EXHIBIT 10.17
HULL NO 3015
CONTRACT
FOR CONSTRUCTION AND SALE OF A
DYNAMIC POSITIONED SEMI-SUBMERSIBLE
DRILLING VESSEL
BETWEEN
DAEWOO CORPORATION &
DAEWOO HEAVY INDUSTRIES LTD
AND
PETRODRILL CONSTRUCTION INC.
1
INDEX
PAGE
DEFINITIONS
1. PURPOSE OF THIS CONTRACT
2. DESIGN: PRINCIPAL DIMENSIONS AND CHARACTERISTICS:
CLASSIFICATION: MANDATORY REGULATIONS: REGISTRATION
3. CONTRACT PRICE
4. PAYMENT SCHEDULE
5. APPROVAL OF PLANS: SUBCONTRACTING
6. VARIABLE LOAD CAPACITY
7. MODIFICATIONS AND ALTERATIONS
8. INSPECTION
9. PLANNED PROGRAMME, PROGRESS CONTROL AND REPORTING
10. TITLE
11. RISK AND INSURANCE
12. LOSS OR DAMAGE TO THE VESSEL
13. TRIALS: TECHNICAL ACCEPTANCE
14. DELIVERY OF THE VESSEL
15. EXTENSION OF TIME FOR DELIVERY: PERMISSIBLE DELAY
16. DELAY IN DELIVERY
17. DEFECTS AND BUILDER'S GUARANTEE
18. DEFAULT BY THE PURCHASER
19. DEFAULT BY THE BUILDER
20. PATENT INDEMNITY
21. NOT USED
22. TAXES AND DUTIES
23. ASSIGNMENT
24. PRIORITY OF DOCUMENTS
2
25. NOTICES
26. RECORDS AND AUDITS
27. LAW
28. DISPUTES
29. MISCELLANEOUS
30. SPARE PARTS
31. SAFETY AND HEALTH STANDARDS
32. EFFECTIVENESS
APPENDICES
APPENDIX I LIST OF PRINCIPAL DRAWINGS AND OTHER CONTRACT DOCUMENTS
APPENDIX II PLANNED PROGRAMME
APPENDIX IIA LISTED ITEMS
APPENDIX III FORM OF PROTOCOL OF DELIVERY AND ACCEPTANCE
APPENDIX IV FORM OF REFUND GUARANTEE
APPENDIX V FORM OF STAGE CERTIFICATE
APPENDIX VI SCHEDULE OF LABOUR COSTS FOR MODIFICATIONS
APPENDIX VII LIST OF CERTIFICATES TO BE SUPPLIED ON DELIVERY OF THE VESSEL
APPENDIX VIII MAKERS LIST
3
CONTRACT
FOR CONSTRUCTION AND SALE OF A DYNAMIC POSITIONED
SEMI-SUBMERSIBLE DRILLING VESSEL
This CONTRACT made this 9th day of April 1998, by and between:-
DAEWOO CORPORATION & DAEWOO HEAVY INDUSTRIES LTD both corporations organised
under the laws of Republic of Korea (hereinafter jointly and severally called
"Builder"), both having their principal offices at 541, 5-GA, Namdaemunro,
Jung-Gu, Seoul, Korea,
and
PETRODRILL CONSTRUCTION INC a corporation organised under the laws of Bahamas
(hereinafter called "Purchaser"), having its principal office at:
Suite 205, Saffrey Square PO Box N8188, Nassau, Bahamas
WITNESSETH THAT THE PARTIES HAVE AGREED AS FOLLOWS:-
DEFINITIONS
In this Contract the following expressions shall have the meanings hereby
assigned to them:-
"Banking Day" means any day on which banks in each of London, New York and
Seoul are open for the transaction of normal banking business;
"Basic Design" means the drawings as detailed in section 99000 Appendix to
the Specification.
"Classification Society" means Lloyds Register of Shipping;
"Classification Surveyor" shall mean any surveyor appointed by the
Classification Society to supervise the Vessel's construction;
"Contract Price" means the price stated in Clause 3.1;
"Contractual Delivery Date" means the date referred to in Clause 14.1 as
the same may from time to time be extended in accordance with the
provisions of this Contract;
"Contract Documents" means the Specifications, the Principal Drawings and
the other documents listed in Appendix I;
"Delivery" means the delivery by the Builder, and acceptance by the
Purchaser, of the Vessel pursuant to Clause 14.2;
"LIBOR" means the interest rate per annum which Citibank, London is
offering to prime banks in the London Interbank market for deposits in
United States Dollars for a three month period, determined at 11.00 a.m.
London time, as quoted on the date from which interest is accrued under
this Contract. All interest hereunder shall be calculated on the basis of
a 360 day year and compounded quarterly and shall be paid on the date when
payment is made of the sum on which interest is accrued:
"Makers' List" means the list of contractors approved by the Purchaser and
set out in Appendix VIII to the Specifications:
"Mandatory Regulations" has the meaning assigned to it in Clause 2.7;
4
"Materials" means all materials and supplies, including, without
limitation, all machinery, equipment, outfittings and spare parts (but
excluding the Listed Items and Purchaser's Supplies), intended for the
Vessel's construction to the extent that the same have been appropriated
to, or incorporated in, the Vessel;
"Planned Programme" means the programme for performance of this Contract
by the Builder detailed in Appendix II hereto:
"Plans" means those drawings, documents and specifications which are
required under this Contract and the Specifications to be submitted to the
Purchaser for approval;
"Principal Drawings" means the drawings initialled by or on behalf of the
Purchaser and the Builder and listed in Appendix I;
"Purchasers Supplies" means all equipment supplied by the Purchaser for
its own use on board the vessel which specifically excludes the Listed
Items.
"Specifications" means:-
(a) Specification no P-95019 Jan 1998 rev I plus Addendum as
issued March 1998 initialled by or on behalf of the Purchaser
and the Builder on 1st April 1998; and
(b) any additions or amendments thereto hereafter agreed between
the parties;
"Stage Certificate" means a certificate in the form set out in Appendix V,
"Statutory Modifications" means modifications applicable to the Vessel as
a result of changes to any of (i) the rules, regulations and requirements
of the Classification Society or (ii) the Mandatory Regulations;
"Working Day" means any day (other than Saturdays or Sundays) on which
work is normally carried out at the Shipyard.
Further terms used in this Contract are defined hereinafter.
1. PURPOSE OF THIS CONTRACT
1.1. Upon the terms and conditions set out in this Contract, the Builder, as an
independent contractor. undertakes to design, construct, build, launch, equip,
complete, test and load out at its shipyard at Okpo Korea (hereinafter called
the "Shipyard") and sell and deliver to Purchaser or the Purchaser's nominee for
the Contract Price referred to in Clause 3 below, one (1) fully operational and
fit for purpose self-propelled Dynamic Positioned Semi-Submersible Drilling
Vessel (hereinafter called the "Vessel") more fully described in Clause 2 below.
Subject to the performance of the Builder's obligations hereunder, the Purchaser
agrees to purchase and take delivery of the Vessel when duly completed.
1.2. References herein to the Vessel shall, except where otherwise expressly
provided, be deemed to include all Materials.
2. DESIGN: PRINCIPAL DIMENSIONS AND CHARACTERISTICS:
CLASSIFICATION: MANDATORY REGULATIONS: REGISTRATION
2.1. The Vessel, which is to be assigned the Builder's Hull No 3015, shall be
designed, constructed and completed in all respects in accordance with the
Specifications. To the extent not defined in the Specifications, the Vessel's
construction is to meet the generally acceptable offshore semi-submersible
construction standards and practices, including without limitation such
standards and practices relating to Quality Assurance. At the time of Delivery
hereunder, the Vessel, which shall conform strictly with the terms and
conditions of this Contract and the
5
Specifications, shall be delivered safely afloat and ready for sail-out as a
self-propelled Dynamic Positioned Semi Submersible Drilling Vessel.
DESIGN
2.2. The basic elements of the Vessel's design (the "Basic Design") will be
delivered by the Purchaser to the Builder. If the Builder considers that any
aspect of the Basic Design might prevent the Vessel when constructed from
complying with the requirements of Clause 2, it will inform the Purchaser
accordingly and the Purchaser may either procure the modification of the Basic
Design to remedy this deficiency or may require the Builder to modify the Basic
Design to remedy this deficiency. If the Purchaser shall require the Builder to
modify the Basic Design, the work required to do so shall constitute an
Purchaser's Modification for the purposes of Clause 7 of this Contract.
2.3. The Builder shall develop a detailed design from the delivered Basic
Design. It is expressly understood that the Purchaser shall be solely
responsible for any errors, omissions and inconsistencies in the Basic Design.
The Builder shall accept responsibility for its own work of developing the
detailed working drawings from the Basic Design and all other design development
work it shall perform in connection with this Contract.
PRINCIPAL DIMENSIONS AND CHARACTERISTICS
2.4. The Vessel shall have the dimensions and characteristics stated in the
Specifications.
CLASSIFICATION
2.5. The Vessel shall be constructed under Special Survey of the Classification
Society and in accordance with its rules, regulations and requirements current
at the date of execution of this Contract, incorporating all additions and
amendments thereof applicable to the Vessel in force or announced but awaiting
ratification, enactment or implementation, so as to achieve on Delivery the
following notation:-
"Unrestricted Service O.U. +100A1, +LMC, UMS, DP (AA), PC, DRILL, OIWS
with the descriptive notation
Semi Submersible, self propelled drilling vessel"
free of all recommendations, reservations and qualifications of any nature
whatsoever.
2.6. Decisions of the Classification Society as to whether or not the Vessel
complies with its rules, regulations and requirements shall be final and shall
bind both parties to this Contract.
MANDATORY REGULATIONS
2.7. The Vessel shall also comply with (i) all requirements of the regulatory
bodies listed in the Specifications and (ii) the following rules, regulations
and requirements, in each case current at the date of execution of this Contract
((i) and (ii) being known herein jointly as the "Mandatory Regulations"):-
a. IMO, Resolution A 649 (16) adopted on 19 October 1989, Code for the
Construction and Equipment of Mobile Offshore Drilling Units.
b. International Convention for the Safety of Life at Sea SOLAS 1974,
protocols of 1978, 1981,1983 and all Amendments in force.
c. International Convention of Load Lines, 1966 with resolutions A 231 (VII)
and A 320 (IX).
d. International Telecommunication Convention and Radio Regulation 1973, 1976
and 1982 and latest GMDSS Rules for radio communications.
