S/S KNIGHT
PRODUCT TANKER CONTRACT
for
AMERICAN HEAVY LIFT
SHIPPING COMPANY
AVONDALE JOB NO. C5-80B
May 1995
AVONDALE INDUSTRIES, INC.
Page
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ARTICLE I DEFINITIONS 2
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ARTICLE II GENERAL STATEMENT OF WORK 4
AND CONTRACT PRICE
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ARTICLE III CONTRACT GROUP 6
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ARTICLE IV ITEMS FURNISHED BY 6
PURCHASER
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ARTICLE V SPECIFICATIONS, 13
INTERPRETATION
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ARTICLE VI PAYMENT OF CONTRACT PRICE 14
- METHOD OF PAYMENT
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ARTICLE VII CHANGES 16
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ARTICLE VIII RIGHTS TO DESIGN DATA 19
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ARTICLE IX EXTENSION OF TIME FOR 20
COMPLETION OF WORK
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ARTICLE X PERFORMANCE STANDARD 24
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ARTICLE XI CONTRACT PRICE 24
ADJUSTMENTS
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ARTICLE XII SCHEDULES 27
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ARTICLE XIII INSURANCE 28
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ARTICLE XIV RISK OF LOSS - TOTAL LOSS 34
OF A VESSEL
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ARTICLE XV INJURY TO EMPLOYEES AND 36
OTHERS
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ARTICLE XVI APPOINTMENT OF 39
REPRESENTATIVES
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ARTICLE XVII MATERIALS AND 39
WORKMANSHIP
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ARTICLE XVIII INSPECTION - APPROVAL OF 40
DRAWINGS
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ARTICLE XIX TRIALS 42
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ARTICLE XX ADDITIONAL TRIALS - 43
EXPENSES
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ARTICLE XXI ACCEPTANCE AND 43
DELIVERY OF THE VESSEL
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ARTICLE XXII GUARANTEE 46
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ARTICLE XXIII DEFAULT BY PURCHASER 49
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ARTICLE XXIV DEFAULT BY BUILDER 51
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ARTICLE XXV ACTION BY BUILDER UPON 53
DEFAULT BY PURCHASER
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ARTICLE XXVI ACTION BY PURCHASER UPON 56
DEFAULT BY BUILDER
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ARTICLE XXVII TITLE 58
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ARTICLE XXVIII LIENS 59
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ARTICLE XXIX TAXES 60
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ARTICLE XXX PATENT INFRINGEMENT 60
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ARTICLE XXXI ASSIGNMENT OF CONTRACT 61
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ARTICLE XXXII COMPUTATION OF TIME 61
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ARTICLE XXXIII BUILDER TO COMPLY WITH 62
LAWS AND REGULATIONS
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ARTICLE XXXIV APPLICABLE LAW 62
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ARTICLE XXXV NOTICES 63
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ARTICLE XXXVI ARBITRATION 64
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ARTICLE XXXVII CONSEQUENTIAL DAMAGES 66
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MISCELLANEOUS 67
ARTICLE XXXVIII
EXHIBITS:
EXHIBIT A - SPECIFICATIONS (NOT ATTACHED)
EXHIBIT B - PROGRESS REPORT (NOT ATTACHED)
EXHIBIT C - BUILDER'S RISK POLICY FORM (NOT ATTACHED)
EXHIBIT D - CHANGE ORDER PROCEDURE (NOT ATTACHED)
EXHIBIT E -BUILDER'S CERTIFICATE OF INSURANCE (This
certificate will be furnished prior to the Effective Date of the
Agreement) (NOT ATTACHED)
EXHIBIT F -PURCHASER'S CERTIFICATE OF INSURANCE (NOT ATTACHED)
EXHIBIT G -SUBCONTRACTOR INSURANCE REQUIREMENTS (NOT ATTACHED)
EXHIBIT H-TITLE XI COMMITMENT LETTER OF 6 FEBRUARY 1995 BY MARAD
TO PURCHASER (NOT ATTACHED)
EXHIBIT I - CREDIT SUPPORT AGREEMENT (NOT ATTACHED)
EXHIBIT J - SALE AND PURCHASE AGREEMENT FOR THE STERN (NOT
ATTACHED)
PRODUCT TANKER
FOR
AMERICAN HEAVY LIFT SHIPPING COMPANY
THIS CONTRACT, (the "CONTRACT") initially entered into on
the 12th day of October, 1994, which is hereby revised,
superseded and resigned after having been adjusted to conform to
the Title XI guarantee and financing requirements, is entered
into by and between American Heavy Lift Shipping Company, a
corporation organized under the laws of the State of Delaware,
having offices at 365 Canal Street, Suite 2670, New Orleans,
Louisiana 70130 (the "PURCHASER"), and Avondale Industries, Inc.,
a corporation organized under the laws of the State of Louisiana,
having a business address of 5100 River Road, Avondale, Louisiana
70094 (the "BUILDER");
W I T N E S S E T H:
WHEREAS:
1. The PURCHASER desires to purchase four (4) product
tankers to be flagged under the United States flag for use in
United States coastwise trade and that comply with the
requirements of the Oil Pollution Act of 1990 (OPA 90); and
2. The BUILDER is a shipbuilder with expertise, ability,
and desire to construct new tonnage that complies with OPA 90
consistent with the terms and conditions set forth in this
CONTRACT.
3. The PURCHASER has applied for Title XI guarantee for
financing under the Merchant Marine Act to the U.S. Department of
Transportation, Maritime Administration for the construction to
be performed pursuant to this CONTRACT. This CONTRACT will only
become effective between the Parties upon PURCHASER furnishing
BUILDER written evidence that the Title XI letter commitment to
guarantee and the financing commitment has been granted to
PURCHASER.
4. The BUILDER has developed the design for the
construction work of this CONTRACT in accordance with all
applicable Regulatory Body requirements.
NOW, THEREFORE, in consideration of the premises and of the
mutual promises hereinafter set forth, the Parties agree as
follows:
ARTICLE I - DEFINITIONS
As used in this CONTRACT, the following terms shall have the
following respective meanings:
BUILDER - As defined in the preamble.
Builder's Certificate - As defined in Subarticle VI(a).
CONTRACT - As defined in the preamble.
Confirmation Date - As defined in Subarticle IV(d).
Contract Group - The "Contract Group" shall mean the four (4)
separate contracts between BUILDER and PURCHASER for similar
construction of four (4) vessels to replace PURCHASER's existing
vessels the S/S Knight, S/S Solar, S/S Spray and S/S King.
Contract Price - As defined in Subarticle II(a).
Contractor Group - As defined in Subarticle XV (d).
Data - As defined in Subarticle VIII(b).
Delivery Certificate - As defined in Subarticle II(b).
Delivery Date - As defined in Subarticle II(c).
Delivery Site - As defined in Subarticle II(b).
Delivery Window - As defined in Subarticle IV(d).
Docking Receipt - As defined in Subarticle IV(c).
Effective Date - The "Effective Date" is the date of the
resigning of this CONTRACT.
Essential changes - As defined in Subarticle VII(b).
Existing Inventory - As defined in Subarticle IV(j).
Existing Vessel - As defined in Subarticle IV(c).
Guarantee Deficiency - As defined in Subarticle XXII(a).
Guaranteed Speed - As defined in Subarticle X(b).
Invoice for Payment - As defined in Subarticle VI(c).
Non-essential changes - As defined in Subarticle VII(b).
Owner Group - As defined in Subarticle XV(a).
Parties - "Parties" shall mean both PURCHASER and BUILDER.
Performance Standard - As defined in Subarticle X(c).
Progress Payments - As defined in Subarticle VI(a).
PURCHASER - As defined in the preamble.
Regulatory Body(ies) - As defined in Subarticle XVII(a).
Revised Contract Price - As defined in Subarticle VI(g).
Schedule - As defined in ARTICLE XII.
Secretary - "Secretary" shall mean the United States Secretary
of Transportation acting by and through the Maritime
Administrator.
Shipyard - As defined in Subarticle II(b).
Specifications - The "Specifications" are that portion of the
CONTRACT consisting of the written requirements for design,
materials, equipment, construction systems, standards and
workmanship for the work, and performance of related services,
which are attached hereto as Exhibit "A".
Stern - that portion of the Existing Vessel (respective S/S
King, S/S Knight, S/S Solar, S/S Spray) purchased by BUILDER in
accordance with Exhibit "J", and as defined in that Exhibit "J",
for incorporation into the Vessel.
Turnover Date - As defined in Subarticle IV(d).
Turnover Window - As defined in Subarticle IV(d).
Working Drawings - The "Working Drawings" are the detailed
graphic and pictorial portions of the documents prepared by
BUILDER after the signing of the CONTRACT which show the design,
location and dimensions of the work, generally including the
outboard profile, structural details and arrangement plans,
elevations, sections, details, schedules and diagrams.
Vessel - As defined in Subarticle II(a).
Vessels - the four vessels to be constructed pursuant to the
Contract Group to replace the S/S King, S/S Solar, S/S Spray and
S/S Knight.
ARTICLE II - GENERAL STATEMENT OF WORK
AND CONTRACT PRICE
(a) The BUILDER shall furnish all plant, facilities, labor,
materials, supplies and equipment, except as otherwise provided
in the Specifications, and shall perform all work necessary to
design, build, launch, outfit, test and deliver a vessel more
fully described in the Specifications (the "Vessel") at its own
risk and expense, and shall do everything required of the BUILDER
by this CONTRACT and the Specifications, including the
development of Working Drawings and the installation of any
outfitting and equipment, all for the total consideration of
"THIRTY FIVE MILLION NINE HUNDRED SIXTY FIVE THOUSAND TWO HUNDRED
NINETEEN DOLLARS ($35,965,219)," (the "Contract Price") together
with such additions and deductions as provided elsewhere in this
CONTRACT. The Parties recognize and acknowledge that the
Contract Price, CONTRACT and/or the Specifications have required
some adjustment due to or arising from the requirements mandated
by the Title XI guarantee and financing approval process which
changes have been incorporated into this CONTRACT.
(b) The Vessel shall be identified as BUILDER's Hull No.
2381, and shall be constructed at the BUILDER's plant (the
"Shipyard"), located at Avondale, Louisiana on the west bank of
the Mississippi River at Mile 107 AHP. Some parts of the Vessel
may be constructed at BUILDER's facilities in Westwego,
Louisiana. When the work on the Vessel is complete in accordance
with this CONTRACT, and the Vessel has passed the tests required
by this CONTRACT, the Vessel as completed shall be delivered with
not less than five (5) days prior written notice by the BUILDER
and accepted by the PURCHASER at Avondale, Louisiana or a
mutually agreed other place (the "Delivery Site"), free and clear
of all liens, security interests, and claims of every nature,
excepting, however, those arising out of the acts or omissions of
the PURCHASER and the PURCHASER'S contractual obligations
pursuant to Article 4 of the Credit Support Agreement of attached
Exhibit "I". Upon such delivery, the PURCHASER shall give the
BUILDER a Delivery Certificate accepting the Vessel (the
"Delivery Certificate"). The PURCHASER shall within five (5) days
thereafter, remove or cause the Vessel to be removed from the
Delivery Site. Delivery and acceptance by the PURCHASER of the
Vessel shall be expressly conditioned upon (1) PURCHASER's rights
under ARTICLE XXII - GUARANTEE of this CONTRACT, (2) PURCHASER's
right to completion by BUILDER thereafter of any uncompleted
CONTRACT work and correction by BUILDER of any defective CONTRACT
work as shown in the Delivery Certificate in accordance with the
determination described in ARTICLE XXI - ACCEPTANCE AND DELIVERY
OF THE VESSEL.
(c) The work is to be performed according to first class
shipbuilding practice and shall be commenced and prosecuted in a
timely manner. BUILDER will deliver the Vessel to the PURCHASER
132 days following the Turnover Date as such date may be extended
pursuant to the terms of this CONTRACT (the "Delivery Date"),
provided that the S/S Knight is turned over to the BUILDER within
the agreed upon Turnover Window. If the S/S Knight is turned
over to the BUILDER before the Turnover Window, BUILDER will
deliver the Vessel to the PURCHASER 132 days following the first
day of the agreed upon Turnover Window.
ARTICLE III - CONTRACT GROUP
The Contract Price for this CONTRACT is agreed to be the
consideration as part of the group of four product tankers for
the four substantially identical contracts signed by BUILDER and
PURCHASER this date. In any event that all four of the vessel
contracts are not completed, or are terminated for any reason,
except the default of the BUILDER, the Contract Price of each of
the unterminated contracts shall be adjusted to reflect the
higher per vessel cost for the remaining vessels as follows:
Number of Contracts Percent Contract Price
Terminated Increase of Each
Completed Contract
3 3.0
2 1.25
1 1.0
ARTICLE IV - ITEMS FURNISHED BY PURCHASER
a) The BUILDER shall, at its own expense and risk, receive,
check as to agreement with bills of lading, store, protect,
remove from the Existing Vessel pursuant to the Specifications,
insure and install aboard the Vessel all of the items required by
the Specifications to be furnished by the PURCHASER. The BUILDER
shall not be deemed to have extended any warranty as to materials
or equipment furnished by the PURCHASER other than the warranty
set forth in ARTICLE XXII - GUARANTEE of this CONTRACT. The
BUILDER shall be liable to the PURCHASER for any damage to or
loss of the items furnished by the PURCHASER occurring during the
BUILDER's custody thereof, which may arise from any event.
Except for the S/S Knight turnover requirements as indicated in
this ARTICLE IV, the Specifications indicate the need dates for
all items to be furnished by PURCHASER.
(b) Except for the S/S Knight turnover requirements as
indicated in this ARTICLE IV, PURCHASER will, by furnishing
reasonable documentation and notice to BUILDER, be entitled to
extension of the indicated need dates stated in the
Specifications for, and to the extent of, any cause of delay
beyond the reasonable control of PURCHASER which PURCHASER could
not reasonably have anticipated. BUILDER may also use such cause
of delay to claim delay of the Delivery Date for the Vessel in
accordance with ARTICLE IX, EXTENSION OF TIME FOR COMPLETION OF
WORK.
(c) The Stern section and after house portion of the Vessel
shall be the Stern section and after house portion of the
Existing Vessel, the S/S Knight, Official Number 277183, shall be
delivered by PURCHASER alongside a dock designated by BUILDER at
BUILDER's Avondale, Louisiana shipyard in accordance with the
Sale and Purchase Agreement attached as Exhibit "J". All
landside expenses associated with the dockside mooring of the S/S
Knight at the Shipyard, including but not limited to mooring
lines, wharfage, gangway, shipyard services, etc. are included in
the Contract Price. For purposes of clarity in this CONTRACT,
the S/S Knight will be referred to and become the "Existing
Vessel" after the S/S Knight is docked at Avondale and its
delivery protocol documentation has been signed (the "Docking
Receipt"). The signed Docking Receipt will also serve to
transfer the risk of loss from PURCHASER to BUILDER pursuant to
Subarticle (g) of this ARTICLE IV and the Sale and Purchase
Agreement for the Stern attached hereto as Exhibit "J".
(d) PURCHASER shall deliver the S/S Knight to BUILDER
between 8 May 1996 and 8 July 1996 (the "Delivery Window").
