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10(a)(iv)(12)
AMENDMENT NO. 2 TO
CONSTRUCTION CONTRACT FOR
COASTAL QUEEN CLASS VESSEL
THIS AMENDMENT NO. 2 is made as of October ___, 2000, by and between
Atlantic Marine, Inc., a corporation organized and existing under the laws of
Florida (the "Shipyard"), the party of the first part, and Cape May Light,
L.L.C., a Delaware limited liability company, and Cape Cod Light, L.L.C., a
Delaware limited liability company (collectively, the "Owner"), the party of the
second part.
RECITALS:
WHEREAS, Owner will issue its United States Government Guaranteed Ship
Financing Bonds, 2000 Series (the "Obligations"), in order to finance the
construction of the Cape May Light, Hull No. 4242, and the Cape Cod Light, Hull
No. 4243 (collectively, the "Vessels") on the closing date relating to such
issuance (the "Closing Date").
WHEREAS, the United States of America, represented by the Secretary of
Transportation, acting by and through the Maritime Administrator (the
"Secretary"), on the Closing Date will guarantee the payment of the outstanding
principal and interest on the Obligations (the "Guarantee") pursuant to Title XI
of the Merchant Marine Act, 1936, as amended.
WHEREAS, Owner and Shipyard, in order to induce the Secretary to issue
the Guarantee, desire to amend that certain Construction Contract for Coastal
Queen Class Vessel, dated May 1, 1999, between Coastal Queen Holdings, L.L.C.
and Shipyard, as amended, and subsequently assigned by Coastal Queen Holdings,
L.L.C. to Owner on September 25, 2000 (the "Original Agreement" or the
"Contract").
WHEREAS, pursuant to the Security Agreement entered into on the date
hereof between the Secretary and the Owner relating to the Guarantee, the
Secretary has required the Owner to grant to the Secretary a security interest
in all of the Owner's right, title and interest in and to the Vessels as paid
for, and pursuant to this Amendment.
WHEREAS, as additional security for the Guarantee, and in order to
facilitate the financing of the Vessels, the parties hereto desire to provide
additional assurances to the Secretary with respect to the property acquired by
the Shipyard for purposes of construction of the Vessels.
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NOW, THEREFORE, in consideration of these premises, the mutual benefit
set forth herein, and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, Owner and Shipyard agree as follows:
1. Section 3.3 is hereby amended by inserting the following paragraph
immediately after the last paragraph of the Subsection 3.3(e):
"(f) Shipyard shall provide to Owner, at the time of the notice
required by the immediately preceding paragraph, all documentation to
substantiate completion of the relevant milestone event to the extent
required in support of each Owner's Request for Disbursement, a form of
which is attached hereto as Exhibit A, and in support of Owner's timely
application for withdrawal from the proceeds of the Obligations in an
amount necessary to make such payments. Within one (1) business day of
receipt of such written documentation from Shipyard, Owner shall submit
to the Secretary a Request for Disbursements under the Security
Agreement relating to the Obligations unless the Owner disputes the
data submitted by the Shipyard or requires additional information to
complete the Request for Disbursement. Within a reasonable time after
receipt of such Request, the parties hereto contemplate that the
Secretary will approve or deny the Request for Disbursement and notify
Owner promptly (together with a written explanation, in sufficient
detail, of any denial). Immediately upon receipt of the Secretary's
approval to such Request, the parties hereto contemplate that the
Secretary will disburse the amount pursuant to the Security Agreement
and instruct lender to make payment directly to Shipyard.
Notwithstanding the provisions of this subsection 3.3(f), Owner remains
fully and completely responsible to make payments to Shipyard within
the time set forth in subsection 3.3(e) above."
2. Section 5.2 is hereby amended by deleting it in its entirety and the
following inserted in lieu thereof:
1. Effective with the date of this Amendment, the Shipyard shall
obtain, at its own cost and expense, and furnish certificates
of copies thereof to Owner, the following policies of
insurances:
(a) Workers' compensation (including occupational disease) and
employer's liability insurance with Maritime, In Rem and U.S.
Longshoremen's and Harborworkers' Act coverage and in
accordance with the applicable statutory requirements of the
United States of America, with limits on the employer
liability
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coverage of not less than U.S.$1,000,000 for bodily injury per
person, with umbrella excess liability limits of
U.S.$25,000,000;
(b) Comprehensive public liability, including broad form
contractual liability coverage, with limits of not less than
U.S.$500,000 for bodily injury per occurrence, and
U.S.$500,000 for property damage per occurrence with umbrella
excess liability limits of U.S.$25,000,000; and
(c) Automobile liability insurance covering automobile equipment
used in the performance of the work under this Contract with
limits of U.S.$10,000,000.
