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) August 1, 1996
(August 1, 1996)
GLOBAL MARINE INC.
__________________________________________________________________
(Exact name or registrant as specified in charter)
Delaware 1-5471 95-1849298
____________________ _____________ __________________
(State or other (Commission (IRS employer
jurisdiction of file number identification no.)
incorporation)
777 N. Eldridge Road, Houston, Texas 77079
_____________________________________ __________________
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (713) 596-5100
Item 5. OTHER EVENTS.
On August 1, 1996, the Registrant announced that its wholly-owned
contract drilling subsidiary, Global Marine Drilling Company, has
received a five-year, $260 million commitment from a major oil
company to drill in water depths to 7,500 feet. To fulfill this
commitment, the Company has entered into a 30-year lease with the
US Navy for use of the Glomar Explorer, a dynamically-positioned
ship that was designed and operated by the Company for the US
government. The Company will convert the Explorer into a deep-water
drillship at a cost of approximately $160 million and intends
to finance this investment primarily with internally generated
funds.
The Company supervised construction of the Glomar Explorer and
operated it from 1973 to 1975 under contract to the US government.
From 1978 to 1980, the Company operated the ship in a deep-ocean
mining test in water depths to 17,000 feet. The Explorer, which is
619 feet long and 116 feet wide, is owned by the US Navy and is
currently part of the Naval Reserve Fleet. The Company expects to
take delivery of the ship in the third quarter of 1996 and have it
ready to commence drilling in the US Gulf of Mexico during the
first quarter of 1998.
Initially, the Explorer will be one of just four rigs capable of
drilling in 7,500 feet of water. Larger than any drillship
currently in operation, the Glomar Explorer can be equipped to
operate in excess of 10,000 feet of water, which is at least 2,000
feet beyond the maximum water depth capability of any existing
drilling rig.
As used herein, the term "Registrant" refers to Global Marine Inc.,
and the term "Company" refers to the Registrant and, unless the
context otherwise requires, to the Registrant's consolidated
subsidiaries.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND
EXHIBITS.
(c) EXHIBITS.
10.1 Bareboat Charter Agreement, dated July 2, 1996, between
the United States of America and Global Marine Capital
Investments 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 thereunto duly authorized.
GLOBAL MARINE INC.
Date: August 1, 1996 By: s/Jerry C. Martin
Jerry C. Martin
Senior Vice President
and Chief Financial Officer
EXHIBIT 99
INDEX TO EXHIBITS
10.1 Bareboat Charter Agreement, dated July 2, 1996, between the
United States of America and Global Marine Capital Investments
Inc.
EXHIBIT 10.1
Contract No. N00024-96-L-8109
Dated July 2, 1996
BAREBOAT CHARTER AGREEMENT
BETWEEN
UNITED STATES OF AMERICA
AND
GLOBAL MARINE CAPITAL INVESTMENTS, INC.
TABLE OF CONTENTS
ARTICLE
1. DEFINITIONS
2. DEMISE AND CHARTER
3. DELIVERY AND REDELIVERY
4. USE AND OPERATION
5. CHARTER HIRE
6. TITLE AND REGISTRATION
7. MAINTENANCE AND REPAIR
8. RISK OF LOSS OR DAMAGE AND INDEMNITY
9. LIABILITY FOR CLAIMS AND INSURANCE
10. TERMINATION
11. CREATION OF LIENS PROHIBITED
12. ALTERATIONS
13. REPRESENTATIONS AND DISCLAIMER OF WARRANTY
14. INSPECTION AND INVENTORY
15. FAILURE TO PERFORM
16. GRATUITIES
17. COVENANT AGAINST CONTINGENT FEES
18. RIGHT TO SUBLEASE OR ASSIGN
19. PROTECTION OF THE ENVIRONMENT
20. STATE AND LOCAL TAXES
21. COST OF COMPLIANCE WITH THIS CHARTER
22. DISPUTES
23. MEDIA INQUIRIES
24. CLAUSES INCORPORATED BY REFERENCE
25. AMENDMENT
26. APPLICABLE LAW
BAREBOAT CHARTER AGREEMENT
This Bareboat Charter Agreement (the "Charter") is made
by and between the United States of America (the "Shipowner"),
represented by the Contracting Officer executing this charter,
and Global Marine Capital Investments, Inc. (the "Charterer"), a
corporation organized and existing under the laws of the State of
Delaware.
RECITALS
WHEREAS the Charterer is engaged in performing
international offshore drilling operations; and
WHEREAS the Shipowner owns the vessel AG 193 known as the
Glomar Explorer (the "Vessel") whose design may be particularly
well suited to conversion to a deepwater drillship; and
WHEREAS the Charterer has requested that the Vessel be
leased to the Charterer; and
WHEREAS the Secretary of the Navy (the "Secretary") has
determined that the Vessel is not excess to the needs of the
Government but is not for the time being required for public
purposes; and
WHEREAS the Secretary has determined that it will be in
the public interest to charter the Vessel to the Charterer upon
the terms and conditions set forth below.
NOW, THEREFORE, in consideration of the premises and
mutual covenants and agreements contained herein, the parties
mutually agree as follows:
ARTICLE 1. DEFINITIONS
For purposes of this Charter, the following terms shall
have the meanings set forth below:
(a) The term "Department" means the Department of the
Navy, as represented either by the "Secretary" or the
"Contracting Officer" as defined in this Article 1.
