall be made by payment by Owners to
Charterers or by Charterers to Owners as the case may require.

 

      Payments in respect of increase of hire
arising under this Clause shall be made promptly after receipt by Charterers of
all the information necessary to calculate such increase.

 

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 tortuous 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 to 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 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 claims for damage 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 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 commotion’s or arrest or restraint of princes, rulers or people.

 

(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.

 

(c) Clause 27(a) shall not apply to or
effect any liability of Owners or the vessel or any other relevant person in
respect of

 

(i)
loss or damage caused to any berth, jetty, 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, as the case may be, which ought pursuant to Clause 54 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.

 

(d) In particular and without limitation,
the foregoing subsection (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 cargo
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 marine diesel
oil/fuel oil with a maximum of           Centistokes
at 50 at sea – fuel oil as per RMG 35 specification with maximum 380 CST
viscosity for main propulsion and auxiliary engines in port or water described
by IMO and/or EU with fuel oil or marine diesel oil which complies with
specifications required to meet the rules/regulations now existing or which may
be imposed in the future degrees Centigrade/ACGFO for main propulsion and
diesel oil/ACGFO 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
are
in accordance herewith shall be of a quality complying with the International
Marine Bunker Supply Terms and Conditions of Shell International Trading
Company and with its specification for marine fuels as amended from time to
time.

 

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.           Charterers shall have the option,
after consultation with Owners, of requiring Owners to lay up the vessel at a
safe place nominated by Charterers, in which case the hire provided for under
this charter shall be adjusted to reflect any net increases in expenditure
reasonably incurred or any net saving which should reasonably be made by Owners
as a result of such lay-up.   Charterers
may exercise the said option any number of times during the charter period.

 

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 government in respect of such requisition period shall be for
Owners’ account. Any such requisition period shall count as part of the charter
period. Should
the Vessel be requisitioned for title by any government the Charter shall be
terminated.

 

Outbreak of War

 

33.           If war or hostilities break out
between any two or more of the following countries: U.S.A., U.S.S.R., P.R.C.,
U.K., Netherlands-both Owners and Charterers shall have the right to cancel
this charter.

 

Additional War

 

34.           If the vessel is ordered to trade in
areas where there is war (de facto or de jure) or threat of war, Charterers
shall reimburse Owners for any additional insurance premia, 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 of any subrogated rights against Charterers in respect of
any claims by Owners under their war risk insurance arising out of compliance
with such orders.

 

War Risks

 

35.           (a) The master shall not be required
or bound to sign bills of lading for any place which in his 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 it becomes, for any of the reasons set out in Clause 35(a) or by the
operation of international law, dangerous, impossible of 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 by telex or radio
message, 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’
obligation 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
direction 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 or 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 Chamber of Shipping War
Risks Clause 1952.

 

Both to Blame Collision Clause

 

36.           If the liability for any collision in
which the vessel is involved while performing this charter fails 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 payable by the other or
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 fails 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, 1974 as amended in  1994, 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 provisions 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 clause:
See
Clause 54

 

“(1) Subject
to sub-clause (2) 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 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
any term of this bill of lading is repugnant to the Hague-Visby Rules, or Hague
Rules if  applicable, such term shall be void to that extent but no
further.”

 

“(4) 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.”

 

TOVALOP

 

39.                                 Owners warrant that the vessel is:

 

(i) a tanker in TOVALOP and

 

(ii) properly
entered in                      a                                                                  P & I Club who is

a member of the International Group of P&I Clubs

 

and will so remain during the currency of this charter.

 

When an
escape or discharge of Oil occurs from the vessel and causes or threatens to
cause Pollution  Damage, or when there is
the threat of an escape or discharge of Oil (i.e. a grave and imminent danger
of the  escape or discharge of Oil which, if it occurred, would create a
serious danger of Pollution Damage, whether or  not an escape or
discharge in fact subsequently occurs), then Charterers may, at their option
upon notice to  Owners or master, undertake such measures as are
reasonably necessary to prevent or minimise such Pollution  Damage or to
remove the Threat, unless Owners promptly undertake the same.  Charterers shall keep Owners  advised
of the nature and result of any such measures taken by them and, if time
permits, the nature of the  measures intended to be taken by them. Any of
the aforementioned measures taken by Charterers shall be  deemed taken on
Owners’ authority as Owners’ agent, and shall be at Owners’ expense except to
the extent that: 

 

(1) any
such escape or discharge or Threat was caused or contributed to by Charterers,
or

 

(2) by reason of the exceptions set out
in Article 111, paragraph 2, of the 1969 International  Convention on
Civil Liability for Oil Pollution Damage, Owner are or, had the said Convention
applied to such  escape or discharge or to the Threat, would have been
exempt from liability for the same, or

 

(3) the cost to such measures together
with all other liabilities, costs and expenses of Owners arising  out of
or in connection with such escape or discharge or Threat exceeds one hundred
and sixty United States  Dollars (US $160) per ton of the vessel’s
Tonnage or sixteen million eight hundred thousand United States  Dollars
(US $16.800.000), whichever is the lesser, save and insofar as Owners shall be
entitled to recover such  excess under either the 1971 International
Convention on the Establishment of an International Fund for  Compensation
for Oil Pollution Damage or under CRISTAL;

 

PROVIDED
ALWAYS that if Owners in their absolute discretion consider said measures

 

 

should be discontinued, Owners shall so notify
Charterers and thereafter Charterers shall have no right to  continue said measures under the provisions of this Clause 39
and all further liability to Charterers under this  Clause 39 shall
thereupon cease. 

 

The above
provisions are not in derogation of such other rights as Charterers or Owners
may have  under this charter or may
otherwise have or acquire by law or any International Convention or TOVALOP.

 

The term
“TOVALOP” means the Tanker Owners’ Voluntary Agreement Concerning Liability  for Oil Pollution dated 7th January 1969, as amended
from time to time, and the term “CRISTAL” means the  Contract Regarding
an Interim Supplement to Tanker Liability for Oil Pollution dated 14th
January 1971, as  amended from time to time.  The term “Oil” , “Pollution Damage”, and “Tonnage” shall for the
purpose of this  Clause 39 have the meanings ascribed to them in TOVALOP.

 

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 of export of the
cargo to the place of discharge designated in or ordered under this bills 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 mutatis mutandis to this charter,
the references to a bill of lading being deemed to be references to this
charter.

 

Laws and Litigation

 

41.           (a) This charter shall be construed
and the relations between the parties determined in accordance with the laws of
England.

 

(b) Any dispute arising under this charter
shall be referred to the arbitration in London in accordance with the
provisions of the Arbitration Act 1996, or any statutory modification or
re-enactment thereof for the time being in force save to the extent necessary
to give effect to this provisions of this Clause.  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.

 

The reference shall be to three arbitrators; one to be
appointed by each of the parties hereto, and the third to be appointed by the
two so chosen; their decision or that of any two of them shall be final.  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 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 with in 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 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.

 

In cases where neither the claim nor any counterclaim
exceeds the sum of USD50,000 (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.

 

 (ii) The parties hereby agree that either
party may-

 

(a) appeal to
the High Court on any question of law arising out of an award:

 

(b) apply to
the High Court for an order that the arbitrator state the reasons for his
award:

 

(c) give
notice to the arbitrator that a reasoned award is required; and

 

(d) apply to
the High Court to determine any question of law arising in the course of the
reference.

 

(d) 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.

 

 

Construction

 

42.           The side headings have been included
in this charter for convenience of reference and shall in no way  affect the construction thereof. Rider
Clauses 43 to 67 as attached and Annex 1 to form an integral part of  this Charter Party.

 

 

SHELLTIME 4 RIDER CLAUSES

 

“FRONT GRANITE”

 

43.                     TRADING LIMITS CLAUSE

 

World-wide within the British Institute
Warranty Limits, as may be revised from time to time, or within the limits
applying in Owners’ insurances in effect from time to time, however excluding
any war zones and any other areas to which restrictions may be imposed by the
United Nations or the flag state. The Charterers may be allowed to breach the
trading limits as described above subject to the Charterers paying any extra
insurance premium supported by vouchers from Owners’ underwriters.