During February 1996 the Parties will meet to narrow the Delivery
Window to a 2 week period when the S/S Knight will be ready for
delivery to the Shipyard and when the BUILDER has progressed
sufficiently with its work that it is ready to receive the S/S
Knight in the Shipyard ("Turnover Window"). The Parties shall
confirm in writing ("Confirmation Date") the Turnover Window. If
by 19 February 1996, the Parties are unable to agree to the
Turnover Window, the Turnover Window shall be 7 June 1996 to 20
June 1996 and the Confirmation Date for this CONTRACT shall be
deemed to be 19 February 1996. The Turnover Date (the "Turnover
Date") shall be the actual date that the S/S Knight is turned
over to the BUILDERS as evidenced by the Docking Receipt. The
Parties have confirmed the Delivery Window and the other dates
set forth in this paragraph on the Effective Date of the
CONTRACT. PURCHASER will be entitled to extension of the
Turnover Window for, and to the extent of, any cause of delay
beyond the reasonable control of PURCHASER which PURCHASER could
not reasonably have anticipated.
(e) With reasonable notice, PURCHASER may deliver the S/S
Knight at any time up to thirty (30) days prior to the Turnover
Window without any increase in the Contract Price. A docking fee
of $1,200.00 per day plus direct costs for extending the
insurance obligations of BUILDER under this CONTRACT will be
charged to PURCHASER for early delivery in excess of thirty (30)
days prior to the Turnover Window. The early delivery docking
fee includes monitoring of mooring lines, pressure fire system
and shore power. Other services are available at standard rates.
(f) PURCHASER will pay BUILDER TWENTY THOUSAND DOLLARS
($20,000.00) per day liquidated damages in addition to the
Contract Price for each and every day that the S/S Knight is
delivered to BUILDER more than (5) days after the Turnover
Window, up to an aggregate maximum of three percent (3%) of the
Contract Price decreased by FOUR MILLION NINE HUNDRED SEVENTY-SIX
THOUSAND TWO HUNDRED NINETEEN DOLLARS, as said Turnover Window
may be extended pursuant to this CONTRACT. The Delivery Date of
the Vessel, and all dates of the Contract Group, will be extended
day for day that the S/S Knight is delivered after the Turnover
Window at no additional cost beyond the liquidated damages paid
for late delivery of the S/S Knight to the BUILDER; provided,
however, that any liability for liquidated damages for any of the
remaining Vessels in the Contract Group shall be determined based
upon the extended dates of the Contract Group. BUILDER may elect
to terminate this CONTRACT by written notice to PURCHASER
pursuant to ARTICLE XXIII, DEFAULT BY PURCHASER, at any time that
the S/S Knight is not delivered to BUILDER within thirty (30)
days after the Turnover Window, except that Subarticle XXV(a)
default cure period does not apply to the delivery failure of the
S/S Knight after expiration of the thirty (30) days after the
Turnover Window.
(g) The S/S Knight with everything belonging to it shall be
at PURCHASER's risk and expense until its delivery is confirmed
by execution of the Docking Receipt. Risk of loss of the
Existing Vessel with everything belonging to it shall be as
indicated in ARTICLE XIV, RISK-OF-LOSS - TOTAL LOSS OF A VESSEL.
The S/S Knight shall be delivered to BUILDER on the Turnover Date
in class, except as a result of the Existing Vessel's OPA '90
trading date restriction, repairs of PURCHASER in progress which
will be completed expeditiously by PURCHASER, or arrangements by
PURCHASER for towing of the Existing Vessel to BUILDER,
preferably free of outstanding items or recommendations, with all
tanks gas free (except for necessary fuel oil and lubricating oil
tanks) and with asbestos removed or encapsulated per the
Specifications. BUILDER shall take over remaining bunkers and
lubricating oils unless otherwise agreed in writing between the
Parties prior to arrival of the S/S Knight at Avondale. All such
remaining bunkers/oils may be sold or retained by BUILDER at its
option. All bunker/oil transfer costs and credits will be for
PURCHASER'S account. The Parties agree to negotiate the
performance of work required for PURCHASER furnished items and/or
the Stern of the Existing Vessel in accordance with the
requirements of ARTICLE VII, CHANGES, as directed by PURCHASER.
Such negotiations are intended to allow PURCHASER to timely order
Essential Changes for PURCHASER furnished items and/or the Stern
of the Existing Vessel in order to remedy class outstandings or
recommendations. Except for work in the Stern of the Existing
Vessel indicated in the Specifications to be performed by
BUILDER, it will be PURCHASER'S obligation under this CONTRACT
that all PURCHASER furnished items for the Vessel, and the Stern
of the Existing Vessel, or any of its parts, meet all the
applicable laws, classifications, rules, regulations, standards
and certification requirements notwithstanding the provisions of
attached Exhibit "J".
(h) PURCHASER warrants that the S/S Knight, at the time of
delivery to BUILDER, is free from all encumbrances, security
interests, maritime liens or any other debts whatsoever except
for the preferred maritime mortgage(s) granted in connection with
the financing of the construction of the vessels as contemplated
by ARTICLE XXVIII - TITLE, and also except for maritime liens
arising from trade payables incurred in the ordinary course of
business which will be discharged in the ordinary course of
business or bonded by PURCHASER within ten (10) working days of
any notice of a lien or other encumbrance against the Existing
Vessel. Should any claims for events which have been incurred
prior to the time of delivery of the S/S Knight to BUILDER be
made against the S/S Knight, the Existing Vessel, or parts
thereof, PURCHASER hereby undertakes to indemnify, hold harmless,
and defend BUILDER against all consequences of such claims. This
Subarticle shall survive the termination or expiration of this
CONTRACT.
(i) In the event of any actual or constructive total loss
of the S/S Knight prior to arrival at BUILDER's shipyard or in
the event that the Stern section and/or the after house shall,
for any reason, be unavailable, PURCHASER may either:
(i) Furnish the S/S Spray or a mutually agreeable
substitute vessel, in which event BUILDER and PURCHASER shall
mutually agree on: (1) any Specification changes, (2) a new
Turnover Date and Delivery Date (3) a new Contract Price
resulting from such substitution; and (4) adjustment of all
dates and prices for all the follow vessels of the Contract
Group. PURCHASER presently has an option to purchase the S/S
Coastal Manatee (Official No. 287186). The substitution of the
S/S Coastal Manatee is subject to the approval of the PURCHASER
and the Secretary.
(ii) Not Used
(iii) Give written notice to BUILDER within fifteen (15)
days after the loss ordering BUILDER to terminate further
performance of work under this CONTRACT and shall upon demand pay
BUILDER its Costs, as defined below, plus a profit of ten percent
(10%) of such Costs, and following receipt by BUILDER of full
payment under this Subarticle (i) , all constructed work and all
materials acquired by BUILDER for the performance of this
CONTRACT shall become the property of PURCHASER. "Costs" are
defined for the purpose of this Subarticle (i) to include the
cost to BUILDER for all services performed, labor performed and
materials acquired or contracted to be acquired plus overhead
allocations for such services, labor and materials in accordance
with BUILDER's usual practices for such work, plus reasonable
cancellation costs actually paid to third parties for terminating
contractual commitments that BUILDER has made for performance of
the CONTRACT work, all in accordance with BUILDER'S established
cost accounting system as verified by an independent auditor
selected by PURCHASER and agreed to by the BUILDER. Under no
circumstances shall BUILDER's claim under this Subarticle
(i)(iii) include any costs allocated to any of the other
contracts of the Contract Group.
(j) Notwithstanding the Sale and Purchase Agreement of
attached Exhibit "J", this CONTRACT is based on utilizing the
aft portion of the S/S Knight as indicated by the Specifications,
and Subarticles (c) and (g) above, in generally its "AS IS"
condition on arrival at BUILDER's yard. Any desired or mandated
improvements, upgrades, damage repairs, maintenance, etc. of this
PURCHASER furnished equipment for the Vessel, and the Stern of
the Existing Vessel, will be performed and documented pursuant to
ARTICLE VII, CHANGES. The "AS IS" condition will be inventoried
and documented by BUILDER and countersigned by PURCHASER during
the delivery voyage and/or on its arrival at BUILDER's Shipyard
(the "Existing Inventory"). BUILDER is obligated to return the
PURCHASER furnished items, and the Stern of the Existing Vessel,
on the Delivery Date as documented in the Existing Inventory.
PURCHASER will provide suitable accommodations and board to
BUILDER's inspectors for performing this inventory at no charge
to BUILDER during the turnover voyage. The Parties will agree to
similar arrangements for design development inspections by
BUILDER'S inspectors at any time after the Effective Date of this
CONTRACT. Article XV, INJURY TO EMPLOYEES AND OTHERS, will also
be applicable during the delivery voyage for taking of the
Existing Inventory and during the performance of any design
development inspections by BUILDER's inspectors at any time after
the Effective Date of this CONTRACT.
(k) PURCHASER will give immediate notice to BUILDER in the
event the S/S Knight is delayed, or is expected to be delayed, in
its scheduled turnover to BUILDER by any unforeseen event beyond
the control of PURCHASER which PURCHASER could not reasonably
have anticipated. PURCHASER will provide expeditiously all known
details of such unforeseen delay and furnish an estimate of the
extent of the claimed delay in the Turnover Date. By agreement
the Parties may mitigate such unforeseen cause of delay to their
respective best interests in adjusting the Turnover Date
including, but not limited to, utilizing the provisions of
Subarticle IV (i). Either of the Parties may request binding
arbitration pursuant to ARTICLE XXXVI, ARBITRATION, for
determination of the claimed delay of the Turnover Date. The
arbitration may not, however, revise the indicated adjustments to
be made to other dates as a consequence of such delays in the
Turnover Date.
(l) BUILDER will provide necessary dockside services for
and permit the crew of the S/S Knight to remain aboard the
Existing Vessel to perform their duties, provided such duties are
at all times subordinate to, and do not interfere with, BUILDER'S
work, for up to thirty (30) days after arrival of the Existing
Vessel and for thirty (30) days prior to the Delivery Date of the
Vessel. Likewise, the BUILDER will permit approved
subcontractors to perform work directly for PURCHASER that is not
ordinarily performed by BUILDER. R & R Marine Maintenance and G.
C. Electric will be allowed into the Shipyard aboard the Existing
Vessel as approved subcontractors to perform work directly for
PURCHASER not to exceed six (6) people at any one time.
(m) Notwithstanding anything contained in the Sale and
Purchase Agreement for the Stern attached hereto as Exhibit "J"
or anything else whatsoever, PURCHASER agrees to protect, defend,
indemnify and hold BUILDER, its agents, officers, directors,
employees and representatives harmless from and against all
costs, damages, losses, claims, penalties, debts or liabilities
BUILDER may incur from holding title to the Stern of the Existing
Vessel, or the Stern of the Vessel, in BUILDER'S name at any time
during the performance of this CONTRACT. It is further
understood and agreed that this indemnity and defense obligation
shall include the obligation to reimburse BUILDER for any
attorneys' fees, costs and expenses which may be incurred by
BUILDER in enforcing the defense and indemnity obligations set
forth in this Subarticle (m). This Subarticle (m) shall prevail
over any conflicting or inconsistent provisions set forth
elsewhere in this CONTRACT and shall survive any termination,
cancellation, expiration or completion of this CONTRACT.
ARTICLE V - SPECIFICATIONS, INTERPRETATION
(a) The Specifications for the construction of the Vessel
have been identified by the initials of the Parties signing this
CONTRACT and are made a part of this CONTRACT with the same force
and effect as though herein set out in full.
(b) If any discrepancy, difference or conflict exists
between the provisions of this CONTRACT and the Specifications,
then to the extent of such discrepancy, difference or conflict
only, the Specifications shall be ineffectual and the provisions
of this CONTRACT shall prevail; but in all other respects the
Specifications shall be in full force and effect. If there is any
discrepancy, difference or conflict between the drawings and
Specifications, then to the extent of such discrepancy,
difference or conflict the Specifications shall prevail;
provided, however, any work called for by the Specifications and
not shown on the drawings and any work shown on the drawings but
not called for in the Specifications shall be performed by the
BUILDER as a part of the CONTRACT work. Any discrepancy,
difference or conflict between the Specifications and the
provisions of this CONTRACT and any discrepancy, difference or
conflict between the Specifications themselves discovered by one
party to this CONTRACT shall be brought to the attention of the
other party promptly in writing.
ARTICLE VI - PAYMENT OF CONTRACT PRICE - METHOD OF PAYMENT
a) PURCHASER shall pay the Revised Contract Price to
BUILDER in increments as the work progresses (the "Progress
Payments"). PURCHASER shall pay Progress Payments to BUILDER at
biweekly intervals upon the invoices of BUILDER, supported in
each instance by its Builder's Certificate. Progress Payment
shall be determined by the proportionate amount of the CONTRACT
work actually accomplished computed by the following method: the
CONTRACT work will be divided into separate components and each
component assigned a number of points. Such components and their
respective points will be as set forth on the form attached as
Exhibit "B". As of the invoice date, BUILDER shall certify the
percentage of completion of each component and the overall
percentage of completion ("Builder's Certificate"), which shall
be the sum of the percentages of completion of each component
multiplied by the number of points referable to that component
divided by the total number of points referable to all components
of CONTRACT work. Each Progress Payment shall be the increment
in overall percentage of completion since the date as of which
BUILDER computed the last previous Progress Payment times the
Revised Contract Price, as defined in Subarticle (g) of this
ARTICLE. Progress Payments shall be paid in full by wire
transfer free of bank charges as soon as possible but in no event
later than five (5) working days after receipt by the Secretary
of documents acceptable to the Secretary. As an exception to the
above procedure for Progress Payments, the first Progress Payment
in the amount of FOUR MILLION NINE HUNDRED SEVENTY SIX THOUSAND
TWO HUNDRED NINETEEN DOLLARS ($4,976,219) will be paid by
PURCHASER TO BUILDER, by wire transfer, free of bank charges, in
immediately available funds to an account designated by BUILDER,
simultaneously with the execution of this amended and restated
CONTRACT to cover the Sale and Purchase Agreement of attached
Exhibit "J".
b) PURCHASER shall inspect and confirm achievement of the
progress by approving the Progress Billing Format form of
attached Exhibit "B". BUILDER shall invoice PURCHASER for the
percentage of the Revised Contract Price for the progress, which
invoice shall include documents acceptable to the SECRETARY.
PURCHASER will notify BUILDER if it determines that the progress
has not in fact been achieved along with PURCHASER's reasons for
said determination. PURCHASER's failure to notify BUILDER within
two (2) business days of receipt of an invoice for payment
together with documents acceptable to the Secretary shall
constitute PURCHASER's acceptance of the progress.
c) At no time prior to the delivery of the Vessel to
PURCHASER may the cumulative invoiced total of Progress Payments
charged to PURCHASER under the provisions of this ARTICLE VI,
exceed 100% of the Revised Contract Price, as defined in
Subarticle (g) of this ARTICLE.
d) Progress Payments may include the cost of subcontracted
machinery, materials, and equipment not yet delivered to
BUILDER'S yard to the extent that BUILDER shall have acquired
title thereto and identified the goods in question to the Vessel,
provided that the risk of loss of or damage to such goods before
delivery remains with the vendor or subcontractor.
e) The final installment of the Revised Contract Price
minus a hold-back equal to 1% of the Revised Contract Price
shall be paid to BUILDER by PURCHASER at the delivery of the
Vessel to PURCHASER.
f) PURCHASER shall pay BUILDER the 1% of the Revised
Contract Price hold-back retained under the provisions of
Subarticle (e) above after the expiration of the warranty period
as provided in ARTICLE XXII, GUARANTEE.
g) In the event that the Parties should agree upon any
change to be made in accordance with the provisions of ARTICLE
VII, CHANGES, and that agreement contains no contrary provision
for time of payment, the Contract Price (or, if there have been
previous such changes, the former Revised Contract Price) shall
be increased or decreased by the amount agreed upon by the
Parties and, as thus increased or decreased, shall be called the
"Revised Contract Price." Immediately upon agreement between the
Parties of any change and the resulting increase or decrease in
the Revised Contract Price, BUILDER shall issue its invoice or
credit memo for the amount of such increase or decrease in the
Revised Contract Price attributable to the change times the
cumulative overall percentage of completion utilized in the
computation under the provisions of this ARTICLE VI of the
Progress Payment most recently invoiced; and the balance of such
increase or decrease shall be paid or deducted by use of the new
Revised Contract Price in the computation of subsequent Progress
Payments.
