EXHIBIT 10.21
TDI-HALTER/PETRODRILL CONTRACT
HULL NO. 1829
CONTRACT
FOR CONSTRUCTION OF A
DYNAMIC POSITIONED SEMI-SUBMERSIBLE
DRILLING VESSEL
BETWEEN
TDI-HALTER, L.P.
AND
PETRODRILL CONSTRUCTION, INC.
HULL NUMBER 1829
INDEX
PAGE
DEFINITIONS.............................................................4
1. PURPOSE OF THIS CONTRACT................................................5
2. DESIGN: PRINCIPAL DIMENSIONS AND CHARACTERISTICS: CLASSIFICATION:
MANDATORY REGULATIONS: REGISTRATION.....................................6
3. CONTRACT PRICE..........................................................8
4. PAYMENT SCHEDULE: PERFORMANCE BOND/PARENT GUARANTEE: PAYMENT FOR
MODIFICATIONS AND OTHER ITEMS: PAYMENT FOR FUELS ETC AND LIQUIDATED
DAMAGES: PAYMENT PROCEDURES.............................................8
5. APPROVAL OF PLANS: SUBCONTRACTING: MAKER'S LIST: NOMINATED
SUBCONTRACTORS: ASSIGNMENT OF EXISTING SUBCONTRACTS: OBLIGATIONS
UNAFFECTED.............................................................11
6. LIGHTSHIP WEIGHT.......................................................14
7. MODIFICATIONS: PURCHASER'S MODIFICATIONS: STATUTORY MODIFICATIONS:
PRICING OF MODIFICATIONS: SUBSTITUTION OF MATERIALS....................14
8. INSPECTION: AUTHORISED REPRESENTATIVES: QUALITY ASSURANCE SYSTEM
AUDITS: INDEPENDENT CONTRACTOR, INDEMNITY AND LIABILITY PROVISIONS.....17
9. PLANNED PROGRAMME, PROGRESS CONTROL AND REPORTING......................22
10. TITLE..................................................................23
11. RISK AND INSURANCE.....................................................24
12. LOSS OR DAMAGE TO THE VESSEL...........................................25
13. SEA TRIALS: TECHNICAL ACCEPTANCE.......................................26
14. DELIVERY OF THE VESSEL: DOCUMENTS TO BE PROVIDED TO THE PURCHASER:
REMOVAL OF THE VESSEL..................................................28
15. EXTENSION OF TIME FOR DELIVERY: PERMISSIBLE DELAY:
CAUSES OF DELAY: NOTICES...............................................30
16. DELAY IN DELIVERY: LIQUIDATED DAMAGES: TERMINATION FOR DELAY
IN DELIVERY............................................................31
17. DEFECTS AND BUILDER'S GUARANTEE WARRANTY: GUARANTEE ENGINEER:
ASSIGNMENT OF BUILDER'S GUARANTEE......................................32
18. DEFAULT BY THE PURCHASER: EVENTS OF PURCHASER'S DEFAULT: TERMINATION
BY THE BUILDER.........................................................35
19. DEFAULT BY THE BUILDER: EVENTS OF BUILDER'S DEFAULT: RECISSION BY THE
PURCHASER..............................................................36
20. PATENT INDEMNITY: PATENT NUMBERS AND TRADEMARKS: HOLD HARMLESS, THE
PURCHASER: HOLD HARMLESS, THE BUILDER: DESIGNS AND PROPERTY OF THE
PURCHASER..............................................................39
21. OWNER FURNISHED EQUIPMENT: DELIVERY OF OWNER FURNISHED EQUIPMENT:
RESPONSIBILITY OF THE BUILDER..........................................40
22. TAXES AND DUTIES.......................................................41
23. ASSIGNMENT.............................................................41
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24. PRIORITY OF DOCUMENTS..................................................42
25. NOTICES................................................................42
26. RECORDS AND AUDITS.....................................................43
27. LAW....................................................................44
28. DISPUTES...............................................................44
29. MISCELLANEOUS..........................................................44
30. SPARE PARTS............................................................45
31. SAFETY AND HEALTH STANDARDS............................................45
32. EFFECTIVENESS..........................................................46
APPENDICES
APPENDIX I LIST OF PRINCIPAL DRAWINGS AND OTHER CONTRACT DOCUMENTS
APPENDIX II PLANNED PROGRAMME
APPENDIX IIA OWNER FURNISHED EQUIPMENT
APPENDIX III FORM OF PROTOCOL OF DELIVERY AND ACCEPTANCE
APPENDIX IV FORM OF PERFORMANCE BOND
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 LIST OF BASIC DESIGN DRAWINGS
APPENDIX IX FORM OF PARENT COMPANY GUARANTEE
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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:-
TDI-Halter, L.P. a limited partnership organised under the laws of the State of
Louisiana (hereinafter called "Builder"), having its principal office at 1601
South Childers Road, Orange, Texas 77631,
and
Petrodrill Construction, Inc. a corporation organised under the laws of Bahamas
(hereinafter called Purchaser"), having its principal office at Suite 205,
Saffrey Square, P.O. 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:-
"Basic Design" means the design drawings provided by the Purchaser listed
Section 99000 in Appendix VIII;
"Banking Day" means any day on which banks in each of London, New York and
Houston are open for the transaction of normal banking business;
"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;
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"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 X hereto;
"Mandatory Regulations" has the meaning assigned to it in Clause 2.7;
"Materials" means all materials and supplies, including, without
limitation, all machinery, equipment, outfittings and spare parts (but
excluding the Owner Furnished Equipment), 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 H hereto:
"Plans" means those drawings, documents and specifications which are
required under this Contract and the Specification (Section 990 10) to be
submitted to the Purchaser for approval;
"Specifications" means:-
(a) Specification no 95019 initialled by or on behalf of the
Purchaser and the Builder on April 1", 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 engineer, construct, build, launch, equip,
complete, and test at various
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of its shipyards at located on the U.S. Gulf Coast, exact locations to be
determined later (hereinafter called the "Shipyard") and deliver to Purchaser or
the Purchaser's nominee, as defined in Clause 23 below, for the Contract Price
referred to in Clause 2 below, one (1) fully operational and complete
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 expressly
agrees to take delivery of the Vessel when duly completed and to pay Builder all
amounts due Builder.
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 1829, shall be
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 good offshore construction standards and practices. At the time of Delivery
hereunder, the Vessel, which shall conform strictly with the terms and
conditions of this Contract and the Specification and shall be delivered safely
afloat.