 

44.                     RATE OF HIRE

 

Subject to the terms and conditions of the
Charter Ancillary Agreement, the Charterers shall pay for the use of the Vessel
in accordance with the terms of this Charter Party a daily rate in US Dollars
as per the following schedule:

 

Basic Charter Period (Clause 4)

 

	
  1st
  year to end December 31, 2004

  	
   

  	
  $

  	
  21,100

  	
   per day/rate

  
	
  2nd
  year to end December 31, 2005

  	
   

  	
  $

  	
  21,100

  	
    per day/rate

  
	
  3rd
  year to end December 31, 2006

  	
   

  	
  $

  	
  21,100

  	
    per day/rate

  
	
  4th
  year to end December 31, 2007

  	
   

  	
  $

  	
  20,700

  	
    per day/rate

  
	
  5th
  year to end December 31, 2008

  	
   

  	
  $

  	
  20,700

  	
    per day/rate

  
	
  6th
  year to June 30, 2009

  	
   

  	
  $

  	
  20,700

  	
    per day/rate

  
	
  July
  1, 2009 to December 31, 2009

  	
   

  	
  $

  	
  15,348

  	
    per day/rate

  
	
  7th
  year to end December 31, 2010

  	
   

  	
  $

  	
  15,348

  	
    per day/rate

  
	
  8th
  year to end December 31, 2011

  	
   

  	
  $

  	
  7,500

  	
    per day/rate

  
	
  9th
  year to end December 31, 2012

  	
   

  	
  $

  	
  7,500

  	
    per day/rate

  
	
  10th
  year to end December 31, 2013

  	
   

  	
  $

  	
  7,500

  	
    per day/rate

  
	
  11th
  year to end December 31, 2014

  	
   

  	
  $

  	
  7,500

  	
    per day/rate

  

 

provided, however, that regardless of the actual number of days
on-hire in any calendar year the Charterers shall not be obligated to pay to
the Owners more than 360 days of charter hire in any calendar year or 361 days
of charter hire in any leap year.  Any
off-hire days shall count against the allotted 360 or 361 days, as the case may
be.

 

45.                     OPTIONS

 

Non-applicable

 

 

46.                     CHANGE OF OWNERSHIP CLAUSE

 

The Owners agree not to sell the Vessel
during the currency of this Time Charter without the written approval of the
Charterers which approval may withheld in the Charterers’ sole discretion.  For purposes of this Clause 46, any sale,
assignment, transfer, conveyance or disposition of the shares of the Owners,
directly or indirectly through intermediate holding companies, by its sole
shareholder, Ship Finance International Limited, to any third party not
controlled by Ship Finance International Limited shall be deemed a sale of the
Vessel.

 

47.                     CHANGE OF CLASSIFICATION SOCIETY

 

The Owners shall have the right to change
the Vessel’s classification society to another classification society being a
member of the IACS, subject to obtaining the prior written approval of the
Charterers which approval may be withheld in the Charterers’ sole discretion.

 

48.                  HOUSE FLAG

 

The Charterers and any subcharterers shall
be allowed to fly their house flag and to paint the Vessel’s funnel with their
own colours if desired at Charterers’ expense.

 

49.                  FLAG CLAUSE

 

The Vessel will fly the flag of Norway with
the right of the Owners to have title to the Vessel registered in an other
register at any time at Owners’ cost and expense also with regard to higher
operating costs incurred thereby. A change of flag must be approved by the
Charterers, Charterers’ approval not to be unreasonably withheld. The same
right to have the Vessel’s register changed shall apply to the Charterers at
Charterers’ costs and expenses, also with regard to higher operating costs
incurred thereby.

 

50.                  ADDITIONAL SMALL EQUIPMENT CLAUSE

 

The Charterers shall be at liberty to
supplement lines and mooring wires, to fit any additional pumps and/or other
vessel gear beyond what is on board at the commencement of the Charter, and to
make the necessary connections with hydraulic, steam or water pipes, such work
to be done at their expenses, and such pumps and/or gear so fitted to be
considered their property, and the Charterers shall be at liberty to remove it
at their expense and time during or at the expiry of this Charter, with the
Vessel to be left in her original condition. Such additions to be always subject
to class approval. The Owners shall however have the option to take over such
additional equipment at a price to be agreed between Charterers and Owners.

 

 

51.                CHANGES/IMPROVEMENTS NECESSARY FOR THE OPERATION OF THE
VESSEL OR IMPOSED BY LEGISLATION OR CLASS

 

51.1             In the event any improvement,
structural change or the installation of new equipment is imposed by compulsory
legislation and/or class rules, Charterers shall have the right at their own
cost to effect such improvement, changes or installation, without the Owners’
consent.

 

51.2             In the event any improvement,
structural change or the installation of new equipment is deemed necessary by
the Charterers for the continued operation of the Vessel, Charterers shall have
the right at their own cost to effect such improvement, changes or
installation, with the Owners’ consent which shall not unreasonably be
withheld.

 

51.3             The Owners have to be notified in
writing in advance by the Charterers about any changes and/or improvements as
per Clauses 51.1 and 51.2.

 

51.4             Any change, improvement or
installation made pursuant to this Clause 51 shall become the property of
Owners.

 

51.5             Nothing in this Clause 51 shall be
construed as to impose any obligation on the Owners to effect any improvement
or structural change with respect to or install new equipment on the Vessel.

 

52.                  UNDERTAKING OF CHARTERERS TO INDEMNIFY

 

In the event, at the time during the period
of this Charter Party and any extension thereto, that Bill(s) of Lading are not
available at any discharge port(s) and/or actual discharge port(s) is/are
different from destination appearing on the Bill(s) of Lading, the Owners shall
nevertheless discharge the cargo carried by the Vessel in compliance with
Charterers’ instructions to the consignee(s) nominated by the Charterers
presenting reasonable identification to the Master, in consideration of which
the following undertaking shall be deemed to have been agreed by the Charterers
and to be in full force and effect on each occasion when discharge as aforesaid
takes place.

 

Undertaking:

 

The Charterers hereby agree as follows :-

 

1.               To
indemnify you the Owners, 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 Vessel, 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 Vessel, other 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.

 

53.                  LIGHTERAGE

 

If the Charterers opt to load and/or
discharge by lighterage operations the following provisions shall apply:

 

In the event lighterage is required by
Charterers, it shall be at Charterers’ risk and expense and Charterers shall
provide a safe area for the conduct of such lighterage operation where the
vessel can safely proceed to, lie and depart from, always afloat and which
shall be subject to Master’s approval.

 

Charterers shall ensure that adequate
fendering and hoses to the satisfaction of the Master are provided. As far as
possible such operations shall be carried out in conformity with the provisions
of the latest edition issued by OCIMF Ship to Ship Transfer Guide, as may be
amended from time to time, but in any case lighterage operations are to be at
the discretion of the Master at all time and if the Master at any time
considers that lighterage operations are about to become unsafe, then he may
order that they be discontinued. Whether or not operations are discontinued,
all time will be considered as on hire. If Owners are obliged to extend their
existing insurance policies to cover lighterage operations, Charterers shall
reimburse Owners for additional premium incurred. Charterers shall obtain
permission from appropriate authorities to perform lighterage and all expenses
in this connection shall be for Charterers’ account.

 

54.                  NEW CLAUSE PARAMOUNT

 

The Charterers warrant to include following
clauses in all Bills of Lading issued pursuant to this Time Charter by them or
any subcharterer:

 

(i)                            Subject to subclauses (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 rights or immunities or any
increase of any of his responsibilities or liabilities under the Hague-Visby
Rules.

 

(ii)                       If there is governing legislation
which applies the Hague Rules compulsory 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.

 

(iii)                    If there is governing legislation
which applies the Hamburg Rules compulsory to this Bill of Lading to the
exclusion of the Hague-Visby Rules, then this Bill of Lading shall have effect
subject to the Hamburg 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 Hamburg Rules.

 

(iv)                   If any term of this Bill of Lading
is repugnant to the Hague-Visby Rules, or Hague Rules or Hamburg Rules, if
applicable, such term shall be void to that extent but no further.

 

55.                TIME CHARTER ENVIRONMENTAL LEGISLATION (COFR) CLAUSE

 

If Charterers advise Owners that the Vessel
is to call at any port where environmental legislation has been enacted that requires
the procurement of financial guarantees, special certificates or special
permits, all related costs payable per call related to compliance with such
legislation (including obtaining a Certificate of Financial Responsibility and
other requirements of the Oil Pollution Act of 1990, as amended from time to
time, with respect to any U.S. port) shall be paid by Charterers. Owners shall
supply any relevant documents to Charterers, and Charterers shall have the
benefit of any eventual discount on the above.

 

56.                  ASSIGNMENT CLAUSE

 

Notwithstanding any other provisions of the
Time Charter Party, the Charterers may assign all of their rights and
obligations under this Time Charter Party to any affiliate. But the Charterers
to remain fully responsible for the fulfilment of the Charter Party.

 

57.                  NOTICE CLAUSE

 

The Charterers to give 30 days approximate
and 5 days definite notice of redelivery to the Owners.

 

58.                  ENGLISH LANGUAGE CLAUSE

 

The Owners undertake to have fluent English
speaking officers available on board and ashore to ensure appropriate
communications between Charterers/ Owners/Managers/Agents/Authorities/Terminal
Officials.

 

59.                  CLEANING CLAUSE

 

The Owners/Master to be at Charterers’
disposal for all tank cleaning making full use of the Vessel’s crew and
equipment. The Owners, the Master and crew to use best endeavours to minimise
cleaning time and expenses.

 

 

60.                  [INTENTIONALLY DELETED]

 

61.                  [ INTENTIONALLY DELETED]

 

62.                  OWNERS’ INDEMNITY CLAUSE FOR ARREST

 

Owners shall indemnify and hold harmless
Charterers from and against any harmful consequences, damages and/or losses of
whatever nature suffered by Charterers as a consequence of any arrest or
detention of the Vessel or other action against the Vessel, depriving
Charterers from the use thereof and resulting from Owners’ failure, for
whatever reason, to comply with its obligations under this Charter or otherwise
towards third parties and/or public authorities.

