Basic Agreement

1. Basic Agreement: Tower agrees to furnish the services of a seagoing tug (hereinafter called the “Tug”), whether singular or plural, to perform this towage service between places designated herein, at which places the Tug and Tow can safely lie afloat at all stages of the tide. Tower may, at any time during the course of this towage service, substitute another tug for the Tug which commences the towage service, provided only that if Owner’s or Underwriters’ approval is required for the designation of the original tug, such approval shall likewise be required for the substitute tug.

2. Towage Earned: Towage money shall be deemed to have been fully earned when the Tug commences the voyage, if prepaid shall not be returnable and, if invoiced, shall be payable on demand, Tow and/or its cargo lost or not lost. Towage money shall be paid no later than the date when the Tug commences the voyage, or as specified in any separate invoicing by Tower. Any sums not paid when due shall bear interest from the date when the services were provided at the rate of ten percent (10%) per annum.

3. Delay and Cancellation, Standby:

a) In the event the Tow shall be unable to commence the voyage for any reason for which neither the Tower nor the Tug is responsible, Owner shall pay the Tower the Tug’s applicable daily rates of hire or pro rata portion thereof, for all time consumed by the Tug from the hour of the day she reports for service until the voyage actually commences, and if the voyage does not commence, Owner shall pay Tower the Tug’s applicable daily rates of hire or pro rata portion thereof for all time consumed by the Tug from the time she departs from her base until the date of return to her base. If the Tug does not return directly to her base, the time of the return voyage shall be computed on the basis of the Tug’s normal running time to her base by the customary route or until she commences another voyage or service, whichever period is shorter.

b) If the Tug puts into port because the Master of Tug considers that the Tow requires repairs, alternations, additional equipment, or re-securing of the cargo in order to permit the Tow to be towed safely to its destination, or because of any other reason for which the Tow is responsible, Owner shall pay the Tower additional compensation, at the Tug’s applicable daily rates of hire or pro rata portion thereof for all the time spent in such port, for all time consumed by the Tug in excess of the time which would have been consumed had such putting in not take place. See Para. 3(e) which is applicable to the situation requiring salvage services.

c) If after commencement of the voyage the Tow is damaged but not to the extent it requires salvage services to save the Tow and/or its cargo from sinking or destruction threatened or actual, or Owner elects to cease the towing venture at any intermediate port, Owner shall pay Tower the Tug’s applicable daily rates of hire or pro rate portion thereof for all time consumed by the Tug including returning to its designated base. If the Tug does not return directly to her base, the time of the return voyage shall be computed on the basis of the Tug’s normal running time to her base by the customary route or, if mutually agreed by Tower and Owner, the Tug’s actual running time to a port designated by agreement for termination of service.

d) In the event the Tug is delayed from entering the port of destination because of low water, obstructed or closed channels or harbors, or because of Owner’s failure to provide a suitable berth for, or otherwise fails to release the Tug promptly, Owner shall pay Tower additional compensation for the period of the Tug’s delay at the port of destination at the Tug’s applicable daily rates of hire or pro rata portion thereof. Owner shall also pay to Tower additional compensation at the Tug’s applicable daily rates of hire or pro rata portion thereof for any delay to the Tug caused by ice conditions, bar conditions, or any other navigational hazards causing such delay.

e) Without being compelled to do so, if Tower, at its option and whether or not assist tugs are hired for the account of the Owner, performs salvage operations on behalf of Tow to save it from sinking or otherwise threatened with destruction or loss, or if the cargo is about to be lost, if such salvage services are performed by Tower, whether successfully or not, Owner of Tow and/or cargo shall pay to Tower for such services at a daily rate of three times the daily rate set forth herein., or pro rata portion thereof, for towage services. Tower shall have a maritime lien for its salvage services in addition to Tower’s maritime lien for its towage services. Any assist tug not owned by Tower shall be compensated by Owner according to any arrangements made between Owner and the owner of said assist tug.

f) If at any time before, during or after the time that the towing services are performed as herein provided, the Tug is required by the circumstances then obtaining to remain on scene but Tower removes the crew (though there is no obligation to do so), then the rate indicated on p. 1 of 10 for “unmanned standby rate (tug only)”, shall apply.