ARTICLE VII - CHANGES
(a) The BUILDER shall not, except as provided in Subarticle
(b) of ARTICLE V - SPECIFICATIONS, INTERPRETATION depart from the
requirements of the Specifications or make any other changes in
the CONTRACT work required by the Specifications without all
prior authorization required by the provisions of this ARTICLE.
Anything to the contrary notwithstanding, any work that is
required to be performed under this CONTRACT to anything that was
sold/purchased pursuant to attached Exhibit "J", other than what
is required by the Specifications, will be performed only
pursuant to an agreed and documented change under this ARTICLE
VII.
(b) For purposes of this ARTICLE, changes in CONTRACT work
shall be classified as either "Essential" changes or "Non-
essential" changes. Essential changes shall consist of changes in
the CONTRACT work due to an action of a Regulatory Body as set
forth in ARTICLE XVII - MATERIALS AND WORKMANSHIP, (a)(iii) of
this CONTRACT, or due to any other promulgation of a new law or
rule after 7 March 1995. All other changes shall be Non-
essential changes. BUILDER shall advise PURCHASER of any
Essential changes which any Regulatory Body may require in the
Vessel.
(c) The PURCHASER shall have the right to direct the
BUILDER to perform an Essential change, and the BUILDER upon
receipt of PURCHASER's written direction shall commence the
performance of the change at such time as the PURCHASER may
direct without regard to whether prior agreement has been reached
as to the net increase or decrease in Revised Contract Price and
delay attributable to the change. The BUILDER shall be entitled
to a fair and reasonable adjustment in the Revised Contract Price
and Delivery Date for the performance of such change and in all
other terms and conditions of this CONTRACT that reasonably
require modification as a consequence of the change, for
performance of such change. Upon receipt of the PURCHASER's
written direction of an Essential change, the BUILDER shall,
within fourteen (14) days, give written notice to the PURCHASER
and the Secretary, that the proposed change will result in a
change in the Performance Standard, Revised Contract Price and/or
Delivery Date and the projected date for the firm quotation for
such change which shall be within thirty (30) days of PURCHASER's
written request or as otherwise mutually agreed. If such notice
is not forwarded as required, BUILDER shall not have the right to
later make claim for such change. After receipt of BUILDERS
quotation, the PURCHASER shall have fourteen (14) days to respond
to the BUILDER. If no response is received within the fourteen
(14) days, the quotation shall be deemed approved. The BUILDER's
quotation shall show the following information: the effect on
weight, moments, centers; effects on the Performance Standard;
and any delay in delivery of the Vessel to result from such
change. Such estimate of price shall consist of estimates,
separately stated, for materials (by type and quantity), labor
(including overhead) based on estimated engineering manhours and
estimated production manhours, and profit. PURCHASER shall take
reasonable precautions to maintain in confidence each estimate
and not disclose the same, except to agents or contractors of
PURCHASER as necessary in the prosecution of CONTRACT work,
provided only that in making such disclosure to agents or
contractors the PURCHASER shall impose upon any person, firm or
corporation to whom such disclosure is made, conditions relating
to the confidential treatment thereof to the same effect as those
imposed upon PURCHASER herein. In no event shall the PURCHASER
disclose estimates to another shipyard. The PURCHASER shall not
be responsible for unauthorized actions of its employees if the
aforementioned reasonable precautions have been taken by it. Any
change work performed by the BUILDER absent written agreement
from the PURCHASER shall be at BUILDER's own risk and expense.
(d) The PURCHASER shall have the right to propose to the
BUILDER in writing a Non-essential change in the CONTRACT work.
The BUILDER shall promptly review such proposal and submit to
PURCHASER an estimate of the net increase or decrease in the
Revised Contract Price; the effect on weight, moments, and
centers; effects on the Performance Standard; and any delay in
delivery of the Vessel to result from such change. If the BUILDER
and PURCHASER agree upon the net increase or decrease in Revised
Contract Price and any delay in delivery, this CONTRACT shall be
modified accordingly, and the BUILDER shall promptly proceed to
perform the change. Nothing herein shall require the BUILDER to
perform a Non-essential change proposed by the PURCHASER in the
absence of prior agreement as to the net increase or decrease in
Revised Contract Price, Performance Standard and any delay in
delivery and all other terms and conditions of this CONTRACT that
reasonably require modification as a consequence of the change.
(e) The BUILDER shall have the right to propose to the
PURCHASER in writing any change in the CONTRACT work. The BUILDER
shall transmit to the PURCHASER its proposed change accompanied
by an estimate of the net increase or decrease in the Revised
Contract Price; the effect on weight, moments, and centers;
effects on Performance Standard; and any delay in delivery of the
Vessel to result from such change. If the BUILDER and PURCHASER
agree upon the net increase or decrease in Revised Contract Price
and any delay in delivery, this CONTRACT shall be modified
accordingly, and the BUILDER shall promptly proceed to perform
the change. Nothing herein shall require the PURCHASER to accept
a change proposed by the BUILDER in the absence of prior
agreement as to the net increase or decrease in Revised Contract
Price and any delay in delivery. Any change work performed by
the BUILDER absent written agreement from the PURCHASER shall be
at BUILDER's own risk and expense.
(f) For good order the Parties may also agree to document
that repair work to PURCHASER furnished equipment for the Vessel,
and the Stern portion of the Existing Vessel as a change
notwithstanding that such documentation would not involve any
revision to the Specifications and also notwithstanding the Sale
and Purchase Agreement of attached Exhibit "J". The Parties have
agreed to utilize the attached Change Order Procedure, Exhibit
"D", for documenting and processing all changes pursuant to this
ARTICLE VII, CHANGES.
(g) Written consent of the Secretary is required to approve
any change to the CONTRACT work which exceeds $100,000 after the
aggregate sum of all changes to the CONTRACT work and the
enhancements to the Stern exceed two million dollars.
ARTICLE VIII - RIGHTS TO DESIGN DATA
(a) The BUILDER shall prepare and furnish Working Drawings
for the installation of the PURCHASER furnished equipment;
however, anything to the contrary notwithstanding, the BUILDER
shall have no obligation to furnish any other details for
operation or otherwise. PURCHASER'S review of Working Drawings
and data will not relieve BUILDER from its obligations under this
CONTRACT.
(b) All Working Drawings, and such other specified design
and engineering data required to be furnished to the PURCHASER by
the Specifications and produced by the BUILDER in the performance
of the CONTRACT (the "Data") shall be the property of the
BUILDER. The PURCHASER shall have the right to use the Data in
such manner as it may deem proper, including the right to make
reproducibles and copies and the right to make alterations
therein, additions thereto, or other changes, provided that (i)
Data will not be made available to any of BUILDER's competitors
at any time by the PURCHASER, except for the sole purpose of
operating, maintaining or repairing the Vessel and (ii) BUILDER
and/or BUILDER's licensor will be entitled to a reasonable
royalty, fee, or commission in the event any Data is so made
available by the PURCHASER and is used for purposes other than
operating, maintaining or repairing the Vessel. The BUILDER also
shall have the unrestricted right to sell or transfer any Data.
(c) Each party shall take reasonable precautions to
maintain in confidence that information disclosed to it in the
performance of this CONTRACT which is specifically identified as
confidential, other than information, which at the time of
disclosure, is known or become available from sources other than
the party disclosing such information or which is or shall become
capable of being independently produced by those skilled in the
trade to which such information relates. Notwithstanding
anything to the contrary herein contained, the BUILDER shall not
be precluded from disclosing information which may be necessary
for the prosecution of the CONTRACT work, provided only that in
making such disclosure the BUILDER shall impose upon any person,
firm or corporation to whom such disclosure is made, conditions
relating to the confidential treatment thereof to the same effect
as those imposed upon it herein; nor shall the BUILDER be
responsible for unauthorized actions of its employees provided
that the aforementioned reasonable precautions have been taken by
it; nor shall anything contained herein restrict or limit the
BUILDER's use of any information contained in the Specifications,
whether confidential or not, for the performance of this
CONTRACT.
(d) PURCHASER shall have all rights to the Data at no cost
for completing construction of the Vessel in the event that this
CONTRACT is terminated due to default of BUILDER pursuant to
ARTICLE XXIV, DEFAULT BY BUILDER.
ARTICLE IX - EXTENSION OF TIME FOR COMPLETION OF WORK
(a) Except as provided under ARTICLE IV, ITEMS FURNISHED BY
PURCHASER, if the BUILDER shall have transmitted written notice
to the PURCHASER of a cause of delay delaying the performance of
the CONTRACT work not later than five (5) working days if due to
rain or fifteen (15) days after the date that knowledge of other
delay in the CONTRACT work has come to the BUILDER, or after the
date that it is determined the BUILDER should have known of the
delay in the CONTRACT work, if such date is an earlier date, and
the cause of delay is beyond the control of the BUILDER, as
provided in Subarticle (b) below, and which the BUILDER could
not reasonably have anticipated, the BUILDER shall be entitled to
an extension of the Delivery Date set out in this CONTRACT by the
number of days that the Delivery Date was delayed by said cause
of delay, except as otherwise provided in Subarticle (e) below.
If such notice is not given within the time allowed, such delay
may not be subsequently invoked.
(b) A cause of delay beyond the control of the BUILDER
shall include, without prejudice to the generality, delay caused
by the PURCHASER or by any agency or instrumentality of the
United States, including delays in the granting of any consents
or approvals by the U.S. Maritime Administration, by Government
priorities, by civil, naval or military authorities, by acts of
God (including hurricanes) by earthquakes, lightning, floods,
union elections, strikes or other industrial disturbances; by
rain as more fully described in Subarticle (c) of this ARTICLE;
such explosions, fires, vandalism as are the result of causes
reasonably beyond the BUILDER's control; by riots, by
insurrections, by sabotage, by blockades, by embargoes, by
epidemics; by the unavailability or late delivery to the BUILDER
of CONTRACT required machinery, equipment and supplies to be
incorporated in the Vessel where it is determined that the
BUILDER's procurement or attempt to procure for such machinery,
equipment and supplies to be incorporated in the Vessel was
expeditious and prudent, that the BUILDER has exercised due
diligence in the performance of any acts required of the BUILDER
and that the BUILDER has exercised due diligence in expediting
deliveries under the BUILDER's purchase CONTRACT or in seeking
equivalent substitute performance; and by the late performance or
default of a subcontract where it is determined that the
BUILDER's choice of the subcontractor was reasonable and
responsible and the BUILDER has exerted all reasonable efforts to
expedite performance, avoid default and procure reasonable
substitute performance; and by the breach of this CONTRACT by the
PURCHASER.
(c) From the Effective Date of this CONTRACT until the
delivery of the Existing Vessel to the Shipyard, the following
provisions shall determine delay caused by rain:
(1) The rain experienced at the project site during
CONTRACT period must be found to be unusually severe. That is,
more severe than the rain anticipated for the project location
during any given month.
(2) The rain must actually cause a delay to the
completion of the project in accordance with the Schedule. The
delay must be beyond the control and without the fault or
negligence of the BUILDER.
(3) Delay in the completion of the project shall be
determined on a shift by shift basis. If the project is running
two shifts at the time it will require two shifts delay to equal
one day of delay and if the shipyard is working three shifts at
the time, it shall require three shifts delay to equal one day of
delay. A rain delay will only be considered a delay in the
completion of the project if its occurrence requires a shutdown
of a substantial portion of the outside work on the Vessel prior
to the mid-point of a shift on a regularly scheduled work day or
any day during the last thirty (30) days prior to the Delivery
Date and such delay shall only be considered a delay for that
particular shift.
The following schedule of monthly anticipated adverse
weather delays is based on National Oceanic and Atmospheric
Administration (NOAA) New Orleans (Audubon Weather Station
located near the project location) and will constitute the base
line for monthly weather time evaluations.
JAN FEB MAR APR MAY JUNE JUL AUG SEP OCT NOV DEC
__________________________________________________________________
(11) (9) (5) (4) (4) (6) (9) (9) (6) (4) (5) (9)
The number of actual rain shift delays shall be
converted to full days as herein above stated. If the number of
actual rain delay days exceeds the number of days anticipated in
the table above, and if the conditions of paragraph (2) above are
met, the BUILDER shall be entitled to an extension of the
Delivery Date by the number of days that the Delivery Date was
delayed by the excess days of rain delay.
From the date the Existing Vessel is delivered to the
Shipyard until the completed Vessel is delivered to the
PURCHASER, the following provisions shall determine delays caused
by rain.
If rain occurs that requires a shutdown of a
substantial portion of outside work on the Vessel prior to twelve
noon on a regularly scheduled work day, or any day during the
last thirty days prior to the Delivery Date, BUILDER shall be
entitled to an extension of the Delivery Date for each such rain
day.
(d) Within five (5) working days of knowledge of any cause
of delay involving rain which may affect the Delivery Date, the
BUILDER shall notify PURCHASER in writing and shall furnish an
estimate, if possible, of the extent of the probable delay. Upon
receipt of any such notice, the PURCHASER shall, within five (5)
working days, acknowledge the same in writing and indicate
agreement that such development is to be treated as a cause of
delay event, or state any objections, and the reasons therefor,
to acceptance of this development as the cause
of delay event. If BUILDER fails to notify PURCHASER of a cause
of delay event involving rain within five (5) working days after
knowledge of the event, BUILDER shall be estopped from thereafter
claiming a delay event for any period of delay more than five (5)
working days prior to said notice. If PURCHASER should fail to
respond within five (5) working days, the claimed extension of
the Delivery Date shall be considered approved.
(e) For any cause of delay not involving rain which may
affect the Delivery Date, the BUILDER shall notify the PURCHASER
in writing and shall furnish an estimate, if possible, of the
extent of the probable delay. Upon receipt of any such notice,
the PURCHASER shall, indicate agreement that such development is
to be treated as a cause of delay event, or state any objections,
and the reasons therefor, to acceptance of this development as a
cause of delay event. If BUILDER fails to notify PURCHASER of a
cause of delay event within fifteen (15) days after knowledge of
the event, BUILDER shall be estopped from thereafter claiming
delay for any period of delay more than fifteen (15) working days
prior to said notice. If PURCHASER should fail to respond within
ten (10) days, the claimed extension of time shall be considered
approved.
(f) If the Parties are unable to resolve their differences,
either party may request binding arbitration pursuant to ARTICLE
XXXVI - ARBITRATION, for determination of the period of delay.
The arbitration may not, however, revise the indicated
adjustments to be made to other dates as a consequence of such
delays.
ARTICLE X - PERFORMANCE STANDARD
a) The principal particulars of the design for the Vessels
are as shown in the attached Specification, Exhibit "A".
