SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) May 27, 1998
HORIZON OFFSHORE, INC.
(Exact name of registrant as specified in its charter)
Delaware 0-23653 76-0494934
(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
2500 CityWest Boulevard, Suite 2200, Houston, Texas 77042
(Address of principal executive office) (Zip Code)
(713) 361-2600
(Registrant's telephone number, including area code)
N/A
(Former name or former address, if changed since last report.)
<PAGE>
ITEMS 2 AND 5. ACQUISITION OR DISPOSITION OF ASSETS; OTHER EVENTS.
On May 27, 1998, Horizon Offshore, Inc. (the "Registrant"), through
its wholly-owned subsidiary, Horizon Vessels, Inc. ("Vessels"), entered
into an agreement to acquire the Valhalla, a recently refurbished 427-foot
derrick barge with a 500-ton lift capability, from Big Hook, L.L.C., the
parent of Manson Gulf L.L.C. Vessels will charter the Valhalla from Big
Hook, L.L.C. for a period of 18 months for $200,000 per month and has the
option to purchase the vessel for $13,240,000 at the end of the lease term.
The vessel will be renamed the Atlantic Horizon and will initially offer
platform salvage and installation services in the Gulf of Mexico.
On May 27, 1998, Vessels acquired the BB-316, a 350-foot pipeline bury
barge, and related equipment from OPI Vessels, Inc., a wholly-owned
subsidiary of J. Ray McDermott, S.A., for $10 million. The Registrant will
reconfigure the vessel as a derrick barge by installing the previously
acquired 800-ton crane, with equipment and crew accommodations below deck,
thus creating a more effective U.S.-flagged work platform for the
Registrant's derrick barge. The vessel will be renamed the Pacific Horizon
and will offer platform salvage and installation services in the Gulf of
Mexico. The Pacific Horizon is scheduled for deployment later this year.
The charter and purchase prices for the vessels were determined
through arm's length negotiations. The purchase price for the BB-316 was
paid from working capital and borrowings under the Registrant's term loan
and revolving credit facility with Den norske Bank ASA. The charter hire
for the Valhalla will be paid from working capital and, assuming the
purchase option is exercised, the purchase price will be financed with
borrowings under the Registrant's term loan and revolving credit facility
with Den norske Bank ASA.
Pursuant to the purchase agreements, Vessels acquired and will acquire
only the vessels and no cash or accounts receivable, crews, physical
facilities, sales force or customers. Additionally, Vessels will take
possession of the barges without their being subject to any executory
contracts.
There are no material relationships between either Big Hook, L.L.C.,
Manson Gulf, L.L.C., OPI Vessels, Inc. or J. Ray McDermott, S.A. and the
Registrant or any of its affiliates, officers, directors, or any associate
of any such director or officer.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) No financial statements are filed with this report, as the vessels do
not constitute a business within the meaning of Rule 11-01 of Regulation S-
X.
(b) Exhibits.
10.1 Vessel Purchase Option Agreement dated and effective as of May
15, 1998 between
Big Hook, L.L.C. and Horizon Vessels, Inc.
10.2 Bareboat Charter dated as of May 15, 1998 between Big Hook,
L.L.C. and Horizon Vessels, Inc.
10.3 Vessel Purchase Agreement dated as of May 27, 1998 between OPI
Vessels, Inc. and Horizon Vessels, Inc.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
HORIZON OFFSHORE, INC.
By: /s/David W. Sharp
David W. Sharp
Executive Vice President and
Chief Financial Officer
Dated: June 10, 1998
VESSEL PURCHASE OPTION AGREEMENT
This agreement (the "Agreement") is made between Big Hook, L.L.C., a
Washington limited liability company (the "Seller") and Horizon Vessels,
Inc., a Delaware corporation and a wholly owned subsidiary of Horizon
Offshore, Inc. (the "Buyer"), with reference to the following facts:
Seller is the owner of the Derrick Barge VALHALLA, official number
652734. Said vessel, including its machinery, cranes, equipment, spare
parts, tools, gear, fuel and consumable stores and other inventory items,
apparel, appurtenances, and all other items belonging thereto as of the
date hereof, whether or not now on board, is collectively referred to
hereafter as the "Vessel."
The parties hereby desire to provide for the terms and conditions of
an agreement whereby the Seller sells the Vessel to the Buyer.
NOW THEREFORE, IN CONSIDERATION OF THE MUTUAL COVENANTS OF THE PARTIES
HEREIN, AND OTHER GOOD AND VALUABLE CONSIDERATION, THE RECEIPT AND
SUFFICIENCY ARE HEREBY ACKNOWLEDGED, IT IS AGREED AS FOLLOWS:
1. PURCHASE PRICE: TERMS OF PAYMENT.
1.1 PRICE. Subject to the terms and conditions hereof, at the
Closing, Seller agrees to sell, and Buyer agrees to purchase the Vessel,
for a total purchase price of US$13,240,000, free and clear of all liens
and encumbrances and exclusive of all charter hire payments.
1.2 TERMS OF PAYMENT. The purchase price shall be paid in cash at
the Closing.
1.3 PURCHASE OPTION SECURITY. Prior to May 29, 1998, Buyer shall
provide to Seller option security, which shall be returned to Buyer at the
time of payment in full of the purchase price at Closing unless earlier
returned to Buyer upon the termination of this Agreement as provided in
Section 6., below. The purchase option security shall be $5,000,000 in the
form of a bond or letter of credit in a form satisfactory to Seller. In
the event the conditions precedent to Closing are satisfied and Buyer fails
or refused to complete the sale on or before the Closing date, then the
option security shall be forfeited by Buyer and paid to Seller as
liquidated damages in lieu of all other damages, whether direct, indirect,
incidental, or consequential, to Seller caused by Buyer's failure or
refusal to complete the sale as aforesaid, neither party having any further
liability or obligation to the other party as regards the purchase of the
Vessel.
2. REPRESENTATIONS AND WARRANTIES.
2.1. BY SELLER. Seller represents and warrants as of the date hereof,
and at the Closing, as follows:
(a) Seller is the owner of the Vessel, and the Seller now has
and will have at Closing good and marketable title to the Vessel without
the consent or approval of any other person or entity, and no other person
or entity has any right, title or claim to the Vessel, or to lease or
otherwise use the Vessel, and there are no options outstanding to purchase,
lease, or otherwise use the Vessel.
(b) Except for that certain Preferred Ship Mortgage (the
"Mortgage") granted to Nationsbanc Leasing Corporation ("Mortgagee"), as
previously provided to Buyer, the Vessel is free and clear of all liens,
claims, debts, and encumbrances and all other claims for possession or
otherwise, including but not limited to all maritime liens and all security
interests whatsoever, (collectively "Liens") and is charter and contract
free, and no equipment of any kind on the Vessel is leased.
(c) There are no suits, actions, proceedings, arbitrations,
claims or investigations pending or threatened against, that would affect
the title of the Vessel or which could give rise to a Lien, attachment,
seizure, forfeiture or other claim against the Vessel, or which otherwise
materially affect the Vessel.
(d) There are no facts or circumstances, past or present, that
would prevent the Vessel from operating legally under applicable federal
law and regulations of the United States of America.
(e) The Vessel has not been involved, in any way, in the
violation of the laws of the United States of America or the laws of any
other country in a manner which could result in the penalty of forfeiture
being invoked against the Vessel, or otherwise hinder Buyer from operation
of the Vessel.
(f) In addition to the foregoing representations and warranties,
Seller represents and warrants as follows:
1) Seller is a limited liability company duly organized,
validly existing, and in good standing under the laws of Washington.
2)
(i) Seller has all company power and authority
necessary to sell the Vessel pursuant to this
Agreement and to otherwise consummate the
transactions contemplated herein;
(ii) The officer or attorney-in-fact executing this
Agreement on behalf of Seller has been duly
authorized by the Members and Managers of Seller
to execute and deliver this Agreement and the
other documents called for herein to be executed
and delivered at or prior to Closing and to
otherwise consummate the transactions contemplated
hereby;
(iii) All company action necessary for this Agreement
to constitute the valid, binding, and legal
obligation of Seller, enforceable in accordance
with its terms, has been taken.
2.2. SELLER'S DISCLAIMER. EXCEPT AS STATED ABOVE, THE VESSEL SHALL BE
CONVEYED "AS IS, WHERE IS." SELLER DISCLAIMS AND MAKES NO WARRANTY OR
REPRESENTATION, EXPRESS OR IMPLIED, AS TO THE MERCHANTABILITY,
SEAWORTHINESS, FITNESS, OR SUITABILITY OF THE VESSEL FOR ANY PURPOSE
INTENDED BY BUYER. The parties acknowledged that the foregoing disclaimer
has been the subject of negotiations between the parties and has been taken
into consideration in establishing the purchase price of the Vessel.