DESIGN
2.2. The basic elements of the Vessel's design (the "Basic Design") will be
delivered by the Purchaser to the Builder. It is expressly understood that the
Purchaser shall be solely responsible for the suitability of the vessel design
supplied by it and for any errors, omissions and inconsistencies in the Basic
Design. 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 all required detailed engineering from the
delivered Basic Deign. The Builder shall accept responsibility for its own work
of developing the detailed working drawings from the Basic Design and all other
engineering it shall perform in connection with this Contract. If the Builder
considers during such detailed engineering 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.
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 according to the rules and regulations of
the Classification Society current at the date of execution of this Contract,
incorporating all additions and
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amendments thereof applicable to the Vessel in force or published, so as to
achieve on Delivery the following notation:-
Unrestricted Service OU +100A1, +LMC, UMS, DP(AAA), PC, DRILL, IWS
with the description notation
semi- submersible, self propelled drilling vessel
Provided that the Purchaser shall not be entitled to refuse delivery where such
recommendations etc. are of such a minor nature as not to adversely affect the
operation of the Vessel. In any event, such recommendations etc. shall be
remedied by the Builder within 90 days of Delivery or such other period as the
parties may mutually agree and Purchaser shall be entitled to retain $250,000
pending such rectification.
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.
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.
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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 or IEEE 45 Subject to the Purchaser's prior
approval, such approval not to be unreasonably withheld.
k. API specifications as applicable.
REGISTRATION
2.8. The Vessel shall upon Delivery fly the Netherland Antilles flag and be
registered in the Netherland Antilles Register of Shipping. Registration of the
Vessel as aforesaid shall be effected by thePurchaser 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 the price of
Eighty-four Million United State Dollars (US $ 84,000,000), (the "Contract
Price"), which shall include the cost of installation of the Owner Furnished
Equipment.
3.2. The Contract Price, which is exclusive of the cost of the Owner Furnished
Equipment, 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;
c. the cost of procuring the classification of the Vessel and of obtaining
all certificates and documents (save for those in respect of the Owner
Furnished Equipment), 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 ten (10)
instalments as follows:-
FIRST INSTALMENT:
Ten per cent (10%) of the Contract Price, being Eight Million Four Hundred
Thousand U.S. Dollars, (US$ 8,400,000) shall be paid within three Banking Days
of the Execution Date.
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SECOND INSTALMENT:
Ten per cent (10%) of the Contract Price, being Eight Million Four Hundred
Thousand U.S. Dollars, (US$ 8,400,000) 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 Builder has placed the orders for the major
equipment, herein defined as the Main Engines, the Thrusters, and the Electrical
Integration Subcontract.
THIRD INSTALMENT:
Ten per cent (10%) of the Contract Price, being Eight Million Four Hundred
Thousand U.S. Dollars, (US$ 8,400,000) 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 Start of Fabrication has taken place.
FOURTH INSTALMENT:
Fifteen per cent (15%) of the Contract Price, being Twelve Million Six Hundred
Thousand U.S. Dollars, (US$ 12,600,000) 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 the keel laying for the pontoons has taken place.
FIFTH INSTALMENT:
Ten per cent (10%) of the Contract Price, being Eight Million Four Hundred
Thousand U.S. Dollars, (US$ 8,400,000) 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 the Pontoons of the Vessel have successfully been launched.
SIXTH INSTALMENT:
Five per cent (5%) of the Contract Price, being Four Million Two Hundred
Thousand U.S. Dollars, (US$ 4,200,000) 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 the Substructure has successfully been erected on the Deck Box.
SEVENTH INSTALMENT:
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Five per cent (5%) of the Contract Price, being Four Million Two Hundred
Thousand U.S. Dollars, (US$ 4,200,000) 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 the Pontoons have successfully been joined.
EIGHTH INSTALMENT:
Ten per cent (10%) of the Contract Price, being Eight Million Four Hundred
Thousand U.S. Dollars, (US$ 8,400,000) 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 the Deck Box has been launched and successfully mated with the Pontoons and
Columns.
NINTH INSTALMENT:
Ten per cent (10%) of the Contract Price, being Eight Million Four Hundred
Thousand U.S. Dollars, (US$ 8,400,000) 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 the Main Engines have been started.
TENTH INSTALMENT:
Fifteen per cent (15 %) of the Contract Price, being Twelve Million Six Hundred
Thousand U.S. Dollars, (US$ 12,600,000) together with any increase or any
decrease of the Contract Price arising from the provisions of Clauses 6, 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. Not withstanding
anything to the contrary contained herein, or in Appendix V hereto, if Purchaser
fails to execute any Stage Certificate and such Stage Certificate has been
executed by the Classification Surveyor, then Purchaser shall be obligated to
pay such Instalment within three banking days of execution by the Classification
Surveyor. In addition, in no event shall the Second or Third Instalments be paid
prior to a date ninety (90) days from the Execution Date.
PERFORMANCE BOND/PARENT GUARANTEE
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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 Performance Bond,
for an amount equal to 100% of the Contract Price, in the form specified in
Appendix IV and given by Fireman's Fund Insurance Company, California, USA. The
Builder shall also, at the same time, provide a form of Parent Guarantee from
its ultimate parent company substantially similar to that contained in Appendix
IX hereto.
PAYMENT FOR MODIFICATIONS AND OTHER ITEMS
4.4. Any sums due to either party under Clause 7 as a result of Purchaser's
Modifications and/or Statutory Modifications shall be payable upon builder
achieving certain milestones and in conjunction with the above payment schedule,
and shall be payable on or before the Delivery Date.
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.
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 Builder's account with
Hibernia National Bank, New Orleans, Louisiana, 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
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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 ten (
10 ) Working 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.
5.2. Should the Builder elect to enter into a subcontract to purchase the detail
engineering with a Shipyard also contracted with the Purchaser who is
constructing a vessel of the same design and in the event that Purchaser elects
to remark or comment previously approved drawings, such remarks or amendments
shall be dealt with under the modification procedure within the meaning of
clause 7 hereof.
5.3. In the event that the Purchaser shall fail to return the Plans to the
Builder within the time limit as hereinabove provided, such Plans shall be
deemed to have been approved without comment.
5.4. 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 a modification
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.
5.5. Copies of all correspondence to and from 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
5.6. 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 , which shall not be unreasonably with held, 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
5.7. The Builder shall select for the supply of each of the Materials listed in
the Makers' List the Vendor named therein in relation to the same. Where the
Makers' List provides for more than one Vendor 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. Such purchase order shall contain full
technical and commercial details. If thereafter, the Purchaser shall request the
Builder to order
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that element of the Materials from another 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 Subcontractor
and the Subcontractor chosen by the Purchaser.