6
e. International Convention for Tonnage Measurement 1967/1969.
f. Suez Canal Tonnage Regulations.
g. International Convention for the Prevention of Pollution from Ships
(MARPOL) 1974/1978, Consolidation Edition, IMO, 1991, including 1992
amendments to Annex 1.
h. International Regulations for Preventing Collision at Sea, 1972 including
amendments.
i. International Labour Organisation (ILO) Convention No. 92 and No. 133 for
crew accommodation.
j. International Electronical Commission (IEC), Electrical Installation in
Ship Publication No. 92.
k. API specifications as applicable.
REGISTRATION
2.8 Vessel shall upon Delivery fly the Dutch Antilles flag and be registered
in the Register of Shipping. Registration of the Vessel as aforesaid shall be
effected by the Purchaser and all costs and expenses thereof shall be for the
Purchaser's account.
3. CONTRACT PRICE
3.1. In consideration of the performance by the Builder of all its obligations
under this Contract the Purchaser shall pay to the Builder a Contract Price
comprised of two elements:-
a. US $ 85,000,000 (the "Construction Price") which shall include the cost
of installation of the Listed Items, and
b. a further amount, to be agreed between the parties hereto, in respect of
the purchase cost of the Listed Items. The parties have provisionally
budgeted this cost at US S 51 million and the aggregate of the same and
the Construction Price is known herein as the "Provisional Contract Price"
which is US $136,000,000
3.2. The Construction Price, which is exclusive of the cost of the Listed Items
and Purchaser's Supplies, shall be a fixed price subject to upward or downward
adjustment only in accordance with the provisions of Clause 7 hereof. It
includes:-
a. the cost of the Vessel completed in accordance with the requirements of
this Contract and the Specifications;
b. the cost of all tests and trials of the Vessel to be performed by the
Builder in accordance with the specification;
c. the cost of procuring the classification of the Vessel and of obtaining
all certificates and documents which are required to be delivered pursuant
to this Contract and the Specifications; and
d. all other costs and expenses of the Builder as provided for herein or
otherwise incurred by the Builder unless expressly provided herein as
being for the Purchaser's account.
4. PAYMENT SCHEDULE
4.1. The Purchaser shall pay the Contract Price to the Builder in five
instalments as follows, the pre-delivery instalments being paid as advances and
not as deposits:-
7
FIRST INSTALMENT:
10 per cent (ten %) of the Provisional Contract Price, being $13,600.000
shall be paid within three Banking Days of the Effective Date.
SECOND INSTALMENT:
30 per cent (thirty %) of the Provisional Contract Price, being $40,800,000,
shall be paid within three Banking Days from receipt by the Purchaser of a
telefax notice from the Builder attaching a Stage Certificate in the form
of the draft attached as Appendix V, countersigned by an Authorised
Representative (or, in default thereof, the Classification Surveyor ),
certifying that it is 6 months after the Effective Date of the contract
has taken place.
THIRD INSTALMENT:
20 per cent (twenty %) of the Provisional Contract Price, being $27,200,000
shall be paid within three Banking Days from receipt by the Purchaser of a
telefax notice from the Builder attaching a Stage Certificate in the form
of the draft attached as Appendix V, countersigned by an Authorised
Representative (or, in default thereof, the Classification Surveyor),
certifying that Keel laying has taken place.
FOURTH INSTALMENT:
20 per cent (twenty %) of the Provisional Contract Price $27,200,000, shall be
paid within three Banking Days from receipt by the Purchaser of a telefax
notice from the Builder attaching a Stage Certificate in the form of the
draft attached as Appendix V, countersigned by an Authorised
Representative (or, in default thereof, the Classification Surveyor),
certifying that launch [ float out ] has taken place.
FIFTH INSTALMENT:
20 percent(twenty %)of the Provisional Contract Price, together with the
aggregate of (i) any excess of the Contract Price over the Provisional
Contract Price and (ii) any increase or any decrease of the Contract Price
arising from the provisions of Clauses 7 and 16 below, shall be paid upon
Delivery.
4.2. The Builder shall notify the Purchaser in writing ten Banking Days in
advance of the estimated dates of occurrence of each of the events before
Delivery referred to above, excluding the First Instalment.
REFUND GUARANTEE
4.3. The Builder shall at its own expense supply to the Purchaser concurrently
with payment of the First Instalment of the Contract Price a letter of guarantee
in favour of the Purchaser in the form attached as Appendix IV (the "Refund
Guarantee"). Such guarantee shall be unconditional and be given by the
Export-Import Bank of Korea as approved by the Purchaser.
PAYMENT FOR MODIFICATIONS AND OTHER ITEMS
4.4. Any sums due to either parry under Clause 7 as a result of Purchaser's
Modifications and/or Statutory Modifications shall be paid with the Instalment
payment which becomes due on a milestone payment coming first after agreement on
such modification.
PAYMENT FOR FUELS ETC AND LIQUIDATED DAMAGES
4.5. All amounts due to the Purchaser (i) under Clause 13-2 hereof and (ii) by
way of liquidated damages in respect of delay in Delivery under Clause 16 shall
be calculated and determined before Delivery and shall be paid on, and as a
condition of, Delivery.
8
PAYMENT PROCEDURES
4.6. Payment of sums due to the Builder in accordance with the provisions of
this Contract shall be made, by telex transfer to the account of the
Export-Import Bank of Korea Account No 04-029-695 at the Bankers Trust Company
of New York. Church Street Station, New York, NY 10015, USA in favour of the
Daewoo Corporation, free of all transfer charges.
4.7. If the date on which any payment is due in accordance with the provisions
of this Contract does not fall on a Banking Day, payment shall be made on the
immediately succeeding Banking Day.
5. APPROVAL OF PLANS: SUBCONTRACTING
APPROVAL OF PLANS
5.1. In respect of all Plans required for the completion of the works envisaged
by this Contract, the same shall be submitted to the Purchaser in four copies as
soon as possible following their production. The Purchaser shall, within
fourteen (14) Calendar Days after receipt thereof, return to the Builder one
copy of such Plans with the Purchaser's approval or the Purchaser's remarks and
amendments (if any) written thereon. The approval of plans by the Purchaser
shall not relieve the Builder of any of its obligations under this contract.
5.2. In the event that the Purchaser shall fail to return the Plans to the
Builder within the time limit as herein above provided, such Plans shall be
deemed to have been approved without comment.
5.3. The Builder shall take due note of the Purchaser's remarks and amendments
(if any) on Plans submitted pursuant to this Clause and, if such remarks or
amendments are not of such a nature or extent as to constitute modifications of
the Specifications within the meaning of Clause 7 hereof, then the Builder shall
commence or continue construction of the Vessel in accordance with the corrected
or amended Plans. If such remarks or amendments are not clearly specified or
detailed, the Builder shall in all cases seek clarification of the same from the
Purchaser before implementing the same.
5.4. Copies of all correspondence to and the Classification Society and the
regulatory authorities referred to in the Specifications, together with all
Plans approved by the Classification Society, shall be furnished to the
Purchaser by the Builder as soon as practicable upon dispatch and receipt.
SUBCONTRACTING
5.5. Save as regards those works delegated to those Subcontractors defined in
the Makers' List, the Builder shall not, without the Purchaser's prior approval
in writing, subcontract any part of the works contemplated by this Contract
which exceed in value US $100,000 or its equivalent in local currency. Where
such approval has been given, the Builder shall nevertheless remain fully
responsible for the performance of the same as if it had personally undertaken
such works.
MAKER'S LIST
5.6. The Builder shall select for the supply of each of the Materials listed in
the Makers' List the Subcontractor named therein in relation to the same. Where
the Makers' List provides for more than one Subcontractor to supply any element
of the Materials, the Builder shall, with reasonable notice, provide the
Purchaser with a copy of the Purchase Order to be issued to its intended choice
of Subcontractor before any subcontract is awarded. The Makers' List shall
indicate Purchasers preferred Sub-contractor (if any) for a given element. Where
there is a Purchase preferred subcontractor stated, such Purchase Order shall
contain full technical and commercial details and also a comparison of same with
Purchaser's preferred Subcontractor. If within 5 days thereafter, the Purchaser
shall request the Builder to order that element of the Materials from
Purchaser's preferred Subcontractor named in the Makers' List in relation
thereto, then the Builder will take all reasonable steps to comply with such
request and the Purchaser shall reimburse to the Builder any difference in price
between that quoted by the Builder's chosen
9
Subcontractor and the Subcontractor chosen by the Purchaser together with an
adjustment in the Delivery Date if any.
NOMINATED SUBCONTRACTORS
5.7. Unless the Purchaser shall otherwise agree, the Builder shall supply those
items of Materials set out in Appendix II (the "Listed Items") from suppliers
and subcontractors nominated by the Purchaser. The Purchaser, as agent for and
on behalf of the Builder, shall negotiate with each of the Nominated
Subcontractors terms for the supply of the Listed Items set out in Appendix II.
It is, however, expressly agreed that the Purchaser shall contract with each of
the suppliers of the Listed Items as agent for and on behalf of the Builder and
the ownership in such Listed Items shall vest with the Builder.
5.8. The price for the Listed Items, including delivery to the Builders yard,
negotiated by the Purchaser, on behalf of the Builder, with the Nominated
Subcontractors shall be included in the contract price based on the overall
budget as set out in Appendix II. In the event of any variations in the actual
price then the Provisional Contract Price shall be increased or decreased by an
amount equal to the amount of such variations. Any such variations shall be
payable by the Purchaser by means of an adjustment of the final instalment of
the Provisional Contract Price.
5.9. Furthermore, in the event that delivery to the Builder of any Listed Item
is delayed beyond the Target Delivery Date for the same set out in Appendix IIA,
the Builder shall be entitled to a postponement of the Contractual Delivery Date
for a period as it shall demonstrate, by reference to the "critical path", that
the Vessel's construction and completion has actually been delayed. Delays in
delivery of more than Listed Item occurring simultaneously shall have give rise
only to concurrent (rather than consecutive) extensions.
5.10. Furthermore, acting on behalf of the Builder, the Purchaser shall ensure
that all the articles to be supplied as per clause 5.7 above shall be supplied
to the Builder at the Shipyard in a condition read, for installation. In
addition, in order to facilitate the installation of the Listed Items by the
Builder, the Purchaser shall ensure that the Nominated Subcontractors furnish
the Builder with instruction books, test reports, certificates and vendor
furnished information as required by applicable rules or regulations.