2.3. BY BUYER. Buyer represents and warrants that it is a citizen of
the United States, and as of the date of this Agreement and as of Closing,
that he and his assigns shall continue to be citizens of the United States
of America.
3. ADDITIONAL COVENANTS.
3.1. Seller unconditionally and without limitation agrees to
indemnify, defend and hold harmless the Buyer, and/or its successors and
assigns and each of them, from and against and in respect of any and all
claims, demands, losses, costs, expenses, obligations, liabilities,
damages, recoveries and deficiencies (including interest, penalties and
actual attorneys' fees incurred and the costs of litigation) that the Buyer
shall incur or suffer as a result of (i) any representation, beach of
warranty or nonfulfillment of any agreement, representation, warranty or
covenant on the part of the Seller hereunder, or (ii) any claim, demand,
Lien, judgment, fine, penalty or obligation which arise out of, result from
or relate to the Vessel. In the event that the Vessel is arrested, seized,
or attached, or any arrest, seizure, or attachment is threatened, as a
result of any claim of Lien or other adverse claim of any person or entity
to any right, title, or interest in the Vessel, Seller will promptly bond
the claim thereby securing its release or otherwise discharge the claim, or
if so bonded or discharged by Buyer or its successors or assigns then
Seller shall pay to same upon demand all costs, expenses, and attorneys
fees incurred thereby together with interest thereon at the rate of 12% per
annum from demand until paid. Buyer shall have the right to set off and
deduct from any amounts owing to Seller under this Agreement amounts due
Buyer from Seller under the terms of this Agreement including without
limitation this Section 3.1.
3.2. Seller covenants and agrees that it shall not at any time incur
Liens or additional mortgages on the Vessel or increase the amount of the
Mortgage to more than $13,000,000.00 or cross-collateralize or cross-
default the Vessel with any other indebtedness. Seller covenants and
agrees that it shall not sell or otherwise dispose of the Vessel or any
interest therein. Seller covenants and agrees that it shall not at any
time from the date hereof through the time of Closing disturb the quiet
enjoyment of Buyer to the Vessel.
3.3. Concurrently with the execution and delivery of this Agreement,
Seller shall deliver to Buyer a secretary certified copy of resolutions of
the Members and Managers of Seller authorizing this transaction and the
execution and delivery of this Agreement and all documents contemplated
herein which are to be executed by Seller, which resolutions shall be
specific as to the Managers of Seller who are authorized to execute and
deliver all such documents and this Agreement on behalf of Seller.
3.4. Concurrently with the execution and delivery of this Agreement,
Buyer shall deliver to Seller a secretary certified copy of resolutions of
the Board of Directors of Buyer authorizing this transaction and the
execution and delivery of this Agreement and all documents contemplated
herein which are to be executed by Buyer, which resolutions shall be
specific as to the Officer or Officers of Buyer who are authorized to
execute and deliver all such documents and this Agreement on behalf of
Buyer.
3.5 Seller shall execute and deliver to Buyer on the date
of execution of this Agreeement and again at Closing an officer's
certificate in the form attached hereto as Exhibit "A".
4. BUYER'S CONDITIONS PRECEDENT. The obligation of Buyer to
purchase the Vessel at Closing is subject to the following conditions
precedent, which must be satisfied and/or waived by the Buyer, on or before
the date of Closing:
4.1. All the representations and warranties of Seller are true and
correct on the date given and also as of the date of Closing, and Seller
has performed all covenants and obligations required hereunder.
4.2. Buyer had the opportunity to inspect the Vessel and the results
of said inspections are satisfactory to Buyer.
4.3. Buyer has received a certificate of ownership from the United
States Coast Guard, which verifies the warranties of Seller herein with
respect to the Vessel's ownership, and outstanding liens and encumbrances
pertaining thereto.
4.4. Seller has delivered into the closing escrow all documents
contemplated herein.
5. CLOSING AND DELIVERY.
5.1. TIME AND PLACE. The conveyance of the Vessel to the Buyer (the
"Closing") shall be no later than November 30, 1999, and shall take place
at the offices of Kim Marine Documentation, Inc. in Seattle, Washington, or
as otherwise agreed between the parties. At the Closing, Seller shall
deliver or cause to be delivered (i) duplicate originals of a properly
notarized Bill of Sale in the usual United States Coast Guard form
conveying the Vessel to Buyer, (ii) the Certificate of Documentation for
the Vessel if in the possession of Seller, (iii) duplicate originals of a
properly notarized satisfaction of the Mortgage in a form recordable with
the United States Coast Guard, (iv) a Protocol of Acceptance and Delivery,
(v) the officer's certificate referred to in Section 3.5 above, and (vi)
such other documents of transfer, manufacturer warranties, vessel
documents, and other records as Buyer shall reasonably require. Should the
Closing not occur due to failure of Seller to close or comply with its
obligations hereunder, Buyer may elect to terminate this Agreement without
prejudice to any and rights and remedies against Seller at law, in equity
or in admiralty, including the right of specific performance, and the
option security referred to in Section 1.3 above shall be promptly returned
to Buyer.
5.2. SATISFACTION OF KNOWN LIENS. Any unsatisfied Liens and
encumbrances, including without limitation the Mortgage, known to the
parties at the time of Closing shall be satisfied from the proceeds of
sale, deposited in escrow with Kim Marine Documentation, Inc.
5.3. COMMISSIONS AND BROKERAGE FEES. Buyer shall be obligated to pay
any and all commissions and brokerage fees due by reason of the sale of the
Vessel. No brokers have been engaged in connection with this Agreement,
except J.P. McCleary. Buyer agrees to pay J.P. McCleary or his designated
company such commission as shall be agreed between Buyer and J.P. McCleary,
which commission shall be in addition to the purchase price. Seller shall
have no responsibility to J.P. McCleary or to any other broker.
The parties shall each pay one-half of the fee charged by Kim
Marine Documentation, Inc. not to exceed $2,000.00 each; provided, each of
the parties shall pay and be responsible for their own attorneys' and
accountant's fees incurred in connection with this transaction.
5.4. DELIVERY OF THE VESSEL. On the Closing date Buyer shall cause
the Vessel to be delivered in international waters outside of the
territorial limits of any state of the United States. Irrespective of the
actual date and time closing documents are signed or exchanged, delivery of
the Vessel shall be deemed to have occurred when Buyer notifies Seller that
the Vessel has reached the required location. All sales or other taxes
(other than income taxes) and fees, if any, due as a result of the sale
shall be paid by Buyer who shall indemnify and hold harmless Seller with
respect thereof.
6. LOSS OF VESSEL.
6.1 In the event of an actual, constructive, or
compromise total loss of the Vessel, then upon payment to Seller (or to
Mortgagee if the Mortgage is then not satisfied of record) of Seller's
insurable interest in the proceeds of the hull and machinery insurance on
the Vessel, this Agreement shall be automatically be deemed terminated with
no further liability of either party to the other and the option security
referred to in Section 1.3 above shall be promptly returned to Buyer.
7. MISCELLANEOUS.
7.1. The representations, warranties, agreements, covenants and
conditions set forth in this Agreement shall survive Closing and shall not
be merged upon delivery of the Bill of Sale from Seller to Buyer nor upon
payment of the purchase price to the Seller.
7.2. This Agreement shall be binding upon and shall inure to the
benefit of the parties and their respective heirs, successors and assigns;
however, Buyer shall not have the right to assign its interest in this
Agreement without the prior written consent of Seller, which consent shall
not be unreasonably withheld.
7.3. This Agreement supersedes all prior agreements and undertakings,
oral and written with respect to the subject matter hereof. This Agreement
may only be amended in writing, signed by both parties.
7.4. In the event of a dispute between the parties regarding the terms
of this Agreement, or in the event either party commences suit for the
enforcement of the terms and conditions hereof, then the prevailing party
shall be entitled to a reasonable Attorney's fees and costs pertaining to
such proceedings, and the venue thereof may be laid in the federal courts
sitting in King County, Washington. The parties agree that in the event of
pending or threatened breach of the terms and conditions of this charter,
the other party will suffer irreparable injury for which an award of money
damages will not be adequate. Accordingly, notwithstanding any procedural
or substantive law or rule to the contrary, all of which are hereby waived,
both parties agree to the granting of injunctive relief, including
mandatory injunction.
7.5 All notices hereunder shall be in writing and delivered by
certified mail, return receipt requested, or by telefax confirmed by mail
to the addresses set forth below the signatures of the parties below.
