EXHIBIT 10(f)
[XXXXXXXX CHANCE LETTERHEAD]
AMENDMENT AND RESTATEMENT OF A CONTRACT
ORIGINALLY MADE BETWEEN
NORWEGIAN CRUISE LINE LIMITED
AND
XXXXX XXXXX BREMERHAVEN GMBH
AND NOW MADE BETWEEN
SHIP HOLDING LLC
AND
XXXXX XXXXX BREMERHAVEN GMBH
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CONTENTS
CLAUSE PAGE
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1. DEFINITIONS......................................................2
2. YARD'S REPRESENTATIONS...........................................8
3. YARD'S OBLIGATIONS...............................................8
4. OWNERSHIP AND RISK..............................................12
5. ADMINISTRATION OF THE PROJECT...................................12
6. MODIFICATIONS...................................................14
7. DATE FOR COMPLETION.............................................16
8. TESTS AND TRIALS................................................20
9. MECHANICAL COMPLETION AND REDELIVERY............................20
10. YARD'S WARRANTY.................................................22
11. CONTRACT PRICE AND PAYMENT TERMS................................25
12. ADJUSTMENT OF CONTRACT PRICE....................................28
13. ENCUMBRANCES....................................................30
14. INDEMNITIES AND LIABILITY.......................................32
15. INSURANCES......................................................32
16. TAXES AND DUTIES................................................34
17. CONFIDENTIALITY.................................................34
18. SUBCONTRACTORS AND ASSIGNMENT...................................35
19. TERMINATION AND REMOVAL OF WORK.................................36
20. PATENT RIGHTS...................................................40
21. NOTICES.........................................................40
22. GOVERNING LAW AND ARBITRATION...................................41
23. EFFECTIVE DATE..................................................43
24. GENERAL PROVISIONS..............................................43
1
THIS CONTRACT, which takes effect as an amendment and restatement of a contract
originally dated 28 December 2000, is made between:
(1) SHIP HOLDING LLC, a Delaware limited liability corporation (the
"OWNER"); and
(2) XXXXX XXXXX BREMERHAVEN GMBH, a corporation incorporated and existing
under the laws of Germany with its registered office at Xxxxxxxxxxxxxx
00, X.X. Xxx 000000, 00000 Xxxxxxxxxxx, Xxxxxxx ("LWB").
WHEREAS:
(A) Northrop Grumman Ship Systems, Inc. ("NGSSI") has partially completed
the construction of two cruise ships, bearing hull number 1 (the
"VESSEL") and hull number 2 (the "HULL"), at the Xxxxxxx facility at
Pascagoula, Mississippi, USA.
(B) The Owner has purchased the Vessel and the Hull, together with all
equipment parts relating thereto (the "PARTS"), from NGSSI.
(C) LWB has previously completed the construction of two cruise ships for
Norwegian Cruise Line Limited ("NCLL"), m.v. "Norwegian Sky" ("SKY ")
and m.v. "Norwegian Sun" ("SUN "). LWB completed construction of the
SKY on the basis of a partly built hull purchased by NCLL from another
shipyard. LWB completed construction of the SUN on the basis of a hull
the construction of which was sub-contracted by LWB to another
shipyard.
(D) This contract was originally signed on 28 December 2000 by NCLL and LWB
in order to record LWB's agreement to build two further cruise ships
for NCLL on a similar basis to the SUN .
(E) By a separate agreement made between the Owner, LWB and NCLL this
contract was novated to the Owner.
(F) The Owner desires to have the Vessel fully completed at LWB's facility
in Bremerhaven (the "SHIPYARD") and parties hereto have therefore
agreed: (a) to complete the construction of the Vessel at the shipyard;
(b) to arrange for the secure storage of the Hull and Parts relating to
it, all in accordance with the terms and conditions of this Contract;
and (c) that the contract signed on 28 December 2000 shall be in all
respects merged herein and amended, restated and superseded hereby.
(G) The Owner and LWB have therefore agreed to amend and restate the
contract signed on 28 December 2000 so as to provide for the matters
described in recital (F) above.
NOW THEREFORE IT IS AGREED AS FOLLOWS:
1. DEFINITIONS
1.1 IN THIS CONTRACT:
2
"BANKING DAY" means any day on which banks in each of London, New York
and Germany are open for the transaction of normal banking business.
"CLASSIFICATION BODIES" means American Bureau of Shipping and Det
Norske Veritas Classification AS.
"CONTRACT" means this contract as now amended and restated by the Owner
and LWB, and as from time to time further amended, restated or
supplemented hereafter by agreement of the parties.
"CONTRACT PRICE" has the meaning given in Clause 11.1.
"COMPONENT" means the individual components of the Works to be defined
in the Specification to the satisfaction of the Owner.
"DATE FOR COMPLETION" has the meaning given in Clause 7.1.
"DAY(S)" means calendar day(s) including any Sunday, Saturday or
holiday.
"DEFECTS" means (a) any defect in the Vessel or in any Equipment
installed or incorporated in, stowed on or otherwise redelivered with
the Vessel which is due to defective materials, workmanship,
construction or design or any failure by LWB or any of its
Subcontractors to comply with the relevant recommendations of any
manufacturers, makers, suppliers or other parties , (b) any inherent
vice, breakdown, incompleteness, omission or other deficiency in or of
the Vessel or any Equipment, (c) any failure of the Vessel or any
Equipment or any component of the Works to comply with any of the
requirements of this Contract or the Specification or the requirements
of any Sub-contractors used by LWB in connection with the Contract, or
(d) the existence of any condition, notation, qualification,
recommendation, reservation or restriction in relation to any
certificate issued by the Classification Bodies or any of the
Regulatory Bodies provided that the term "DEFECT" shall not include any
defect in any of the OFI properly received, handled, installed and
incorporated in, stowed on or otherwise redelivered with, the Vessel by
LWB or its Subcontractors in accordance with the requirements of this
Contract and the Specification.
"DRAWINGS" means the general arrangement plan and the technical
drawings hereafter approved by the Owner and for the purposes of
identification initialled by or on behalf of the parties, which shall
be deemed to form part of the Specification.
"EFFECTIVE DATE" has the meaning given in Clause 23.
"ENCUMBRANCE" means (a) any claim (whether IN PERSONAM or IN REM
including any arrest or other detention in connection with any claim)
and any debt, and/or (b) any mortgage, charge, pledge, maritime or
possessory or other lien, assignment, hypothecation, trust arrangement,
encumbrance or other security interest securing any obligation of any
person or any other type of preferential arrangement (including,
without limitation, title transfer and retention arrangements having a
similar effect), and/or (c) any of the German law encumbrance rights
but does not include any "ENCUMBRANCE" created by the Owner or relating
to any claims against the Owner for which the Owner would not be
entitled to bring an indemnity or other claim against LWB.
3
"EQUIPMENT" means the Parts relating to the Vessel and all other
components, equipment, machinery, materials, supplies, outfittings and
spare parts to be appropriated for fully developing and completing the
Vessel in accordance with the terms and conditions of this Contract and
the Specification.
"EXCLUDED REGULATORY PROVISIONS" means the provisions of the US flag
rules to be defined in the Specification in terms acceptable to the
Owner.
"GERMAN LAW ENCUMBRANCE RIGHTS" means any: retention of title
(EIGENTUMSVORBEHALT, AUCH ERWEITERT, VERLANGERT, WEITERGELEITET,
NACHGESCHALTET, NACHTRAGLICH, ALS KONTOKORRENTVORBEHALT, ALS
KONZERNVORBEHALT U.S.W.), right of retention (ZURUCKBEHALTUNGSGRECHT),
pledge, lien (PFANDRECHT) and any other encumbrance (SONSTIGE BELASTUNG)
or other similar rights under German law.
"FINAL COMPLETION CERTIFICATE" has the meaning given in Clause 9.4.
"FLAG STATE" means any of the Bahamas, Panama or the United States of
America.
"INDEMNIFIED PARTIES" means the Owner's subcontractors and the
directors, officers, employees, consultants, agents and other
representatives of the Owner and its sub-contractors.
"INFORMATION" means all technical information relating to the Vessel
unless designated by the Owner from time to time in writing as not
confidential, except information (a) which was developed by and/or in
possession of LWB before receipt from the Owner and/or (b) which at the
date hereof or hereafter becomes, through no wrongful act or omission on
the part of LWB (or any of its sub-contractors or any of its or their
directors, officers, employees, consultants, agents or other
representatives), generally known and/or (c) which hereafter is
furnished to LWB by a third party as a matter of right without
restriction on disclosure.
"INSTALMENT" means an instalment of the Contract Price payable to LWB
pursuant to Clause 11 and "INSTALMENTS" shall be construed accordingly.
"INTELLECTUAL PROPERTY RIGHTS" means inventions, patent applications,
patents, registered and unregistered designs, and copyright.
"LMAA TERMS" means the London Maritime Arbitrators Association Terms
current at any given time.
"LEGAL OPINION" means a legal opinion from such German and/or other law
firm as may be approved by the Owner, in a form hereafter approved by
the Owner, confirming that each of the Performance Guarantee, the Refund
Guarantee and the Pledge of LWB's Account has been duly authorised and
validly executed and that each is enforceable against LWB in accordance
with its terms
"LOSSES" means any and all causes of action, charges (including interest
charges), costs, claims (in contract, tort of otherwise), controls,
liquidated or unliquidated damages, demands, expenses, fees (including
legal fees), fines, liabilities (civil, criminal or otherwise), losses
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(other than consequential or indirect losses), payments, penalties,
proceedings, restrictions, suits and any other sanctions of a monetary
nature other than taxes.
"LWB" means Xxxxx Xxxxx Bremerhaven GmbH and shall include its legal
representative(s), successor(s) and permitted assign(s).
"LWB'S ACCOUNT" means an account to be held by LWB's Bank and to which
all payments by the Owner under this Contract shall be made, the details
of which shall be provided by LWB to the Owner.
"LWB'S BANK" means an first class bank to be nominated by LWB and to be
acceptable to the Owner.
"MECHANICAL COMPLETION" means the completion of each component of the
Works in accordance with the provisions of this Contract and the
Specification .
"MECHANICAL COMPLETION CERTIFICATE" has the meaning given in Clause 9.1.
"OPTION AGREEMENT" means a legally binding agreement to be made between
LWB and the Owner (or an affiliate of the Owner) under which LWB grants
to the Owner (or its affiliate) an option to convert the Hull into a
sister ship of the Vessel on terms acceptable to the Owner (or its
affiliate).
"OMT" has the meaning given in Clause 5.1.3.
"OWNER" means Ship Holding LLC, as owner of the Vessel, and shall
include its legal representative(s), successor(s) and permitted
assign(s).
"OFI" means the items of Equipment supplied by the Owner in accordance
with the terms of this Contract and the Specification or which belong to
the Owner and are brought onto the Work Site or placed on board the
Vessel at any time.
"OFI COSTS" means in relation to any OFI which becomes a Total Loss the
aggregate of (a) the costs incurred by the Owner in relation to the
carriage, insurance and delivery of the relevant OFI and (b) the cost to
the Owner of obtaining replacements for such OFI .
"OIPR" means all Intellectual Property Rights of the Owner and all
similar rights of ownership or such other proprietary rights created or
developed, now or in the future, by the Owner or its contractors and/or
LWB (or any of its Subcontractors or any of its or their directors,
officers, their employees, agents, consultants or other representatives)
in connection with the Works.
"PARTIAL LOSS" means any loss or damage to the Vessel which does not
constitute a Total Loss and "PARTIAL LOSS PROCEEDS" means any insurance
proceeds paid and/or payable in respect of a Partial Loss.
"PARTS" has the meaning given in Recital B above.
"PERFORMANCE GUARANTEE" means an irrevocable performance guarantee in
the amount of [***] [Confidential Treatment] to
5
be issued by LWB's Bank (or a first class international insurance
company acceptable to the Owner) in a form hereafter approved by the
Owner.
"PERMISSIBLE DELAY" has the meaning given in Clause 7.3.1.
"PLEDGE OF LWB'S ACCOUNT" means a security pledge of LWB's Account to be
executed by LWB in favour of the Owner, and to be acknowledged by LWB's
Bank, each in the form approved by the Owner.
"PROTOCOL OF REDELIVERY" has the meaning give in Clause 9.6.
"REDELIVERY DOCUMENTS" means : (a) a builder's certificates, executed in
a form and manner acceptable to the Owner, confirming that LWB has
completed the construction of the Vessel in accordance with the
requirements of this Contract and the Specification; (b) a declaration
of warranty by LWB, executed in a form and manner acceptable to the
Owner, confirming that the Vessel is redelivered to the Owner free and
clear of all Encumbrances whatsoever and that the Vessel is free of all
burdens in the nature of taxes imposed by the nation, city, state or
port of redelivery; (c) a detailed inventory showing the Equipment
installed on the Vessel, and the spares, stores and other consumable
items delivered with the Vessel; (d) all of the approvals, certificates,
licenses and other documents to be issued or supplied by the Regulatory
Bodies, including all specified Classification, trading and other
certificates; (e) a protocol showing the results of the Tests and Sea
Trials; (f) a full set of the makers' certificates, instructions books,
manuals, drawings, plans and other specified construction completion
documents; (g) a commercial invoice showing the amounts payable by the
Owner to LWB on redelivery of the Vessel in accordance with this
Contract and Specification; (h) such documents as the Owner may
reasonably require to procure the deletion of the Vessel from the
Registry of Ships under Construction; and (i) such other documents as
the Owner may reasonably require in connection with the Owner's
financing and/or registration of the Vessel.
"REGULATORY BODIES" means those authorities, bodies and entities having
regulatory responsibilities and authority in respect of the Vessel or
specific areas or parts of the Vessel including those who would have
regulatory responsibilities and authority in respect of the Vessel
during its deployment, use or trade by the Owner including, without
limitation, the Classification Bodies, the maritime administration of
the Flag State selected by the Owner pursuant to Clause 3.3.8, the
International Maritime Organisation, the World Health Organisation, the
United States Coast Guard and Public Health Services Authorities, and
all other national or international authorities, bodies and entities
referred to in the Specification.
"REFUND GUARANTEE" means an irrevocable refund guarantee in the amount
of [***] [Confidential Treatment] to be issued by LWB's Bank (or a first
class insurance company acceptable to the Owner) in a form hereafter
approved by the Owner.
"RELEVANT RATE" means LIBOR plus 2 % per annum.
6
"RULES" means the applicable regulations, resolutions, rules, standards
and other requirements of the Classification Bodies and/or the
Regulatory Bodies other than the Excluded Regulatory Provisions.
"SHIPYARD" has the meaning given in Recital F above.
"SPECIFICATION" shall mean the technical specification hereafter
approved by the Owner and for the purposes of identification initialled
by or on behalf of the parties which, together with the Drawings, shall
be deemed to form part of this Contract including an Addendum to the
Specifications of today's date.
"SUBCONTRACTORS" means any consultants, makers, suppliers, vendors or
other third parties with whom LWB enters into a contract for the supply
of labour, Equipment, other materials, supplies and/or services for the
purpose of completing the Works.
"TESTS AND SEA TRIALS" means (a) the shop, dock, sea and other tests,
trials and inspections described in the Specification, and (b) such
other tests, trials and other inspections (or retests, retrials or
reinspections) as the Owner and/or the Classification Bodies and/or any
of the Regulatory Bodies may require from time to time in order to
demonstrate and confirm the complete correction of any Defects.
"TOTAL LOSS" means any actual, constructive, compromised or arranged or
agreed total loss of the Vessel.
"TRIBUNAL" has the meaning given in Clause 23.2.5.
"VESSEL" has the meaning given at Recital A above and includes the
Equipment.
"WARRANTY PERIOD" has the meaning given in Clause 10.1 .
