Document:

Exhibit 10.2

 

OMNIBUS AGREEMENT

 

AMONG

 

EXMAR NV

 

EXMAR ENERGY PARTNERS LP

 

EXMAR GENERAL PARTNER LIMITED

 

AND

 

EXMAR ENERGY HONG KONG LTD.

 

 

TABLE OF CONTENTS

 

	
ARTICLE I
    
	
DEFINITIONS
    
	
 
    	
 
    	
 
    
	
Section 1.1
    	
Definitions
    	
1
    
	
 
    	
 
    	
 
    
	
ARTICLE II
    
	
FIVE-YEAR   VESSEL RESTRICTED BUSINESS OPPORTUNITIES
    
	
 
    	
 
    	
 
    
	
Section 2.1
    	
Five-Year Vessel Restricted Businesses
    	
5
    
	
Section 2.2
    	
Permitted Exceptions
    	
5
    
	
 
    	
 
    	
 
    
	
ARTICLE III
    
	
NON-FIVE-YEAR   VESSEL RESTRICTED BUSINESS OPPORTUNITIES
    
	
 
    	
 
    	
 
    
	
Section 3.1
    	
Non-Five-Year Vessel Restricted Businesses
    	
6
    
	
Section 3.2
    	
Permitted Exceptions
    	
6
    
	
 
    	
 
    	
 
    
	
ARTICLE IV
    
	
BUSINESS   OPPORTUNITIES PROCEDURES
    
	
 
    	
 
    	
 
    
	
Section 4.1
    	
Procedures
    	
7
    
	
Section 4.2
    	
Scope of Prohibition
    	
9
    
	
Section 4.3
    	
Enforcement
    	
9
    
	
 
    	
 
    	
 
    
	
ARTICLE V
    
	
RIGHTS OF   FIRST OFFER
    
	
 
    	
 
    	
 
    
	
Section 5.1
    	
Rights of First Offer
    	
10
    
	
Section 5.2
    	
Procedures for Rights of First Offer
    	
10
    
	
 
    	
 
    	
 
    
	
ARTICLE VI
    
	
CARIBBEAN   FLNG INTERESTS PURCHASE OPTION
    
	
 
    	
 
    	
 
    
	
Section 6.1
    	
Option to Purchase the Caribbean FLNG Interests
    	
11
    
	
Section 6.2
    	
Procedures
    	
12
    
	
 
    	
 
    	
 
    
	
ARTICLE VII
    
	
EXCEL   INTERESTS PURCHASE OPTION
    
	
 
    	
 
    	
 
    
	
Section 7.1
    	
Option to Purchase the Excel Interests
    	
14
    
	
Section 7.2
    	
Procedures
    	
14
    
	
 
    	
 
    	
 
    
	
ARTICLE VIII
    
	
INDEMNIFICATION
    
	
 
    	
 
    	
 
    
	
Section 8.1
    	
Exmar Indemnification
    	
16
    
	
Section 8.2
    	
Indemnification Procedures
    	
16
    

 

i

 

	
ARTICLE IX
    
	
MISCELLANEOUS
    
	
 
    	
 
    	
 
    
	
Section 9.1
    	
Choice of Law; Submission To Jurisdiction
    	
17
    
	
Section 9.2
    	
Notice
    	
17
    
	
Section 9.3
    	
Entire Agreement
    	
18
    
	
Section 9.4
    	
Termination
    	
18
    
	
Section 9.5
    	
Waiver; Effect of Waiver or Consent
    	
18
    
	
Section 9.6
    	
Amendment or Modification
    	
18
    
	
Section 9.7
    	
Assignment
    	
18
    
	
Section 9.8
    	
Counterparts
    	
19
    
	
Section 9.9
    	
Severability
    	
19
    
	
Section 9.10
    	
Gender, Parts, Articles and Sections
    	
19
    
	
Section 9.11
    	
Further Assurances
    	
19
    
	
Section 9.12
    	
Withholding or Granting of Consent
    	
19
    
	
Section 9.13
    	
Laws and Regulations
    	
19
    
	
Section 9.14
    	
Negotiation of Rights of Exmar, Limited Partners, Assignees   and Third Parties
    	
19
    

 

ii

 

OMNIBUS AGREEMENT

 

THIS OMNIBUS AGREEMENT is entered into on, and effective as of, the Closing Date (as defined herein), among Exmar NV, a limited liability company organized under the laws of Belgium (“Exmar”), Exmar Energy Partners LP, a limited partnership organized under the laws of the Republic of the Marshall Islands (the “MLP”), Exmar General Partner Limited, a limited liability company organized under the laws of Hong Kong and the general partner of the MLP (including any permitted successors and assigns under the MLP Agreement (as defined herein)) (the “General Partner”), and Exmar Energy Hong Kong Ltd., a limited company organized under the laws of Hong Kong (the “Operating Company”).

 

R E C I T A L S:

 

1.                                      The Parties desire by their execution of this Agreement to evidence their understanding, as more fully set forth in Articles II and IV, with respect to (a) those business opportunities that the Exmar Entities (as defined herein) will not pursue during the term of this Agreement and (b) the procedures whereby such business opportunities are to be offered to the Partnership Group (as defined herein) and accepted or declined.

 

2.                                      The Parties desire by their execution of this Agreement to evidence their understanding, as more fully set forth in Articles III and IV, with respect to (a) those business opportunities that the Partnership Group will not pursue during the term of this Agreement and (b) the procedures whereby such business opportunities are to be offered to Exmar and accepted or declined.

 

3.                                      The Parties desire by their execution of this Agreement to evidence their understanding, as more fully set forth in Article V, with respect to (a) Exmar’s right of first offer relating to Five-Year Vessels (as defined herein) or Non-Five-Year Vessels (as defined herein) owned by the MLP and (b) the MLP’s right of first offer relating to Five-Year Vessels that Exmar might own.

 

4.                                      The Parties desire by their execution of this Agreement to evidence their understanding, as more fully set forth in Articles VI and VII, with respect to the rights of the MLP to purchase the Caribbean FLNG Interests and the Excel Interests (each as defined herein).

 

5.                                      The Parties desire by their execution of this Agreement to evidence their understanding, as more fully set forth in Section 6.2(c)(ii), Section 7.2(c)(ii) and Article VIII, with respect to certain indemnification obligations of Exmar.

 

In consideration of the premises and the covenants, conditions, and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereby agree as follows:

 

ARTICLE I
 DEFINITIONS

 

Section 1.1                                    Definitions.  As used in this Agreement, the following terms shall have the respective meanings set forth below:

 

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“Acquiring Party” has the meaning given such term in Section 4.1.

 

“Affiliate” means, with respect to any Person, any other Person that directly or indirectly through one or more intermediaries controls, is controlled by or is under common control with, the Person in question.  As used herein, the term “control” means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a Person, whether through ownership of Voting Securities, by contract or otherwise.

 

“Agreement” means this Omnibus Agreement, as it may be amended, modified, or supplemented from time to time in accordance with Section 9.6 hereof.

 

“Applicable Caribbean FLNG Interests” has the meaning given such term in Section 6.1(a).

 

“Board” means the Board of Directors of the MLP.

 

“Break-up Costs” means the aggregate amount of any and all additional taxes, flag administration, financing, hedging, legal and other similar costs (except with respect to Section 2.2(b) where Break-up Costs shall be deemed to include only administrative costs associated with transfer and re-flagging, including related legal costs) to (a) the Exmar Entities that would be required to transfer Five-Year Vessels acquired by the Exmar Entities as part of a larger transaction to a Partnership Group Member pursuant to Sections 2.2(b) or 2.2(d)(i), or (b) the Partnership Group that would be required to transfer Non-Five-Year Vessels acquired by the Partnership Group as part of a larger transaction to an Exmar Entity pursuant to Section 3.2(b)(i).

 

“Caribbean FLNG” means the newbuild FLNG that will operate under a 15-year contract (tolling agreement) with Pacific Rubiales Energy Corp., an independent oil and gas exploration company in Columbia, and will be located off the Colombian Caribbean coast.

 

“Caribbean FLNG Interests” means all of Exmar’s rights, title and interests in Caribbean FLNG Infrastructure Colombia S.A.S., a company organized under the laws of Hong Kong, and the owner of the Caribbean FLNG and interests in any other Exmar Entity holding interests in the Caribbean FLNG and including any charters or other agreements then in effect relating to the operation of the Caribbean FLNG.  For the avoidance of doubt, it is understood by the parties that Exmar has granted to Pacific Rubiales Energy Corp. an option to purchase up to 10% of Caribbean FLNG Infrastructure Colombia S.A.S., which option expires at delivery of the Caribbean FLNG in Colombia. For the purpose of this definition, “delivery” is understood to take place after full commissioning of the unit on location.

 

“Change of Control” means, with respect to any Person (the “Applicable Person”), any of the following events: (a) any sale, lease, exchange or other transfer (in one transaction or a series of related transactions) of all or substantially all of the Applicable Person’s assets to any other Person, unless immediately following such sale, lease, exchange or other transfer such assets are owned, directly or indirectly, by the Applicable Person; (b) the consolidation or merger of the Applicable Person with or into another Person pursuant to a transaction in which the outstanding Voting Securities of the

 

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Applicable Person are changed into or exchanged for cash, securities or other property, other than any such transaction where (i) the outstanding Voting Securities of the Applicable Person are changed into or exchanged for Voting Securities of the surviving Person or its parent and (ii) the holders of the Voting Securities of the Applicable Person immediately prior to such transaction own, directly or indirectly, not less than a majority of the outstanding Voting Securities of the surviving Person or its parent immediately after such transaction; and (c) a “person” or “group” (within the meaning of Sections 13(d) or 14(d)(2) of the Exchange Act), other than Exmar and its Affiliates with respect to the General Partner, being or becoming the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Exchange Act) of more than 50% of all of the then outstanding Voting Securities of the Applicable Person, except in a merger or consolidation which would not constitute a Change of Control under clause (b) above.

 

“Closing Date” means the date of the closing of the initial public offering of common units representing limited partner interests in the MLP.

 

“Conflicts Committee” means the Conflicts Committee of the Board of Directors.

 

“Contribution Assets” has the meaning given such term in Section 8.1.

 

“Excel” means the LNG carrier delivered in 2003 that is jointly owned with Mitsui O.S.K. Lines, Ltd.

 

“Excel Interests” means all of Exmar’s rights, title and interests in the Excel, including interests in any entity holding interests in the Excel and including any charters or other agreements relating to the operation of the Excel then in effect.

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

 

“Exmar Entities” means Exmar and any Person controlled, directly or indirectly, by Exmar, other than the Partnership Entities.

 

“Exmar Potential Transferee” has the meaning given such term in Section 5.2(b).

 

“Exmar Sale Assets” has the meaning given such term in Section 5.2(b).

 

“Exmar Transfer Notice” has the meaning given such term in Section 5.2(b).

 

“Exmar Transferring Party” has the meaning given such term in Section 5.2(b).

 

“First Offer Negotiation Period” has the meaning given such term in Section 5.2(c).

 

“Five-Year Vessel” means any floating LNG infrastructure asset operating under a charter with a firm term of five or more years, together with the related charter.  For the avoidance of doubt, any vessel that has not yet been built or contracted to be built that has, prior to the execution of any newbuilding contract, secured a charter with a firm term of five or more years, shall become a Five-Year Vessel upon commencement of its operations.

 

“FLNG” means a floating liquefied natural gas unit.

 

“General Partner” is defined in the introduction to this Agreement.

 

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“Losses” means losses, damages, liabilities, claims, demands, causes of action, judgments, settlements, fines, penalties, costs and expenses (including, without limitation, court costs and reasonable attorneys’ and experts’ fees) of any and every kind or character; provided, however, that such term shall not include any special, indirect, incidental or consequential damages.

 

“MLP” is defined in the introduction to this Agreement.

 

“MLP Agreement” means the First Amended and Restated Agreement of Limited Partnership of the MLP, dated as of                                                            , 2014, as such agreement is in effect on the Closing Date, to which reference is hereby made for all purposes of this Agreement.  No amendment or modification to the MLP Agreement subsequent to the Closing Date shall be given effect for purposes of this Agreement unless consented to by each of the Parties.

 

“Non-Five-Year Vessel” means any floating LNG infrastructure asset that is not a Five-Year Vessel.  For the avoidance of doubt, a Non-Five-Year Vessel shall include any vessel that has not yet been built or contracted to be built that has, prior to the execution of any newbuilding contract, secured a charter with a firm term of five or more years (and any such vessel shall be deemed to have been put under charter for five or more years at the time any such vessel commences operations).

 

“Offer” has the meaning given such term in Section 4.1.

 

“Offered Assets” has the meaning given such term in Section 4.1.

 

“Offeree” has the meaning given such term in Section 4.1.

 

“Offer Period” has the meaning given such term in Section 4.1.

 

“Parties” means the parties to this Agreement and their successors and permitted assigns.