Notices shall be effective on receipt.
7.6 Seller shall execute and deliver to Buyer such other and
further documents and instruments as Buyer may reasonably require to more
fully effectuate the terms and conditions of this Agreement and the sale
and purchase of the Vessel.
7.7 If any provision of this Agreement is held to be invalid or
unenforceable, such unenforceability shall not effect or impair the
validity or enforceability of the remaining provisions of this Agreement.
7.8 Headings used in this Agreement are for convenience of reference
only, and are not intended, to any extent or for any purpose, to limit or
define the text of any provision hereof. This Agreement may be executed in
several counterparts all of which shall constitute one and the same
agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement this 15th
day of May, 1998.
OWNER: CHARTERER:
BIG HOOK, L.L.C. HORIZON VESSELS, INC.
By: /s/Glen A. Earhart By: /s/ Bill Lam
Its: MEMBER Its: PRESIDENT
Address: Address:
5209 East Marginal Way S. 2500 City West Blvd
Seattle, Washington 98134 Suite 2200
P.O. Box 24067 Houston, Texas 77042
Seattle, Washington 98124-0067
Telephone: (206) 762-0850 Telephone: (713) 361-2600
Facsimile: (206) 764-8595 Facsimile: (713) 361-2693
NOTICE
THIS CHARTER IS SUBJECT TO A SECURITY INTEREST GRANTED BY BIG HOOK, L.L.C. AS
OWNER OF THE VESSEL NAMED HEREIN TO NATIONSBANC LEASING CORPORATION
("MORTGAGEE") PURSUANT TO THE TERMS AND CONDITIONS OF THE MORTGAGE ON THE
VESSEL GRANTED BY OWNER TO MORTGAGEE AS DESCRIBED IN SECTION 7 OF THIS
CHARTER.
BAREBOAT CHARTER
Big Hook, L.L.C., a Washington limited liability company (Owner) and Horizon
Vessels, Inc., a Delaware corporation and a wholly owned subsidiary of Horizon
Offshore, Inc. (Charterer) agree in consideration of the covenants and
provisions herein as follows:
AGREEMENT
1. Owner agrees to let and Charterer agrees to hire, on a bareboat
basis, the Derrick Barge VALHALLA, O.N. 652734, hereafter referred to as
Vessel, on the terms and under the conditions set forth below.
The Vessel is identified as follows:
a. Type and/or use : derrick barge
b. Length : 427'
c. Width : 98'
d. Depth : 25'
The term Vessel shall be deemed to include not only the Vessel
itself, but all of her machinery, cranes, equipment, spare parts, tools, fuel,
furnishings, gear and consumables, stores, and other inventory items, apparel,
appurtenances, and all other items belonging thereto as of the date thereof.
COMMENCEMENT
2. The charter term shall commence with delivery (as later herein
described) on a date selected by Charterer not earlier than May 15, 1998, nor
later than May 29, 1998.
TERM
3. Unless otherwise mutually agreed by parties, this charter shall be
for a term of eighteen (18) months, with the charter term deemed to commence
as of the date of delivery of the Vessel by Owner to Charterer. The charter
shall terminate eighteen (18) months after commencement or earlier at the time
of any actual or constructive or compromise total loss of the Vessel.
CHARTER HIRE
4. Charterer shall pay Owner US $200,000.00 per month during the
contract term.
The first month's hire (US $200,000.00) shall be payable in advance
upon the execution of this charter agreement, and all further hire shall be
payable in advance in monthly increments commencing on the date which is
thirty (30) days after the date of delivery. In the event a payment date
falls on a weekend or bank holiday, the payment shall be due on the next
banking day. In the event Charterer fails to pay monthly charter hire before
the inception of each month, the failure to pay shall be considered a material
breach of this charter agreement and Owner at its sole discretion can remove
the Vessel from the jobsite and Charterer's possession. Hire payments due but
unpaid shall bear interest at the rate of 12% per annum until fully paid. In
the event of a total loss or constructive or compromise total loss of the
Vessel, and upon receipt by Owner (or the Mortgagee if the Mortgage shall not
then be satisfied of record) of insurable interest in the hull insurance
proceeds, Charterer's obligation for hire shall cease.
SECURITY
5. Prior to delivery, Charterer shall post with Owner security in the
amount of US $5,000,000.00 in the form of a bond or other financial instrument
satisfactory to Owner, to guarantee Charterer's performance of the charter.
This amount shall be due and owing to Owner if this charter is cancelled (i)
for any reason by Charterer other than upon the actual, constructive, or
compromise total loss of the Vessel or (ii) if this charter is cancelled by
Owner for default ("cause") as defined herein.
OPERATION AND USE
6. Charterer shall, at its sole expense, man, fuel, victual, navigate,
operate, maintain and supply the Vessel, and shall pay all charges and
expenses of every kind and nature whatsoever relating to the use and operation
of the Vessel during this charter. It is expressly understood that this is
intended as a demise of the Vessel by Owner to Charterer for the term of this
agreement, and that Charterer shall have full, complete and exclusive
possession, command and control of the Vessel and of its navigation and
operation.
Charterer shall employ the Vessel only in lawful trades and activities,
and shall operate the Vessel within the trading limits and other conditions
imposed by the insurances on the Vessel. Charterer shall not take the Vessel
into foreign waters without prior written approval from Owner, which approval
shall not be unreasonably withheld.
Charterer covenants that it shall not knowingly cause or permit the
Vessel to be operated in any manner contrary to the laws of the United States
or of any state or country wherein the same is operated.
REPRESENTATIONS AND COVENANTS
7. Charterer shall have full opportunity to inspect the Vessel prior to
delivery to determine its condition and suitability for service, and may
additionally arrange for the pre-delivery inspection of the Vessel by a
surveyor or similar technical representative of its choice. Items of
deterioration or damages from the Vessel's condition as of the date of the
final inspection found at delivery are to be repaired by Owner. Otherwise,
the Vessel is chartered to Charterer on an "AS IS, WHERE IS" basis, and it is
specifically agreed that Owner makes no representation or warranty, express or
implied, regarding condition of the Vessel or its suitability for any purpose,
and Owner shall not be held to any warranty of seaworthiness, fitness for a
particular purpose or workmanlike service.
Owner represents and warrants as follows:
(a) Owner is the owner of the Vessel, and the Owner now has and
will have at delivery good and marketable title to the Vessel without the
consent or approval of any other person or entity, and no other person or
entity has any right, title or claim to the Vessel, or to lease or otherwise
use the Vessel, and there are no options outstanding to any other entity to
purchase, lease, or otherwise use the Vessel.
(b) Except for that certain Preferred Ship Mortgage (the
"Mortgage") granted to Nationsbanc Leasing Corporation ("Mortgagee"), as
previously provided to Charterer, the Vessel is free and clear of all liens,
claims, debts, and encumbrances and all other claims for possession or
otherwise, including but not limited to all maritime liens and all security
interests whatsoever, (collectively "Liens") and is charter and contract free,
and no equipment of any kind on the Vessel is leased. Charterer acknowledges
that the Vessel is mortgaged to Mortgagee pursuant to the Mortgage and that
Charterer has received a copy of the Mortgage, and Charterer agrees that any
claims and rights of Charterer in and to the Vessel which Charterer may have
against Owner or the Vessel arising under or as a result of this charter shall
be subordinate to the lien of the Mortgage, including any increases to the
Mortgage pursuant to the provisions of this Section 7.
(c) There are no suits, actions, proceedings, arbitrations, claims
or investigations pending or threatened against, that would affect the title
of the Vessel or which could give rise to a Lien, attachment, seizure,
forfeiture or other claim against the Vessel, or which otherwise materially
affect the Vessel.
(d) There are no facts or circumstances, past or present, that
would prevent the Vessel from operating legally under applicable federal law
and regulations of the United States of America.
(e) The Vessel has not been involved, in any way, in the violation
of the laws of the United States of America or the laws of any other country
in a manner which could result in the penalty of forfeiture being invoked
against the Vessel, or otherwise hinder Charterer from operation of the
Vessel.
(f) In addition to the foregoing representations and warranties,
Owner represents and warrants as follows:
1) Owner is a limited liability company duly organized, validly
existing, and in good standing under the laws of Washington.
2)
(i) Owner has all company power and authority necessary
to charter the Vessel pursuant to this Charter;
(ii) The officer or attorney-in-fact executing this
Charter on behalf of Owner has been duly authorized
by the Members and Managers of Seller to execute and
deliver this Charter and the other documents called
for herein to be executed and delivered at or prior
to Closing and to otherwise consummate the
transactions contemplated hereby;
(iii)All company action necessary for this Charter to
constitute the valid, binding, and legal obligation
of Owner, enforceable in accordance with its terms,
has been taken.