5.11. On the basis that the Purchaser has price, delivery and quality risk in
terms of clauses 5.8, 5.9 and 5.10 above, Builder acknowledges that, not
withstanding that it is the party to the contract with the Nominated
Subcontractor, the Purchaser shall be fully entitled to liase with the Nominated
Subcontractors on pricing, quality and delivery issues and Builder appoints
Purchaser as its agent for this purpose.
5.12. It is also agreed that any costs incurred by the Builder in the repair of
Listed Items occasioned by their defective material or poor workmanship or
failure to perform, or by damage caused to them during transportation to the
Shipyard shall be for the Purchasers account.
ASSIGNMENT OF EXISTING SUBCONTRACTS / LETTER OF INTENT
In relation to the following "long lead" items of Materials, it is
understood that the Purchaser has already entered into agreements with certain
suppliers.
5.13. Concurrently with signature of this Contract, the benefit together with
the burden of all such contracts are to be assigned by the Purchaser to the
Builder, whereupon the Materials to which they relate are to be treated as
Builders supply . The Builder shall, upon assignment of each such subcontract,
reimburse to the Purchaser all of the instalments of the contract price paid by
the latter in respect thereof.
5.14. Packages included under this provision cover items supplied by LIPS,
Caterpillar and GEC Alsthom.
OBLIGATIONS UNAFFECTED
5.15 Nothing in this Clause shall affect the other obligations of the Builder
under this Contract nor diminish the responsibility of the Builder in respect of
the Materials, design or workmanship required hereunder.
10
6. VARIABLE LOAD CAPACITY
6.1. The Builders commitment to the lightship weight excluding the weight and
centre of gravity of the Listed Items shall be 8,950 metric ton at a VCG of
21.43 m ( the "Required Lightship Weight" ). A detailed Light Weight Estimation
and VCG Calculation justifying the Required Lightship Weight, shall be included
as part of the "Basic Design" to be provided by the Purchaser.
6.2. The lightship weight and centre of gravity of the Vessel shall be
verified by an Inclining Experiment prior to Delivery.
6.3. The results of the Inclining Experiment referred to in Clause 6.2 shall be
used to demonstrate a Variable Load Capacity (Deck and Column) in the conditions
referred to in the Specifications as a minimum of 3,500 metric tons in the
operational condition
6.4. Builder shall pay liquidated damages to the Purchaser as follows if the
lightship weight increases above the Required Lightship Weight.
Excess from 1% to 2% : USD 5,000 per ton
Excess from 2% to 4% : USD 7,500 per ton
Excess 4% and above : USD 10,000 per ton
In any event the Builder's liability, for the above liquidated damages shall be
limited to 5% of the Construction Price.
6.5. The Purchaser shall pay to the Builder a bonus if the lightship weight is
below the Required Lightship Weight on the same basis as the liquidated damages
in 6.4 above but without the application of any grace.
6.6. The Purchaser shall have no obligation to accept delivery of the Vessel if
the ship lightweight, as defined in 6.2 above, is more than 400 tonnes over the
Required Lightship Weight. The Builder shall, however, in such context be
entitled to make modifications to the Vessel in order to either reduce the
weight or ensure that the VLC is restored to its original level provided that
the same (i) are approved in advance by the Classification Society and the
Purchaser, such approval not to be unreasonably withheld, (ii) do not
significantly affect the motion characteristics or operational capability of the
Vessel.
7. MODIFICATIONS
PURCHASER'S MODIFICATIONS
7.1. The Purchaser may at any time after the date hereof submit a request in
writing to the Builder for changes (the "Purchaser's Modifications") to be made
to the Specifications and shall supply with such request sufficient particulars,
documentation and details to describe the change requested.
7.2. If the change so requested (the "Requested Change") can be reasonably
undertaken having regard to the stage of construction of the Vessel and the
Planned Programme, then the Builder shall be obliged to effect the same but
shall be entitled to any increase (and shall concede any decrease) in
construction cost or adjustment of the Contractual Delivery Date or any other
provisions of his Contract or the Specifications which the Requested Change
reasonably necessitates and which is agreed in writing by the Builder and the
Purchaser. The Builder shall notify the Purchaser in writing no later than seven
Working Days after receipt of the written request for the Requested Change, of
any such adjustments which it will require.
7.3. On the basis of such notification the Purchaser shall no later than
fifteen Working Days thereafter elect in writing to:
11
a. agree to the adjustments notified, in which case the Builder shall
construct the Vessel in accordance with the Requested Change;
b. contest the reasonableness of the adjustment notified, in which case
subc1ause 7.5 below shall apply; or
c. withdraw the Requested Change. in which case the Vessel shall be built
without reference to the same.
7.4. If within fifteen Working Days after such notification the Purchaser has
made no election as aforesaid, then the Requested Change shall be deemed to have
been withdrawn by the Purchaser.
7.5. If, however, the Purchaser notifies the Builder in writing that the
Purchaser wishes to implement the Requested Change but disputes the
reasonableness of the adjustments, the matters shall be determined by an expert.
acting as such and not as an arbitrator, to be appointed by agreement between
the parties. In the event that the parties are unable to agree as to any
appointment within thirty days of the Purchaser's written notice, the
appointment shall be made, upon the written application of either party, by the
Classification Society. The decision of the said expert shall be final and
binding upon the parties and the costs of such expert in reaching his decision
shall be shared by the Parties. Pending the decision of the aforesaid expert,
the Builder shall continue construction of the Vessel in accordance with the
Requested Change.
7.6. The agreed extra cost of any Requested Change or that decided by the
expert shall be paid by the Purchaser and any cost savings by the Builder as a
result of any Requested Change shall be paid to the Purchaser in accordance with
Clause 4.4.
STATUTORY MODIFICATIONS
7.7. In the event of any Statutory Modifications arising the Builder shall
within seven Working Days of its becoming aware of the same, give notice to the
Purchaser of:-
a. the change required to be made to the Specifications (the "Required
Change");
b. any estimated extra or reduced cost of construction of the Vessel in
accordance with the Required Change together with any documentation
substantiating such cost which the Purchaser reasonably requires; and
c. the effect of the Required Change on any other provisions of this Contract
or the Specifications (including without limitation any change to the
Contractual Delivery Date).
7.8. The Purchaser may apply for a formal waiver of compliance with the
Required Change from the body having power to grant such waiver if the Purchaser
considers that the operation of the Vessel in its intended service would permit
of such waiver, and shall notify the Builder as soon as possibly after receiving
the decision of such body. In applying for any waiver, the Purchaser may call
upon the Builder for assistance and the Builder will provide reasonably
co-operation to the Purchaser in this respect.
7.9. If no waiver has been obtained and notified by the Purchaser to the
Builder within thirty Working Days of the receipt by the Purchaser of the notice
referred to above, the Builder shall build the Vessel in accordance with the
Required Change and the reasonable extra cost thereof, if any, shall be paid by
the Purchaser. Before the expiry of such time the Builder shall continue with
tile construction of the Vessel in accordance with the Required Change but it
shall, in so doing, use its best endeavours to minimise any costs and loss of
time which might arise if a waiver were obtained.
7.10. If the Purchaser notifies the Builder in writing that the Purchaser
disputes the reasonableness of the extension or variation notified, the issue of
what is a reasonable extension or variation may be put, by the Purchaser or the
Builder to an expert, acting as such and not as arbitrator, to be appointed by
agreement between the parties. In the event that the parties are unable to agree
as to an appointment within thirty days of the Purchaser's written notice as
aforesaid the appointment shall be made, upon the written application of either
party, by the Classification Society. The decision of the expert shall be final
and binding upon the parties and the costs of such expert in
12
reaching his decision shared by the Parties. Pending the decision of the said
expert, the Builder shall continue construction of the Vessel in accordance with
the Required Change.
PRICING OF MODIFICATIONS
7.11. In relation both to Purchaser's Modifications and Statutory Modifications
as aforesaid, the Builder's quotations in respect of any increase or decrease in
the Contract Price relating thereto shall, if requested in writing by the
Purchaser, be calculated both on "lump sum" and a "time and materials" basis. In
relation to quotations effected on a "time and materials" basis, the Builder
shall apply the following parameters:-
a. labour costs shall be charged at the agreed hourly rates set out in
Appendix VI;
b. the cost of all materials and equipment shall not exceed one hundred and
ten per cent (110%) of the cost to the Builder of the same (inclusive of
the costs of delivery of those materials and equipment to the Shipyard);
provided, however, that the Builder shall in all cases endeavour to obtain
the best price terms and trade discounts from suppliers and subcontractors
for the benefit of the Purchaser.
SUBSTITUTION OF MATERIALS
7.12. If at any time during the construction of the Vessel, any Materials are
not available (other than as the result of any neglect or omission on the part
of the Builder) then, subject to the prior approval in writing of the Purchaser
and, where necessary, of the Classification Society, the Builder may use or
install other Materials provided that such other Materials used or installed in
substitution for those specified are equivalent in quality to, or better than,
those specified, and which meet the requirements of the Classification Society
and the other requirements of this Contract.
8. INSPECTION
AUTHORISED REPRESENTATIVES
8.1. The Purchaser shall have the right to retain up to fifteen supervisors
"Authorised Representatives"), whose names and scope of authority shall be
notified in writing to the Builder, permanently at the Shipyard during all times
until Delivery. The Builder shall provide suitable office accommodation
(including adequate parking spaces), photocopying and canteen facilities and the
installation of telephones and telefax machines with reasonable and safe access
to work areas for, and permit and afford every facility to, the Authorised
Representatives from time to time and at all times whilst work is proceeding to
examine and inspect the work being done under this Contract and every part
thereof, together with the materials being used or about to be used thereon, and
to call for and witness such tests as may be required. The costs of
telecommunication facilities outside the country in which the Shipyard is
located and the use of the canteen shall be for the Purchaser's account.
8.2. In addition to the Authorised Representatives, the Purchaser may from time
to time employ further personnel and contractors on site and the Builder shall
afford the same facilities to them on the basis set out above.
8.3. The Authorised Representatives shall have the right to attend all tests,
trials and inspections of the Vessel, her machinery and equipment, which shall
in each case be conducted within the Shipyard's normal working hours. The
Builder shall give notice to the Authorised Representatives in advance of the
date and place of such tests, trials and inspections in accordance with the
provisions of the Specifications. Failure of the Purchaser or its Authorised
Representatives to be present at such tests, trials and inspections after due
notice as above provided shall be deemed to be a waiver of the Purchaser's right
to be present. The Builder shall obtain for the Purchaser and the Authorised
Representatives rights of access to the Subcontractors' premises for the purpose
of inspection of workmanship and Materials.
