LAW OFFICE OF ARNOLD J. CESTARI, JR.

LAW OFFICE OF ARNOLD J. CESTARI, JR. P.O. BOX 821 hTTAPOISETT, NA 02719 Arnold J.Canaar. Auomark Gould May 1, 2014 VIA EMAIL ONLY: LSJE, LLC 6100 Red Hook Quarters Suite 3B St. Thomas, VI 00802-1348 RE: Salvor. Sea Tow Virgin Islands Yacht: LITTLE C Date of Service: April 25 & 26, 2014 Claim for Salvage Assistance Dear Mr. Vicars: Telephone: Facaimile: e-mail This office serves as Sea Tow US Virgin Islands' salvage claims administrator and with this letter submits Sea Tow's claim for marine salvage of the Pro Sport 3660 LITTLE C(the "Yacht.") As you will recall, on April 25, 2014, the Yacht ran aground on the rocks at Great St. James Island, was holed and needed pulling power to get off ground. Sea Tow responded to the scene and pulled the Yacht off the rocks, plugged the hole to slow the ingress of water then provided a pump and 4,000- lb. air lift bag to ensure she made it to the ramp afloat for haul out. Under the circumstances, the service provided by Sea Tow falls within the classification of no cure-no pay pure salvage. To be entitled to a pure salvage award, the salvors must prove three elements: that the Yacht was in peril and needed assistance; that the salvors came to her aid voluntarily, and that the salvors' service saved the Yacht in whole or in part. All three elements were present here. Therefore, the salvors are entitled to salvage compensation. Compensation for pure salvage is dependent upon the facts of each particular incident. Unlike towage, salvage is not based on time and material charges. Rather, it is governed by federal maritime law and since 1869 the well-settled law outlines six factors used in the calculation of a salvage award.'/ Those factors are listed in descending order of importance as follows: the degree of danger from which the ship was rescued; the post casualty value of the property saved; the risk incurred in saving the property from impending peril; the promptitude, skill and energy displayed in rendering the salvage services; the value of the property employed by the salvors and the dangers to which it was exposed and the costs in terms of labor and materials expended by the salvors in rendering the 'I See The Blackv.all, 77 U.S. at 13-14, 2002 AMC at 1814-15. EFTA00621082 LSJE, LLC Attn: Mr. Daniel F. Vicars May 1, 2014 Page No. 2 services. These factors were adopted by the International Convention on Salvage in 1989 and since then Article 13 of the Convention sets forth the criteria used to determine a pure salvage reward as follows: 1. The reward shall be fixed with a view to encouraging salvage operations, taking into account the following criteria without regard to the order in which they are presented below: a. the salved value of the vessel and other property; b. the skill and efforts of the salvors in preventing or minimizing damage to the environment; c. the measure of success obtained by the salvor; d. the nature and degree of the danger; c. the skill and efforts of the salvors in salving the vessel, other property and life; f. the time used and expenses and losses incurred by the salvors; g. the risk of liability and other risks run by the salvors or their equipment; h. the promptness of the services rendered; i. the availability and use of vessels or other equipment intended for salvage operations; and j. the state of readiness and efficiency of the salvor's equipment and the value thereof. In applying the above criteria to the facts here to determine the compensation sought, Sea Tow estimated the salved value of the Yacht and her engines at approximately 5140,000 based upon a pre- loss value of $170,000 and estimated repair costs of $30,000. If this estimated post loss value is incorrect, please let us know the actual pre-loss value and cost of repairs as soon as possible and the award sought will be adjusted accordingly. As to the skill and efforts ofthe salvors in preventing or minimizing damage to the environment, by refloating the Yacht before she broke apart under her own weight on the rocks, Sea Tow averted the potential liability of a fuel spill. As to the measure of success obtained by the salvors, that the Yacht made it to the haul out ramp afloat with a post loss value of $140,000 is the best evidence of their success. As to the nature and degree of danger, under maritime law, a vessel that is aground and unable to off ground without aide is presumed to be in a dangerous position as she is at risk of further destruction. In this case, when the Yacht ran aground, she became holed and was stranded high and dry on the rocks. For as long as the weight of the Yacht was not supported by the water, the hull was at risk of breaking apart. In many grounding situations, although a vessel does not possess sufficient buoyancy to float itself free, there can be enough buoyancy that when acted upon by wind and waves the vessel will momentarily be lifted completely or partially off ground and then come back into contact with the