"WORKS" means all of the design and other work and services to be
carried out and provided by LWB after it has taken possession of the
Vessel and the Equipment pursuant to the provisions of this Contract and
Specification and includes (without limitation) all necessary
construction work, the procurement, installation onboard, support for
testing and commissioning of all Equipment, and all other engineering,
outfitting, contracting, testing, certification and Mechanical
Completion of the Vessel as further described in the Specification and
Drawings including (without limitation) achieving compliance with the
applicable Rules of the Classification Bodies and the Regulatory Bodies
and extending to the preservation of the Vessel, the Equipment and all
other materials required for completion of the Vessel, and to all
correction, repair and other works undertaken (or to be undertaken)
pursuant to the warranty provisions of Clause 10.
"WORK SITE" means the shipyard and all other places and premises,
including Subcontractors' premises, at which any parts of the Works are
performed.
1.2 In the event of any conflict between: (a) the provisions of this
Contract and the Specification, this Contract shall take precedence; or
(b) the provisions of the Specification and the Drawings, the
Specification shall take precedence.
1.3 The Index, Clause and sub-headings are inserted for convenience only and
shall not affect the interpretation of this Contract.
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2. YARD'S REPRESENTATIONS
2.1 LWB REPRESENTS AND WARRANTS:
2.1.1 that, after due consideration of the present condition and state
of completion of the Vessel and the composition of the Parts,
LWB has, or has the ability to subcontract, the necessary
construction facilities and capabilities, and sufficient and
competent supervisors and other personnel, efficiently and
expeditiously to accomplish the Works and complete the Vessel in
accordance with this Contract and the Specification;
2.1.2 that it has no knowledge of any further aspects of the Works or
other circumstances which could in any materially adverse way
affect or delay the Works or completion of the Vessel in
accordance with this Contract and the Specification; and
2.1.3 that is has taken and that it shall take (throughout the term of
this Contract) all commercially reasonable steps to prevent and,
where necessary, to mitigate and overcome the effects of any
breakdown in any labour relations, work stoppages or other
events or circumstances whatsoever (including any which are not
related to labour relations or work stoppages) which might
jeopardise the timely completion of the Works.
3. YARD'S OBLIGATIONS
3.1 LWB'S PERFORMANCE OF THE WORKS
3.1.1 LWB, with full knowledge of the Owner's performance and quality
requirements and standards, shall undertake and complete the
Works as expeditiously as commercially reasonable and in a
competent, efficient and workmanlike manner and in accordance
with the highest shipbuilding and marine engineering qualities,
practices and standards for new passenger cruise ships, and so
that (unless specified to the contrary in the Specification )
the quality of workmanship, quality of materials and aesthetic
design of the passenger cabins and public areas shall not be of
a lower standard than on the Sun except where the quality
standards of the OFI, the materials and design are lower than
the same standards of corresponding items on the SUN .
3.1.2 As required by the Owner, LWB shall provide all such design and
engineering services, labour, materials, supplies, facilities
and other related services, whether of a permanent or temporary
nature, as may be required (whether directly or indirectly) for,
or by reason of, timely completion of the Works in accordance
with this Contract and the Specification.
3.1.3 The construction, installation and outfitting stages of the
Works shall be undertaken at the shipyard.
3.1.4 Any overtime carried out by LWB or any of its Subcontractors
shall be for the account of LWB.
8
3.2 QUALITY STANDARDS
3.2.1 The Works shall be undertaken and performed in all respects in
accordance with this Contract, in compliance with the Rules of
the Classification Bodies and of the Regulatory Bodies, and to
the reasonable satisfaction of the Owner, and LWB shall in
particular be responsible for ensuring adherence in all aspects
of the Works, whether undertaken and performed by itself or by
any of its own Subcontractors, with the quality assurance
standards and procedures detailed in the Specification.
3.2.2 In so far as concerns all matters falling within the scope of
the Works, the Vessel shall upon Mechanical Completion be ready
for commissioning and completion of all Tests and Sea Trials in
compliance with this Contract and the Specification, and shall
at all times comply with all applicable Rules of the
Classification Bodies and the Regulatory Bodies, which shall be
the responsibility of LWB in all respects.
3.3 DESIGN RESPONSIBILITIES, CLASSIFICATION AND REGULATORY BODIES
3.3.1 LWB shall be fully and solely responsible for all aspects and
features of its Works, and for carrying out all such detailed
design and engineering work as may be required to complete the
Vessel in accordance with this Contract and the Specification,
and in compliance with the Rules of the Classification Bodies
and the Regulatory Bodies.
3.3.2 The Works shall be carried out under the supervision and special
survey of the Classification Bodies, in accordance with the
Rules of the Classification Bodies which are (a) in force as of
the Effective Date and (b) announced as of the Effective Date as
intended thereafter to come into force or to be implemented, so
that on redelivery to the Owner the Vessel achieves the class
rating DNV + 1A1 PASSENGER VESSEL EO and ABS + A1 PASSENGER
VESSEL E + AMS ACCU free of all conditions, qualifications,
notations, recommendations, reservations and restrictions.
3.3.3 The Classification Bodies decision as to compliance or
non-compliance of the Works with the Rules of the Classification
Bodies shall be final and binding on the parties but this
provision shall not in any manner or to any extent relieve LWB
from (or otherwise reduce) any of LWB's obligations to comply
with this Contract or the Specification and in respect of
requirements which exceed such Rules.
3.3.4 The Works shall also be carried out under the supervision and in
accordance with the Rules of the Regulatory Bodies which are (a)
in force as of the Effective Date and (b) announced as of the
Effective Date as intended thereafter to come into force or to
be implemented. Provided always that (without in any manner or
to any extent reducing the scope of LWB's other obligations with
respect to the Works) the Owner acknowledges and agrees (a) that
LWB is not required to comply with the Excluded Regulatory
Provisions, and (b) that the Owner shall be responsible for
obtaining from the relevant Regulatory Bodies any exemptions
that may be required as a result of the Vessel's non-compliance
with the Excluded Regulatory Provisions.
9
3.3.5 The decision of any Regulatory Body which is to issue specified
certificates shall be final and binding on the parties as to
compliance or non-compliance of the Works with the regulations,
resolutions and Rules of such Regulatory Body but this provision
shall not in any manner or to any extent relieve LWB from (or
otherwise reduce) any of LWB's obligations to comply with this
Contract or the Specification and in respect of requirements
which exceed such Rules.
3.3.6 All classification, certification, testing, survey and other
fees and charges payable to the Classification Bodies, the
Regulatory Bodies and other third parties in relation to the
Works shall be for the account of LWB.
3.3.7 Although the Classification Bodies will be appointed and paid
for by LWB, and although LWB will be exclusively responsible for
the correct interpretation and application of the Rules of the
Classification Bodies, the parties intend that in performing its
role in relation to the Works the Classification Bodies shall be
acting for, and shall owe identical duties to, both of the
parties to this Contract AND that LWB will ensure that the
provisions of this Clause 3.3.7 are communicated to, and
accepted by, each of the Classification Bodies before its
appointment under this Contract.
3.3.8 All fees and charges incidental to the registration of the
Vessel under the laws of the Flag State (which may be selected
at any time by the Owner from the three states referred to in
the Flag State definition in Clause 1.1) shall be for the
account of the Owner.
3.3.9 The Owner has the right to have copies of all correspondence and
other documents passing between LWB and the Classification
Bodies, and to attend all meetings between LWB and the
Classification Bodies, in relation to the Works and LWB shall
promptly copy all such correspondence to the Owner and keep it
well and regularly informed (in advance) of all such meetings.
3.3.10 LWB and all its Subcontractors shall comply with all laws,
rules, and regulations applicable to the Works, and LWB shall
obtain all licenses, permits, certificates and permissions
required for the execution and the completion of the Works,
including but not limited to those required by the
Classification Bodies and the Regulatory Bodies.
3.3.11 LWB shall be responsible for obtaining the approval of all
drawings, calculations and other necessary matters by the
Classification Bodies and/or the Regulatory Bodies; and shall
arrange for all applicable certificates issued by the
Classification Bodies or any of the Regulatory Bodies to be
issued direct to the Owner.
3.4 OFI
3.4.1 Apart from the first containers that have been unpacked with the
agreement of the Owners, upon arrival at the Work Site of each
box or other container of OFI, LWB shall in the presence of the
Owner's designated representatives, open and unpack and then
inspect and check the contents of each such box and container.
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Thereafter, LWB shall repack each box and container and then
keep it safely stored and well protected in readiness for the
installation or incorporation or stowage of the OFI on or in the
Vessel.
3.4.2 If not already so marked, as soon as practicable after their
delivery to the Work Site all OFI and all Equipment shall be
marked by LWB with the notation "PROPERTY OF SHIP HOLDING LLC -
HULL NUMBER 1", for those items which will be incorporated in or
otherwise appropriated for the Vessel, and "PROPERTY OF SHIP
HOLDING LLC - HULL NUMBER 2" for all other items.
3.4.3 LWB:
(a) shall not be liable to the Owner for any damage to or
deficiency in or loss or misdescription of any OFI
provided and to the extent that LWB can prove that any
such damage, deficiency, loss or misdescription existed
before LWB took possession of the relevant OFI and could
not have been detected or avoided by reasonable steps on
the part of LWB (or its Subcontractors and other
representatives) before or after LWB took possession of
such OFI;
(b) shall notify the Owner's senior representative at the
shipyard as soon as practicable of any loss or
misdescription of or damage to, or deficiency in the
supply or performance of, any of the OFI or any late
delivery thereof; and
(c) acknowledges and confirms that as at the date of its
signature of this Agreement there has been no loss or
misdescription of or damage to or deficiency or delay in
the supply of any OFI delivered to the shipyard save for
or in respect of the specific items expressly agreed in
writing between the parties before or after the date of
signature of this Contract.
3.4.4 Where LWB is liable to the Owner for any damage to or loss of
any OFI, LWB will promptly replace the relevant OFI with
identical items at its risk and expense.
3.4.5 LWB shall make and keep fully itemised and up-to-date records of
all OFI from time to time delivered to any part of the Work Site
and, without prejudice to the generality of the foregoing, LWB
shall ensure that such records are made and kept in the form
used by LWB for its own stocks and show:
(a) the date of delivery to the Work Site of each
consignment of OFI;
(b) where and how each consignment of OFI is stored;
(c) when each batch of OFI units is or will be incorporated
or installed in, or stowed in or on, the Vessel; and
(d) the balance (in units) of any unused OFI.
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3.4.6 LWB shall provide the Owner, on a monthly basis, with a complete
set of the records described in Clause 3.4.5 and all amendments
of, or supplements to, such records.
4. OWNERSHIP AND RISK
4.1 With effect from the moment of delivery to LWB of the Vessel and the
Hull and each batch of Equipment, LWB shall (a) bear all risks of loss
and damage, and (b) assume full responsibility for the due and proper
care, custody, safety, and security of the Vessel and the Hull and
Equipment.
4.2 The Owner shall retain full and unrestricted ownership of the Vessel and
the Hull, the OFI, the Parts, Equipment and the Works (in each case
whether under construction or completed, whether unfinished or partly or
wholly finished and whether at the Work Site or elsewhere) at all times
during the term of this Contract.
4.3 The Owner shall be entitled to mortgage the Vessel and the Hull for the
purposes of financing or refinancing its acquisition and completion of
the Vessel and the Hull.
4.4 The Owner shall also be entitled to charge or pledge the OFI, Parts and
other Equipment for the purposes of financing or refinancing its
acquisition and completion of the Vessel and the Hull.
4.5 The Yard shall at its own cost promptly give all such assistance,
provide all such information, and execute and deliver all such documents
to the Owner and/or any other relevant person, body or entity
(including, but not limited to the Registry of Ships under construction
and the Bundesamt fur Seeschiffahrt und Hydrographie) as may from time
to time be requested by the Owner in connection with the registration
and deletion of the Vessel and/or the Hull in and from the Registry of
Ships under Construction. In addition to the obligations set out in
Clause 3.4.2, if the Vessel and/or the Hull are registered the Yard
undertakes to identify and/or xxxx the Vessel and/or the Hull for the
purposes of such registration.
4.6 Upon delivery the Yard will obtain actual possession (UNMITTELBARER
BESITZ) of the Vessel, the OFI, the Parts and other Equipment thereby
providing to the Owner German law constructive possession (MITTELBARER
BESITZ) until the Owner re-obtains actual possession (UNMITTELBARER
BESITZ) thereof. The same applies to all Parts and Equipment purchased
by the Yard and built into the Vessel during completion of the Vessel as
well as to all Parts and Equipment purchased by the Owner and delivered
to the Yard and/or the Vessel during completion of the Vessel.
4.7 LWB shall at its own cost store the Hull and any Parts relating to the
Hull for the Owner thereby obtaining actual possession (UNMITTELBARER
BESITZ) and providing to the Owner constructive possession (MITTELBARER
BESITZ) thereof for the period of the option granted under the terms of
the Option Agreement, and up to sixty (60) Days following expiry of that
option, in a safe and secure manner at the shipyard.
5. ADMINISTRATION OF THE PROJECT
5.1 ADMINISTRATION OF THE PROJECT
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5.1.1 Representatives of the Owner and of LWB shall co-operate closely
with each other in order to achieve the timely completion of the
Vessel.
5.1.2 LWB shall be responsible for the management of the project and
for all related activities including, but not limited to, labour
relations and management, the appointment and supervision of
Sub-contractors, procurement, Equipment provision and
maintenance, quality control, safety and security, planning and
scheduling and project administration.
5.1.3 The Owner shall provide and pay for a site management team (the
"OMT") which shall act as the principal interface between the
Owner and LWB and shall have responsibility for overseeing, on
the Owner's behalf, the activities of LWB and its Subcontractors
in bringing about the timely completion of the Vessel.
5.1.4 LWB shall prepare and deliver to the OMT on Monday morning of
each week a weekly report which shall be discussed on the Monday
afternoon of that week at a weekly management meeting to be
attended by senior members of the OMT and of LWB's project
management team. Each weekly report shall identify:
(a) matters critical to the project and matters relating to
safety identified during the preceding week and
anticipated for the forthcoming week;
(b) progress made during the preceding week towards
completion of the Vessel; and
(c) the planned expenditure for the next week comprising
labour costs, sub-contractor costs, Equipment costs and
materials costs.
The above items shall be discussed at the weekly management
meeting for the purpose of agreeing a strategy for the next
week.
5.1.5 The outcome of the discussions and agreements reached in the
weekly management meetings shall be minuted and rolled-up in a
monthly report prepared by LWB which shall be discussed at a
monthly meeting attended by representatives of the OMT and LWB.
5.1.6 It is expressly agreed and understood that the Owner may wish to
undertake, concurrently with LWB's execution of the Works,
certain other works on the Vessel and that the Owner and/or
their subcontractors will require access to the Work Site and to
the Vessel at all times for such purpose. The Owner will give
LWB reasonable advance notice of any such works and shall ensure
that such works will not impede or delay or prevent the Works.
5.1.7 To the extent that such are available, LWB will provide at cost
(on a twenty-four hour, seven day week basis if required by the
Owner) all necessary facilities for such Owner's work, including
electricity supply, lighting, compressed air, steam, warehousing
and cranage as well as dock space and all other services
required by the Owner or their subcontractors to undertake such
works.
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5.1.8 LWB will otherwise co-operate to the maximum practical extent to
permit successful and efficient completion of such Owner's work.
5.1.9 The Owner shall have the right to object to the conduct or
performance of any person assigned to the project by LWB and, if
LWB has within thirty (30) Days failed to take remedial action
satisfactory to the Owner following any such complaint, the
Owner shall have the right to require that such person be
removed from the project.
5.1.10 LWB shall have the right to object to the conduct or performance
of any person assigned to the project by the Owner and, if the
Owner has within thirty (30) Days failed to take remedial action
satisfactory to LWB following any such complaint, LWB shall have
the right to require that such person be removed from the
project.