(b) Within the limits stipulated in ARTICLE XI, CONTRACT
PRICE ADJUSTMENTS, the BUILDER guarantees a trial speed of 15.5
knots at a keel draft of 36 feet in calm deep sea conditions,
with a clean bottom and windforce not exceeding Beaufort scale
No. 3, "Guaranteed Speed", provided that PURCHASER'S engine
delivers 11,000 shaft horsepower, notwithstanding any provisions
of attached Exhibit "J". The speed trials are to be carried out
as specified in the Specifications.
(c) The performance parameter in Subarticle (b) above is
hereinafter referred to as the "Performance Standard."
ARTICLE XI - CONTRACT PRICE ADJUSTMENTS
(a) In the event the BUILDER fails to deliver the Vessel on
the Delivery Date provided in this CONTRACT, as said Delivery
Date may be extended pursuant to this CONTRACT, plus ninety five
(95) calendar days the PURCHASER will suffer damages which are
difficult of ascertainment. It is agreed by the BUILDER and the
PURCHASER that the sum of TWENTY THOUSAND DOLLARS ($20,000.00)
per day represents the damages to the PURCHASER for each day of
delayed delivery, and the BUILDER shall pay to the PURCHASER in
discharge of its obligations to the PURCHASER for such failure to
deliver the Vessel, as liquidated damages and not as a penalty,
the said sum as per-day liquidated damages, for each calendar day
or part thereof elapsing after the said
allowable delivery period indicated in the previous sentence and
until delivery of the Vessel. In no event will BUILDER's
liquidated damages for late delivery of the Vessel exceed a cap
of three percent (3%) of the Revised Contract Price decreased by
FOUR MILLION NINE HUNDRED SEVENTY SIX THOUSAND TWO HUNDRED
NINETEEN DOLLARS.
(b) The Revised Contract Price shall not be affected or
changed by reason of the speed of the Vessel, as determined by
sea trial in accordance with the Specifications, being less than
the Guaranteed Speed, if such deficiency in the aforesaid speed
of the Vessel is less than five tenths (5/10) of one (1) knot
below the Guaranteed Speed. Adjustments in the Vessel's speed
resulting from modification and/or changes in the Specifications
or the drawings agreed hereinafter provided for in ARTICLE VII,
CHANGES, shall not be considered as such deficiency. However,
commencing with and including a deficiency of five tenths (5/10)
of one (1) knot below the Guaranteed Speed the Revised Contract
Price shall be reduced by TWO HUNDRED THIRTY THREE THOUSAND
DOLLARS ($233,000) for each additional tenth of one knot
deficiency at or below a deficiency of five tenths (5/10) of one
knot. The maximum reduction in the Revised Contract Price for
Guaranteed Speed shall, however, be in no event more than the
amount as would be the case of a deficiency of nine-tenths (9/10)
of one (1) knot below the Guaranteed Speed.
(c) In no event will BUILDER's liability for Guaranteed
Speed exceed a cap of three percent (3%) of the Revised Contract
Price decreased by FOUR MILLION NINE HUNDRED
SEVENTY SIX THOUSAND TWO HUNDRED NINETEEN DOLLARS.
(d) The rights of PURCHASER to a reduction of the Revised
Contract Price by reason of the provisions provided in this
ARTICLE XI shall be cumulative to the maximum aggregate sum not
to exceed three percent (3%) of the Revised Contract Price
decreased by FOUR MILLION NINE HUNDRED SEVENTY SIX THOUSAND TWO
HUNDRED NINETEEN DOLLARS. In the event that the Vessel is
delivered with better speed than set forth in this ARTICLE XI,
such better performance does not entitle BUILDER to any premium,
special bonus, or offset against deficiencies in other
categories. Any reduction of the Revised Contract Price shall be
the PURCHASER'S sole remedy for failure to meet the speed
requirement which remedy shall not exceed three percent (3%) of
the Revised Contract Price decreased by FOUR MILLION NINE HUNDRED
SEVENTY SIX THOUSAND TWO HUNDRED NINETEEN DOLLARS.
(e) The PURCHASER may terminate this CONTRACT and demand
delivery of the Vessel at any time after the aggregate maximum
for liquidated damages is attained pursuant to the provisions of
this ARTICLE XI(a). Upon such termination and delivery the
PURCHASER may proceed to move the Vessel elsewhere and the
BUILDER shall be responsible for the PURCHASER's reasonable
additional cost required to complete the Vessel to the
requirements of the Specifications. Notwithstanding any other
terms and conditions of this CONTRACT, the remedies set forth in
paragraph (a) and (e) of this ARTICLE XI shall be the PURCHASER's
sole remedy for late delivery of the Vessel.
(f) In the event PURCHASER fails to timely provide the
PURCHASER furnished items for the Vessel for meeting all
applicable laws, classifications, rules, regulations, standards
and certification requirements for the Vessel, so as to become
the sole cause for having to extend the Delivery Date for the
Vessel, the BUILDER will suffer damages which are difficult of
ascertainment. It is agreed by the PURCHASER and the BUILDER
that the sum of TWENTY THOUSAND DOLLARS ($20,000.00) per day
represents the damages to the BUILDER for each day of such
delayed delivery, and the PURCHASER shall pay to the BUILDER in
discharge of its obligations to the BUILDER for such failure to
deliver the PURCHASER furnished items and/or documentation, as
liquidated damages and not as a penalty, the said sum as per-day
liquidated damages, for each calendar day or part thereof
elapsing after the fourteenth (14th) day and until delivery of
the Vessel. The payment of such liquidated damages, or agreed
increase in the Revised Contract Price, shall be BUILDER'S sole
remedy for late delivery of PURCHASER furnished items. In no
event will PURCHASER's liquidated damages pursuant to this
Subarticle (f) exceed a cap of three percent (3%) of the Revised
Contract Price decreased by FOUR MILLION NINE HUNDRED SEVENTY SIX
THOUSAND TWO HUNDRED NINETEEN DOLLARS.
ARTICLE XII - SCHEDULES
The BUILDER shall furnish the following schedules covering
work to be performed by BUILDER hereunder as the Master Schedule
(Erection Schedule and the Structural Index Schedule). The
Master Schedule, (the "Schedule") as may be revised by BUILDER
from time to time, will show the dates for all required
activities for project completion. The level of activities
included in the Master Schedule shall be sufficient to assure
that each activity listed has been properly defined and analyzed
and that there is a direct correlation of activities in this
Master Schedule to individual supporting BUILDER and
subcontractor schedules for engineering, material procurement,
forebody construction, Existing Vessel cut/join process, testing,
etc. The Master Schedule shall be submitted to the PURCHASER
within thirty (30) days of the Effective Date of this CONTRACT.
The PURCHASER'S Representative shall meet with BUILDER'S
Representative weekly to review the Master Schedule and any
changes thereto for the purpose of determining the actual
progress of the job. This Master Schedule will also be used by
the PURCHASER in his evaluation of schedule extensions, delays,
default, schedule adjustments for changes, BUILDER performance in
support of Delivery Date and any other schedule dependent
CONTRACT or Contract Group issues. Use of this Master Schedule
does not, however, change or alter any other terms and conditions
of this CONTRACT including but not limited to ARTICLE IX, ARTICLE
XI, ARTICLE XXIV, and ARTICLE XXVI.
ARTICLE XIII - INSURANCE
(a) BUILDER, at its own expense, shall from the time the
first materials and/or
equipment destined for inclusion as part of the Vessel become the
risk of the BUILDER and until the Vessel has been delivered to
and accepted by PURCHASER, keep the Vessel and all materials,
outfit, equipment and appliances to be installed on or in the
Vessel, including the Existing Vessel, fully insured under a Full
Form (including prekeel) Marine Builder's Risk Policy. The
amount of insurance, the terms of the policy, the insurance
companies and the underwriters shall at all times be satisfactory
to PURCHASER and the Secretary. The amount of such insurance
shall be at least equal to the completed Revised Contract Price
of the Vessel plus the value of all PURCHASER furnished materials
and equipment. It is agreed that the total value of all
PURCHASER furnished materials and equipment is FOUR MILLION
DOLLARS ($4,000,000) each for the S/S King, S/S Solar and S/S
Spray and FIVE MILLION DOLLARS ($5,000,000) for the S/S Knight.
In addition, the Builder's Risk Policy will contain a provision
that from the time of removal of the forebody from the Existing
Vessel until redelivery of the forebody to PURCHASER, coverage
will continue on the forebody in the amount of ONE MILLION
DOLLARS ($1,000,000). The Builder's Risk Policy shall also
include Protection and Indemnity Insurance with the limits at
least equal to the completed Revised Contract Price of the Vessel
plus the value of all PURCHASER furnished materials and
equipment.
The Builder's Risk Policy shall be in the form as set forth
in Exhibit "C" attached hereto and made a part hereof. The
Builder's Risk Policy shall have a loss payable clause that shall
provide that all losses in excess of $100,000 shall be payable to
the Secretary for distribution by him to himself, the BUILDER
and/or the PURCHASER as their interests may appear. For purposes
of this Agreement, the "other than owner limitation clause" of
the Builder's Risk Policy shall be deleted and not apply.
(b) BUILDER agrees, at its own expense, during the entire
term of BUILDER'S performance of work hereunder from the time the
first materials and/or equipment destined for inclusion as part
of the Vessel become at risk or services are performed until the
Vessel has been delivered to and accepted by PURCHASER, to carry
with an insurance company satisfactory to the PURCHASER and the
Secretary and authorized to do business in the State of Louisiana
the following insurance with limits in the amounts stated for
which a certificate of insurance is attached as Exhibit "E":
1)Worker's Compensation Insurance fully complying with the laws
of the state or states in which the work is to be done, including
the Longshoremen's and Harbor Worker's Compensation act in an
amount required by said Acts and Employer's Liability Insurance,
including Maritime Employer's Liability Insurance with provisions
for the payment of transportation, wages, maintenance and cure,
in the amount of $1,000,000.
2)Comprehensive General Liability Insurance in the amount of
$1,000,000 per occurrence, Combined Single Limit but in the
aggregate each annual period with respect to the
Products/Completed Operations Hazard and subject further to a
general aggregate of $4,000,000 for Bodily Injury to or Death of
persons and for Property Damage with the Watercraft Exclusion
deleted and including Contractual Liability Insurance to cover
Hold Harmless and Indemnity Agreement contained elsewhere in this
CONTRACT.
3)Automobile Liability and Property Damage Insurance covering
Bodily injuries or Death in the amount of $500,000 per person and
$1,000,000 per any one occurrence and Property Damage in the
amount of $500,000 per accident. This coverage applies to each
and every unit of automotive equipment operated or used by
BUILDER in the performance of their work.
4)Excess Liabilities covering the liabilities insured in the
above policies with a limit equal to the difference between the
above indicated limits and $20,000,000.00 any one occurrence.
5)All subcontractors working for BUILDER at the Shipyard will be
required to have and evidence to BUILDER the insurance coverage
indicated in Exhibit "G".
(c) The Builder's Risk policy shall include PURCHASER and
PURCHASER's agents and all its subsidiaries and affiliates and
the United States of America as assureds. Underwriters agree to
waive subrogation against PURCHASER's group and the United States
of America. The policy shall also provide no recourse against
the United States of America for payment of premium and a 10 day
prior written notice of cancellation or material change in the
policy to the Secretary c/o the Maritime Administration, Chief,
Division of Marine Insurance.
For liabilities and indemnities assumed by BUILDER
under this CONTRACT all insurance policies of BUILDER (and its
subcontractors, if any) shall expressly waive subrogation as to
PURCHASER and the Secretary. It is further agreed that each such
policy, other than Worker's Compensation policies, shall name
PURCHASER as an additional assured, for liabilities and
indemnities assumed by BUILDER, it being understood that such
policies shall be endorsed to provide that BUILDER's policies are
primary to, and shall receive no contribution from, any insurance
policies maintained by PURCHASER.
(d) Should PURCHASER make any claim against the BUILDER for
any alleged post Delivery Date damage to the Stern section of the
Vessel as a result of the work performed by the BUILDER under
this CONTRACT, PURCHASER and BUILDER agree that any recovery by
the PURCHASER shall be limited to the coverage provided under the
CGL and excess liability policies to the limit of $20,000,000.
This will be PURCHASER's sole remedy for any alleged post
Delivery Date damage to the Stern section of the Vessel.
(e) All insurance policies in which both parties are named
insureds will have a "Cross Liability" Clause identical to the
Cross Liabilities clause as referenced in Exhibit "C", item F
excluding all claims arising under this CONTRACT.
(f) All insurance policies will provide for thirty (30)
days prior written notice of cancellation or material change to
PURCHASER from the underwriters.
(g) Prior to commencement of work, BUILDER shall furnish to
PURCHASER a Certificate of Insurance evidencing that coverages
outlined above are in full force and effect and the originals of
the above policies shall be available in BUILDER'S office at 5100
River Road, Avondale, Louisiana for review upon reasonable
request of PURCHASER.
(h) Any deductibles under such insurance shall be borne by
BUILDER.
(i) PURCHASER agrees, at its own expense, from the time the
first materials and/or equipment destined for inclusion as part
of the Vessel become at risk or services are performed until the
Vessel has been delivered to and accepted by PURCHASER, to carry
with an insurance company satisfactory to the BUILDER and
authorized to do business in the State of Louisiana the following
insurance with limits in the amounts stated for which a
certificate of insurance is attached as Exhibit "F":
1)Worker's Compensation Insurance fully complying with the laws
of the state or states in which the work is to be done, including
the Longshoremen's and Harbor Worker's Compensation act in an
amount required by said Acts and Employer's Liability Insurance,
including Maritime Employer's Liability Insurance with provisions
for the payment of transportation, wages, maintenance and cure,
in the amount of $1,000,000.
2)Comprehensive General Liability Insurance in the amount of
$1,000,000 per occurrence, Combined Single Limit for Bodily
Injury to or Death of persons and for Property Damage with the
Watercraft Exclusion deleted and including Contractual Liability
Insurance to cover Hold Harmless and Indemnity Agreement
contained elsewhere in this CONTRACT.
3)Excess Liabilities covering the liabilities insured in the
above policies with a limit equal to the difference between the
above indicated limits and $20,000,000.00 any one occurrence.
(j) From the Effective Date of this CONTRACT until delivery
of the Existing Vessel to BUILDER'S yard, PURCHASER shall procure
and maintain Protection and Indemnity insurance in a form at
least as broad as, and with limits not less than, that provided
by the Rules of the Standard Steamship Ownership Protection and
Indemnity Association (Bermuda) Limited, and PURCHASER shall
require Club Managers to register BUILDER as a Co-Assured under
Rule 8.2 of said insurance and Club Managers have noted that
there may be a transfer of interest, either of the whole or a
part of the ship, created by the Agreement to Purchase and Sell
between the member, American Heavy Lift Shipping Company and
Avondale Industries, Inc. dated May 12, 1995 prior to the Vessel
entering the yard for refit. It is agreed that such transfer of
interest will not prejudice the member's cover.
Further, PURCHASER shall require that its brokers, B & P
International, Ltd. and Lloyd Thompson give notice to BUILDER of
any notice or information relating to the cancellation,
termination or cessation of the Vessel's Club Entry or any
material change of the Vessel's Club Entry immediately upon
receipt of such notice or information.
Further, from the Effective Date of this CONTRACT until
delivery of the Existing Vessel to BUILDER'S yard, PURCHASER
shall procure and maintain Collision Liability insurance in a
form at least as broad as that contained in the American
Institute Hull Clauses (June 2, 1977).