bottom as the influence of the swell or wind withdraws from the vessel. This condition, commonly referred to as "pounding," is a significant danger to any vessel in a grounding situation. Therefore, it is reasonable to assume had the Yacht remained on the rocks for an extended LAW OFFICE OF ARNOLD J. CESTARI, JR. PO BOX S2I MATTAPOISITT. MA 12737 EFTA00621083 LSJE, LLC Attn: Mr. Daniel F. Vicars May 1, 2014 Page No. 3 time, pounding forces would have eventually caused further structural damage. Instead, Sea Tow refloated the Yacht before further damage was sustained. Once the Yacht was floating free in deep water, as expected, she quickly began taking on water through the hole in the bow and the nature of the peril shifted from breaking apart on the rocks to sinking in deep water. Time being of the essence to get the Yacht out of the water, as soon as they pulled her off ground, the salvors deployed a high capacity 2-inch gas pump to remove water overboard and dove to plug the hole in the starboard bow with soft patching material to slow the ingress of water. Then, recognizing it was the fastest way to get ashore, the Yacht made way under her own power toward the haul out ramp. During the run to the ramp, the Yacht continued to take on water and was intentionally beached on a soft bottom in shallow water and the salvors rigged a 4,000-1b. air lift bag under the stem to support the weight of the engines while she continued toward the nearby ramp. Based on the foregoing, there can be no doubt the Yacht was exposed to many risks from breaking apart to sinking and but for the salvors' prompt intervention the outcome would have been much different. Regarding the skill and efforts of the salvors in salving the Yacht, over the course of the operation, six salvors responded to the scene onboard two specially equipped salvage vessels. The salvors worked efficiently to refloat, plug and pump the Yacht to ensure she made it to the haul out ramp afloat. It was the salvors' skill and efforts that saved the Yacht from sustaining added structural damage to her hull and water damage to her engines. As to the time involved, from dispatch to demobilization, the salvors dedicated about eight hours to this undertaking. As to the risk of liability and other risks run by the salvors and their equipment, the dangers were among the many risks salvors are exposed to when providing salvage including the risk of injury while working around taunt lines that often snap, cleats that break free under the strain of pulling a vessel off the rocks and diving below grounded vessels in the vicinity of rocks to assess damage and make temporary repairs. The risk to the salvors ranged from slight to high during various stages of the undertaking. The salvors' vessels were also at high risk of sustaining damage by going in and around the rocks in the dark to assist the Yacht. As to the promptness of the services rendered, Sea Tow received the call for help at approximately 2230 hours. A crew was immediately Sled in to respond to the scene and the salvors arrived alongside the Yacht by about 2315 hours. As to the availability and use of vessels or other equipment intended for salvage operations, a total of six salvors, including licensed captains, certified divers and deckhands participated in the operation. Also, two specially equipped commercial salvage vessels with pumps, patching material, air lift bags and standard gear needed in salvage operations responded to the scene. The two vessels have a combined value of about $130,000. Had the situation worsened, the salvors had additional vessels and equipment available nearby, including pumps, patching material, dive gear, air lift bags, compressors, generators and miscellaneous salvage gear and materials, plus sea spill trailers containing readily available spill and containment materials used to respond to, contain and clean up fuel spills if needed. LAW OFFICE OF ARNOLD J. CESTARI, JR. M3 Box 82I MAITAPOISETT. MA 02739 EFTA00621084 LSJE, LLC Attn: Mr. Daniel F. Vicars May 1, 2014 Page No. 4 Based on the above factors, the salvors seek a salvage award of $33,600, 24% of the $140,000 estimated salved value. Keep in mind, but for the salvors' prompt intervention, the cost of repairs and/or replacement, plus possible wreck removal, pollution containment and clean up would have far exceeded the amount sought by the salvors for what they saved. Since salvage is generally covered by most hull insurance policies, I suggest that you forward a copy of this claim to your marine insurer, if any. In the meantime, please contact our office if you need further information or have any questions regarding the claim or salvage in general. Finally, photographs taken and the documents signed at the time of the salvage are attached here in support of the salvage claim. I look forward to speaking with you or your agent soon. lai rd7 Amol J. Cestari, r. Attachments 1. MARSALV Agreement 2. Log and Job Invoice No.904002001 3. Photographs LAW OFFICE OF ARNOLD J. CESTARL JR. PO BOX 121 MATTAPOISETT. MA 82739 EFTA00621085 The Society of Maritime Arbitrators, Inc U.S. OPEN FORM SALVAGE AGREEMENT Codename - MARSALVe This SALVAGE AGREEMENT ("The Agreement), between L. in l• NY4t). ") Master and/or Owner and/or Underwriter of the vessel Lrrri—tb e ('The Vessel") and • ("The Salvo?), is for salvage services rendered or to be rendered to the Vessel. her cargo and other property currently lying at or near 5.