4. Hawsers: Tower shall furnish the use of all towing hawsers necessary

for the towage service.

5. Owner to Prepare Tow, Cargo:

a) Owner warrants that the Tow shall be seaworthy and in all respects ready for and capable of making the specified voyage, and shall be properly and sufficiently equipped, including, among other things, proper and sufficient lights, towage shape, surge chain and bridle and towing bits. Owner shall comply with any additional requirements imposed by

underwriter’s surveyors. Owner agrees to indemnify and hold Tower and the

Tug harmless against any loss, damage, or liability arising out of or contributed to in any way by non-seaworthiness of the Tow, or by any deficiency in or failure of its equipment.

b) If cargo is loaded aboard the Tow, the packaging, suitability for transport, stowage, securing, and lashing of the cargo shall be the sole responsibility of the Owner. Owner undertakes to comply fully with any and all requirements imposed by underwriters of the Tow or its cargo, or by surveyors for such underwriters, and agrees to save and hold Tower and Tug harmless from and against any claim, demand, or liability in respect of cargo. No personnel of Tower or of the Tug shall have any duty or responsibility with respect to inspection, seaworthiness or suitability of the Tow or of the cargo for the voyage. If any such person shall participate in decisions or recommendations relating to the cargo, such acts shall be as special servant of the Owner for such purposes.

c) Owner shall pay Tower additional compensation at the Tug’s applicable daily rates of hire, or pro rata portion thereof, for any delay or deviation caused by insufficiency of packaging, stowage, securing and lashing of cargo, or non seaworthiness or failure of the Tow for which the Tower or Tug is not responsible.

6. Export: Tower shall not be responsible for any consequence arising

through any act or error in connection with export declaration for the tow or cargo. Any penalty incurred by Tower by reason thereof shall be for the account of the Tow, and its owners.

7. Liberties: The Tug shall have liberty to go to the assistance of vessels in distress for the purpose of saving of life or property, call at any port for fuel, repairs, supplies, or other necessities, or to land disabled seamen; but time lost by the Tug under such circumstances shall not entitle the Tower to claim additional compensation from the Owner except as otherwise provided in Section 3(b). Unless expressly excluded herein, Tower shall have the right to tow more than one towed vessel, whether in tandem or by any other method which the Tower deems proper.

8. Lien for Charges: Tower shall have a maritime lien on the Tow

and any cargo laden aboard it for the full towage charge and for all additional compensation and charges due it under this agreement, including collection costs and expenses. Owner shall be liable in personam for attorney’s fees and any charges not entitled to a maritime lien. The lien of Tower herein shall survive the relinquishment of possession of the Tow and/or its cargo to the Owner and/or any party designated by it.

9. Extension of Benefits: The Tower, the Tug, the Tow and their owners, operators, agents, or charterers shall have the benefit of all exemptions from, and limitations of liability to which an owner of a vessel is entitled under the Limitation of Liability statutes of the United States. This Agreement, except for salvage services as provided for in Para. 3(e), shall be construed as a contract for towage service. This Agreement shall not be construed as a charter of the Tug or be or give rise to a personal contract. It is expressly understood and agreed that this Agreement shall not give rise to nor shall it be construed to embrace any implied or express warranty of workmanlike service.

10. Other Charges: All survey fees, port charges, pilot fees, agency fees, taxes (including Federal Transportation Tax and waterways/port taxes or imports where applicable), dues, duties, required import charges or required clearance or entry permits for the Tow, and other expenses upon or in connection with the Tow and Tug, including all services of assisting Tugs, shall be for the account of the Owner. To the extent to which the failure of Owner to comply with this Section, or to secure the approval of any cognizant governmental agency with respect to the operation of the Tow causes or occasions any delay to the Tug, Tower shall be compensated therefore at its applicable daily rate of hire, or pro rata portion thereof.