PURCHASER shall require Hull and War Risks insurance
Underwriters to acknowledge in writing that in the event that
BUILDER should be found liable in any manner or under any theory
of law or equity for, but not limited to, loss, damage, expense,
fines, and/or penalties arising out of the operation of the
existing Vessel and the Sale and Purchase Agreement, BUILDER
shall have the same rights and status under the above and
Collision Liability Insurance Policy as the PURCHASER.
For liabilities and indemnities assumed by PURCHASER under
this CONTRACT all insurance policies of PURCHASER (and its
subcontractors, if any) shall expressly waive subrogation as to
BUILDER. It is further agreed that each such policy, other than
Worker's Compensation policies, shall name BUILDER as an
additional assured, for liabilities and indemnities assumed by
PURCHASER, it being understood that such policies shall be
endorsed to provide that PURCHASER'S policies are primary to, and
shall receive no contribution from, any insurance policies
maintained by BUILDER.
(k) All insurance policies in which both parties are named
insureds will have a "Cross Liability" Clause identical to the
Cross Liabilities clause as referenced in Exhibit "C", item F
excluding all claims arising under this CONTRACT.
(l) Except for the Protection and Indemnity and War Risks
insurance, all insurance policies will provide for thirty (30)
days prior written notice of cancellation or material change to
BUILDER from the underwriters.
(m) Prior to commencement of work, PURCHASER shall furnish
to BUILDER a Certificate of Insurance evidencing that coverages
outlined above are in full force and effect and the originals of
the above policies shall be available in PURCHASER'S office at
365 Canal Street, Suite 2670, New Orleans, Louisiana 70130 for
review upon reasonable request of BUILDER. Any deductibles under
such insurance shall be borne by PURCHASER excluding BUILDER's
Risk.
ARTICLE XIV - RISK OF LOSS - TOTAL LOSS OF A VESSEL
(a) In the event of an actual or constructive total loss of
the Vessel (as defined in BUILDER's insurance coverage) prior to
the delivery, construction of such Vessel shall proceed unless
the PURCHASER or the BUILDER shall elect within a reasonable
period of time to cancel the construction. If an election is made
to cancel the construction, the party electing to cancel shall
give notice to that effect to the other party. If no election is
made to cancel the construction, then construction and delivery
of the Vessel shall proceed in accordance with this CONTRACT, as
it may have been amended. In any such event an extension of the
CONTRACT Delivery Date of the Vessel pursuant to the provisions
of ARTICLE IX - EXTENSION OF TIME FOR COMPLETION OF WORK of this
CONTRACT shall be agreed upon.
(b) In the event that there is an actual or constructive
total loss of the Vessel prior to delivery and such loss results
from the operation of an insurable risk covered by insurance as
required under ARTICLE XIII - INSURANCE of this CONTRACT, all the
proceeds of such insurance payable as a result of such loss shall
be paid to the SECRETARY for distribution to the SECRETARY or the
PURCHASER, as appropriate, in an amount equal to (i) the total
progress payments made for the lost Vessel and (ii) the value of
all lost materials, outfit, equipment and appliances provided by
the PURCHASER for and used or to be used in the construction of
the Vessel, with the balance paid to the BUILDER. Such
distribution shall be made without regard to whether, under
Subarticle (a) above, construction is cancelled or proceeds. It
is agreed that only in the event of an actual or constructive
total loss of the Vessel prior to arrival of the existing vessel
at the Shipyard, the total progress payments for the lost Vessel
in (i) above shall not include the first progress payment paid
for the Stern of the existing vessel. It is agreed that in the
event of an actual or constructive total loss of the Vessel after
the arrival of the Existing Vessel at the Shipyard, the
obligations to pay PURCHASER shall include the amount of the
first progress payment paid by PURCHASER to BUILDER for the Stern
of the Existing Vessel and this amount shall be utilized by
PURCHASER to exercise its option to purchase the S/S COASTAL
MANATEE, Official No. 287186 or another mutually agreeable
substitute Vessel.
(c) In the event that there is an actual or constructive
total loss of the Vessel prior to delivery which is not covered
by insurance and election is made by the PURCHASER or the BUILDER
to cancel construction of the Vessel, the BUILDER shall pay to
the SECRETARY for distribution to the SECRETARY or the PURCHASER,
as appropriate, an amount equal to all payments made under this
CONTRACT up to the date of the actual or constructive total loss.
It is agreed that only in the event of an actual or constructive
total loss of the Vessel prior to arrival of the existing vessel
at the Shipyard, the obligation in the above sentence for BUILDER
to pay the SECRETARY for distribution to the SECRETARY or the
PURCHASER, as appropriate, an amount equal to all payments under
this CONTRACT shall not include the first progress payment paid
by PURCHASER to BUILDER for the Stern of the existing vessel. It
is agreed that in the event of an actual or constructive total
loss of the Vessel after the arrival of the Existing Vessel at
the Shipyard the obligations of the BUILDER to pay the SECRETARY
shall include the first progress payment paid by PURCHASER to
BUILDER for the Stern of the Existing Vessel and this amount of
the first progress payment shall be utilized by PURCHASER to
exercise its option to purchase the S/S COASTAL MANATEE, Official
No. 287186 or another mutually agreeable substitute Vessel.
(d) In the event of damage to or loss of the Vessel or any
equipment or materials to be installed therein prior to the
delivery of the Vessel to PURCHASER and such loss or damage is
not an actual or constructive total loss, such loss or damage
shall be made good at BUILDER's expense; the proceeds of
insurance for said loss or damage shall be paid to the SECRETARY
for distribution to the BUILDER; and the CONTRACT Delivery Date
shall be extended as required by such additional work.
ARTICLE XV - INJURY TO EMPLOYEES AND OTHERS
(a) BUILDER agrees to protect, defend, indemnify and hold
PURCHASER, its agents, officers, directors, employees, and
representatives (hereinafter collectively referred to as "Owner
Group") harmless from and against all claims, losses, costs,
demand, damages, suits, judgments, penalties, liabilities, debts,
expenses and causes of action of whatsoever nature or character,
whether known or unknown, and whether arising out of contract,
tort, strict liability, unseaworthiness of any vessel,
misrepresentation, violation of applicable law and/or any cause
whatsoever, including but not limited to reasonable attorney's
fees and other costs and expenses, without limit and without
regard to the cause or causes thereof, which in any way arise out
of or are related to this agreement between PURCHASER and BUILDER
(including, without limitation, the performance or subject matter
of this CONTRACT or ingress, egress or presence on any premises,
whether land, buildings, vessels, or otherwise, in conjunction
with this CONTRACT) and which are asserted by or arise in favor
of BUILDER, BUILDER's agents, representatives or employees
(and/or their spouses or relatives) or BUILDER's subcontractors,
subcontractor's agents, representatives or employees (and/or
their spouses or relatives) due to bodily injury or death,
whether or not caused by the sole, joint and/or concurrent
negligence, fault or strict liability of Owner Group, the
unseaworthiness of any vessel, or any other cause whatsoever. It
is further understood and agreed that this indemnity and defense
obligation shall include the obligation to reimburse PURCHASER
for any attorneys' fees, costs and expenses which may be incurred
by PURCHASER in enforcing the defense and indemnity obligations
set forth in this Article.
(b) For liabilities and indemnities assumed by BUILDER
under this CONTRACT all insurance policies of BUILDER (and its
subcontractors, if any) shall expressly waive subrogation as to
PURCHASER. It is further agreed that each such policy, other
than Worker's Compensation policies, shall name PURCHASER as an
additional insured, for liabilities and indemnities assumed by
BUILDER, it being understood that such policies shall be endorsed
to provide that BUILDER'S policies are primary to, and shall
receive no contribution from, any insurance policies maintained
by PURCHASER.
(c) Without in any manner limiting the generality of the
foregoing Subarticle (a), BUILDER agrees to protect, defend,
indemnify and hold Owner Group harmless from and against any and
all claims, demands, suits, administrative fines and penalties,
liabilities or causes of action, civil or criminal, including
those made by or before any administrative body or commission
established by any government having jurisdiction over the
premises, relating to the generation or disposal of hazardous
wastes or to the pollution or contamination of the waters, or
air, or earth, or otherwise directly or indirectly arising out of
or connected with or related to this CONTRACT or the performance
thereof, regardless of whether based on any violation or
purported violation of a statute, ordinance or regulation of any
governmental authority, but only if caused by BUILDER's
negligence. BUILDER assumes the obligation to comply with all
such statutes, ordinances and regulations. As used in this
Subarticle, the phrase "liabilities" includes without limitation
expenditures for controlling and removing pollutants,
expenditures for cleaning up any polluted areas, sums paid on
account of injury to or death of persons, and sums paid or
assessed on account of damage to or destruction of property,
public or private, including any and all natural resources and
marine life. The obligations of this Subarticle (c) will expire
on the Delivery Date.
(d) PURCHASER agrees to protect, defend, indemnify and hold
BUILDER, its agents, officers, directors, employees, and
representatives (hereinafter referred to collectively as
"Contractor Group") harmless from and against all claims, losses,
costs, suits, judgments, demands, damages, penalties,
liabilities, debts, expenses and causes of action of whatsoever
nature or character, whether known or unknown and whether arising
out of contract, tort, strict liability, unseaworthiness of any
vessel, misrepresentation, or violation of applicable law and/or
any cause whatsoever, including but not limited to reasonable
attorney's fees and other costs and expenses, without limit and
without regard to the cause or causes thereof, which in any way
arise out of or are related to this agreement between PURCHASER
and BUILDER (including, without limitation, the performance of
subject matter of this CONTRACT or ingress, egress or presence on
any premises, whether land, buildings, vessels, or otherwise, in
conjunction with this CONTRACT and which are asserted by or arise
in favor of PURCHASER, PURCHASER's agents, representatives or
employees (and/or their spouses or relatives) or PURCHASER's
subcontractors, subcontractor's agents, representatives or
employees (and/or their spouses or relatives) due to bodily
injury or death, whether or not caused by the sole, joint and/or
concurrent negligence, fault or strict liability of Contractor
Group, the unseaworthiness of any vessel, or any other cause
whatsoever. It is further understood and agreed that this
indemnity and defense obligation shall include the obligation to
reimburse BUILDER for any attorneys' fees, costs and expenses
which may be incurred by BUILDER in enforcing the defense and
indemnity obligations set forth in this Article.
(e) For liabilities and indemnities assumed by PURCHASER
under this CONTRACT all insurance policies of PURCHASER (and its
subcontractors, if any) shall expressly waive subrogation as to
BUILDER. It is further agreed that each such policy, other than
Worker's Compensation policies, shall name BUILDER as an
additional insured, for liabilities and indemnities assumed by
PURCHASER, it being understood that such policies shall be
endorsed to provide that PURCHASER'S policies are primary to, and
shall receive no contribution from, any insurance policies
maintained by BUILDER.
(f) Without in any manner limiting the generality of the
foregoing Subarticle (d), PURCHASER agrees to protect, defend,
indemnify and hold Contractor Group harmless from and against any
and all claims, demands, suits, administrative fines and
penalties, liabilities or causes of action, civil or criminal,
including those made by or before any administrative body or
commission established by any government having jurisdiction over
the premises, relating to the generation or disposal of hazardous
wastes or to the pollution or contamination of the waters, or
air, or earth, or otherwise directly or indirectly arising out of
or connected with or related to this CONTRACT or the performance
thereof, regardless of whether based on any violation or
purported violation of a statute, ordinance or regulation of any
governmental authority, but only if caused by PURCHASER's
negligence. PURCHASER assumes the obligation to comply with all
such statutes, ordinances and regulations. As used in this
Subarticle, the phrase "liabilities" includes without limitation
expenditures for controlling and removing pollutants,
expenditures for cleaning up any polluted areas, sums paid on
account of injury to or death of persons, and sums paid or
assessed on account of damage to or destruction of property,
public or private, including any and all natural resources and
marine life. The obligations of this Subarticle (f) will expire
on the Delivery Date.
ARTICLE XVI - APPOINTMENT OF REPRESENTATIVES
(a) PURCHASER designates Alan B. Nierenberg to be its
authorized representative for all matters during the performance
of this CONTRACT.
(b) BUILDER designates Mr. Bruce Wismar to be its BUILDER's
Program Manager for administering the performance of this
CONTRACT.
(c) The Parties agree that its named representative will be
available for consultations during normal working hours.
With respect to the performance of this CONTRACT, the
PURCHASER shall be entitled to designate authorized
representatives who shall have authority to give directions under
this CONTRACT. Notice of all such designations (together with a
statement of the scope of authority of the designee) and notice
of the revocation of any prior designation shall be given
promptly to the BUILDER in writing. The BUILDER shall have no
obligation to follow any directions of the PURCHASER except those
which shall be issued in writing over the signature of an
authorized representative of the PURCHASER acting within the
scope of his authority.
ARTICLE XVII - MATERIALS AND WORKMANSHIP
(a) In performing the CONTRACT work, the BUILDER shall
comply with all of the requirements of the American Bureau of
Shipping, the United States Coast Guard and all other agencies
having jurisdiction over the CONTRACT work (hereinafter called
individually a "Regulatory Body" and collectively "Regulatory
Bodies") notwithstanding that there may be shown in or on any
drawing set out in the Specifications and the specific
requirements of any item of CONTRACT work, and notwithstanding
any approvals shown upon said drawing , subject, however, to the
following: (i) if the Specifications specifically require work in
excess of that required by the applicable Regulatory Body, such
specifically required work shall be performed by the BUILDER as
CONTRACT work required by this CONTRACT; (ii) if the
Specifications require work which is less than that required by
the applicable Regulatory Body, the BUILDER shall perform the
work required by the Regulatory Body as CONTRACT work required by
this CONTRACT; (iii) if the Specifications require work which is
less than that required by the applicable Regulatory Body, and
such regulatory requirement is in compliance with a rule or an
interpretation of a rule of the Regulatory Body made effective
subsequent to 7 March 1995, and said requirement effects an
increase in the cost of the CONTRACT work and/or the Delivery
Date, the Revised Contract Price and/or the Delivery Date shall
be adjusted pursuant to the provisions of ARTICLE VII - CHANGES
of this CONTRACT.
(b) Unless otherwise specifically provided in the
Specifications, all workmanship, equipment, materials, and
articles incorporated in the Vessel shall be new, of first class
marine quality and not known to be a discontinued line. The
BUILDER shall furnish to the PURCHASER the purchase
specifications and vendors' specifications for materials or
components which BUILDER contemplates incorporating in the Vessel
and all changes thereto, and names of the manufactures, vendors
and subcontractors of the principal items of machinery,
mechanical and other equipment and work which it contemplates
incorporating in or having performed on the Vessel.
ARTICLE XVIII - INSPECTION - APPROVAL OF DRAWINGS
(a) All material and workmanship, unless otherwise
designated by the Specifications or by this CONTRACT, shall be
subject to inspection by representatives of the PURCHASER and
representatives of Regulatory Bodies at any and all proper times
during manufacture and/or construction at any and all places
where such manufacture and/or construction are carried on, and
BUILDER's subcontracts shall make appropriate provision therefor.
Access to the Shipyard for the performance and administration
therein of all inspections and tests that may be required by the
representatives of the PURCHASER or representatives of Regulatory
Bodies shall at all times be subject to BUILDER's security
requirements.
(b) The BUILDER shall furnish promptly at the Shipyard,
without additional charge, all reasonable facilities and
materials, including suitably furnished offices for the PURCHASER
with light, heat and air conditioning, as required by climatic
conditions, telephone, desks, drawing tables, and filing
cabinets, necessary for the convenient administration of the
inspection and tests that may be required by the representatives
of the PURCHASER and Regulatory Bodies. Long distance telephone
charges will be for the account of PURCHASER.