8.4. The Builder shall carry out in strict compliance with the Specifications
all the tests and trials of the Vessel and commissioning of the Materials which
are detailed therein so as to demonstrate that the same are in accordance with
the requirements of the Specifications and that all of her systems function in
their intended manner. Any Materials or workmanship found to be faulty or
inadequate shall be replaced or made good by the Builder prior to
13
Delivery, at its expense and without additional expense to the Purchaser, by
suitable and sound Materials and workmanship.
8.5. Nothing done or omitted to be done by or on behalf of the Purchaser under
this Clause shall be deemed to be a waiver of any objection to, or an acceptance
of, faulty or inadequate Materials or workmanship, or an admission that any
Materials or workmanship are of the standard required for due performance of
this Contract.
8.6. The Authorised Representatives shall be deemed to be employees of the
Purchaser and not the Builder. The Builder shall be under no liability to the
Authorised Representatives for death, personal injury or damage to their
property during the time when they are engaged in the duties contemplated under
this Contract either on the Vessel or within the premises of the Builder or its
Subcontractors unless such death, personal injury or damage to property was
caused by the wilful act, omission or negligence of the Builder, or any of its
employees, agents or Subcontractors.
QUALITY ASSURANCE SYSTEM AUDITS
8.7. Quality Assurance System Audits may be carried out by the Purchaser, and
regulatory authorities to verify compliance with the quality requirements
stipulated in this Contract and with regulatory requirements. Such requirements
shall include but not necessarily be limited to quality records, personnel and
procedure qualifications records, material traceability records, inspection
plans etc. The Builder is required to provide to the Purchaser any documentation
and administrative systems necessary to verify compliance. Inspection and
testing and Quality Assurance System Audits by the Purchaser as described in
this Clause or otherwise shall not imply any diminution of the Builder's
responsibilities and obligations under this Contract.
9. PLANNED PROGRAMME, PROGRESS CONTROL AND REPORTING
PLANNED PROGRAMME
9.1. The Vessel shall be constructed by the Builder in accordance with the
Planned Programme set out in Appendix II hereof A detailed copy of this plan,
including the sub-level planning identifying critical paths, shall be made
available to the Purchaser and updated on a regular basis. The plan will define
certain stages of the construction process ("Milestones") which must be
completed by the dates specified therein. The Planned Programme will include a
comprehensive statement of the dates on which the Listed Items are required to
be delivered to the Shipyard.
PROGRESS CONTROL AND REPORTING
9.2. At the commencement of the contract a "kick off' meeting shall be held
during which the major parameters by which performance of the Builder will be
measured are to be mutually agreed. These shall include, but not necessarily be
limited to a detailed weight budget, a steel procurement and processing
schedule, an engineering schedule, outfitting targets, manning schedules etc.
Unless mutually agreed otherwise such meeting shall be held within 30 days on
contract signature.
9.3. During the course of performance of this Contract the Builder shall submit
to the Purchaser on a fortnightly basis, commencing on the date failing fourteen
days after the "kick off meeting" and thereafter fortnightly.
a. a status report on the Vessel's construction as compared with the Planned
Programme, including the critical path;
b. a report setting out the actual progress in performance of this Contract
during the previous month as compared with the Planned Programme; Such
report to identify progress against the agreed performance parameters.
14
c. a report setting out the forecast lightship weight, identifying any
variances from the agreed weight budget and in the case of negative
variations including proposals for reducing the variance to within
acceptable levels.
d. a list of Purchaser's Modifications and Statutory Modifications (if any)
agreed or resolved by an expert during the previous month, as the case may
be, including adjustments, if any, agreed or resolved by an expert, to the
Contract;
e. a report on the delivery of sub-contracted Materials during the pervious
month (the precise nature of which report shall be agreed, from time to
time, between the Purchaser and the Builder).
9.4. Without prejudice to the Builder's obligations under this Contract, if the
construction of the Vessel should for any reason whatsoever be delayed beyond
the time-frame envisaged in the Planned Programme, the Builder shall immediately
notify the Purchaser and shall within seven Working Days thereof provide to the
Purchaser a schedule indicating, in so far as the delay which has occurred is
not Permissible Delay, the steps (including any appropriate increase in manpower
and material resources) the Builder intends to take to recover the time so lost.
The Builder and the Purchaser shall thereafter meet at the earliest opportunity
to discuss the schedule and the Builder's detailed plans for implementation of
the same.
9.5. The Builder shall take monthly progress photographs illustrating the
progress of the Vessel's construction up to and including trials and delivery.
The Builder shall also supply the Purchaser with sufficient number of
photographs (size: approximately 18 x 24 cms) depicting the final stage of the
Vessel as delivered: this set will be at least 25 percent colour prints. One set
of standard transparencies will be supplied, free of charge to the Purchaser.
Additional copies of photographs and transparencies will be made available by
Builder, at the Purchaser's request and expense.
10. TITLE
10.1. Title to the Vessel shall pass to the Purchaser upon Delivery. Subject to
the provisions of this Contract, title to the Purchaser's Supplies shall,
however, remain with the Purchaser at all times.
11. RISK AND INSURANCE
RISK
11.1. The Vessel and all Materials (including, from the time of their delivery
to the Shipyard, the Purchaser's Supplies) shall remain at the risk of the
Builder until Delivery.
INSURANCE
11.2. The Builder undertakes to keep the Vessel and all Materials (including the
Listed Items) in its or its Subcontractors' custody fully insured at all times
and until Delivery at its own cost with first class insurers approved by the
Purchaser in the amount of the higher of (1) the value of the Vessel as from
time to time constructed and (2) the aggregate of (i) the instalments of the
Contract Price for the time being paid by the Purchaser to the Builder, (ii) the
interest payable to the Purchaser on such instalments in the event of the
Purchaser's termination of this Contract and (iii) the value of the Purchaser's
Supplies delivered to the Shipyard or built into or installed in or upon the
Vessel.
11.3. The policy or policies (the "Stipulated Insurances"), which shall be
subject to English law and jurisdiction, shall incorporate the following
clauses:-
a. the Institute of London Underwriters ("ILU") Clauses for Builder's Risks:
b. the ILU Strikes Clauses - Builder's Risks; and
15
c. (from the date of the Vessel's launching) the ILU War Clauses - Builder's
Risks.
11.4. The policies shall be taken out in the joint names of the Purchaser and
the Builder but on terms that the Builder alone shall be responsible for all
premiums payable thereunder. The Builder shall furnish the Purchaser promptly
with certified copies of the policies and the originals shall be made available
to the Purchaser, its employees or agents for inspection at all reasonable
times.
11.5. The policies taken out shall contain a provision to the effect that, in
the event of an actual, constructive, arranged or compromised total loss, such
insurance proceeds as the Purchaser is entitled to hereunder shall be payable to
the Purchaser and such policies shall be so endorsed as to enable the Purchaser
by its brokers or agents or personally to collect such proceeds pursuant to the
provisions of this Clause. In addition, all such policies shall include
provision that they shall not be capable of cancellation by the insurers without
not less than thirty (30) days' prior written notice being given to the
Purchaser and that not less than ten (10) days' prior written notice of
non-renewal or lapse shall be given by the insurers to the Purchaser before the
same shall take effect.
12. LOSS OR DAMAGE TO THE VESSEL
12.1. Should the Vessel or any items insured pursuant to the provisions of
Clause 11 sustain loss or damage prior to Delivery and should such loss or
damage not make the Vessel a total loss, actual, constructive, arranged or
compromised, the Builder shall, at its own expense and with all due despatch,
make good such damage to the satisfaction of the Purchaser and (if applicable)
the Classification Surveyor, and any monies payable in respect of any insurance
effected under Clause II shall be payable to the Builder.
12.2. Should the Vessel sustain loss or damage prior to Delivery hereunder such
that it is either conceded by the insurers liable therefor, or determined by a
court of competent jurisdiction, that the Vessel has become a total loss,
actual, constructive, arranged or compromised, then the Builder shall not be
liable to repair the damage or replace the Vessel but, where the Purchaser has
not made recovery of such sums under the Stipulated Insurances within twenty-one
Working Days of the total loss, the Builder shall:-
a. refund promptly to the Purchaser in full the aggregate amount of
instalments of the Contract Price already paid by the Purchaser with
interest thereon at a fixed rate of 10 percent from the date of payment of
each instalment until the date of refund (calculated on the same basis as
a commercial banking transaction in London ); and
b. return to the Purchaser all Purchaser's Supplies or refund to the
Purchaser a sum equivalent to the value of any of same which have been
lost or which cannot be removed in a sound condition from the Vessel.
12.3. When the conditions set out in sub-clause (2) above have been satisfied by
the Builder, the Purchaser shall instruct the insurers to pay to the Builder or,
as the case may be, if instructed by the Builder to the Export-Import Bank of
Korea any further sums due and payable under the Stipulated Insurances in
respect of the total loss but subject to a limit equal to the cost to the
Builder of those parts of the works which were already undertaken as at the date
of the casualty giving rise to the total loss. Save as elsewhere herein
specifically provided to the contrary, the parties' obligations under this
Contract shall thereupon cease and terminate.
13. TRIALS: TECHNICAL ACCEPTANCE
13.1. At least 120 days before the scheduled commencement of the same the
Builder shall submit to the Purchaser for approval comprehensive testing and
trials programmes covering the Full Scale Test and Trials (collectively the
"Trials") as generally described in Section 03000 of the Specifications,
including (i) Workshop Tests, (ii) Quayside Trials (including the Inclining
Test), and (iii) Sea Trials (including trial runs and all other tests at sea).
13.2. The Trials shall be conducted at the risk and expense of the Builder which
shall provide and pay for the personnel necessary for the safe management and
navigation of the Vessel during the same. The Builder shall also provide and pay
for all necessary ballast and fresh water and shall meet all other costs
associated with the Trials.
16
The fuels, lubricants and consumable stores required for the Trials shall be
specified, supplied and paid for by the Purchaser, who shall upon Delivery be
entitled to reimbursement from the Builder of the costs of such fuels,
lubricants and consumable stores as are consumed during the Trials.
13.3. The Builder shall give the Purchaser not less than seven Working Days'
notice of the date and place of commencement of each of the Trials and
representatives of the Purchaser shall be afforded every opportunity to observe
and determine the performance of the Vessel during the same. Failure by the
Purchaser to attend any Trial following due notice shall be deemed to be a
waiver by the Purchaser of its rights of attendance in respect of such Trial.
SEA TRIALS
13.4. The Sea Trials shall be carried out following satisfactory conclusion of
all other Trials and after the Vessel's construction has been completed with
only minor items of work outstanding which are agreed by the Authorised
Representatives as suitable for completion after the Sea Trials but before
Delivery.