11. Insurance:

a) The Owner of the Tow shall obtain at its expense and keep in full force and effect throughout the life of this Agreement, in good and solvent companies, full form American Institute Time Hulls (or equivalent) hull and machinery insurance, and Protection and Indemnity insurance (International Club Rules or SP 23 form or better) on the tow and all floating equipment towed hereunder, and full form marine cargo insurance on all cargoes to be transported in or on the Tow to the full insurable values thereof, naming Tower and the Tug as additional assureds and having all rights of subrogation or action under loan receipt waived by all underwriters against Tower, its vessels, their owners, operators, agents, managers, charterers, and parties in interest therein. All deductibles under said policies are for Owner’s account without assessment or claim against Tower.

b) Owner represents that it has complied with all directives of any environmental quality control agency or agencies having jurisdiction over activities on the waters involved under this Agreement, that all necessary permits have been obtained, and that appropriate financial responsibility assurances and insurance policies have been procured, protecting Owner against its liabilities to all state and federal agencies and third parties for pollution damage and cleanup. Coverage shall be at least equal to the standard policy form prevailing under International Club Rules. The limits of liability of such insurance shall not be less than the minimums provided under International Club Rules or as required by applicable state and federal statutory minimum limits of liability in all areas of operation. Tower and the Tugs shall be named as additional assureds in all such policies with full waiver of subrogation or action under loan receipt in favor of Tower, its vessels, their owners, operators, agents, managers, charterers, and parties in interest therein.

c) If the cargo carried, or the transportation undertaken by Owner, is within the Scope of the Tanker Owner’s Voluntary Agreement Concerning Liability for Oil Pollution (TOVALOP), then Owner shall cause the towed vessel to be enrolled as a member of TOVALOP along with Owner. All costs and obligations associated with membership of TOVALOP for the towed vessel shall be for Owner’s account and Owner shall indemnify and hold Tower harmless for and from all costs, obligations and liabilities associated with the same. Owner shall pay any deductible or assessment under TOVALOP.

d) It is understood and agreed that in the event of any claim for any loss or damage which would have been or is covered by the insurances specified in subsections “a” and “b” above, Owner of the Tow and/or cargo, if any, will look exclusively for the payment of any such claim or claims to any third party or parties who may be found to be responsible for such loss or damage, or the underwriters on the insurances specified in Section 11, as the case may be, and not otherwise, it being the intent hereof that all liabilities of the Tower, its agents, employees, servants, and the towing vessel arising out of this Agreement shall be and are covered by appropriate insurances, the rates prescribed for the towage herein having been predicated upon this basis.

e) In the event that the Owner of the Tow and/or the cargo aboard, if any, shall elect to procure additional insurance other than those specified herein, it or they agree to name Tower as an additional assured with full waiver of subrogation as respects to Tower and the towing vessel.

f) Proper evidence of required insurance coverage and the naming of Tower as additional assureds with waiver of subrogation shall be furnished to Tower prior to commencement of the tow. In the event the Owner of the Tow and/or cargo aboard it, if any, shall elect to move the Tow without the insurances specified above, and Tower agrees thereto, it or they shall so notify the Tower, and by such notice they shall be deemed to be self-insurers and parties in interest, and any and all claims for loss of or damage to said Tow, and/or the cargo thereon and claims of third parties which would otherwise have been covered by the insurances specified in the preceding Sections, shall be the responsibility of Owners and cargo owners. With or without such notice, Owner shall be deemed to be self-insured as to all deductibles under the insurances specified in the preceding Sections.

g) The insurances specified above shall be primary to all other insurances which the Tower and/or the Owner shall carry as respects to the towing vessel, the Tow and/or cargo laden aboard the tow (if any), and none of the “such other insurances” shall be required to contribute, pro rata or otherwise, to any claim or claims for loss of or damage to the towing vessel, the Tow and/or cargo laden aboard the tow, or to claims of third parties failing under the Protection & Indemnity policy referred to above.

12. Notice of Claim: Unless notice of loss or damage and the general nature thereof be given in writing to the Tower or its agent at the port or place of destination within 48 hours after delivery of the Tow to the port or place designated herein, such delivery shall be deemed to be prima facie evidence of the delivery of the Tow and any cargo laden aboard it in good order and condition. Tower and the Tug shall be discharged from all liability in respect of loss or damage claims arising under this Agreement unless suit or action is brought within thirty (30) days after delivery to the tow and cargo aboard it, if any, or within thirty (30) days after the date when the tow and cargo aboard it, if any, should have been delivered.