••-.4••• n , under the following terms and conditions: FIRST: The Salvor shall use his best endeavors to salve the Vessel, her cargo and other property and deliver same safely afloat, hauled or drydocked at or noar 7r " S7 141-tos) r i ;.•.t4.0 at which place and time the Salvors services will terminate unless otherwise mutually agreed. SECOND: The Master and crew of the Vessel agree to lend their aid and assistance to the Salvor, who shall be entitled. free of expense, to the reasonable use of the Vessel's equipment. THIRD: The Salvor's services are to be performed on the following basis (check and inklal): 0 No Cure-No Pay (Compensation to be conditioned upon successful salvage of the Vessel and/or her cargo and/or other property. In such case, the Salvors compensation shall be pursuant to the criteria and other provisions of Article 13 of the 1989 International Convention on Salvage shown on the reverse of this Agreement). E No Curo-No Pay, Find Foo s E. Per Diem/Hourly at $ per day/hour pro rata E Other pa 2,7, FOURTH: Notwithstanding the election(s) made in Paragraph THIRD, the Salvor shall in any event be entitled to compensation for actions he takes to prevent or minimize damage to the environment, pursuant to Articles 13 and 14 of the 1989 International Convention on Salvage shown or, the reverse of this Agreement. FIFTH: The Salvor shall have a lien upon the Vessel, her cargo and other property for services rendered pursuant to Paragraphs THIRD and FOURTH. and his statement for services rendered shall be submitted as promptly as possible after completion or termination of such services. In lieu of arrest or attachment of the Vessel the Salvor may demand reasonable security for such services from the Vessel and cargo interests as a condition for releasing same. SIXTH: This Agreement shell be governed by and construed in accordance with the Federal Maritime Law of the United States. Any dispute arising out of this Agreement shall be referred to arbitration in the United States in accordance with the applicable Arbitration Rules of the Society of Maritime Arbitrators, Inc. The Arbltrabor(s) shall be familiar with maritime salvage. Any award made hereunder may include interest, attorneys fees and costs, and shaft be final and binding. For the purpose of enforcement the Award may be entered for judgment in any court of competent jurisdiction. Dated this day of /1P,i2t.,_ For SALVOR ) (au onzed signature) /IL-A(.." k (ti rierirAvii,71/ 20 For VESSEL. CARGO and PROPERTY All (authorized signature) Ive4etM.f ,e tJ (print name and title) (print name and title) wee, salvor . Mauer/Owner. Pink: 1/edema:sr 611998 SOGety of Menem, AZDIUMOtt, Inc. Rev. 1999 EFTA00621086 INTERNATIONAL CONVENTION ON SALVAGE, 1989 . Article 13 Criteria for Fixing the Reward 1.The reward shall be fixed with a view to encouraging salvage operations, taking into account the following criteria without regard to the order In which they are presented below: (a) the salved value of the vessel and other' roperty; (b) the skill and efforts of the salvors in preventing or minimizing damage to the environment; (c) the measure of success obtained by the salvor; (d) the nature and degree of the danger (e) the skill and efforts of the salvors in salving the vessel, other property and life; (1) the time used and expenses and losses incurred by the salvors; (g) the risk of liability and other risks run by the salvors or their equipment; (h) the promptness of the services rendered; () the availability and use of vessels or other equipment Intended fbr salvage operations; 0) the state of readiness and efficiency of the salvor's equipment and the value thereof. . . , • 2. Payment cif a reward fixid according to paragraph I shall bimade by all et the vessel and Other property Interests In proportion to their respective salved values. Howevei, a StOte Rails; Siin -Its national law provide that the piaitnieitt. of a reward has to be made by one of these interests, subject to a right of recourse of this Interest against the other Interests for their respective shares. Nothing in this article shall prevent any right of defence. 3.The rewards, exclusive of any interest and recoverable legal costs that may be payable thereon, shall not exceed the salved value of the vessel and other property. Article 14 Special Compensation 1. If the salvor has carried out salvage operations in respect of a vessel which by itself or its cargo threatened damage to the environment and has failed to earn a reward under article 13 at least equivalent to the special compensation assessable in accordance with this article, he shall be entitled to special compensation from the owner of that vessel equivalent to his expenses as herein defined. 