(b) The term "Secretary" means the Secretary, the Under
Secretary or any Assistant Secretary of the Department of the
Navy; and the term "his duly authorized representative" means any
person or persons or board (other than the Contracting Officer)
authorized to act for the Secretary.
(c) The term "Contracting Officer" means the person
executing this Charter on behalf of the Government and any other
officer or employee who is properly designated Contracting
Officer; and the term includes the Administrative Contracting
Officer.
(d) The term "fiscal year" means the Government's fiscal
year.
ARTICLE 2. DEMISE AND CHARTER
(a) Upon the terms and conditions of this Charter and
subject to termination as provided herein, the Shipowner hereby
lets and demises to the Charterer and the Charterer hereby hires
the Navy's 618 foot deep ocean work vessel, GLOMAR EXPLORER (AG
193), and the Government property accountable to the vessel as
set forth in __________________from the Shipowner for a period of
thirty (30) years commencing with the date of this Charter.
ARTICLE 3. DELIVERY AND REDELIVERY
(a) Vessel shall be delivered to Charterer on or after
the date of this Charter in its then condition, "as is", at
Suisun Bay, California.
(b) The end of the Term of the charter, the Charterer
shall redeliver the Vessel to Shipowner at the MARAD facility at
Suisun Bay, CA. At the time of redelivery, the Vessel shall be
free of any insignia or colors of the Charterer or others and in
acceptable operational order, condition and repair as
converted/reconfigured to a drill ship at the beginning of the
lease term, ordinary wear and tear excepted.
(c) The time of redelivery, Charterer shall at its
expense drydock the Vessel and make the Vessel available for
joint inspection and survey. During the performance of the
drydocking, the Charterer, at its own expense, shall conduct a
marine survey of the vessel. The maintenance requirements
identified in the survey must be accomplished during the
drydocking and at a minimum, the underwater hull parts, both
interior and exterior areas, shall be cleaned, repaired, and
completely painted or treated as may be necessary. This
drydocking requirement may be waived, at the discretion of the
Contracting Officer, if the Charterer can document that these
drydocking requirements were accomplished since the beginning of
the 26th year of this lease. Also, at their own expense, the
Charterer shall prepare/place the vessel in a safe stowage
condition. Such work shall include as a minimum, the following,
unless a written determination of non-applicable is made by the
ACO.
(I) externally blank all overboard discharges above the
waterline (See XXXII below);
(II) wire all sea valves shut;
(III) clean tanks, voids, and compartments;
(IV) (RESERVED)
(V) (RESERVED)
(VI) secure all topside closures;
(VII) (RESERVED)
(VIII)(RESERVED)
(IX) (RESERVED)
(X) remove all trash, rags, debris, oil, grease and other
fire hazards and clean and dry spaces;
(XI) secure in place all weathertight/watertight closures,
doors, hatches, scuttles, weatherdeck lifelines/lifelines,
stanchions/safety chains, deck plates, gratings, and vent duct
openings;
(XII) secure all lockers, wardrobes, desk drawers and file
cabinets;
(XIII) remove all flammables;
(XIV) remove all compressed gas cylinders except five full
15-lb CO2 bottles;
(XV) recover and remove all refrigerants;
(XVI) remove all portable PKP, fixed PKP cylinders and other
firefighting liquids;
(XVII) deenergize and red tab all switchboards and
electrical circuits except lighting;
(XVIII) remove all batteries except for flooding alarms and
tow lights;
(XIX)seal all insulation and lagging;
(XX) remove all asbestos material from storage;
(XXI) unlock and wire open all safes with combination set at
50-25-50;
(XXII)identified and stored in one location all keys;
(XXIII)inventory, tag and record any transformer or
capacitor containing PCBs;
(XXIV) test and analyze hydraulic and lube oil for
polychlorinated biphenyls and remove & dispose of any regulated
materials;
(XXV) inventory all mercury-containing components;
(XXVI) test all locked-in fresh water ballast tanks for
sodium chromate concentrations and remove & dispose of any
regulated materials;
(XXVII) remove all bulk paints, solvents, greases, oils,
acids, insecticides, pesticides, film processing chemicals, etc.;
(XXVIII) identify, containerize and off-load all hazardous
material;
(XXIX) exterminate and provide extermination certification
of dock for rodents, insects, pests, etc.;
(XXX) drain and remove FYRQUEL (Fire Resistant Hydraulic
Fluid) from all systems;
(XXXI) retain, inventory and stow in normal locations the
following documentation: instruction books, manuals, records,
logs, ship's instruction, bills, EOSS, PMS cards, drawings,
Booklet of General Plans, Tank Loading & Sounding Tables, Ship
Characteristics Card, Damage Control Book & Diagrams, last
docking report, docking plan paint schedule, tech manuals, and
tank soundings;
(XXXII) blank all hull penetrations below waterline and up
to 4 feet above waterline, internally on inboard flange of first
sea valve. Valve must be closed & wired shut. Blanks to be made
of 1/2" thick steel plate with .06 inch rubber gasket with same
number of bolt holes as flange. Blanks are to be painted yellow
and serialized.
(XXXIII) clean, gas free and leave open all CHT tanks;
(XXXIV) drain all steam, freshwater, saltwater, condensate,
air and drain piping systems to low point and leave open for
natural drying;
(XXXV) pump fuel oil tanks to less than 0.3% of tank
capacity and wire open fuel oil transfer valves;
(XXXVI) maintain internal watertight and subdivision
integrity;
(XXXVII) secure and seal: porthole covers, deck access,
deck plates & grates, handrails and ladders;
(XXXVIII) clean and dry all heads and sanitary facilities;
remove all sink and urinal traps;
(XXXIX) clean and dry all bilges;
(XL) clean and leave open all reefers/refrigerators with
doors either removed or bolted to prevent sagging;
(XLI) cap and mark all sounding tubes; and
(XLII) isolate tanks required for ballasting from associated
systems.