NOMINATED SUBCONTRACTORS
5.8. ASSIGNMENT OF EXISTING SUBCONTRACTS
In relation to the following "long lead" items of Materials, (the cost of which
is included in the Contract Price) it is understood that the Purchaser has had
advanced negotiations with the following suppliers and the Builder will enter
into subcontracts for the following based on the references below:
SUPPLIER NAME SUPPLIED ITEM REFERENCE
- - -------------------------------------------
Caterpillar Engine Generator Sets Fax transmission between Caterpillar
and Petrodrill on the 11th and 29th
January plus 6th February
GEC Alsthom Electrical Integrator Offer No. P354-A01
5.9. The Purchaser has also entered into an agreement with LIPS Thrusters BV for
the supply of thrusters Ref Petrodrill PO No. 1.9001/Lips order No. T07387/94
for Dutch Guilders 6.2 Million per set delivered Europe.
Concurrently with the receipt of the First Instalment, the benefit together with
the burden of all such existing contracts are to be assigned by the Purchaser
to the Builder, to the extent that it relates to only one shipset of equipment,
where upon the Materials to which they relate are to be treated as Builder's
supply. The Builder shall, upon assignment of each sub-contract, reimburse to
the Purchaser all of the instalments of the contract price paid by the latter in
respect thereof. It being understood that the cost of said thrusters is included
in the Contract Price.
OBLIGATIONS UNAFFECTED
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, detailed engineering or workmanship required hereunder.
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6. LIGHTSHIP WEIGHT
6.1. The Builder shall meet the target figures set out for Lightship Weight and
Centre of Gravity as specified in section 12000 page 3 of the Addendum to Rev 3
P-95019 of the Specification.
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 Lightship Weight in the conditions referred to in the
Specifications.
6.4. The Builder shall have no liability for the Owner Furnished Equipment
lightweight and centre of gravity as specified in section 12000 page 3 of the
Addendum to Rev 3 P-95019 of the specification. If the remaining lightship
weight so demonstrated is more than 9075 metric tons the Builder shall pay to
the Purchaser on Delivery as liquidated damages US $12,500 per full metric tons
of the increase above 9075 metric tonnes up to a maximum of 2.5 million U.S.
Dollars, (U.S.$2,500,000).
6.5. The Purchaser shall have no obligation to accept delivery of the Vessel if
the ship lightweight as defined on page 3 of the addendum to the specification
is more than 9,275 metric tons. 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 Operational VLC is restored to its original level
provided that the same (i) are approved in advance by the Classification Society
and (ii) do not significantly affect the motion characteristics or operational
performance of the Vessel.
6.6. In the event that the lightship weight demonstrated as a result of Clause
6.2 is less than 8,875 tonnes the Purchaser shall pay the Builder $12,500 per
tonne for each complete tonne that the weight is below 8,875 tonnes up to a
maximum of 3.0 million U.S. Dollars, (U.S. $3,000,000).
6.7. The Builders shall also have the option of exercising its rights as per
clause 6.5 in the event that the liquidated damages due is in excess of $ 1.0
million. In this case the level of liquidated damages that is finally paid will
be reduced from the calculated level by the same percentage that the Builder is
able to recover the VDL that has been lost as a result of the changes in the
lightship weight.
6.8. The parties hereto agree that the above liquidated damages shall ( subject
always to the provisions of clause 16.2 and 16.3 below ) be the sole and
exclusive remedy for damages being due as a result of increases in lightship
weight as set forth in this section.
6.9. The weights described in this Section 6 shall be adjusted for any
Modifications pursuant to Section 7.
7. MODIFICATIONS
PURCHASER'S MODIFICATIONS
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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.
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 this
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 ten (10) Working
Days after receipt of the written request for the Requested Change, of any such
adjustments which it will require.
On the basis of such notification the Purchaser shall no later than seven (7)
Working Days thereafter elect in writing to:
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
subclause 7.5 below shall apply; or
c. withdraw the Requested Change, in which case the Vessel shall be built
without reference to the same.
7.2. If within seven (7) Working Days after such notification the Purchaser has
made no election as aforesaid, then the adjustments notified by the Builder
shall be deemed to have been withdrawn by the Purchaser.
7.3. 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 Det
Norske Veritas. 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.
7.4. 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
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7.5. 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).
7.6. 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
such waiver, and shall notify the Builder as soon as possible 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 reasonable
co-operation to the Purchaser in this respect.
7.7. 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
the 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.
7.8. 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 Det Norske Veritas. The decision of the 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 said expert, the
Builder shall continue construction of the Vessel in accordance with the
Required Change.
PRICING OF MODIFICATIONS
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7.9. 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
fifteen per cent (115%) 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
7.10. 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
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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 where
available 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 local area in which the
Shipyard is located and the use of the canteen shall be for the Purchaser's
account. Purchaser shall designate one Representative authorised to make
contractual decisions and/or commitments on behalf of the Purchaser and likewise
Builder shall designate one Representative authorised to make contractual
decisions and/or commitments on behalf of the Builder. Builder and Purchaser
shall notify each other of the name of their respective designated
Representative within thirty (30) days of the Execution Date. To the extent that
Builder or Purchaser elects to change its designated Representative, it shall
notify of such change, in writing, within five (5) Working Days of such change.
8.2. In addition to the Authorised Representatives, the Purchaser may from time
to time employ further personnel and contractors on site.
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, within normal
working hours, 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 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.
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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.
QUALITY ASSURANCE SYSTEM AUDITS
8.7. Quality Assurance System Audits may be carried out by the Purchaser, and/or
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, 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.
INDEPENDENT CONTRACTOR, INDEMNITY AND LIABILITY PROVISIONS
8.8. It is understood that Builder is an independent contractor as to all Work
performed hereunder and that the detailed manner and method of doing the Work
and the areas of the Vessel where the Work is being performed shall be under the
exclusive control of the Builder. Purchaser shall have the right to supervise
the performance of the Work as to the results to be achieved and the compliance
of the Contractor with the terms of this Contract and the specifications.