All the Shipyard insurance policies set forth in this Section
5.2.1 shall, either on the face thereof or by appropriate
endorsement: (w) name (except for the policy specified herein)
the Shipyard and Owner as assureds and provide that payments
thereunder shall be made to the extent that their respective
interests may appear, (x) provide that they shall not be
cancelled or their coverage reduced, except upon thirty (30)
days' prior written notice to the Shipyard and Owner (if such
cancellation or reduction should be caused by the Shipyard's
failure to pay any premium when due, Owner shall have the
right to pay any such premium within such thirty (30) days to
maintain the coverage in effect for the benefit of Owner, and
Owner retains the right to be reimbursed by the Shipyard), (y)
contain waiver of subrogation provisions pursuant to which the
insurer waives all express or implied rights of subrogation
against Owner, the Shipyard and Owner hereby waiving any
rights to subrogate against each other, and (z) be maintained
in full force and effect by the Shipyard from the effective
date of this Amendment until the Delivery Date, the obligation
to name Owner as assured and waive subrogation with respect to
the policy specified herein shall be limited to those risks
which are covered by the Shipyard's indemnity obligations
under this Contract.
2. From the time the first material destined for inclusion as
part of the Vessels becomes at risk and until the Vessels have
been physically delivered to and accepted by Owner, the
Vessels and all materials, outfit and equipment provided by
the Owner for and to be used in the construction thereof,
shall be kept fully insured under a full form Builder's Risk
Policy under the latest American Institute Builder's Risk
Clauses, including loss or damage caused by strikers,
locked-out workmen, or persons taking part in labor
disturbances, or riot or civil commotion, protection and
indemnity
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clauses. The amount of such insurance shall be equal to the
aggregate value of the work done, including material,
appurtenances, equipment and outfit delivered to the Shipyard
for the Vessels at any time during the construction period,
including any such items furnished by Owner. The amount of
insurance, the terms of the policies and the underwriters
shall at all times be reasonably satisfactory to the Shipyard,
Owner and the Secretary.
The Owner shall at its own cost and expense keep the Vessels
fully insured under the aforementioned Builder's Risk Policy.
In addition, Owner shall provide acceptable total loss only
insurance covering the expenses of design and inspection,
construction period interest, and the guarantee fee for the
Obligations.
3. The Builder's Risk Policy shall contain the following
provisions:
(a) The Owner, the Shipyard and the Secretary shall be named
additional assureds.
(b) The policy shall provide no recourse against Shipyard and the
Secretary for payment of premium.
(c) At least ten (10) days' prior written notice of any
cancellation or material change in the policy shall be given
to the Shipyard and the Owner at the addresses provided in
Section 11.2 and to the Secretary at the following address:
U.S. Department of Transportation, c/o Maritime
Administration, 400 Seventh Street, S.W., Washington, D.C.
20590, Attention: Chief, Division of Marine Insurance.
(d) There shall be a waiver of subrogation provision pursuant to
which the insurer waives all express and implied rights of
subrogation against the Owner. The Shipyard and Owner hereby
waive any rights to subrogate against each other.
(e) The deductible or self-insured retention under the Builder's
Risk Policy shall be to the account of the Shipyard at any
amount to be agreed among the Shipyard, Owner and the
Secretary, in any case not exceeding $100,000 per occurrence.
The Shipyard shall cooperate in providing timelines of
increasing values and other information Owner may require to
secure coverage.
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4. (a) If the Vessels or any Owner furnished equipment shall be
damaged by any insured cause whatsoever prior to acceptance
thereof by Owner, and such damage does not constitute an
actual, compromised or a constructive total loss of the
Vessels, insurance proceeds shall be applied to the repair of
the item and paid in accordance with Section 2.05 of the
Security Agreement, and Owner and the Shipyard shall then seek
to mutually agree on new milestone payments for work which has
to be redone as a result of the damage covered by the
Builder's Risk Policy.
(b) In the event of an actual, compromised or constructive total
loss of the Vessels prior to delivery, this Contract shall
automatically be deemed terminated unless the Shipyard, Owner
and the Secretary elect to construct the Vessels under this
Contract. Upon any such termination, the Shipyard shall retain
all installment payments made pursuant to this Contract and
the price for that portion of the Vessels then constructed for
which an installment payment has not yet been made and all
work in progress (including profit thereon to the Shipyard).