6. MODIFICATIONS
6.1 VOLUNTARY MODIFICATIONS
6.1.1 The scope of the Works and any other aspect of the Specification
may be modified from time to time by agreement of the parties
PROVIDED THAT any reasonable and timely modifications requested
by the Owner, and/or any modifications required to be made under
Clause 6.2 which are occasioned by any changes in the Rules of
the Classification Bodies and/or the Rules of any of the
Regulatory Bodies after the Effective Date, shall be implemented
by LWB if the Owner assents to necessary modifications to the
Contract Price, the Date for Completion and any other relevant
provisions of this Contract and the Specification, LWB agreeing
to act in good faith and use its best efforts to accommodate any
such reasonable requests by the Owner so that any such
modifications shall be made:
(a) at the lowest cost reasonably possible;
(b) within the shortest period of time reasonably possible;
and
(c) without any loss in the relative priority of the Works
compared to other construction work at the Work Site,
PROVIDED THAT nothing in this Clause 6.1 shall require LWB to
jeopardise its contracted work schedule(s) for other ships at
the Work Site.
6.1.2 Any agreement on a modification of this Contract or the
Specification shall include:
(a) any increase or decrease in the Contract Price;
(b) any extension of, or reduction in, the Date for
Completion, and
(c) any other adjustment to or amendment of any relevant
provisions of this Contract or the Specification,
which is directly, necessarily and reasonably occasioned by such
modification.
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6.1.3 Any agreement on a modification of this Contract or the
Specification shall be recorded and evidenced by an exchange of
letters or telefaxes, each of which shall constitute an
amendment to this Contract and/or the Specification and shall be
sequentially numbered, marked "CONTRACT MODIFICATION UNDER
CLAUSE 6" and duly signed by the parties' representatives, and
following any such agreement LWB shall modify the Works or the
Vessel in accordance therewith.
6.1.4 If there is any dispute between the parties as to any of the
matters referred to in this Clause 6.1 then, if the Owner so
requires, LWB will make the requested modification before the
dispute has been resolved provided the Owner confirms its
willingness to pay any amount found due to LWB in respect of
such modification.
6.2 CLASSIFICATION AND REGULATORY CHANGES
6.2.1 If, after the Effective Date, any Rules of the Classification
Bodies and/or any of the Regulatory Bodies (or the
interpretation of such Rules) are changed by the Classification
Bodies or such Regulatory Bodies, LWB shall promptly notify the
Owner in writing of the relevant change(s) and of the necessary
modifications to be made to this Contract and/or the
Specification.
6.2.2 If, following its receipt of a notice under Clause 6.2.1, the
Owner reasonably considers that the operation of the Vessel in
its intended service would permit of a dispensation or waiver,
LWB will at the request of the Owner apply for a dispensation
from, or waiver of compliance with, the relevant change(s).
6.2.3 If the Owner does not require LWB to apply for a dispensation or
waiver (or it has not been possible to obtain a dispensation or
waiver) within a period of fifteen (15) Days after the Owner's
receipt of a notice under Clause 6.2.1 (or such longer period of
time as the parties may agree to be reasonable in the light of
all the circumstances then prevailing), the parties shall make
an agreement to modify this Contract and/or the Specification in
accordance with Clause 6.1 and thereafter LWB shall make the
relevant change(s) in the Vessel.
6.3 SUBSTITUTION OF EQUIPMENT
6.3.1 If (notwithstanding all reasonable efforts on the part of LWB
and PROVIDED THAT orders for the same were placed in good time
by LWB) any items of Equipment are not available at the time
required for their installation or incorporation in the Vessel,
LWB may (with the prior written approval of the Owner) use
suitable substitute items which are at least equal to the
standard and quality of the items which were not available and
which are capable of meeting all of the requirements of:
(a) this Contract and the Specification; and
(b) the Classification Bodies and the Regulatory Bodies.
6.3.2 Where a proposed substitution of any Equipment is approved by
the Owner, LWB shall:
15
(a) bear all additional costs and expenses whatsoever in
relation to such substitution; and
(b) credit the Owner with any cost savings occasioned by
such substitution.
6.4 COMPLIANCE WITH EXCLUDED REGULATORY PROVISIONS
If the Owner fails to obtain any exemption from the Regulatory Bodies
which is required as a result of the Vessel's non-compliance with any of
the Excluded Regulatory Provisions and if the Owner therefore requests
LWB to comply with the relevant Excluded Regulatory Provisions, such
request shall be treated as a request for a modification under Clause
6.1, always provided that compliance with the relevant Excluded
Regulatory Provisions would be technically feasible.
7. DATE FOR COMPLETION
7.1 FINAL COMPLETION CERTIFICATE
7.1.1 For the purpose of this Clause 7 completion of the Works shall
be deemed to coincide with the Owner's issuance of the Final
Completion Certificate or (if earlier) the time at which the
Owner should rightfully have issued the Final Completion
Certificate.
7.1.2 The Date for Completion of the Works shall be 31 December 2003.
7.2 TERMINATION FOR EXCESSIVE DELAY IN COMPLETION
7.2.1 If the total accumulated time of all delays on account of the
causes specified in Clause 7.3, and unauthorised delays on
account of which the Contract Price is subject to adjustment as
provided for in Clause 12 hereof, amounts to [***] [Confidential
Treatment] or more, then, in such event, the Owner may terminate
this Contract in accordance with the provisions of Clause 19
hereof. LWB may, at any time after the accumulated time of the
aforementioned delays justifying termination by the Owner,
demand in writing that the Owner shall make an election, in
which case the Owner shall, within twenty (20) Days after such
demand is received by the Owner, either notify LWB of its
intention to terminate this Contract, or consent to a
postponement of the Date for Completion to a specific future
date; it being understood and agreed by the parties hereto that,
if any further delay occurs on account of causes justifying
termination as specified in this Clause 7, the Owner shall have
the same right of termination upon the same terms as hereinabove
provided. Failure by the Owner to answer to LWB's claim for an
election within the above-mentioned period shall be deemed to be
a waiver by the Owner of its right to object to such
postponement.
7.2.2 The Owner shall at any time after six (6) months following the
Effective Date, have the right to terminate this Contract upon
giving LWB ten (10) Banking Days prior written notice in the
event that LWB is significantly behind the building program for
the Vessel and the Owner in its reasonable opinion deems that
LWB will not be able to complete the Vessel within the period of
One Hundred and Eighty (180) Days from the Date of Completion
16
(adjusted for Permissible Delays). The Owner shall not be
obliged to pay any further Instalments after having terminated
this Contract under this Clause 7.2.2, and all Instalments paid
shall be reimbursed together with interest thereon at the
Relevant Rate.
7.2.3 If the Owner elects to treat this Contract as so repudiated,
then the Owner shall give notice in writing to LWB that this
Contract is terminated (which shall be effective from receipt
thereof by LWB) in which case the provisions of Clauses 19.3
and 19.4 shall apply.
7.3 PERMISSIBLE DELAYS
7.3.1 Any delay in respect of which LWB shall be entitled, pursuant to
the provisions of Clauses 7.3 and 7.4, to an extension of the
Date for Completion shall be known as a "PERMISSIBLE DELAY".
7.3.2 If LWB gives notice as provided in Clauses 7.4.1, 7.4.2 and
7.4.3 LWB shall be entitled to an extension of the Date for
Completion but only if:
(a) there is a specific cause of delay which LWB can prove
will solely and directly delay redelivery of the Vessel
beyond the Date for Completion and which cause is
delaying or will delay Works which are in the critical
path of redelivery of the Vessel for more than one Day;
(b) such cause of delay is one of the excusable causes set
out in Clause 7.3.4;
(c) LWB proves that it has used and is continuing to use all
reasonable efforts to avoid, prevent, minimise and
overcome the actual delay in redelivery of the Vessel
including, without limitation, by the performance of
other or additional work; and
(d) but for such cause of delay the Vessel would have been
redelivered on time,
PROVIDED THAT the length of any such extension shall be the
number of Days by which LWB can prove that the Date for
Completion of the Vessel actually will be delayed solely and
directly by each such cause of delay.
7.3.3 LWB shall at all times have the burden of proving each of the
matters required to be established by this Clause 7.3 and in the
event that it is not possible for it to prove whether, or to
what extent, any delay in redelivery is directly and solely
attributable to a cause which is excused by the provisions of
this Clause 7, LWB shall not be entitled to any extension of the
Date for Completion.
7.3.4 LWB shall be entitled to an extension of the Date for
Completion, as provided in Clauses 7.3.1 and 7.3.2, for any
delay caused:
(a) by the Owner (other than such delays, if any, as are
caused by the Owner in the proper and timely exercise of
any of its rights or obligations under this Contract);
17
(b) by legislation or other formal action by or on behalf of
any government (or any agency or other authority of such
government) which directly prohibits or otherwise
prevents LWB from proceeding with the Works;
(c) by war or warlike events involving any country which is
directly relevant to the performance of the Works;
(d) by extraordinary weather conditions, or other
circumstances beyond LWB's control;
(e) by typhoons, hurricanes or other extraordinary weather
conditions preventing LWB from proceeding with the
Works;
(f) by such blockades, strikes, lockouts and other labour
disturbances as are beyond LWB's control;
(g) by such accidents, explosions, fires, disruptions of
power supplies and other similar occurrences as are
beyond LWB's control;
(h) by the short, late or non-delivery to LWB of any
Equipment, or the late performance of any Subcontractors
PROVIDED THAT the late, short or non-delivery or late
performance resulted from causes which would entitle LWB
to an extension of the Date for Completion under this
Clause 7.3 and PROVIDED THAT LWB proves that it has
exercised due diligence (a) in contracting for such
Equipment and with such Subcontractors, (b) in the
performance of any acts required of it with respect to
such Equipment or Subcontractors, (c) in monitoring the
acts and circumstances of such Subcontractors, and (d)
in expediting deliveries or performance under LWB's
purchase or subcontracts or procuring equivalent
substitute performance in the event of the late delivery
of such Equipment or the under-performance in such
purchase or subcontracts; or
(i) by unfavourable weather conditions if commencement of
the Tests and Sea Trials is postponed or such Tests or
Sea Trials are discontinued by reason of such conditions
and the number of Days thereafter during which such
Tests and Sea Trials cannot be undertaken exceed three
in total, then any further Days during which the weather
conditions remain unfavourable may be claimed (subject
to the provisions of this Clause 7) as a Permissible
Delay; or
(j) subject to the provisions of clauses 3.4.3 and 3.4.4,
delays resulting from defects inherent in the Vessel or
OFI before LWB took possession of the same which could
not have been detected or avoided by reasonable steps on
the part of LWB (or its Subcontractors and other
representatives) before or after LWB took possession of
the Vessel and relevant OFI.
7.3.5 Notwithstanding anything to the contrary in this Clause 7, LWB
shall not be entitled to any extension of the Date for
Completion on account of:
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(a) any delay resulting from a cause of delay which has
itself been caused or contributed to by the negligence
or other default of LWB;
(b) any delay resulting from a cause of delay in existence
as of the Effective Date; or
(c) any delay resulting from a cause of delay, which was or
reasonably should have been foreseen or anticipated by
LWB by reason of facts which were, or after reasonable
enquiry should have become, known to LWB as of the
Effective Date; or
(d) any delay resulting from a cause of delay which
reasonably could have been avoided by LWB;
(e) any delay resulting from the late performance or default
of a Subcontractor, if such delay results from a cause
of delay in effect published and announced as of the
date of the award of the relevant purchase contract or
subcontract; or
(f) any delay resulting from any dispute or arbitration
proceeding under this Contract, PROVIDED THAT in the
case of any Works under dispute or arbitration which
would otherwise be commenced prior to the resolution
thereof LWB shall not be required to proceed therewith
(and a corresponding extension of the Date for
Completion shall be allowed) if, after written request
by LWB, the Owner fails to confirm forthwith its
willingness to pay the amount found due in respect of
such work.
7.4 DELAY NOTICES
7.4.1 LWB shall give written notice to the Owner of a cause of delay
pursuant to Clause 7.3 as soon as practicable and no later than
five (5) Days after the date on which LWB first has knowledge of
such cause of delay and in such notice LWB shall describe the
cause of the delay, the date of commencement (or first
occurrence) of the cause, its expected duration and its expected
effect on LWB's ability to carry on with the Works.
7.4.2 LWB will provide the Owner with regular written status reports
(at such reasonable intervals as the Owner may request) with
respect to any delay in respect of which LWB has given notice
pursuant to Clause 7.4.1 and as to the steps being taken (and
planned) by LWB to minimise and overcome any actual delay in
delivery of the Vessel.
7.4.3 Within five (5) Days after any cause of delay set forth in
Clause 7.3 has ceased to exist, LWB shall notify the Owner of
such cessation and give the Owner a written statement of the
actual or estimated delay in the completion of the Works
resulting from such cause together with such detailed
documentation as is then available to it justifying such
extension, and any such detailed documentation thereafter
becoming available to LWB shall be promptly be given to the
Owner.
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7.4.4 On the basis of the notices, reports, statements and information
given to the Owner by LWB relating to any actual or estimated
delay in redelivery (and such further information and
documentation as the Owner may reasonably request), the Owner
and LWB shall confer and attempt to agree upon the number of
days by which the Date for Completion shall be extended PROVIDED
THAT if the Owner and LWB cannot so agree within thirty (30)
Days after the completion of any such conference, the extension
of the Date for Completion (if any) shall be determined as a
dispute pursuant to the provisions of Clause 22.
7.4.5 The extension of the Date for Completion provided for in this
Clause shall be the only remedy for delay to which LWB shall be
entitled and, by way of illustration but not limitation, LWB
shall not be entitled to damages or any adjustment in the
Contract Price.
8. TESTS AND TRIALS
Following completion of construction of the Vessel, installation and
commissioning of the Equipment, and completion of all other components
of the Works, the Vessel and the Equipment referred to in the
Specification shall be subjected to detailed Tests and Sea Trials by LWB
at its sole responsibility, risk and expense.
9. MECHANICAL COMPLETION AND REDELIVERY
9.1 Within three (3) Days of Mechanical Completion of each Component of the
Works, LWB shall notify the Owner in writing of the results of the same
and shall, where appropriate, confirm to the Owner that the relevant
Component has been duly mechanically completed. Each such notification
and confirmation shall be approved and countersigned by the
Classification Bodies and (where appropriate) the Regulatory Bodies.
Unless the Owner is in disagreement with LWB that the relevant Component
has been duly completed the Owner shall, within three (3) Days of
receipt of LWB's notice confirming due completion of the relevant
Component, issue an interim completion certificate (the "MECHANICAL
COMPLETION CERTIFICATE") in respect of that Component of the Works.
Issuance of the Mechanical Completion Certificate in respect of any
Component of the Works shall in no respect or extent release LWB from
its obligations under this Contract or the Specification.
9.2 If, however, in the view of the Owner any part of the Works confirmed by
LWB as having been mechanically completed does not conform to the
requirements of this Contract and the Specification, the Owner shall so
advise LWB (again within three (3) Days of the receipt of LWB's notice
in respect of the relevant Component) and shall specify the respects in
which the same fails to conform with the requirements of this Contract
and the Specification. Thereafter LWB shall take the necessary steps to
rectify such non-conformity and, upon completion of such remedial works,
LWB shall notify the Owner.
9.3 Upon completion of such remedial works, the Owner shall, within three
(3) Days of receipt of such further notice from LWB, issue the
applicable Mechanical Completion Certificate or shall again specify to
LWB the respects in which the Works still fail to conform with the
requirements of this Contract and the Specification. This process shall
20
be repeated until the earlier of (a) the Owner's issuance of the
applicable Mechanical Completion Certificate or (b) the referral by
either party of the unresolved matter applicable to that Component of
the Works to adjudication by an expert in accordance with the provisions
of Clause 22.2.1.
9.4 When each of the following conditions has been fully satisfied:
(a) the Mechanical Completion Certificate for each individual
Component of the Works has been issued;
(b) the Vessel has been fully commissioned and is in all respects
complete;
(c) the Vessel has successfully passed all of the Tests and Trials;
(d) the Classification Bodies and the Regulatory Bodies have issued
all applicable certificates, licences and all other required
authorisations and approvals; and
(e) all of the Redelivery Documents are ready for delivery to the
Owner and are free of all conditions, qualifications, notations,
recommendations, reservations and restrictions,
LWB shall request the Owner to issue a final completion certificate (the
"FINAL COMPLETION CERTIFICATE").