Owner unconditionally and without limitation agrees to indemnify,
defend and hold harmless the Charterer, and/or its successors and assigns and
each of them, from and against and in respect of any and all claims, demands,
losses, costs, expenses, obligations, liabilities, damages, recoveries and
deficiencies (including interest, penalties and actual attorneys' fees
incurred and the costs of litigation) that the Charterer shall incur or suffer
as a result of (i) any representation, beach of warranty or nonfulfillment of
any agreement, representation, warranty or covenant on the part of the Owner
hereunder, or (ii) any claim, demand, Lien, judgment, fine, penalty or
obligation which arise out of, result from or relate to the Vessel. In the
event that the Vessel is arrested, seized, or attached, or any arrest,
seizure, or attachment is threatened, as a result of any claim of Lien or
other adverse claim of any person or entity to any right, title, or interest
in the Vessel, Owner will promptly bond the claim thereby securing its release
or otherwise discharge the claim, or if so bonded or discharged by Charterer
or its successors or assigns then Owner shall pay to same upon demand all
costs, expenses, and attorneys fees incurred thereby together with interest
thereon at the rate of 12% per annum from demand until paid. Charterer shall
have the right to set off and deduct from any amounts owing to Owner under
this Agreement amounts due Charterer from Owner under the terms of this
Agreement including without limitation this Section 7.
Owner covenants and agrees that it shall not at any time incur Liens or
additional mortgages on the Vessel or increase the amount of the Mortgage to
more than $13,000,000.00 or cross-collateralize or cross-default the Vessel
with any other indebtedness. Owner covenants and agrees that it shall not sell
or otherwise dispose of the Vessel or any interest therein. Owner covenants
and agrees that it shall not at any time from the date hereof through the term
of this charter disturb the quiet enjoyment of Charterer to the Vessel.
Owner shall execute and deliver to Charterer on the date of execution of this
Charter and again on delivery of the Vessel to Charterer an officer's
certificate in the form attached hereto as Exhibit "A".
DELIVERY
8. The Vessel shall be delivered to Charterer in Houma, Louisiana, at a
safe berth with free and ready access and open to the sea, with any sales or
use taxes due to be solely for Charterer's account.
Acceptance of the Vessel by Charterer shall constitute the admission
by Charterer of Owner's full performance of its obligations under this
agreement, and Charterer shall not thereafter be entitled to claim against
Owner on any basis, including (without limitation) seaworthiness of the
Vessel, negligence of Owner, latent defect or condition, any condition or
fitness, or any representation or warranty, express or implied, with respect
to the Vessel, her furnishings and equipment, except that Owner warrants that
the Vessel is owned by Owner and is free and clear of liens, claims, and
encumbrances, including maritime liens, other than the Mortgage.
ON-HIRE SURVEY
9. On or before the date specified above for delivery of the Vessel to
Charterer, the Vessel shall be surveyed by a mutually acceptable surveyor to
determine its condition. Owner and Charterer shall agree upon the manner in
which the condition of the Vessel upon delivery, and at redelivery, shall be
established; the method which is agreed must involve written and/or
photographic documentation of the condition of the Vessel. The costs of such
method for establishing the condition of the Vessel for delivery shall be
divided equally and paid separately by each party.
INVENTORIES
10. Prior to delivery of the Vessel, Owner shall provide Charterer with
a written inventory of machinery, cranes, equipment, spare parts, tools, fuel,
furnishings, gear and consumables, stores, and other inventory items, apparel,
appurtenances, and all other items belonging thereto as of the date thereof,
which inventory shall be reviewed and verified by Charterer. The inventory
shall specifically identify those items, as well as their quantity and
condition.
Charterer shall return the Vessel to Owner unless otherwise mutually
agreed by the parties, at redelivery or otherwise, with the same machinery,
cranes, equipment, spare parts, tools, fuel, furnishings, gear and
consumables, stores, and other inventory items, apparel, appurtenances, and
all other items belonging thereto as of the date hereof. Any loss, damage or
deficiency with respect to such machinery, deck crane, equipment, consumables,
stores, furnishings and gear at redelivery shall be made up by Charterer or
Charterer shall pay to Owner the sums actually necessary to repair, replace or
replenish said items, in each case less ordinary wear and tear as defined in
Article 13, below.
The written inventory shall be conclusive between the parties with
respect to equipment and consumables.
MAINTENANCE
11. Charterer shall, at its own expense, maintain the Vessel in the same
good condition, repair and working order as when received less ordinary wear
and tear as defined in Article 13, below. Charterer's responsibility for
maintenance shall include all costs and expenses relating to Coast Guard,
American Bureau of Shipping and similar inspections arising during the term of
the charter, including the costs and expenses of compliance with the
requirements of such entities.
ALTERATIONS
12. Charterer may not modify the Vessel, or make structural alterations
or additions without the prior written consent of Owner, such consent not to
be unreasonably witheld. Any alterations, additions or modifications allowed
by Owner shall be removed by Charterer prior to redelivery, and the Vessel
shall be returned to the same condition as upon delivery (less ordinary wear
and tear as set forth in Article 13., below).
OFF-HIRE SURVEY
13. At the conclusion of the charter term (or sooner, at Owner's option
in the event of default by Charterer), an off-hire survey of the Vessel upon
the same method utilized pursuant to Article 7, above, to establish the
condition of the Vessel for delivery shall be conducted. This survey shall be
conclusive between the parties with respect to Charterer's obligation to
redeliver the Vessel to Owner in the same good working order, repair and
condition as when received, less ordinary wear and tear. The term "ordinary
wear and tear" shall not include such wear and tear as would have been
corrected with routine maintenance. The costs of such survey shall be divided
equally between Owner and Charterer and paid directly by each.
REDELIVERY
14. Charterer shall be obligated to redeliver the Vessel to Owner at the
place of delivery at the conclusion of the charter term or earlier (at Owner's
election in event of default) in the same good condition, repair and working
order as when received, less ordinary wear and tear as identified in Article
13., above. Redelivery shall not be deemed to have occurred until the Vessel
is restored to the same repair and condition, less ordinary wear and tear, as
upon initial delivery.
Charter hire shall continue at the rate specified in Article 4.
above, for every day after the date specified at the conclusion of the charter
term, until redelivery has occurred, i.e., the Vessel has been restored to the
required good order and condition, unless otherwise mutually agreed by the
parties.
Should Charterer fail to make required repairs, Owner shall have the
options of making the repairs itself, with Charterer to reimburse Owner fully
for such repairs, or, value such repairs and submit to Charterer an invoice
for the reasonable cost of such repairs. In any event, Charterer shall remain
liable for charter hire until payment upon the option selected by Owner has
been made.
At time of redelivery, charter hire will continue as above until the
Vessel shall be free of any claims, liabilities, liens or encumbrances created
or arising during the term of this charter (except such claims, liabilities,
liens or encumbrances which have been created solely by Owner.) Should any
such claims, liabilities, liens or encumbrances exist at redelivery and Owner
shall resolve or settle them, then Charterer shall pay Owner the full sums
expended by Owner as well as Owner's legal fees and costs, including such fees
or costs necessary to establish Owner's rights to collect such sums from
Charterer, as well as fees and costs necessary to resolve or settle such
claims, liabilities, liens or encumbrances.
In addition, interest on unpaid hire, repairs and those charges
identified in the foregoing paragraph shall run at the rate of one percent
(1%) per month until fully paid.
INSURANCE
15. Charterer shall, at its sole expense, procure and maintain the
following insurances during the full term of this charter including all
extensions thereof:
a. Hull and Machinery Insurance, including collision and tower's
liability coverage, pursuant to Pacific Coast Tug & Barge Form
(1979), or equivalent, with an insured amount of US $17,000,000.00.
The Hull and Machinery Insurance shall be extended to include War
risk and S.R. and C.C. coverage on forms approved by owner.
b. Full form Protection & Indemnity Liability Insurance, specifically
extended to include contractual liability of Charterer under this
agreement and all risk of legal liability for all property damage
and/or bodily injury which may occur with a limit of US
$50,000,000.00.
c. Broad form Pollution & Environmental Liability Insurance, if not
included with the Protection & Indemnity Insurance identified above,
inclusive of a Certificate of Financial Responsibility pursuant to
Coast Guard Regulations including OPA 90 with limits of US
$50,000,000.00.
d. Standard Workers' Compensation and Employer's Liability Insurance,
extended to include coverage for the Longshore Act and the Outer
Continental Shelf Lands Act, for all employees of Charterer, all
Charterer's contractors and subcontractors and all employees of such
contractors and subcontractors. Such insurances shall be statutory
limits for compensation coverage, and with minimum limits of US
$5,000,000.00 in all other instances.
e. Commercial General Liability Insurance, specifically including
contractual liability coverage for this agreement, including the
addendum attached to this agreement, and deleting policy limitations
as to watercraft and items in the care, custody and control of an
insured, with limits of US $50,000,000.00.