 

“Partnership Entities” means the General Partner, the MLP and any Person controlled by any such entity.

 

“Partnership Group” means the MLP and any Person controlled by any such entity.

 

“Partnership Group Member” means any Person in the Partnership Group.

 

“Partnership Potential Transferee” has the meaning given such term in Section 5.2(a).

 

“Partnership Sale Assets” has the meaning given such term in Section 5.2(a).

 

“Partnership Transfer Notice” has the meaning given such term in Section 5.2(a).

 

“Partnership Transferring Party” has the meaning given such term in Section 5.2(a).

 

“Person” means an individual, corporation, partnership, joint venture, trust, limited liability company, unincorporated organization or any other entity.

 

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“Potential Transferee” has the meaning given such term in Section 5.2(b).

 

“Sale Assets” has the meaning given such term in Section 5.2(b).

 

“Transfer” means any transfer, assignment, sale or other disposition of any Non-Five-Year Vessel by an Exmar Entity or of any Five-Year Vessel or Non-Five-Year Vessel by a Partnership Group Member; provided, however, that such term shall not include: (a) transfers, assignments, sales or other dispositions from an Exmar Entity to another Exmar Entity, or from a Partnership Group Member to another Partnership Group Member; (b) transfers, assignments, sales or other dispositions pursuant to the terms of any related charter or other agreement with a charter party; (c) transfers, assignments, sales or other dispositions pursuant to the terms of any related joint venture agreement or other agreement with a joint venture partner; (d) transfers, assignments, sales or other dispositions pursuant to Articles II or III of this Agreement; or (e) grants of security interests in or mortgages or liens on such Five-Year Vessels or Non-Five-Year Vessels in favor of a bona fide third party lender and the foreclosing of any such security interest, mortgage or lien or other exercise of remedies by a bona fide third party lender.

 

“Transfer Notice” has the meaning given such term in Section 5.2(b).

 

“Transferring Party” has the meaning given such term in Section 5.2(b).

 

“Voting Securities” means securities of any class of Person entitling the holders thereof to vote in the election of members of the board of directors or other similar governing body of the Person.

 

ARTICLE II
 FIVE-YEAR VESSEL RESTRICTED BUSINESS OPPORTUNITIES

 

Section 2.1                                    Five-Year Vessel Restricted Businesses.  Subject to Section 9.4 and except as permitted by Section 2.2, each of the Exmar Entities shall be prohibited from acquiring, owning, operating or chartering Five-Year Vessels.

 

Section 2.2                                    Permitted Exceptions.  Notwithstanding any provision of Section 2.1 to the contrary, the restrictions in this Agreement shall not prevent any Exmar Entity from:

 

(a)                                 acquiring, owning, operating or chartering any Non-Five-Year Vessel;

 

(b)                                 acquiring one or more Five-Year Vessels if such Exmar Entity offers to sell the vessel to the MLP for the acquisition price plus any Break-up Costs in accordance with the procedures set forth in Section 4.1;

 

(c)                                  putting a Non-Five-Year Vessel under charter for five or more years if such Exmar Entity offers to sell the vessel to the MLP for fair market value (x) after the time it becomes a Five-Year Vessel and (y) at each renewal or extension of that charter for five or more years, in each case in accordance with the procedures set forth in Section 4.1;

 

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(d)                                 acquiring one or more Five-Year Vessels as part of the acquisition of a controlling interest in a business or package of assets and owning, operating or chartering such Five-Year Vessel(s); provided, however, that:

 

(i)                                     if less than 50% of the value of the business or assets acquired is attributable to Five-Year Vessels, as determined in good faith by Exmar, the Exmar Entity must offer to sell such Five-Year Vessel(s) to the MLP for their fair market value plus any Break-up Costs in accordance with the procedures set forth in Section 4.1; and

 

(ii)                                  if 50% or more of the value of the business or assets acquired is attributable to Five-Year Vessels, as determined in good faith by Exmar, Exmar shall notify the MLP of the proposed acquisition in writing.  The MLP shall, not later than the 10th calendar day following receipt of such notice, notify Exmar if it or any other Partnership Group Member wishes to acquire any Five-Year Vessel forming part of that business or package of assets in cooperation and simultaneously with the Exmar Entity acquiring the Non-Five-Year Vessels forming part of that business or package of assets.  If the MLP does not notify Exmar of its intent to pursue the acquisition within such 10 calendar days, the Exmar Entity may proceed with the acquisition and then offer to sell such vessels to the MLP as provided in subsection (i) above;

 

(e)                                  acquiring a non-controlling interest in any company, business or pool of assets;

 

(f)                                   acquiring, owning, operating or chartering any Five-Year Vessel if the MLP does not fulfill its obligation to purchase such Five-Year Vessel in accordance with the terms of any existing or future agreement;

 

(g)                                  acquiring, owning, operating or chartering any Five-Year Vessel that is subject to an offer to purchase by a Partnership Group Member as described in paragraphs (b), (c) and (d) above, in each case pending the offer of such Five-Year Vessel to the MLP and the MLP’s determination pursuant to Section 4.1 whether to purchase the Five-Year Vessel and, if the MLP has determined to purchase or to cause any Partnership Group Member to purchase such Five-Year Vessel, pending the closing of such purchase;

 

(h)                                 providing management services relating to any vessel; or

 

(i)                                     acquiring, owning, operating or chartering any Five-Year Vessel if the MLP has previously advised Exmar that it consents to such acquisition, operation or charter.

 

ARTICLE III
 NON-FIVE-YEAR VESSEL RESTRICTED BUSINESS OPPORTUNITIES

 

Section 3.1                                    Non-Five-Year Vessel Restricted Businesses.  Subject to Section 9.4 and except as permitted by Section 3.2, each Partnership Group Member shall be prohibited from acquiring, owning, operating or chartering Non-Five-Year Vessels.

 

Section 3.2                                    Permitted Exceptions.  Notwithstanding any provision of Section 3.1 to the contrary, the restrictions in this Agreement shall not prevent any Partnership Group Member from:

 

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(a)                                 owning, operating or chartering any Non-Five-Year Vessel that was previously a Five-Year Vessel while owned by any Partnership Group Member;

 

(b)                                 acquiring one or more Non-Five-Year Vessels as part of the acquisition of a controlling interest in a business or package of assets and owning, operating or chartering those Non-Five-Year Vessels; provided, however, that:

 

(i)                                     if less than 50% of the value of the business or assets acquired is attributable to Non-Five-Year Vessels, as determined in good faith by the Board, such Partnership Group Member must offer to sell such Non-Five-Year Vessels to Exmar for their fair market value plus any applicable Break-up Costs in accordance with the procedures set forth in Section 4.1; and

 

(ii)                                  if 50% or more of the value of the business or assets acquired is attributable to Non-Five-Year Vessels, as determined in good faith by the Board, the MLP shall notify Exmar of the proposed acquisition in writing.  Exmar shall, not later than the 10th calendar day following receipt of such notice, notify the MLP if it or any other Exmar Entity wishes to acquire any Non-Five-Year Vessel forming part of that business or package of assets in cooperation and simultaneously with the Partnership Group Member acquiring the Five-Year Vessels forming part of that business or package of assets.  If Exmar does not notify the MLP of its intent to pursue the acquisition within such 10 calendar days, the Partnership Group Member may proceed with the acquisition and then offer to sell such Non-Five-Year Vessels to Exmar as provided in subsection (i) above;

 

(c)                                  acquiring, owning, operating or chartering any Non-Five-Year Vessel that is subject to an offer to purchase by an Exmar Entity as described in paragraph (b) above pending the offer of such Non-Five-Year Vessel to Exmar and Exmar’s determination pursuant to Section 4.1 whether to purchase the Five-Year Vessel and, if Exmar has determined to purchase or cause any Exmar Entity to purchase such Five-Year Vessel, pending the closing of such purchase; or

 

(d)                                 acquiring, owning, operating or chartering Non-Five-Year Vessels if Exmar has previously advised the MLP that it consents to such acquisition, ownership, operation or charter.

 

ARTICLE IV
 BUSINESS OPPORTUNITIES PROCEDURES

 

Section 4.1                                    Procedures.  In the event that (x) a Partnership Group Member acquires, operates or puts under charter Non-Five-Year Vessels in accordance with Section 3.2(b)(i), or (y) an Exmar Entity acquires, operates or puts under charter Five-Year Vessels in accordance with Sections 2.2(b), 2.2(c) or 2.2(d)(i), then simultaneously or in any event not later than 30 calendar days after the consummation of the acquisition or the commencement of operations or charter, such acquiring Party (the “Acquiring Party”) shall notify (1) Exmar, in the case of an acquisition by a Partnership Group Member or (2) the Board, in the case of an acquisition by an Exmar Entity and offer such party to be notified (each an “Offeree”) the opportunity for any Exmar Entity or Partnership Group Member, as applicable, to purchase such Non-Five-Year Vessels or

 

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Five-Year Vessels, as applicable (the “Offered Assets”), for their fair market value (or, in the case of an acquisition in accordance with Section 2.2(b), the acquisition price) plus, in the case of an acquisition in accordance with Sections 2.2(b), 2.2(d)(i) or 3.2(b)(i), any applicable Break-up Costs, in each case on commercially reasonable terms in accordance with this Section 4.1 (the “Offer”).  The Offer shall set forth the Acquiring Party’s proposed terms relating to the purchase of the Offered Assets by the applicable Exmar Entity or Partnership Group Member, including any liabilities to be assumed by the applicable Exmar Entity or Partnership Group Member as part of the Offer.  As soon as practicable after the Offer is made, the Acquiring Party will deliver to the Offeree all information prepared by or on behalf of or in the possession of such Acquiring Party relating to the Offered Assets and reasonably requested by the Offeree.  As soon as practicable, but in any event, within 30 calendar days after receipt of the Offer, the Offeree shall notify the Acquiring Party in writing that either:

 

(a)                                 Exmar has elected not to purchase (or not to cause any of its permitted Affiliates to purchase) or the Board has elected not to cause any Partnership Group Member to purchase, as applicable, such Offered Assets, in which event the Acquiring Party and its Affiliates shall, subject to the other terms of this Agreement (including Section 2.2(b)), be forever free, subject to the provisions of this Agreement, to continue to own, operate and charter such Offered Assets; or

 

(b)                                 Exmar has elected to purchase (or to cause any of its permitted Affiliates to purchase) or the Board has elected to cause any Partnership Group Member to purchase, as applicable, such Offered Assets, in which event the following procedures shall be followed:

 

(i)                                     After the receipt of the Offer by the Offeree, the Acquiring Party and the Offeree shall negotiate in good faith regarding the fair market value (and any applicable Break-up Costs) of the Offered Assets that are subject to the Offer and the other terms of the Offer on which the Offered Assets will be sold to the applicable Exmar Entity or Partnership Group Member.  If the Acquiring Party and the Offeree agree on the fair market value (and any applicable Break-up Costs) of the Offered Assets that are subject to the Offer and the other terms of the Offer during the 30-day period (the “Offer Period”) after receipt by the Acquiring Party of Exmar’s election to purchase (or election to cause any of its permitted Affiliates to purchase) or of the Board’s election to cause any Partnership Group Member to purchase, as applicable, the Offered Assets, Exmar shall purchase (or cause any of its permitted Affiliates to purchase) or the Board shall cause any Partnership Group Member to purchase, as applicable, the Offered Assets on such terms as soon as commercially practicable after such agreement has been reached.

 

(ii)                                  If the Acquiring Party and the Offeree are unable to agree on the fair market value (and any applicable Break-up Costs) of the Offered Assets that are subject to the Offer or on any other terms of the Offer during the Offer Period, the Acquiring Party and the Offeree will engage a mutually-agreed-upon investment banking firm, ship broker or other expert advisor prior to the end of the Offer Period to determine the fair market value of the Offered Assets and/or the other terms on which the Acquiring Party and the Offeree are unable to agree.  In determining the fair market value of the Offered Assets and other terms on which the Offered Assets are to be sold, the investment banking firm, ship broker or other expert advisor, as applicable, will have

 

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access to the proposed sale and purchase values and terms for the Offer submitted by the Acquiring Party and the Offeree, respectively, and to all information prepared by or on behalf of the Acquiring Party relating to the Offered Assets and reasonably requested by such investment banking firm, ship broker or other expert advisor.  Such investment banking firm, ship broker or other expert advisor will determine the fair market value (and any applicable Break-up Costs) of the Offered Assets and/or the other terms on which the Acquiring Party and the Offeree are unable to agree within 30 calendar days of its engagement and furnish the Acquiring Party and the Offeree its determination.  The fees and expenses of the investment banking firm, ship broker or other expert advisor, as applicable, will be divided equally between the Acquiring Party and the Offeree.  Upon receipt of such determination, the Offeree will have the option, but not the obligation:

 

(A)                               in the case that the Offeree is Exmar, to purchase or cause any of its permitted Affiliates to purchase, or in the case that the Offeree is the Board, to cause any Partnership Group Member to purchase the Offered Assets for the fair market value (and any applicable Break-up Costs), and on the other terms determined by the ship broker or investment banking firm, as soon as commercially practicable after determinations have been made; or

 

(B)                               in the case that the Offeree is Exmar, to elect not to cause any of its permitted Affiliates to purchase, or in the case that the Offeree is the Board, not to cause any Partnership Group Member to purchase such Offered Assets, in which event the Acquiring Party and its Affiliates shall, subject to the other terms of this Agreement, be forever free to continue to own and operate such Offered Assets.