2. If, in the circumstances set out in paragraph 1, the salvor by his salvage operations has prevented or minimized damage to the environment, the special compensation payable by the owner to the salvor under paragraph 1 may be increased up to a maximum of 30% of the expenses incurred by the salvor. However, the tribunal, if it deems it fair and just to do so and bearing in mind the relevant criteria set out in article 13, paragraph 1, may increase such special compensation further, but in no event shall the total increase be more than 100% of the expenses incurred by the salvor. 3. Salvor's expenses for the purpose of paragraphs 1 and 2 means the out•of-pocket expenses reasonably incurred by the salvor in the salvage operation and a fair rate for equipment and personnel actually and reasonably used in the salvage operation, taking into consideration the criteria set out in article 13, paragraph 1(h), (I) and (j). 4. The total special compensation under this article shall be paid only if and to the extent that such compensation is greater than any reward recoverable by the salvor under article 13. S. If the salvor has been negligent and has thereby failed to prevent or minimize damage to the environment, he may be deprived of the whole or part of any special compensation due under this article. 6. Nothing in this article shall affect any right of recourse on the part of the owner of the vessel. EFTA00621087 Sea Tow Virgin islands 8168 Crown Bay Manna, ST t 310 - PM$ 229 St. Thomas. 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Canes ircutiM shall constitute a salvors plenty end option's' hem span 414 Stig'S behalf 0 , esonOr Use assisted oeSSCL LLSVCRLER ,o'ae. 10 pay rutad Charlet and n the not of am milealen PrOCeduce, nth ding artiMITIO , made .ects,a, be -resell and all Cott BOOM. 011 Property on bond the moat, aid an fragM or*" 0`410111e 1R AO, "n respect Wtic cola! SALVOR 4.100t. nor ink of om hacerdodY. SALVOR hes authon to /stars estrovve pease on of the vane', Its hat tetMdoes. tarn ana (Menai cd'eut aboeol until lull payment is nolo. wended ovate Costs skein; any ceded el rot hae. SALVOR has the authority to cos. Jo wept he deems mateoggig of ocomoory to soon n oonl.:n rage. and at contras, and this does not displace Custonees menet Ode to die-Ooso >llMks a opened miles that May beat .pen sentitot and to p'aanly sense ell items aboard prier to COMPOVICOMOM of any :Mittel and tnemalta Vern MR need ides Custonm Avers I41t1r1eud ano hereby indcmrifit$ and holds Reno- lest Su Wit in Van servants of &Mom ant Sell/ON SentiCeS Mternadcat toe gINIMIOVeS-1 (Of if MO au dams:CMOS to Or amine Out of ShOlieh tadudeng expenses, corn km. anommt fees. U emaciated IltrOW1111. and hablhoes otnert and hereby tenet ell dams against metoritits indedee negligence (but not von neghatorta. ano roofers, otnam. moat to the um taut nett, cargo or wham.. *to praola, e sects.. h ammo o all cone tenet s. LOS, 00RLO shwa en any enworoantel damage in Ana pofebon of :rotsoul eithe mleed its seam ee omega Al Owe we/ ..///t doe and psysble anmeemely. satvOR shall an 'nen: tame ei pet month Can annual rate of I Ran vs any holaner don one 30 OWL ' , Pot reo Whether contested Any ceno>mnya des n amino eV of nr having in tint agraernve of the hooch ;hoot Mall be hod and/or Jemmied (as INICSSO may be) CO Feder la Coon Or la 6Ynatirforn foie and Went arblUatkok et 10 a :Obi :able aunsentlea ucor SaWORsdnieContri Imam elordon. which Mal be Mai and binding, In Peel An% the chamosn o/ mord and/ea tornprnanon due SALVOR, he coat MT arbdiatorsistaal apply the Criterid 101 NOSS an swan under A/MI*11O1th( MSS Salvage Centennen or the CrileISI1O1 damming space, comensarten ter SALVOR as set forth In ArtIOn 2/4 of Use IMP Salvage Eortelmen• or WPen•nikli autheflty, or art tt snot IYOWtotielt. n w.04 dente With lbet ea the mans venue The w rd sesol- be tented boa Jodonoi aping CUSTOMER a ever/ Cam 0' amoeba modicum. Admecagen. innate-Po of venue, Mal be rendered n anemone wah I edvel Genera Mar:tine Law of Snag* than in force and attract and this Ameement than toms Mall govern; minces rendered 'ha contadOSALUOIrt tollanca inseam anO CUSTOAnothownem 'Non. I HAVE FULLY READ, UNDERSTAND AND AGREE TO THE TERMS AND CONDITIONS AS ABOVE WRITTEN. CUSTOMER X DATE SEA TOW QTY DESCRIPTION RATE TOTAL Hours of Sea Tow On-The-Water Assistance Towboat Timor P.,..„,g,...ss.,..,,,....._,.-.... tat. de--- S£A TOW MEMBER TOTAL INVOICE SUBTOTAL: SAVED: CHARGES: v 5 A maSTOt CARD MOE Oecovu CAS,. Cofer ShrxraleMwMOa • ____ _ — aA• C C°O4 ', x00. TO I HEREBY ACKN WLEDGE TI.IE. Sytl / TIS ACTORY COMPLETION OF THE ABOVE WORK AND ACCEPT RESPONSIBILITY OF THE CHARGES FOR THE WORK. CUSTOMER Lamleet-ca DATE PRINT NAME DATE Aid it-air.. WWI -Vaiwittn EFTA00621088