ADDITIONAL INSURANCE REQUIREMENTS
16. The following additional conditions shall apply to each of the
insurances identified above:
a. The policies shall have trading limits encompassing the area of
operations of the Vessel.
b. All policy forms, insurers and insurance brokers shall be subject to
Owner's approval, such approval not to be unreasonably withheld.
c. Charterer shall be solely responsible for payment of all deductibles
of all policies, and for payment of premium for each policy. The
deductible for each policy shall not exceed US $50,000.00.
d. Each insurance to be provided (except for workers' compensation and
employer's liability insurance) shall name the Owner as an
additional insured, with waiver of subrogation. Each policy shall
also waive subrogation against associated, affiliated and/or
subsidiary companies, joint ventures or partnerships of Owner; each
policy shall be primary to Owner's insurances.
e. Prior to Vessel delivery, Charterer must provide to Owner
certificates of insurance evidencing the required coverages, and
Charterer shall thereafter provide updated current certificates of
insurance during the charter term.
f. Each policy shall be specifically endorsed to require that notice of
cancellation must be sent in writing to each insured at least thirty
(30) days in advance of such cancellation (ten (10) days in the
event of cancellation for non-payment of premiums); each policy
shall also be endorsed to require that all insureds, including
Owner, be given at least thirty (30) days advance written
notification of any material change in policy provisions or of any
non-renewal occurring during the term of this charter.
g. Charterer agrees to indemnify and hold harmless (including necessary
legal fees and costs) Owner of and from any loss, damage and/or
claim resulting from its failure to procure the specified
insurances, or the failure of a specified insurance, including
exposure to any loss, damage, claim, suit or liability which would
have been covered had the insurances been provided.
Charterer further agrees that it shall comply with all insurance
covenants and agreements of Owner to the Mortgagee under the terms
and conditions of Section 2.04 of the Mortgage.
LIABILITY, LIENS AND INDEMNITY
17. Charterer assumes all risk of liability for and to the Vessel and
for the use and operation thereof, and for injuries to, illnesses of or deaths
of any and all persons and/or loss of or damage to any and all property
arising from or incident to such use or operation, whether such injuries or
deaths involve Charterer's employees or others and whether such loss or damage
involves property of Charterer or of others. Charterer will indemnify and
hold harmless Owner and the Vessel against and from all loss, damage,
liability and expense, including attorneys' fees and legal costs, arising from
or in connection with such injury, death, loss or damage, howsoever caused and
whether resulting in whole or in part from the negligence or other fault of
either party or the Vessel.
18. Neither Charterer, Master, nor any other person shall have any
right, power or authority to create, incur or permit to be imposed upon the
Vessel any liens whatsoever other than (a) liens for salvage, (b) inchoate
liens for current crew's wages, (c) liens covered by valid policies of
insurance held by or otherwise in favor of Owner (and Mortgagee if the
Mortgage is then not satisfied of record) and meeting or exceeding the minimum
limits specified in Section 15 above, and (d) inchoate liens not covered by
insurance, incurred in the ordinary course of business and not more than
thirty (30) days past due. Charterer agrees to carry a properly certified
copy of this charter (and the Mortgage if it is then not satisfied of record)
with the Vessel's papers, and to exhibit the same to any person having
business with the Vessel which might give rise to any lien thereon. Charterer
agrees to notify any persons furnishing repairs, supplies, towage or other
necessities to the Vessel, that neither Charterer nor the Master has any right
to incur, create or permit to be imposed upon the Vessel any liens whatsoever.
Such notice, as far as may be practicable, shall be in writing.
Charterer shall place and keep permanently in a conspicuous place on
the vessel, including in the wheel house or pilothouse, during the term of
this charter, the notice required by the Mortgage if it is then not satisfied
of record as well as a notice in the following form:
THIS VESSEL IS OWNED BY BIG HOOK, L.L.C., A WASHINGTON LIMITED
LIABILITY COMPANY, AND IS UNDER CHARTER TO HORIZON VESSELS, INC.
UNDER THE TERMS OF SAID CHARTER, NEITHER THE CHARTERER, ITS
OFFICERS, EMPLOYEES OR AGENTS, THE MASTER OR ANY OTHER OFFICER OR
MEMBER OF THE CREW OF THIS VESSEL, NOR ANY OTHER PERSON, SHALL HAVE
ANY RIGHT, POWER OR AUTHORITY TO CREATE, INCUR, OR PERMIT TO BE
IMPOSED UPON THIS VESSEL ANY LIENS WHATSOEVER, EXCEPT FOR SALVAGE.
If any libel should be filed against the Vessel, or if the Vessel be
otherwise levied against, arrested or taken into custody by virtue of any
legal proceedings in any court because of any lien or claim arising out of or
during the possession, use or operation of said Vessel by Charterer, Charterer
shall promptly, and in any event within fifteen (15) days thereof, cause the
Vessel to be released and the lien to be discharged; provided, however, that
this provision shall not in any way affect or impair any other obligation or
responsibility set forth in this agreement. If the Vessel shall be levied
against as set forth above due to any lien or claim arising out of any act or
omission by Owner, Owner shall promptly, and in any event within fifteen (15)
days thereof, cause the Vessel to be released.
Except to liens caused or created by Owner and not involving or
relating to Charterer's use or possession of the Vessel pursuant to this
agreement, Charterer shall indemnify and hold Owner harmless from, and at its
own cost defend Owner against, any liens of whatsoever nature upon said Vessel
and any claims of whatsoever nature against Owner arising out of or in any way
related to any act or neglect of Charterer in relation to said Vessel, or
arising out or during, or related to, the possession, use or operation of the
Vessel by Charterer.
DEFAULT ("CAUSE")
19. The following shall, without limitation, constitute events of
default ("cause") under this charter:
a. Failure of the Charterer to pay charter hire in advance when due;
b. Should Charterer fail to maintain in full force and effect all
insurance required under Section 15 of this charter;
c. Failure of the Charterer to operate said Vessel pursuant to the
terms hereof or the failure to fully perform each and every covenant
contained herein to be done and performed by Charterer, in each case
which continues unremedied after twenty (20) days prior written
notice from Owner to Charterer;
d. The occurrence of any event causing the Charterer to be prohibited
by governmental or other action from chartering the Vessel;
e. The filing of a petition in bankruptcy by or against the Charterer
which remains undismissed or unstayed for thirty (30) days; the
entry of an order adjudicating the Charterer a bankrupt; the making
by Charterer of a general assignment for the benefit of creditors;
the appointment of a receiver of any kind, whether in admiralty,
bankruptcy, common law or equity proceedings which remains
undismissed or unstayed for thirty (30) days; the filing by
Charterer of a petition for reorganization under the Bankruptcy Act.
During occurrence and continuance of an event of default ("cause"), Owner
may do each of the following:
1. Require immediate payment to Owner of the US $5,000,000.00 security
provided for in Article 5 hereof, and upon payment the security
shall be returned to Charterer.
2. Personally or by agents or attorneys enter and retake the Vessel
without legal process wherever the same may be, and Charterer
forthwith upon demand of Owner shall surrender to the Owner
possession of the Vessel.
3. In the event that the Vessel shall be arrested or detained while in
possession of Charterer by any judicial or other officer of any
country or nation and shall not be released from detention within
thirty (30) days from the date of arrest or detention, Charterer
does hereby empower and authorize Owner, in the name of Charterer,
to apply for and receive possession thereof, or to take possession
thereof, and this power of attorney shall be irrevocable and may be
exercised not only by Owner but also by any appointee or appointees
of Owner with full power of substitution to the same extent and
effect as if such appointee or appointees had been named as one of
the attorneys above-named by express designation.
4. In its discretion do all acts and make all reasonable expenditures
necessary to retake or regain possession of the Vessel, including
without limitation, incur travel, towing and other expenses in
retaking and regaining, or attempting to retake and regain,
possession of the Vessel. Charterer covenants and agrees to
promptly reimburse Owner, with interest at the rate of 12% per annum
and an additional 10% administrative surcharge, for any and all
expenditures so made or incurred, and until Charterer has so
reimbursed Owner for such expenditures the amount thereof, together
with such interest, shall be an additional indebtedness due from
Charterer to Owner.