 

Section 4.2                                    Scope of Prohibition.  If any Party or its Affiliates engages in the ownership or operation of Five-Year Vessels in the case of an Exmar Entity, or Non-Five-Year Vessels in the case of a Partnership Group Member, pursuant to any of the exceptions described in Sections 2.2 or 3.2, as applicable, the Party and its Affiliates may not subsequently expand that portion of their business other than pursuant to the exceptions contained in such Sections 2.2 or 3.2.  Except as otherwise provided in this Agreement or the MLP Agreement, each Party and its Affiliates shall be free to engage in any business activity whatsoever, including those that may be in direct competition with the Exmar Entities or the Partnership Group Members.

 

Section 4.3                                    Enforcement.  Each Party agrees and acknowledges that the other Parties do not have an adequate remedy at law for the breach by any such Party of its covenants and agreements set forth in this Article IV, and that any breach by any such Party of its covenants and agreements set forth in this Article IV would result in irreparable injury to such other Parties.  Each Party further agrees and acknowledges that any other Party may, in addition to the other remedies which may be available to such other Party, file a suit in equity to enjoin such Party from such breach, and consent to the issuance of injunctive relief to enforce the provisions of Article IV of this Agreement.

 

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ARTICLE V
 RIGHTS OF FIRST OFFER

 

Section 5.1                                    Rights of First Offer.

 

(a)                                 The Partnership Group hereby grants Exmar a right of first offer on any proposed Transfer by any Partnership Group Member of any Five-Year Vessels or any Non-Five-Year Vessels owned or acquired by any Partnership Group Member.  With respect to any such proposed Transfer, the Partnership Group need not offer any particular Five-Year Vessel or Non-Five-Year Vessel to Exmar if Exmar has previously advised the MLP that it does not wish to acquire such vessel.  Such right of first offer is subject to applicable rights of the MLP’s joint venture partners under applicable joint venture agreements.

 

(b)                                 The Exmar Entities hereby grant the MLP a right of first offer on any proposed Transfer of any Five-Year Vessels owned or acquired by any Exmar Entity.  With respect to any such proposed Transfer, the Exmar Entities need not offer any particular Five-Year Vessel to the MLP if the MLP has previously advised the Exmar Entities that it does not wish to acquire such vessel.  Such right of first offer is subject to applicable rights of the Exmar Entities’ joint venture partners under applicable joint venture agreements.

 

(c)                                  The Parties acknowledge that all potential Transfers of Five-Year Vessels or Non-Five-Year Vessels pursuant to this Article V are subject to obtaining any and all written consents of governmental authorities and other non-affiliated third parties (including, without limitation, lenders and other providers of financing) and to the terms of all agreements (including, without limitation, debt and other financing arrangements) in respect of such Five-Year Vessels or Non-Five-Year Vessels, as applicable.

 

Section 5.2                                    Procedures for Rights of First Offer.

 

(a)                                 In the event that a Partnership Group Member (a “Partnership Transferring Party”) proposes to Transfer any Five-Year Vessel or any Non-Five-Year Vessels (the “Partnership Sale Assets”), prior to engaging in any negotiation for such Transfer with any non-affiliated third party or otherwise offering to Transfer the Partnership Sale Assets to any non-affiliated third party, such Partnership Transferring Party shall give Exmar (a “Partnership Potential Transferee”), written notice setting forth all material terms and conditions (including, without limitation, the purchase price or the terms of the charter agreement and a description of the Partnership Sale Asset(s) on which such Partnership Transferring Party desires to Transfer the Partnership Sale Assets) (a “Partnership Transfer Notice”).

 

(b)                                 In the event that an Exmar Entity (an “Exmar Transferring Party” and, together with a Partnership Transferring Party, a “Transferring Party”) proposes to Transfer any Five-Year Vessels (the “Exmar Sale Assets” and, together with the Partnership Sale Assets, the “Sale Assets”), prior to engaging in any negotiation for such Transfer with any non-affiliated third party or otherwise offering to Transfer the Exmar Sale Assets to any non-affiliated third party, such Exmar Transferring Party shall give the MLP (an “Exmar Potential Transferee” and, together with a Partnership Potential Transferee, a “Potential Transferee”), written notice setting forth all material terms and conditions (including, without limitation, the purchase price or the terms of the charter agreement and a description of the Exmar Sale Asset(s) on which such Exmar Transferring Party desires to Transfer the Exmar Sale Assets) (an “Exmar Transfer Notice” and, together with a Partnership Transfer Notice, each a “Transfer Notice”).

 

10

 

(c)                                  After delivery of a Transfer Notice, the Transferring Party then shall be obligated to negotiate in good faith for a 30-day period following the delivery by the Transferring Party of the Transfer Notice (the “First Offer Negotiation Period”) to reach an agreement for the Transfer of such Sale Assets to the Potential Transferee or any of its Affiliates on the terms and conditions set forth in the Transfer Notice.  If no such agreement with respect to the Sale Assets is reached during the First Offer Negotiation Period, and the Transferring Party has not Transferred, or agreed in writing to Transfer, such Sale Assets to a third party within 180 calendar days after the end of the First Offer Negotiation Period on terms generally no less favorable to the Transferring Party than those included in the Transfer Notice, then the Transferring Party shall not thereafter Transfer any of the Sale Assets without first offering such assets to the applicable Potential Transferee in the manner provided above.

 

ARTICLE VI
 CARIBBEAN FLNG INTERESTS PURCHASE OPTION

 

Section 6.1                                    Option to Purchase the Caribbean FLNG Interests.

 

(a)                                 Exmar hereby grants to the Partnership Group the right and option to purchase, in one or more transactions and subject to no condition, other than as set forth in Section 6.1(b), for fair market value at any time within 24 months following the commencement of the operations of the Caribbean FLNG, all or a portion of the Caribbean FLNG Interests (such interests, the “Applicable Caribbean FLNG Interests”).  For the avoidance of doubt, if the Partnership Group purchases a portion, but not all, of the Caribbean FLNG Interests in accordance with this Article VI, the Partnership Group has the right and option to purchase, in one or more transactions and subject to no condition other than as set forth in Section 6.1(b), for fair market value at any time within 24 months following the commencement of the operations of the Caribbean FLNG with Pacific Rubiales Energy Corp., all or a portion of the remaining Caribbean FLNG Interests.

 

(b)                                 The Parties acknowledge that the potential transfer of the Applicable Caribbean FLNG Interests pursuant to this Article VI is subject to obtaining any and all written consents of governmental authorities and other third parties including providers of financing and other holders of security interests in the Applicable Caribbean FLNG Interests, and to the terms of all agreements in respect of the Applicable Caribbean FLNG Interests including, without limitation, (i) any rights of first refusal of the parties to such agreements to purchase the Applicable Caribbean FLNG Interests and (ii) any rights of lenders or other providers of financing.  Exmar hereby covenants and agrees to use its reasonable efforts to obtain any such consents required to be obtained by it in connection with the transfer of the Applicable Caribbean FLNG Interests pursuant to this Article VI.

 

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Section 6.2                                    Procedures.

 

(a)                                 Not later than 30 calendar days after the date on which the Caribbean FLNG commences operation with Pacific Rubiales Energy Corp., Exmar shall notify the Board and offer the Board the opportunity to cause any Partnership Group Member to purchase the Applicable Caribbean FLNG Interests for their fair market value pursuant to Section 6.1(a).

 

(b)                                 If a Partnership Group Member decides to exercise the option to purchase the Applicable Caribbean FLNG Interests, it will provide, within 30 days of receipt of notice pursuant to Section 6.2(a), written notice to Exmar of such exercise, the fair market value it proposes to pay for the Applicable Caribbean FLNG Interests, and the other material terms of the purchase.  The decision to purchase the Applicable Caribbean FLNG Interests, the fair market value to be paid for the Applicable Caribbean FLNG Interests, and the other terms of the purchase shall be approved by the Conflicts Committee.  If the Partnership Group Member and Exmar are unable to agree on the fair market value of the Applicable Caribbean FLNG Interests and/or the other material terms, the Partnership Group Member and Exmar shall engage a mutually-agreed-upon investment banking firm, ship broker or other expert advisor to determine the fair market value of the Applicable Caribbean FLNG Interests and/or the other material terms on which the Partnership Group Member and Exmar are unable to agree.  In determining the fair market value of the Applicable Caribbean FLNG Interests and/or the other material terms on which the Applicable Caribbean FLNG Interests are to be sold, the investment banking firm, ship broker or other expert advisor, as applicable, will have access to the proposed sale and purchase values and terms for the offer submitted by the Partnership Group Member and Exmar, respectively, and to all information prepared by or on behalf of the Partnership Group Member and Exmar with respect to the Applicable Caribbean FLNG Interests and reasonably requested by such investment banking firm, ship broker or other expert advisor.  Such investment banking firm, ship broker or other expert advisor will determine the fair market value of the Applicable Caribbean FLNG Interests and/or the other terms on which the Partnership Group Member and Exmar are unable to agree within 30 calendar days of its engagement and furnish the Partnership Group Member and Exmar its determination.  The fees and expenses of the investment banking firm, ship broker or other expert advisor, as applicable, will be divided equally between the Partnership Group Member and Exmar.  Upon receipt of such determination, the Partnership Group Member will have the option, but not the obligation to purchase the Applicable Caribbean FLNG Interests for the fair market value and on the other terms, which include those specified in Section 6.2(c)(i) through Section 6.2(c)(vi), as determined by the investment banking firm, ship broker or other expert advisor, as soon as commercially practicable after determinations have been made.

 

(c)                                  If a Partnership Group Member chooses to exercise its option to purchase the Applicable Caribbean FLNG Interests under Section 6.2(a), the applicable parties shall enter into a purchase and sale agreement for the purchase and sale of the Applicable Caribbean FLNG Interests pursuant to which Exmar shall be obligated to sell the Applicable Caribbean FLNG Interests to the Partnership Group Member and the Partnership Group Member shall be obligated to purchase the Applicable Caribbean FLNG Interests from Exmar.  The terms of the purchase and sale agreement will include the following:

 

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(i)                                     the Partnership Group Member will deliver a cash purchase price (unless the Partnership Group Member and Exmar agree that the consideration will be paid by means of equity of the MLP, an interest-bearing promissory note or other form of consideration);

 

(ii)                                  the Partnership Group will be entitled to the benefit of the indemnification contained in Article VIII of this Agreement for the remaining term of such indemnification with respect to events or conditions associated with the operation of the Caribbean FLNG and occurring before the date of acquisition of the Applicable Caribbean FLNG Interests by the Partnership Group Member; provided, however, that the remaining term of any such indemnification with respect to the Caribbean FLNG shall be deemed to be not less than three (3) years from the closing date of the acquisition of the Applicable Caribbean FLNG Interests by the Partnership Group Member;

 

(iii)                               Exmar will provide customary representations and warranties with respect to title to the Applicable Caribbean FLNG Interests and any other such matters as the Partnership Group Member may approve, which approval will not be unreasonably withheld;

 

(iv)                              Exmar will grant to the Partnership Group Member the right, exercisable at the Partnership Group Member’s risk and expense, to make such surveys, tests and inspections of the Caribbean FLNG as the Partnership Group Member may deem desirable, so long as such surveys, tests or inspections do not damage the Caribbean FLNG or interfere with the activities of the Exmar Entities or Pacific Rubiales Energy Corp. thereon and so long as the Partnership Group Member has furnished Exmar with evidence that adequate liability insurance is in full force and effect;

 

(v)                                 the Partnership Group Member will have the right to terminate its obligation to purchase the Applicable Caribbean FLNG Interests under this Article VI and the related purchase and sale agreement if the results of any searches, surveys, tests or inspections conducted pursuant to paragraph (iv) above are, in the reasonable opinion of the Partnership Group, unsatisfactory; and

 

(vi)                              neither Exmar nor the applicable Partnership Group Member shall have any obligation to sell or buy the Applicable Caribbean FLNG Interests if any of the consents referred to in Section 6.1(b) above have not been obtained.

 

(d)                                 If the Board, on behalf of a Partnership Group Member, chooses or is deemed to have chosen not to exercise its option to purchase all of the Caribbean FLNG Interests within 24 months following the commencement of the operations of the Caribbean FLNG with Pacific Rubiales Energy Corp., all future rights to purchase any of the Caribbean FLNG Interests by the Partnership Group will be extinguished.