9.5 Unless the Owner is in disagreement with LWB that each of the conditions
referred to in Clause 9.4 has been fully satisfied the Owner shall,
within three (3) Days of receipt of LWB's request under Clause 9.4,
issue the Final Completion Certificate. If, however, in the view of the
Owner, any of such conditions has not been fully satisfied, the Owner
shall so advise LWB and the provisions of Clauses 9.2 and 9.3 above
shall apply, with necessary modification, to the issuance of the Final
Completion Certificate save that either party may elect to refer any
disputes to arbitration in accordance with the provisions of Clause 22.
9.6 As soon as reasonably practicable after the Owner's issuance of the
Final Completion Certificate LWB shall tender redelivery of the Vessel,
and delivery of the Redelivery Documents, to the Owner. The time and
date of redelivery of the Vessel shall be confirmed and recorded by the
concurrent delivery by each party to the other of a Protocol of
redelivery and acceptance (the "PROTOCOL OF REDELIVERY") in the
following form:-
"IT IS THIS DAY AGREED THAT M.V. [ ], COMPLETED BY LWB AT
ITS SHIPYARD IN BREMERHAVEN UNDER A CONSTRUCTION COMPLETION
CONTRACT DATED [ ] 2003 AND MADE BETWEEN XXXXX XXXXX
BREMERHAVEN GMBH ("LWB") AND SHIP HOLDING LLC ("OWNER"), WAS
AT [ ] HOURS BREMERHAVEN TIME TODAY REDELIVERED BY
LWB AND ACCEPTED BY THE OWNER.
DATED [ ]
SIGNED SIGNED
FOR LWB FOR OWNER."
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9.7 If any aspects of the Works and/or any of the Redelivery Documents do
not correspond to the requirements of this Contract and the
Specification even after the completion of remedial steps mentioned in
Clauses 9.2, 9.3 and/or 9.5 above, the Owner may, in its sole
discretion, agree to accept the Vessel. In such an event the aspects of
the Works and/or the Redelivery Documents which in the Owner's view do
not conform with the requirements of this Contract and the Specification
shall be mentioned by the Owner on the Final Completion Certificate and
the Protocol of Redelivery, and LWB shall be obliged to remedy such
non-conformities (at LWB's risk and expense) to the Owner's
satisfaction.
9.8 Acceptance of redelivery of the Vessel by the Owner under this Contract
shall not constitute a waiver of or otherwise prejudice any of the
Owner's rights under Clause 10 with respect to any Defect, whether known
or unknown, and whether or not noted in any document issued or signed
by, or sent or handed to, either party in connection with redelivery and
acceptance of the Vessel and any such Defect may be reported, and
corrected or otherwise dealt with, pursuant to Clause 10.
10. YARD'S WARRANTY
10.1 The guarantee and warranty provided for in this Clause 10 shall apply to
all Works performed and materials supplied by LWB and its Subcontractors
under or in connection with this Contract and the Specification. Subject
to the provisions of this Clause 10 , LWB guarantees the Vessel and
Equipment against all Defects for the period of three hundred and sixty
five (365) Days from the date of the Vessel's redelivery to the Owner
under this Contract (the "WARRANTY PERIOD") and undertakes to correct
(or to pay for the correction) of any Defects in accordance with this
Clause 10.
10.2 Where any Defect in the Vessel or any Equipment is corrected during or
after the Warranty Period, LWB's guarantee under this Clause 10 shall
apply to such correction for a further period of three hundred and sixty
five (365) Days from the date on which the correction was completed.
10.3 If any corrective works made or agreed to be made during the Warranty
Period indicate the existence of any recurring Defect, LWB shall carry
out such investigations as may be necessary to ascertain the cause, and
shall correct the Defect and the cause in order to ensure that there is
no recurrence.
10.4 LWB shall not be responsible for the correction of any Defect due to:
(a) a peril of the sea, an accident (other than any accident caused
by a Defect for which LWB or its Subcontractors are
responsible), negligence (other than negligence on the part of
LWB or its Subcontractors), or improper maintenance or handling
(including, without limitation, overloading) of the Vessel or
any Equipment by the Owner or any of its employees; or
(b) the Owner's use of fuels or lubricants not recommended by the
relevant manufacturer; or
(c) ordinary wear and tear; or
22
(d) any fault in (or caused by) any OFI properly (i) received, (ii)
handled, (iii) installed or incorporated in, (iv) stowed on, or
(v) otherwise delivered with the Vessel by LWB in accordance
with all of the requirements of this Contract and the
Specification; or
(e) repairs carried out by parties other than LWB or its
Subcontractors.
10.5 The Owner shall give written notice to LWB as soon as reasonably
possible and in any event within twenty one (21) Days after the
discovery of any Defect for which a claim is made under this Clause 10.
The Owner's notice shall give full details (so far as it is possible for
the Owner to do so) of the nature of the Defect and the extent of any
damage caused thereby.
10.6 Within thirty (30) Days after the end of the Warranty Period, the Owner
will draw up, and send to LWB, a list identifying every Defect for which
a claim is to be made under this Clause 10 provided that this Clause
10.6 will not preclude the Owner from giving notice to LWB of, and
making claims in respect of, any Defect which is covered by Clause 10.2.
10.7 Subject always to the Owner's rights under Clauses 10.8 and 10.9, each
Defect will be corrected by LWB free of charge to the Owner as soon as
may reasonably be practicable and all correction works shall be
scheduled so as to minimise delay of and disruption to the Vessel's
service and the availability of cabins, public rooms and areas, and
other passenger facilities
10.8 The Owner may require any Defect to be corrected under the instruction
or supervision of LWB at a suitably qualified shipyard or workshop
selected by the Owner, in which case LWB shall pay to the Owner all
costs incurred by it for the correction of such Defect but limited to
the amount which such correction would have cost (on an arms length
basis) if made at the shipyard. For the avoidance of doubt, in view of
the intended area of the Vessel's operation during the Warranty Period,
LWB will not be entitled to require the Vessel to be returned to the
shipyard or any other part of the Work Site for the correction of any
Defects.
10.9 Where the Owner discovers any Defect which (in the reasonable opinion of
the Owner) requires correction on an urgent basis, the Owner will
(acting in good faith) give such notice to LWB as is practicable in the
circumstances then prevailing (the intention being that LWB shall have a
reasonable opportunity to obtain necessary remedial instructions from
the relevant sub-contractor(s) and to relay such instructions to the
Owner) and thereafter the necessary corrective works may be carried out
by the Vessel's crew or, if practicable having regard to the degree of
urgency, by the nearest suitably qualified shipyard or workshop selected
by the Owner.
10.10 Irrespective of whether a Defect is corrected by LWB under Clause 10.7
or by any other parties under Clause 10.8 or Clause 10.9 above, LWB
shall bear and pay:
(a) the cost of all equipment, parts and materials required to
correct the Defect (including, without limitation, the cost of
delivering the same to the selected shipyard or workshop by such
23
means as the Owner may reasonably require in order to minimise
delay of and disruption to the Vessel's service); and
(b) the cost of all labour required to correct the Defect including,
without limitation, the expenses of independent contractors in
travelling to the Vessel; and
(c) the cost of any necessary underwater inspection of the Vessel by
divers; and
where the Vessel is drydocked solely on account of the need to
investigate or correct any Defect in the Vessel's external underwater
parts at any time before the Vessel's first scheduled drydocking after
redelivery, the drydocking costs (including, without limitation, the
costs of taking the Vessel from her berth to the nearest available
dry-dock and vice versa) as well as the costs of correcting any such
Defect. Provided however that the costs payable by LWB for the
correction of any Defect shall be limited to the amount which the
correction would have cost (on an arms length basis) if made at the
shipyard.
10.11 To the extent that the Owner incurs and pays any of the costs and
charges which LWB is liable to bear and pay under this Clause 10, LWB
shall reimburse the Owner in cash for the Owner's documented costs in
the currency(ies) actually expended by the Owner. Provided however that
the costs payable to the Owner for the correction of any Defect shall be
limited to the amount which the correction would have cost (on an arms
length basis) if made at the shipyard.
10.12 With effect from the expiry of the Warranty Period or (if later) final
completion of all corrective works to be made by LWB under this Clause
10, LWB will:
(a) assign to the Owner, to the fullest extent possible and without
any charge to the Owner, that part of every warranty or
guarantee made or given by any Subcontractors with respect to
any aspect of the Works or the Equipment which extends beyond
the Warranty Period or which is otherwise more favourable to the
Owner than the warranty or guarantee of LWB under this Clause
10; or
(b) if it is not possible fully and effectively to assign the
relevant part of any such warranty or guarantee, hold and
enforce the relevant warranty and guarantee as trustee and agent
for the Owner and promptly account to the Owner for all monies
received in or pursuant to the holding or enforcement of any
such warranty or guarantee.
10.13 During the Warranty Period the Owner may require LWB to employ and place
on board the Vessel a suitably qualified and experienced
English-speaking guarantee engineer acceptable to the Owner. The
guarantee engineer shall, at all times and in all respects, be an
employee of LWB. The Owner shall be under no liability whatsoever for
the death of or any personal injury suffered by the guarantee engineer
during the time when he is on board the Vessel unless caused by the
gross negligence of the Owner or any of its employees. Nor shall the
Owner be under any liability whatsoever for any damage to or the loss or
destruction of any property of the guarantee engineer unless caused by
gross negligence on the part of the Owner or any of its employees. If so
requested by the Owner, LWB and the guarantee engineer shall sign the
24
Owner's letter of indemnity and waiver. Although the guarantee engineer
will be employed by LWB at its expense, the Owner will at its cost
provide the guarantee engineer with suitable food and accommodation on
board the Vessel. The salary of the guarantee engineer will be
reimbursed by the Owner to LWB up to a maximum amount which is to be
agreed between the parties before the Vessel's redelivery to the Owner.
10.14 If:
(a) any Defect in the Vessel's external underwater parts is
discovered during the Warranty Period or the period of thirty
(30) Days referred to in Clause 10.6; or
(b) any Defect in the Vessel's external underwater parts is
discovered during the Vessel's first scheduled drydocking after
redelivery and either LWB accepts that the Defect arose during
the Warranty Period or LWB is unable to prove that the Defect
arose after the end of the Warranty Period,
LWB shall be responsible for such Defect and the correction thereof in
accordance with this Clause 10 PROVIDED THAT the Owner shall bear and
pay for the haul day and any drydocking costs incurred in the ordinary
course of the Vessel's normal drydocking maintenance and LWB, in
addition to the costs of all necessary corrective works, shall bear and
pay for such additional drydocking day(s) as may be required to correct
such Defect.
10.15 If a Defect results in or causes damage to the Vessel or any Equipment,
LWB's obligation and liability under this Clause 10 shall extend to the
correction (or, as the case may be, reimbursement of the cost of
correction) of any parts of the Vessel and any Equipment that have been
directly damaged as a direct result of the Defect. Otherwise, LWB shall
have no responsibility or liability for any consequential defects. Nor
shall LWB in any circumstances be responsible or liable towards the
Owner or any third party for any consequential damages or expenses
including, but not limited to, loss of time, loss of profit or earnings
directly or indirectly caused by any Defect or due to repairs or other
works done to the Vessel to remedy any Defects.
10.16 In this Clause 10, the expression "CORRECT" shall be construed so as to
mean and include rectify, remedy, repair or replace with the intent that
LWB's duty under this Clause 10 shall be to take all necessary
corrective action by (as may be appropriate) correcting or rectifying or
repairing or replacing, or paying for the correction or rectification or
remedy or repair or replacement of, every Defect to which this Clause 10
applies.
11. CONTRACT PRICE AND PAYMENT TERMS
11.1 The Contract Price for the Works shall be (EURO)298,000,000 (Two Hundred
Ninety Eight Million Euros).
11.2 The Contract Price:
11.2.1 is a fixed price and may be adjusted only in strict accordance
with, and subject to, the express provisions of this Contract;
and
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11.2.2 includes a lump sum allowance of (EURO)23,000,000 (Twenty Three
Million Euros) in respect of Equipment to be purchased by LWB
from time to time at the direction of the Owner.
11.2.3 Any amount of the allowance set forth in 11.2.2 above which is
not used to purchase such Equipment at the request of Owner
shall result in a reduction in the Contracted Price of equal
amount.
11.3 For the avoidance of doubt, the Contract Price includes:
11.3.1 the cost of all Works, completed in accordance with the
requirements of this Contract and the Specification, and the
provision by LWB and its Subcontractors of all ancillary and
related services;
11.3.2 the cost of all Tests and Sea Trials;
11.3.3 the cost of procuring the classification rating for the Vessel,
and of obtaining all certificates and other documents which are
required to be delivered pursuant to this Contract and the
Specification; and
11.3.4 all other costs and expenses of LWB otherwise incurred by LWB in
connection with the Works unless expressly specified in this
Contract as being for the Owner's account.
11.4 No commission of any kind whatsoever is or will be payable (whether
directly or indirectly) by or to any person in relation to or in
connection with this Contract or any of the business transactions
described in or contemplated by this Contract.
11.5 The Contract Price shall be paid by the Owner to LWB's Account in
Instalments, as follows:
------------------ ------------------------- ----------------------------
First Instalment: [***] [Confidential Treatment] [***] [Confidential Treatment]
------------------ ------------------------- ----------------------------
Second Instalment: [***] [Confidential Treatment] [***] [Confidential Treatment]
------------------ ------------------------- ----------------------------
Third Instalment: [***] [Confidential Treatment] [***] [Confidential Treatment]
------------------ ------------------------- ----------------------------
Fourth Instalment: [***] [Confidential Treatment] [***] [Confidential Treatment]
------------------ ------------------------- ----------------------------
Fifth Instalment: [***] [Confidential Treatment] [***] [Confidential Treatment]
------------------ ------------------------- ----------------------------
Sixth Instalment: [***] [Confidential Treatment] [***] [Confidential Treatment]
------------------ ------------------------- ----------------------------
26
11.6 LWB shall by not less than fourteen (14) Days advance written notice
advise the Owner of the date upon which each of the payments referred to
Clause 11.5 shall become due and payable and, in addition the notice
relating to payment of the Seventh Instalment will show (in reasonable
detail) LWB's calculation of the balance of the Contract Price payable
at such time and, in particular, the amounts of any reductions in or
additions to the Contract Price occasioned by the terms and conditions
of this Contract.
11.7 The Owner's obligation to pay each of the Instalments referred to in
Clause 11.5 shall be subject to and conditional upon the Owner's receipt
of:
11.7.1 LWB's invoice for the relevant payment; and
11.7.2 in the case of the First Instalment only, (a) the Performance
Guarantee, (b) the Refund Guarantee, (c) the Pledge of LWB's
Account (and acknowledgement thereof by LWB's Bank), and (d) the
Legal Opinion - all of which shall be delivered to the Owner not
later than three (3) Banking Days before the First Instalment
Date.
11.8 LWB shall not be entitled to use the proceeds from any Instalment, or
any amount standing to the credit of LWB's Account, for any purpose
other than to pay for work done and deliveries made in relation to the
completion of the Vessel. LWB shall however be entitled to draw amounts
from LWB's Account for this purpose as long as LWB is not in breach of
its obligations hereunder, and LWB's Account shall forthwith be blocked
in favour of the Owner when the Owner notifies LWB's Bank that LWB is in
breach of its obligations under this Contract. The Owner shall nominate
a representative to monitor and control LWB's Account, and LWB shall
give the Owner and its representative full access to LWB's Account as
well as to all invoices and documentation relating to any payments
therefrom. Any invoice exceeding the amount of (EURO)500,000 (in words,
Five Hundred Thousand Euros) must be pre-approved by the Owner's
representative before payment from LWB's Account, such approval not to
be unreasonably withheld or delayed.