Notwithstanding anything to the contrary in Section 2.05 of
the Security Agreement all proceeds in excess of $100,000 per
occurrence of the Builder's Risk insurance shall be paid to
the Secretary for distribution to the Shipyard, the Secretary
and the Owner as their interests may appear and any proceeds
equal to or less than $100,000 per occurrence of the Builder's
Risk insurance shall be paid to the Shipyard for distribution
to the Secretary, the Shipyard and the Owner as their
interests may appear; provided however, if a default exists
under the Security Agreement, then all proceeds of whatever
amount shall be paid to the Secretary for disbursement in
accordance with Section 2.05 of the Security Agreement."
3. Section 6.7 is hereby amended by designating the existing paragraph as
subsection "(f)" and inserting the following prior to the beginning of said
paragraph:
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"(a) The Shipyard hereby represents, warrants and covenants that no
lender to the Shipyard, under any form of credit, loan or other
extension of funds facility of any manner whatsoever, has or possesses
any security interest, lien or other encumbrance of any nature, or has
any right to any such security interest, lien or other encumbrance of
any nature in, on or as to the Property described in clause (c) of this
Section.
(b) Provided that the Shipyard is paid all amounts owing by the Owner
to the Shipyard. The Shipyard hereby represents, warrants and covenants
that all Property described in clause (c) of this Section other than
Owner Furnished Equipment, which it has acquired, or may at any time
hereafter acquire with respect to the construction of the Vessels,
whether by means of cash purchase, purchase-money transaction,
conditional sale agreement, or otherwise, is and shall at all times be
free of any and all security interests, liens or other encumbrances of
any nature in favor of any person, which might otherwise arise in favor
of any vendor or other person providing such Property.
(c) For all purposes of this Contract, the "Property" shall consist of
Hull Nos. 4242 and 4243 and all material, machinery and equipment which
are purchased for or identified for use in the construction of said
hulls, and identifiable proceeds or products thereof; provided,
however, that the tools, equipment and implements of the Shipyard used
in the construction of the Vessels are specifically excluded herefrom.
(d) Shipyard agrees and acknowledges that Shipyard has, as contemplated
by the Security Agreement dated October ___, 2000, between the Shipyard
and the Secretary (the "Shipyard Security Agreement"), granted a
security interest to the Secretary in the Vessels, any equipment,
inventory or materials incorporated or to be incorporated therein as
specified in the Shipyard Security Agreement.
(e) On the Closing Date, and at the time of delivery of the Vessels,
and from time to time as Owner shall submit a Request for Disbursement
under the Security Agreement to the Secretary, Shipyard agrees, on
behalf of itself, or any party claiming through the Shipyard, to
execute certificates that are in form and substance satisfactory to the
Secretary, stating there are no liens with respect to the applicable
Vessels, hulls or component parts other than the lien of the Secretary
pursuant to the Shipyard Security Agreement, in each case for which
payment has been made or is currently due and with respect to all work
that has previously been accomplished and incorporated in and made a
part of the Vessels."
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4. Section 6.8 is hereby amended by inserting the sentence "The Shipyard shall
give Owner and the Secretary simultaneous notice of any default by Owner under
this Section." At the beginning of the first paragraph prior to the first word
and by adding the following paragraphs immediately after the last paragraph of
the Section:
"Notwithstanding anything to the contrary contained in this Contract,
the Shipyard hereby grants the Secretary twenty (20) days from the
receipt of the notice referred to in this Section, to cure any default
under this Contract, and the Shipyard agrees to take no action to
enforce its rights pursuant to this Contract, including, without
limitation, its right to terminate pursuant to this Section 6.8, until
the elapse of said twenty (20) days."
5. Section 8.1 is hereby amended by inserting the following paragraph after the
third paragraph of the section and prior to the fourth paragraph:
"Notwithstanding any provisions in this Contract, the Shipyard shall
permit inspection by, supply information to and cooperate with
representatives of the Secretary at the Shipyard and at such other
yards of the Shipyard, its affiliates and subcontractors where parts of
the Contract or subcontracts may be performed. The Shipyard
acknowledges that such cooperation may include, but not be limited to,
providing the Secretary (a) access to the Vessels and areas of the
Shipyard where work related to the Vessels is being performed by the
Shipyard, its contractors and subcontractors, at all reasonable times
during normal working hours to inspect performance of the work
performed hereunder, and to observe trials and other tests, (b) copies
of detailed production and construction schedules and critical paths
for the Vessels along with changes to such documents as they occur, and
updated schedules of all Equipment and material received by or
delivered to the Shipyard relating to the Vessels, (c) access to
contract plans and specifications for the Vessels, (d) reasonable
access to the Shipyard's production manager or supervisor, (e)
information on the origination and source of materials, (f) access to
progress payment and construction milestone information, and (g)
simultaneous copies of all notices and correspondence required by
Section 14.6. In conjunction with any such inspections by the
Secretary, the Shipyard will provide access to the Owner's space at its
Shipyard for the Secretary's representatives for communication, copying
and access to any other facilities available to the Owner, as
appropriate. The Secretary's representatives shall comply with and
follow the Shipyard's safety, traffic and security rules while at the
Shipyard, and shall not interfere in the Shipyard's prosecution of the
work hereunder."