 

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ARTICLE VII
 EXCEL INTERESTS PURCHASE OPTION

 

Section 7.1                                    Option to Purchase the Excel Interests.

 

(a)                                 Exmar hereby grants to the Partnership Group the unconditional right and option to purchase for fair market value at any time within 24 months following the commencement of a charter for the Excel with an initial term of five or more years, the Excel Interests.

 

(b)                                 The Parties acknowledge that the potential transfer of the Excel Interests pursuant to this Article VII is subject to obtaining any and all written consents of governmental authorities and other third parties and to the terms of all agreements existing as of the date hereof in respect of the Excel Interests including, without limitation, any rights of first refusal of the parties to such agreements to purchase the Excel Interests.  Exmar hereby covenants and agrees to use its reasonable efforts to obtain any such consents required to be obtained by it in connection with the transfer of the Excel Interests pursuant to this Article VII.

 

Section 7.2                                    Procedures.

 

(a)                                 Not later than 30 calendar days after the date on which the Excel commences operations under a charter with an initial term of five or more years, Exmar shall notify the Board and offer the Board the opportunity to cause any Partnership Group Member to purchase the Excel Interests for its fair market value pursuant to Section 7.1(a).

 

(b)                                 If a Partnership Group Member decides to exercise the option to purchase the Excel Interests, it will provide, within 30 days of receipt of notice pursuant to Section 7.2(a), written notice to Exmar of such exercise, the fair market value it proposes to pay for the Excel Interests, and the other material terms of the purchase.  The decision to purchase the Excel Interests, the fair market value to be paid for the Excel Interests, and the other terms of the purchase shall be approved by the Conflicts Committee.  If the Partnership Group Member and Exmar are unable to agree on the fair market value of the Excel Interests and/or the other material terms, the Partnership Group Member and Exmar shall engage a mutually-agreed-upon investment banking firm, ship broker or other expert advisor to determine the fair market value of the Excel Interests and/or the other material terms on which the Partnership Group Member and Exmar are unable to agree.  In determining the fair market value of the Excel Interests and/or the other material terms on which the Excel Interests are to be sold, the investment banking firm, ship broker or other expert advisor, as applicable, will have access to the proposed sale and purchase values and terms for the offer submitted by the Partnership Group Member and Exmar, respectively, and to all information prepared by or on behalf of the Partnership Group Member and Exmar with respect to the Excel Interests and reasonably requested by such investment banking firm, ship broker or other expert advisor.  Such investment banking firm, ship broker or other expert advisor will determine the fair market value of the Excel Interests and/or the other terms on which the Partnership Group Member and Exmar are unable to agree within 30 calendar days of its engagement and furnish the Partnership Group Member and Exmar its determination.  The fees and expenses of the investment banking firm, ship broker or other expert advisor, as applicable, will be divided equally between the Partnership Group Member and Exmar.  Upon receipt of such determination, the Partnership Group Member will have the

 

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option, but not the obligation to purchase the Excel Interests for the fair market value and on the other terms, including those specified in Section 7.2(c)(i) through Section 7.2(c)(vi), as determined by the investment banking firm, ship broker or other expert advisor, as soon as commercially practicable after determinations have been made.

 

(c)                                  If a Partnership Group Member chooses to exercise its option to purchase the Excel Interests under Section 7.2(b), the applicable parties shall enter into a purchase and sale agreement for the purchase and sale of the Excel Interests pursuant to which Exmar shall be obligated to sell the Excel Interests to the Partnership Group Member and the Partnership Group Member shall be obligated to purchase the Excel Interests from Exmar.  The terms of the purchase and sale agreement will include the following:

 

(i)                                     the Partnership Group Member will deliver a cash purchase price (unless the Partnership Group Member and Exmar agree that the consideration will be paid by means of equity of the MLP, an interest-bearing promissory note or other form of consideration);

 

(ii)                                  the Partnership Group will be entitled to the benefit of the indemnification contained in Article VIII of this Agreement for the remaining term of such indemnification with respect to events or conditions associated with the operation of the Excel and occurring before the date of acquisition of the Excel Interests by the Partnership Group Member; provided, however, that the remaining term of any such indemnification with respect to the Excel shall be deemed to be not less than three (3) years from the closing date of the acquisition of the Excel Interests by the Partnership Group Member;

 

(iii)                               Exmar will provide customary representations and warranties with respect to title to the Excel Interests and any other such matters as the Partnership Group Member may approve, which approval will not be unreasonably withheld;

 

(iv)                              Exmar will grant to the Partnership Group Member the right, exercisable at the Partnership Group Member’s risk and expense, to make such surveys, tests and inspections of the Excel as the Partnership Group Member may deem desirable, so long as such surveys, tests or inspections do not damage the Excel or interfere with the activities of the Exmar Entities or the charterer of the Excel thereon and so long as the Partnership Group Member has furnished Exmar with evidence that adequate liability insurance is in full force and effect;

 

(v)                                 the Partnership Group Member will have the right to terminate its obligation to purchase the Excel Interests under this Article VII and the related purchase and sale agreement if the results of any searches, surveys, tests or inspections conducted pursuant to paragraph (iii) above are, in the reasonable opinion of the Partnership Group, unsatisfactory; and

 

(vi)                              neither Exmar nor the applicable Partnership Group Member shall have any obligation to sell or buy the Excel Interests if any of the consents referred to in Section 7.1(b) above have not been obtained.

 

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(d)                                 If the Board, on behalf of a Partnership Group Member, chooses or is deemed to have chosen not to exercise its option to purchase the Excel Interests at the price determined by the investment banking firm, ship broker or other expert advisor under Section 7.2(b), all future rights to purchase any of the Excel Interests by the Partnership Group will be extinguished.

 

ARTICLE VIII
 INDEMNIFICATION

 

Section 8.1                                    Exmar Indemnification.  Subject to the provisions of Section 8.2, Exmar shall indemnify, defend and hold harmless the Partnership Group from and against: (a) Losses to the Partnership Group arising from (i) the failure of the Partnership Group, immediately after the Closing Date, to be the owner of such valid leasehold interests or fee ownership interests in and to the assets contributed by the Exmar Entities to the Partnership Group prior to or on the Closing Date (the “Contribution Assets”) as are necessary to enable the Partnership Entities to own and operate the Contribution Assets in substantially the same manner that the Contribution Assets were owned and operated by the Exmar Entities immediately prior to the respective dates on which each such Contribution Asset was acquired by the Partnership Entities or (ii) the failure of the Partnership Entities to have by the Closing Date any consent or governmental permit necessary to allow the Partnership Entities to own or operate the Contribution Assets in substantially the same manner that the Contribution Assets were owned and operated by the Exmar Entities immediately prior to the respective dates on which each such Contribution Asset was acquired by the Partnership Entities, in each of clauses (i) and (ii) above, to the extent that Exmar is notified by the MLP of such Losses within three (3) years after the Closing Date; and (b) all federal, state, foreign and local income tax liabilities attributable to the operation of the Contribution Assets prior to the Closing Date, including any such income tax liabilities of the Exmar Entities that may result from the consummation of the formation transactions for the Partnership Group and the MLP, but excluding any federal, state, foreign and local income taxes reserved on the books of the Partnership Group on the Closing Date.

 

Section 8.2                                    Indemnification Procedures.

 

(a)                                 The Partnership Group Members agree that within a reasonable period of time after they become aware of facts giving rise to a claim for indemnification pursuant to Section 8.1, they will provide notice thereof in writing to Exmar specifying the nature of and specific basis for such claim.

 

(b)                                 Exmar shall have the right to control all aspects of the defense of (and any counterclaims with respect to) any claims brought against the Partnership Group that are covered by the indemnification set forth in Section 8.1, including, without limitation, the selection of counsel, determination of whether to appeal any decision of any court and the settling of any such matter or any issues relating thereto; provided, however, that no such settlement shall be entered into without the consent (which consent shall not be unreasonably withheld) of the Partnership Group unless it includes a full release of the Partnership Group from such matter or issues, as the case may be.

 

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(c)                                  The Partnership Group Members agree to cooperate fully with Exmar with respect to all aspects of the defense of any claims covered by the indemnification set forth in Section 8.1, including, without limitation, the prompt furnishing to Exmar of any correspondence or other notice relating thereto that the Partnership Group may receive, permitting the names of the members of the Partnership Group to be utilized in connection with such defense, the making available to Exmar of any files, records or other information of the Partnership Group that Exmar considers relevant to such defense and the making available to Exmar of any employees of the Partnership Group; provided, however, that in connection therewith Exmar agrees to use reasonable efforts to minimize the impact thereof on the operations of the Partnership Group and further agrees to maintain the confidentiality of all files, records and other information furnished by a Partnership Group Member pursuant to this Section 8.2.  In no event shall the obligation of the Partnership Group to cooperate with Exmar as set forth in the immediately preceding sentence be construed as imposing upon the Partnership Group an obligation to hire and pay for counsel in connection with the defense of any claims covered by the indemnification set forth in this Article VIII; provided, however, that the Partnership Group Members may, at their own option, cost and expense, hire and pay for counsel in connection with any such defense.  Exmar agrees to keep any such counsel hired by the Partnership Group reasonably informed as to the status of any such defense (including providing such counsel with such information related to any such defense as such counsel may reasonably request) but Exmar shall have the right to retain sole control over such defense.

 

In determining the amount of any Loss for which any of the members of the Partnership Group is entitled to indemnification under this Agreement, the gross amount of the indemnification will be reduced by (i) any insurance proceeds realized by the Partnership Group, and such correlative insurance benefit shall be net of any incremental insurance premium that becomes due and payable by the Partnership Group as a result of such claim, and (ii) all amounts recovered by the Partnership Group under contractual indemnities from third Persons.  The Partnership Group hereby agrees to use commercially reasonable efforts to realize any applicable insurance proceeds or amounts recoverable under such contractual indemnities; provided, however, that the costs and expenses (including, without limitation, court costs and reasonable attorneys’ fees) of the Partnership Group in connection with such efforts shall be promptly reimbursed by Exmar in advance of any determination of whether such insurance proceeds or other amounts will be recoverable.

 

ARTICLE IX
 MISCELLANEOUS

 

Section 9.1                                    Choice of Law; Submission To Jurisdiction.  This Agreement shall be subject to and governed by the laws of the State of New York.  Each party hereby submits to the jurisdiction of the state and federal courts located in the State of New York and to venue in New York, New York.

 

Section 9.2                                    Notice.  All notices, requests or consents provided for or permitted to be given pursuant to this Agreement must be in writing and must be given by depositing the same in the mail, addressed to the Person to be notified, postpaid, and registered or certified with return receipt requested or by delivering such notice in person or by private-courier, prepaid, or by telecopier to such party.  Notice given by personal delivery or mail shall be effective upon actual

 

17

 

receipt.  Couriered notices shall be deemed delivered on the date the courier represents that delivery will occur.  Notice given by telecopier shall be effective upon actual receipt if received during the recipient’s normal business hours, or at the beginning of the recipient’s next business day after receipt if not received during the recipient’s normal business hours.  All notices to be sent to a party pursuant to this Agreement shall be sent to or made at the address set forth below such party’s signature to this Agreement, or at such other address as such party may stipulate to the other parties in the manner provided in this Section 9.2.

 

Section 9.3                                    Entire Agreement.  This Agreement constitutes the entire agreement of the parties relating to the matters contained herein, superseding all prior contracts or agreements, whether oral or written, relating to the matters contained herein.

 

Section 9.4                                    Termination.  Upon a Change of Control of the General Partner or of the MLP, the provisions of Articles II, III, IV and V of this Agreement and Section 8.1 shall terminate immediately.  Upon a Change of Control of Exmar, the provisions of Articles II, III, IV and V of this Agreement applicable to Exmar shall terminate at the time that is the later of (i) the date on which all of the MLP’s outstanding subordinated units have converted to common units of the MLP and (ii) the date of the Change of Control of Exmar. On the date on which a majority of the Board ceases to consist of directors that were (i) appointed by the General Partner prior to the first annual meeting of unitholders of the MLP and (ii) recommended for election to the board of directors of the MLP by a majority of the MLP’s Appointed Directors (as defined in the MLP Agreement), the provisions of Articles II, VI and VII and, to the extent applicable to any Exmar Entities, Sections 5.1(b) and 5.2(b) shall terminate immediately.