(d) The Term of the charter will be extended for any time
necessary for the Charterer to make required repairs to the
vessel and/or to prepare/place the Vessel in a safe stowage
condition as outlined above; and Charterer will not be liable to
pay additional charter hire for any such charter extension.
ARTICLE 4. USE AND OPERATION
(a) SCOPE OF USE. Subject to any limitations on the
operation of the vessel under any agreement between the Charterer
and Shipowner, the Charterer shall have full use of the Vessel
and may employ the Vessel for lawful trade as a deep sea oil
drilling ship, provided that (i) the Charterer shall operate the
ship using a crew which is knowledgeable and qualified regarding
the safe operation of the vessel.; (ii) the Vessel shall, at all
times, meet all requirements of laws, treaties, conventions or
statutes and applicable rules and regulations thereunder which
are applicable to the safe use and operation of the vessel; and
(iii) the Vessel shall have on board as and when required valid
certificates showing compliance with such laws, rules and
regulations. The Charterer shall provide, upon request, a
description of all uses of the vessel in non-Government work.
(b) USE OF SPARE PARTS. The Charterer shall have the
right to use all of the Shipowner-owned spare parts aboard the
Vessel at the time of delivery. Charterer may likewise use
without further or additional cost any outfit, tool, equipment
and appliances aboard the Vessel at the time of delivery and
acceptance provided the same or their substantial replacement
equivalent shall be returned to Shipowner upon redelivery in the
same condition as when received, ordinary wear and tear excepted.
(c) REMOVAL OF EQUIPMENT. The Charterer shall have the
right, at its expense, to remove and store during the Term of the
charter, such government property/equipment (including plant
equipment, instruments, machine tools, and portable tools) as is
not required for Charterer's use of the Vessel. Prior to
redelivery of the Vessel, Charterer shall restore all stored
equipment to the Vessel. Disposing of any of the equipment
accountable to the Glomar Explorer must be done in accordance
with FAR Part 45 after approval by the Contracting Officer. Any
disposition documentation shall be kept with Inventory of the
Ship maintained in accordance with Article 14 INSPECTION AND
INVENTORY.
(d) DISPOSAL OF GOVERNMENT PROPERTY INCIDENT TO THE
CHARTERER'S CONVERSION/REFURBISHMENT of the Glomar Explorer to a
Deep Sea Oil Drilling Ship The Conversion/Refurbishment of the
Glomar Explorer was approved by Assistant Secretary of the Navy
and is part of the compensation for this Charter Agreement. The
ship's conversion includes the dismantling, removal and disposal
of portions of the existing Glomar Explorer which are detrimental
to the Charterer's planned conversion of the vessel to a deep sea
oil drilling ship. Accordingly, the Charterer shall coordinate
with the cognizant SUPSHIP Administrative Contracting Officer
(ACO), communicate to the ACO their government property disposal
requirements and request guidance, support and assistance in
disposing of the government property/material in accordance with
FAR Part 45, DFARS Part 245. The Charterer shall retain a copy of
the final disposition documentation with the inventory maintained
in accordance with ARTICLE 14 INSPECTION AND INVENTORY.
(e) RIGHT TO SALVAGE. The Shipowner shall not have any
interest in any salvage monies earned by the Vessel or received
by Charterer during the Term of the charter.
(f) LIABILITY FOR TAX. With the exception of taxes
described in Article 20 below, Shipowner shall not be responsible
for any transportation, use, sales or any such Federal or State
taxes due resulting from the operation and use of the Vessel and
its equipment during the period of this Charter. Such taxes are
to be for Charterer's account, if and when any such taxes or
charges are determined to be due by proper authority.
(g) EXPENSE OF OPERATION. Charterer shall, at its cost
and expense, man, operate, victual, fuel, maintain and supply the
Vessel. Except as stated herein, Shipowner retains no possession
or control of the Vessel during the Term of the charter.
ARTICLE 5. CHARTER HIRE
(a) Charterer agrees to pay hire for the vessel to the
Shipowner or its order, which Charter Hire shall be payable in
arrears, 15 days after the end of each annual period. For each of
the first two one-year term of the charters, the Charter Hire
shall be $ 200,000.00. The Charter Hire for the following twenty
eight one-year term of the charters shall be $1,768,275.26 for
each year. All charter hire payments shall be made-payable to the
U.S. Treasury and shall be submitted to the Contracting Officer.
(b) As part of the total compensation for this Charter,
the Charterer shall, during the initial two years of this
Charter, convert/refurbish the Vessel to a deep sea oil drilling
vessel, with a minimum, auditable incurred cost to the Charterer
of $130,000,000., and the Charterer shall maintain the Vessel in
accordance with Article 7 below. The Charterer agrees that this
conversion/refurbishment shall be performed by a U.S. owned and
operated Shipyard. The Charterer shall notify the Contracting
Officer of the U. S. Shipyard(s) where the
Conversion/refurbishment will be accomplished for the Contracting
Officer to designate the cognizant ACO. Within 45 days of the
conclusion of the conversion/ refurbishment, the Charterer shall
provide to the Contracting Officer a written record of the work
accomplished on the vessel. This documentation shall, as a
starting point, provide an updated version of the preliminary
planning "reconfiguration package" provided to the Contracting
Officer on 20 May 1996.