 

63.                  CHARTER ANCILLARY AGREEMENT

 

The Owners and the Charterers have entered
into a Charter Ancillary Agreement with, inter alia, Ship Finance
International Limited and Frontline Ltd. This Time Charter Party is subject to
certain provisions contained in and should be read together with such Charter
Ancillary Agreement.  In the event of
any conflict between the provisions hereunder and the provisions of the Charter
Ancillary Agreement, the provisions of the Charter Ancillary Agreement shall
prevail.

 

64.                  TERMINATION PROVISIONS

 

In addition to the provisions with respect
to termination set forth in clauses 9, 20 and 32 [and 67, if applicable]
hereof, certain termination provisions with respect to this Agreement/Charter
are set forth in the Charter Ancillary Agreement.

 

65.                  THIRD PARTY CLAUSE

 

Except as may be otherwise agreed in
writing by the parties with any third party, a person who is not party to this
Agreement/Charter may not enforce, or otherwise have the benefit of, any
provision of this Agreement/Charter under the Contracts (Rights of Third
Parties Act 1999), but this provision does not affect any right or remedy of a
third party which exists or is available apart from that Act.

 

66.                  CHARTERERS OPTION TO DIRECT BAREBOAT OF VESSEL

 

The Charterers shall have the right to
direct the Owners to bareboat charter the Vessel to an unrelated third
party.  In the event that the Owners
enter into a bareboat charter (the “Bareboat Charter”) with such unrelated
third party with respect to the Vessel at the Charterers’ direction, the
parties hereby agree that this Agreement/Charter shall remain in full force and
effect and until such time as the Vessel is redelivered under the Bareboat
Charter and physically delivered to the Charterers hereunder: (i) the
Charterers will (A) continue to make all payments of Charter Hire set forth in
Clause 44 (less $6500 per day), (B) guarantee the performance of the charterer
under the Bareboat Charter and (C) assume and undertake to perform (at their
own cost) the obligations of the Owners under the Bareboat Charter in
accordance with sound commercial practices; and (ii) the Owners shall (A) remit
to the Charterers any and all payments of charter hire under the Bareboat
Charter and (B) assign their rights under the Bareboat Charter to the
Charterers.  The Charterers hereby agree
to automatically accept

 

 

delivery of the Vessel upon redelivery of
the Vessel under the Bareboat Charter. 
In order to give effect to this Clause 66, the parties agree that Owners
may set off any amounts received from the third party bareboat charterer
pursuant to the Bareboat Charter against amounts due from the Charterers
pursuant to this Clause 66.

 

67.                  TERMINATION AFTER 2010

 

The Charterers shall have the option to
terminate this Agreement/Charter after December 31, 2010 upon 30 days’ prior
notice.

 

 

	
  For the Owners:

  	
   

  	
  For the Charterers:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  

 

 

ANNEX 1

DESCRIPTION OF VESSELExhibit 10.5

 

	
   

  	
   

  	
   

  	
   

  	
  [LOGO]

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.

  	
   

  	
  Date of
  Agreement

  	
   

  	
  THE BALTIC AND INTERNATIONAL MARITIME COUNCIL (BIMCO)

  
	
   

  	
   

  	
  Jan .1, 2004

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  STANDARD SHIP MANAGEMENT AGREEMENT

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  CODE NAME: “SHIPMAN 98”

  
	
   

  	
   

  	
   

  	
   

  	
  Part I

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
   

  	
  Owners
  (name, place of registered office and law of registry) (Cl. 1)

  	
   

  	
  3.

  	
   

  	
  Managers
  (name, place of registered office and law of registry) (Cl. 1)

  
	
   

  	
   

  	
  Granite Shipping company Limited

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name

  	
   

  	
   

  	
   

  	
  Name

  
	
   

  	
   

  	
  Monrovia, Liberia

  	
   

  	
   

  	
   

  	
  Frontline Management (Bermuda) Ltd.

  
	
   

  	
   

  	
  Place of
  registered office

  	
   

  	
   

  	
   

  	
  Place of
  registered office

  
	
   

  	
   

  	
  Liberia

  	
   

  	
   

  	
   

  	
  Hamilton, Bermuda

  
	
   

  	
   

  	
  Law of
  registry

  	
   

  	
   

  	
   

  	
  Law of
  registry

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Bermuda

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.

  	
   

  	
  Day and year
  of commencement of Agreement (Cl. 2)

  	
   

  	
   

  
	
   

  	
   

  	
  See Clauses 2 and 17

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5.

  	
   

  	
  Crew
  Management (state “yes” or “no” as agreed) (Cl. 3.1)

  Yes

  	
   

  	
  6.

  	
   

  	
  Technical
  Management (state “yes” or “no” as agreed) (Cl. 3.2)

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Yes

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7.

  	
   

  	
  Commercial
  Management (state “yes” or “no” as agreed) (Cl. 3.3)

  	
   

  	
  8.

  	
   

  	
  Insurance
  Arrangements (state “yes” or “no” as agreed) (Cl. 3.4)

  
	
   

  	
   

  	
  No

  	
   

  	
   

  	
   

  	
  Yes

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  9.

  	
   

  	
  Accounting
  Services (state “yes” or “no” as agreed) (Cl. 3.5)

  Yes

  	
   

  	
  10.

  	
   

  	
  Sale or
  purchase of the Vessel (state “yes” or “no” as agreed) (Cl. 3.6)

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  No

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  11.

  	
   

  	
  Provisions
  (state “yes” or “no” as agreed) (Cl. 3.7)

  	
   

  	
  12.

  	
   

  	
  Bunkering
  (state “yes” or “no” as agreed) (Cl. 3.8)

  
	
   

  	
   

  	
  Yes

  	
   

  	
   

  	
   

  	
  No

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  13.

  	
   

  	
  Chartering
  Services Period (only to be filled in if “yes” stated in Box 7) (Cl. 3.3(i))

  	
   

  	
  14.

  	
   

  	
  Owners’
  Insurance (state alternative (i), (ii) or (iii) of Cl.
  6.3)

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  6.3 (i), (ii) and (iii)

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  15.

  	
   

  	
  Annual
  Management Fee (state annual amount) (Cl. 8.1)

  	
   

  	
  16.

  	
   

  	
  Severance
  Costs (state maximum amount) (Cl. 8.4(ii))

  
	
   

  	
   

  	
  See Clause 21.1 and 21.2

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  17.

  	
   

  	
  Day and year
  of termination of Agreement (Cl. 17)

  See Clause 17

  	
   

  	
  18.

  	
   

  	
  Law and
  Arbitration (state alternative 19.1, 19.2 or 19.3; if 19.3
  place of arbitration must be stated) (Cl. 19)

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  19.1

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  19.

  	
   

  	
  Notices
  (state postal and cable address, telex and telefax number for serving notice
  and communication to the Owners) (Cl. 20)

  	
   

  	
  20.

  	
   

  	
  Notices
  (state postal and cable address, telex and telefax number for serving notice
  and communication to the Managers) (Cl. 20)

  
	
   

  	
   

  	
  c/o Ship Finance International Limited

  	
   

  	
   

  	
   

  	
  Par-La-ville Place

  
	
   

  	
   

  	
  Par-La-Ville Place

  	
   

  	
   

  	
   

  	
  14 Par-La-Ville Road

  
	
   

  	
   

  	
  14 Par-La-Ville Road

  	
   

  	
   

  	
   

  	
  Hamilton, Bermuda HM 08

  
	
   

  	
   

  	
  Hamilton, Bermuda HM 08

  	
   

  	
   

  	
   

  	
  Attention: Managing Director

  
	
   

  	
   

  	
  Attention: Managing Director

  	
   

  	
   

  	
   

  	
  Facsimile: +1 441 295 3494

  
	
   

  	
   

  	
  Facsimile: +1 441 295 3494

  	
   

  	
   

  	
   

  	
   

  
	
  It is
  mutually agreed between the party stated ins Box 2 and the party
  stated in Box 3 that this Agreement consisting of PART I and PART
  II as well as Annexes “A” (Details of Vessel), “B”
  (Detail of Crew), “C” (Budget) and “D” (Associated vessels)
  attached hereto, shall be performed subject to the conditions contained
  herein.  In the event of a conflict of
  conditions, the provisions of PART I and Annexes “A”,
  “B”, “C”and “D” shall prevail over those of PART
  II to the extent of such conflict but no further..

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Signature(s)
  (Owners)

  	
   

  	
  Signature(s)
  (Managers)

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  /s/
  [ILLEGIBLE] (POA)

  	
   

  	
  /s/
  [ILLEGIBLE] / (POA)

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Approved by

  	
   

  	
   

  
	
   

  	
   

  	
  the Documentary Committee of The

  	
   

  	
  Approved  by

  
	
  Printed by BIMCO’s Idea

  	
   

  	
  Japan Shipping Exchange Inc., Tokyo

  	
   

  	
  the International Ship Managers’ Association (ISMA)

  
																

 

This document is a computer
generated SHIPMAN 98 form printed by authority of BIMCO.  Any insertion or deletion to the form must
be clearly visible.  In the event of any
modification made to the pre-printed text of this document which in not clearly
visible, the text of the original BIMCO approved document shall apply.  BIMCO assumes no responsibility for any
loss, damage or expense as a result of discrepancies between the original BIMCO
approved document and this computer generated document.