 

Section 9.5                                    Waiver; Effect of Waiver or Consent.  Any party hereto may (a) extend the time for the performance of any obligation or other act of any other party hereto or (b) waive compliance with any agreement or condition contained herein.  Except as otherwise specifically provided herein, any such extension or waiver shall be valid only if set forth in a written instrument duly executed by the party or parties to be bound thereby; provided, however, that the MLP may not, without the prior approval of the Conflicts Committee, agree to any extension or waiver of this Agreement that, in the reasonable discretion of the Board, will adversely affect the holders of common units of the MLP.  No waiver or consent, express or implied, by any party of or to any breach or default by any Person in the performance by such Person of its obligations hereunder shall be deemed or construed to be a waiver or consent of or to any other breach or default in the performance by such Person of the same or any other obligations of such Person hereunder.  Failure on the part of a party to complain of any act of any Person or to declare any Person in default, irrespective of how long such failure continues, shall not constitute a waiver by such party of its rights hereunder until the applicable statute of limitations period has run.

 

Section 9.6                                    Amendment or Modification.  This Agreement may be amended or modified from time to time only by the written agreement of all the parties hereto; provided, however, that the MLP may not, without the prior approval of the Conflicts Committee, agree to any amendment or modification of this Agreement that, in the reasonable discretion of the Board, will adversely affect the holders of common units of the MLP.

 

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Section 9.7                                    Assignment.  No party shall have the right to assign its rights or obligations under this Agreement without the consent of the other parties hereto.

 

Section 9.8                                    Counterparts.  This Agreement may be executed in any number of counterparts with the same effect as if all signatory parties had signed the same document.  All counterparts shall be construed together and shall constitute one and the same instrument.

 

Section 9.9                                    Severability.  If any provision of this Agreement or the application thereof to any Person or circumstance shall be held invalid or unenforceable to any extent, the remainder of this Agreement and the application of such provision to other Persons or circumstances shall not be affected thereby and shall be enforced to the greatest extent permitted by law.

 

Section 9.10                             Gender, Parts, Articles and Sections.  Whenever the context requires, the gender of all words used in this Agreement shall include the masculine, feminine and neuter, and the number of all words shall include the singular and plural.  All references to Article numbers and Section numbers refer to Articles and Sections of this Agreement.

 

Section 9.11                             Further Assurances.  In connection with this Agreement and all transactions contemplated by this Agreement, each signatory party hereto agrees to execute and deliver such additional documents and instruments and to perform such additional acts as may be necessary or appropriate to effectuate, carry out and perform all of the terms, provisions and conditions of this Agreement and all such transactions.

 

Section 9.12                             Withholding or Granting of Consent.  Each party may, with respect to any consent or approval that it is entitled to grant pursuant to this Agreement, grant or withhold such consent or approval in its sole and uncontrolled discretion, with or without cause, and subject to such conditions as it shall deem appropriate.

 

Section 9.13                             Laws and Regulations.  Notwithstanding any provision of this Agreement to the contrary, no party to this Agreement shall be required to take any act, or fail to take any act, under this Agreement if the effect thereof would be to cause such party to be in violation of any applicable law, statute, rule or regulation.

 

Section 9.14                             Negotiation of Rights of Exmar, Limited Partners, Assignees and Third Parties.  The provisions of this Agreement are enforceable solely by the parties to this Agreement, and no shareholder of Exmar and no limited partner, member, assignee or other Person of the MLP shall have the right, separate and apart from Exmar or the MLP, as applicable, to enforce any provision of this Agreement or to compel any party to this Agreement to comply with the terms of this Agreement.  Exmar is entitled to enforce the rights on behalf of any Exmar Entity, and the MLP is entitled to enforce the rights on behalf of any Partnership Group Member.

 

[SIGNATURE PAGE FOLLOWS]

 

19

 

IN WITNESS WHEREOF, the Parties have executed this Agreement on, and effective as of, the Closing Date.

 

	
 
    	
EXMAR   NV
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    
	
 
    	
 
    	
 
    
	
 
    	
Address   for Notice:
    
	
 
    	
De   Gerlachekaai 20
    
	
 
    	
2000,   Antwerpen, Belgium
    
	
 
    	
Phone:
    	
+32   3 247 5611
    
	
 
    	
Fax:
    	
+32   3 248 2740
    
	
 
    	
Attention:   [·]
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
EXMAR   ENERGY PARTNERS LP
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    
	
 
    	
 
    	
 
    
	
 
    	
Address   for Notice:
    
	
 
    	
Room 3206,   32nd Floor
    
	
 
    	
Lippo   Center, Tower Two
    
	
 
    	
N°   89 Queensway
    
	
 
    	
Hong   Kong
    
	
 
    	
Phone:
    	
+852   2861 9668
    
	
 
    	
Fax:
    	
[·]
    
	
 
    	
Attention:   [·]
    

 

[Signature Page to Omnibus Agreement]

 

 

	
 
    	
EXMAR   GENERAL PARTNER LIMITED
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    
	
 
    	
 
    	
 
    
	
 
    	
Address   for Notice:
    
	
 
    	
Room 3206,   32nd Floor
    
	
 
    	
Lippo   Center, Tower Two
    
	
 
    	
N°   89 Queensway
    
	
 
    	
Hong   Kong
    
	
 
    	
Phone:
    	
+852   2861 9668
    
	
 
    	
Fax:
    	
[·]
    
	
 
    	
Attention:   [·]
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
EXMAR   ENERGY HONG KONG LTD.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    
	
 
    	
 
    	
 
    
	
 
    	
Address   for Notice:
    
	
 
    	
Room 3206,   32nd Floor
    
	
 
    	
Lippo   Center, Tower Two
    
	
 
    	
N°   89 Queensway
    
	
 
    	
Hong   Kong
    
	
 
    	
Phone:
    	
+852   2861 9668
    
	
 
    	
Fax:
    	
[·]
    
	
 
    	
Attention:   [·]
    

 

[Signature Page to Omnibus Agreement]Exhibit 10.19

 

	
Copyright, published by BIMCO
    	
 
    	
Explanatory Notes for SHIPMAN 2009   are available from BIMCO at www.bimco.org
    	
 
    	
First published 1988. Revised 1998   and 2009
    	
 
    	
Approved by   the international Ship Managers’ Association
    	
 
    	

    

 

SPECIFIC TERMS IN THIS EXHIBIT HAVE BEEN REDACTED BECAUSE CONFIDENTIAL TREATMENT FOR THOSE TERMS HAS BEEN REQUESTED. THE REDACTED MATERIAL HAS BEEN SEPARATELY FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND THE TERMS HAVE BEEN MARKED AT THE APPROPRIATE PLACE WITH FIVE ASTERISKS (*****).

Printed by BIMCO’s idea

 

	

    	
SHIPMAN 2009
    STANDARD   SHIP MANAGEMENT AGREEMENT

 

PART I
    
	
 

1.        Place and date of Agreement

Antwerp, 31st October 2014
    	
 

2.        Date of commencement of Agreement (Cls.   2, 12, 21 and 25)

31st October 2014

 
    
	
 

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

(i)   Name: Solaia Shiping LLC

(ii)    Place of registered office:  80 Broad Street

(iii) Law   of registry:  Monrovia,   Liberia
    	
 

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

(i)   Name:    EXMAR Shipmanagement NV

(ii)    Place of registered office: De Gerlachekaai 20

(iii) Law   of registry: B-2000 Antwerpen, Belgium

 
    
	
 

5.         The Company (with reference to the   ISM/ISPS Codes) (state name and IMO Unique Company Identification number. If   the Company is a third party then also state registered office and principal   place of business) (Cls. 1 and 9(c)(i))

(i)             Name: EXMAR   Shipmanagement NV

(ii)          IMO Unique Company Identification   number: 3008137

(iii)       Place of registered office: Antwerpen, Belgium

(iv)       Principal place of business: Antwerpen, Belgium
    	
 

6.        Technical Management (state “yes” or “no”   as agreed) (Cl. 4)

YES

 
    
	
7.        Crew Management (state “yes” or “no” as   agreed) (Cl. 5(a))

YES

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

NO
    
	
 

9.        Chartering Services period (only to be   filled in if “yes” stated in Box 8) (Cl.6(a))
    	
 

10.      Crew Insurance arrangements (state “yes”   or “no” as agreed)

(i)          Crew Insurances* (Cl. 5(b)):  NO

(ii)       Insurance for persons proceeding to sea   onboard (Cl. 5(b)(i)):  NO

*only to apply if Crew Management (Cl. 5(a))   agreed (see Box 7)

 
    
	
11.      Insurance arrangements (state “yes” or “no”   as agreed) (Cl. 7)

NO
    	
12.         Optional insurances (state optional   insurance(s) as agreed, such as piracy, kidnap and ransom, loss of hire   and FD & D) (Cl. 10(a)(iv))

all marine insurance policies including but not   limited to the ones mentioned above

 
    
	
 

13.      Interest (state rate of interest to   apply after due date to outstanding sums) (Cl. 9(a))

EURIBOR 3M + 3% p.a.

 
    	
 

14.      Annual management fee (state annual   amount) (Cl. 12(a))

USD ***** base 2014

see clause 12(b)
    
	
 

15.      Manager’s nominated account (Cl.12(a))

IBAN BE 73 0014 3974 7960

BIC GEBABEBB
    	
 

16.      Daily rate (state rate for days in   excess of those agreed in budget) (Cl. 12(c))

Engineering / Superintendency: ***** EUR / day

 
    
	
17.      Lay-up period / number of months (Cl.12(d))

3

 

 
    
	
 

18.      Minimum contract period (state number of   months) (Cl. 21(a))
    	
 

19.      Management fee on termination (state   number of months to apply) (Cl. 22(g))

3

 

 
    
	
20.      Severance Costs (state maximum amount) (Cl.   22(h)(ii))

At cost, as per applicable CBA
    	
21.  Dispute Resolution (state alternative Cl. 23(a),   23(b) or 23(c); if Cl. 23(c) place of arbitration   must be stated) (Cl. 23)

Cl. 23(a)

 
    
	
 

22.   Notices (state full style contact details for serving   notice and communication to the Owners) (Cl. 24)

c/o Exmar Hong Kong Ltd.

Room 3206, 32rd floor, Lippo Centre Tower 2

89 Queensway, Hong Kong

Tel: +852 2861 3880

Fax: +852 2861 3881
    	
 

23.   Notices (state full style contact details for serving   notice and communication to the Managers) (Cl. 24)

EXMAR Shipmanagement NV

De Gerlachekaai 20

B-2000 Antwerpen, Belgium

Tel : +32 3 247 50 11

Fax: +32 3 247 50 91
    

 

 

Continued

 

This document is a computer generated SHIPMAN 2009 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 is 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.

 

 

	
Copyright, published by BIMCO
    	
 
    	
Explanatory Notes for SHIPMAN 2009   are available from BIMCO at www.bimco.org
    	
 
    	
First published 1988. Revised 1998   and 2009
    	
 
    	
Approved by the international Ship   Managers’ Association
    	
 
    	

    

 

	
Printed by BIMCO’s idea
    	
SHIPMAN 2009
    	
 
    
	
 
    	
Standard ship management agreement
    	
 
    

 

	
(Continued)
    	
PART 1
    

 

 

It is mutually agreed between the party stated in Box 3 and the party stated in Box 4 that this Agreement consisting of PART l and PART ll as well as Annexes “A” (Details of Vessel or Vessels), “B” (Details of Crew), “C” (Budget), “D” (Associated Vessels) and “E” (Fee Schedule) attached hereto, shall be performed subject to the conditions contained herein. In the event of a conflict of conditions, the provisions of PART l and Annexes “A”, “B”, “C”, “D” and “E” shall prevail over those of PART ll to the extent of such conflict but no further.

 

 

	
 

Signature(s) Owners

 

 

 

/s/   illegible
    	
 

Signature(s) (Managers)

 

 

 

/s/   illegible

 

 

 

 
    

 

 

	
Copyright, published by BIMCO
    	
 
    	
Explanatory Notes for SHIPMAN 2009   are available from BIMCO at www.bimco.org
    	
 
    	
First published 1988. Revised 1998   and 2009
    	
 
    	
Approved by the international Ship   Managers’ Association
    	
 
    	

    

 

Printed by BIMCO’s idea

 

ANNEX “A” (DETAILS OF VESSEL OR VESSELS)
 TO THE BIMCO STANDARD SHIP MANAGEMENT AGREEMENT
 CODE NAME: SHIPMAN 2009

 

Date of Agreement:  Antwerp, 31st October 2014

 

Name of Vessel(s):  M/V EXCALIBUR

 

Particulars of Vessel(s):

 

Built: 01/10/2002

Flag: Belgian

IMO: 9230050

Call sign: ONCE

Class: BV

GT: 93.786

 

 

 

 

 

 

 

Continued

 

This document is a computer generated SHIPMAN 2009 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 is 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.