5. If any charter hire due under this charter from Charterer to Owner,
or any part thereof, shall be and remain unpaid when the Vessel
shall have been retaken and/or repossessed, then notwithstanding
such retaking and/or repossession by the Owner, the liability of the
Charterer for charter hire for the balance of the term of the
charter, as provided for herein, shall not be extinguished, and
Charterer covenants and agrees to make good to the Owner any
deficiency which may arise from a retaking and/or repossession of
the Vessel and/or the negotiation of a new charter with any other
party or parties at a lesser amount of charter hire than that herein
agreed to, or from its inability to secure any satisfactory party or
parties with whom to execute such reasonable charter agreements.
Charterer specifically covenants and agrees to pay such deficiency
each month as the amount thereof is ascertained by Owner.
INSPECTION
20. The Owner shall have the right to board and examine the Vessel and
its logs at any reasonable time. Charterer shall be given reasonable notice
of Owner's intent to inspect said Vessel, and shall cooperate in providing
access.
CASUALTIES
21. Immediately after any casualty, accident, or damage to the Vessel,
Charterer shall furnish Owner full particulars thereof, including copies of
any survey reports available to Charterer. Also, Charterer shall notify Owner
as soon as practicable of any claim which may be asserted in writing by any
third party against the Vessel and shall send Owner a copy of such writing.
ASSIGNMENT
22. Charterer shall not have any right to assign this agreement without
the prior written consent of Owner, which consent shall not be unreasonably
withheld. Charterer shall not have the right to subcharter the Vessel on a
demise basis without the prior written approval of Owner, such approval not to
be unreasonably withheld, except to affiliated companies of Charterer.
LIMITATION OF LIABILITY
23. Nothing contained in this charter shall be deemed to prohibit or
deny to Owner the benefit of all limitations of, and exemptions from,
liability accorded to owners of vessels by any statute or rule of law for the
time being in force. This agreement shall not be deemed to be a personal
contract such as to deprive Owner of the rights and benefits of any law
limiting the liability of vessel owners.
PERMITS AND LICENSES
24. Charterer shall be required to obtain and maintain at its sole cost,
all permits, licenses and authorities required for its use or operation of the
Vessel by applicable national, state, local or foreign laws or regulations.
TAXES
25. Charterer shall be responsible for any transportation, use, charter
hire, sales, and all other taxes levied or assessed by any taxing entity in
connection with this charter, or with the Vessel or its operation during the
term of this charter or arising thereafter as a result of the use or operation
of the Vessel during this charter, and Charterer shall defend and indemnify
Owner with respect to any claims, assessments or notices that such or any
other taxes are due from Owner.
ADDITIONAL PROVISIONS
26. a. Name Change: Charterer shall have the right to change the name
of the Vessel at any time after posting the security required
under Section 5 above.
b. Owner represents that no brokers have been engaged in
connection with this charter, except J. P. McCleary. Charterer
agrees to pay J. P. McCleary or his designated company monthly
in arrears such commission as shall be agreed between Charterer
and J. P. McCleary, which commission shall be in addition to
the charter hire. Owner shall have no responsibility to J. P.
McCleary or to any other broker.
c. All obligations of the parties to insure, reimburse, indemnify,
defend, hold harmless or pay under this agreement shall survive
termination, cancellation or expiration of this agreement.
d. Charterer specifically warrants it is a citizen of the United
States as defined in Section 2 of the Shipping Act, 1916, as
amended, or alternatively, that this charter has been approved
by the Maritime Administration.
e. Any claim, suit or action arising out of or relating to this
charter, and involving Owner and Charterer, may be maintained
in the federal courts located in King County, Washington. The
prevailing party in any such suit shall be entitled to recover
its costs of suit and reasonable attorneys fees. The parties
agree that in the event of pending or threatened breach of the
terms and conditions of this charter, the other party will
suffer irreparable injury for which an award of money damages
will not be adequate. Accordingly, notwithstanding any
procedural or substantive law or rule to the contrary, all of
which are hereby waived, both parties agree to the granting of
injunctive relief, including mandatory injunction.
f. This constitutes the final agreement between the parties and
may not be modified or altered except by a writing signed by
both parties.
g. The headings utilized in this agreement are for reference only;
they are not substantive and may not be used to construe this
agreement.
h. This Charter shall be binding upon and shall inure to the
benefit of the parties and their respective heirs, successors
and assigns.
i. This Charter supersedes all prior agreements and undertakings,
oral and written with respect to the subject matter hereof.
This Charter may only be amended in writing, signed by both
parties.
j. All notices hereunder shall be in writing and delivered by
certified mail, return receipt requested, or by telefax
confirmed by mail to the addresses set forth below the
signatures of the parties below. Notices shall be effective on
receipt.
k. If any provision of this Charter is held to be invalid or
unenforceable, such unenforceability shall not effect or impair
the validity or enforceability of the remaining provisions of
this Charter.
l. This Charter may be executed in several counterparts all of
which shall constitute one and the same agreement.
The foregoing Standard Bareboat Charter is entered into by the
undersigned parties on this 15th day of May, 1998.
OWNER: CHARTERER:
BIG HOOK, L.L.C. HORIZON VESSELS, INC.
By: /s/ Glen A. Earhart By: /s/ Bill Lam
Its: MEMBER Its: PRESIDENT
Address: Address:
5209 East Marginal Way S. 2500 City West Blvd
Seattle, Washington 98134 Suite 2200
P.O. Box 24067 Houston, Texas 77042
Seattle, Washington 98124-0067
Telephone: (206) 762-0850 Telephone: (713) 361-2600
Facsimile: (206) 764-8595 Facsimile: (713) 361-2693
VESSEL PURCHASE AGREEMENT
THIS VESSEL PURCHASE AGREEMENT, dated as of May 27, 1998, is by and
between OPI VESSELS, INC. a Delaware corporation (the "Seller"), and
HORIZON VESSELS, INC., a Delaware corporation (the "Buyer").
WHEREAS, the Seller is the owner of the bury barge known as the
"BB316", official no. 537871 together with everything belonging to the
vessel including without limitation the items listed on Schedule 1 attached
hereto (collectively the "Vessel");
WHEREAS, the Seller desires to sell the Vessel to the Buyer and the
Buyer desires to purchase the Vessel from the Seller.
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained herein, the Buyer and Seller hereto represent and agree as
follows:
SECTION 1
SALE AND PURCHASE OF THE VESSEL
1.1 SALE OF THE VESSEL. The Seller shall sell to the Buyer and the
Buyer shall purchase from the Seller the Vessel. The Seller is not
required to replace spare parts, but any replaced item shall be the
property of the Buyer.
1.2 PURCHASE PRICE. In consideration of its purchase of the Vessel,
at the Closing (defined in subsection 1.4 hereof), the Buyer shall, subject
to the terms of this Agreement, pay to the Seller the sum of Ten Million
($10,000,000.00) U. S. Dollars in the manner provided in Subsection 2.1(a)
(the "Purchase Price"). On or before May 27, 1998, Buyer shall deposit
with Seller a nonrefundable deposit of One Million ($1,000,000.00) U. S.
Dollars (the "Deposit").
1.3 "AS IS, WHERE IS" SALE. The Vessel shall be sold on an "AS IS,
WHERE IS" basis dockside Seller's Bayou Black yard near Gibson, Louisiana,
and the Buyer shall accept delivery of the Vessel in such condition.
Except as set forth in Subsection 3.2, no representations or warranties,
either expressed or implied, are made with respect to the title,
maintenance, repair, condition, design, operation, seaworthiness, value,
marketability, merchantability, usefulness or suitability for any purpose,
of the Vessel including without limitation, (i) any implied or expressed
warranty of merchantability, (ii) any implied or expressed warranty for
fitness for a particular purpose and (iii) any claim by the Buyer for
damages because of or related to any defects, whether known or unknown,
with respect to the Vessel. The Buyer and the Seller intend that the
Vessel shall be conveyed and transferred to the Buyer in its present
condition and state of repair "as is" and "where is", with all faults. In
accordance with the foregoing, the Buyer waives each and every claim for
recovery against the Seller for any and all loss or damage to the Vessel
arising from or relating to, in whole or in part the maintenance, repair,
condition or design of the Vessel.
1.4 CLOSING. The consummation of the sale and purchase of the Vessel
(the "Closing") shall take place on such date as shall be designated by
Buyer upon five (5) business days prior written notice but in no event
later than May 29, 1998. At the Closing, the Buyer shall deliver the
Purchase Price to the Seller, the Seller shall deliver the Vessel to the
Buyer, (with any items included in this sale but not onboard the vessel to
be loaded onboard at Seller's risk and expense prior to delivery) with free
access to and from its current location and the Buyer and the Seller each
shall provide the other documents, certificates and instruments required to
be delivered pursuant to Section 2.