A. Indemnification
a.1. BUILDER INDEMNIFICATION
a.l.a.Builder Personnel and Property
Builder shall release, defend, indemnify, and hold Purchaser, its
parent or affiliated companies, and their respective officers, directors,
employees, contractors, subcontractors, invitees, licensees and agents,
except any of the foregoing which are part of the Builder Group
(hereinafter called the Purchaser Group) harmless from and against all
liability, claims, losses, damages, punitive damages, costs, expenses,
attorney's fees, demands, suits and causes of action of every kind and
character (the "claims"), arising in favor of any officer, director, or
employee of the Builder or its sublessees, contractors and subcontractors,
their respective parent and affiliated companies, and their respective
officers, directors, employees, vendors, invitees, licensees and agents
(hereinafter collectively called the "Builder Group") on account of
personal injury or death or damage to property owned by any member of the
Builder Group, or, prior to Delivery, the Vessel and/or Owner Furnished
Equipment in Builder's care, custody and control, in any way incident to
or in connection with or arising out of or under this Contract, regardless
of the sole, joint or concurrent negligence, negligence per se, gross
negligence, statutory fault, or strict liability of any member of the
Purchaser Group or the unseaworthiness of the Vessel or any vessel owned
operated or chartered by any member of the Purchaser Group
19
that may have caused or contributed to the claims, to the extent such
indemnity obligations are not prohibited by applicable law.
a.1.b. Third Parties
Prior to the Delivery of the Vessel, Builder shall release, defend,
indemnify, and hold the Purchaser Group harmless from and against all
liability, claims, losses, damages, punitive damages, costs, expenses,
attorney's fees, demands, suits and causes of action of every kind and
character (the "claims"), arising in favor of any Third Party on account
of personal injury or death and/or damage to Third Party property in any
way incident to or in connection with or arising out of or under this
Contract, resulting from the joint or concurrent negligence, negligence
per se, gross negligence, (collectively "negligence") statutory fault or
strict liability of any member of the Builder Group or the unseaworthiness
of the Vessel or any vessel owned operated or chartered by any member of
the Builder Group, to the extent such claims were caused by the negligence
or other legal liability of any member of the Builder Group. As used
herein, a Third Party is any person of entity not included in either the
Purchaser Group or the Builder Group.
a.1.c. Pollution
Notwithstanding anything to the contrary herein, Builder shall
release, defend, indemnify, and hold the Purchaser Group harmless from and
against all, claims, demands, suits, causes of action, damages, natural
resource damage assessments, response, clean up, containment or disposal
expenses and other liabilities, including but not limited to attorney's
fees and the costs of litigation or administrative proceedings but
excluding any claim covered by a. 1. or a.2. above (the "Purchaser
pollution claims"), arising from any spill, discharge, escape, release of
or exposure to any waste, rubbish, petroleum, chemical or hazardous
substance, whether solid, liquid or gas, originating from any equipment,
facility or property of the Builder Group and, prior to Delivery, from the
Vessel, or from handling, removal, transportation or disposal thereof,
except to the extent such claims may have resulted from the negligence of
a member of the Purchaser Group.
a.2. PURCHASER INDEMNIFICATION
a.2.a.Purchaser Personnel and Property
Purchaser shall release, defend, indemnify, and hold the Builder
Group harmless from and against all liability, claims, losses, damages,
punitive damages, costs, expenses, attorney's fees, demands, suits and
causes of action of every kind and character (the "claims"), arising in
favor of any officer, director, or employee of the Purchaser Group on
account of personal injury or death or damage to property owned by any
member of the Purchaser Group except, prior to Delivery, the Vessel and/or
Owner Furnished Equipment in Builders care, custody and control, in any
way incident to or in connection with or arising out of or under this
Contract, regardless of the sole, joint or concurrent negligence,
negligence per se, gross negligence, (collectively "negligence") statutory
fault, or strict liability of any member of the Builder Group or the
unseaworthiness of the Vessel or any vessel owned operated or chartered by
any member of the Builder Group
20
that may have caused or contributed to the claims, to the extent such
indemnity obligations are not prohibited by applicable law.
a.2.b. Third Parties
Purchaser shall release, defend, indemnify, and hold the Builder
Group harmless from and against all liability, claims, losses, damages,
punitive damages, costs, expenses, attorney's fees, demands, suits and
causes of action of every kind and character (the "claims"), arising in
favor of any Third Party on account of personal injury or death and/or
damage to Third Party property in any way incident to or in connection
with or arising out of or under this Contract, resulting from the joint or
concurrent negligence, negligence per se, gross negligence, statutory
fault, or strict liability of any member of the Purchaser Group or the
unseaworthiness of the Vessel or any vessel owned operated or chartered by
any member of the Purchaser Group, to the extent such claims were caused
by the negligence or other legal liability of any member of the Purchaser
Group. As used herein, a Third Party is any person of entity not included
in either the Purchaser Group or the Builder Group.
a.2.c. Pollution
Notwithstanding anything to the contrary herein, Purchaser shall
release, defend, indemnify, and hold the Builder Group harmless from and
against all, claims, demands, suits, causes of action, damages, natural
resource damage assessments, response, clean up, containment or disposal
expenses and other liabilities, including but not limited to attorney's
fees and the costs of litigation or administrative proceedings but
excluding any claim covered by a.2.a. or a.2.b. above (the "Builder
pollution claims"), arrising from any spill, discharge, escape, release of
or exposure to any waste, rubbish, petroleum, chemical or hazardous
substance, whether solid, liquid or gas, originating from any equipment,
facility or property of the Purchaser Group including, after Delivery,
from the Vessel or from handling, removal, transportation or disposal
thereof, except to the extent such claims may have resulted from the
negligence of a member of the Builder Group.
B. Builder shall indemnify Purchaser for loss of or damage to Purchaser's
property intended to be incorporated into or used in the Vessel to be
performed while in Builder's care, custody or control prior to
installation aboard the Vessel provided such loss or damage does not
result from the negligence of any member of the Purchaser Group.
C. Risk of loss of the Vessel shall rest with the Builder at all times prior
to acceptance of the Vessel by Purchaser.
D. In no event, except for the liquidated damages as provided in Sections 6
and 16 shall any member of the Purchaser Group, or the Builder Group be
liable to each other for any incidental, consequential or special damages
incurred by the other, including but not limited to, loss of profit, loss
of business opportunities, loss of earnings or downtime, arising directly
or indirectly out of or relating in any way to this Contract or any
activities or omissions or delays in connection herewith, whether arising
out of the negligence (in
21
whole or in part), gross negligence or strict liability of either Party or
the unseaworthiness of the Vessel or otherwise. The Purchaser Group and
Builder Group hereby mutually release each other from all such losses.
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 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 Owner Furnished Equipment 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 of
contract signature.
9.3. During the course of the performance of this Contract the Builder shall
submit to the Purchaser on a fortnightly basis, commencing on the date falling
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
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;
22
e. a report on the delivery of sub-contracted Materials during the previous
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. To the extent Builder has been paid by the Purchaser, therefore the Vessel
and all Materials from time to time purchased by Builder for use in connection
with this Contract whether unfinished or partly or wholly finished and whether
at the Shipyard or at the premises of the Builder's subcontractors shall become
and remain the absolute property of the Purchaser. The Purchaser shall be
entitled to mortgage the Vessel to the extent title to the Vessel has passed to
Purchaser as aforesaid in connection with the financing of its purchase of the
Vessel and the Builder will execute any reasonable and necessary documentation
required by the Purchaser to effect such mortgage. The Builder shall have no
authority or entitlement to create any lien, encumbrance or charge over the
Vessel, the Material or the Owner Furnished Equipment at any time except to the
extent said lien or encumbrance is created by applicable law.