11.9 The other payments from time to time due under this Contract shall be
made as follows:
(i) payment or credits for any modification(s) pursuant to Clause 6
and/or any other amount(s) accruing before redelivery and
acceptance of the Vessel (but for which no specific date is
stipulated in this Contract) shall be made simultaneously with
redelivery and acceptance of the Vessel, and the amount(s)
thereof shall be shown in the final invoice to be issued and
delivered by LWB;
(ii) any amount for which a specific payment date is stipulated in
this Contract shall be paid on such date; and
27
(iii) for any amount accruing after redelivery and acceptance of the
Vessel in respect of a defect, payment shall be made as follows:
(a) if the parties agree that the defect in question is a
Defect, not later than fifteen (15) Days after LWB's
receipt of an invoice for the Defect remedied pursuant
to Clause 10; or
(b) if the parties are in dispute as to whether the defect
is a Defect, on the date on which it is finally
determined or adjudged to be a Defect under Clause 22,
together with interest thereon at the Relevant Rate
calculated from the date of LWB's receipt of an invoice
for the Defect remedied pursuant to Clause 10 up to and
including the date of the Owner's receipt of the
relevant amount.
11.10 Every amount from time to time due under this Contract but unpaid for
longer than fifteen (15) Days from (and excluding) the due date shall
bear interest at the Relevant Rate from the due date up to and including
the date of receipt by the party to which the amount is owed.
11.11 All amounts payable to LWB under this Contract shall be paid direct to
LWB's Account, and the parties shall consult with each other in good
faith about the mode of payment with a view to reducing the amount of
any applicable bank transfer charges.
11.12 All payments made by the Owner to LWB prior to redelivery and acceptance
of the Vessel shall be in the nature of advances to LWB.
11.13 All fees, costs and other charges whatsoever:
11.13.1 in connection with each of the guarantees and other securities
referred to in Clause 11.7 (including, without limitation, fees
payable to the relevant bank(s) and/or insurance company(ies) in
respect of payments made thereunder) shall be borne and paid by
LWB; and
11.13.2 arising in connection with any payment made under this Contract
shall be borne and paid by the paying party PROVIDED THAT any
fees, costs or other charges levied by the receiving party's
bank(s) (including correspondent banks, whether in Germany or
elsewhere) shall be borne and paid by that party.
12. ADJUSTMENT OF CONTRACT PRICE
12.1 LATE DELIVERY
12.1.1 The Contract Price shall be subject to adjustments in the event
of delayed redelivery (it being understood and agreed by both
parties that any reduction of the Contract Price will be by way
of liquidated damages and not by way of penalty), and LWB shall
not in any way be responsible or liable for any other
consequences by way of damages or otherwise as a consequence of
delayed redelivery.
12.1.2 LWB shall prior to the second instalment being paid provide the
Buyer with a production plan for the construction of the Vessel,
and shall on each payment date as set out in Clause 11.5, notify
the Owner of any delay in the production plan of the
28
construction of the Vessel and/or change in the scheduled Date
for Completion of the Vessel.
12.1.3 If the delivery of the Vessel is delayed after the Date for
Completion (as the same may be reset pursuant to Clause 7.3),
then, in such event, beginning at 12:00 midnight on the Day
falling [***] [Confidential Treatment] after the Date for
Completion, the Contract Price shall be reduced by deducting
therefrom: [***] [Confidential Treatment] per Day for each
further Day of delay between 12:00 midnight on the [***]
[Confidential Treatment] Day and 12:00 midnight on the [***]
[Confidential Treatment] Day after the Date for Completion; and
[***] [Confidential Treatment] for each further Day of delay
between 12:00 midnight on the [***] [Confidential Treatment] Day
and 12:00 midnight on the [***] [Confidential Treatment] Day
after the Date for Completion.
12.1.4 However, the total reduction in the Contract Price shall not be
more than would be the case for a delay of One Hundred and
Twenty (120) Days, counting from 12:00 midnight on the Date for
Completion, at the rates of reduction applicable to the relevant
periods of delay as specified in subclause 12.1.3
12.1.5 If the delay in redelivery of the Vessel should continue for a
period of [***] [Confidential Treatment] from the Date for
Completion (adjusted for Permissible Delay), then in such event,
and after such period has expired, the Owner may at its option
terminate this Contract in accordance with the provisions of
Clause 19 hereof. If [***] [Confidential Treatment] of delay
have elapsed after the Date for Completion (adjusted for
Permissible Delay) and provided that the Owner has not sent
notice of termination as provided for in Clause 19 hereof, LWB
may demand in writing that the Owner shall make an election, in
which case the Owner shall, within [***] [Confidential
Treatment] after such demand is received by the Owner, notify
LWB of its intention either to terminate this Contract or to
consent to the acceptance of redelivery of the Vessel at an
agreed future date; it being understood that, if the Vessel is
not delivered by such agreed future date, the Owner shall have
the same right to terminate as herein above provided.
12.1.6 If the Owner fails to make an election as specified above within
such Fifteen (15) Day period, the Owner shall be deemed to have
consented to the redelivery of the Vessel at the future date
proposed by LWB.
12.2 SAVINGS
12.2.1 From time to time at the request of the Owner, LWB will make
available to the Owner, on an open-book basis, all calculations
made and all costs and other data used by LWB in determining the
Contract Price and any of the savings referred to in this Clause
12.2.
12.2.2 LWB has used, and will continue to use, its best efforts to
minimise the costs implicit in the Contract Price and to reduce
the Contract Price wherever possible by achieving savings
29
between LWB's budgeted costs and the costs actually incurred
under or in connection with this Contract.
12.2.3 The full amount of any cost savings directly or indirectly
achieved through the Owner's efforts (including through the
purchase by the Owner from NGSSI of materials, Parts and other
Equipment items), whether through the purchase of Equipment by
the Owner or through the Owner negotiating or procuring the
supply of Equipment to LWB or any of its Subcontractors or
through any other means, shall be credited to the Owner.
12.2.4 The full amount of any cost savings directly or indirectly
achieved by LWB in relation to the [***] [Confidential
Treatment] component of the Contract Price referable to the
upgrading, commissioning and post-redelivery guarantee in
respect of the Vessel's MERMAID POD units shall be credited to
the Owner.
12.2.5 One half of any discounts, rebates or other cost savings
directly or indirectly achieved by LWB (irrespective of the form
which they take) shall be credited to the Owner.
12.2.6 Save for any increase in the Contract Price expressly occasioned
by the operation of Clause 6, LWB shall bear the full amount by
which its actual expenditure under or in connection with this
Contract exceeds its budgeted expenditure.
12.2.7 At each of the monthly meetings referred to in Clause 5.1.6, LWB
will inform the Owner about the status of its efforts to achieve
savings pursuant to this Clause 12.2, and provide the Owner with
details of any cost savings achieved in the preceding month and
an updated calculation of the total savings achieved to the date
of the relevant meeting.
12.2.8 The credits to be given to the Owner in respect of savings
achieved by LWB or the Owner shall be applied and reflected in
the invoice for the Seventh Instalment and the related notice
referred to in Clause 11.6.
13. ENCUMBRANCES
13.1 LWB expressly, unconditionally and irrevocably waives any right to any
Encumbrance granted by law, or otherwise, and shall undertake not to
permit or create or do any act, deed or thing which would or might
result in the creation or assertion of any Encumbrance on any part of
the Owner's property (which for all purposes of this Contract shall mean
the Vessel, the Hull, the Equipment, OFI, Parts and any other property
of the Owner relating to or connected in some way with this Contract or
the arrangements described herein or contemplated hereby).
13.2 LWB shall promptly and fully indemnify and hold harmless and defend the
Owner and the Indemnified Parties from and against all liabilities for
the payment of the amount of any Encumbrance claimed or asserted against
or imposed on any property of the Owner by LWB, any Subcontractors, or
any other third party whatsoever.
30
13.3 In the event that:
13.3.1 LWB has a PRIMA FACIE valid claim against the Owner; and
13.3.2 LWB has commenced arbitration proceedings in respect of such
claim in accordance with the terms of this Contract (such
commencement being the service by LWB of a notice referring the
claim to arbitration and advising of the appointment of a first
arbitrator); and
13.3.3 the Owner at any time wishes to remove any of its property from
the Work Site (upon or before completion of the Works),
then the Owner shall be entitled to remove such property from the Work
Site upon provision by the Owner of a guarantee issued by a first class
bank in a form reasonably acceptable to LWB in an amount equivalent to
LWB's claim (exclusive of interest and legal costs), less the value of
any PRIMA FACIE valid counterclaims asserted by the Owner (exclusive of
interest and legal costs).
13.4 At any time when a payment is due to LWB under this Contract, and at all
other reasonable times, the Owner may require LWB to provide a written
statement satisfactory to the Owner showing what, if any, Encumbrance of
any kind has been or is liable to be or may be imposed on or asserted
against any property of the Owner located at any part of the Work Site.
13.5 If any Encumbrance of any kind is imposed on or asserted or claimed
against any property of the Owner located at any part of the Work Site,
LWB shall promptly notify the Owner and shall, not later than ten (10)
Days thereafter, secure the discharge or release of such Encumbrance
PROVIDED THAT if the Owner desires to contest any such Encumbrance and
such discharge or release is not available under law during such contest
(including, without limitation, through the filing of a bond or other
security), LWB shall immediately take such steps as in the opinion of
the Owner shall prevent such Encumbrance from delaying or otherwise
adversely affecting the execution of the Works and shall indemnify
fully, hold harmless and defend the Owner and all other Indemnified
Parties from and against all Losses which any of them may sustain or
incur as a result of the imposition of any such Encumbrance.
13.6 Notwithstanding the provisions of Clause 13.5, the Owner may secure the
removal of any such Encumbrance in which event LWB shall reimburse the
Owner for its costs (including legal fees) of securing such discharge or
release by deducting such sum from any payments due or to become due to
LWB under this Contract save that if any such cost is in excess of the
amount of any such reimbursement by deduction, LWB shall pay the amount
of such excess to the Owner promptly upon demand.
13.7 Notwithstanding the provisions of Clause 13.5, the Owner, without
securing the discharge or release of any such Encumbrance, may
nevertheless withhold from any payments due or to become due to LWB,
unless and until such Encumbrance is discharged or released by LWB, a
sum equal to the amount reasonably determined by the Owner to be
required to secure the discharge or release of such Encumbrance (which
31
amount shall include the estimated amount of all expenses which might be
incurred in connection therewith, including legal fees).
14. INDEMNITIES AND LIABILITY
14.1 LWB agrees to fully indemnify and hold harmless and defend the Owner and
the Indemnified Parties from and against any and all Losses except to
the extent that any Losses are caused directly or indirectly by the acts
or omissions of the Owner or any of the Indemnified Parties in respect
of:
14.1.1 sickness or injury to and death of the directors, officers,
employees and agents of the Owner, LWB and the Subcontractors,
and/or
14.1.2 loss of or damage to the property of the Owner, LWB and the
Subcontractors including, without limitation, equipment,
materials, machines, vehicles, plants, assets and the facilities
owned, hired or rented by the Owner, LWB, the Subcontractors and
any of its or their directors, officers, employees, consultants,
agents and other representatives, and/or
14.1.3 loss of or damage to any of the Owner's property whilst in the
care and custody of, or under the control of, LWB, and/or
14.1.4 sickness or injury to or death of any third party and/or loss of
or damage to the property of any third party, including wreck
removal and pollution, and/or any other loss or damage claimed
against the Owner for which LWB and/or any Subcontractor is
legally liable,
arising in connection with the Works and regardless of the cause or
reason therefor.
14.2 LWB's indemnities and liabilities under this Clause 14 shall be
limited to a total amount of (EURO)5,000,000 (in words, Five Million
Euros) for all and any events mentioned in this Clause 14.
15. INSURANCES
15.1 During the term of this Contract and until issuance of the Final
Completion Certificate, the Vessel, the Hull, the Equipment, the Parts,
the OFI and all other property of the Owner at the Work Site shall be at
the sole, direct and entire risk of LWB which shall at its own expense
keep the same insured against construction risks on terms, in amounts
and with insurers reasonably acceptable to the Owner.
15.2 All insurances (the "INSURANCES") shall be taken out in the name of LWB
and the Owner as co-insured for their respective interests, and all
losses under the Insurances shall be made payable to LWB and the Owner
for distribution between them in accordance with Clauses 15.6, 15.9 and
15.10.
15.3 All insurances shall provide that there shall be no recourse against the
Owner or the Indemnified Parties for whatsoever reason, and in
particular for the payment of any premiums or commissions and that no
alteration or cancellation of any of the Insurances shall become
effective unless and until fourteen (14) Days prior written notice has
been given by the relevant brokers or insurers to the Owner.
32
15.4 LWB shall provide the Owner with an original cover note specifying the
terms of the Insurances and all such other documentation and information
relating to the Insurances as the Owner may request from time to time.
15.5 If at any time there is:
15.5.1 any lapse in the insurance coverage which LWB is required to
arrange under this Clause 15, the Owner may effect replacement
coverage at LWB's expense; or
15.5.2 any failure by LWB to pay any premiums due in respect of the
Insurances, the Owner may pay the same and recover the relevant
payment(s) from LWB.
15.6 In the event of any Partial Loss of the Vessel and/or Parts and/or
Equipment and/or OFI and/or Hull before issuance of the Final Completion
Certificate:
15.6.1 the loss shall be made good by LWB as soon as reasonably
possible, the Date for Completion shall be extended in
accordance with Clause 7.3 (PROVIDED THAT the cause of the
Partial Loss is excused under that Clause) and the Partial Loss
proceeds referable to the Vessel and/or OFI and/or Parts and/or
Equipment (other than the Hull) which are subject to the Partial
Loss shall be applied by LWB in making good the Partial Loss to
the approval of the Owner, the Classification Bodies and the
Regulatory Bodies; and
15.6.2 the partial loss proceeds referable to the Hull which are
subject to the Partial Loss shall be paid to the Owner.
15.7 In the event of the Total Loss of the Vessel before issuance of the
Final Completion Certificate, either LWB or the Owner shall be entitled
to terminate this Contract by written notice to the other, such notice
to be delivered within thirty (30) Days after the date (the
"DETERMINATION DATE") on which it is determined that the Vessel has
become a Total Loss pursuant to Clause 15.11 below.
15.8 If, following the Total Loss of the Vessel, neither party terminates
this Contract pursuant to Clause 15.7, LWB shall proceed with the Works
in accordance with this Contract and the Date for Completion shall be
extended in accordance with Clause 7.3 PROVIDED THAT the cause of the
Total Loss is excused under that Clause.
15.9 If there is a Total Loss of the Vessel before issuance of the Final
Completion Certificate, then:-
15.9.1 if either party elects to terminate this Contract pursuant to
Clause 15.7, LWB shall within forty five (45) Days from (and
including) the Determination Date pay to the Owner an amount
equal to the sum of: (a) all payments previously made by the
Owner to LWB under this Contract together with interest thereon
at the Relevant Rate calculated from the date on which LWB
received each such payment to the date on which the
reimbursement is received by the Owner, and (b) the OFI Costs in
respect of any OFI which are subject to the Total Loss; or
33
15.9.2 if neither party terminates this Contract pursuant to Clause
15.7: (a) the Total Loss proceeds referable to the Vessel and/or
OFI and/or Parts and/or Equipment (other than the Hull) shall be
paid to and applied by LWB in completing the Works pursuant to
Clause 15.8 above, and (b) LWB shall within forty five (45) Days
from (and including) the Determination Date pay to the Owner the
OFI Costs in respect of any OFI which are subject to the Total
Loss.
15.10 In the event of a total loss of the Hull, the Total Loss proceeds
relating thereto shall be paid to the Owner.
15.11 A Total Loss shall be deemed to have occurred:
15.11.1 if it consists of an actual Total Loss, at noon Bremerhaven time
on the actual date of the loss; or
15.11.2 if it consists of a constructive or compromised or arranged or
agreed Total Loss, at noon Bremerhaven time on the date on which
notice of abandonment of the Vessel or Hull is given to her
insurers or (if her insurers do not admit the claim for a total
loss) at the time on the date at which a Total Loss is
subsequently adjudged to have occurred by a competent court or
arbitration tribunal or liability in respect thereof as a Total
Loss is admitted by underwriters.
16. TAXES AND DUTIES
16.1 All taxes and duties levied on the importation into Germany of the
Vessel, the Parts, the OFI and Equipment shall be for LWB's account.