 

 

 

ANNEX
“A” (DETAILS OF VESSEL OR VESSELS) TO

THE BALTIC AND INTERNATIONAL MARITIME COUNCIL (BIMCO)

STANDARD SHIP MANAGEMENT AGREEMENT - CODE NAME: “SHIPMAN 98”

 

 

Date of Agreement:

      ,
2004

Name of Vessel(s):

 

Particulars of Vessel(s):

See
description Annex 1

 

 

ANNEX 1

DESCRIPTION OF VESSEL

 

 

 

	
  Sent by::
  Wallem Shipmanagement, Inc.

  	
   

  	
  954 725 009;

  	
   

  	
  12/09/03
  3:15PM; JetFax #416;Page 17/28

  
	
  Received at:
  9h 41m, 12/9/2003

  	
   

  	
   

  	
   

  	
  FRONT
  GRANITE

  
	
   

  	
   

  	
   

  	
   

  	
  P 002

  
	
  12/09/03    14:29     FAX
  NO.:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  [ILLEGIBLE]

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [LOGO]

  	
   

  	
  KONGERIKET NORGE

  	
   

  	
   

  
	
   

  	
   

  	
  (NORWAY)

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  INTERNASJONALT MALEBREY (1969)

  	
   

  	
   

  
	
   

  	
   

  	
  International Tonnage Certificate 1969

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  [ILLEGIBLE]

  	
   

  	
   

  
									

 

 

PART II

“SHIPMAN 98” Standard Ship Management
Agreement

 

1.              Definitions

 

In this
Agreement save where the context otherwise requires, the following words and
expressions shall have the meanings, hereby assigned to them.

 

“Owners” means the party identified in Box
2. 

 

“Managers” means the party identified in Box
3.

 

“Vessel” means the vessel or vessels details
of which are set out in Annnex “A” attached hereto.

 

“Crew” means the Master, officers and
ratings of the Vesselnumbers, rank and nationality specified in Annex “8”
attached hereto.

 

“Crew Support Costs” means all expenses of
a general nature which are not particularly referable to any individual vessel
for the time being managed by the Managers and which are incurred by the
Managers for the purpose of providing an efficient and economic management
service and, without prejudice to the generality of the foregoing, shall
include the cost of crew standby pay, training schemes for officers and
ratings, cadet training schemes, sick pay, study pay, recruitment and
interviews.

 

“Severance Costs” means the costs which the
employers are legally obliged to pay to or in respect of the Crew as a result
of the early termination of any employment contract for service on the Vessel.

 

“Crew Insurances” means insurances against
crew risks which shall include but not be limited to death, sickness,
repetriation, injury, shipwreck unemployment indemnity and loss of personal
effects.

 

“Management Services” means the services
specified in sub-clauses 3.1 to 3.8 as indicated affirmatively in Boxes 5
to 12.

 

“ISM Code” means the International
Management Code for the Safe Operation of Ships and for Pollution Prevention as
adopted by the International Maritime Organization (IMO) by resolution
A.741(18) or any subsequent amendment thereto.

 

“STCW 95”means the International Convention
on Standards of Training, Certification and Watchkeeping for Seafarers, 1978,
as amended in 1995 or any subsequent amendment thereto.

 

“Time Charter”
means the time charterparty between Owners as owners and Frontline Shipping
Limited (the “Time Charterers”) as charterers effective as of January 1, 2004.

 

“Charters
Ancilliary Agreement” means that certain agreement by and among, inter alia,
Ship Finance International Limited, Frontline Ltd., the Time Charterers, the
Owners and certain of Ship Finance International Limited’s other vessel-owning
subsidiaries with respect to, inter alia, theTime Charter.

 

“Agreement”
means Part I, Part II, including Rider Clauses 21 to 37, as well as Annex A.

 

2.              Appointment of
Managers

 

With effect
from the effective date of the Time Charter day and year stated in Box 4
and continuing unless and until terminated as provided herein, the
Owners herby appoint the Managers and the Managers hereby agree to act as the
Managers of the Vessel.

 

[FOR VESSELS
CURRENTLY UNDER BAREBOAT TO 3RD PARTIES, THIS AGREEMENT SHALL BECOME
EFFECTIVE FROM THE DATE OF ACTUAL PHYSICAL DELIVERY UNDER THE TIME CHARTER –
THIS CLAUSE WILL BE MODIFIED AS NECESSARY TO REFLECT SUCH STATUS]

 

3.              Basis of Agreement

 

Subject to the
terms and conditions herein provided, during the period of this Agreement, the
Managers shall carry out Management Services in respect of the Vessel as agents
for and on behalf of the Owners. The Managers shall have authority to take such
actions as they may from time to time in their absolute discretion consider to
be necessary to enable them to perform this Agreement in accordance with sound
ship management practice.

 

3.1 Crew Management

(only applicable if agreed according to Box
5)

 

The Managers
shall provide at their own cost suitably qualified Crew for the Vessel as
required by the Owners in accordance with the STCW 95 Requirements and the Time
Charter, provision of which includes but is not limited to the following
functions:

 

(i)             selecting
and engaging the Vessel’s Crew, including payroll arrangements, pension
administration, and insurances for the Crew other than those mentioned in Clause
6;

(ii)          ensuring
that the applicable requirements of the law of the flag of the Vessel are
satisfied in respect of manning levels, rank, qualification and certification
of the Crew and employment regulations including Crew’s tax, social insurance,
discipline and other requirements;

(iii)       ensuring
that all members of the Crew have passed a medical examination with a qualified
doctor certifying that they are fit for the duties for which they are engaged
and are in possession of valid medical certificates issued in accordance with
appropriate flag State requirements. In the absence of applicable flag State
requirements the medical certificate shall be dated not more than three months
prior to the respective Crew members leaving their country of domicile and
maintained for the duration of their service on board the Vessel;

(iv)      ensuring
that the Crew shall have a command of the English language of a sufficient
standard to enable them to perform their duties safely;

(v)         arranging
transportation of the Crew, including repatriation;

(vi)      training
of the Crew and supervising their efficiency;

(vii)   conducting
union negotiations;

(viii) operating the Managers’ drug and
alcohol policy unless otherwise agreed;

(ix)        ensuring
that any compliants from the Time Charterers with respect to the conduct of the
Crew are immediately investigated, communicating the results of such
investigation to the Time Charterers and if such complaints are well founded
ensuring that changes in the appointments are made without delay.

 

3.2       Technical Management

(only applicable if agreed according to Box
6)

 

Subject to the
limitations set forth in Clause 25.6. The Managers shall provide at their own
cost technical management which shall include the performance of each and all
of the Owners’ obligations to the Time Charaters in accordance with the terms
of the Time Charter and meeting all liabilities and obligations of the Owner
arising under the Time Charter to the Time charterers or any third party which
also includes, but is not limited to, the following functions:

 

(i)             provision
of competent personnel to supervise the Maintenance, and general efficiency
and, if necessary, restoration of the Vessel in accordance with the conditions
stipulated in Clause 1 and 2(a) of the Time Charter;

(ii)          arrangement
and supervision of dry dockings, repairs, alterations and the [ILLEGIBLE]
(including, if necessary, [ILLEGIBLE]) of the Vessel to the standards required by
of the Owners by class and provided that the Managers shall be
entitled to incur the necessary expenditure to ensure that the Vessel will
comply with the law of the flag of the Vessel and of the places where she
trades (including, if required, the provision of [ILLEGIBLE] certificates),
and all requirements and recommendations of the classification society;

(iii)       arrangement
of the supply of necessary stores, spares and lubricating oil;

(iv)      appointment
of surveyors and technical consultants as the Managers may consider from time
to time to be necessary;

(v)         development,
implementation and maintenance of a Safety Management System (SMS) in
accordance with the ISM Code (see sub-clauses 4.2  and 5.3).

(vi)      Functions
as per (iv) and (v) above to be effected after due consultation with Owners and
Time Charterers.

 

3.3       Commercial Management

(only applicable if agreed according to Box
7)

 

 

PART II

“SHIPMAN 98” Standard Ship Management
Agreement

 

The Managers shall provide the commercial operation of the Vessel, as
required by the Owners, which includes, but is not limited to, the following
functions:

 

(i)    providing chartering
services in accordance with the Owners’ instructions which include, but are not
limited to, cooking and negotiating employment for the Vessel and the
conclusion (including the execution thereof) of charter parties or other
contracts relating to the employment of the Vessel.  If such a contract exceeds the period stated in Box 13,
consent thereto in writing shall first be obtained from the Owners.

(ii)   arranging of the proper
payment to Owners or their nominees of all hire and/or freight revenues or
other moneys of whatsoever nature to which Owners may be entitled arising out
of the employment of or otherwise in connection with the Vessel.