13.5. The Sea Trials shall have the objective of permitting the Builder to
demonstrate fulfilment of the quality and performance requirements for the
Vessel as set forth in the Specifications. The course to be followed during the
Sea Trials shall be determined by the Builder, but shall be in open waters off
Korea. The Purchaser shall be allowed to maintain a shadow crew and other
necessary personnel on board the Vessel during the sea trials to familiarise
themselves with the Vessel and its operation.
13.6. The safe management and navigation of the Vessel in transit to, during and
from the Sea Trials shall remain the sole responsibility of the Builder. Neither
the Purchaser nor any of its representatives shall bear or be liable for loss or
damage of any description done by or to the Vessel, or personal injury or loss
of life arising from any cause whatsoever during the same, except where such
liability is directly attributable to the Purchaser as a result of a wilful act
by any representative of the Purchaser on board the Vessel during such trials;
the Builder shall pay for and indemnify the Purchaser and its representatives
against all such loss, damage and the consequences of personal injury and loss
of life as aforesaid.
13.7. Should the weather conditions at the time scheduled for the Sea Trials be
such that they cannot be carried out properly, the Builder shall postpone them
or such part of them as necessary to the earliest possible time when suitable
weather conditions occur to ensure that all readings and results are obtained in
a manner satisfactory to the Purchaser. Any delay to the Sea Trials caused by
such unfavourable weather conditions, if the delay exceeds five (5) days, shall
operate to postpone the Contractual Delivery Date by the period of delay.
involved and such delay shall be deemed to be Permissible Delay.
13.8. If during the Sea Trials any, breakdown occurs which entails interruption
or irregular performance and the breakdown can be repaired by the normal means
available on board, this shall be done as soon as possible and the trial shall
be continued after repairs are completed. However, if the Vessel must return to
a port to enable the breakdown to be remedied, a further complete trial shall be
undertaken at the earliest opportunity.
13.9. On completion of the Sea Trials to the satisfaction of the Purchaser the
Vessel shall be brought back to a berth in the Shipyard, or elsewhere as may be
agreed, for the inspection of the machinery required in the Specifications, and
during this period all defects or omissions found in the Vessel shall be
remedied and made good by the Builder to the satisfaction of the Purchaser, and
the machinery closed up by the Builder ready for sea at its expense and without
expense to the Purchaser.
TECHNICAL ACCEPTANCE
13.10. Within three Working Days of completion of the Trials and the closing up
of machinery referred to in sub-clause 9 above, the Builder shall notify the
Purchaser in writing of the results of the Trials and shall, where the same is
appropriate, confirm to the Purchaser that the Vessel conforms with the
requirements of the Contract and Specifications. If the Purchaser is in
agreement with the Builder, the Purchaser shall, within four (4) Working Days
17
of receipt of the Builder's notice as aforesaid, advise the Builder in writing
of its Technical Acceptance of the Vessel.
13.11. If, however, in the view of the Purchaser the Vessel or any part thereof
does not conform to the requirements of this Contract and/or the Specifications,
the Purchaser shall so advise the Builder (again within four (4) Working Days of
the receipt of the Builder's notice as aforesaid) and shall specify the respects
in which the Vessel fails to conform with the requirements of this Contract and
Specifications. The Builder shall thereupon take the necessary steps to correct
such non-conformities and, upon completion of such works, the Builder shall
advise the Purchaser who shall, in the reasonable exercise of its discretion, be
entitled to require the Builder to undertake further trials of the Vessel; in
such event the Builder shall give the Purchaser three Working Days' notice of
such further trials.
13.12. Upon satisfactory completion of such remedial works and/or trials, the
Purchaser shall, within four (4) Working Days after receipt of a further notice
from the Builder that the Vessel conforms with the requirements of the Contract
and Specifications, notify the Builder of its Technical Acceptance of the Vessel
or the respects in which the Vessel still fails to conform with the requirements
of this Contract and the Specifications. This process shall be repeated until
the earlier of (a) the Purchaser's Technical Acceptance of the Vessel or (b) the
valid and proper termination or rescission of this Contract by either the
Purchaser or the Builder.
13.13. If the Purchaser fails to notify the Builder in writing of its Technical
Acceptance or otherwise of the Vessel within the periods as provided above the
Purchaser shall be deemed to have accepted the Vessel.
13.14. The Purchaser's Technical Acceptance of the Vessel as above provided
shall preclude the Purchaser from refusing Delivery of the Vessel as hereinafter
provided, if the Builder complies with the procedural requirements for Delivery
of the Vessel as provided in Clause 14 hereof.
14. DELIVERY OF THE VESSEL
DELIVERY
14.1. The Vessel shall be delivered by the Builder to the Purchaser at the
Shipyard (or other place as may be agreed with unrestricted access to the open
sea) on 9th February 2000 except that, in the event of Permissible Delay as
defined in Clause 15.2 hereof, the aforementioned date shall be postponed
accordingly. The aforementioned date, or such later date to which requirement to
deliver may be postponed, is herein called the "Contractual Delivery Date".
14.2. Delivery shall take place on a Working/Banking Day to be nominated by the
Builder following Technical Acceptance of the Vessel by the Purchaser and with
not less than thirty (30) Working Days' advance notice to the Purchaser.
Delivery shall be effected by the execution by the Parties of a Protocol of
Delivery and Acceptance in the form set out in Appendix III, acknowledging
delivery by the Builder and acceptance thereof by the Purchaser. The Builder
shall give the Purchaser at least ninety (90) days' (plus or minus seven (7)
days) calendar notice of the estimated date of Delivery.
14.3. The Builder guarantees that at the time of Delivery title to the Vessel
and every part thereof shall pass to the Purchaser free and clear of any and all
liens, claims, mortgages or other encumbrances upon it and in particular, but
without limitation, that she shall be free of all burdens in the nature of
imposts, taxes or charges imposed by any liabilities arising from the
construction of the Vessel or from its operation on Trials or otherwise.
DOCUMENTS TO BE PROVIDED TO THE PURCHASER
14.4. The Builder shall provide to the Purchaser the following documents prior
to Delivery failing which the Purchaser may refuse to accept Delivery.
a. Records of inventory of the Vessel's equipment including spare gear and
the like as detailed in the Specifications;
18
b. Records of any and all fuels, lubricants, consumable stores and fresh
water supplied to this Contract by either the Builder or the Purchaser
together with such quantities same as remain on board at Delivery;
c. All certificates (including Class and other regulatory certificates)
required to be furnished prior to or upon Delivery of the Vessel pursuant
to the Specifications; such certificates are to be clean and free of all
qualifications, reservations and recommendations whatsoever;
d. Declaration of Warranty of the Builder in accordance with Clause 14.3
above;
e. The following technical documentation:-
e.1. Four (4) copies and one reproducible of all the "As Built"
drawings of the Vessel required for its operation and
maintenance in accordance with its design and purpose.
e.2. Four (4) complete documentation and instructions (Operation
and Maintenance) books covering builder supplied equipment.
e.3. Four (4) sets of Operating Manuals and Instruction Books
according to MODU CODE 1989 with all the necessary data
including sea preparation and any other data or documents
required by Owner's insurers.
e.4. Four (4) copies of a complete maintenance guide including all
drawings.
e.5. One (1) copy of all the test and commissioning trials and
results which have been done prior to delivery.
e.6. Lightship weight, variable load and centre of gravity of
lightship weight calculations.
f. The certificates listed in Appendix VII, together with (i) Builder's
Certificate or (at the Purchaser's option) Bill of Sale in favour of the
Purchaser notarised and legalised to permit registration of the Vessel on
the [ ] Register of Shipping and (ii) any other document relating to the
condition and/or performance of the Vessel which the Purchaser may
reasonably require provided the same is requested no later than seven
Working Days prior to Delivery.
14.5. The documents listed in sub-clauses 14.4.e. 1-6 above are also to be
supplied as a diskette in a format to be agreed between the Parties.
REMOVAL OF THE VESSEL
14.6. Following Delivery of the Vessel, the Purchaser shall in seven (7) Working
Days remove her from the Shipyard. If the Purchaser fails to remove the Vessel
within this period, it shall pay to the Builder reasonable mooring charges
thereafter until removal.
15. EXTENSION OF TIME FOR DELIVERY: PERMISSIBLE DELAY
CAUSES OF DELAY
15.1. If at any time before the Contractual Delivery Date the construction of
the Vessel is delayed due to Acts of God, acts of princes or rulers, war or
other hostilities or preparations therefor, blockade, civil commotion or riots,
strike, epidemics, floods, hurricanes, earthquakes, tidal waves, landslides,
fires, lightning, explosions, collisions or strandings, shortage of materials or
equipment other than resulting from any act, omission or improvidence of the
Builder or its Subcontractors, prolonged failure, shortage or restriction of
electric current, oil or gas or destruction of or damage to the Shipyard or
works of the Builder or its Subcontractors by any causes herein described and
other causes or accidents beyond control of the Builder or its major
subcontractors or suppliers of similar nature, the
19
Contractual Delivery Date and any Milestones not then achieved shall be
postponed for the period of time during which construction of the Vessel is
directly and unavoidably delayed by the same.
15.2. Any periods of time by which the Contractual Delivery Date of the Vessel
and any Milestones not then achieved is properly and justifiably claimed by the
Builder to be extended by reason of matters falling within (a) subclause I above
or (b) Clauses 5.6, 5.9, 7, 13.7 or 18.2 hereof shall be defined herein as
"Permissible Delay".
15.3. The Builder's entitlement to a Permissible Delay shall, however, be
subject to:-
a. the delay in respect of which the Builder is claiming relief not being
within its control or contemplation at the date of signing of this
Contract nor caused or contributed to by its error, neglect, act or
omission or that of its agents, employees or Subcontractors:
b. the delay affecting the "critical path" of the Vessel's construction as
the time of commencement of the event;
c. since the occurrence of the event in respect of which relief is claimed,
the Builder having taken all steps open to it to mitigate the effect of
the event upon the Contractual Delivery Date and any Milestones not then
achieved; and
d. the Builder having duly given all the notices required under sub-clause
15.4 below within the time-limits therein laid down.