SECTION 2
CONDITIONS PRECEDENT
The respective obligations of the Seller to sell the Vessel to the
Buyer and to otherwise proceed with the Closing, and the Buyer to pay the
Purchase Price for the Vessel and to otherwise proceed with the Closing,
are subject to the satisfaction of the following conditions precedent.
2.1 DELIVERIES BY THE BUYER. At the Closing, the following actions
shall have been taken and the Seller shall have received the following
items, in form, substance and date satisfactory to Seller.
a. At the Closing, the Buyer shall, in satisfaction of the
Purchase Price pay $10,000,000.00 via wire transfer of immediately
available funds. Buyer may apply the Deposit toward payment of the
Purchase Price at Closing or request the return of the Deposit;
Wire transfer information is as follows:
CITIBANK, N.A.
399 PARK AVENUE
NEW YORK, NY
J. RAY MCDERMOTT HOLDINGS, INC.
ABA NO.: 021000089
ACCOUNT NAME: J. RAY MCDERMOTT HOLDINGS, INC.
ACCOUNT NUMBER: 40667432
b. Buyer shall execute and deliver a Certificate of Delivery
and Acceptance in the form attached hereto as Exhibit "A" and accept
delivery of the Vessel;
<PAGE>
c. Buyer shall execute and deliver an Officer's Certificate in
the form attached hereto as Exhibit "C"; and
d. All other such documents, certificates and instruments
reasonably requested by Seller in writing at least five (5) business days
before closing concerning the accuracy and validity of or compliance with
all representations warranties and covenants by Buyer.
e. Proof of insurance.
2.2 DELIVERIES BY SELLER. At the Closing, the following actions
shall have been taken and the Buyer shall have received the following
items, in form, substance and date satisfactory to Buyer.
a. Seller shall execute and deliver to the Buyer a bill of sale
for the Vessel in the form of Exhibit "B" (the "Bill of Sale") conveying
title to the Vessel to Buyer;
b. Seller shall execute and deliver a Certificate of Delivery
and Acceptance in the form attached hereto as Exhibit "A";
c. Seller shall deliver originals or copies, if originals do
not exist, of all available vessel documents in Seller's possession such as
classification certificates, plans, as built drawings, manufacturers
drawings and diagrams, manufacturers maintenance schedules and spare parts
schedules which are retained on board the Vessel. Seller shall also
promptly forward to Buyer any technical documentation in Sellers'
possession. The Seller may keep the log books, but Buyer shall have a
right to make copies of them.
d. The United States Coast Guard Certificate of Documentation
or a statement that the same has been lost or destroyed.
e. All other such documents, certificates, and instruments
reasonably requested by Buyer in writing at least five (5) business days
before closing concerning the accuracy and validity of or compliance with
all representations and warranties by Seller.
2.3 NO LOSS OF VESSEL. At the time of the Closing, the Vessel shall
not have suffered an actual or constructive or compromise total loss, nor
shall the Vessel have sustained partial loss or damage exceeding repair
costs of $50,000.00 in the aggregate; provided, however, that in the event
of partial loss to the Vessel prior to Closing equal to or greater than
this amount, Buyer shall have the option to either refuse to proceed to
Closing and terminate the Agreement as provided in Section 7 or to proceed
to Closing with the Vessel in such damaged condition and to reduce the
Purchase Price by the cost of repairing such damage in excess of
$50,000.00.
2.4 REPRESENTATIONS AND WARRANTIES. All representations and
warranties made by Buyer and Seller shall be true and correct in all
material respects on and as of the time of the Closing with the same effect
as though made on and as of such date.
SECTION 3
REPRESENTATIONS AND WARRANTIES OF SELLER
The Seller represents and warrants to Buyer:
3.1 ORGANIZATION EXISTENCE AND CORPORATE POWER. The Seller has all
requisite power to execute, deliver and perform this Agreement, the Bill of
Sale and the other documents, certificates and instruments contemplated
hereby.
3.2 Title No Encumbrances. The Seller has good, valid and marketable
title to the Vessel, and, at the time of delivery to the Buyer,
the Vessel shall be free and clear of all debts, claims, liens,
and encumbrances of any kind whatsoever save those arising out of
or attributable in any manner, directly or indirectly, to Buyer's
ownership of the Vessel or which result from actions taken for or
on behalf of Buyer.
3.3 BUSINESS OF SELLER. The Seller has not been and is not currently
engaged in the business of selling tangible personal property
similar to the Vessel and the Seller has not and does not hold
itself out to be engaged in such business.
SECTION 4
ACCESS TO VESSEL
Until Closing, Seller shall afford the Buyer's employees and
representatives access to the Vessel and all documents and records relating
thereto, for purposes of inspection (the "Inspection"). Buyer may place
one of its employees or representatives on the Vessel with the purpose of
insuring its security. The Seller shall not be obligated to facilitate the
placement of this individual by altering the location or scheduled movement
of the Vessel.
SECTION 5
REPRESENTATIONS AND WARRANTIES OF THE BUYER
The Buyer represents and warrants to the Seller:
5.1 ORGANIZATION EXISTENCE AND CORPORATE POWER. The Buyer (a) is a
corporation duly organized, validly existing and in good standing under the
laws of Delaware, (b) has all requisite power and authority to own and
conduct its business as it has been and is being conducted, and (c) has all
requisite power to execute, deliver and perform this Agreement and the
documents, certificates and instruments contemplated hereby.
5.2 AUTHORIZATION AND EXECUTION. The execution delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby, have been duly authorized and approved by all
requisite organizational action of the Buyer. This Agreement constitutes
the legal, valid, and binding obligation of the Buyer enforceable against
it in accordance with its terms.
5.3 CONFLICT. Neither the execution, delivery or performance by the
Buyer of this Agreement, nor the consummation of the transactions
contemplated hereby, will (a) violate the Buyer's organizational documents
or any judgment, decree, order or award of any court or other governmental
agency or any law, rule or regulation applicable to the Buyer or its
property or assets; or (b) conflict with, result in a breach of, or
constitute a default under, any contractual obligation of the Buyer.
5.4 CITIZENSHIP. The Buyer is a "citizen of the United States" as
such term is defined in Section 2 of the Shipping Act of 1916, as amended,
qualified to engage in the trade in which the Vessel is employed.
SECTION 6
INDEMNIFICATION
6.1 INDEMNIFICATION OF BUYER BY SELLER. Seller shall defend,
indemnify and hold harmless Buyer and each of Buyer's related, affiliated,
and subsidiary companies and its and their officers, directors, employees,
successors and assigns, (hereinafter collectively "Buyer Parties"), against
each and every demand, claim, action, loss (which shall include any
diminution in value), liability, judgment, damage, cost and expense
(including, without limitation, interest, penalties, cost of preparation
and investigation, and reasonable fees, disbursements and expenses of
attorneys, accountants and other professional advisors) collectively,
"Losses", attributable to, related to, or arising out of, or alleged to be
attributable to, related to or arising out of (a) any inaccuracy in any
representation or warranty of Seller in this Agreement or any document,
certificate or other instrument delivered or to be delivered pursuant
hereto in any respect, (b) any breach or nonfulfillment of any covenant,
agreement or other obligation of Seller under this Agreement or (c) the
existence of any claim, lien, general average or encumbrance of any kind
arising from the ownership, use or possession by Seller of the Vessel
accruing prior to the date of delivery of the Vessel.
6.2 INDEMNIFICATION OF SELLER BY BUYER. Buyer shall defend,
indemnify and hold harmless Seller; Seller's related affiliated and
subsidiary company and their joint ventures and its and their officers,
directors, employees, agents, servants, successors and assigns (hereinafter
collectively "Seller Parties") against all Losses, as defined in Section
6.1, attributable to, related to or arising out of, or alleged to be
attributable to related to or arising out of (a) any inaccuracy in any
representation or warranty of Buyer in this Agreement or any document,
certificate or other instrument delivered or to be delivered pursuant
hereto in any respect, (b) any breach or nonfulfillment of any covenant,
agreement or other obligation of Buyer under this Agreement (c) the
existence of any claim, lein, general average or encumbrance of any kind
arising from the ownership, use or possession by Buyer of the Vessel
accruing after the date of delivery of the Vessel or (d) any injury,
including death, suffered by any of the Buyer's employees or
representatives related to or arising out of any inspection or review of
the Vessel or Buyer's securing of same pursuant to Section 4 hereof,
whether caused by such person's sole negligence or the Seller Parties sold
or concurrent negligence, other legal fault or the unseaworthiness of the
Vessel.