10.2. In furtherance of the provisions of Clause 10. 1 above the Builder shall
(i) use all reasonable endeavours to procure that all subcontracts placed with
all suppliers and manufacturers of Materials contain provisions similar to the
above and (ii) ensure that all substantial items of Materials and owner
Furnished Equipment shall be clearly marked with the notation "Hull 1829"
immediately upon their appropriation for use in connection with this Contract
and in no circumstances more than twenty-four hours following their delivery to
the Shipyard.
Title to the Owner Furnished Equipment shall at all times from the date hereof
vest in the Purchaser absolutely.
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11. RISK AND INSURANCE
RISK
11.1. The Vessel and all Materials (including, from the time of their delivery
to the Shipyard, the Owner Furnished Equipment) 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
Owner Furnished Equipment) 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, such approval not to be unreasonably withheld, in the
amount of the higher of (1) the value of the Vessel as from time to time
constructed or (i) the instalments of the Contract Price for the time being paid
by the Purchaser to the Builder, (ii) the value of the Owner Furnished Equipment
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
c. (from the date of the Vessel's launching) the ILU War Clauses - Builder's
Risks.
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11.4. The policies shall name the Purchaser and the Builder as joint loss payees
as their interest may appear but on terms that the Builder alone shall be
responsible for all premiums payable thereunder. The Builder shall furnish the
Purchaser promptly with certificates evidencing coverage and upon request copies
of the policies. The originals shall be made available to the Purchaser, its
employees or agents for inspection at Builder's corporate offices in Gulfport,
Mississippi 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 as its interest may appear 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 11 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 and insurance proceeds shall
be payable to Purchaser and Builder as their interest may appear. but, to the
extent that the Purchaser has not made recovery of such sums under the
Stipulated Insurances within sixty (60) 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: and
b. return to the Purchaser all Owner Furnished Equipment 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.
25
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 all
sums due and payable under the Stipulated Insurances in respect of 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") described in Chapter 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. 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
the Gulf Coast of the United States. 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.
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
26
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 a total of seven (7) 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 agreed Trial
Procedure 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 reasonable
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 (3) 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 three (3) Working Days
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 seven (7) 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
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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 15.4 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 five (5) 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 II, acknowledging delivery by the
Builder and acceptance thereof by the Purchaser. The Builder shall give the
Purchaser at least sixty (60 ) 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
(to the extent not already transferred to Purchaser) and every part thereof
shall pass to the Purchaser free and clear of any and all liens, except liens
created by Purchaser, 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 Deliver;-
a. Records of inventory of the Vessel's equipment including spare gear and
the like as detailed in the Specifications;
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b. Records of any and all fuels, lubricants, consumable stores and fresh
water supplied pursuant to this Contract by either the Builder or the
Purchaser together with such quantities of the 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 save as noted in clause 2.5 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
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 Netherland Antilles 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 the
extent that is practical to be supplied as a diskette in a format to be agreed
between the Parties.
REMOVAL OF THE VESSEL
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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,
epidemics, floods, hurricanes, earthquakes, tidal waves, landslides, fires,
lightning, explosions, unusually severe inclement weather which stops production
at the yard and can be shown to be in excess of the a five year statistical
average, collisions or strandings, shortage of materials or equipment (other
than resulting from any act, omission or improvidence of the Builder or its
Subcontractors / Suppliers ), 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 / Suppliers by any causes herein
described, the 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 1 above
or (b) Clauses 7.1-7.12, 13.7, 18.2 or 21.2 hereof shall be defined herein as
"Permissible Delay."
15.3. The Builder's entitlement to a postponement of the Contractual Delivery
Date and any Milestones not then achieved shall, however, be subject to:-
a. the delay in respect of which the Builder is claiming relief not being
within its reasonable 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, suppliers or Subcontractors.
Provided, however that in respect of suppliers / subcontractors for i) the
"long lead" items identified in clause 5.12 above, together with ii) the
Builders requirement for minimum tolerance steel as identified in the
Specification and if applicable, (iii) the detailed engineering
sub-contractor referred to in clause 5.2 above where the Builder can show
it exercised all due diligence in the placing and prosecuting of the
orders and the management of these suppliers / subcontractors, errors,
neglect, act or omission of such suppliers / subcontractors shall not
preclude the Builders entitlement to a Permissible Delay
b. the delay affecting the "critical path" of the Vessel's construction as at
the time of commencement of the event;
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c. since the occurrence of the event in respect of which relief is claimed,
the Builder having taken all reasonable 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
(3) below within the time-limits therein laid down.
NOTICES
15.4. Upon the occurrence of any of the events 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, and any permitted extension thereof, the Builder
shall, subject to the provisions of sub-clauses 4 and 5 of this Clause 15, pay
to the Purchaser by way of liquidated damages for loss of use of the Vessel the
amounts set out below:-
16.2. If the delivery of the Vessel is delayed, then, in such event, beginning
at twelve o'clock midnight on the Delivery Date, the Builder shall pay to the
Purchaser as agreed liquidated damages and not by way of penalty, the following
amounts:-
a. 1 - 30 days of delay US$ 10,000 per day
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b. 31 - to actual delivery US$ 20,000 per day
It being understood that in no event shall the Builder's obligation for such
liquidated damages exceeds 1,000,000.-.
In this connection, the parties acknowledge that if the Vessel is not delivered
by the Delivery Date, as allowed for extension, Purchaser will suffer damages
from such later delivery and that Purchaser should be compensated for such
damages. The parties further acknowledge, however, that it is not possible to
accurately calculate such damages at this time and that therefore the parties
agree that the liquidated damages are a fair and reasonable forecast of
anticipated actual damages under the circumstances and will provide just
compensation for the harm that is caused to Purchaser as a result of any late
delivery. In the event of any such delays in delivery the said liquidated
damages shall be deducted from the amounts otherwise due to Builder at the time
of execution of the Protocol of Acceptance and Delivery. Parties hereto agree
that the above shall be the sole and exclusive remedy for damages due to the
late delivery save as set forth in section 16.3
TERMINATION FOR DELAY IN DELIVERY
16.3. Furthermore, if Delivery should not have occurred prior to the expiry of
one hundred thirty five (135) days from the Contractual Delivery Date (as
extended by Permissible Delays) the Builder shall be in default, in which case
Clause 19.2 shall apply.
17. DEFECTS AND BUILDER'S GUARANTEE WARRANTY:
17.1. From the date of this Contract until the expiration of the Warranty Period
(subject to Purchaser's right to report any defect, claim or loss within 30 days
of the expiration of the Warranty Period pursuant to the term of the following
paragraph), Builder warrants that all labor furnished by Builder hereunder shall
have been performed in a good and workmanlike manner. The provisions set forth
herein as to the liabilities of the Builder are to apply also to all labor and
workmanship furnished by any sub-contractor in Builder's performance of this
Contract.