16.2 All taxes and duties levied on the importation into the United States of
America or any other state of the Vessel, the Parts, the OFI and
Equipment shall be for the Owner's account.
16.3 All other taxes and duties arising in connection with the Works shall be
for LWB's account. In particular, LWB shall be responsible for all
taxes, duties and/or levies assessed or payable in respect of the
operation of the Work Site as well as in respect of LWB's or its
Sub-contractors income on business activities.
17. CONFIDENTIALITY
17.1 LWB, its Subcontractors and its or their directors, officers, employees,
consultants, agents and other representatives shall not, except to the
extent required by law:
17.1.1 make any announcement, or issue any circular, in connection with
this Contract or the Works without the prior written approval of
the Owner;
17.1.2 divulge any Information to any person, natural or legal, other
than the Owner except as may properly be required for the
execution of the Works; or
17.1.3 use any Information or OIPR, except as may properly be required
for the performance of the Works.
17.2 LWB shall procure and enforce similar confidentiality undertakings from
its Subcontractors and all other persons engaged by it in relation to
the Works.
34
18. SUBCONTRACTORS AND ASSIGNMENT
18.1 SUBCONTRACTORS
18.1.1 LWB may subcontract the performance of certain parts of the
Works to reputable and suitably qualified and experienced
Subcontractors.
18.1.2 LWB's appointment or use of any Subcontractors (including,
without limitation, any such persons appointed or employed or
contracted by LWB with the approval or at the request of the
Owner) shall not in any manner or to any extent relieve LWB from
(or otherwise reduce) any of LWB's obligations and/or
liabilities under or in connection with this Contract and the
Specification nor diminish the responsibility of LWB adequately
to manage and supervise the Subcontractors and to ensure that
such Subcontractors conduct themselves in a thoroughly efficient
and workmanlike manner.
18.1.3 LWB agrees and covenants with the Owner that:
(a) it shall ensure that there is not and will not be
created by LWB any direct or indirect contractual or
other legal relationship (including but not limited to
any relationship arising out of or by reason of or in
connection with any German law encumbrance rights)
between the Owner and any Subcontractors appointed or
otherwise used by LWB (save for such relationships as
may be created by reason of the warranty and guarantee
assignments to be made by LWB under Clause 10.12 );
(b) it shall take reasonable care in the selection,
appointment and supervision of all Subcontractors, and
shall use its best endeavours to procure their
appointment on the best possible terms consistent with
the Owner's rights, and LWB's obligations and
liabilities, under this Contract and the Specification
including, without limitation, such matters as (i) the
best possible guarantees and warranties and liberty for
LWB to assign all or any part(s) of such guarantees and
warranties to the Owner, (ii) the safety of passengers
and crew, (iii) good service, (iv) reliability of
Subcontractors, and (v) availability of spares and
post-delivery service and other support;
(c) it shall procure a waiver from each Subcontractor (in
terms acceptable to the Owner) of any rights (including
without limitation any German law encumbrance rights) to
arrest, attach, detain or encumber any property of the
Owner or to cease work, and if LWB fails to procure any
such waiver LWB shall (i) promptly notify the Owner of
such failure and provide it with all such information
and documentation as the Owner may require regarding
contracts with any Subcontractor(s) who refuse to waive
such rights, and (ii) prevent the relevant
Subcontractor(s) from exercising such rights;
(d) it shall promptly provide the Owner with (i) such
documentation or information as it may request from time
to time in connection with the terms of appointment
35
(actual or proposed) of any Subcontractors and (ii) such
rights of access to any part of the Work Site as the
Owner may require from time to time in order to verify
the performance of any parts of the Works carried out by
Subcontractors;
(e) it shall promptly (i) deal with the Owner's reasonable
complaints regarding the terms of engagement or contract
of any Subcontractors, and/or (ii) take necessary steps
to ensure the proper performance of any such
Subcontractors, and/or (iii) comply with any reasonable
requests by the Owner to terminate any such engagement
or contract and appoint substitute Subcontractors; and
(f) it shall be fully, directly and solely responsible (as
between LWB, the Owner and the other Indemnified
Parties) for the acts, omissions and defaults of
Subcontractors (including, without limitation, any
persons appointed, employed or contracted by LWB with
the approval or at the request of the Owner) and for the
acts, omissions and defaults of the respective
directors, officers, employees, workmen, consultants,
agents and other representatives of LWB and its
Subcontractors.
18.1.4 If any Subcontractor nominated by LWB is not acceptable to the
Owner, or if the actual or proposed terms of appointment of any
Subcontractor are not acceptable to the Owner, LWB shall not
appoint any such Subcontractor or shall make such changes to the
terms of appointment as the Owner may reasonably require.
18.1.5 Further, if the Owner wishes any Subcontractors not nominated by
LWB to be appointed by LWB in relation to the Works, LWB shall
take all reasonable steps to secure the appointment of any such
Subcontractors.
18.2 ASSIGNMENT
18.2.1 LWB shall not be entitled to assign or transfer (and shall not
purport to assign or transfer) any of its rights, liabilities or
obligations under this Contract without the prior written
consent of the Owner.
18.2.2 The Owner may assign or transfer any of its obligations and
liabilities under this Contract to any third party, subject to
the written approval of LWB, such approval not to be
unreasonably withheld.
18.2.3 The Owner may assign any of its rights and benefits under or in
connection with this Contract, and in respect of all related
insurances claims, without the need to apply for or obtain the
approval or consent of LWB.
19. TERMINATION AND REMOVAL OF WORK
19.1 TERMINATION BY LWB FOR CAUSE
19.1.1 The Owner shall be deemed to be in default of performance of its
obligations under this Contract in the following cases:
36
(a) if, without due cause, the Owner fails to pay to LWB any
amount due and owing under the provisions of Clause 11
for a period of twenty (20) Banking Days from the due
date; or
(b) if an order or an effective resolution is passed for the
winding-up of the Owner (otherwise than for the purposes
of a reconstruction or amalgamation) or if a receiver is
appointed over the whole or any part of the undertaking
or property of the Owner or if the Owner becomes
insolvent or suspends payment generally of its debts or
ceases to carry on its business or makes any composition
with its creditors.
19.1.2 If the Owner is in default as to the payment of any amount as
provided in Clause 19.1.2, then without prejudice to any other
rights of LWB or of the Owner, the Owner shall be liable to pay
interest at the Relevant Rate on the unpaid amount from the day
from which the same became due to LWB up until the date of
actual payment thereof.
19.1.3 If any default on the part of the Owner as provided in Clause
19.1.1 continues for a further period of twenty (20) Banking
Days, LWB shall have the right at its sole discretion to cease
work until such default is cured by the Owner or, alternatively,
to terminate this Contract by giving prompt written notice to
the Owner which notice shall be effective from receipt thereof
by the Owner. In the event of such termination LWB shall be
entitled by way of exclusive compensation to payment by the
Owner of a sum equivalent to that part of the Works already
undertaken but not paid for by the Owner as at the date of the
Owner's receipt of the notice of termination.
19.2 TERMINATION BY THE OWNER FOR CONVENIENCE
19.2.1 The Owner shall have the right to terminate this Contract at any
time by giving a minimum of seven (7) Days written notice to LWB
and termination shall take effect from the expiry of such notice
period.
19.2.2 Following such termination, the Owner shall pay:
(a) the unpaid balance due to LWB for that part of the Works
already completed but not paid for;
(b) all reasonable costs directly and properly incurred by
LWB and its Subcontractors in connection with materials
ordered prior to receipt of the notice of termination,
and compensation for work properly performed on such
materials prior to such date, unless such costs are
covered by payment under (a) above;
(c) all necessary, reasonable and unavoidable cancellation
charges and administration costs directly incurred by
LWB in connection with termination of this Contract;
37
(d) LWB's and its Subcontractors other necessary, reasonable
and unavoidable expenses which are directly attributable
to an orderly close-out of this Contract; and
(e) any other amounts which LWB is required by law to pay to
its Subcontractors which are directly attributable to
this Contract, always provided that LWB has used its
best endeavours to minimise the amounts so due.
19.3 TERMINATION BY THE OWNER FOR CAUSE
19.3.1 In the event that any of the following events should occur and
LWB fails to remedy, if remedy is possible, within thirty (30)
Days of receiving a written remedy request from the Owner:
(a) LWB shall without legal justification fail to proceed
and continue with the Works with all reasonable
despatch;
(b) LWB shall (i) fail to effect or maintain the insurances
required to be effected or maintained by it under this
Contract, or (ii) any insurer shall avoid or cancel any
such insurances, or (iii) LWB shall commit any breach of
or make any misrepresentation in respect of any such
insurances the effect of which is to entitle the
relevant insurer to avoid the policy or otherwise to be
excused or released from all or any of its liability
thereunder, or (iv) any of such insurances shall cease
for whatsoever reason to be in full force and effect, or
(v) commit any other material breach of this Contract;
(c) LWB shall fail to provide any of the Performance
Guarantee, the Refund Guarantee or the Pledge or any of
the same, or the security thereby given, is or proves to
be or becomes wholly or partially invalid, ineffective
or unenforceable in the reasonable opinion of the Owner;
(d) the filing of a bankruptcy petition by LWB, its
shareholders, its representatives and/or any other
person, the making of any order or passing of an
effective resolution for the winding-up of LWB (other
than for the purposes of reconstruction or amalgamation
which has been previously approved in writing by the
Owner), the appointment of a receiver of the whole or
any substantial part of the undertaking or property of
LWB, the insolvency of or a suspension of payments by
LWB, the cessation of the carrying on of business by
LWB, or the making by LWB of any special arrangement or
composition with creditors of LWB; or
(e) any time the Owner, acting reasonably and in good faith,
considers that LWB's performance of the Works is
unsatisfactory,
the Owner may elect to terminate this Contract by giving written
notice to LWB.
38
19.3.2 The Owner may also terminate this Contract for cause if it
becomes entitled to do so under any of the other provisions of
this Contract including, without limitation, those contained in
Clauses 7 and 12.
19.3.3 If the Owner elects to terminate this Contract for cause
pursuant to the provisions of this Clause 19, then the Owner
shall give notice in writing to LWB that the Owner regards this
Contract as terminated in which case the provisions of Clauses
19.3.4 and 19.4 shall apply. Such notice shall be effective from
receipt thereof by LWB and shall operate without prejudice to
the Owner's rights under this Contract before the time of
despatch of the notice.
19.3.4 If the Owner elects to terminate this Contract for cause
pursuant to any of the provisions of Clauses 19.3.1 or 19.3.2
then:
(a) the Owner may retain and/or claim from LWB (which shall
immediately pay to the Owner) all liquidated damages
paid or payable by LWB to the Owner under Clause 12 ;
and
(b) the Owner may also claim from LWB (which shall
immediately refund to the Owner) the aggregate of (i)
all payments previously made by the Owner to LWB under
this Contract together with interest thereon at the
Relevant Rate calculated from the date upon which LWB
received each such payment to the date on which the
refund is received by the Owner and (ii) all other
amounts payable by LWB to the Owner under or in
connection with this Contract; and
(c) the Owner may also claim from LWB (which shall
immediately pay to the Owner) a termination payment
sufficient to cover all of the costs incurred and to be
incurred by the Owner in order to effect the orderly
removal of the Vessel, Hull, Equipment, Parts, OFI and
other property of the Owner from the Work Site to the
premises of another European contractor selected by the
Owner; and
(d) if the Owner's right to terminate this Contract becomes
exercisable as a result of any negligence or wilful
misconduct on the part of LWB, the Owner shall, in
addition to the payments referred to above, be entitled
to claim and recover from LWB (which shall immediately
pay to the Owner) the proved loss of the Owner resulting
from LWB's default.
19.4 GENERAL PROVISIONS RELATING TO TERMINATION OF THIS CONTRACT
19.4.1 If this Contract is terminated for whatever reason, upon the
fulfilment by the Owner of all of its obligations hereunder LWB
shall deliver to the Owner at the Owner's expense all completed
and partially completed portions of the Works as directed by
Owner, and LWB shall execute and deliver to the Owner all
documents required by Owner and take all steps necessary to vest
fully in Owner the rights and benefits of LWB under its existing
agreements with its Subcontractors, in so far as relevant for
the Works. LWB shall cause the Vessel, the Hull, the Equipment,
Parts, OFI and all other property of the Owner to be redelivered
to the Owner as soon as possible following termination and the
Owner shall promptly remove the same as soon as LWB has made it
39
available to him and LWB shall not arrest or attach or lien or
encumber or detain or delay or otherwise restrict or withhold
the Vessel, the Hull, the Equipment, Parts, OFI and other
property of the Owner from being removed from the Work Site by
the Owner.
19.4.2 Without prejudice to the Owner's other rights in respect of such
termination of the Contract, LWB shall at the Owner's request
and cost, as soon as practicable: (a) complete all works
required as a minimum to permit the Vessel and all other items
of the Owner's property to depart from the Work Site in an
orderly, safe and seaworthy condition; (b) thereafter remove its
and its Subcontractors' employees and agents, together with
their equipment, from the Vessel; and (c) render all necessary
assistance to enable the Vessel and all other items of the
Owner's property to leave the Work Site at the earliest moment
convenient to the Owner.
19.4.3 If this Contract is terminated for whatever reason, a redelivery
certificate shall be drawn up, signed by both parties, attesting
that the Vessel and all other items of the Owner's property have
been redelivered to the Owner by LWB.
19.4.4 Should there be a dispute over the amounts, if any, which are
due to LWB from the Owner at the time of redelivery, the Owner
shall be entitled to take redelivery of the Vessel by paying the
undisputed amount, if any, or by establishing a bank guarantee,
or by paying funds into an escrow account or providing other
reasonable security, for the disputed amount.
20. PATENT RIGHTS
20.1 Nothing contained this Contract shall be construed as transferring any
patent, registered design, copyright or any similar right in machinery,
equipment, outfittings and other parts covered by this Contract, and all
such rights are hereby expressly reserved to the true and lawful owners
thereof. However the Owner shall be provided for its sole use with a
royalty free licence in respect of any patents, registered designs,
copyrights or any similar rights developed through or as a direct or
indirect result of the Works.
20.2 The Owner reserves the right to seek patents on any items or idea
invented or otherwise arising as a result of the Works done under this
Contract. LWB shall promptly disclose to the Owner any potentially
patentable ideas conceived by LWB as a direct or indirect result of the
Works under this Contract.
20.3 Notwithstanding the above, all OIPR shall belong exclusively to the
Owner, for his free use and licensing world wide, with no payment to LWB
in respect thereof.
21. NOTICES
21.1 Any notice required or permitted to be given by the parties under the
terms of this Contract shall be in writing and given by registered mail
or facsimile by one party to the other at the following addresses or to
such other address or facsimile number as may from time to time be
designated by either of them in writing to the other.
40
IF TO LWB, TO:
Xxxxx Xxxxx Xxxxxxxxxxx XxxX
Xxxxxxxxxxx(xxxx)x 00, 00000
Xxxxxxxxxxx, Xxxxxxx
Telefax: x00 000 000 000
Attention: Xx Xxxxxx Xxxxx
IF TO THE OWNER, TO: Ship Holding LLC
c/o 0000 Xxxxxxxxx Xxxxxx Xxxxx
Xxxxx, Xxxxxxx 00000
Telefax: x0 000 000 0000
Attention: Xx Xxxxx Xxxxxx
President & CEO
and with a copy telefax to: x0 000 000 0000
Attention: Xx Xxxxxx Xxxxxxxx
Xx. Vice President and General Counsel
21.2 Any such notice shall be in the English language and shall be deemed to
have been received and given (a) in the case of registered mail, two (2)
Banking Days after the date of despatch and (b) in the case of
facsimile, immediately following transmission if within the normal
business hours of the addressee and in any other event on the next
working day falling thereafter.
22. GOVERNING LAW AND ARBITRATION
22.1 GOVERNING LAW
This Contract shall be governed by and construed in all respects in
accordance with English law save that the ambit and effect of (a) the
rights referred to in the definition of "GERMAN LAW ENCUMBRANCE RIGHTS"
in Clause 1.1, (b) the rights of actual possession and constructive
possession referred to in Clauses 4.6 and 4.7, and (c) the right to seek
interlocutory relief in the German courts referred to in Clause 22.2.2,
shall be governed by and construed in accordance with German law.