(iii)  providing voyage estimates
and accounts and calculating of hire, freights, demurrage and/or despatch
moneys due from or due to the charterers of the Vessel;

(iv)  issuing of voyage
instructions;

(v)   appointing agents;

(vi)  appointing stevedores;

(vii) arranging surveys associated
with the commercial operation of the Vessel.

 

3.4  Insurance
Arrangements

(only applicable if agreed according to Box
8)

 

The Managers
shall arrange at their own cost insurances in accordance with Clause 6, on such
terms and conditions as the Owners shall have instructed or agreed, in
particular regarding conditions, insured values, deductibles and franchises.

 

3.5  Accounting
Services

(only applicable if agreed according to Box
9)

 

The Managers
shall at their own cost:

(i)    establish an accounting system with respect
to the management, operation and maintenance of the Vessel (including
accounting for insurance costs, deductibles, claims and collections) which
meets the requirements of the Owners and provide regular accounting services,
supply regular reports and records,

(ii)          maintain
the records of all costs and expenditure incurred as well as data necessary or
proper for the settlement of accounts between the parties.

 

3.6  Sale
or Purchase of the Vessel

(only applicable if
agreed according to Box 10)

 

The Managers shall, in accordance with the Owners’ Instructions,
supervise the sale or purchase of the Vessel, including the performance of any
sale or purchase agreement, but not negotiation of the same.

 

3.7  Provisions
(only applicable if
agreed according to Box 11)

 

The Managers
shall at their own cost arrange for the supply of provisions.  The Owners acknowledge that all provisions,
stores, lubricating oil and other consumables on board on the date when this
Agreement takes effect are the property of the Managers.  Upon redelivery, the Owners shall pay the
Managers for all provisions on board at cost.

 

3.8  [ILLEGIBLE]
(Only
applicable if agreed according to Box 12)

 

The Managers shall arrange for the provision of bunkar fuel of the
quality specified by the Owners as required for the Vessel’s trade.

 

4.     Managers’
Obligations

 

4.1 The Managers
undertake to use their best endeavours to provide the agreed Management
Services as agents for and on behalf of the Owners.  In accordance with the terms of the Time
Charter and sound ship management practice and to protect and promote the
interests of the Owners in all matters relating to the provision of services
hereunder.

 

Provided,
however, that the Managers in the performance of their management
responsibilities under this Agreement shall be entitled to have regard to their
overall responsibility in relation to all vessels as may from time to time be
entrusted to their management and in particular, but without prejudice to the
generality of the foregoing, the Managers shall be entitled to allocate
available supplies, manpower and services in such manner as in the prevailing
circumstances the Managers in their absolute discretion consider to be fair and
reasonable.

 

4.2 Where the
Managers are providing Technical Management in accordance with sub-clause 3.2,
they shall procure that the requirements of the law of the flag of the Vessel
are satisfied and they shall in particular be deemed to be the “Company” as
defined by the ISM Code, assuming the responsibility for the operation of the Vessel
and taking over the duties and responsibilities imposed by the ISM Code when
applicable.

 

5.     Owners’
Obligations

 

5.1 The Owners shall
pay the Warranted Amounts referred to in Clause 21 all sums due to the
Managers punctually in accordance with the terms of this Agreement.

 

5.2 Where the
Managers are providing Technical Management in accordance with sub-clause 3.2,
the Owners shall:

(i)    procure that all officers
and ratings supplied by them or on their behalf comply with the requirements of
STCW 95;

(ii)   instruct such officers and ratings to obey
all reasonable orders of the Managers in connection with the operation of the
Managers’ safety management system.

 

5.3 Where the
Managers are not providing Technical Management in accordance with sub-clause 3.2,
the Owners shall procure that the requirements of the law of the flag of the
Vessel are satisfied and that they, or such other entity as may be appointed by
them and identified to the Managers, shall be deemed to be the “Company” as
defined by the ISM Code assuming the responsibility for the operation of the
Vessel and taking over the duties and responsibilities imposed by the ISM Code
when applicable.

 

6.     Insurance
Policies

 

The Owners
Managers shall procure, whether by instructing the Managers under sub-clause
3.4 or otherwise, that throughout the period of this Agreement including
during any off-hire time:

 

6.1 at the Owners’
Managers’ expense, the Vessel is insured for not less than her sound market
value or entered for her full gross tonnage, as the case may be for:

(i)             usual ?? and
machinery marine risks (including crew negligence) and excess liabilities
according to Norwegian or similar standard;

(ii)          protection and indemnity
risks (including pollution risks and Crew insurances) with a P & I Club that
is a member of the International Group of P&I Clubs; and

(iii)       war
risks (including protection and indemnity and crew risks) in accordance with
the best practice of prudent owners of vessels of a similar type to the Vessel,
with first class insurance companies, underwriters or associations (“the
Owners’ Insurances”);

 

6.2 all premiums and
calls on the Owners’ Insurances are paid promptly by their due date,

 

6.3 the Owners’
Insurances name the Managers Owners, the Time Charterers and the
Managers and, subject to underwriters’ agreement, any third party designated by
the Managers Owners, the Time Charterers and/or the Managers as a joint
assured, with full cover, with the Owners Managers obtaining cover in
respect of each of the insurances specified in sub-clause 6.1;

(i)             on
terms whereby the Managers and any such third party are liable in respect of
premiums or calls arising in connection with the Owners’ insurances; or

 

 

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“SHIPMAN 98” Standard Ship Management
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(ii)          if
reasonably obtainable, on terms such that neither the Mangers nor any such
third party shall be under any liability in respect of premiums or calls
arising in connection with the Owners’ Insurances; or

(iii)  on such other terms as may be agreed in
writing between the Manager and the Owners, but in all cases subject to the
terms and conditions that the Owners shall have agreed with the mortgages of
the Vessel.

Indicate alternative (i), (ii) or (iii) in Box
14, if Box 14 is left blank then (i) applies.

 

6.4 written
evidence is provided, to the reasonable satisfaction of the Managers Owners, of
their compliance with their obligations under Clause 6 within a
reasonable time of the commencement of the Agreement, and of each renewal date
and, if specifically requested, of each payment date of the Owners’
Insurances.

 

7.              Income Collected and
Expenses Paid on Behalf of Owners

 

7.1 All moneys collected by the Managers under the terms of this
Agreement (other than moneys payable by the Owners to the Managers) and ony
interest thereon shall be held to the credit of the Owners in a separate bank
account.

 

7.2 All expense incurred by the Managers under the terms of this
Agreement on behalf of the Owners (including expenses as provided in Clause 8
may be debited against the Owners in the account referred to under sub clause
7.1 but shall in any event remain payable by the Owners to the Managers on
demand.

 

8.              Management ChargeFee

 

8.1 The Owners
shall pay to the Managers for their services as Managers and for the provision
of all Management Services under this Agreement theon Warranted Amounts annual
management fee referenced in Clauses 21.1 and 21.2 as stated in Box 15
which shall be payable by equal monthly instalments in advance, the first
instalment being payable on the effective datecommencement of this
Agreement (see Clause 2 and Box 4) and subsequent instalments
being payable every month.

 

8.2 The
management chargefee shall be fixed and final for the entire duration of this
Agreement.  subject to an annual
review on the anniversary date of the Agreement and the proposed fee shall be
presented in the annual budget referred to in sub-clause 9.1.

 

8.3 The
Managers shall, at no extra cost to the Owners, provide their own office
accommodation, office staff, facilities and stationery.  Without limiting the generally of Clause
7 the Owners shall reimburse the Managers for postage and communication
expenses, traveling expenses, and other out of pocket expenses properly
incurred by the Managers in pursuance of the Management Services.

 

8.4 In the event of the appointment of the Managers being terminated by
the Owners or the Managers in accordance with the provisions of Clause 17
and 18 other than by reason of default by the Managers, or if the Vessel
is lost, sold or otherwise disposed of the “management fee” payable to the
Managers according to the provisions of sub-clause 8.1, shall continue
to be payable for a further period of three calendar months are from the
termination date.  In addition, provided
that the Managers provide Crew for the Vessel in accordance with sub-clause
3.1:

 

(i)             the
Owners shall continue to pay Crew Support Costs during the said further period
of three calendar months and 

(ii)          the
Owners shall pay on equitable proportion of any Severance Costs which may
materialize, not exceeding the amount stated in Box 16.

 

8.5 If the
Owners decide to lay-up the Vessel whilst this Agreement remains in force and
such lay-up lasts for more than three months, an appropriate reduction of
the management charge specified in this Clause 8 shall be made subject to (i)
adjustments to reflect any net increase in expenditure reasonably incurred or
any net saving which would be reasonably made by the Managers as a result of
such lay-up and (ii) the agreement of the Time Charterersfee for the period
exceeding three months until one month before the Vessels is again put into
service shall be mutually agreed between the parties.

 

8.6 Unless otherwise agreed in writing off discounts and commissions
obtained by the Managers in the course of the management of the Vessel shall be
credited to the Owners.