(c) Within thirty (30) days after the effective date of
this CONTRACT, the BUILDER shall submit for approval a Working
Drawing schedule listing all Working Drawings to be prepared and
the dates by which each Working Drawing is to be completed.
Copies of all Working Drawings will be submitted to PURCHASER for
review, and the PURCHASER shall return the Working Drawings
within fourteen (14) days after receipt thereof marking
corrections required for compliance with the Specifications.
Failure of the PURCHASER to return a Working Drawing within
fourteen (14) days shall constitute acceptance of such Working
Drawing. Approval or acceptance of such Working Drawings ,
materials and components or schedules shall not relieve the
BUILDER from the responsibilities specified in this CONTRACT.
BUILDER will keep PURCHASER advised of required reviewing
priorities. BUILDER will provide PURCHASER with copies of all
correspondence with Regulatory Bodies. BUILDER will provide
PURCHASER full access to all working documents for this CONTRACT.
(d) The PURCHASER shall promptly approve all work and
materials conforming to the requirements of this CONTRACT and
shall promptly reject all work and materials not conforming to
the requirements of this CONTRACT. Rejected workmanship shall be
satisfactorily corrected, and rejected material shall be
satisfactorily repaired or replaced with proper material without
charge therefor, unless such work or material shall have been
furnished by the PURCHASER, in which event the remedying of such
defective work, or the replacing of such defective material, if
done by the BUILDER, shall be treated as a change under this
CONTRACT. The BUILDER shall promptly segregate and remove the
rejected material. The acceptance of such workmanship and
materials shall not prejudice the rights of the PURCHASER under
this CONTRACT.
(e) All inspection, tests, and approvals shall be performed
in such manner as not to unnecessarily delay the work.
(f) The provisions of this Article are subject to the
provisions of other ARTICLES of this CONTRACT and Specifications
relative to the trials, tests and acceptance of work done on the
Vessel.
(g) If requested by the Secretary upon delivery of the
Vessel, the PURCHASER will provide or cause to be provided a
complete set of drawings used for the construction of the Vessel
on microfilm or other acceptable format.
ARTICLE XIX - TRIALS
(a) The Vessel shall have the trials set forth in the
Specifications and this CONTRACT. The reasonably necessary
expenses of all trials shall be borne by the BUILDER except that
the PURCHASER will furnish the operating crew for the Vessel.
(b) When work on the Vessel is substantially complete, as
required by this CONTRACT, and when the BUILDER has made
sufficient tests at the dock to the satisfaction of the PURCHASER
to be reasonably sure of compliance with the requirements of this
CONTRACT, the Vessel shall be subject to trials at sea as
prescribed by the Specifications and this CONTRACT.
(c) If there is reasonable cause to question its
performance, new machinery or machinery repaired by BUILDER shall
be opened up for post-trial inspection and examination after
completion of such trials at sea. If any defects, deficiencies
or damage appear in the work performed by the BUILDER or in the
materials or equipment supplied by the BUILDER excluding the
Stern, the defects, deficiencies or damage shall be corrected by
and at the expense of the BUILDER, after which the machinery
shall be closed and connected, ready for service.
ARTICLE XX - ADDITIONAL TRIALS - EXPENSES
If, at and upon the trials described in ARTICLE XIX - TRIALS
hereof, there shall be any failure of the Vessel to meet the
requirements of the Specifications and this CONTRACT, the BUILDER
shall, after corrective action is taken and provided a trial is
necessary to reasonably prove the effectiveness of the corrective
action, be required to make further trials, sufficient in number
reasonably to demonstrate compliance with the Specifications and
this CONTRACT. Except for the operating crew furnished by
PURCHASER, or the Stern, the costs of all additional trials
required by this ARTICLE XX - ADDITIONAL TRIALS - EXPENSES shall
be borne by the BUILDER, except that with regard to any trials
made necessary by failure or malfunction upon prior trial of
equipment or machinery furnished by the PURCHASER, the PURCHASER
shall bear the cost of such additional trial.
ARTICLE XXI - ACCEPTANCE AND DELIVERY OF THE VESSEL
(a) On completion of the inspections by PURCHASER, as well
as all tests, and trials and rectification of any defects
discovered therein, with the exception of those defects as may be
listed in the Delivery Certificate by PURCHASER, a meeting will
be held between the BUILDER and PURCHASER at which:
(i) The BUILDER will report to PURCHASER on the work
carried out in rectifying any defects or omissions found in the
Vessel during the sea trials and/or any work outstanding on
completion of the sea trials;
(ii) PURCHASER'S representatives may conduct a final
inspection of the Vessel in the presence of BUILDER'S
representatives;
(iii)The Parties will agree to the quantity and value
of fuel and lubricants remaining on board after completion of all
tests and sea trials to be charged to PURCHASER.
(iv) BUILDER will present to PURCHASER evidence that
the Vessel is certified by the U.S. Coast Guard and ABS (interim
certification), unless PURCHASER furnished equipment, or the
Stern precludes such certification.
(v) PURCHASER shall pay to BUILDER any amount then due
under the provisions of ARTICLE VI, PAYMENT OF CONTRACT PRICE -
METHOD OF PAYMENT.
(vi) Upon completion of items (i), (ii), (iii), (iv),
and (v) above and any other outstanding matters, the BUILDER will
deliver the Vessel to PURCHASER, whereupon PURCHASER will accept
the Vessel by the concurrent execution by both Parties of a
Delivery Certificate, whereupon such title to the Vessel as
remains in BUILDER will pass to PURCHASER.
(b) The interval between completion of the sea trials and
the delivery shall be sufficient to enable the inspections and
rectifications of defects to be completed, but in any event shall
not be less than four (4) business days.
(c) Within five (5) business days after delivery, PURCHASER
shall remove the Vessel from BUILDER'S yard. The Vessel shall be
deemed ready for delivery when it has received the necessary
certification by the U. S. Coast Guard without any qualification
or limitation that would significantly affect the operation or
commercial value of the Vessel in the intended service and has
been judged ready for delivery without any qualification or
limitation that would significantly affect the commercial value
or operation of the Vessel in the intended service by the
Surveyor of the American Bureau of Shipping assigned to the
Vessel. If after the necessary U.S. Coast Guard certification
and ABS approvals have been obtained and there still remains a
good faith dispute between the parties as to whether the Vessel
is ready for delivery, the PURCHASER may deposit the estimated
cost of the disputed items into an escrow account in accordance
with the provisions of Subarticle XXV(f) hereof and accept
delivery of the Vessel.
(d) If by agreement between the Parties and notwithstanding
the provisions of this ARTICLE the Vessel is accepted by
PURCHASER with any known outstanding discrepancies or defects not
corrected prior to delivery, each deficiency or deviation from
the Specifications and drawings not previously approved by
BUILDER and PURCHASER shall be set out in a list and signed by
PURCHASER and BUILDER. At the option of PURCHASER, the Parties
may agree on money damages in lieu of performance by BUILDER for
each such deficiency or deviation.
(e) The Vessel shall be turned over by BUILDER to PURCHASER
in midstream of the Mississippi River at the Shipyard.
ARTICLE XXII - GUARANTEE
(a) Notwithstanding any inspection or failure to reject by
the PURCHASER or any Regulatory Body pursuant to ARTICLES XVIII
through XXI of this CONTRACT, if, at any time within twelve (12)
months after delivery of the Vessel there shall arise or be
discovered any weakness, any deficiency, any failure, any
breaking down or deterioration in the design, workmanship,
equipment, machinery, or material, furnished by the BUILDER or
its subcontractors in performing the CONTRACT work, excluding all
PURCHASER furnished items and excluding the Stern except for work
performed by the BUILDER pursuant to the Specifications, which
causes the Vessel to not function as prescribed and as intended
by the Specifications and this CONTRACT (herein called a
"Guarantee Deficiency"), such Guarantee Deficiency shall be made
good, at the BUILDER's expense, to the requirements of the
Specifications and this CONTRACT; provided, however, the BUILDER
shall not be responsible for the cost of correcting any such
Guarantee Deficiency due to ordinary wear and tear, nor to the
extent increased by the negligence or other improper act of the
PURCHASER or any operator of the Vessel or of any other person
other than the BUILDER or its subcontractors during said period.
The liability of the BUILDER to the PURCHASER under this CONTRACT
on account of any such Guarantee Deficiency shall not extend
beyond the actual corrective repair or replacement thereof at
straight time commercial shipyard or ship repair yard rates, or
overtime rates that have been approved by BUILDER in case of
emergency, including the cost of the dockage of the Vessel, if
necessary. The BUILDER shall not be liable to the PURCHASER for
any damage to such Vessel or its equipment or cargo or other
property of the PURCHASER or for consequential damages of the
PURCHASER arising out of any such Guarantee Deficiency, except
that in the event any Guarantee Deficiency in any item of
machinery or equipment furnished by the BUILDER, or in the event
that any workmanship or material furnished by the BUILDER in
performance of work upon the Vessel's machinery or equipment,
gives rise to a Guarantee Deficiency causing any damage to such
items of machinery or equipment, the BUILDER shall be liable not
only for the cost of correcting or repairing such Guarantee
Deficiency, but also shall be liable for the cost of correcting
or repairing such damage to such item of machinery or equipment
caused by such Guarantee Deficiency. Any work required to be
performed pursuant to the provisions of this ARTICLE shall be
carried out, if practicable and at the PURCHASER's option, at the
shipyard of the BUILDER. The BUILDER may, with the concurrence of
the PURCHASER, have such work performed by its subcontractor,
another shipyard or repair facility. The PURCHASER may, however,
have such work performed by a shipyard or ship repair yard at any
port satisfactory to it and in that event the BUILDER shall be
liable to the PURCHASER for the reasonable expense thereof at the
straight time commercial shipyard or ship repair yard rates
prevailing in such port areas, including the cost of dockage of
the Vessel, if necessary. Should the BUILDER so desire, it may
have an engineer onboard the Vessel for the guarantee period who
shall have full opportunity to observe and inspect the working of
the Vessel in all its parts, but without any directing or
controlling authority over the Vessel. PURCHASER will provide
suitable accommodations and board to the engineer during the
guarantee period without charge.
(b) The PURCHASER promptly shall notify the BUILDER of any
Guarantee Deficiencies or damage for which the BUILDER is liable
pursuant to Subarticle (a) above that are discovered or appear
within the guarantee period, but in no event later than ten (10)
days after the end of such period. In the event the PURCHASER
proposes the repair or correction of such Guarantee Deficiency or
damage before the Vessel reaches its next continental United
States port, notice shall be given to the BUILDER not later than
five (5) days after the discovery of the Guarantee Deficiency or
damage and before repair, otherwise notice shall be given five
(5) days after the Vessel next reaches a continental United
States port and before the Guarantee Deficiency or damage is
repaired or corrected. Whenever practical (taking into
consideration the necessity of keeping the Vessel on schedule)
the BUILDER shall be given an opportunity to inspect the
Guarantee Deficiency or damage before it is remedied.
(c) A final guarantee survey of the Vessel shall be
conducted by the PURCHASER at or near the expiration of the
guarantee period. Such survey shall be based on the Guarantee
Deficiencies in the CONTRACT work appearing or discovered during
the guarantee period. In the event that the Vessel is not
available for the guarantee survey on or before the end of the
guarantee period, the PURCHASER promptly shall submit to the
BUILDER a list of all of the Guarantee Deficiencies in the
CONTRACT work appearing or discovered during the guarantee period
and all damage for which the BUILDER is liable under the
provisions of this ARTICLE. The final guarantee survey shall be
held at such port in the United States as the PURCHASER
designates and seven (7) days written notice of time and place
for such guarantee survey shall be given to the BUILDER by the
PURCHASER.
(d) For the determination of any underwater Guarantee
Deficiencies, the PURCHASER, at the PURCHASER's expense, may
retain two (2) divers, one to be chosen by BUILDER, to inspect
the bottom of the Vessel in clear water. If both divers agree in
writing to the extent of underwater Guarantee Deficiencies to the
Vessel then PURCHASER may drydock the Vessel within twenty four
(24) months after its delivery at its expense and BUILDER will
not be responsible for repairs of the Guarantee Deficiencies
except as documented by the agreement of both divers. If both
divers cannot agree to the extent of the underwater Guarantee
Deficiencies to the Vessel then PURCHASER may request that
BUILDER drydock the Vessel at its expense within fifteen months
following the Vessel delivery and BUILDER's liability for
underwater Guarantee Deficiencies will be limited to those which
arose during the twelve (12) month guarantee period. If it
becomes necessary to drydock the Vessel solely for the correction
of a Guarantee Deficiency for which the BUILDER is responsible,
the cost of the entire drydocking required for the correction of
the Guarantee Deficiency, as well as the cost of remedying the
deficiency, as provided in this ARTICLE , shall be at the expense
of the BUILDER.
(e) At the end of the guarantee period herein provided, the
BUILDER agrees to transfer and assign to the PURCHASER, as to any
item of material installed in the Vessel, the guarantee rights of
the BUILDER against the vendor of such item of material which
under the terms of such vendor's guarantee the vendor's
obligations extend for a period beyond the guarantee period
herein set forth; provided that the BUILDER may exclude from such
assignment any rights against the vendor in favor of the BUILDER
for Guarantee Deficiencies and damages within the guarantee
period in ARTICLE XXII - GUARANTEE (a) hereof. BUILDER will
assign to PURCHASER any warranties in excess of the twelve (12)
months after the delivery of the Vessel that BUILDER is able to
obtain from paint vendors, if any.
(f) The liability (if any) of the BUILDER for a Guarantee
Deficiency and for any damage to the equipment or machinery of
the Vessel, resulting from any Guarantee Deficiency, as set out
in this ARTICLE, is the exclusive remedy of the PURCHASER in
warranty, contract, tort or otherwise against the BUILDER for any
Guarantee Deficiency. Except for the provisions of ARTICLE XI,
CONTRACT PRICE ADJUSTMENTS, in no event under this CONTRACT shall
BUILDER be responsible for any sum in excess of the repairs
and/or replacement as specified herein it being specifically
understood that BUILDER is not responsible for delay, demurrage,
loss of profits, loss of use or any other consequential damages.
It is specifically understood that any Guarantee Deficiency
reported after the twelve (12) month guarantee period, except for
the underwater Guarantee Deficiencies of Subarticle (d) above,
and all damages therefrom, shall be the exclusive responsibility
of PURCHASER.
(g) THE GUARANTEES SET FORTH IN THIS ARTICLE XXII,
GUARANTEE, RELATING TO ANY GUARANTEE DEFICIENCY ARE EXCLUSIVE AND
ARE IN LIEU OF ALL IMPLIED WARRANTIES (INCLUDING BUT NOT LIMITED
TO ANY IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A
PARTICULAR PURPOSE AND WORKMANLIKE SERVICES).
(h) Anything to the contrary notwithstanding, the BUILDER
does not guarantee PURCHASER furnished materials or equipment,
nor the Stern, for any Guarantee Deficiency items except to meet
the requirements stipulated in ARTICLE X, PERFORMANCE STANDARD.
ARTICLE XXIII - DEFAULT BY PURCHASER
The following shall constitute events of default by
PURCHASER under this CONTRACT:
(a) Delay in Payment
Failure of PURCHASER to make payment to BUILDER as required
under the provisions of ARTICLE VI - PAYMENT OF CONTRACT PRICE -
METHOD OF PAYMENT, provided payment is not received by BUILDER
for a period of ten (10) days after written notice to PURCHASER
thereof by BUILDER.