NOTICES
15.4. Upon the occurrence of any of the events potentially constituting
permissible delay listed in sub-clause (1) above, the Builder shall:-
a. within seven (7) Working Days of the date on which it became aware of the
event, give the Purchaser notice in writing of the occurrence of the
event;
b. as soon as possible thereafter, and in any event not more than seven (7)
Working Days after the giving of the said notice, submit to the Purchaser
a statement in writing, specifying as far as possible, with full
particulars, the nature and the cause of the event, the effect on the item
involved, the likely overall effect computed from the Planned Programme
upon the Contractual Delivery Date and any Milestones not then achieved
and the steps which are being taken by it to mitigate any delay which may
result from the event;
c. within seven (7) Working Days after the date on which it becomes aware
that the event is at an end, give the Purchaser notice in writing of the
date when the event ended;
d. within seven (7) Working Days of the date of the Builder's notice under
sub-paragraph (c), notify the Purchaser of the period of time by which it
claims the Contractual Delivery Date of the Vessel and any Milestones not
then achieved should be extended by reason of the event.
16. DELAY IN DELIVERY
LIQUIDATED DAMAGES
16.1. In the event that Delivery should be delayed beyond midnight local time on
the Contractual Delivery Date, the Builder shall, subject to the provisions of
Clause 15 above, pay to the Purchaser by way of liquidated damages, not by way
of penalty, for loss of use of the Vessel, the amounts set out below:-
1 - 150 days of delay US$ 42,500 per day
20
However, the total amount of the liquidated damages shall not be more than as
would be the case for a delay of 150 days. The liquidated damages shall be due
at the date of actual delivery of the vessel.
TERMINATION FOR DELAY IN DELIVERY
16.2. Furthermore, if Delivery should not have occurred prior to either:-
a. the expiry of 90 days from the Contractual Delivery Date (as extended by
Permissible Delays); or
b. The expiry of 180 days from the Contractual Delivery Date extended by such
days of Permissible Delay as are attributable to the Purchasers fault.
the Purchaser, as an alternative to receiving the above mentioned liquidated
damages, may elect to rescind this Contract. If the Purchaser elects to rescind
this Contract, then the Purchaser shall give notice in writing to the Builder in
which case Clause 19.2 shall apply. Such notice, which shall be effective from
receipt thereof by the Builder, shall operate without prejudice to the
Purchaser's rights at law generally, but exclusive of its right to liquidated
damages.
17. DEFECTS AND BUILDER'S GUARANTEE
GUARANTEE PERIOD
17.1 The Builder guarantees the Vessel for a period of twelve months from
Delivery or, in respect of individual items as provided for in the
Specification, for such greater period as may be agreed, against all defects
whether attributable to Materials, workmanship, construction or detail design,
and against all physical damage caused to the Vessel thereby. The aforesaid
period of twelve months from Delivery shall be known herein as the "Guarantee
Period".
17.2. This guarantee shall not extend to Listed Items or to any damage caused by
any defect therein not attributable to the Builder, but it shall extend to
defects in Materials, workmanship or design and to physical damage caused
therein resulting from the Builder's installation of the Listed Items.
17.3. The Builder guarantees repairs or replacements to the Vessel made under
the guarantee in sub-clause (1) above for a further period of twelve months from
the date of completion of such repair or replacement, provided that the total
guarantee period shall not exceed twenty-four months from Delivery.
REMEDY OF DEFECTS
17.4. The Purchaser shall notify the Builder in writing within thirty days after
discovery of any defect or physical damage falling within the provisions of this
Clause 17. The Purchaser's notice shall include such particulars as can
reasonably be given as to the nature of such defect or physical damage, the date
of discovery and the place at which the Vessel can be made available for
earliest inspection by or on behalf of the Builder. The Purchaser shall furnish
to the Builder as soon as practicable copies of any relevant survey or
inspection reports.
17.5. The Purchaser may require the Builder to make good any defect or physical
damage for which the Builder is liable under this Clause 17 by giving notice of
such requirement to the Builder. Any parts replaced shall on their removal
become the property of and shall be at the risk of the Builder whilst the
replacement parts fitted to the Vessel shall upon fitting become the property of
the Purchaser.
17.6. The Builder shall execute the necessary work including the carrying out of
any essential dismantling and reassembling with the utmost despatch in
accordance with the quality standards which are applicable hereunder to the
Vessel's original construction.
17.7. In the event that the Builder is unable to make good any defect at the
Shipyard, it shall forthwith nominate a yard suitable for such purpose for the
Purchaser's approval, and should the Purchaser consider such yard
21
acceptable the Builder shall arrange for the making good of the defect and the
carrying out of any essential dismantling and reassembling at its own expense.
17.8. Should the Purchaser consider the yard nominated by the Builder
unacceptable, or should the Purchaser elect to have the work referred to above
carried out elsewhere than at the Shipyard, the Purchaser shall nominate a yard
acceptable to it. In such case the Builder shall pay to the Purchaser for
repairs and/or replacements such sum as would equate to the costs of effecting
such repairs at a first-class North-West European shipyard. The Builder may, at
its own expense, have its representative in attendance during execution of the
work. The Purchaser shall ensure that any parts replaced under this sub-clause
are returned to the Builder (if required by the Builder) at the Builder's
expenses, and in such case those parts returned shall on their replacement
become the property of and shall be at the risk of the Builder.
17.9. In the event of defects arising which fall within the provisions of this
Clause 17, whether or not such defects require the Vessel to be dry-docked, the
Builder shall pay for any costs incurred by the Purchaser in making the Vessel
available to the Builder or to any other yard for the making good of any such
defect as aforesaid. Such additional costs shall include, but shall not be
limited to, port charges and the cost of fuels, lubricants and consumable stores
consumed in excess of those which would have been consumed had the Vessel not
deviated to allow the Builder to make good any such defects as aforesaid. The
Purchaser shall use all reasonable endeavours to mitigate the incidence of such
costs chargeable to the Builder's account. Excepting the abovesaid additional
costs, the Builder shall not be responsible or liable for any exceptional or
special losses, damages or expenses including, but not limited to, loss of time,
loss of profit or earning or demurrage directly or due to repairs or other works
done to the Vessel to remedy such defects.
17.10. In the event that the Vessel is idle for more than 15 days in total
accumulated time due to defects under this Clause 17 the Guarantee Period shall
be extended by the number of all days during which the Vessel is idle commencing
with the sixteenth day, whether or not other work is undertaken simultaneously
with the guarantee work.
GUARANTEE ENGINEER
17.11. Where so requested by the Purchaser, the Builder shall appoint a suitably
qualified English-speaking Guarantee Engineer to serve on the Vessel as the
representative of the Builder for such portion of the Guarantee Period as the
Purchaser shall require, the Purchaser and its employees shall give the
Guarantee Engineer full co-operation in carrying out his duties as the
representative of the Builder on board the Vessel. In particular, the Purchaser
shall accord the Guarantee Engineer treatment and subsistence on board the
Vessel comparable to the Vessel's Chief Engineer (except that the Purchaser
shall provide him accommodation in a standard passenger cabin) at no cost to the
Builder.
17.12. The Purchaser shall pay the expenses of the Guarantee Engineer's
repatriation by air to Korea upon termination of his services on the Vessel.
However, save as aforesaid, the Purchaser shall be responsible for no other
expenses in connection with the Guarantee Engineer, who shall at all times be
conclusively deemed an employee of the Builder. The Builder shall indemnify and
hold harmless the Purchaser from and against personal injury, including death,
of, or loss of or damage to property of the Guarantee Engineer unless the same
shall been caused by the gross negligence of the Purchaser or any of its
employees, agents or sub-contractors. If the Purchaser has reason to be
dissatisfied with the conduct or competence of the Guarantee Engineer, the
Builder, on receiving particulars of the complaint, shall promptly investigate
the matter and, if the complaint is found to be justified, make a change in the
appointment.
ASSIGNMENT OF SUBCONTRACTORS' GUARANTEES
17.13. The Builder agrees upon the expiry of the Guarantee Period to assign (to
the extent to which it may validly do so) to the Purchaser, or as the Purchaser
may direct, all the right, title and interest of the Builder in and to all
guarantees or warranties given by the Subcontractors save insofar as the same
relate to existing claims by the Purchaser against the Builder.
22
ASSIGNMENT OF BUILDER'S GUARANTEE
17.14. It is expressly agreed and understood that the benefit of this Guarantee
shall be capable of transfer by the Purchaser to any Assignee. The Builder shall
in such circumstances enter into any documentation reasonably requested by
either the Purchaser or the Assignee to evidence such transfer and the vesting
in the Assignee pursuant to such assignment of all rights in respect of this
Guarantee.
18. DEFAULT BY THE PURCHASER
EVENTS OF PURCHASER'S DEFAULT
18.1. The Purchaser shall be deemed to be in default of performance of its
obligations under this Contract in the following cases:
a. if the Purchaser fails to pay the amount of any of the Instalments of the
Contract Price due to the Builder in the period prior to Delivery on the
due date for payment thereof,
b. if the Purchaser fails without legal justification to take delivery of the
Vessel in accordance with Clause 14 and to pay the instalment of the
Contract Price due thereon;
c. if an order or an effective resolution is passed for the winding up of the
Purchaser (otherwise than for the purposes of a reconstruction or
amalgamation previously approved by the Builder) or if a receiver is
appointed over the whole or any part of the undertaking or property of the
Purchaser or if the Purchaser becomes insolvent or suspends payment
generally of its debts or ceases to carry on its business or makes any
special arrangement composition with its creditors.
18.2. If the Purchaser is in default as to the payment of any instalment as
provided in (a) or (b) of sub-clause (1) above, then without prejudice to any
other rights of the Builder or of the Purchaser, the Purchaser shall be liable
to pay interest at 2 % per cent over LIBOR on the unpaid amount from the day
from which the same became due to the Builder up until the date of actual
payment thereof. The Builder shall further be entitled to claim as Permissible
Delay within the meaning of Clause 15.2 any period of time during which the
construction or completion of the Vessel has been delayed in consequence of the
Purchaser's default as aforesaid.
TERMINATION BY THE BUILDER
18.3. If default on the part of the Purchaser continues for a period of thirty
days, the Builder shall have the right at its sole discretion to rescind this
Contract by giving written notice to the Purchaser. The Builder shall in such
event be entitled to retain all of the instalments received from the Purchaser.
Upon completion of this Contract in accordance with this clause, title to the
Vessel shall be temporarily transferred to the joint ownership of the Builder
and the Purchaser and remain as such until disposal of the Vessel by the Builder
in accordance with this clause.
18.4. In the event of rescission of this Contract in accordance with this Clause
the Builder shall have the right and power either to complete or not to complete
the Vessel as it deems fit but in any event shall sell the Vessel (either in its
complete or incomplete form) at the best available price at a public or private
sale on such reasonable terms and conditions. If the Builder sells the Vessel in
an incomplete form then the Builder shall give credit to the Purchaser for any
and all savings which arise from not having to complete the construction of the
Vessel.