 

9.              Budgets and
Management of Funds

 

9.1 The Managers shall present to the Owners annually a budget for the
following twelve months in such form as the Owners require.  The budget for the first year hereof is set
out in Annex “C” hereto. 
Subsequent annual budgets shall be prepared by the Managers and
submitted to the Owners not less than three months before the anniversary date
of the commencement of this Agreement (see Clause ? and Box 4).

 

9.2 The Owners shall indicate to the Managers their acceptance and
approval of the annual budget within one month of presentation and in the
absence of any such indication the Managers shall be entitled to assume that
the Owners have accepted the proposed budget.

 

9.3 Following the agreement of the budget, the Managers shall prepare
and present to the Owners their estimate of the working capital requirement of
the Vessel and the Managers shall each month up-date this estimate.  Based thereon, the Managers shall each month
request the Owners in writing for the funds required to run the Vessel for the
ongoing month, including the payment of any occasional or extraordinary item of
expenditure, such as emergency repair costs, additional insurance premiums,
[ILLEGIBLE] or provisions.  Such funds
shall be received by the Managers within ten running days after the receipt by
the Owners of the Managers’ written request and shall be held to the credit of
the Owners in a separate bank account.

 

9.4 The Managers shall produce a comparison between budgeted and actual
income and expenditure of the Vessel in such form as required by the Owners
monthly or at such other intervals as mutually agreed.

 

9.5 Notwithstanding anything contained herein to the contrary, the
Managers shall in no circumstances be required to use of commit their own funds
to finance the provision of the Management Services.

 

10.       Managers’ Right to
Sub-Contract

 

The Managers
shall not have the right to sub-contract any of their obligations
hereunder, including those mentioned in sub-clause 3.1 and 4.2,
without the prior written consent of the Owners which shall not be unreasonably
withheld, in the event of such a sub-contract the Managers shall remain
fully liable for the due performance of their obligations under this Agreement.

 

11.       Responsibilities

 

11.1 Force Majeure - Neither the Owners nor the
Managers shall be under any liability for any failure to perform any of their
obligations hereunder by reason of any cause whatsoever of any nature of kind
beyond their reasonable control.

 

11.2 Liability to Owners —(i) Save as otherwise
provided for in the Rider Clauses and without prejudice Without prejudice to
sub-clause

 

11.1 and
Clause 27, the Managers shall be under no liability whatsoever to the Owners
for any loss, damage, delay or expense of whatsoever nature, whether direct or
indirect, (including but not limited to loss of profit arising out of or in
connection with detention of or delay to the Vessel ) and howsoever arising
that is outside of the 

 

 

PART II

“SHIPMAN 98” Standard Ship Management
Agreement

 

scope in the course of performance of the
Management Services UNLESS same is proved to have resulted solely from the negligence,
gross negligence or wilful default of the Managers or their employees, or
agents or sub-contractors employed by them in connection with the Vessel, in
which case (save where loss, damage, delay or expense has resulted from the
Managers’ personal act or omission committed with the intent to cause same or
recklessly and with knowledge that such loss, damage, delay or expense would
probably result) the Managers’ liability for each incident or series of
incidents giving rise to a claim or claims shall never exceed a total of ten
times the annual management fee payable hereunder.

 

(ii)
Notwithstanding anything that may appear to the contrary in this Agreement, the
Managers shall not be liable for any of the actions of the Crew, even if such
actions are negligent, grossly negligent or wilful, except only to the extent
that they are shown to have resulted from a failure by the Managers to
discharge their obligations under sub-clause 3.1, in which case their
liability shall be limited in accordance with the terms of this Clause 11.

 

11.3  Indemnity - To
the extent that they are caused by any act or omission of the Owners Except
to the extent and solely for the amount therein set out that the Managers would
be liable under sub clause 11.2, the Owners hereby undertake to keep
the Managers and their employees, agents and sub-contractors indemnified and to
hold them harmless against all actions, proceedings, claims, demands or
liabilities whatsoever or howsoever arising which may be brought against them
or incurred or suffered by them arising out of or in connection with the
performance of the Agreement, and against and in respect of all costs, losses,
damages and expenses (including legal costs and expenses on a full indemnity
basis) which the Managers may suffer or incur (either directly or indirectly)
in the course of the performance of this Agreement.

 

11.4  “Himalaya” - It
is hereby expressly agreed that no employee or agent of the Managers (including
every sub-contractor from time to time employed by the Managers) shall in any
circumstances whatsoever be under any liability whatsoever to the Owners for any
loss, damage or delay of whatsoever kind arising or resulting directly or
indirectly from any act, neglect or default on his part while acting in the
course of or in connection with his employment and, without prejudice to the
generality of the foregoing provisions in this Clause 11, every
exemption, limitation, condition and liberty herein contained and every right,
exemption from liability, defence and immunity of whatsoever nature applicable
to the Managers or to which the Managers are entitled hereunder shall also be
available and shall extend to protect every such employee or agent of the
Managers acting as aforesaid and for the purpose of all the foregoing
provisions of this Clause 11 the Managers are or shall be deemed
to be acting as agent or trustee on behalf of and for the benefit of all
persons who are or might be their servants or agents from time to time
(including sub-contractors as aforesaid) and all such persons shall to this
extent be or be deemed to be parties to this Agreement.

 

12.  Documentation

 

Where the
Managers are providing Technical Management in accordance with sub-clause 3.2
and/or Crew Management in accordance with sub-clause 3.1, they shall
make available, upon Owners’ request, all documentation and records related to
the Safety Management System (SMS) and/or the Crew which the Owners need in
order to demonstrate compliance with the ISM Code and STCW 95 or to defend a
claim against a third party.

 

13.  General
Administration

 

13.1         The Managers shall at
their own cost handle and settle all claims arising out of the Management
Services hereunder and keep the Owners informed regarding any incident of which
the Managers become aware which gives or may give rise to claims or disputes
involving third parties.

 

13.2         The Managers shall,
as instructed by the Owners, bring or defend actions, suits or proceedings in
connection with matters entrusted to the Managers according to this Agreement.

 

13.3         The Managers shall
also have power to obtain legal or technical or other outside expert advice in
relation to the handling and settlement of claims and disputes or all other
matters affecting the interests of the Owners in respect of the Vessel.

 

13.4         The Owners shall
arrange for the provision of any necessary guarantee bond or other security.

 

13.5         Any costs reasonably
incurred by the Managers in carrying out their obligations according to Clause
13 shall be reimbursed by the Owners.

 

14.  Auditing

 

The Managers
shall at their own cost at all times maintain and keep true and correct
accounts in compliance with Clause 3.5(i) above and shall make the same
available for inspection and auditing by the Owners at such times as may be
mutually agreed.  On the termination,
for whatever reasons, of this Agreement, the Managers shall release to the
Owners, if so requested, the originals where possible, or otherwise certified
copies, of all such accounts and all documents specifically relating to the
Vessel and her operation.

 

15.  Inspection
of Vessel

 

The Owners and
the Time Charterers shall have the right at any time after giving reasonable
notice to the Managers to inspect the Vessel at their own expense for any
reason they consider necessary.

 

16.  Compliance
with Laws and Regulations

 

The Managers
will not do or permit to be done anything which might cause any breach or
infringement of the laws and regulations of the Vessels [ILLEGIBLE] or of the
places where she trades.

 

17.  Duration
of the Agreement

 

This Agreement
shall come into effect on the day and year stated in Box 4 and shall
continue, subject to Clause 24, until December 31, 2014. the date
stated in Box 17.

Thereafter it shall continue until terminated by other party giving to
the other notice in writing, in which event the Agreement shall terminate upon
the expiration of a period of two months from the date upon which such notice
was given.

 

18.  Termination

 

18.1 Owners’
default

(i)             The
Managers shall be entitled to terminate the Agreement with immediate effect by
notice in writing if any moneys payable by the Owners under this Agreement and/or
the owners of any associated vessel, details of which are listed in Annex “D”,
shall not have been received in the Managers’ nominated account within ten
running days of receipt by the Owners of the Managers written request or if the
Vessel is repossessed by the Mortgagees.

(ii)          If
the Owners:

(a)          fail
to meet their obligations under sub-clauses 5.2  and 5.3 of
this Agreement for any reason within their control, or

(b)         proceed
with the employment of or continue to employ the Vessel in the carriage of
contraband, blockade running, or in an unlawful trade, or on a voyage which in
the reasonable opinion of the Managers is unduly hazardous or improper, or

(c )       default
in any obligation that (i) has not been

 

 

PART II

“SHIPMAN 98” Standard Ship Management
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specifically
delegated to the Managers hereunder as part of the Management Services and (ii)
results in or is substantially likely to result in the arrest and/or detention
of the Vessel, the Managers may give notice of the default to the Owners,
requiring them to remedy it as soon as practically possible.  In the event that the Owners fail to remedy
it within 30 days after a  reasonable time to the satisfaction of
written notice to the Owners from the Managers, the Managers shall be entitled
to terminate the Agreement with immediate effect by notice in writing.