 

 

	
Copyright, published by BIMCO
    	
 
    	
Explanatory Notes for SHIPMAN 2009   are available from BIMCO at www.bimco.org
    	
 
    	
First published 1988. Revised 1998   and 2009
    	
 
    	
Approved by the international Ship   Managers’ Association
    	
 
    	

    

 

Printed by BIMCO’s idea

 

ANNEX “B” (DETAILS OF CREW)

TO THE BIMCO STANDARD SHIP MANAGEMENT AGREEMENT

CODE NAME: SHIPMAN 2009

 

Date of Agreement: Antwerp, 31st October 2014

 

Details of Crew:

 

	
Numbers
    	
25
    	
Rank
    	
Nationality
    	
Mixed
    
	
1
    	
Captain
    	
BE
    	
 
    	
 
    
	
2
    	
Chief Officer
    	
HR
    	
 
    	
 
    
	
3
    	
2nd Officer
    	
UA
    	
 
    	
 
    
	
4
    	
2nd Officer
    	
HR
    	
 
    	
 
    
	
5
    	
3rd Officer
    	
BE
    	
 
    	
 
    
	
6
    	
Aspirant Officer
    	
UA
    	
 
    	
 
    
	
7
    	
Chief Engineer
    	
HR
    	
 
    	
 
    
	
8
    	
2nd Engineer
    	
BE
    	
 
    	
 
    
	
9
    	
3rd Engineer
    	
RO
    	
 
    	
 
    
	
10
    	
3rd Eng CGO
    	
UA
    	
 
    	
 
    
	
11
    	
4th Engineer
    	
JM
    	
 
    	
 
    
	
12
    	
Asp Engineer
    	
JM
    	
 
    	
 
    
	
13
    	
Aut Engineer
    	
HR
    	
 
    	
 
    
	
14
    	
Bosun
    	
PH
    	
 
    	
 
    
	
15
    	
Fitter
    	
PH
    	
 
    	
 
    
	
16
    	
QAB/W
    	
PH
    	
 
    	
 
    
	
17
    	
QAB/W
    	
PH
    	
 
    	
 
    
	
18
    	
QAB/W
    	
PH
    	
 
    	
 
    
	
19
    	
QAB/W
    	
PH
    	
 
    	
 
    
	
20
    	
MotorMan
    	
PH
    	
 
    	
 
    
	
21
    	
Wiper
    	
PH
    	
 
    	
 
    
	
22
    	
OS
    	
PH
    	
 
    	
 
    
	
23
    	
Chief Cook
    	
PH
    	
 
    	
 
    
	
24
    	
2nd Cook
    	
PH
    	
 
    	
 
    
	
25
    	
Messman
    	
PH
    	
 
    	
 
    

 

Deviation from nationality and rank can occur as per flag state requirements and/or as mutually agreed between parties.

 

 

 

 

 

 

 

Continued

 

This document is a computer generated SHIPMAN 2009 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 is 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.

 

 

	
Copyright, published by BIMCO
    	
 
    	
Explanatory Notes for SHIPMAN 2009   are available from BIMCO at www.bimco.org
    	
 
    	
First published 1988. Revised 1998   and 2009
    	
 
    	
Approved by the international Ship   Managers’ Association
    	
 
    	

    

 

SPECIFIC TERMS IN THIS EXHIBIT HAVE BEEN REDACTED BECAUSE CONFIDENTIAL TREATMENT FOR THOSE TERMS HAS BEEN REQUESTED. THE REDACTED MATERIAL HAS BEEN SEPARATELY FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND THE TERMS HAVE BEEN MARKED AT THE APPROPRIATE PLACE WITH FIVE ASTERISKS (*****).

 

Printed by BIMCO’s idea

 

ANNEX “C” (BUDGET)

TO THE BIMCO STANDARD SHIP MANAGEMENT AGREEMENT

CODE NAME: SHIPMAN 2009

 

Date of Agreement: 31st October 2014

 

Managers’ initial budget with effect from the commencement date of this Agreement (see Box 2):

 

	
Crewing expenses :
    	
***** USD
    
	
Techinical Expenses:
    	
*****
    
	
General Expenses :
    	
*****
    
	
Other Opex:
    	
*****
    
	
 
    	
 
    
	
Total :
    	
***** USD
    

 

 

 

 

 

 

 

Continued

 

This document is a computer generated SHIPMAN 2009 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 is 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.

 

 

	
Copyright, published by BIMCO
    	
 
    	
Explanatory Notes for SHIPMAN 2009   are available from BIMCO at www.bimco.org
    	
 
    	
First published 1988. Revised 1998   and 2009
    	
 
    	
Approved by the international Ship   Managers’ Association
    	
 
    	

    

 

Printed by BIMCO’s idea

 

ANNEX “D” (ASSOCIATED VESSELS)

TO THE BIMCO STANDARD SHIP MANAGEMENT AGREEMENT

CODE NAME: SHIPMAN 2009

 

NOTE: PARTIES SHOULD BE AWARE THAT BY COMPLETING THIS ANNEX “D” THEY WILL BE SUBJECT TO THE PROVISIONS OF SUB-CLAUSE 22(b)(i) OF THIS AGREEMENT.

 

Date of Agreement:

 

Details of Associated Vessels: N/A

 

 

 

 

 

 

 

Continued

 

This document is a computer generated SHIPMAN 2009 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 is 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.

 

 

	
Copyright, published by BIMCO
    	
 
    	
Explanatory Notes for SHIPMAN 2009   are available from BIMCO at www.bimco.org
    	
 
    	
First published 1988. Revised 1998   and 2009
    	
 
    	
Approved by the international Ship   Managers’ Association
    	
 
    	

    

 

Printed by BIMCO’s idea

 

ANNEX “E” (FEE SCHEDULE)

TO THE BIMCO STANDARD SHIP MANAGEMENT AGREEMENT

CODE NAME: SHIPMAN 2009

 

 

 

 

 

 

 

Continued

 

This document is a computer generated SHIPMAN 2009 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 is 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.

 

 

PART II
 SHIPMAN 2009
 Standard ship management agreement

 

SECTION 1 - Basis of the 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:

 

“Company” (with reference to the ISM Code and the ISPS Code) means the organization identified in Box 5 or any replacement organization appointed by the Owners from time to time (see Sub-clauses 9(b)(i) or 9(c)(ii), whichever is applicable).

 

“Crew” means the personnel of the numbers, rank and nationality specified in Annex “B” hereto.

 

“Crew Insurances” means insurance of liabilities in respect of crew risks which shall include but not be limited to death, permanent disability, sickness, injury, repatriation, shipwreck unemployment indemnity and loss of personal effects (see Sub-clause 5(b) (Crew Insurances) and Clause 7 (Insurance Arrangements) and Clause 10 (Insurance Policies) and Boxes 10 and 11).

 

“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.

 

“Flag State” means the State whose flag the Vessel is flying.

 

“ISM Code” means the International Management Code for the Safe Operation of Ships and for Pollution Prevention and any amendment thereto or substitution therefor.

 

“ISPS Code” means the International Code for the Security of Ships and Port Facilities and the relevant amendments to Chapter XI of SOLAS and any amendment thereto or substitution therefor.

 

“Managers” means the party identified in Box 4.

 

“Management Services” means the services specified in SECTION 2 - Services (Clauses 4 through 7) as indicated affirmatively in Boxes 6 through 8, 10 and 11, and all other functions performed by the Managers under the terms of this Agreement.

 

“Owners” means the party identified in Box 3.

 

“Severance Costs” means the costs which are legally required to be paid to the Crew as a result of the early termination of any contracts for service on the Vessel.

 

“SMS” means the Safety Management System (as defined by the ISM Code).

 

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

 

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

 

2.              Commencement and Appointment

With effect from the date stated in Box 2 for the commencement of the Management Services and continuing unless and until terminated as provided herein, the Owners hereby appoint the Managers and the Managers hereby agree to act as the Managers of the Vessel in respect of the Management Services.

 

3.              Authority of the Managers

Subject to the terms and conditions herein provided, during the period of this Agreement the Managers shall carry out the 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 

 

1

 

PART II
 SHIPMAN 2009
 Standard ship management agreement

 

consider to be necessary to enable them to perform the Management Services in accordance with sound ship management practice, including but not limited to compliance with all relevant rules and regulations.

 

SECTION 2 - Services

 

4.              Technical Management

(only applicable if agreed according to Box 6).

The Managers shall provide technical management which includes, but is not limited to, the following services:

 

(a)     ensuring that the Vessel complies with the requirements of the law of the Flag State;

 

(b)     ensuring compliance with the ISM Code;

 

(c)     ensuring compliance with the ISPS Code;

 

(d)     providing competent personnel to supervise the maintenance and general efficiency of the Vessel;

 

(e)     arranging and supervising dry dockings, repairs, alterations and the maintenance of the Vessel to the standards agreed with the Owners provided that the Managers shall be entitled to incur the necessary expenditure to ensure that the Vessel will comply with all requirements and recommendations of the classification society, and with the law of the Flag State and of the places where the Vessel is required to trade;

 

(f)     arranging the supply of necessary stores, spares and lubricating oil;

 

(g)     appointing surveyors and technical consultants as the Managers may consider from time to time to be necessary;

 

(h)     in accordance with the Owners’ instructions, supervising the sale and physical delivery of the Vessel under the sale agreement. However services under this Sub-clause 4(h) shall not include negotiation of the sale agreement or transfer of ownership of the Vessel;

 

(i)      arranging for the supply of provisions unless provided by the Owners; and

 

(j)      arranging for the sampling and testing of bunkers.

 

(k)     developing, implementing and monitoring of a computerized Planned Maintenance System (PMS) and Safety Managment System (SMS) in accordance with the ISM Code (see Sub-clause 8.b and 9b);

 

5.              Crew Management and Crew Insurances

(a)     Crew Management

(only applicable if agreed according to Box 7)

The Managers shall provide suitably qualified Crew who shall comply with the requirements of STCW 95.

The provision of such crew management services includes, but is not limited to, the following services:

 

(i)                  selecting, engaging and providing for the administration of the Crew, including, as applicable, payroll arrangements, pension arrangements, tax, social security contributions and other mandatory dues related to their employment payable in each Crew member’s country of domicile;

 

(ii)              ensuring that the applicable requirements of the law of the Flag State in respect of rank, qualification and certification of the Crew and employment regulations, such as Crew’s tax and social insurance, are satisfied;

 

(iii)          ensuring that all 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 or such higher standard of medical examination as 

 

2

 

PART II
 SHIPMAN 2009
 Standard ship management agreement

 

may be agreed with the Owners. In the absence of applicable Flag State requirements the medical certificate shall be valid at the time when the respective Crew member arrives on board the Vessel and shall be maintained for the duration of the service on board the Vessel;

 

(iv)           ensuring that the Crew shall have a common working language and 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;

 

(vii)       conducting union negotiations; and

 

(viii)   if the Managers are the Company, ensuring that the Crew, on joining the Vessel, are given proper familiarisation with their duties in relation to the Vessel’s SMS and that instructions which are essential to the SMS are identified, documented and given to the Crew prior to sailing.

 

(ix)           if the Managers are not the Company:

 

(1)     ensuring that the Crew, before joining the Vessel, are given proper familiarisation with their duties in relation to the ISM Code; and

 

(2)     instructing the Crew to obey all reasonable orders of the Company in connection with the operation of the SMS.

 

(x)               Where Managers are not providing technical management services in accordance with Clause 4 (Technical Management):

 

(1)     ensuring that no person connected to the provision and the performance of the crew management services shall proceed to sea on board the Vessel without the prior consent of the Owners (such consent not to be unreasonably withheld); and

 

(2)     ensuring that in the event that the Owners’ drug and alcohol policy requires measures to be taken prior to the Crew joining the Vessel, implementing such measures;

 

(b)     Crew Insurances

(only applicable if Sub-clause 5(a) applies and if agreed according to Box 10)

The Managers shall throughout the period of this Agreement provide the following services:

 

(i)                  arranging Crew Insurances in accordance with the best practice of prudent managers of vessels of a similar type to the Vessel, with sound and reputable insurance companies, underwriters or associations. Insurances for any other persons proceeding to sea onboard the Vessel may be separately agreed by the Owners and the Managers (see Box 10);

 

(ii)              ensuring that the Owners are aware of the terms, conditions, exceptions and limits of liability of the insurances in Sub-clause 5(b)(i);

 

(iii)          ensuring that all premiums or calls in respect of the insurances in Sub-clause 5(b)(i) are paid by their due date;

 

(iv)           if obtainable at no additional cost, ensuring that insurances in Sub-clause 5(b)(i) name the Owners as a joint assured with full cover and, unless otherwise agreed, on terms such that Owners shall be under no liability in respect of premiums or calls arising in connection with such insurances.

 

3

 

PART II
 SHIPMAN 2009
 Standard ship management agreement

 

(v)               providing written evidence, to the reasonable satisfaction of the Owners, of the Managers’ compliance with their obligations under Sub-clauses 5(b)(ii), and 5(b)(iii) within a reasonable time of the commencement of this Agreement, and of each renewal date and, if specifically requested, of each payment date of the insurances in Sub-clause 5(b)(i).

 

6.              Commercial Management

(only applicable if agreed according to Box 8).