ARTICLE 6. TITLE AND REGISTRATION
(a) TITLE IN SHIPOWNER. Title to the Vessel shall remain
with the Shipowner. Title to all replacement, repair or
permanently affixed modification parts of the Vessel furnished by
Charterer shall rest with the Shipowner upon installation
thereof; provided, however, that Charterer may elect to remove
any permanently affixed modification parts at its sole cost and
expense provided it otherwise complies with the provisions of
this Charter relating to the condition of the Vessel upon
redelivery very including Article 12 and Article 7.
(b) RIGHT TO U.S. REGISTRY. Shipowner represents and
warrants that at the time of delivery the Vessel is eligible to
be registered under U.S. flag. At all times during the Term of
the charter, Charterer shall maintain the Vessel in U.S.
registry.
(c) House Flag and Insignia. During the term of the
Charter, Charterer shall have the right to fly its house flag and
to display upon the hull and stack of the Vessel its own insignia
or the insignia of others by whom the Vessel may from time to
time be employed.
(d) CHANGE OF NAME. During the term of the Charter,
Charter shall have the right to change the name of the vessel.
Shipowner shall cooperate with the Charterer to accomplish such
change of name and shall execute such documents as may from time
to time be required for that purpose.
ARTICLE 7. MAINTENANCE AND REPAIR
(a) OBLIGATION TO MAINTAIN. The Charterer shall, at its
own expense, and whether the work involved is normal or capital
in nature, protect, preserve, maintain and repair the Vessel
during the term of the Charter, so that the Vessel shall be,
insofar as due diligence may make her so, in good running order
and repair, tight, staunch, strong and well and sufficiently
tackled, appareled, fu~shed and equipped. Throughout the term of
the Charter, Charterer shall maintain the Vessel in such
condition as will entitle her to the highest classification and
rating by the American Bureau of Shipping (ABS) for vessels of
the same age, type and use, causing the Vessel to be overhauled
when necessary and drydocked, cleaned and bottom painted at least
so often as may be required by applicable U.S. Coast Guard (USCG)
regulations or the ABS. The Charterer shall maintain the Vessel
including the hull, machinery, boilers, appurtenances and spare
parts in good state of repair and in efficient and safe operating
condition. At all times, Charterer shall maintain all required
certificates including USCG/ABS Load Line Certificate, periodic
inspections with applicable written reports by a representative
of ABS, and certificates of freedom from hazardous materials
issued by recognized authorities, required by the USCG and the
ABS.
(b) NOTICE OF DRYDOCKING. The Charterer shall give the
Shipowner reasonable advance notice of the time and place of
drydockings in order to afford the Shipowner an opportunity to
inspect the Vessel while such work is being performed. The
Charterer shall furnish to the Shipowner a copy of the work to be
accomplished together with a schedule of actions taken or to be
taken during drydocking and repairs.
(c) COST OF DRYDOCKING. As soon as practicable after
delivery and redelivery, the Charterer shall drydock the Vessel
at the Charterer's expense to permit survey and inspection of the
Vessel by the parties (See Article 3 DELIVERY AND REDELIVERY). To
the extent that repairs, alterations or modifications to the
Vessel are required or undertaken by Charterer at any time, the
cost of the drydocking in connection therewith shall be paid by
the Charterer. During the term of the Charter, the Charterer
shall drydock the Vessel at such times and on such occasions as
may be necessary to comply with applicable U.S. Coast Guard
regulations and to maintain the Vessel at the highest
classification and rating by the ABS for vessels of the same age,
type and use.
(d) SHIPOWNER RESPONSIBILITY. Shipowner shall have no
responsibility to maintain or repair the Vessel during the term
of the Charter. Use of insurance proceeds necessary to repair the
Vessel shall be made in accordance with Article 9 below.
ARTICLE 8. RISK OF LOSS OR DAMAGE AND INDEMNITY
(a) The Charterer shall be solely liable for any damage
to, or loss or destruction of, the Vessel during the Term of the
charter.
(b) It is stipulated and agreed by Shipowner and
Charterer that the Vessel has a value of $30,000,000.00 (Thirty
million U.S. dollars) at the beginning of this Charter. Shipowner
shall be entitled to receive this $30,000,000.00 as first and
paramount recipient of any insurance proceeds, claims paid,
judgment proceeds, or other amounts paid, in the event of the
total loss or constructive total loss of the Vessel after the
Vessel is delivered to Charterer. The agreed value covers the
Vessel described herein.
(c) The Charterer agrees to abide by any direction
provided by the Contracting Officer to direct to designated
accounts, any proceeds from insurance policies recovered from the
loss of the vessel.
(d) In the event of damage of more than $1,000,000.00
(One Million U.S. dollars) to the vessel, or loss thereof, the
Charterer shall immediately submit to the Contracting Officer a
detailed written report of the accident, damage or loss.
(e) The Charterer shall acquire and maintain, at its sole
expense, insurance against any loss or damage to the leased
property in an amount at least equal to the agreed value in (b)
above and as further explained in Article 9 below.