 

18.2  Managers’ Default

 

If the
Managers fail to meet their obligations under Clauses 3 and 4 of
this Agreement for any reason within the control of the Managers, the Owners
may give notice to the Managers of the default, requiring them to remedy it as
soon as practically possible.  In the
event that the Managers fail to remedy it within 30 days after written notice
to the Managers from a reasonable time to the satisfaction of the
Owners, the Owners shall be entitled to terminate the Agreement with immediate
effect by notice in writing without prejudice to any rights of Owners at such
time.

 

18.3  Extraordinary Termination

 

This Agreement
shall be deemed to be terminated in the case of the sale of the Vessel or if
the Vessel becomes a total loss or is declared as a constructive or compromised
or arranged total loss or is requisitioned.

 

18.4  For the purpose of sub-clause 18.3
hereof

 

(i)             the
date upon which the Vessel is to be treated as having been sold or otherwise
disposed of shall be the date on which the Owners cease to be registered as
Owners of the Vessel;

(ii)          the
Vessel shall not be deemed to be lost unless either she has become an actual
total loss or agreement has been reached with her underwriters in respect of
her constructive, compromised or arranged total loss or if such agreement with
her underwriters is not reached it is adjudged by a competent tribunal that a
constructive loss of the Vessel has occurred;

(iii)       any
sale, assignment, transfer, conveyance or disposition of the shares of the
Owner, directly or indirectly through intermediate holding companies, by its
sole shareholder, Ship Finance International Limited, to any third party not
controlled by Ship Finance International Limited shall be deemed a sale of the
Vessel;

 

18.5 This Agreement
shall terminate forthwith in the event of an order being made or resolution
passed for the winding up, dissolution, liquidation or bankruptcy of either
party (otherwise than for the purpose of reconstruction or amalgamation) or if
a receiver is appointed, or if it suspends payment, ceases to carry on business
or makes any special arrangement or composition with its creditors.

 

18.6  The termination of this Agreement shall be
without prejudice to all rights accrued due between the parties prior to the
date of termination.

 

19.  Law
and Arbitration

 

19.1  This Agreement shall be governed by and
construed in accordance with English law and any dispute arising out of or in
connection with this Agreement 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.

 

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.

 

The reference shall be to three arbitrators; one to be appointed by
each of the parties hereto and the third by the two so chosen; their decision
or that of any two of them shall be final. 
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 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 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.

 

In cases where neither the claim nor any counterclaim exceeds the sum
of USD50,000 (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.

 

19.2  This
Agreement shall be governed by and construed in accordance with Title
[ILLEGIBLE] of the United States Code and the Maritime Law of the United States
and any dispute arising out of or in connection with this Agreement shall be
referred to three persons at New York, one to be appointed by each of the
parties hereto, and the third by the two so chosen, their decision or that of
any two of them shall be final, and for the purposes of enforcing any award,
judgement may be entered on an award by any court of competent
jurisdiction.  The proceedings shall be
conducted in accordance with the rules of the Society of Maritime Arbitrators,
Inc.

 

In cases where neither the claim nor any counterclaim exceeds the sum
of USD50,000 (or such other sum as the parties may agree) the arbitration shall
be conducted in accordance with the Shortened Arbitration Procedure of the
Society of Maritime Arbitrators, Inc. current of the time when the arbitration
proceedings are commenced.

 

19.3  This Agreement shall be governed by and
construed in accordance with the laws of the place mutually agreed by the
parties and any dispute arising out of or in connection with this Agreement
shall be referred to arbitration at a mutually agreed place, subject to the
procedures applicable there.

 

19.4  If
Box18 in Part I is not appropriately filled in, sub-clause 1[ILLEGIBLE].1
of this Clause shall apply.

 

Note: 19.1,  19.2 and 19.3
are alternatives indicate alternative agreed in Box 18.

 

20.  Notices

 

20.1  Any notice to be given by either party to
the other party shall be in writing and may be sent by fax, telex, registered
or recorded mail or by personal service.

 

20.2  The address of the Parties for service of
such communication shall be as stated in Boxes 19 and 20,
respectively.

 

 

Management Agreement
Rider Clauses

 

“[VESSEL NAME]”FRONT
GRANITE”

 

21.                               Management
Charge

 

21.1                            The
Owners shall fund the Managers as provided hereinafter:

 

i.                                          The Managers
warrant to the Owners that the operating costs of the Vessel in performing the
Time Charter do not exceed the Warranted Amounts as stated in Clause 21.2. The
Owners shall remit to the Managers funds for the operating costs of the Vessel
by monthly advance payments in an amount equal to the aggregate Warranted
Amounts for the relevant period.  With
respect to the Managers’ services to be provided under this Agreement in
connection with the Vessel, including the obligations of the Owners which the
Managers have specifically undertaken to perform under the Time Charter
pursuant to Clause 24, the Manager agrees to be liable for the cost of all such
services, provided that with respect to environmental liabilities, the Managers
shall not be liable for any amounts in excess of applicable protection and
indemnity association coverage.

 

ii.                                       Owners shall
fund the Managers 365 days per year (366 days per leap year) in accordance with
the Warranted Amounts.

 

21.2                           Warranted
Amounts

 

The Warranted Amounts, referred to in Clause 21.1 (i) including but not
limited to insurance premiums, annual taxes and registration fees and
dry-docking reserves are as follows:

 

	
  Year

  	
   

  	
  Warranted
  Amount per day in US$

  	
   

  
	
  2004

  	
   

  	
  6,500

  	
   

  
	
  2005

  	
   

  	
  6,500

  	
   

  
	
  2006

  	
   

  	
  6,500

  	
   

  
	
  2007

  	
   

  	
  6,500

  	
   

  
	
  2008

  	
   

  	
  6,500

  	
   

  
	
  2009

  	
   

  	
  6,500

  	
   

  
	
  2010

  	
   

  	
  6,500

  	
   

  
	
  2011

  	
   

  	
  6,500

  	
   

  
	
  2012

  	
   

  	
  6,500

  	
   

  
	
  2013

  	
   

  	
  6,500

  	
   

  
	
  2014

  	
   

  	
  6,500

  	
   

  
	
  2015

  	
   

  	
  6,500

  	
   

  

 

1

 

The Owners warrant that they will remit
promptly but under no circumstances later than within four (4) banking days
after the scheduled payment of any Charter hire under the Time Charter the
aggregate of the Warranted Amounts to the Managers for the relevant period.

 

 

22.                               Drug
and Alcohol Policy

 

The Managers shall have a policy on drug and alcohol abuse (“Policy”)
applicable to the Vessel which meets or exceeds the standards in the Oil
International Marine Forum Guidelines for the control of Drug and Alcohol
onboard Ship, as may be amended from time to time.

 

 

23.                               Financial
Responsibility in Respect of Pollution Clause

 

23.1.                       The Managers warrant that
throughout the currency of this Agreement they will provide the Vessel with all
trading certificates.

 

23.2                          Notwithstanding anything
whether printed or typed herein to the contrary, the Owners shall not be required
to establish or maintain financial security or responsibility in respect of oil
or other pollution damage to enable the Vessel lawfully to enter, remain or
leave any port, place, territorial or contiguous waters of any country, state,
territory in performance of the Time Charter.

 

2

 

24.                               Acknowledgement
of Time Charter

 

The Managers have read and are
familiar with the terms of the Time Charter, and acknowledge that the Owners’
ability to perform under the Time Charter is dependent on the Managers’ due
performance of their obligations hereunder. 
Accordingly, the Managers undertake to perform as part of its Management
Services the duties and obligations of the Owners under the Time Charter as if
such duties and obligations were specifically set forth herein as duties and
obligations of the Managers.

 

The Managers further undertake
(without limitation to the generality of the foregoing) to meet each and all of
the Owner’s liabilities and obligations under the Time Charter in accordance
with the terms, conditions and requirements of the Time Charter including:
delivery of the Vessel; maintenance of the Vessel; payment of insurance
premiums and calls; payment of insurance deductibles; the discharging of liens
and third party claims on the Vessel; payment for provisions, wages and stores
etc.; carrying out repairs; ensuring proper storage; drydocking the Vessel;
meeting the cost of salvage expenses; meeting any claims from cargo owners;
and, releasing the Vessel from arrest.

 

In the event that the Time
Charter is terminated for any reason, either party may terminate this Agreement
upon notice to the other.

 

 

25.                               Eligibility
Clause

 

25.1                         The
Managers warrant that the Vessel will be at all times and in all respects
eligible under applicable conventions, laws, regulations, rules, ordinances,
decrees and international conventions. The Owners have the right at any time to
audit the Mangers’ office system in this respect. The Managers warrant that the
Vessel at all times will have onboard for inspection by the appropriate
authorities, all certificates including trading certificates, records,
compliance letters, contingency plans including SOPEP and other documents
required for its service, including but not limited to the US Coast Guard
Certificate of Financial Responsibility and certificates, records and other
documentation required by US Oil Pollution Act of 1990.

 

25.2                          The Managers warrant that the
Vessel does, and will fully comply with all applicable conventions, laws,
regulations and ordinances of any international, national states or

 

3

 

local government entity having jurisdiction
including but not limited to the US Federal Water Pollution Control Act as
amended, the International Convention for the Prevention of Pollution from
Ships (MARPOL 1973) as amended together with 1978 Protocol and 1984 (SOLAS
1974) as amended together with 1978 Protocol and 1981/1983 amendment thereto,
IMO Regulations.