The Managers shall provide the following services for the Vessel in accordance with the Owners’ instructions, which shall include but not be limited to:

 

(a)     seeking 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 9, consent thereto in writing shall first be obtained from the Owners;

 

(b)     arranging for the provision of bunker fuels of the quality specified by the Owners as required for the Vessel’s trade;

 

(c)     voyage estimating and accounting and calculation of hire, freights, demurrage and/or despatch monies due from or due to the charterers of the Vessel; assisting in the collection of any sums due to the Owners related to the commercial operation of the Vessel in accordance with Clause 11 (Income Collected and Expenses Paid on Behalf of Owners);

 

If any of the services under Sub clauses 6(a), 6(b) and 6(c) are to be excluded from the Management Fee, remuneration for these services must be stated in Annex E (Fee Schedule). See Sub clause 12(e).

 

(d)     issuing voyage instructions;

 

(e)     appointing agents;

 

(f)     appointing stevedores; and

 

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

 

7.              Insurance Arrangements

(only applicable if agreed according to Box 11).

The Managers shall arrange insurances in accordance with Clause 10 (Insurance Policies), on such terms as the Owners shall have instructed or agreed, in particular regarding conditions, insured values, deductibles, franchises and limits of liability.

 

4

 

PART II
 SHIPMAN 2009
 Standard ship management agreement

 

SECTION 3 – Obligations

 

8.              Managers’ Obligations

(a)     The Managers undertake to use their best endeavours to provide the Management Services as agents for and on behalf of the Owners in accordance with 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 in the performance of their management responsibilities under this Agreement, the Managers 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.

 

(b)     Where the Managers are providing technical management services in accordance with Clause 4 (Technical Management), they shall procure that the requirements of the Flag State are satisfied and they shall agree to be appointed as the Company, assuming the responsibility for the operation of the Vessel and taking over the duties and responsibilities imposed by the ISM Code and the ISPS Code, if applicable.

 

9.              Owners’ Obligations

(a)     The Owners shall pay all sums due to the Managers punctually in accordance with the terms of this Agreement. In the event of payment after the due date of any outstanding sums the Manager shall be entitled to charge interest at the rate stated in Box 13.

 

(b)     Where the Managers are providing technical management services in accordance with Clause 4 (Technical Management), the Owners shall:

 

(i)                  report (or where the Owners are not the registered owners of the Vessel procure that the registered owners report) to the Flag State administration the details of the Managers as the Company as required to comply with the ISM and ISPS Codes;

 

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

 

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

 

(c)     Where the Managers are not providing technical management services in accordance with Clause 4 (Technical Management), the Owners shall:

 

(i)                  procure that the requirements of the Flag State are satisfied and notify the Managers upon execution of this Agreement of the name and contact details of the organization that will be the Company by completing Box 5;

 

(ii)              if the Company changes at any time during this Agreement, notify the Managers in a timely manner of the name and contact details of the new organization;

 

(iii)          procure that the details of the Company, including any change thereof, are reported to the Flag State administration as required to comply with the ISM and ISPS Codes. The Owners shall advise the Managers in a timely manner when the Flag State administration has approved the Company; and

 

(iv)           unless otherwise agreed, arrange for the supply of provisions at their own expense.

 

(d)     Where the Managers are providing crew management services in accordance with Sub-clause 5(a) the Owners shall:

 

5

 

PART II
 SHIPMAN 2009
 Standard ship management agreement

 

(i)                  inform the Managers prior to ordering the Vessel to any excluded or additional premium area under any of the Owners’ Insurances by reason of war risks and/or piracy or like perils and pay whatever additional costs may properly be incurred by the Managers as a consequence of such orders including, if necessary, the costs of replacing any member of the Crew. Any delays resulting from negotiation with or replacement of any member of the Crew as a result of the Vessel being ordered to such an area shall be for the Owners’ account. Should the Vessel be within an area which becomes an excluded or additional premium area the above provisions relating to cost and delay shall apply;

 

(ii)              agree with the Managers prior to any change of flag of the Vessel and pay whatever additional costs may properly be incurred by the Managers as a consequence of such change. If agreement cannot be reached then either party may terminate this Agreement in accordance with Sub-clause 22(e); and

 

(iii)          provide, at no cost to the Managers, in accordance with the requirements of the law of the Flag State, or higher standard, as mutually agreed, adequate Crew accommodation and living standards.

 

(e)     Where the Managers are not the Company, the Owners shall ensure that Crew are properly familiarized with their duties in accordance with the Vessel’s SMS and that instructions which are essential to the SMS are identified, documented and given to the Crew prior to sailing.

 

6

 

PART II
 SHIPMAN 2009
 Standard ship management agreement

 

SECTION 4 – Insurance, Budgets, Income, Expenses and Fees

 

10.       Insurance Policies

The Owners shall procure, whether by instructing the Managers under Clause 7 (Insurance Arrangements) or otherwise, that throughout the period of this Agreement:

 

(a)     at the Owners’ expense, the Vessel is insured for not less than its sound market value or entered for its full gross tonnage, as the case may be for:

 

(i)                  hull and machinery marine risks (including but not limited to crew negligence) and excess liabilities;

 

(ii)              protection and indemnity risks (including but not limited to pollution risks, diversion expenses and, except to the extent insured separately by the Managers in accordance with Sub-clause 5(b)(i), Crew Insurances;

 

NOTE: If the Managers are not providing crew management services under Sub-clause 5(a) (Crew Management) or have agreed not to provide Crew Insurances separately in accordance with Sub-clause 5(b)(i), then such insurances must be included in the protection and indemnity risks cover for the Vessel (see Sub-clause 10(a)(ii) above).

 

(iii)          war risks (including but not limited to blocking and trapping, protection and indemnity, terrorism and crew risks); and

 

(iv)           such optional insurances as may be agreed (such as piracy, kidnap and ransom, loss of hire and FD & D) (see Box 12) Sub-clauses 10(a)(i) through 10(a)(iv) all in accordance with the best practice of prudent owners of vessels of a similar type to the Vessel, with sound and reputable insurance companies, underwriters or associations (“the Owners’ Insurances”);

 

(b)     all premiums and calls on the Owners’ Insurances are paid by their due date;

 

(c)     the Owners’ Insurances name the Managers and, subject to underwriters’ agreement, any third party designated by the Managers as a joint assured, with full cover. It is understood that in some cases, such as protection and indemnity, the normal terms for such cover may impose on the Managers and any such third party a liability in respect of premiums or calls arising in connection with the Owners’ Insurances.

 

If obtainable at no additional cost, however, the Owners shall procure such insurances on terms such that neither the Managers nor any such third party shall be under any liability in respect of premiums or calls arising in connection with the Owners’ Insurances. In any event, on termination of this Agreement in accordance with Clause 21 (Duration of the Agreement) and Clause 22 (Termination), the Owners shall procure that the Managers and any third party designated by the Managers as joint assured shall cease to be joint assured and, if reasonably achievable, that they shall be released from any and all liability for premiums and calls that may arise in relation to the period of this Agreement; and

 

(d)     written evidence is provided, to the reasonable satisfaction of the Managers, of the Owners’ compliance with their obligations under this Clause 10 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.

 

11.       Income Collected and Expenses Paid on Behalf of Owners

(a)     Except as provided in Sub-clause 11(c) all monies collected by the Managers under the terms of this Agreement (other than monies payable by the Owners to the Managers) and any interest thereon shall be held to the credit of the Owners in a separate bank account.

 

(b)     All expenses incurred by the Managers under the terms of this Agreement on behalf of the Owners (including expenses as provided in Clause 12(c)) may be debited against the Owners in the account referred to under Sub-clause 11(a) but shall in any event remain payable by the Owners to the Managers on demand.

 

7

 

SPECIFIC TERMS IN THIS EXHIBIT HAVE BEEN REDACTED BECAUSE CONFIDENTIAL TREATMENT FOR THOSE TERMS HAS BEEN REQUESTED. THE REDACTED MATERIAL HAS BEEN SEPARATELY FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND THE TERMS HAVE BEEN MARKED AT THE APPROPRIATE PLACE WITH FIVE ASTERISKS (*****).

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(c)     All monies collected by the Managers under Clause 6 (Commercial Management) shall be paid into a bank account in the name of the Owners or as may be otherwise advised by the Owners in writing.

 

12.       Management Fee and Expenses

(a)     The Owners shall pay to the Managers an annual management fee as stated in Box 14 for their services as Managers under this Agreement, which shall be payable in equal monthly instalments in advance, the first instalment (pro rata if appropriate) being payable on the commencement of this Agreement (see Clause 2 (Commencement and Appointment) and Box 2) and subsequent instalments being payable at the beginning of every calendar month. The management fee shall be payable to the Managers’ nominated account stated in Box 15.

 

(b)     The management fee shall be subject to an annual review increase of ***** on the 1st of January of each year and the proposed fee shall be presented in the annual budget in accordance with Sub-clause 13(a).

 

(c)     The Managers shall, at no extra cost to the Owners, provide their own office accommodation, office staff, facilities and stationery. Without limiting the generality of this Clause 12 (Management Fee and Expenses) the Owners shall reimburse the Managers for ***** properly incurred by the Managers in pursuance of the Management Services. Any days used by the Managers’ personnel travelling to or from or attending on the Vessel or otherwise used in connection with the Management Services in excess of those agreed in the budget shall be charged at the daily rate stated in Box 16. The Manager can revise the daily rates on a quarterly basis to reflect the current market conditions.

 

(d)     If the Owners decide to layup the Vessel and such layup lasts for more than the number of months stated in Box 17, an appropriate reduction of the Management Fee for the period exceeding such period until one month before the Vessel is again put into service shall be mutually agreed between the parties. If the Managers are providing crew management services in accordance with Sub-clause 5(a), consequential costs of reduction and reinstatement of the Crew shall be for the Owners’ account. If agreement cannot be reached then either party may terminate this Agreement in accordance with Sub clause 22(e).

 

(e)     Save as otherwise provided in this Agreement, all discounts and commissions obtained by the Managers in the course of the performance of the Management Services shall be credited to the Owners.

 

(f)     Fleet wide programs

 

(i)                  Training program

 

The owners agree to participate in the Manager’s fleet wide training program which encompasses seafarer conferences, courses in excess of STCW requirements, etc. The owners agree to contribute monthly to the training fund

 

(ii)              Volume purchasing agreement

 

The owners join in on the lub oil volume purchasing agreement.

 

13.       Budgets and Management of Funds

(a)     The Managers’ initial budget is set out in Annex “C” hereto. Subsequent budgets shall be for twelve month periods and shall be prepared by the Managers and presented to the Owners not less than three two months before the end of the budget calendar year.

 

(b)     The Owners shall state to the Managers in a timely manner, but in any event within one month of presentation, whether or not they agree to each proposed annual budget. The parties shall negotiate in good Faith. and if they fail to agree on the annual budget, including the management fee, either party may terminate this Agreement in accordance with Sub clause 22(e).

 

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(c)     Following the agreement of the budget, the Managers shall prepare and present to the Owners their estimate of the working capital requirement for the Vessel i.e. 1/12 of the budget and shall each month request the Owners in writing to pay the funds required to run the Vessel for the ensuing month, including the payment of any occasional or extraordinary item of expenditure, such as emergency repair costs, additional insurance premiums, bunkers 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.

 

(d)     The Managers shall at all times maintain and keep true and correct accounts in respect of the Management Services in accordance with the relevant International Financial Reporting Standards or such other standard as the parties may agree, including records of all costs and expenditure incurred, and produce a comparison between budgeted and actual income and expenditure of the Vessel in such form and at such quarterly intervals as shall be mutually agreed.

 

The Managers shall make such accounts available for inspection and auditing by the Owners and/or their representatives in the Managers’ offices or by electronic means, provided reasonable notice is given by the Owners.

 

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

 

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SECTION 5 – Legal, General and Duration of Agreement

 

14.       Trading Restrictions

If the Managers are providing crew management services in accordance with Sub-clause 5(a) (Crew Management), the Owners and the Managers will, prior to the commencement of this Agreement, agree on any trading restrictions to the Vessel that may result from the terms and conditions of the Crew’s employment.

 

15.       Replacement

If the Managers are providing crew management services in accordance with Sub-clause 5(a) (Crew Management), the Owners may require the replacement, at their own expense, at the next reasonable opportunity, of any member of the Crew found on reasonable grounds to be unsuitable for service. If the Managers have failed to fulfil their obligations in providing suitable qualified Crew within the meaning of Sub-clause 5(a) (Crew Management), then such replacement shall be at the Managers’ expense.

 

16.       Managers’ Right to Sub-Contract

The Managers shall not subcontract any of their obligations hereunder 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.