(b) Non-Compliance with other Undertakings
Default in compliance with or the due and punctual
performance of any material warranties, covenants and agreements
required to be maintained and performed by PURCHASER hereunder
other than the scheduled delivery of the S/S Knight, which
default continues unremedied for a period of thirty (30) days
after written notice to PURCHASER thereof by BUILDER.
(c) Receivership or Insolvency
An order of a court of competent jurisdiction, other than
upon petition by BUILDER, appointing a receiver, liquidator or
trustee of the assets of PURCHASER or any part thereof or a
decree of such court adjudicating PURCHASER as bankrupt, or
declaring PURCHASER insolvent.
(d) Acts of Bankruptcy
The filing by PURCHASER of a voluntary petition in
bankruptcy, or the making by PURCHASER of an assignment for the
benefit of its creditors, or the admission by PURCHASER in
writing of its inability to pay its debts generally as they
become due, or its consent to, acquiescence in or failure to
contest the appointment of a receiver or receivers of all or part
of its assets.
(e) Voluntary Reorganization
Any petition or any answer proposing the reorganization of
PURCHASER pursuant to the Federal Bankruptcy Act or any similar
law, federal or state, being filed against PURCHASER in any court
and not being dismissed or denied within sixty (60) days after
the date on which such petition or answer was filed, or the
approval of any such petition or answer by any court.
(f) Involuntary Reorganization
The filing of a petition by any of the creditors of
PURCHASER to reorganize PURCHASER pursuant to the Federal
Bankruptcy Act or any similar law, federal or state, and such
petition not being dismissed or denied within sixty (60) days
after the date on which such petition was filed, or the approval
of such petition by the court having jurisdiction thereof.
(g) Seizure of Assets
The assumption of custody or control of the whole or any
substantial part of the assets of PURCHASER for a period in
excess of thirty (30) days by any governmental agency or any
court of competent jurisdiction at the instance of any
governmental agency.
(h) Nondelivery of S/S Knight
Failure to timely deliver the S/S Knight as required by
ARTICLE IV, ITEMS FURNISHED BY PURCHASER.
ARTICLE XXIV - DEFAULT BY BUILDER
The following shall constitute events of default by BUILDER
under this CONTRACT:
(a) Receivership or Insolvency
An order of a court of competent jurisdiction, other than
upon petition by PURCHASER, appointing a receiver, liquidator or
trustee of the assets of BUILDER or any part thereof, or a decree
of such a court adjudicating BUILDER as bankrupt, or declaring
BUILDER insolvent.
(b) Acts of Bankruptcy
The filing by BUILDER of a voluntary petition in bankruptcy,
or the making by BUILDER of an assignment for the benefit of its
creditors, or the admission of BUILDER in writing of its
inability to pay its debts generally as they become due, or its
consent to, acquiescence in or failure to contest the appointment
of a receiver or receivers of all or any part of its assets.
(c) Voluntary Reorganization
Any petition or answer proposing the reorganization of
BUILDER pursuant to the Federal Bankruptcy Act or any similar
law, federal or state, being filed against BUILDER in any court
and not being dismissed or denied within sixty (60) days after
the date on which such petition or answer was filed, or the
approval of such petition or answer by any court of competent
jurisdiction.
(d) Involuntary Reorganization
The filing of a petition to reorganize BUILDER by any of the
creditors of BUILDER pursuant to the Federal Bankruptcy Act or
any similar law, federal or state, and such petition not being
dismissed or denied within sixty (60) days after the date on
which such petition was filed, or the approval of such petition
by the court having jurisdiction thereof.
(e) Attachment of Liens or Privileges
The attachment of any lien or privilege to the Vessel not
due to the acts or omissions of PURCHASER or persons in privity
with it, whether under federal or state law or the General
Maritime Law, if such lien is not removed within sixty (60) days
after written demand by PURCHASER to BUILDER for such removal or
unless BUILDER, within such time, shall not have provided
PURCHASER with a bond by sureties acceptable to PURCHASER against
such lien in an amount equal to the face amount of such lien.
(f) Non-Compliance
Default in compliance with or the due performance of any
material warranties, covenants and agreements required to be
maintained and performed by BUILDER hereunder, which default
continues unremedied for a period of third (30) days after
written notice to BUILDER thereof.
ARTICLE XXV - ACTION BY BUILDER UPON DEFAULT BY PURCHASER
(a) Right of Termination
In the event that any one or more of the events of default
specified in ARTICLE XXIII - DEFAULT BY PURCHASER of this
CONTRACT shall have occurred and be continuing, BUILDER, if it so
elects, may terminate this CONTRACT thirty (30) days (ten (10)
days if for non-payment and as otherwise indicated in ARTICLE IV,
ITEMS FURNISHED BY PURCHASER, for PURCHASER's failure to deliver
the S/S Knight) after written notice has been given to the
PURCHASER.
(b) Completion and Sale of Vessel
In the event of such termination, PURCHASER agrees that
BUILDER shall be entitled to continue construction and to sell
the Vessel while work is in process or after completion. Sale of
the Vessel under this ARTICLE XXV means all work-in-process,
materials, articles of machinery, outfit and equipment and
supplies to be installed in the Vessel. Pending such sale,
BUILDER shall be entitled to retain any progress payments already
paid.
(i) Any such sale may be effected by the BUILDER
either by public auction (in which case BUILDER, its agents or
affiliates may bid for and buy the Vessel) or by private contract
on such terms and conditions as BUILDER may see fit, but BUILDER
shall be bound in good faith to secure the best price obtainable,
and no such private contract shall be effective until fifteen
(15) days after BUILDER has notified PURCHASER and the Secretary
of its intention to enter such contract and the purchase price
thereunder.
(ii) In the event BUILDER elects to complete and sell
the Vessel, then BUILDER thereafter shall repay to PURCHASER (but
without interest) an amount equal to the sum of all progress
payments made by PURCHASER, less any deficiency between (a) the
Revised Contract Price as adjusted under this CONTRACT at the
time of such sale and (b) the net price realized for the Vessel
from the sale, after payment of all additional costs, charges and
expenses incurred by BUILDER resulting from such default.
(iii)In the event that BUILDER elects to complete the
Vessel, PURCHASER shall be entitled to negotiate the revival of
this CONTRACT at any time before the sale of the Vessel by
providing satisfactory evidence that the events causing the
default have been remedied.
(c) Abandonment of Construction
In the event of termination, BUILDER may at its option elect
not to complete the Vessel and to sell the Vessel in its state of
completion at the time of abandonment of construction. If BUILDER
so elects, BUILDER shall notify PURCHASER in writing of its
election and shall thereafter repay to PURCHASER (but without
interest) all progress payments already paid by PURCHASER less
the sum of: (i) One-Hundred ten percent (110%) of BUILDER's
reasonable costs incurred in the CONTRACT work to the date of the
abandonment of construction, plus (ii) such other costs, charges,
expenses and damages as BUILDER may have incurred as a result of
the default of PURCHASER, minus (iii) the proceeds of any sale of
the Vessel in its state of completion as of the time of
abandonment of construction and the reasonable value of any part
thereof that remains unsold. BUILDER shall be bound in good faith
to secure the best price obtainable therefor for purposes of the
determination of item (iii) of the foregoing sum; and if
PURCHASER shall have cause to believe that BUILDER has not
obtained the best price and terms possible, PURCHASER or the
Secretary shall have the option of purchasing the Vessel for cash
within thirty (30) days after notice thereof by BUILDER to
PURCHASER at the price and on the terms of the offer by a third
party deemed by BUILDER to be most favorable to BUILDER.
(d) Alternative Remedies
The rights conferred upon BUILDER under the terms of this
ARTICLE XXV - ACTION BY BUILDER UPON DEFAULT OF PURCHASER shall
not be exclusive of any other remedies in law or equity which
might be otherwise available to BUILDER upon the happening of the
events of default specified in ARTICLE XXIII - DEFAULT BY
PURCHASER hereof. Failure of BUILDER to exercise any of the
rights conferred upon it hereunder with respect to any default of
PURCHASER shall not constitute a waiver of any rights of BUILDER
with respect to any other events of default of PURCHASER
hereunder.
(e) Contract Group Adjustments
The Revised Contract Price increase due and payable as part
of the settlement of accounts pursuant to this ARTICLE XXV,
ACTION BY BUILDER UPON DEFAULT BY PURCHASER shall include any
adjustment of the Revised Contract Price to be made pursuant to
ARTICLE III, CONTRACT GROUP.
(f) Escrow of Funds During Disputes
In the event any payment or payments otherwise due to
BUILDER under this CONTRACT are subject to a good faith dispute
between the parties arising under any of the other ARTICLES of
this CONTRACT, then, pending resolution of said dispute,
PURCHASER or the Secretary shall have the right to prevent
termination of this CONTRACT by BUILDER by depositing the dollar
amount of payments then under dispute with an escrow holder which
shall be a national banking association or trust company. Said
amount shall be held by the escrow holder in interest-bearing
accounts and any interest accruing thereon (at the rate paid by
the escrow holder and not at the rate defined elsewhere in this
CONTRACT), less lawful charges, shall be paid to the party who
prevails in any such dispute to the extent it prevails. This
Subarticle shall be subject to all other ARTICLES of this
CONTRACT and is intended to provide for the specific event of
imminent termination of this CONTRACT by BUILDER or delay in the
delivery of the Vessel.
ARTICLE XXVI - ACTION BY PURCHASER UPON DEFAULT OF BUILDER
(a) In the event that any one or more of the events of
default specified in ARTICLE XXIV - DEFAULT BY BUILDER of this
CONTRACT shall have occurred except for late delivery, the
PURCHASER may terminate this CONTRACT. The PURCHASER may then
proceed to have all or part of the work on the Vessel completed
at BUILDER's Shipyard or elsewhere and for such purpose may take
possession and use and occupy so much of the
BUILDER's shipyard, plant, equipment, tools, machinery and
appliances, as may be needed for such purposes, without the
payment of any rental or other charge therefor to the BUILDER.
BUILDER hereby agrees to assure to the PURCHASER such use and
occupancy of said facilities and said other property of the
BUILDER for such period of time as may be necessary for the
completion of the CONTRACT work.
(b) If the PURCHASER shall elect to have all or part of the
CONTRACT work completed, the BUILDER shall (i) assign such
subcontractors and orders for material, services and supplies to
be used in the performance of said CONTRACT work to the PURCHASER
as the PURCHASER may direct, and (ii) pay to the PURCHASER the
amount by which the total cost to the PURCHASER of completing
said work (including all amounts paid to the BUILDER hereunder),
plus such other costs, charges, expenses (including reasonable
attorneys fees) and damages as PURCHASER may have incurred as a
result of the default of BUILDER exceeds the total Revised
Contract Price provided in this CONTRACT, as adjusted hereunder;
provided, however, that in computing the amount, if any, to be
paid by the BUILDER to the PURCHASER, appropriate adjustment
shall be made for changes in the CONTRACT work subsequent to the
termination of the CONTRACT.
(c) If the PURCHASER shall elect not to complete the
Vessel, the PURCHASER, at any time within one hundred fifty (150)
days from the date of termination hereunder, may sell the
partially completed Vessel, work-in-process, materials, articles
of machinery, outfit and equipment and supplies to be installed
in the Vessel, together with providing copies of all drawings ,
specifications, calculations and other records reasonably
required for the construction or equipment thereof, provided that
subject to PURCHASER'S right to use all documentation for
completion of the Vessel the BUILDER shall continue to be
entitled to all rights under ARTICLE VIII - RIGHTS TO DESIGN
DATA. The PURCHASER shall have access to the Shipyard in order to
conduct the sale. Any purchaser at any such sale shall be given
reasonable time, not less than sixty (60) days from the date of
sale, within which to remove from the BUILDER's plant the Vessel,
work-in-process, materials, articles of machinery, outfit,
equipment and supplies purchased. The BUILDER or PURCHASER may
become a purchaser at such sale. The proceeds of the sale shall
be applied, first, to payment of all costs and expenses,
including reasonable attorney's fees incurred by the PURCHASER or
its assigns in making such sale, secondly, to reimbursement of
the PURCHASER for payments heretofore made by the PURCHASER to
the BUILDER on account of the Vessel; and thirdly, to payment of
such other costs, charges, expenses and damages, including
reasonable attorneys fees, as PURCHASER may have incurred as a
result of the default of BUILDER. The remaining proceeds, if
any, shall be paid over to the BUILDER. In the event the proceeds
of the sale shall not be sufficient to pay the first, second and
third items, as above set forth, the difference shall be paid to
the PURCHASER by the BUILDER.
(d) The rights conferred upon the PURCHASER under the terms
of this Article shall not be exclusive of any other remedies in
law or equity which might be otherwise available to PURCHASER
upon the happening of the events of default specified in ARTICLE
XXIV - DEFAULT BY BUILDER. Failure of the PURCHASER to exercise
any of the rights conferred upon it hereunder with respect to any
event of default of BUILDER shall not constitute a waiver of the
right subsequently to terminate this CONTRACT, as herein
provided.
ARTICLE XXVII - TITLE
a) Title to the Vessel and to the work for the Vessel
shall vest in the PURCHASER as and when performed, title to the
materials to be incorporated or installed in the Vessel shall
vest in the PURCHASER as and when delivered to the shipyard or
yard of the BUILDER, and title to the components to be
incorporated or installed in the Vessel shall vest in the
PURCHASER as and when fabricated. As used herein, the term
"Vessel" shall also mean a "ship" as defined in LA. R.S. 9:5522
and the terms, "work", "materials" and "components" shall have
the meanings as set forth in La. R.S. 9:5522 provided, however,
that the PURCHASER's lenders agree that BUILDER's liens on the
Vessel (at any stage of completion) and on the work, materials
and components, in each case, securing BUILDER's claims for
payments due under the CONTRACT for which BUILDER has not
previously been paid as required by the CONTRACT are superior to
the lender's lien, and also provided, however, that except as may
otherwise be provided in this CONTRACT, the risk of loss or
damage to such material and the Vessel shall remain with the
BUILDER, and the PURCHASER shall not be deemed to have waived its
rights to require the BUILDER to replace, at the BUILDER's
expense, defective, damaged or destroyed workmanship or material,
and to deliver the Vessel with the CONTRACT work completed, as
provided in this CONTRACT. BUILDER will properly identify the
ship, work, components and materials as belonging to the
PURCHASER all in accordance with La. R.S. 9:5523 and shall
certify to the PURCHASER and the Secretary, from time to time,
that these requirements have been fully complied with. Title to
all scrap and title to any material which is surplus to the
requirements of this CONTRACT (except material furnished by the
PURCHASER or which under any adjustment of Revised Contract Price
under the provisions of ARTICLE VI - PAYMENT OF CONTRACT PRICE -
METHOD OF PAYMENT of this CONTRACT remains the property of the
PURCHASER) shall vest in the BUILDER. Notwithstanding the
provisions of this ARTICLE as to title, the BUILDER shall be
subject to the risk of loss of all CONTRACT workmanship and
material and the undelivered Vessel as provided in this CONTRACT.
(b) The Existing Vessel's forebody removed from the
Existing Vessel, pursuant to
the terms of this CONTRACT, including all fittings, equipment and
appurtenances thereto not used on the Vessel or having been
removed as provided in the Specification, shall become the
property of the PURCHASER at the time of severance from the
Existing Vessel "AS IS" without any warranties. PURCHASER
warrants title to and that the severed Stern section, including
all such fittings, equipment and appurtenances thereto, will on
and after the delivery date of the Existing Vessel to the
Shipyard be free and clear of all liens, security interests,
claims and encumbrances of every nature and PURCHASER shall
defend, indemnify and hold BUILDER harmless from and against any
such lien, security interest, claim or encumbrance. The
obligations of this Subarticle shall survive the termination or
completion of this CONTRACT.