Builder shall have no responsibility whatsoever with respect to any defect,
claim, or loss of the Vessel not reported in writing to Builder within three
hundred and sixty-five (365) days from the Delivery Date (as specifically
defined in Sections 14 and 15) (such 365 day period being hereinafter referred
to as the "Warranty Period"); provided, however, Purchaser may report to Builder
warranty claims arising during the final thirty (30) days of the Warranty Period
within thirty (30) days of the expiration of the Warranty Period.
The warranty granted to Purchaser by Builder shall extend only to those claims
reported in writing to Builder within such Warranty Period or within thirty (30)
days thereafter (as set forth above). For purposes solely for this Section 17,
"Delivery Date" shall be defined as the earlier of the following: (1) fourteen
(14) days after date of the final invoice from Builder upon completion of the
Vessel, or (2) the date of actual delivery and acceptance of the Vessel. In the
event Purchaser notifies Builder of any claim covered under this Warranty,
Builder will make repairs and/or replacement at its option, at one of Builder's
yards without expense to Builder for
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transporting the Vessel, or any component thereof, to or from that yard;
provided, however, that if it is not practical to have the Vessel proceed to
such yard, purchaser may, with prior written consent of Builder, have such
repairs and/or replacement made elsewhere, and, in such event, Builder shall
reimburse Purchaser a sum equivalent to (i) the amount Builder would have
expended, at its own yard at Builder's then Prevailing rates, or (ii) the amount
actually expended by purchaser, whichever is less. In no event shall Builder be
responsible for any sum in excess of the cost of the repairs and/or replacement
as specified herein, and Builder shall in no event be responsible for any claims
to property, persons, and/or punitive or consequential damages, including, but
not limited to claims for bodily injury, illness, disease, death, loss of
service, loss of society, maintenance, cure wages, and any other consequential
or punitive damages arising out of any breach of this Contract or faulty or
negligent performance thereof.
As to the installation of all third-party supplied components, materials or
equipment, if the manufacturer or supplier has a representative at the job site
during such installation, and if the installation is completed to the
satisfaction of such representative, with all requirements of such
representative having been satisfied by Builder, it shall be conclusively
presumed that such installation has been completed by Builder in accordance with
the manufacturer's recommendations, in a proper and satisfactory manner.
Builder does not warrant that any equipment or materials purchased by it from a
supplier or manufacturer for installation in the Vessel is free from
manufacturers' defects and deficiencies and Purchaser specifically releases
Builder from any such implied warranty of fitness or workmanship or freedom from
defects relating thereto. To the extent available, Builder agrees to transfer
and assign to Purchaser, without warranty of Builder with respect thereto, any
warranties relative to material, equipment and/or labor furnished by others
which warranties shall not be adversely affected by any limitation period set
forth herein. Builder agrees that Manufacturer's Warranty on major components,
including, but not limited to, main engines, gears, jacks, winches, generators,
pumps, etc., shall be a minimum of six (6) months after the Delivery Date of the
Vessel. Should Purchaser be required to enforce-any such warranty, Builder will
cooperate with Purchaser's efforts, short of instituting legal action on
Purchaser's behalf and/or incurring other legal fees.
Nothing contained herein shall obligate Builder at any time to repair or replace
the Vessel, or any component part thereof, where such repair and/or replacement
is caused, in whole or in part, by normal wear or unusual handling, by the
negligent operation or maintenance of the Vessel, or its equipment or by abuse,
rough weather, accident, fire, by Purchaser or Purchaser's agents, employees or
representatives.
With respect to paint, Builder warrants that it will purchase paint of good
marine quality and that it will apply the paint in accordance with the
manufacturer's specifications, recommendations, and inspection, and Builder
makes no warranty, express or implied, with respect to the fitness of the paint
or the manufacturer's specifications and recommendations.
For any claim for damages to or loss of the Vessel, and/or damages to persons
and/or property (including, but not limited to claims, demands, or actions for
bodily injury, illness, disease,
33
death, loss of service, loss of society, maintenance and cure, wages or
property) made as a result of any defect in the Vessel, or any component parts
thereof, after the said Warranty Period, Purchaser shall have no claim or
actions whatsoever against Builder, regardless of any negligence, tort, fault,
strict liability or otherwise of Builder, its employees or sub-contractors, and
Purchaser hereby waives and releases Builder and its employees and
sub-contractors from and against any and all liability and any and all damages
resulting therefrom, including, but not limited to, for personal injury, death,
property damage, damage to and/or loss of the Vessel, delay, demurrage, loss of
profits, loss of use, or any other consequential or punitive damages of any
kind, whether such claim is based in contract, redhibition, negligence, strict
liability, or otherwise, arising out of any defect and/or negligent design, the
selection or choice of specifications and/or materials and/or component parts,
manufacture, construction, fabrication, workmanship, labor and/or installation
of equipment, materials and/or components or from any unseaworthy condition or
any other defective condition of the Vessel, it being specifically understood
and agreed that any such defects reported and/or occurring after the Warranty
Period and all damages, loss of profits, demurrages, delay, losses of use or
other consequential or punitive damages of any kind whatsoever resulting
therefrom, shall not be the responsibility of Builder, but shall be borne
exclusively by Purchaser.
"THIS WARRANTY IS EXPRESSLY IN LIEU OF ALL OTHER WARRANTIES, EXPRESS OR
IMPLIED, INCLUDING ANY WARRANTY OF MERCHANTABILITY OR THAT THE VESSELS,
MATERIAL OR SERVICES ARE FIT FOR ANY PARTICULAR PURPOSE OR USE, AND
SPECIFICALLY IN LIEU OF ALL INDIRECT, SPECIAL, PUNITIVE OR CONSEQUENTIAL
DAMAGES."
17.2. This guarantee shall not extend to Owner Furnished Equipment or to any
damage caused by any defect therein not attributable to the Builder.
GUARANTEE ENGINEER
17.3. 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.
17.4. The Purchaser shall pay the expenses of the Guarantee Engineer's
repatriation by air to the point of origin upon termination of his services on
the Vessel together with a daily rate of US$ 700 per day worked.. 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
34
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 BUILDER'S GUARANTEE
17.5. 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 or 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 above 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 14.4 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
35
Purchaser. The Builder shall in such event hold all of the installments received
from the Purchaser in trust both for itself and the Purchaser until disposal of
the Vessel whereupon the same shall either be retained by the Builder to
compensate it for any shortfall between the Contract Price and the actual price
obtained for the Vessel on disposal together.