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6. Section 10.5 is hereby amended by adding the following paragraph immediately
after the last paragraph in the Section:
"Shipyard and Owner shall keep records of construction costs
paid by or for Owner's account and furnish the Secretary with a
detailed statement of these costs, distinguishing between (i) items
paid or obligated to be paid, and (ii) with respect to the hull and
superstructure only the costs of American and foreign materials
(including services)."
7. Notwithstanding anything to the contrary in Section 11, (a) prior written
notice to the Secretary shall be given by Owner and Shipyard for (i) any changes
to the Construction Contract as the result of any requirements of any
classification society or any governmental agency other than those that are
specified in the Specification ("Mandatory Changes"), or (ii) any changes that
are not Mandatory Changes, and that the Shipyard and Owner desire to make which
do not exceed, with respect to any item of the Vessels' construction, one
percent (1%) of each Vessel's Contract Price and which do not, in the aggregate,
cause each Vessel's Contract Price to be increased more than five percent (5%)
or the delivery and completion date of each Vessel to be extended more than ten
(10) days; (b) no change shall be made after the Closing Date that exceeds the
five percent (5%) limit set forth in clause (a)(ii), without the Secretary's
prior written consent; (c) Owner has agreed in the Security Agreement not to
make any change in the general dimensions and/or characteristics of the Vessels
which would diminish the capacity of the Vessels to perform as originally
intended by this Contract without the Secretary's prior written consent, and
hereby further agrees not to present or propose to the Shipyard any such change
without receiving such prior written consent from the Secretary. No payment for
any change requiring prior written approval from the Secretary shall be made
with proceeds from the escrow fund until such prior written consent shall have
been received.
8. Section 12.1 is hereby amended by inserting the following paragraphs after
the last paragraph thereof:
The Shipyard agrees to, and does fully subordinate to the
rights of the Secretary all liens and security rights and remedies to
enforce such rights which the Shipyard has or may have with respect to
any work, materials and components, incorporated in, or incorporated in
the hulls and in each Vessel (the "Equipment") to the extent that (a)
the Owner has paid Shipyard for the Equipment or (b)(i) such work is
performed on the hull of each Vessel, (ii) such materials are installed
in the hull of each Vessel, or (iii) such components are fabricated and
installed in the hull of each Vessel, whether or not such work
materials or components have been paid for by the Owner. For the
purposes of this Agreement, Equipment shall be deemed "paid" if ordered
and received by the Shipyard prior to the Owner's latest payment in
accordance with Appendix One, Progress Payment Milestones.
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In the event that prior to delivery of the Vessels, following
the occurrence or during the continuance of any default by Owner under
any agreements with the Secretary, including but not limited to the
Security Agreement (the "Secretary's Documents"), or by the Shipyard
under the Contract, the Secretary shall have the sole right to
foreclose its lien and to sell the Equipment. Any proceeds the
Secretary receives from the sale of the Equipment, shall be distributed
promptly between the Shipyard and the Secretary on a Pro Rata Basis (as
defined below) based on the Amount Due (as defined below) to the
Shipyard and the Secretary.
For the purposes of this section, the "Amount Due" to the
Shipyard shall include all progress payments then due to the Shipyard
for materials purchased or work performed, provided, however, if the
Shipyard is in material default under the Contract as amended and Owner
is not in material default, such Amount Due to the Shipyard shall be
zero. For the purposes of this section, the Amounts Due to the
Secretary shall include all amounts secured by the Secretary's
Documents. For the purposes of this section, the share to be
distributed to a party under the Pro Rata Basis shall be the amount
realized from the sale of the Equipment times a fraction equal to the
Amount Due that party divided by the sum of the Amount Due both
parties.
In the event of a Owner default and an enforcement of the
Secretary's Documents, the Secretary shall use reasonable efforts to
expedite the enforcement and foreclosure process for the enforcement of
the Secretary's Documents.