ARTICLE 9. LIABILITY FOR CLAIMS AND INSURANCE
(a) Charterer agrees that it will completely indemnify
and hold harmless the Shipowner against all suits, actions,
claims, charges, expenses, demands, or costs resulting or arising
(without limitation) from any personal injury, death, property
damage or loss, pollution, wreck removal, or any other casualty,
which arises or results in whole or in part from the chartering,
subchartering, use, possession, or operation of Vessel by
Charterer or others. As an agreed allocation of risk, Charterer
expressly agrees to completely indemnify and hold harmless the
Shipowner even if the Shipowner is negligent or otherwise at
fault
(b) The Charterer shall obtain and maintain, at its sole
expense, as a minimum, the following insurance:
(l) Salvage and towage insurance coverage for the
Vessel in sufficient amount to cover the Charterer's
responsibilities as regards towage and salvage. The
salvage and towage coverage of the insurer under the
policy shall be not less than $50,000,000.00 (Fifty
million U.S. dollars).
(2) "All Risk" marine hull and machinery insurance
against loss of or damage to the Vessel in an amount not
less than $30,000,000.00 (Thirty Million U.S. dollars)
for the full term of the Charter. The amount of Hull
Insurance may be increased as the Conversion/
Reconfiguration/Refurbishment progresses. Such insurance
shall also contain a loss payable provision as follows:
"Loss, if any, under this policy shall be adjusted
with the Charterer and the proceeds, at the
election of the Government, shall be payable to
the Charterer. Proceeds not paid to said Charterer
shall be payable to the Treasure of the United
States."
(3) Collision and Protection and Indemnity (P&I)
Marine Insurance subject to the terms of entry equivalent
to the United Kingdom Mutual Stream Ship Assurance
Association (Bermuda) limited rules. Such insurance shall
cover vessel liabilities including crew, pollution
(including the filing of any Certification of Financial
Responsibility) and war risks (if outside the waters of
he United States of America), in an amount not less than
$200,000,000.00 (Two Hundred Million U.S.Dollars) per
incident.
(4) Worker's Compensation (in amount set by
Federal or State statute) and Employers Liability
Insurance, in an amount not less than $50,000,000 (Fifty
Million U.S. Dollars), required by the country or
governing law of the jurisdiction wherein the Charterer
qualifies as an employer and wherein operations are
performed.
(5) Third Party Bodily Injury and Property Damage
Insurance covering liability imposed by law or assumed
under contract for such injury or damage in an amount not
less than $50,000,000 (Fifty Million U.S. Dollars) per
occurrence (amount of insurance should be increased based
on the conversion/reconfiguration/refurbishment to remain
at least equal the value of the vessel)
(c) Each policy of insurance shall:
(1) be maintained for the entire term of the
charter with insurers satisfactory to the Shipowner;
(2) shall be issued, except worker's Compensation
Insurance, in the names of the Charterer and the
United States of America (Department of the Navy);
(3) contain an endorsement reading "The insurer
waives any right of subrogation against the United
States of America which might arise by reason of
any payment under this policy";
(4) contain a provision for a thirty (30) days
prior notice to the Insurance Examiner of any
proposed cancellation, material change or non-renewal of
the policy coverage on the part of the insurer.
(d) A certificate or certified copy of each policy of
insurance procured hereunder must be deposited with the said
Insurance Examiner at the following address:
Office of the Assistant Secretary of the Navy,
(Research, Development and Acquisition) ABM,
Attn: Insurance Examiner
Washington D. C. 20350-1000
with a copy to the Contracting Officer, within 30 days of
the effective date of this charter.
(e) The Charterer shall, at its own cost and expense,
make all proofs of loss and take all appropriate steps to effect
collections from underwriters for any loss under any insurance
required to be maintained in accordance with this Article 9.
(f) The Charterer may, if desired by Charterer, maintain
insurance in amounts greater than those required by this Charter.
ARTICLE 10. TERMINATION
(a) This charter may be terminated by the Government at
any time at any time prior to the expiration of the full term of
the charter:
(1) Upon ten (10) days' written notice to the
Charterer, if the Charterer defaults in the performance of any of
its obligations hereunder and fails to cure or initiate action to
cure such default within thirty (30) days after receipt of notice
from the Contracting Officer specifying such default or within
such longer time as may have been specified in said notice;
PROVIDED, HOWEVER, that in lieu of terminating this lease, the
Government may elect to perform, or cause to be performed, the
defaulted obligations for the account of and at the expense of
the Charterer;
(2) In the event of proceedings in any Federal or State
court for adjudication of the Charterer as bankrupt by the
Charterer or others, for corporate reorganization of the
Charterer, for an arrangement within the meaning of the
Bankruptcy Act and any amendments thereto, for other similar
debtor or creditor relief available under State or local law, or
upon the appointment of a Receiver or Trustee for the property of
the Charterer;
(3) If the Government terminates this charter under
paragraph 1.a. or 1.b. above, it may immediately re-enter and
resume possession of the vessel and remove all persons and
property therefrom, but such entry is not deemed an acceptance or
surrender of this charter. In the event of termination and
reentry the Government may, at its election, re-charter the
vessel for any period, less than, equal to, or greater than the
remainder of the term of this charter or any extension thereof,
for any rental and upon any terms and conditions deemed by the
Government to be reasonable and satisfactory, and the Charterer
is liable to and shall pay the Government the amount of the
difference between the rental and charges received by the
Government from such re-chartering of the vessel. This amount is
due and payable at the time specified for the payment of rent in
Article 5, Charter Hire. It is expressly agreed and understood
that, whether or not the Government releases the vessel, the
Charterer is obligated to reimburse the Government for any costs
incurred by the Government in (i) resuming possession of the
vessel, and (ii) performing or having performed the maintenance
and any other obligation for which the Charterer is responsible
under this Charter but has failed to perform.