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
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 as a result 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 the Purchaser without interest thereon and shall
at the same time either permit the Purchaser to remove the Owner Furnished
Equipment 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 one hundred and thirty five days
of the respective dates agreed for the same as extended by permissible
delays;
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b. the Builder shall commit any material breach of this Contract and shall
fail to remedy 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), 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 by notice in writing to the Builder elect to rescind this
Contract.
RESCISSION BY THE PURCHASER
19.2. In the event that the Purchaser shall exercise its option to rescind this
Contract, the Purchaser shall give notice in writing to the Builder. the Builder
shall thereupon immediately comply with either the provisions of clause 19.3 or
clause 19.6 below as may be elected by Purchased in said notice:-
19.3. The Builder shall:
a. secure the immediate discharge of all liens (including its own), claims,
mortgages or other encumbrances upon the Vessel other than in favour of
the Purchaser and/or its financiers;
b. complete 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 for the purposes of registration of the Vessel
in a shipbuilding or shipowning register other than the Newbuilding
registry; 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. All risk of loss of or damage to the Vessel shall where Purchaser elects
to proceed per clause 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
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failure to deliver all or part of the other documentation required to be
delivered by the Builder pursuant to subclauses 19.3.c and d above.
19.5. In the event that the Purchaser elects to proceed per clause 19.3 the
Builder shall remain liable: -
a. to pay all liquidated damages to which the Purchaser may have become
entitled to prior to the election to rescind;
b. To indemnify the purchaser for any infringement for which the Builder
would have been liable for pursuant to Clause 20 hereof but excluding
liability for work done or Materials supplied other than by the Builder or
its subcontractors pursuant to this Contract; and
c. pursuant to its guarantee contained in Clause 17 hereof excluding
liability for work done or Materials supplied other than by the Builder or
its subcontractors pursuant to this Contract.
d. if the reasonable expense of completion of the Work plus any reasonable
expense incurred as a result of the Event of Default of Builder exceeds
the balance of the Contract Price remaining unpaid, then such excess shall
be immediately due and payable by Builder to Purchaser. The rights and
remedies available to Purchaser under this Section shall not be exclusive,
but shall be in addition to any and all rights and remedies available to
Purchaser under this Contract or applicable law or equity practice.
Furthermore, the designation of specific events of default of Builder and
certain rights and remedies therefor shall not preclude Purchaser from
exercising any rights or remedies available to it under this Contract for
any breach of this Contract by Builder not constituting an Event of
Default of Builder.
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19.6. As an alternative to clause 19.3 if Purchaser so elects per clause 19.2
Builder shall promptly ( but no later than seven days of such receipt of such
notice ) repay to the Purchaser the amount of all monies paid by the Purchaser
in respect of the Contract Price together with interest thereon at a rate of 2 %
over LEBOR from the date when such monies were paid by the Purchaser to the
Builder up to the date of the repayment therefore. Upon receipt of such
repayment, Purchaser shall execute all documentation required to vest title in
the Vessel in its then condition to Builder.
19.7. In the event that Purchaser elects to proceed per clause 19.6, the Builder
shall additionally purchase from the Purchaser and/or alternatively accept
assignment / novation of purchase orders of such of the Owner Furnished
Equipment as the Purchaser shall evidence it has either purchased or has a
binding commitment to purchaser. The price payable for such OFE shall be
evidenced by the Purchaser as what the Purchaser has expended plus interest from
the date of such expenditure at two percent over LIBOR. Payment shall be made by
the Builder within seven days of such evidence by the Purchaser. Upon such
payment, Purchaser shall execute all documentation required to transfer title in
such OFE to the Builder.
20. PATENT INDEMNITY
PATENT NUMBERS AND TRADEMARKS
20.1. Machinery and equipment of the Vessel may bear the patent numbers,
trademarks or trade names of the manufacturer. Nothing contained herein shall be
construed as transferring any patent or trademark rights or copyrights in
equipment covered by this Agreement, and all such rights are hereby expressly
reserved to the true and lawful of Purchaser thereof.
HOLD HARMLESS, THE PURCHASER
20.2. The Purchaser shall defend the Builder and hold it harmless in respect of
infringement of any patent rights, copy rights or other intellectual property on
account of the Purchaser Furnished Equipment or the Basic Design.
HOLD HARMLESS, THE BUILDER
20.3. The Builder shall defend the Purchaser and hold it harmless in respect of
infringement of any patent rights, copy rights or other intellectual property of
the Vessel or construction components or equipment for the Vessel furnished by
the Builder, except to the extent the Specifications require Builder to use the
infringing method of work or construction of components or equipment.
DESIGNS AND PROPERTY OF THE PURCHASER
20.4. The Builder agrees that the designs, drawings, specifications and ideas
submitted by the Purchaser to the Builder are the property of the Purchaser,
some of which are protected by U.S. or other, foreign patents and the remainder
of which constitutes the trade secrets and know-how of the Purchaser. These
designs, drawings, specifications and ideas shall not be copied or used in
39
whole or in part by the Builder or divulged by the Builder to others for any
purpose other than the proper performance of this Agreement. The Builder further
agrees to notify its employees and subcontractors of the confidential nature of
this property and the limitations upon its use.
The parties expressly agree that the obligations of the builder under this
Section 20 shall survive and remain effective notwithstanding the cancellation
or termination of this Agreement for any reason whatsoever.
21. OWNER FURNISHED EQUIPMENT
DELIVERY OF OWNER FURNISHED EQUIPMENT
21.1. The Purchaser shall, at its own expense, supply all articles specifically
listed in Appendix II as ("Owner Furnished Equipment") to the Builder at the
Shipyard in a condition ready for installation and by the date listed in
Appendix IIa
21.2. Should the Purchaser fail to deliver to the Builder any item of Owner
Furnished Equipment by the date so notified, any delay in the construction or
completion of the Vessel thereby resulting shall be deemed Permissible Delay
within the meaning of Clause 15.4.
21.3. In order to facilitate the installation of Owner Furnished Equipment by
the Builder, the Purchaser shall at its own expense furnish the Builder with
Vendor Information which shall generally consist of , necessary plans,
instruction books, test reports and certificates required by applicable rules or
regulations, and if necessary and if requested by the Builder, shall use all
reasonable endeavours, at its own expense, to cause the manufacturers of Owner
Furnished Equipment to assist the Builder in the installation thereof or to make
any necessary adjustment thereto at the Shipyard. In the event that any
manufacturers representatives incur unnecessary standby time while attending at
the Builders request such standby time shall be at the Builders expense.
21.4. The Purchaser shall be liable for the cost incurred by the Builder in the
repair of Owner Furnished Equipment occasioned by their defective material or
poor workmanship or failure to perform, or by damage caused to them during
transportation to the Shipyard.