22.2 DISPUTE RESOLUTION AND ARBITRATION
22.2.1 In the event of a dispute under Clause 9 relating to any
technical deficiencies or non-conformities or other Defects with
an aggregate value of less than (EURO)50,000 (in words, Fifty
Thousand Euros) either LWB or the Owner may upon three (3) Days
notice to the other refer such dispute for resolution to a duly
qualified surveyor appointed or employed by the Classification
Society, who shall act as an expert (and not as an arbitrator)
and whose decision shall be final and binding on the parties.
22.2.2 In the event of any other dispute, difference or claim arising
out of, or relating to or in connection with this Contract which
is not resolved amicably, the same shall be submitted to and
41
settled by arbitration in London or at such other venue as may
hereafter be agreed by the parties in writing but the Owner
reserves the right to proceed under this Contract against LWB in
the German state courts for interlocutory relief (EINSTWEILIGER
RECHTSSCHUTZ).
22.2.3 The arbitration tribunal shall be entitled to determine in its
award which party shall bear the costs of the arbitration, or
the proportion of such expenses which each party shall bear.
22.2.4 The parties agree to utilise a fast-track arbitration procedure
to resolve any dispute, difference or claim arising out of or
relating to or in connection with this Contract. Such
arbitration shall be conducted in London in accordance with the
criteria specified in this Clause 23. The party requiring
arbitration of any dispute, difference or claim shall serve on
the other party written notice thereof, specifying the issues to
be arbitrated, appointing their arbitrator (who shall be a
lawyer with experience as a maritime arbitrator) and inviting
the other party to identify, within fourteen (14) Days, any
further issues which it wishes to be arbitrated and giving
notice of the appointment of a second arbitrator (who shall also
be a lawyer with experience as a maritime arbitrator).
22.2.5 The arbitration shall be conducted before a tribunal of three
arbitrators (the "TRIBUNAL") in accordance with the Arbitration
Act 1996 (or any statutory modification thereof) and the LMAA
Terms current at the time when the arbitration proceedings are
commenced (save insofar as those terms are inconsistent with the
express terms of this arbitration agreement in which
circumstance the latter will prevail). The two party-appointed
arbitrators shall forthwith upon the appointment of the second
arbitrator appoint a third arbitrator who shall act as chairman
of the Tribunal. It is expressly agreed that arbitration shall
proceed before a sole arbitrator (being the arbitrator first
appointed) if the party called upon to appoint the second
arbitrator fails to do so within the time period specified
herein or agrees that the first appointed arbitrator should
serve as a sole arbitrator.
22.2.6 The Tribunal shall be instructed to hear the merits of the
dispute as presented by the parties. The arbitration shall be
concluded as promptly as is reasonably practicable, and in any
event within two hundred (200) Days of the commencement of
proceedings.
22.2.7 The parties agree that the decision of the Tribunal shall be
final and binding on the parties except that either party shall
have the right of appeal to the English High Court in London in
respect of manifest errors of law. The decision of the Tribunal
shall be recorded in writing with reasons.
22.2.8 LWB shall proceed with the Works with all due diligence whilst
any matter is under dispute in accordance with the provisions of
this Clause 22.
42
23. EFFECTIVE DATE
23.1 Notwithstanding the execution of this Contract by or on behalf of both
parties, this Contract shall not be to any extent legally binding on the
Owner until the time on the date (the "EFFECTIVE DATE") when each of the
following conditions has been satisfied.
23.1.1 all of the insurances to be arranged by LWB in connection with
this Contract have been unconditionally approved in writing by
the Owner;
23.1.2 the Option Agreement shall have been signed by both parties and
all outstanding commercial issues in relation to the option
arrangements shall have been finally agreed between the parties;
and
23.1.3 the Owner shall have confirmed in writing to LWB (i) that it has
approved the form and terms of each of the Drawings, the Legal
Opinion, the Performance Guarantee, the Pledge of LWB's Account,
the Refund Guarantee and the Specification, and (ii) that it has
obtained satisfactory commitments for the pre and post
redelivery financing which the Owner requires in connection with
the completion of the Vessel.
23.2 If the Effective Date has not occurred by 15 February 2003 either party
may terminate this Contract by notice to the other whereupon this
Contract will terminate without any liability whatsoever on the part of
either party save for any accrued rights of the Owner, and any accrued
obligations or liabilities of LWB, under or in connection with the
Contract.
24. GENERAL PROVISIONS
24.1 This Contract does not constitute either party the agent, partner or
legal representative of the other party for any purposes whatsoever, and
neither party shall have any express or implied right or authority to
assume or create any obligation or responsibility on behalf of or in the
name of the other party.
24.2 This Contract may not be amended, modified or changed except by an
instrument in writing executed by the duly authorised representatives of
each of the parties hereto.
24.3 Where any matter requires an instruction from the Owner, a waiver by the
Owner or the approval, authority or consent of the Owner any such
instruction, waiver, approval, authority or consent shall not be deemed
to have been given or to any extent effective unless it is given in
writing by a duly authorised representative of the Owner. If any matter
is required to be acceptable or satisfactory to the Owner, the Owner
shall not be deemed to have accepted, or to be satisfied with such
matter, unless its acceptance or satisfaction is communicated in writing
to LWB by a duly authorised representative of the Owner.
24.4 Except as otherwise expressly provided herein, nothing in this Contract
shall convey or confer any rights upon any person or entity which is not
a party or permitted assignee of a party to this Contract.
24.5 This Contract may be executed in two counterparts, each of which shall
be deemed an original and both counterparts shall together constitute a
single instrument.
43
24.6 Each of the Owner and LWB acknowledges and agrees that the design and
usage of certain public areas may differ depending upon whether the
Owner selects the US flag or another flag under Clause 3.3.8. For
example, the casino area will be put to another use if the Vessel is
flagged into the US. In addition, the design and usagee of the extra
areas created by the "stretch" have not been finalised at the time of
signing. Subject to the Owner refining and finalising alternative plans
and designs for these areas, and subject to the specification of these
areas being consistent with other public areas on the Vessel, LWB shall
not be entitled to increase the Contract Price (but shall decrease it if
any savings can be achieved) as a result of changed designs and usages
for these areas. If this subclause should conflict with any other
provisions of this Contract or the Specification, the provisions of this
subclause shall prevail.
IN WITNESS WHEREOF the duly authorised representatives of the parties have
executed this Contract as of February 2003 :
SHIP HOLDING LLC
/s/
-------------------------------------
XXXXX XXXXXX
XXXXX XXXXX BREMERHAVEN GMBH
/s/
-------------------------------------
XXXXXX XXXXX
44
THIS AGREEMENT is dated as of February 5, 2003 and made between:
(1) Norwegian Cruise Line Limited ("NCLL");
(2) Ship Holding LLC ("SH"); and
(3) Xxxxx Xxxxx Bremerhaven ("LWB").
INTRODUCTION:
(A) NCLL and LWB are parties to a shipbuilding contract dated 28
December 2000 (as amended or supplemented at any time by
agreement of the parties thereto, the "ORIGINAL AGREEMENT").
(B) As a pre-condition to the proposed amendment and restatement
of the Original Agreement, the parties have agreed to novate
the Original Agreement to SH.
THE PARTIES AGREE as follows:
1. NOVATION
With effect from the moment when this Agreement has been signed by
NCLL, SH and LWB:
(i) SH shall perform NCLL's obligations under the Original
Agreement and shall be bound by the terms of the Original
Agreement in every way as if SH had at all times been a party
to the Original Agreement in place of NCLL;
(ii) LWB releases and discharges NCLL from further performance of
the Original Agreement and all liabilities, claims and demands
whatsoever and howsoever arising from or in connection with
the Original Agreement, whether in contract, tort or
otherwise, and LWB accepts the liability of SH under the
Original Agreement in place of the liability of NCLL; and
(iii) LWB shall perform its obligations under the Original Agreement
and shall be bound by the terms of the Original Agreement in
every way as if SH had at all times been a party to the
Original Agreement in place of NCLL.
2. GOVERNING LAW AND JURISDICTION
2.1 This Agreement and all matters arising from or connected with it are
governed by English law.
2.2 The English courts have exclusive jurisdiction to settle any dispute (a
"DISPUTE") arising from or connected with this Agreement.
2.3 This Clause 2 is for the benefit of NCLL and SH only. As a result it
shall not prevent NCLL and/or SH from taking proceedings relating to a
Dispute in any other courts with jurisdiction.
45
EXECUTED by the duly authorised representatives of the parties
Signed by )
for and on behalf of )
NORWEGIAN CRUISE LINE LIMITED )
/S/ Signature
-----------------------------------------
Signed by )
for and on behalf of )
SHIP HOLDING LLC )
/S/ Signature
-----------------------------------------
Signed by )
for and on behalf of )
XXXXX XXXXX BREMERHAVEN GMBH )
/S/ Signature
-----------------------------------------
46
ADDENDUM NO. 1 TO THE CONTRACT DATED AS OF 5 FEBRUARY 2003 BETWEEN SHIP HOLDING
LLC (OWNER) AND XXXXX XXXXX BREMERHAVEN GMBH (LWB)
1. The Owner and LWB have made the following amendments to the Contract:
(i) in Clause 1.1, the following new definition has been inserted
"POST-REDELIVERY PERFORMANCE GUARANTEE" means an irrevocable
performance guarantee to secure LWB's obligations and
liabilities under Clause 10 of this Contract which is to be
issued by LWB's Bank (or a first class insurance company
acceptable to the Owner) in the amount of [***] [Confidential
Treatment] and otherwise in a form hereafter approved by the
Owner;
(ii) in Clause 1.1, a new sub-paragraph has been inserted in the
definition "REDELIVERY DOCUMENTS" as follows "and (j) the
Post-Redelivery Performance Guarantee";
(iii) in Clause 11.6, the words "Seventh Instalment" have been
replaced by "Sixth Instalment";
(iv) in Clause 12.2.8, the words "Ninth Instalment" have been
replaced by "Sixth Instalment";
(v) in Clause 23.1.3, the words "the Post-Redelivery Performance
Guarantee," have been inserted after "Performance Guarantee,";
(vi) in Cause 23.2, the reference to "15 February 2003" has been
replaced by a reference to "17 March 2003"; and
(vii) every reference to "Yard" in the Contract has been replaced by
a reference to "LWB".
2. The Owner and LWB have agreed that the assignments referred to below
will be made at such time or times hereafter as the parties may agree,
and that they each will take all such steps and sign all such documents
as may reasonably be required to effect and perfect the assignments:
(i) LWB will assign to its financiers all of LWB's rights and
interests under the Contract;
(ii) the Owner will assign to its financiers all of the Owner's
rights and interests under the Contract, the Performance
Guarantee, the Post-Redelivery Performance Guarantee, the
Refund Guarantee, and (if so required) the Pledge; and
47
(iii) each of the Owner and LWB will assign to the Owner's
financiers all of the respective rights and interests of the
Owner and LWB under the insurances arranged (and to be
arranged) by LWB under Clause 15 of the Contract.
3. All other terms and conditions of the Contract shall remain unamended.
4. Words and expressions defined in the Contract shall have the same
respective meanings in this Addendum.
5. This Addendum shall be effective immediately.
Signed on 7 March 2003 by: [illegible signature]
for and on behalf of SHIP HOLDING LLC Senior Vice President
Signal on 7th March 2003 by:
for and on behalf of XXXXX XXXXX BREMERHAVEN GMBH
[illegible signature]
(END OF ADDENDUM NO. 1)
48
ADDENDUM NO. 2 TO THE CONTRACT DATED AS OF 5 FEBRUARY 2003 BETWEEN SHIP HOLDING
LLC (OWNER) AND XXXXX XXXXX BREMERHAVEN GMBH (LWB)
1. In view of the replacement in Clause 23.2 of the date 15 February 2003
by the date 17 March 2003, the Owner and LWB have made the following
amendments to the Contract:
(i) Clause 12.1.3 shall be replaced by the following:
"If the Delivery of the Vessel is delayed after the Date for
Completion (as the same may be reset pursuant to Clause 7.3),
then, in such event, beginning at 12:00 midnight on the Day
falling [***] [Confidential Treatment] Days after the Date for
Completion, the Contract Price shall be reduced by deducting
therefrom: [***] [Confidential Treatment] per Day for each
further Day of delay between 12:00 midnight on the [***]
[Confidential Treatment] Day and 12:00 midnight on the [***]
[Confidential Treatment] Day after the Date for Completion;
and [***] [Confidential Treatment] for each further Day of
delay between 12:00 midnight on the [***] [Confidential
Treatment] Day and 12:00 midnight on the [***] [Confidential
Treatment] Day after the Date for Completion," and
(ii) in Clause 11.5 there has been added the following sentence:
"If the delivery of the Vessel is delayed after the Date for
Completion (as the same may be reset pursuant to Clause 7.3),
then, in such event, the Sixth Instalment of the Contract
Price shall be effected as follows: [***] [Confidential
Treatment].
2. All other terms and conditions of the Contract shall remain unamended.
3. Words and expressions defined in the Contract shall have the same
respective meanings in this Addendum.
4. This Addendum shall be effective immediately.
Signed on 14 March 2003 by: [illegible signature]
for and on behalf of SHIP HOLDING LLC
Signed on March 2003 by: [illegible signature]
for and on behalf of XXXXX XXXXX BREMERHAVEN GMBH
(END OF ADDENDUM NO. 2)
49
Addendum No. 3 to the Contract dated as of 5 February 2003 (as amended and
supplemented from time to time, the "Contract") between Ship Holding LLC
("Owner") and Xxxxx Xxxxx Bremerhaven GmbH ("LWB")
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THE PARTIES HEREBY AGREE as follows:
1. The definition of "Contract Price" has been amended to read:
"HAS THE MEANING GIVEN IN CLAUSE 11.1 SAVE THAT, PURSUANT TO ADDENDUM
NO. 3, THE AMOUNT OF THE UNPAID BALANCE OF THE CONTRACT PRICE AS OF THE
ADDENDUM NO. 5 EFFECTIVE DATE HAS BEEN REDUCED TO Euro 165,00,000".
2. The definition of "DATE FOR COMPLETION", and the related data reference
in Clause 7.1.2, have been amended to read "6 June 2005".
3. Paragraph (d) in the definition of "DEFECTS" has been redesignated
"(e)" and a new paragraph (d) has been inserted in the following terms:
"TO THE EXTENT NOT ALREADY COVERED BY (A) OR (B) OR (C), ANY PATENT OR
PATENT DEFECT, DEFICIENCY BREAKDOWN, INCOMPLETENESS, INHERENT VICE,
OMISSION, FAILURE OR ANY OTHER FAULT WHATSOEVER IN THE VESSEL OR IN ANY
EQUIPMENT WHICH DIRECTLY OR INDIRECTLY ARISES OUT OF OR RESULTS FROM
THE CASUALTY SUFFERED BY THE VESSEL WHEN SHE LISTED HEAVILY AND
GROUNDED ON BREMERHAVEN ON ABOUT 13 JANUARY 2004 (THE "CASUALTY").
4. The following new definitions have been inserted in Clause 1.1:
"THE ADDENDUM NO. 5 EFFECTIVE DATE" MEANS THE DATE ON WHICH EACH OF THE
CONDITIONS SPECIFIED IN PARAGRAPH 18 OF ADDENDUM NO. 3 STILL HAVE BEEN
SATISFIED OR EXPRESSLY WAIVED IN WRITING BY THE OWNER AND LWB;
"THE CASUALLY WORKS" MEANS THE SALVAGE, PRESERVATION, REPAIR,
RECONDITIONING, REINSTATEMENT AND RENEWAL WORKS CARRIED OUT AND TO BE
CARRIED OUT BY OR ON BEHALF OF LWB PURSUANT TO THE CONTRACT IN ORDER TO
PUT THE VESSEL BACK INTO HER PRE-CASUALTY CONDITION;
"THE ER DATE" MEANS THE DATE FROM TIME TO TIME DETERMINED BY THE OWNER,
ACTING REASONABLY AND IN GOOD FAITH AND TAKING INTO ACCOUNT LWB'S
REQUIREMENT TO HAVE SUFFICIENT FUNDS AVAILABLE TO PROCEED WITH THE
WORKS, FOR THE PURPOSES OF FIXING THE INSTALMENT PAYMENT DATES REFERRED
TO IN SUB-PARAGRAPHS 6(B) AND (C) OF ADDENDUM NO. 3, AS THE DATE ON
WHICH THE VESSEL IS EXPECTED TO BE READY FOR REDELIVERY IN ACCORDANCE
WITH THIS CONTRACT.