(b) After the commencement of the sixteenth (16th) year of
the charter, the Government may terminate this charter written
notice to the Charterer, whenever the Secretary determines that
the interests of national defense require it;
(c) Termination of this Charter by the Shipowner shall be
by notice issued by the Contracting Officer. Such notice shall
contain the following information: (i) date of termination of
Charterer's right to use the Vessel; (ii) date and location of
return of the Vessel to the Shipowner; provided that the date of
redelivery shall be not more than ninety (90) days after issuance
of the Shipowner's notice to terminate is given to the Charterer;
and (iii) such other instructions as are deemed necessary by the
Contracting Officer. The Charterer agrees to comply with the
terms of the notice of termination at no cost to the Shipowner.
(d) This charter may be terminated by the Charterer at any
time prior to the expiration of the term upon thirty (30) days'
written notice to the Contracting Officer in the event of damage
to or destruction of all or a substantial part of the Vessel so
as to render the vessel incapable of use for the purposes for
which it is chartered hereunder; provided, that (i) such damage
or destruction is occasioned by a risk not in fact covered and
not customarily covered by insurance in the locality in which the
vessel is located or by a risk which is covered by insurance and
the Government either has not authorized or directed the repair,
rebuilding or replacement of the vessel or does not make
provision for payment for such repair, rebuilding or replacement
by the application of insurance proceeds or otherwise, and (ii)
the damage or destruction is not occasioned by the fault or
negligence of the Charterer or by any failure or refusal on its
part to fully comply with its obligations hereunder.
(e) Upon expiration of this Charter or a termination under
this Article 10, all terms and conditions of this Charter shall
remain in effect until the date of redelivery of the Vessel to
the Shipowner. Charterer shall not be entitled to any
compensation for any costs or losses arising from termination.
ARTICLE 11. CREATION OF LIENS PROHIBITED
(a) The Charterer shall not do or permit anything to be
done to the Vessel which may subject the Vessel or any part
thereof to any liens or rights in rem of any kind other than one
in favor of the Shipowner. The Charterer undertakes to place its
marine personnel, suppliers, and repair yards on notice, by
posting notices in its offices ashore and on the Vessel, that
title to the Vessel is vested in the United States of America and
is not subject to any lien whatsoever.
(b) The Charterer shall indemnify and hold harmless
Shipowner against all liens of whatever nature upon the Vessel.
If a complaint should be filed against the Shipowner or the
Vessel or if the Vessel is otherwise levied against or taken into
custody by virtue of legal proceedings in any court because of
any such lien, the Charterer shall, within 15 days thereafter,
cause the Vessel to be released and the lien thereon to be
discharged at its own expense.
ARTICLE 12. ALTERATIONS
(a) The Charterer is hereby authorized, at their own
expense, to convert/reconfigure/refurbish the Global Explorer to
a deep sea oil drilling ship based on the plans submitted to the
Contracting Officer dated 20 May 1996 and the Charterer's
commitment that 1) none of the modifications involved in the
conversion/ refurbishment/reconfiguration shall adversely affect
the seaworthiness, structural integrity, or ultimate stability of
the vessel and 2) they will meet all the applicable requirements
of the cognizant regulatory bodies including the USCG and the
ABS. (See ARTICLE 5, CHARTER HIRE for the reporting requirement
at the completion of the conversion.)
(b) Alterations costing less than $2,000,000, involving
structural alterations, changes, and/or installations of
machinery or equipment to meet the requirements of customers
hiring the Charterer and the Glomar Explorer for deep sea oil
drilling are also authorized without receiving advance approval
of the Contracting Officer provided that 1) none of the
modifications will adversely affect the seaworthiness, structural
integrity or ultimate stability of the vessel and 2) the
Charterer meets the applicable requirements of the cognizant
regulatory bodies including the ABS and the U.S. Coast Guard.
The Charterer shall provide a written report of the work
accomplished on each such alteration to the Contracting Officer
within 60 days of the completion of the alteration effort.
(c) Alterations (excepting the major alteration addressed
in paragraph (a) above) costing $2,000,000.00 or more, involving
structural alterations, changes and installations of machinery or
equipment may be made by the Charterer provided (i) none of the
modifications will adversely affect the seaworthiness, structural
integrity or ultimate stability of the vessel; (ii) the Charterer
meets the applicable requirements of the cognizant regulatory
bodies including the 'ABS and USCG; (iii) the Charterer must
submit to the Contracting Officer for approval (and validate
receipt by the Contracting Officer) a written description and
notice of such alterations, changes and installations on or
before forty-five (45) days prior to the date such work begins;
and (iv) the proposed alterations, installations or changes may
be made if the Contracting Officer does not otherwise notify the
Charterer within the forty-five-day notification period.
The Charter shall provide a written report of the work
accomplished on such alterations to the Contracting Officers with
60 days of the completion of the alteration effort.
(d) The Shipowner may choose to inspect such completed
alterations, changes and installations as it deems necessary but
in no case shall such inspection delay operation of the
Charterer. It is the intention of this Charter to consider
alterations, changes and installations which may affect the
stability of the Vessel to come under the purview of the
regulatory bodies. No alternation or modification permitted by
this Article shall detract from the seaworthiness of the Vessel
or cause the Vessel to lose its classification and its rating by
the ABS.