21.5. Any Owner Furnished Equipment found to be faulty or defective which
require replacement or retesting shall be for the purchaser's account.
Furthermore, delays or damage resulting from faulty or defective equipment shall
be considered Permissible Delays under the terms of Section 15 of this Contract.
RESPONSIBILITY OF THE BUILDER
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21.6. The Builder shall be responsible for storing and handing Owner Furnished
Equipment after their delivery to the Shipyard and shall install them on board
the Vessel at the Builder's expense. The Owner Furnished Equipment shall be at
the Builder's risk from the time of their delivery to the Shipyard until the
time of their redelivery to the Purchaser either as part of the Vessel or
otherwise.
21.7. Upon delivery of the Owner Furnished Equipment the Builder shall check by
external inspection that the items appear to be in accordance with the relevant
order and undamaged and if any item is not delivered with a weight certificate
issued by a reputable body the Builder shall weigh the same in order to
incorporate the actual weight and the actual weight control procedure. The
Builder shall promptly inform the Purchaser if any item of the Owner Furnished
Equipment does not conform to the relevant purchase order to enable the
Purchaser to take corrective action. If the Builder fails to comply with this
requirement, any additional cost shall be for the Builder's account and any
delay shall not count as Permissible Delay hereunder.
21.8. In the event of termination or rescission of this Contract by the
Purchaser and election by the Purchaser under clause 19.3 above, the Builder
shall, at his own expense return to the Purchaser all Owner Furnished Equipment.
22. TAXES AND DUTIES
22.1. The Builder shall pay or cause to be paid all taxes, duties, fees and
stamp duties of whatsoever nature imposed by any state of the United States in
connection with its performance of its obligations under this Contract,
excluding any taxes, duties, fees and stamp duties imposed in by any state of
the United States upon the Owner Furnished Equipment.
22.2. The Purchaser shall pay or cause to be paid all taxes, duties, fees and
stamp duties of whatsoever nature imposed outside [ the United States in
connection with the execution and performance of this Contract, except for
taxes, duties, fees and stamp duties imposed upon those items and services to be
procured by the Builder and further excluding any taxes measured by he net
income of the Builder.
23. ASSIGNMENT
23.1. 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 guarantee in a form acceptable to the Builder the performance by
such Assignee of any of its obligations.
23.2. The Builder may, with the prior written approval of the Purchaser, assign
the benefit of this Contract.
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24. PRIORITY OF DOCUMENTS
24.1. The Appendices hereto shall form an integral part of this Contract as if
the same were expressly set out herein.
24.2. 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;
25. NOTICES
25.1. Every notice, consent or approval (individually and collectively called
"Communications" for the purposes of this Clause 25) given or required, whether
expressly or impliedly, under this Contract shall be in writing.
25.2. Communications shall be given by the Builder to the Purchaser as follows:
Address:
Suite 205, Saffrey Square
P.O. Box N8188
Nassau, Bahamas
Attn: Company Secretary
Facsimile: To be provided
25.3. Communications shall be given by the Purchaser to the Builder as follows:
Address:
13085 Industrial Seaway Rd.
Gulfport, Mississippi
39503
Attn: Mr. Daniel J. Mortimer
Facsimile: 228-897-4803
with copy to:
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1601 S. Childers Rd.
Orange, Texas
77631
Attn: Mr. Don O. Covington
Facsimile: 409-882-9010
26. RECORDS AND AUDITS
26.1. 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.
26.2. 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.
26.3. 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 terminate this Contract in which
case the provisions of Clause 19.2 shall apply.
26.4. 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.
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27. LAW
27.1. The construction, validity and performance of this Contract shall be
governed by English Law.
28. DISPUTES
28.1. 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.
28.2. 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:
Hewett Battersby of St. Michael's Rectory
Cornhill, London EC3V 9DS
United Kingdom
THE PURCHASER:
Ince & Co., Solicitors
Knollys House
#11 Byward Street
London EC3R 5EN
United Kingdom
28.3. 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.
28.4. 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.
29. MISCELLANEOUS
29.1. 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 or
financial reporting as may be required under the applicable laws and regulations
governing said financial reports. This obligation shall survive
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termination of this Contract for any reason whatsoever. The parties agree that
within twenty-four hours of the execution of this Contract that the parties will
use their reasonable endeavours to agree upon language of a press release to be
jointly published.
30. SPARE PARTS
30.1. 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.
30.2. 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.
30.3. 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.
30.4. The Builder shall complete the storage spaces installation in time to
enable to positioning, labeling 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.
31. SAFETY AND HEALTH STANDARDS
31.1. The Purchaser's Representative will have authority to monitor the
performance of the work done by the Builder to ensure safe and workmanlike
performance.
31.2. 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 demonstrate that they are capable of conducting
themselves in a safe and competent manner in their area of activity.
31.3. 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 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.
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31.4. 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*C shall be used for cleaning purposes.
31.5. Asbestos containing products are not to be applied on board the Vessel.
Substitutes therefor shall be applied only after authorisation by the Purchaser.
31.6. 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". Purchaser and Builder agree to cooperate to reach
mutually agreeable resolutions and immediate rectification of any perceived
unsafe practices.
31.7. 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.
31.8. 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.
32. EFFECTIVENESS
32.1. This Contract is subject to, and shall become effective and legally
binding on the parties at the date of execution.
32.2. The date upon which the above conditions shall all have been satisfied
shall be known hereunder as the "Execution Date."
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:
BY: Derek Leach BY: Richard M. Currence, Jr.
Title: Attorney-in-Fact Title
/s/ DEREK LEACH /s/ RICHARD M. CURRENCE, JR.
- - -------------------------------- --------------------------------
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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. MODO 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.
l. 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.
APPENDIX VIII
BASIC DESIGN
As per Section 99000 of the Specification.
APPENDIX IX
PARENT COMPANY GUARANTEE
PARENT GUARANTEE
In order to induce PETRODRILL, N.V. and/or any AMU e or sister company of
Petrodrill, N.V., to enter into that those certain Vessel Connection Contract(s)
(the "Contract' between Purchaser and TDI-HALTER, L.P. ("Builder"), dated on or
about April 8, 1998, Halter Marine, Inc., a Nevada corporation ("Guarantor")
represented herein by its duly authorized President and CEO, John Dane III, does
hereby unconditionally and irrevocably guarantee to Purchaser pro t and faithful
performance of, and compliance with, all obligations, covenants, terms,
conditions and undertakings of Builder contained in the Contract in accordance
with the respective terms thereof. Such guarantee is an absolute, unconditional,
present and continuing guarantee of performance and compliance.
IN WITNESS WHEREOF, Guarantor has executed this Parent Guarantee as of this
7" day of April, 1998.
HALTER MARINE, INC.
By:____________________
John Dane III
President and CEO