(c) PURCHASER will remove, or cause the removal of, the
Existing Vessel's forebody from BUILDER's premises within forty
five (45) days of BUILDER's severance of the existing forebody
from the existing Stern and the removal of reusable equipment
from the existing forebody. While the existing forebody remains
on BUILDER's premises, BUILDER shall assume all risks and
expenses associated with the dockside mooring described in
ARTICLE IV.
ARTICLE XXVIII - LIENS
(a) BUILDER agrees that no liens, security interests or
rights in rem of any kind arising out of the CONTRACT work, or on
account of any claim against the BUILDER arising from the
construction of the Vessel or against any subcontractor of the
BUILDER performing work or furnishing material under this
CONTRACT shall lie or attach against or upon the Vessel or any of
said property, material or CONTRACT work, except, however, liens,
security interests or rights in rem in favor of a claimant
arising out of acts or omissions of the PURCHASER.
(b) If any such lien, security interest or right in rem of
any kind is filed or asserted against or attached upon the Vessel
or any of said property, material or CONTRACT work, the party
having knowledge thereof shall promptly notify the other party.
If such lien, security interest or right in rem does not arise
out of acts or omissions of the PURCHASER, BUILDER shall, not
later than thirty (30) days thereafter, secure the discharge or
release of such lien, security interest or right in rem;
provided, however, the BUILDER may contest such lien, security
interest or right in rem or the claim upon which it is based and
if within the time herein provided shall not have secured the
discharge or release of such lien, security interest or right in
rem by court order, then BUILDER shall furnish to PURCHASER or
the appropriate court having jurisdiction in such matters, such
bond or security therefor as shall be acceptable to PURCHASER,
and BUILDER shall indemnify and save harmless the PURCHASER from
all costs, charges and damages by reason of such lien, security
interest, right in rem or claims in any way attributable thereto.
ARTICLE XXIX - TAXES
The BUILDER shall pay, as a cost of the BUILDER, all
federal, state, parish, city and other taxes, assessments and
duties in effect prior to the date of this CONTRACT and lawfully
assessed or levied prior to delivery and acceptance of the Vessel
by the PURCHASER, against the Vessel and material, supplies and
equipment to be used, or used in, the construction of the Vessel.
Notwithstanding the provisions of the preceding sentence, any
sales, use, excise or other taxes lawfully assessed or levied
concurrently or in connection with the delivery, transfer of
possession, or acceptance or passage of title of the Vessel to
the PURCHASER shall be paid by the PURCHASER in addition to the
Revised Contract Price.
ARTICLE XXX - PATENT INFRINGEMENT
The BUILDER shall be responsible for any and all claims
against the PURCHASER or the Vessel for infringement of patents,
patent rights, copyrights or trademarks in the construction of
the Vessel as constructed by the BUILDER (excepting claims
arising out of equipment, machinery or material supplied to the
BUILDER by the PURCHASER or the use, sale or disposition thereof)
and the BUILDER shall defend, save harmless and indemnify the
PURCHASER and the Vessel against all such claims and against all
costs, expenses, charges and damages which the PURCHASER or the
Vessel may be obligated to pay by reason thereof, including
expenses of litigation, if any; provided, that the foregoing
shall not apply to inventions covered by applications for United
States Letters Patent which, during the performance of this
CONTRACT, are being maintained in secrecy, under the provisions
of 35 U.S.C., Sections 181-188, nor shall the BUILDER be
obligated to indemnify the PURCHASER or the Vessel for any
infringement of patents, patent rights, copyrights or trademarks
resulting from compliance by the BUILDER with any specific
written instructions of the PURCHASER; provided, further, that
upon any such claim being made against said Parties or any
thereof, the BUILDER shall be notified promptly of such claim and
also of any suit brought in connection therewith and shall be
given an opportunity to defend the same; and provided further
that no payment on account of any such claim shall be made by the
PURCHASER unless with the consent of the BUILDER or pursuant to
the decree of a proper court or tribunal.
ARTICLE XXXI - ASSIGNMENT OF CONTRACT
This CONTRACT may not be assigned by PURCHASER or BUILDER
without the prior written consent of the other party, which
consent shall not be unreasonably withheld, except that PURCHASER
may assign this CONTRACT to any applicable United States
government entity for the purposes of financing the Contract
Price under Title XI. Neither BUILDER nor PURCHASER will make
any assignment of this CONTRACT without the prior written
approval of the Secretary.
ARTICLE XXXII - COMPUTATION OF TIME
All periods of time shall be computed by including
Saturdays, Sundays and holidays except that if such period
terminates on a Saturday, Sunday or holiday, it shall be deemed
extended to the business day next succeeding.
ARTICLE XXXIII - BUILDER TO COMPLY WITH LAWS AND REGULATIONS
The BUILDER shall comply with all laws, rules, regulations,
and requirements of any applicable classification society and of
the departments or agencies of the United States affecting the
construction of works, plants, and vessels, in or on navigable
waters and the shores thereof, and all other waters subject to
the control of the United States, and shall procure at its own
expense such permits from the United States, state and local
authorities as may be necessary in connection with beginning or
carrying on to completion of the CONTRACT work. BUILDER shall at
all times comply with all United States, state and local laws in
any way affecting the CONTRACT work; provided, however, that the
provisions of ARTICLE VII - CHANGES and ARTICLE XXII - GUARANTEE
of this CONTRACT shall govern the BUILDER's right to recover any
increased costs due to changes in the rules or laws of any
classification society or other authority affecting the CONTRACT
work.
ARTICLE XXXIV - APPLICABLE LAW
(a) This CONTRACT shall be constructed in accordance with
the laws of the State of Louisiana and the General Maritime Law
where its application is required for compliance with the Title
XI financing requirements or as otherwise applicable to in this
CONTRACT.
(b) PURCHASER and BUILDER each hereby agree that any
judicial proceeding instituted by one party against the other
party involving any controversy or claim arising out of or
relating to this CONTRACT shall be instituted only in the United
States District Court for the Eastern District of Louisiana at
New Orleans, Louisiana or, if the District Court has no
jurisdiction over the cause, in the appropriate court of the
State of Louisiana in Jefferson Parish, Louisiana. The parties
hereto agree to submit to the personal jurisdiction of the above
courts.
ARTICLE XXXV - NOTICES
Until the BUILDER shall hereafter designate otherwise in
writing to the PURCHASER, all notices hereunder directed to the
BUILDER shall be in writing and shall be mailed by certified
mail, return receipt requested, first class, postage prepaid
addressed to:
Mr. Tom Doussan
Vice President - Commercial Ship Construction
Avondale Industries, Inc.
P.O. Box 50280
New Orleans, Louisiana 70150
Until the PURCHASER shall hereafter designate otherwise in
writing to the BUILDER, all notices hereunder directed to the
PURCHASER shall be in writing and shall be mailed by certified
mail, return receipt requested, first class, postage prepaid, to
the following address:
Richard D. Horner
American Heavy Lift Shipping Company, Inc.
365 Canal Street, Suite 2670
New Orleans, Louisiana 70130
All notices given pursuant to this ARTICLE XXXV shall be
deemed to have been received if so mailed and the sender has
received the return receipt with notation thereon of delivery.
ARTICLE XXXVI - ARBITRATION
(a) In the event a dispute arises hereunder, prior to the
commencement of any formal proceedings, the Parties shall
continue performance as set forth in this CONTRACT and shall
attempt in good faith to reach a negotiated resolution by
designating an officer of appropriate authority to resolve the
dispute. If the Parties have attempted in good faith to resolve
the dispute and failed to do so, if both BUILDER and PURCHASER
agree, they may elect voluntary, non-binding arbitration.
Disputes as to causes of delay are agreed to be resolved by
mandatory and binding arbitration pursuant to this ARTICLE.
(b) In the event BUILDER claims a cause of delay under
ARTICLE IX, EXTENSION OF TIME FOR COMPLETION OF WORK, and
PURCHASER does not agree, or the PURCHASER claims a cause of
delay under ARTICLE IV, ITEMS FURNISHED BY PURCHASER, and BUILDER
does not agree, either of the Parties may request the Arbitrator
to decide the issue(s) which will be binding on both Parties.
(c) BUILDER and PURCHASER intend to agree on a mutually
acceptable Arbitrator, and alternate Arbitrator in the event the
office of the Arbitrator becomes vacant or otherwise is not able
to function promptly, prior to any arbitration proceeding.
(d) The Parties agree that the powers of the Arbitrator
shall be limited as follows:
1.He shall deal only with the disputes which are
referred for him to investigate and submit his findings and
recommendations.
2.He shall have no power to decide any matter which is
not directly related to the dispute submitted to him.
3.He shall have no power to modify the Working Drawings
or any Specifications, terms or conditions related thereto.
4.He shall have no power to add to, subtract from, or
modify any of the terms of this CONTRACT.
5.His decisions shall be advisory only and shall not
bind the Parties except for determination of disputed causes of
delay under ARTICLE IX, EXTENSION OF TIME FOR COMPLETION OF WORK.
6.He shall have no power to decide or interpret any matter
arising under or which involves any of CONTRACT Exhibits C, E, F,
G, H, I, or J.
(e) The party initiating the demand for arbitration shall
notify the other party in writing, at the same time stating the
matter or matters in dispute. Within a reasonable time
thereafter, not exceeding ten (10) calendar days, the second
party shall acknowledge the notice in writing, either specifying
any additional issues or issues to be arbitrated or refusing the
demand for arbitration. Providing the arbitration has been
agreed to, the arbitration shall be conducted in New Orleans,
Louisiana under applicable Louisiana laws.
(f) Should PURCHASER and BUILDER consent, the Arbitrator
will review claims and take one or more of the following
preliminary actions within ten (10) days of receipt of claim:
(1) request additional supporting data from the claimant, (2)
submit a schedule to the parties indicating when the Arbitrator
expects to take action, (3) reject the claim in whole or in part,
stating reasons for rejection, (4) recommend approval of the
claim by the other party or (5) suggest a compromise.
(g) If a claim has not been resolved, the party making the
claim, shall, within ten (10) days after the Arbitrator's
preliminary response, take one or more of the following actions:
(1) submit additional supporting data requested by the Arbitrator
(2) modify the initial claim or (3) notify the Arbitrator that
the initial claim stands.
(h) If a claim has not been resolved after consideration of
the foregoing and of further evidence presented by the Parties or
requested by the Arbitrator, the Arbitrator will notify the
Parties in writing that the Arbitrator's decision will be made
within seven (7) days. Upon expiration of such time period, the
Arbitrator will render to the Parties the Arbitrator's written
decision relative to the claim, including any change in the
Revised Contract Price or Contract Time or both. Either party
aggrieved by the conduct or decision of the Arbitrator may at any
time seek a judicial determination of the claim.
(i) The Arbitrator shall also determine which party, or the
proper proportion which each party, shall assume of the expenses
of such arbitration. The arbitration expenses so allocated shall
be paid directly by the party or parties as directed by the
Arbitrator.
(j) Except for the binding arbitration of Subarticle XXXVI
(b) above, a decision by the Arbitrator shall not be required as
a condition precedent to litigation of a dispute between BUILDER
and PURCHASER.
ARTICLE XXXVII - CONSEQUENTIAL DAMAGES
Except for the adjustment to payments specifically stated in
this CONTRACT, notwithstanding anything to the contrary, neither
of the Parties to this CONTRACT will under any circumstances be
liable to the other under any theory of recovery, whether based
in contract, in tort (including negligence and strict liability)
under warranty or otherwise, for any indirect, special,
incidental or consequential loss or damage whatsoever and
howsoever caused. Consequential damages shall include, but shall
not be limited to, loss of revenue or profit, loss or delay of
production, loss of product, downtime of facilities, equipment or
vessels, loss of capital, loss of use of, or under-utilization of
labor, equipment or facilities.
ARTICLE XXXVIII - MISCELLANEOUS
(a) This CONTRACT constitutes the full and complete
understanding between the parties hereto and supersedes all prior
arrangements, negotiations, representations, understandings and
agreements, oral or written, or any matter of this CONTRACT.
(b) No change, alteration or modification of this CONTRACT
may be made except in writing signed by both Parties hereto and
the prior written consent of the Secretary. Provided, however,
that the consent of the Secretary will not be required for any
changes to the CONTRACT work pursuant to ARTICLE VII except as
provided therein.
(c) The headings in this CONTRACT are for convenience of
reference only and shall not be considered as part of this
CONTRACT or limit or otherwise affect the meaning hereof.
(d) No waiver of any provision of this CONTRACT by any
party shall (1) be effective unless executed in writing, or (2)
constitute a waiver of any other provision.
(e) In case any one or more of the provisions contained in
this CONTRACT shall be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions
shall not be affected or impaired.
(f) The remedies, damages and obligations specified in this
CONTRACT shall be exclusive and in lieu of any other remedies,
damages or obligations available in contract , tort or otherwise
to PURCHASER or BUILDER with respect to the CONTRACT work except
where a specific provision provides to the contrary.
(g) This CONTRACT may be executed simultaneously in two or
more counterparts, each of which shall be deemed an original but
all of which together shall constitute one and the same
instrument.
(h) Any news releases, public announcements,
advertisements, or publicity released by either party concerning
this CONTRACT, or anything incidental to the work thereof, will
be subject to prior approval of the other party. The Parties
agree that any publicity releases made by either of them shall
recognize and indicate the participation and contributions of the
other party.
(i) PURCHASER represent and warrants that: (i) it is a
corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware; (ii) it has all the
requisite power and authority and legal right to enter into and
carry out the transactions contemplated by this CONTRACT,
including but not limited to all the Exhibits attached hereto;
(iii) the CONTRACT and all its Exhibits do not conflict with
PURCHASER's charter, by-laws, or any other agreement to which it
or its assets are bound; (iv) and that the CONTRACT, required
Exhibits and any Amendments have each been duly executed by
PURCHASER and constitute the legal, valid and binding obligation
of PURCHASER.
(j) BUILDER represent and warrants that: (i) it is a
corporation duly organized, validly existing and in good standing
under the laws of the State of Louisiana; (ii) it has all the
requisite power and authority and legal right to enter into and
carry out the transactions contemplated by this CONTRACT,
including but not limited to all the Exhibits attached hereto;
(iii) the CONTRACT and all its Exhibits do not conflict with
BUILDER's charter, by-laws, or any other agreement to which it or
its assets are bound; (iv) and that the CONTRACT, required
Exhibits and any Amendments have each been duly executed by
BUILDER and constitute the legal, valid and binding obligation of
BUILDER.
IN WITNESS WHEREOF, the Parties have caused this CONTRACT to
be executed in four counterparts as of the day above written.
ATTEST AVONDALE INDUSTRIES, INC.
(BUILDER)
/s/ R. D. Church
----------------
R.D. Church By:/s/ Albert L. Bossier, Jr.
--------------------------
Albert L. Bossier, Jr.
Title: Chairman, President & CFO
Date: May 12, 1995
AMERICAN HEAVY LIFT SHIPPING
COMPANY
ATTEST (PURCHASER)
/s/ H.A. Downing By:/s/ Richard D. Horner
---------------- ---------------------
H.A. Downing Richard D. Horner
Title: President & CEO
Date: May 12, 1995