 

17.       Responsibilities

(a)     Force Majeure - Neither party shall be liable for any loss, damage or delay due to any of the following force majeure events and/or conditions to the extent that the party invoking force majeure is prevented or hindered from performing any or all of their obligations under this Agreement, provided they have made all reasonable efforts to avoid, minimize or prevent the effect of such events and/or conditions:

 

(i)                  acts of God;

 

(ii)              any Government requisition, control, intervention, requirement or interference;

 

(iii)          any circumstances arising out of war, threatened act of war or warlike operations, acts of terrorism, sabotage or piracy, or the consequences thereof;

 

(iv)           riots, civil commotion, blockades or embargoes;

 

(v)               epidemics;

 

(vi)           earthquakes, landslides, floods or other extraordinary weather conditions;

 

(vii)       strikes, lockouts or other industrial action, unless limited to the employees (which shall not include the Crew) of the party seeking to invoke force majeure;

 

(viii)   fire, accident, explosion except where caused by negligence of the party seeking to invoke force majeure; and

 

(ix)           any other similar cause beyond the reasonable control of either party.

 

(b)     Liability to Owners

(i)                  Without prejudice to Sub-clause 17(a), 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 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 

 

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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 (10) times the annual management fee payable hereunder.

 

(ii)              Acts or omissions of the Crew - Notwithstanding anything that may appear to the contrary in this Agreement, the Managers shall not be liable for any acts or omissions of the Crew, even if such acts or omissions 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 Clause 5(a) (Crew Management), in which case their liability shall be limited in accordance with the terms of this Clause 17 (Responsibilities).

 

(c)     Indemnity - Except to the extent and solely for the amount therein set out that the Managers would be liable under Sub-clause 17(b), 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 this Agreement, and against and in respect of all costs, loss, 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.

 

(d)     “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 17 (Responsibilities), 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 17 (Responsibilities) 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.

 

18.       General Administration

(a)     The Managers shall keep the Owners and, if appropriate, the Company informed in a timely manner of any incident of which the Managers become aware which gives or may give rise to delay to the Vessel or claims or disputes involving third parties.

 

(b)     The Managers shall handle and settle all claims and disputes arising out of the Management Services hereunder, unless the Owners instruct the Managers otherwise. The Managers shall keep the Owners appropriately informed in a timely manner throughout the handling of such claims and disputes.

 

(c)     The Owners may request the Managers to bring or defend other actions, suits or proceedings related to the Management Services, on terms to be agreed.

 

(d)     The Managers shall have power to obtain appropriate legal or technical or other outside expert advice in relation to the handling and settlement of claims in relation to Sub-clauses 18(a) and 18(b) and disputes and any other matters affecting the interests of the Owners in respect of the Vessel, unless the Owners instruct the Managers otherwise.

 

(e)     On giving reasonable notice, the Owners may request, and the Managers shall in a timely manner make available, all documentation, information and records in respect of the matters covered by this Agreement either related to mandatory rules or regulations or other obligations applying to the Owners in respect of the Vessel (including but not limited to STCW 95, the ISM Code and ISPS Code) to the extent permitted by relevant legislation.

 

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SPECIFIC TERMS IN THIS EXHIBIT HAVE BEEN REDACTED BECAUSE CONFIDENTIAL TREATMENT FOR THOSE TERMS HAS BEEN REQUESTED. THE REDACTED MATERIAL HAS BEEN SEPARATELY FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND THE TERMS HAVE BEEN MARKED AT THE APPROPRIATE PLACE WITH FIVE ASTERISKS (*****).

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On giving reasonable notice, the Owners may request, and the Managers shall in a timely manner make available, all documentation, information and records reasonably required by the Managers to enable them to perform the Management Services.

 

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

 

(g)     Any costs incurred by the Managers in carrying out their obligations according to this Clause 18 (General Administration) shall be reimbursed by the Owners.

 

19.       Inspection of Vessel

The Owners may at any time after giving reasonable notice to the Managers inspect the Vessel for any reason they consider necessary.

 

20.       Compliance with Laws and Regulations

The parties will not do or permit to be done anything which might cause any breach or infringement of the laws and regulations applicable to the Vessel and/or party hereto. of the Flag State, or of the places where the Vessel trades.

 

21.       Duration of the Agreement

(a)     This Agreement shall come into effect at the date stated in Box 2 and shall continue until terminated by either party by giving notice to the other; in which event this Agreement shall terminate upon the expiration of the later of the number of months stated in Box 18 or a period of two (2) months from the date on which such notice is received, unless terminated earlier in accordance with Clause 22 (Termination).

 

(b)     Where the Vessel is not at a mutually convenient port or place on the expiry of such period, this Agreement shall terminate on the subsequent arrival of the Vessel at the next mutually convenient port or place.

 

22.       Termination

(a)     Owners’ or Managers’ default

 

If either party fails to meet their obligations under this Agreement, the other party may give notice to the party in default requiring them to remedy it. In the event that the party in default fails to remedy it within a reasonable time to the reasonable satisfaction of the other party, that party shall be entitled to terminate this Agreement with immediate effect by giving notice to the party in default.

 

(b)     Notwithstanding Sub-clause 22(a):

 

(i)                  The Managers shall be entitled to terminate the Agreement with immediate effect by giving notice to the Owners if any monies payable by the Owners 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 ***** days of receipt by the Owners of the Managers’ written request, or if the Vessel is repossessed by the Mortgagee(s).

 

(ii)              If the Owners 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, 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 a reasonable time to the satisfaction of the Managers, the Managers shall be entitled to terminate the Agreement with immediate effect by notice.

 

(iii)          If either party fails to meet their respective obligations under Sub-clause 5(b) (Crew Insurances) and Clause 10 (Insurance Policies), the other party may give notice to the party in default requiring them to remedy it within ***** days, failing which the other party may terminate this Agreement with immediate effect by giving notice to the party in default.

 

12

 

SPECIFIC TERMS IN THIS EXHIBIT HAVE BEEN REDACTED BECAUSE CONFIDENTIAL TREATMENT FOR THOSE TERMS HAS BEEN REQUESTED. THE REDACTED MATERIAL HAS BEEN SEPARATELY FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, AND THE TERMS HAVE BEEN MARKED AT THE APPROPRIATE PLACE WITH FIVE ASTERISKS (*****).

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(c)     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 or has been declared missing or, if bareboat chartered, unless otherwise agreed, when the bareboat charter comes to an end.

 

(d)     For the purpose of Sub-clause 22(c) 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 Vessel’s owners cease to be the registered owners of the Vessel;

 

(ii)              the Vessel shall be deemed to be lost either when it has become an actual total loss or agreement has been reached with the Vessel’s underwriters in respect of its constructive total loss or if such agreement with the Vessel’s underwriters is not reached it is adjudged by a competent tribunal that a constructive loss of the Vessel has occurred; and

 

(iii)          the date upon which the Vessel is to be treated as declared missing shall be ***** days after the Vessel was last reported or when the Vessel is recorded as missing by the Vessel’s underwriters, whichever occurs first. A missing vessel shall be deemed lost in accordance with the provisions of Sub-clause 22(d)(ii).

 

(e)     In the event the parties fail to agree the annual budget in accordance with Sub clause 13(b), or to agree a change of flag in accordance with Sub clause 9(d)(ii), or to agree to a reduction in the Management Fee in accordance with Sub clause 12(d), either party may terminate this Agreement by giving the other party not less than one month’s notice, the result of which will be the expiry of the Agreement at the end of the current budget period or on expiry of the notice period, whichever is the later.

 

(f)     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 or administrator is appointed, or if it suspends payment, ceases to carry on business or makes any special arrangement or composition with its creditors.

 

(g)     In the event of the termination of this Agreement for any reason other than default by the Managers the management fee payable to the Managers according to the provisions of Clause 12 (Management Fee and Expenses), shall continue to be payable for a further period of the number of months stated in Box 19 as from the effective date of termination. If Box 19 is left blank then ninety (90) days shall apply.

 

(h)     In addition, where the Managers provide Crew for the Vessel in accordance with Clause 5(a) (Crew Management):

 

(i)                  the Owners shall continue to pay Crew Support Costs during the said further period of the number of months stated in Box 19; and

 

(ii)              the Owners shall pay an equitable proportion of any Severance Costs which may be incurred, not exceeding the amount stated in Box 20. The Managers shall use their reasonable endeavours to minimize such Severance Costs.

 

(i)      On the termination, for whatever reason, of this Agreement, the Managers shall release to the Owners, if so requested, the originals where possible, or otherwise certified copies, of all accounts and all documents specifically relating to the Vessel and its operation.

 

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

 

23.       BIMCO Dispute Resolution Clause

(a)     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. 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.

 

(b)     This Agreement shall be governed by and construed in accordance with Title 9 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, judgment 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 at the time when the arbitration proceedings are commenced.

 

(c)     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.

 

(d)     Notwithstanding Sub-clauses 23(a), 23(b) or 23(c) above, the parties may agree at any time to refer to mediation any difference and/or dispute arising out of or in connection with this Agreement.

 

(i)                  In the case of a dispute in respect of which arbitration has been commenced under Sub-clauses 23(a), 23(b) or 23(c) above, the following shall apply:

 

(ii)              Either party may at any time and from time to time elect to refer the dispute or part of the dispute to mediation by service on the other party of a written notice (the “Mediation Notice”) calling on the other party to agree to mediation.

 

(iii)          The other party shall thereupon within 14 calendar days of receipt of the Mediation Notice confirm that they agree to mediation, in which case the parties shall thereafter agree a mediator within a further 14 

 

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calendar days, failing which on the application of either party a mediator will be appointed promptly by the Arbitration Tribunal (“the Tribunal”) or such person as the Tribunal may designate for that purpose. The mediation shall be conducted in such place and in accordance with such procedure and on such terms as the parties may agree or, in the event of disagreement, as may be set by the mediator.

 

(iv)           If the other party does not agree to mediate, that fact may be brought to the attention of the Tribunal and may be taken into account by the Tribunal when allocating the costs of the arbitration as between the parties.

 

(v)               The mediation shall not affect the right of either party to seek such relief or take such steps as it considers necessary to protect its interest.

 

(vi)           Either party may advise the Tribunal that they have agreed to mediation. The arbitration procedure shall continue during the conduct of the mediation but the Tribunal may take the mediation timetable into account when setting the timetable for steps in the arbitration.

 

(vii)       Unless otherwise agreed or specified in the mediation terms, each party shall bear its own costs incurred in the mediation and the parties shall share equally the mediator’s costs and expenses.

 

(viii)   The mediation process shall be without prejudice and confidential and no information or documents disclosed during it shall be revealed to the Tribunal except to the extent that they are disclosable under the law and procedure governing the arbitration.

 

(Note: The parties should be aware that the mediation process may not necessarily interrupt time limits.)

 

(e)     If Box 21 in Part 1 is not appropriately filled in, Sub-clause 23(a) of this Clause shall apply.

 

Note: Sub-clauses 23(a), 23(b) and 23(c) are alternatives; indicate alternative agreed in Box 21. Sub-clause 23(d) shall apply in all cases.

 

24.       Notices

(a)     All notices given by either party or their agents to the other party or their agents in accordance with the provisions of this Agreement shall be in writing and shall, unless specifically provided in this Agreement to the contrary, be sent to the address for that other party as set out in Boxes 22 and 23 or as appropriate or to such other address as the other party may designate in writing.

 

A notice may be sent by registered or recorded mail, facsimile, electronically or delivered by hand in accordance with this Sub-clause 24(a).

 

(b)     Any notice given under this Agreement shall take effect on receipt by the other party and shall be deemed to have been received:

 

(i)                  if posted, on the seventh (7th) day after posting;

 

(ii)              if sent by facsimile or electronically, on the day of transmission; and

 

(iii)          if delivered by hand, on the day of delivery.

 

And in each case proof of posting, handing in or transmission shall be proof that notice has been given, unless proven to the contrary.

 

25.       Entire Agreement

This Agreement constitutes the entire agreement between the parties and no promise, undertaking, representation, warranty or statement by either party prior to the date stated in Box 2 shall affect this Agreement. Any modification of this Agreement shall not be of any effect unless in writing signed by or on behalf of the parties.

 

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26.       Third Party Rights

Except to the extent provided in Sub-clauses 17(c) (Indemnity) and 17(d) (Himalaya), no third parties may enforce any term of this Agreement.

 

27.       Partial Validity

If any provision of this Agreement is or becomes or is held by any arbitrator or other competent body to be illegal, invalid or unenforceable in any respect under any law or jurisdiction, the provision shall be deemed to be amended to the extent necessary to avoid such illegality, invalidity or unenforceability, or, if such amendment is not possible, the provision shall be deemed to be deleted from this Agreement to the extent of such illegality, invalidity or unenforceability, and the remaining provisions shall continue in full force and effect and shall not in any way be affected or impaired thereby.

 

28.       Interpretation

In this Agreement:

 

(a)     Singular/Plural

The singular includes the plural and vice versa as the context admits or requires.

 

(b)     Headings

The index and headings to the clauses and appendices to this Agreement are for convenience only and shall not affect its construction or interpretation.

 

(c)     Day

“Day” means a calendar day unless expressly stated to the contrary.

 

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