(e) Upon receiving the Contracting Officer's approval, if
required above, the Charterer may install such of its own
machinery, equipment and materials necessary for its operations;
provided, however, that all such installation shall become the
property of the Shipowner when annexed to the Vessel, except as
otherwise stated in a Pre-Installation Agreement between the
Contracting Officer and the Charterer. All removable property not
owned by the Shipowner, installed by the Charterer, which is not
removed on or before the return of the Vessel shall be deemed
abandoned by the Charterer and may be used or disposed of by the
Shipowner in any manner whatsoever without liability or any
obligation to account to the Charterer.
(f) The Charterer shall not be reimbursed under this
Charter for any costs incurred in the performance of the
provisions of this Article.
ARTICLE 13. REPRESENTATIONS AND DISCLAIMER OF WARRANTY
(a) Delivery of the Vessel to Charterer and Charterer's
acceptance shall constitute full performance by Shipowner of its
obligations except as otherwise expressly stated in this Charter
and Charterer shall not, following delivery, be entitled to
assert any claim against Shipowner on account of any
representations or warranties express or implied with respect to
the condition of the Vessel or its inventory. The Charterer has
examined and knows the condition and state of repair of the
Vessel as of the date of this Charter and the Charterer accepts
the Vessel as such. At the time of execution of this Charter, the
Vessel is in an inactive, inoperative condition and is not ready
for sea. The Charterer acknowledges (i) that the Shipowner has
made no representation or warranty, express or implied, regarding
the condition or fitness for use of the Vessel nor has the
Shipowner made any agreement or promise under this Charter to
alter, repair, adapt, or improve the Vessel or any part thereof
during the term of the charter, and (ii) that this Charter
contains all of the agreements between the parties respecting the
Vessel. Charterer agrees to put the Vessel in seaworthy condition
at its own expense prior to the commencement of the first
drilling contract to be performed by the vessel and to thereafter
exercise due diligence to maintain, service, and preserve the
Vessel in a seaworthy condition until the Vessel is redelivered
by the Charterer to the Shipowner in accordance with Article 3.
The Charterer warrants that for the operation of the Vessel the
Charterer has or will obtain all licenses and permits required by
law.
ARTICLE 14. INSPECTION AND INVENTORY
(a) SHIPOWNER'S ACCESS TO VESSEL. Charterer will, at all
reasonable times, afford Shipowner upon reasonable notice, access
to the Vessel, its cargo and papers for the purpose of examining
the condition of the Vessel and to satisfy Shipowner that the
Vessel is being properly repaired and maintained in accordance
with this charter. The parties intend that, whenever possible,
such inspection shall be held at such time and in such a manner
as not to interfere with the operation of the Vessel and shall
coincide with inspection of the Vessel by other regulatory
bodies.
(b) REVIEW OF LOGS. Upon the request of Shipowner, upon
reasonable notice, Charterer shall allow the Shipowner to review
the Vessel's logs in order to provide the Shipowner with full
information regarding any casualties or other accidents or damage
to the Vessel, and to provide other information related to such
casualties as may be reasonably necessary.
(c) SURVEY. Upon delivery and redelivery, the parties
shall jointly conduct a detailed inspection and inventory of the
Vessel to determine physical condition including the state and
condition of the tackle, apparel, furnishings, equipage,
seaworthiness, running order and repair. A joint report of the
findings of each Inspection and Inventory shall be signed and
retained by both parties. This joint report shall at a minimum
discuss findings regarding the condition of all compartments,
machinery, equipment, and plating. Upon return of the Vessel to
the Shipowner, a similar joint inspection and inventory shall be
conducted. These joint reports shall be conclusive evidence as to
the physical condition of the Vessel at the time of delivery and
return except with respect to latent defects not observable upon
such inspection.
(d) INVENTORY. The Shipowner and the Charterer shall also
take a full and complete inventory of all government property
(including machine tools, portable tools, instruments and other
equipment) of the Shipowner on board the Vessel at time of
delivery to the Charterer.
The Charterer shall maintain a inventory tracking and
maintenance list describing the condition of the
property/equipment that is the property of the Shipowner.
(e) A SIMILAR INVENTORY SHALL BE CONDUCTED UPON RETURN OF
THE VESSEL TO THE SHIPOWNER. Unless otherwise directed by the
Shipowner, the Charterer shall promptly deliver on board the
Vessel such government property as shall be required to meet any
deficiency either as to quantity or quality disclosed by later
inventory, except for normal wear and tear. In the event the
latter inventory discloses an excess an excess quantity (not
quality) of government property (machine tools, portable tools,
instruments or other equipment), the Charterer may remove such
excess quantity and, in the absence of prompt removal thereof,
title to such excess quantity shall thereupon vest in the
Shipowner.
ARTICLE 15. FAILURE TO PERFORM
(a) The failure of the Shipowner to insist on any one or
more instances upon performance of any of the terms, covenants or
conditions of this Charter shall not be construed as a waiver or
relinquishment of the Shipowner's right to the future performance
of any such term, covenant or condition, and the Charterer's
obligation in respect of such future performance shall continue
in full force and effect.
ARTICLE 16. GRATUITIES
(a) The Shipowner may, by written notice to the
Charterer, terminate this Charter if it is found, after notice
and hearing, by the Secretary or his duly authorized
representative, that gratuities (in the form of entertainment,
gifts or otherwise) were offered or given by the Charterer, or
any agent or representative of the Charterer, to any officer or
employee of the Shipowner with a view toward securing a contract
or securing favorable treatment with respect to the award or
amending, or the making of any determinations with respect to the
performing of such contract; provided that the existence of the
facts upon which the Secretary or his duly authorized
representative makes such findings may be reviewed by any court
having lawful jurisdiction.