18.5. In the event of the sale of the Vessel in its completed state the proceeds
of sale received by the Builder shall be applied to payment of all expenses
attending such sale and otherwise incurred by the Builder as a result of the
Purchaser's default and then to payment of all unpaid instalments of the
Contract Price and interest on such instalments at the rate of 2 per cent above
LIBOR from the respective due dates thereof to the date of application.
18.6. In the event of sale of the Vessel in its incomplete state the proceeds of
sale received by the Builder shall be applied first to all expenses attending
such sale incurred by the Builder as result of the Purchaser's default and then
23
to payment of all costs of part-construction of the Vessel less the instalments
retained by the Builder and compensation to the Builder for damages suffered by
the Builder in consequence of such default.
18.7. In either of the above events of sale, if the proceeds of sale exceed the
sums to which such proceeds are to be applied as aforesaid the Builder shall
promptly pay any such excess to [he Purchaser without interest thereon and shall
at the same time either permit the Purchaser to remove the Purchaser's Supplies
from the Shipyard or pay to the Purchaser the full value thereof.
18.8. If the proceeds of sale of the Vessel are insufficient to pay such total
amounts payable as aforesaid the Purchaser shall be liable to pay to the Builder
upon demand the amount of such deficiency.
19. DEFAULT BY THE BUILDER
EVENTS OF BUILDER'S DEFAULT
19.1. In the event that any of the following events should occur:-
a. the Builder shall without legal justification fail to proceed with
construction of the Vessel with all reasonable despatch so that it fails
to meet two consecutive Milestones within ninety days of the respective
dates agreed for the same;
b. the Builder shall commit any material breach of this Contract and shall
fail to initiate the remedy work for the same within five Working Days of
receipt by the Builder of written notice from the Purchaser;
c. the making of any order or the passing of an effective resolution for the
winding-up of the Builder (other than for the purposes of reconstruction
or amalgamation which has been previously approved in writing by the
Purchaser such approval not to be unreasonably withheld), or the
appointment of a receiver of the undertaking or property of the Builder,
or the insolvency of or a suspension of payment by the Builder, or the
cessation of the carrying on of business by the Builder, or the making by
the Builder of any special arrangement or composition with creditors of
the Builder, and failure by the Builder
the Purchaser may elect either (a) to rescind this Contract or (b) to exercise
its option to purchase the Vessel pursuant to sub-clause.3 hereof. If the
Purchaser elects to rescind this Contract. then the Purchaser shall give notice
in writing to the Builder in which case the provisions of sub-clause 2 below
shall apply. Such notice shall be effective from receipt thereof by the Builder.
RESCISSION BY THE PURCHASER
19.2. If, in accordance with (1) the provisions of sub-clause 1 above or (2)
Clause 16.3 above the Purchaser exercises its right to rescind this Contract,
then the Builder shall, without prejudice to the Purchaser's general remedies at
law, promptly repay to the Purchaser the amount of all monies paid by the
Purchaser on account of the Contract Price together with interest thereon at a
fixed rate of 10% p.a. from the date when such monies were paid by the Purchaser
to the Builder up to the date of the repayment thereof calculated on the same
basis as an commercial inter-bank transaction carried out in London. The Builder
shall also redeliver to the Purchaser at the Shipyard all of the Purchaser's
Supplies delivered to the Builder at the time of the Purchaser's rescission.
Upon such refund by the Builder to the Purchasers, all obligations, duties and
liabilities of each of the parties to the other under this Contract shall be
completely discharged.
PURCHASE OF THE VESSEL
19.3. In the event that the Purchaser shall exercise its option to purchase the
Vessel, the Builder shall give notice in writing to the Builder. The Builder
shall thereupon:
a. secure the immediate discharge of all liens, claims, mortgages or other
encumbrances upon the Vessel;
24
b. complete at its own cost all works required as a minimum to permit the
Vessel to depart from the Shipyard in a safe and seaworthy condition,
remove its employees, agents and contractors, together with their
equipment, from the Vessel and render all necessary assistance to the
Vessel in leaving the Shipyard at the earliest moment convenient to the
Purchaser;
c. execute and deliver to the Purchaser an original of the Protocol of
Delivery and Acceptance together with any and all documentation (including
but not limited to a bill of sale or builder's certificate) in such form
and such manner as the Purchaser shall in its absolute discretion
determine shall be required or desirable for the purposes of transferring
to the Purchaser title to the Vessel in her then current state of
construction; and
d. execute and deliver to the Purchaser all of the documentation listed in
Clause 14.4 hereof to the extent that the same is at that time capable of
production by the Builder.
19.4. Title to the Vessel, and all risk of loss thereof, shall in such
circumstances transfer to the Purchaser upon execution by the Purchaser of the
Protocol of Delivery and Acceptance following receipt of all of the
documentation received above. The Purchaser may, however, elect to execute the
Protocol of Delivery and Acceptance notwithstanding the Builder's failure to
deliver all or part of the other documentation required to be delivered by the
Builder pursuant to subclause 3 above.
19.5. The Purchaser shall thereafter be entitled to retain and apply any balance
which may be otherwise due under this Contract by it to the Builder, or such
part thereof as may be necessary to meet the cost of completing the works
envisaged under this Contract elsewhere, together with the supervision thereof
(the "Completion Costs"). If the Completion Costs exceed the balance which would
otherwise have been due from the Purchaser to the Builder hereunder, the Builder
shall pay the amount of such excess to the Purchaser. However, if the Completion
Costs are less than the balance which would otherwise have been due from the
Purchaser to the Builder, the Builder shall be entitled to receive from
Purchaser an amount equal to the difference between such price and the
Completion Costs.
NON-PAYMENT BY THE BUILDER
19.6. Should the Builder default in payment of any amount due under this
Contract (including, without limitation, payment of liquidated damages), then
the Builder shall pay to the Purchaser interest thereon at the rate of 2 percent
over LIBOR from the date when the amount became due to the Purchaser to the date
of the payment thereof.
20. PATENT INDEMNITY
20.1. The Builder warrants that the Purchaser and its successors in title shall
enjoy quiet possession of the Vessel and that the Purchaser's possession,
ownership or operation of the Vessel shall not at any time infringe any patent
rights, utility model rights, trade mark rights or copyrights in any country.
The purchaser shall protect, defend, hold harmless and indemnity the Builder in
respect of any claim or infringement of a patent right, utility model rights,
trade mark rights or copyrights related to the basic design, Listed Items or
material or equipment provided by the Purchaser to the Builder.
20.2. The Builder shall indemnify and hold the Purchaser harmless against any
loss, damage, claim, demand, proceeding or liability whatsoever arising out of
relating to:
a. any lawful claims of superior title by a third party against the
Purchaser's quiet possession of the Vessel and
b. the infringement of any of the rights set out in sub-clause (1) above by
reason of the Purchaser's possession, ownership or operation of the
Vessel.
20.3. The loss referred to in sub-clause (2) above shall include, but shall not
be limited to:
a. the costs and expenses of considering and defending any claim, demand or
proceeding;
25
b. any sum paid or payable by the Purchaser in respect of any settlement or
any such claim, demand or proceeding;
c. any sum paid or payable by the Purchaser to acquire a license under any of
the rights set out in sub-clause (1) above; and
d. any sum paid or payable by the Purchaser to its servants or agents or to
any operator of the Vessel to indemnify them or any of them against any
such loss, damage, claim demand, processing or liability or the cost of
acquiring a license under any of the such rights.
21. TAXES AND DUTIES
21.1. The Builder shall pay or cause to be paid all taxes, duties, fees and
stamp duties of whatsoever nature imposed in Korea in connection with the
execution and performance of this Contract, However personal income taxes
imposed by Korean Authority upon employees of the Purchaser, if any, shall be
the Purchasers account.
21.2. The Purchaser shall pay or cause to be paid all taxes, duties, fees and
stamp duties of whatsoever nature imposed outside Korea in connection with the
execution and performance of this Contract.
22. ASSIGNMENT
22.1. The Purchaser may transfer, by assignment or novation, to any third party
or parties (herein "Assignee(s)") any of its rights and/or obligations under
this Contract. Provided, however, that, to the extent that any such assignment
or novation transfers to an Assignee the obligations of this Contract, the
purchaser shall be responsible, jointly and severally with the Assignee, to
perform the obligations of this Contract.
22.2. The Builder may, with the prior written approval of the Purchaser assign
the benefit of this Contract.
23. PRIORITY OF DOCUMENTS
23.1. The Appendices hereto shall form an integral part of this Contract as if
the same were expressly set out herein.
23.2. If there is any discrepancy between the following documents priority
between them shall be as follows:-
a. between the terms of this Contract (excluding the Specifications) and the
terms of the Specifications, the terms of the former shall prevail;
b. between the Principal Drawings and the Specifications, the Specifications
shall prevail;
c. between the Principal Drawings, in the order of precedence contained in
Appendix I;
d. between one approved Plan and another approved Plan, the later in date
shall prevail;
24. NOTICES
24.1. Every notice, consent or approval (individually and collectively called
"Communications" for the purposes of this Clause 24) given or required, whether
expressly or impliedly, under this Contract shall be in writing.
24.2. Communications shall be given by the Builder to the Purchaser as follows:
Address: to be advised
Attn:
Facsimile
24.3. Communications shall be given by the Purchaser to the Builder as follows:
Address: to be advised
26
Attn:
Facsimile
25. RECORDS AND AUDITS
25.1. The Builder shall maintain true and complete records in connection with
the construction of the Vessel and all transactions related thereto, and shall
retain all such records for not less than twenty-four (24) months following
Delivery.
25.2. No director, employee or agent of the Builder shall give or receive any
commission, fee, rebate, gift or entertainment of significant cost or value in
connection with the work under this Contract, or enter into any business
arrangement with any director, employee or agent of the Purchaser.
25.3. If any violation of sub-clause (2) above is found to have occurred prior
to the date of signing this Contact and such violation is determined to have
resulted directly or indirectly in the Purchaser's consent to enter into this
Contract with the Builder the Purchaser may rescind this Contract by notice in
writing to the Builder in which case the provisions of Clause 19.2 shall apply.
25.4. The Builder shall use its best endeavours to procure that all
Subcontractors:-
a. maintain records in accordance with sub-clause (1) above;
b. enter into obligations with the Builder, to the like intent and effect as
those which bind the Builder as above. The Builder shall promptly notify
the Purchaser of any violation of such obligations involving
Subcontractors which comes to the Builder's notice.