6.3 INDEMNIFICATION FOR THIRD PARTIES.
With respect to claims by Third Parties:
a. Seller shall fully protect, defend, indemnify and hold
harmless Buyer from and against any and all Losses arising
out of any incident, accident, event, omission or occurrence
prior to the delivery of the Vessel which are brought by or
in favor of any third party which arises directly or
indirectly from the ownership, possession, control,
maintenance, management, design, construction, loading,
unloading, operation or navigation of the Vessel or either
party's performance hereunder, without any regard whatsoever
to the cause, negligence (including sole negligence) or
other acts or omissions or other legal fault of Buyer or any
unseaworthiness of the Vessel(whether or not the unseaworthy
condition is alleged or determined to have come into
existence after the time of the signing of this Agreement.
b. Buyer shall fully protect, defend, indemnify and hold
harmless Seller Parties from and against any and all Losses
arising out of any incident, accident, event, omission or
occurrence at the time of delivery or thereafter which are
brought by or in favor of any third party which arises
directly or indirectly from the ownership, possession,
control, maintenance, management, design, construction,
loading, unloading, operation or navigation of the Vessel,
without any regard whatsoever to the cause, negligence
(including sole negligence) or other acts or omissions or
other legal fault of Seller Parties or any unseaworthiness
of the Vessel (whether or not the unseaworthy condition is
alleged or determined to have existed prior to the time of
the signing of this Agreement).
6.4 SURVIVAL OF INDEMNIFICATION. The indemnification obligations of
the Seller and Buyer under this Section 6 shall survive the termination of
this Agreement.
SECTION 7
TERMINATION AND DEFAULT
7.1 TERMINATION BY AGREEMENT. This Agreement may be terminated by
the written mutual consent of Seller and Buyer on terms as agreed between
them.
7.2 BUYER'S DEFAULT. In the event of: (i) any material breach by
Buyer of any representation, warranty or covenant contained in this
Agreement prior to Closing which is not cured three (3) business days after
receipt of written demand; or (ii) Buyer's failure or refusal to satisfy
any condition precedent hereunder or purchase the Vessel at Closing, Seller
shall, at its exclusive option, have the right to either:
a. Terminate this Agreement and retain the Deposit as
liquidated damages; or
b. Sue for specific performance and attorney's fees and costs
in obtaining said specific performance.
7.3 SELLER'S DEFAULT. In the event of: (i) any material breach by
Seller of any representation, warranty or covenant contained in this
Agreement prior to Closing, which is not cured three (3) business days
after receipt of written demand; or (ii) Seller's failure or refusal to
satisfy any condition precedent hereunder or sell the Vessel at Closing,
Buyer shall, at its exclusive option, have the right to either:
a. Terminate this Agreement and have the Deposit returned to it
with a like amount as liquidated damages; or
b. Sue for specific performance and attorneys' fees and costs
in obtaining said specific performance.
<PAGE>
SECTION 8
ASBESTOS AND HAZARDOUS MATERIALS
Buyer hereby acknowledges that it is fully aware of and that Seller
has fully advised Buyer of the fact that the Vessel may contain asbestos
and other hazardous materials. Buyer assumes liability therefor and agrees
to comply with all applicable laws regarding the handling and disposal of
such materials and further fully indemnifies Seller Parties (as defined in
Section 6) against any Losses (as defined in Section 6) which may result
therefrom.
SECTION 9
WAIVER OF CONSEQUENTIAL DAMAGES
Both parties waive all claims against each other for consequential or
indirect damages, including without limitation, those which may result from
Buyer's use or possession (or loss of use or possession) of said Vessel
whether based on, related to, or arising directly or indirectly from
Seller's negligence, breach of warranty, strict liability or otherwise.
Consequential damages shall include, but not be limited to, loss of
revenue, profit or use of capital, production delays and losses resulting
from failure to meet other contractual commitments or deadlines.
Consequential damages does not include the obligation of Buyer hereunder to
pay the full price for the Vessel or any other sums due under this
Contract.
SECTION 10
MISCELLANEOUS
10.1 EXPENSES. The Buyer and the Seller shall each pay its own
expenses, including legal, accounting, advisory or brokerage fees, incurred
in connection with the transactions contemplated hereby regardless of
whether such transactions are consummated.
10.2 TAXES. The Buyer shall pay any taxes (other than any income
taxes or similar taxes based on the revenue of the Seller), fees and
expenses connected with the purchase and redocumentation of the Vessel.
This is a casual or "isolated or occasional" sale. Seller shall
be liable for payment of all ad valorem taxes payable with respect to the
Vessel prior to Delivery of such Vessel, and Buyer shall be liable for
payment of all ad valorem taxes payable with respect to the Vessel after
Delivery of such Vessel . Seller shall also be liable for any tax of
Seller resulting from its recognition of income from the sale of the
Vessel. All other taxes (including sales and/or use taxes, if any), import
duties, value added tax, registration fees, stamp duties and similar
expenses that may be imposed by any state or subdivision, or governmental
agency or authority (including, but not limited to any governmental
authority in the State of Louisiana) in connection with the sale of the
Vessel hereunder shall be for the account of and paid by the Buyer. Buyer
shall not withhold or retain from the Price any amounts with respect to any
tax or other governmental charge whatsoever. Where Buyer makes a payment
of any tax relating to this Contract, Buyer shall promptly supply Seller
with official governmental receipts for such tax payments without any right
of reimbursement from Seller.
10.3 AMENDMENT AND WAIVERS. No modification, waiver or amendment of
this Agreement shall be effective unless such modification or amendment
shall be in writing and executed by the parties hereto.
10.4 NOTICES. Except as may otherwise be expressly provided herein,
any notice herein required or permitted to be given shall be in writing or
by telex or facsimile transmission with subsequent written confirmation,
and may be personally served or sent by United States mail and shall be
deemed to have been given upon receipt by the party notified. For the
purposes hereof, the addresses of the parties hereto (until notice of a
change thereof is delivered as provided in this Subsection 8.3) shall be as
set forth opposite each party's name on the signature page hereof.
10.5 SURVIVAL OF WARRANTIES AND AGREEMENTS. All agreements,
representations, and warranties made herein shall survive the execution and
delivery of this Agreement and the closing.
10.6 SEVERABILITY. In case any provision of or obligation under this
Agreement shall be invalid, illegal or unenforceable in any jurisdiction,
the validity, legality and enforceability of the remaining provisions or
obligations, or of such provision or obligation in any other jurisdiction,
shall not in any way be affected or impaired thereby.
10.7 FURTHER ASSURANCES. At any time or from time to time upon the
request of the Seller or Buyer, the other party will execute and deliver
such further documents and do such other acts and things as the Seller or
Buyer, as applicable, may reasonably request in order to effect fully the
purposes of this Agreement.
10.8. HEADINGS. Section and Subsection headings in this Agreement are
included herein for the convenience of reference only and shall not
constitute a part of this Agreement for any other purpose or be given any
substantive effect.
<PAGE>
10.9 GOVERNING LAW AND FORUM. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE SUBSTANTIVE LAWS OF THE STATE OF LOUISIANA AND SHALL BE
RESOLVED IN THE STATE COURTS OF LOUISIANA FOR THE PARISH OF ORLEANS AND THE
PARTIES HEREBY SUBMIT TO THE JURISDICTION OF SUCH COURT.
10.10 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon
and shall inure to the benefit of the parties hereto and their respective
successors and assigns.
10.11 REMOVAL, NAMES/MARKINGS. As soon as practicable after delivery,
Buyer shall remove from the Vessel all identification and other markings
indicating Seller as owner of the Vessel, including but not limited to, all
logos, the current name of the Vessel, and any word, name, or phrase
associated with the Seller or its parent, related, affiliated or subsidiary
companies.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
OPI VESSELS, INC.
The Seller's address is: By: /s/ Stephen E. Becnel
P. O. Box 188 Name: STEPHEN E. BECNEL
Morgan City, Louisiana 70381 Title: CONTRACT MANAGER
HORIZON VESSELS, INC.
The Buyer's address is: By: /s/ James K. Cole
2500 City West Blvd., Suite 2200 Name: JAMES K. COLE
Houston, Texas 77042 Title: SENIOR VICE PRESIDENT
EXHIBIT "A" Certificate of Delivery and Acceptance
EXHIBIT "B" Bill of Sale
EXHIBIT "C" Officer's Certificate
SCHEDULE "1" Items Included in Sale
<PAGE>
All the exhibits have been omitted from this filing and will be furnished
to the Securities and Exchange Commission's staff upon request.