(b) In the event this Charter is terminated as provided
in paragraph (a) hereof, the Shipowner shall be entitled (i) to
pursue the same remedies against the Charterer as it could pursue
in the event of a breach of the Charter by the Charterer, and
(ii) as a penalty in addition to any other damages to which it
may be entitled by law, to exemplary damages in an amount (as
determined by the Secretary or his duly authorized
representative) which shall be not less than three or more than
ten times the cost incurred by the Charterer in providing, any
such gratuities to any such officer or employee.
(c) The rights and remedies of the Shipowner provided in
this clause shall not be exclusive and are in addition to any
other rights and remedies provided by law or under this Charter.
ARTICLE 17. COVENANT AGAINST CONTINGENT FEES
(a) The Charterer warrants that no person or selling
agency has been employed or retained to solicit or secure this
Charter upon an agreement or understanding for a commission,
percentage, brokerage, or contingent fee, excepting bonafide
employees or bonafide established commercial or selling agencies
maintained by the Charterer for the purpose of securing business.
For breach or violation of this warranty the Shipowner shall have
the right to annul this Charter without liability.
ARTICLE 18. RIGHT TO SUBLEASE OR ASSIGN
(a) The Charterer may "time"or "voyage" subcharter (oil
drilling contract) the vessel under this charter.
Provided that the express written consent of the
Contracting Officer is obtained, the Charterer may sub-bareboat
charter the vessel under this charter. Any such sub-bareboat
charter must be made upon such terms and subject to such
conditions as shall impose upon such subcharterers the
obligations of Charterer hereunder. Any such approved sub-bareboat charter
does not relieve the Charterer from its obligations and liabilities under
this Charter. This Charter may not be assigned or transferred by the
Charterer except with the express prior written consent of Contracting
Officer.
ARTICLE 19. PROTECTION OF THE ENVIRONMENT
(a) The Charterer shall comply with all Federal, state,
and local environmental laws and regulations in existence or that
may be hereinafter enacted that are applicable to the
transportation, operation, and maintenance of the Vessel.
ARTICLE 20. STATE AND LOCAL TAXES
(a) As required by 10 U.S.C. Statute 2667, in the event that as
a result of any future Act of Congress, the Vessel is subject to
taxation, assessments, or similar charges imposed by State or
local authorities upon the Vessel (other than upon the Lessee's
possessory or use interest therein), this Charter shall be
renegotiated.
ARTICLE 21. COST OF COMPLIANCE WITH THIS CHARTER
(a) Execution of this Charter by the Contracting Officer
imposes no obligation on the Shipowner, either directly or
indirectly, to pay for costs incurred by the Charterer to comply
with the terms and conditions of this Charter.
ARTICLE 22. DISPUTES
(a) Federal Acquisition Regulation (FAR) clause 52.233-I
entitled "Disputes (Oct 1995)" is incorporated by reference and
shall have the same force and effect as if fully set forth
herein.
ARTICLE 23. MEDIA INQUIRIES
(a) The Charterer shall refer all media inquiries
regarding past use and the potential military capabilities of the
vessel to the Office of the Deputy Assistant Secretary of the
Navy (Research, Development and Acquisition) for Ships Programs.
ARTICLE 24. CLAUSES INCORPORATED BY REFERENCE
(a) The FAR clauses listed below are incorporated by
reference and are made a part of this Charter with the same force
and effect as if set forth in full text. The complete text of any
or all of the clauses incorporated herein by reference may be
obtained upon request to the Contracting Officer.
CLAUSE NO. TITLE AND DATE
FAR SECURITY REQUIREMENTS (APR 1984)
52.204-2
FAR EQUAL OPPORTUNITY (APR 1984)
52.222-26
FAR AUTHORIZATION AND CONSENT (JUL 1995)
52.227-1
FAR INTEREST (JAN 1991)
52.232-17
DFARS DISCLOSURE OF INFORMATION (DEC 1991)
252.204-7000
DFARS DISCLOSURE OF OWNERSHIP OR CONTROL BY
THE
252.209-7001 GOVERNMENT OF A TERRORIST COUNTRY (SEP
1994)
DFARS DISCLOSURE OF OWNERSHIP OR CONTROL BY A
252.209-7002 FOREIGN GOVERNMENT (SEP 1994)
DFARS HAZARDOUS WASTE LIABILITY (OCT 1992)
252.223-7005
DFARS BUY AMERICAN ACT AND THE BALANCE OF
252.225-7001 PAYMENTS PROGRAM (JAN 1994)
ARTICLE 25. AMENDMENT
(a) Neither this Charter nor any provision hereof may be
amended, modified, waived, discharged or terminated orally, but
only by an instrument in writing signed by both parties.
ARTICLE 26, APPLICABLE LAW
(a) This Charter shall be construed and enforced in
accordance with and governed by the general maritime law of the
United States and so far as applicable federal law.
IN WITNESS WHEREOF the parties have duly executed this
Charter as of the date first above written.
UNITED STATES OF AMERICA
BY /s/ Jonathan B. Hall
Contracting Officer
Naval Sea Systems Command
GLOBAL MARINE CAPITAL INVESTMENTS, INC.
BY /s/ James L. McCulloch
Vice President