Prior to the delivery of the Vessels and acceptance thereof by
the Owner in accordance with the Contract, the Shipyard agrees (i) to
provide to the Secretary searches and copies of filings with respect to
UCC filings against the Shipyard, and (ii) to provide the Secretary
with releases or subordinations of any security interest, lien or other
encumbrance of any nature, held or claimed by any financing party,
vendor or provider referred to in Subsections 12.1 hereof (and any such
release or subordination shall be in form and substance satisfactory to
the Secretary)."
9. Article 14 is hereby amended by adding the following new Section 14.14
immediately after Section 14.13:
"(a) Distinct Obligations
The Shipyard hereby agrees and acknowledges that the obligations of
Owner under this Contract with regard to the Vessels are separate,
distinct and independent of any other obligation or agreement of Owner
to or with
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the Shipyard in connection with any other transaction, and that a
default by Owner under such other obligation or agreement in connection
with any other such transaction shall not in any way affect the
obligations of the Shipyard under this Contract with regard to the
Vessels or permit the Shipyard to exercise any right of set-off or
other remedy (all of which the Shipyard expressly waives and agrees not
to assert with respect to this Contract) which could materially
adversely affect this Contract, the Vessels, or the construction
thereof.
(b) Shipyard Plans
Upon the delivery of the Vessels, or earlier if feasible, upon the
Secretary's written request, the Shipyard and Owner agree to submit to
the Secretary one set of Shipyard plans, in form and substance
satisfactory to the Secretary, for the Vessels as built.
10. Section 14.5 is hereby amended by inserting the following after the last
paragraph thereof:
"Notwithstanding anything in this Contract to the contrary, Owner may
not terminate, cancel or assign this Contract without the prior written
consent of the Secretary."
11. Section 14.6 is hereby amended by:
(i) adding the following paragraph immediately after the first
paragraph of the Section:
"All notices required after the date of this Amendment under Sections
6.1, 6.3, 6.6, 6.7, 6.8, 7.2 (except the Guidance Drawings and Working
Drawings or notices relating thereto), 7.3 (except the maker's list
(except where such list contains information relating to foreign
materials) or notices relating thereto), 8.2, 9.1, 10.1, 10.2, 10.4
(except the minutes of progress meetings or notices thereto), 11.2,
11.3, 11.4 and 14.9 shall be simultaneously copied to the Secretary."
(ii) adding the following notice information immediately after the
Shipyard notice information contained therein:
"(c) To the Secretary: United States Maritime Administration
400 Seventh Street, S.W.
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Washington, D.C. 20590
Attention: Office of Ship Financing"
12. Except for the changes set forth in this Amendment, all other terms and
conditions of the Original Agreement, shall remain in full force and effect.
13. Counterparts. This Amendment may be executed in one or more
counterparts. All such counterparts shall be deemed to be originals and shall
together constitute but one and the same agreement.
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IN WITNESS WHEREOF, the parties hereto have executed this Amendment.
No. 2 to Construction Contract for Coastal Queen Class Vessel as of the day and
year first above written.
ATLANTIC MARINE, INC.,
Shipyard
/s/ William F. Clifford
By:
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William F. Clifford
Vice President
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IN WITNESS WHEREOF, the parties hereto have executed this Amendment.
No. 2 to Construction Contract for Coastal Queen Class Vessel as of the day and
year first above written.
CAPE MAY LIGHT, L.L.C.,
By: DELTA QUEEN COASTAL VOYAGES, L.L.C.,
its Managing Member
By: THE DELTA QUEEN STEAMBOAT CO.,
its Managing Member
Owner
By: /s/ JORDAN B. ALLEN
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Jordan B. Allen
Executive Vice President
CAPE COD LIGHT, L.L.C.,
By: DELTA QUEEN COASTAL VOYAGES, L.L.C.,
its Managing Member
By: THE DELTA QUEEN STEAMBOAT CO.,
its Managing Member
Owner
By: /s/ JORDAN B. ALLEN
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Jordan B. Allen
Executive Vice President
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CONSENTED TO:
UNITED STATES OF AMERICA,
SECRETARY OF TRANSPORTATION
MARITIME ADMINISTRATOR
By /s/ JOEL C. RICHARD
----------------------------
Its Secretary
ATTEST:
By /s/ Sarah J. Washington
----------------------------------------------
Its Assistant Secretary
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EXHIBIT A
[FORM OF REQUEST FOR DISBURSEMENT]