13. General Average: In the event of accident, danger, damage, or disaster before or after the commencement of the towage service resulting from any cause whatsoever, whether due to negligence or not, for which or for the consequences of which the Tower or the Tug is not responsible, by statute, contract or otherwise (including, without limitations, non-responsibility by virtue of the insurance provision set forth above in Section 11), the Owner of the Tow and/or of the cargo aboard it, if any, shall contribute with the Tower in general average to the payment of any sacrifices, losses, or expenses of a general average nature that may be made or incurred, and shall pay salvage and special charges incurred in respect to the venture. Salvage services or assistance rendered to the venture by another vessel owned by or in service of the Tower shall be paid for according to Tower’s salvage rate per 3(e) above as fully as if such vessel were owned by or in the service of strangers.

14. Both-To-Blame Collision: If the Tug and/or the Tow come into

collision with another vessel or structure as a result of negligence of the other ship or structure and/or due to any negligence or other fault on the part of Tower or its servants or subcontractors, Owner agrees to indemnify Tower against all loss or liability to the other or non-carrying vessel or structures or their owners, insofar as such loss of liability represents loss of, or damage to, or any claim whatsoever of the Owner of the Tow, or any claim of the owner of cargo carried aboard the Tow, paid or payable by the other or non-carrying vessel or structure or their owners to the Owner of said Tow or cargo, and setoff, recouped or recovered by the other or non-carrying vessel or structure or their owners as part of their claim against the Tug or the Tow or the owner or operator of either. The foregoing provisions shall also apply where the owners, operators, or those in charge of any vessel or objects other than, or in addition to, the colliding vessels or objects are at fault in respect of a collision or contact.

15. Liability: Neither the Tower nor the Tug shall be responsible for any loss or damage, or delay or failure in performing hereunder arising from: act of God, act of war, act of public enemies, pirates or thieves, arrest or restraint of princes, rulers, dictators, or people, or seizure under legal process (provided bond, if required, is promptly furnished to release the Tug); strikes or lockouts or stoppages or restraints of labor from whatever cause, either partial or general; or riot or civil commotion.

16. No Consequential Damages: Except as provided for herein, neither the Owner, the Tower, their vessels, nor their owners, operators, agents, managers, charters, and parties in interest therein shall in any event be responsible for consequential, indirect, or special damages, including without limitation, extra expense, loss of profits, loss of use of property, delay, or damages consequential upon loss of use, whether resulting from negligence or breach of this contract by Owner, Tower, the Tug, or any such person, entity, vessel, or otherwise and even if the possibility of such damages is or was foreseeable by Owner, Tower, or any such person or entity.

17. Place of Suit: Any suit between the parties shall, to the extent there is subject matter jurisdiction in the U.S. District Court, be filed in the U.S. District Court for the Northern District of California in San Francisco. Such action shall be before a District Judge, not a Magistrate Judge. If no Federal subject matter jurisdiction, then suit may be filed in the California Superior Court for the City and County of San Francisco, or Contra Costa County or Marin County, depending on which is the proper venue for the case. The parties agree to accept service of process by certified U.S. mail, return receipt requested. Addresses for mailing shall be as set forth in this Agreement and if not, then the mailing shall be directed to the attorney for that party or to the business address of the party. Failing a business address, then the mailing shall be to the party's residence. The parties do not agree to arbitration.

18. Attorney Fees: Owner agrees to pay Tower’s reasonable attorneys’ fees and collection costs incurred to collect sums due from Owner or to enforce any right possessed by Tower under this Agreement, even though no suit or action is filed hereon; however, if suit or action is filed, the amount of such reasonable attorneys’ fees at trial, or appeal, shall be fixed by the Court. Such award may include attorneys’ fees as may be incurred in collection of any judgment rendered, as well as deposition costs and fees of expert witnesses engaged in any such action. Should there be other disputes between the parties hereto and a suit be filed, the prevailing party shall be entitled to reasonable attorney fees, expenses and costs as set by the Court.

19. Complete Integration: This Agreement represents the final and complete agreement of the parties for the towage service undertaken, and all prior written and oral statements, representations or agreements with respect to the towage service are superseded by and full integrated into this Agreement.

20. Modification: This contract cannot be modified except in writing signed by all parties hereto.

21. Owner’s Acceptance of Towage agreement:

I have read page (1) through (10) and understand and accept the Terms and Conditions set forth in this Agreement.