26. LAW
26.1. The construction, validity and performance of this Contract shall be
governed by English Law.
27. DISPUTES
27.1. Any claim, difference or dispute which may arise out of this Contract
shall be decided by the Commercial Court of the Queen's Bench Division of the
High Court of England and Wales to whose exclusive jurisdiction the parties
hereby agree.
27.2. For the purposes of any proceedings pursuant to sub-clause (1) above, the
parties hereby irrevocably appoint the following as their agents for the service
of process:
THE BUILDER
To be advised
Ref: [ ]
THE PURCHASER
To be advised
Ref: [ ]
27
27.3. Without prejudice to the generality of sub-clause (1) above and without
prejudice to any express provision contained herein for referral of any matter
to an expert, any dispute or difference of opinion between the parties relating
to conformity of the construction of the Vessel, Materials or workmanship with
this Contract, the Specifications and the other Contract Documents may, by
agreement between the Parties, be referred to an expert, acting as an expert and
not an arbitrator, to be appointed by agreement between them and whose opinion
on the matter shall be final and binding upon the parties hereto.
27.4. If the parties shall fail to agree either (i) to submit the dispute to a
technical expert or (ii) upon the identity of a mutually acceptable technical
expert as aforesaid, such dispute shall be settled in the manner as defined in
sub-clause 1 above.
28. MISCELLANEOUS
28.1 The terms of this Contract are to remain confidential to the parties and no
disclosure of the same may be made to any third party other than for the
purposes of permitting or ensuring its due performance by either party hereto.
This obligation shall survive termination of this Contract for any reason
whatsoever.
28.2. The Builder undertakes to ensure that all its supervisory staff, both on
and off the construction site, are fluent in the English language and are
capable of understanding any written or verbal instructions in the English
language.
29. SPARE PARTS
29.1. The Builder shall furnish spare parts and maintenance tools of the kind
and in at least the specified quantities in accordance with the Specifications,
Classification Society requirements, and the maker's standards, for items
furnished by the Builder. The cost of these spare parts is included in the
Contract Price.
29.2. In addition, the Builder shall supply to the Purchaser a list of the
maker's recommended spare parts for two (2) years of continuous operations
covering items supplied by Builder, at least six months prior to the Vessel's
completion.
29.3. The spare parts furnished by the Builder shall be properly protected
against physical decay, corrosion and mechanical damage and shall be properly
listed so that replacements may be readily ordered.
29.4. The Builder shall complete the storage spaces installation in time to
enable to positioning, labelling and listing of all spare parts (the Builder and
Purchaser supplied) prior to Delivery. The Builder at his own cost shall be
responsible for handling, bringing on board and storage on the Vessel of all
spare parts, tools and supplies under instruction and supervision of Purchaser's
Representative.
30. SAFETY AND HEALTH STANDARDS
30.1. The Purchaser's Representative will have authority to monitor the
performance of the work done by the Builder to ensure safe and workmanlike
performance.
30.2. It is the Purchaser's policy not only to comply with the safety and health
measures required by law but to act positively to prevent injury, ill health,
damages and loss arising from its operations. The Purchaser requires the Builder
and his sub-contractors to apply health, safety and local environmental
standards in order to achieve high levels of performance. it is essential that
the Builder and his sub-contractors undertaking work consistently show a high
level of safety awareness and prove that they are capable of conducting
themselves in a safe and competent manner in their area of activity.
30.3. The Builder acknowledges the Purchaser's strong commitment to safety and
affirms that he has a written safety policy which has been signed and is
actively supported and endorsed by Builder's management. The Builder further
affirms that his safety policy is widely disseminated, understood and
implemented by and among Builder's
28
and Builder's sub-contractors' employees. This policy shall be in English and
such other language(s) as required. A copy of Builder's Safety Policy shall be
furnished to the Purchaser prior to start of the work.
30.4. It is essential that good housekeeping is maintained by the Builder's
employees throughout the term of this Contract. The working areas shall be kept
tidy at all times, access ways kept clear and surplus/scrap material removed
daily. Cleaning up at end of the job is not considered sufficient. Spillage of
oil or chemicals shall be cleared up immediately to avoid fire hazards, slippery
surfaces, contact with toxic substance and other hazards. Appropriate safety
precautions shall be taken during cleaning up. No oil grade with flash points
lower than 55 degrees C shall be used for cleaning purposes.
30.5. Asbestos containing products are not to be applied on board the Vessel.
Substitutes therefor shall be applied only after authorisation by the Purchaser.
30.6. The Builder shall report immediately to the Purchaser all accidents
occurring during the term of this Contract and related to work thereunder, that
result in injury to or death of any person and/or damage to or loss of property.
Accidents are defined as "Unintentional or unplanned events that may or may not
result in personal injury or equipment, plant, or property damage, or any
combination of these. The Purchaser reserves the right to stop part or all of
the work at no cost to the Purchaser until relevant unsafe acts and situations
have been rectified and the period work is so stopped shall not be a permitted
reason for extending the of Delivery Date. Any such stoppage of work shall be
confirmed to the Builder in writing by the Purchaser stating the reasons for
stoppage and the actions that the Builder has to implement for work to be
permitted to resume. For minor violation of safety regulations the Purchaser may
choose not to require work stoppage provided that the Builder promptly rectifies
such violation.
30.7. The Purchaser may require the Builder to permanently remove and replace
any of Builder's or Builder's sub-contractors' employees who violate safety
regulations and any equipment which is obviously unsafe.
30.8. The Builder shall, at his own expense, supply his personnel and his
sub-contractors' personnel with adequate protective personal clothing, safety
helmets, safety shoes, and other protective equipment required for the type of
work to be carried out.
31. EFFECTIVENESS
31.1. This Contract is subject to, and shall become effective and legally
binding on the parties as at the date of execution.
31.2. The date upon which the above conditions shall all have been satisfied
shall be known hereunder as the "Effective Date".
29
IN WITNESS WHEREOF the parties hereto have caused this Contract to be duly
executed the day and year first above written.
THE PURCHASER: THE BUILDER:
PETRODRILL CONSTRUCTION INC. DAEWOO CORPORATION
/s/ DEREK LEACH /s/ YOUNG-KYUN SHIN
By: Derek Leach By: Young-Kyun Shin
Title: Attorney-in-Fact Title: Attorney-in-Fact
DAEWOO HEAVY
INDUSTRIES LTD
/s/ YOUNG-KYUN SHIN
By: Young-Kyun Shin
Title: President
30
APPENDIX III
FORM OF PROTOCOL OF DELIVERY AND ACCEPTANCE
It is this day agreed that m.v. [ ], built by the Builder as
Hull No.[ ] at its[ ] yard in [ ] under a Contract
dated [ ] 1998 and made between the Builder and the Purchaser therein
described has today been delivered by the Builder and accepted by the Purchaser.
Dated:
Signed ....................
for
[ ].
The Builder
Signed ....................
for [ ].
The Purchaser
31
APPENDIX VII
LIST OF CERTIFICATES TO BE SUPPLIED
ON DELIVERY OF THE VESSEL
The Builder shall furnish, at the Builder's expense, to the Purchaser the
following certificates upon delivery of the Vessel:
From the Classification Society:
a. Classification certificates for hull, machinery and electricals of the
Vessel.
b. Safety radio telegraph certificate.
c. Load line certificate.
d. Register tonnage certificate.
e. Suez Canal tonnage certificate.
f. MODU CODE certificate.
g. Safety Construction certificate.
h. Certificate of Navigation Lights.
i. Certificate of Lifesaving Equipment, Fire Fighting and Fire Detection
System.
j. Compass Certificate.
k. Compass Deviation Table.
1. MARPOL International Oil Pollution Prevention Certificate (IOPPC).
m. Load test and lifting appliances certificate.
n. Test Certificate of Pressure Vessels.
From the Local Government Authority:
a. De-ratting exemption certificate.
b. Potable water analysis certificate.
32
APPENDIX VIII
MAKERS LIST
In accordance with Clause 5.6 of the contract the following maker's list details
the Purchaser's preference based on (1) being the preferred supplier.
- - -------------------------------------------------------------------------------
AMETHYST - APPROVED SUPPLIERS LSIT
- - -------------------------------------------------------------------------------
Steel Suppliers (2) British Steel
(1) Inexa
(2) Posco
Sumitomo
NSC
- - -------------------------------------------------------------------------------
Casting "TBA"
- - -------------------------------------------------------------------------------
16.000 Helideck (3) Baynards
(2) Raufoss
(1) Marine Aluminium
- - -------------------------------------------------------------------------------
19.000 Painting (4) Sigma
(3) Hempel
(5) Carboline
(3) International
(1) Jotun
- - -------------------------------------------------------------------------------
19.000 Cathodic Protection (3) Wilson Walton
(1) Jotun
(4) Impalloy
(2) Electrocataltic
- - -------------------------------------------------------------------------------
32.200 Mooring winches - Capstans (4) Navel
(2) Norwinch
(1) Ulstein
(3) Pusness
(6) Zicom
(5) Plimsol
- - -------------------------------------------------------------------------------
34.010 Liferafts (2) Zodiac
34.200 (1) Viking
(3) Beaufort
(4) RFD
Lifeboats (1) Norsafe
(3) Harding
(2) Schat-Watercraft
- - -------------------------------------------------------------------------------
34.150 Fire Detection (1) Thom Security
(4) Minervia
(2) Autronica
(3) Siemens
- - -------------------------------------------------------------------------------
34.520 C02 system (1) Unitor
(2) LPG
(3) Walter Kidde
(4) Heisn Larsen
- - -------------------------------------------------------------------------------
36.000 Air Conditioning (4) ABB Flakt Marine
(5) Semco
(1) Stork
- - -------------------------------------------------------------------------------
33
- - -------------------------------------------------------------------------------
73.000 Fuel Transfer Pumps (2) Hamworthy
(3) Allweiler
(1) IMO
- - -------------------------------------------------------------------------------
75.000 Fresh water pumps (1) Hamworthy
76.000 Sea water pumps (5) Grundfoss
81.000 Ballast pumps (6) Allweiler
(4) Kvaerner
(7) Shinko
(2) Iron
(3) Itvr
- - -------------------------------------------------------------------------------
81.500 Bilge / Dirty Oil Separator (4) Gefico
(3) Blohm & Voss
(2) Alfa Laval
(1) Hermond Marine
- - -------------------------------------------------------------------------------
88.300 Fresh water makers (1) Alfa-laval
(2) Atlas
- - -------------------------------------------------------------------------------
34