 

25.3                         The
Managers shall make available, upon the Owners’ request, all documentation and
records related to the Safety Management System (SMS) and/or crew which the
Owners need in order to demonstrate compliance with ISM Code and STCW 95 or to
defend a claim against a third party.

 

25.4                         The
Managers are furthermore to ensure that:

 

i.                  the Vessel is inspected semi-annually
by the Managers’ technical superintendent who physically verifies the condition
of the Vessel, the planned maintenance programmes performance, and reviews the
Vessel’s maintenance planning for the next six months, and

 

ii.               the Vessel’s maintenance is monitored
through analysis of planned maintenance records, requisitions and reports, and

 

The Managers shall indemnify the Owners for
any delays, losses, expenses or damages arising as a result of failure to
comply with this Clause at the agreed Time Charter hire rate.

 

25.5                          The Managers will exercise
due diligence in making the Vessel seaworthy and maintaining her in that
condition during the entire period of this Agreement.

 

25.6                          Nothing in this Clause 25 or
in this Agreement shall be construed so as to impose an obligation on the
Managers to convert any non-double hull vessel into a double hull vessel.

 

4

 

26.                              VRP
Requirement Clause

 

The Managers warrant that

 

i.                  the Vessel will have whenever
necessary an approved response plan for the Vessel (“VRP”) which meets in full
the requirements of any environmental legislation that has been enacted and any
regulations issued pursuant thereto in any jurisdiction where the Vessel is to
call (including, without limitation O.P.A. 1990, the governmental regulations
issued thereunder and any change, rule or regulation in substitution of, or
supplementary to, such regulations) (collectively “VRP Requirements”), and

 

ii.               the VRP shall be approved and the Vessel
operated in compliance therewith, when and as required by the VRP Requirements,
and

 

iii.            the Manager and the Vessel fully meet all
VRP Requirements.

 

27.                               Managers’
Responsibility for Off-Hire

 

The Managers agree to indemnify the Owners
for any days of off-hire (pursuant to Clause 21 of the Time Charter and Clause
6.1 of the Charter Ancillary Agreement) or reduced hire (pursuant to Clause 24
of the Time Charter) with respect to the Vessel under the Time Charter such
that in any given calendar year (or leap year) the Owners shall have received
from the Time Charterers and the Managers, on a combined basis, a total of 360
(or 361) days of charter hire at the rate applicable to such Vessel pursuant to
Clause 44 of the Time Charter or Section 3.1 of the Charter Ancillary
Agreement, as the case may be; provided, however, that any
amounts paid by the Managers in respect of off-hire or reduced hire under this
Clause 27 shall be in accordance with the applicable rate set forth in Clause
44 of the Time Charter such that even if the Time Charterers defer payments of
charter hire pursuant to Article III of the Charter Ancillary Agreement
the Managers shall reimburse for off-hire (pursuant to Clause 21 of the Time
Charter and Clause 6.1 of the Charter Ancillary Agreement) or reduced hire
(pursuant to Clause 24 of the Time Charter) at the rate set forth in Clause 44
of the Time Charter rather than the deferred rate; provided,

 

5

 

further, that
nothing in this Clause 27 shall be construed so as to impose an obligation on
the Managers to indemnify the Owners for the payment of charter hire by the
Time Charterers under the Time Charter other than off-hire (pursuant to Clause
21 of the Time Charter and Clause 6.1 of the Charter Ancillary Agreement) or
reduced hire (pursuant to Clause 24 of the Time Charter).

 

28.                               SCAC
Code Clause

 

The Managers warrant that, in accordance with
19 CFR 4.7a and 178.2 as amended, it has a Standard Carrier Alpha Code (SCAC)
which will prefix a Bill of Lading serial number and forms the “Unique
Identifier” to be entered on all Bills of Lading, cargo manifest, cargo
declaration and other cargo documents relating to carriage of goods to the
United States as may be provided for hereunder. The Managers shall indemnify
the Owners for any losses or delays due to the failure to comply with the
foregoing.

 

29.                               Communications

 

All communications under this agreement shall be in the English
language.

 

31.                              O.C.I.M.F.
Clause

 

Managers shall ensure that the Vessel fully
complies and will so remain throughout the period of this Agreement with OCIMF
Standards and Recommendations for Oil Tankers, 1981 International Safety Guide
for Oil Tankers and Terminals, Standards for Oil Tankers Manifold Associated
Equipment (latest editions), Ship to Ship Transfer Guide (Petroleum) (latest
edition) and Recommendation for Equipment Employed in the mooring of the ship
at single point moorings (latest editions) and any amendment thereto.

 

32.                              Assignment
Clause

 

The Owners may assign all of their rights
this Agreement to any mortgagee of the Vessel on the following conditions: (i)
all of the vessel-owning subsidiaries of Ship Finance International Limited
that are party to the Charter Ancillary Agreement shall have similarly assigned
or agreed to assign their rights and obligations under the management
agreements with the Managers to which each is a party and (ii) such assignment
shall not otherwise prejudice the rights of the Managers to terminate this

 

6

 

Agreement in the event that the Time Charter
is cancelled in accordance with Clause 24. 
Upon satisfaction of the conditions set forth above, Managers hereby agree
to enter into an acknowledgement of such assignment in such form as such
mortgagee may reasonably require.

 

33.                              Flag
Clause

 

The Managers shall have the right to have
title of the Vessel registered in another jurisdiction identified on the United
Nation’s White List, as may be amended from time to time, at any time at the
Managers’ cost and expense (including any higher operating costs incurred
thereby).  A change of flag shall be
subject to the consent of the Owners which shall be withheld only if any mortgagees
with a security interest in the Vessel withhold consent.

 

34.                              Third
party rights

 

Except as may be otherwise agreed in writing by the parties with any
third party, a person who is not a party to this Agreement may not enforce, or
otherwise have the benefit of, any provisions of this Agreement under The
Contracts (Rights of Third Parties) Act 1999, and, without limitation, no
consent of any such person shall be required for the rescission or amendment of
this Agreement, but this does not affect any right or remedy of a third party
which exists or is available apart from that Act.

 

35.                              Owners’
right to bareboat charter the Vessel; Suspension of Agreement

 

Owners’ shall have the right to bareboat charter the Vessel to an
unrelated third party if so requested by the Time Charterer under the Time
Charter.  In the event that the Owners
enter into a bareboat charter (the “Bareboat Charter”) with an unrelated third
party with respect to the Vessel, the obligations of the both the Owners and
the Managers under this Agreement shall be suspended until such time as the
Vessel has been redelivered pursuant to the terms of the Bareboat Charter. The
Managers and Owners hereby agree that the obligations of both the Owners and
the Managers under this Agreement shall be automatically reinstated at such
time as the Vessel has been redelivered under the Bareboat Charter.  For the avoidance of doubt, during such time
as any Bareboat Charter is in effect, the Owners shall not be required to

 

7

 

pay to the Managers the Warranted Amounts set forth in Clause 21 and
the Managers shall not be required to provide any services with respect to the
Vessel.

 

36.                              Indemnification

 

The Managers hereby indemnify the Owners
against the consequences of any failure by the Managers to comply with the
requirements of this Agreement and related documentation including (without
limitation) any claims made by the Time Charterer against the Owners resulting
from a failure of the Managers to perform their obligations under this
Agreement; provided that Managers’ indemnification for
environmental matters shall not extend beyond the protection and indemnity
coverage with respect to the Vessel required hereunder.

 

The Managers also agree to indemnify the
Owners against the consequences of any insurer with respect to the Vessel
failing to pay out any claim in full; provided that the Managers’
indemnification for environmental matters shall not extend beyond the
protection and indemnity coverage with respect to the Vessel required hereunder.

 

37.                              Changes/Improvements
Necessary for the Operation of the Vessel or Imposed by Legislation or Class

 

37.1.                      In the event
any improvement, structural change or the installation of new equipment is
imposed by compulsory legislation and/or class rules, Manager shall at their
own cost effect such improvement, changes or installation, except to the extent
the Time Charterers elect to do so in accordance with the terms of the Time
Charter.

 

37.2                         In the
event any improvement, structural change or the installation of new equipment
is deemed necessary by the Managers for the continued operation of the Vessel,
Managers shall have the right at their own cost to effect such improvement,
changes or installation, with the Owners’ consent which shall not be
unreasonably withheld.

 

37.3                         The
Owners have to be notified in writing in advance by the Managers about any
changes and/or improvements as per Clauses 37.1 and 37.2.

 

37.4                           Any
change, improvement or installation made pursuant to this Clause 37 shall
become the property of the owners.

 

8

 

37.5                           Nothing
in this Clause 37 or in this Agreement shall be construed so as to impose an
obligation on the Managers to convert any non-double hull vessel into a double
hull vessel.

 

9

 

ANNEX
A

DESCRIPTION
OF VESSEL

 

10

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