"THE REMAINING CONTRACT PRICE", EXCLUDING PAYMENTS FROM UNDERWRITERS
FOR CASUALTY WORKS, MEANS THE SUM OF EURO 165,000,000, BEING THE
AGREED UNPAID BALANCE OF THE CONTRACT PRICE AS AT THE ADDENDUM NO. 3
EFFECTIVE DATE AND THIS SUM SHALL BE SUBJECT TO
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ADJUSTMENT ONLY IN STRICT ACCORDANCE WITH, AND SUBJECT TO THE EXPRESS
CONDITIONS OF THIS CONTRACT; AND "THE SHAREHOLDER" MEANS LPS
DIENSTLEISTUNGS AND VERWATUNGSGESELLSCHAFT BREMERHAEN GMBH OF
BRICKENSTRA(BETA)E 25, 27568 BREMERHAVEN, REPRESENTED BY THEIR MANAGING
DIRECTORS XX. XXXXXX XXXXX AND XX. XXXXXXX PALLENBIN, BEING THE
REGISTERED OWNER OF 94.5% OF ALL SHARES IN THE CAPITAL OF LWB, AND W.I.
XXXXXX XXXXX VERWALTUNGS AND BETALLGUNGS GMBH OF NARBANSWEG 19, 27007
XXXXXX, REPRESENTED BY XXXXXX XXXXX AS A GENERAL MANAGER, BEING THE
REGISTERED OWNER OF THE BALANCE OF 5.5% OF THE SHARES IN THE CAPITAL OF
LWB.
5. The final paragraph of Clause 11.5 has been amended to read as follows:
"THE REMAINING CONTRACT PRICE SHALL BE PAID IN THE FOLLOWING
INSTALLMENTS: (A) A SIXTH INSTALLMENT IN THE SUM OF [***] [CONFIDENTIAL
TREATMENT] SHALL BE PAID WITHIN [***] [CONFIDENTIAL TREATMENT]; (B) A
SEVENTH INSTALMENT IN THE SUM OF [***] [CONFIDENTIAL TREATMENT] SHALL
BE PAID ON THE DATE [***] [CONFIDENTIAL TREATMENT]; (C) AN EIGHTH
INSTALMENT IN THE SUM OF [***] [CONFIDENTIAL TREATMENT] SHALL BE PAID
ON THE DATE [***] [CONFIDENTIAL TREATMENT]; (D) A NINTH INSTALMENT IN
THE SUM OF [***] [CONFIDENTIAL TREATMENT] SHALL BE PAID ON THE DATE
[***] [CONFIDENTIAL TREATMENT]; (E) A TENTH INSTALMENT IN THE SUM OF
[***] [CONFIDENTIAL TREATMENT] SHALL BE PAID ON THE DATE [***]
[CONFIDENTIAL TREATMENT]; AND (F) AN ELEVENTH INSTALMENT BEING [***]
[CONFIDENTIAL TREATMENT], SHALL BE PAID AGAINST ACTUAL REDELIVERY OF
THE VESSEL AND HER ACCEPTANCE BY THE OWNER IN ACCORDANCE WITH THIS
CONTRACT. THE NINTH AND TENTH INSTALMENTS SHALL BE REDUCED BY THE
EQUIVALENT IN EURO OF [***] [CONFIDENTIAL TREATMENT] IF LWE SHALL NOT
HAVE INCREASED THE VALUE OF THE CONSTRUCTION RISKS POLICY TO [***]
[CONFIDENTIAL TREATMENT] BY 31 DECEMBER 2004, IN WHICH CASE THE
ELEVENTH INSTALMENT SHALL BE INCREASED BY THE EQUIVALENT IN EURO OF
[***] [CONFIDENTIAL TREATMENT]."
6. Clause 11.6 has been amended as follows: the reference to the "SIXTH
INSTALMENT" has been amended to "ELEVENTH INSTALMENT"; and the
following new sentence has been inserted at the end of Clause 11.6:
"IN ADDITION TO ANY FUTURE PERMITTED REDUCTIONS FROM THE CONTRACT PRICE
PROVIDED FOR ELSEWHERE IN THIS CONTRACT, THE REMAINING CONTRACT PRICE
MAY BE REDUCED BY THE OWNER IN ACCORDANCE WITH AND AS PROVIDED IN THE
AGREEMENT REFERRED TO IN SUBPARAGRAPH 18(F) OF ADDENDUM NO. 3."
The final two sentences in Clause 11.7 have been amended to read as
follows:
"THE OWNER SHALL DESIGNATE REPRESENTATIVES TO MONITOR AND CONTROL LWB'S
ACCOUNT AND PAYMENTS MADE AND TO BE MADE BY LWB IN RELATION TO CASUALTY
WORKS, LWB SHALL GIVE THE OWNER AND ITS REPRESENTATIVES FULL
INFORMATION ABOUT LWB'S ACCOUNT AND ANY OTHER ACCOUNT FROM TIME TO TIME
ESTABLISHED BY OR ON BEHALF OF LWB OR ITS SACHWALTER MR. VAN BATTERY IN
CONNECTION WITH THIS CONTRACT AS WELL AS TO ALL INVOICES AND OTHER
DOCUMENTATION RELATING TO ANY PAYMENTS FROM SUCH ACCOUNTS. ALL INVOICES
EQUIVALENT TO OR EXCEEDING THE AMOUNT OF EURO 200,000 MUST BE
PRE-APPROVED BY ONE OF THE OWNER'S DESIGNATED REPRESENTATIVES BEFORE
PAYMENT, SUCH APPROVAL WILL NOT BE UNREASONABLY WITHHELD OR DELAYED AND
THE OWNER WILL ENSURE THAT ITS DESIGNATED REPRESENTATIVES
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RESPOND TO REQUESTS FOR APPROVAL AS SOON AS REASONABLY PRACTICABLE AND,
IN ANY EVENT, WITHIN FIVE BANKING DAYS OF EACH REQUEST FOR APPROVAL."
7. LWB agrees that (i) the weekly reports referred to in Clause 5.1.4 of
the Contract shall cover the status of the Works and Casualty works,
actual expenditures in respect of the Works and Casualty works in the
preceding week, and planned expenditures for the Works and Casualty
works during the next month; and (ii) if so requested by the Owner, LWB
shall meet with the Owner's designated representatives at least once a
week to discuss the matters referred to above as well as other matters
covered by Clause 5.1.4.
8. In Clause 12.3.8 the reference to the "SIXTH INSTALMENT" has been
amended to "ELEVENTH INSTALMENT".
9. The parties:
(a) have agreed to work closely together in good faith and use
their best efforts in order to agree all such amended or
supplemental approval, inspection, testing and other
procedures as the Owner may reasonably require in relation to
(i) the planning, approval, execution and testing of the
renewal and repair works required to reinstate the Vessel to
her pre-Casualty condition, and (ii) the Tests and Sea Trials
programmes required to ensure that all Defects, and in
particular (but without limitation) those arising out of or
resulting from the Casualty, are identified and corrected or
eradicated before the Vessel is tendered for redelivery to the
Owner, and LWB agree that these programmes will include tests
of the weldings relating to the Vessel's new mid-section;
(b) have agreed that any disputes between the Owner and LWB in
relation to the approval, inspection, testing and other
procedures referred to in subparagraph 9(a) above shall be
decided by either the Classification Bodies in accordance with
Clause 3.3.3 of the Contract or (as appropriate) by the
Regulatory Bodies according to Clause 3.3.5 of the Contract;
and
(c) have agreed to work closely in good faith and use their best
efforts in order to obtain extended warranties wherever
possible, including, without limitation, in connection with
the pods (in respect of which the parties will endeavour to
obtain a two year warranty extension giving a total warranty
period of three years from the date of the Vessel's redelivery
to the Owner) and in connection with the electrical systems
(in respect of which the parties will endeavour to obtain a
one year warranty extension giving a total warranty period of
two years from the date of the Vessel's redelivery to the
Owner), always provided that this will not increase the costs
or the costs are borne by underwriters.
10. LWS (a) have irrevocably and unconditionally waived all rights
whatsoever (i) to make any claims whatsoever against the Owner with
respect to all Works before the Addendum No. 2 Effective Date and with
respect to all other claims whatsoever against the Owner made or
arising before the Addendum No. 3 Effective Date, (ii) to claim any
extension of the revised Date for Completion referred to in paragraph 2
above or any other relief on
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account of any cause of delay (including any cause of delay referable
directly or indirectly to Subcontractors) resulting from the Casualty
or any other cause of delay in existence as of the Addendum No. 3
Effective Date or any other cause of delay which was known to LWB (or
which should have been foreseen or anticipated by LWB) as of the
Addendum No. 3 Effective Date, and (iii) to make any claim against the
Owner, whether for interest or any other relief, or to exercise any
termination or other rights under the Contract including any in respect
of non payment of LWB's invoice dated 6 January; and (b) hereby cancel
their invoice dated 6 January 2004.
11. Without prejudice to the Owner's rights and remedies in respect of any
non-Permissible Delay in the redelivery of the Vessel beyond the
revised Date for Completion referred to in paragraph 2 above, LWB and
the Shareholder, on a joint and several basis, have agreed to pay the
Owner the sum of EURO 30,000,000 in full and final compensation (the
"Casualty Compensation") for the 120 Days' delay in redelivery from the
original Date for Completion and any other damage arising out of the
Casualty. The Casualty Compensation will be paid by LWB or the
Shareholder pursuant to this Addendum and the agreement referred to in
subparagraph 1800 below, For the avoidance of doubt, the provisions of
the Contract (including, without limitation, Clause 12.1) shall apply
in full in respect of any delay in redelivery beyond the new Data for
Completion defined in paragraph 2 above and payments from time to time
made to the Owner in respect of the Casualty Compensation shall not in
any manner or to any extent reduce the amount of any reduction in the
Contract Price to be made or liquidated damages to be paid by reason of
any delay in redelivery beyond the new Date for Compensation.
12. The Owner has irrevocably waived all of its rights whatsoever to claim
compensation from LWB (apart from the Casualty Compensation) or to
terminate the Contract on account of the Casualty provided always that
the Owner's agreement is without prejudice to the Owner's ability to
exercise any rights that may arise in the future.
13. LWB acknowledge and agree that the Vessel is not within the scope of
OFI.
14. The Parties have acknowledged and agreed that:
(a) the Remaining Contract Price is fixed and is subject to
adjustment only in strict accordance with, and subject to the
express conditions of, the Contract as amended by this
Addendum No. 3;
(b) the Remaining Contract Price includes, without limitation, (i)
all of the matters referred to in Clause 11.3 of the Contract;
(ii) all post-Casualty start-up and re-start costs of LWB and
the Subcontractors other than as may be referred to in
subparagraph 15(d); (iii) all of the works specified in the
list, initialled by the parties for purposes of
identification, the parties hereby agreeing that the list is a
full and final categorisation of the works specified therein
which will not be subject to further recategorisation and nor
will the Owner be entitled to any credits if it requires that
any of such works shall not be carried out by LWB, and an
allowance of EURO 2,000,000 in respect of new modifications
(or changes to existing modifications) to be designated by the
Owner and if any part of this
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allowance of EURO 2,000,000 is not utilised by the Owner, the
final Instalment of the Remaining Contract Price shall be
reduced by an equivalent amount; (iv) all cost increases
claimed or claimable by LWB in relation to works commenced or
carried out before the Addendum No. 3 Effective Date by LWB or
any Subcontractors, whether or not such works are the subject
of the agreements or modifications ("AOM's") made between the
parties and regardless of the state of completion of such
works; (v) all cost increases which LWB are entitled to claim
pursuant to AOM's made between the parties before the Addendum
No. 3 Effective Date, regardless of the state of completion of
the underlying works and whether or not any of the works
covered by such AOM's remain to be done after that date; (vi)
all past and future berthing and storage charges (up to the
date of redelivery of the Vessel) in relation to SS Norway;
(vii) all past and future berthing and storage charges (up to
the date of redelivery of the Vessel) in relation to the
Vessel, the Parts related to the Vessel and Equipment; (viii)
the full cost of all warranty claim works to be performed by
(or on behalf of) LWB in relation to m.v. Norwegian Sun and
m.v. Pride of Aloha (ex-Norwegian Sky); and (ix) all premia
payable for the maintenance of the Refund Guarantee, the
Performance Guarantee and the construction risks policy; and
(c) save for the operation of Clause 6 in respect of any AOM's
made between the parties after the Addendum No. 3 Effective
Date in respect of matters arising after the Addendum No. 3
Effective Date, LWB shall bear and pay the full amount by
which its actual costs and expenditures in connection with the
Contract (whether in relation to the remaining Works or the
Casualty works or otherwise) exceeds its budgeted costs and
expenditures, and (save only as specified in subparagraph
15(d) below) irrespective of any cost increases required or
imposed by any Subcontractors.
15. The parties have agreed that:
(a) they will work together in good faith, on an open-book basis,
with a view to minimizing the prices to be charged by
Subcontractors in relation to the remaining Works and the
Casualty works;
(b) LWB has provided the Owner with a list of key Subcontractors
who are trying to increase their prices ("KSC's") and a list
of the next 20 to 25 Subcontractors who are proceeding on the
basis of their original pricing, and agrees to allow the Owner
to negotiate direct with such Subcontractors in relation to
charges as well as warranty and other post-redelivery support
issues;
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(c) LWB will accede to all reasonable requests by the Owner to
replace Subcontractors provided that LWB shall not be obliged
to comply with any such request if such compliance would
result in any increase in LWB's costs or any delay in the
redelivery of the Vessel; and
(d) if, after compliance by LWB with its obligations under (a),
(b) and (c) above, and after the Owner has had a reasonable
and timely opportunity (not causing any delay in the
redelivery of the Vessel) to negotiate direct with the KSC's,
the principal amount actually charged to LWB by any of the
KSC's exceeds 100% of the charges contractually agreed between
LWB and such KSC's before the Casualty then the amount of the
next Instalment falling due after such excess charges have
been paid will be increased by the sum total of such excess
charges.
16.
(a) The parties have agreed that [***] [Confidential Treatment] of
all cost savings, profits or other financial benefits
whatsoever directly or indirectly achieved by LWB or the Owner
(irrespective of the form they take) under or in connection
with the Contract shall be credited to the Owner and that any
such credits shall be applied by the Owner to reduce the
Casualty Compensation provided that this paragraph does not
affect and will not affect the operation of Clause 6 of the
Contract so that [***] [Confidential Treatment] of any
decrease in the Contract Price realized by the operation of
Clause 6 shall be deducted from the instalment payable by the
Owner PRIOR to the period in which the related work was
intended to be carried out.
(b) The parties have also agreed that the full amount of all
insurance cost savings to be credited to the Owner and LWB
under Clause 5 of the "Vereinberung" settlement terms (up to a
limit of [***] [Confidential Treatment] shall be paid by LWB
to the Owner and applied by the Owner to reduce the Casualty
Compensation. If LWB have increased the value of the
construction risks policy to [***] [Confidential Treatment] by
31 December 2004, these savings will be paid by LWB to the
Owner immediately in reduction of the Casualty Compensation.
If LWB have not increased the value of the construction risks
policy to [***] [Confidential Treatment] by 31 December 2004,
the savings referred to above shall be paid to the Owner at
redelivery of the Vessel in reduction of the Casualty
Compensation. Any insurance cost savings recalled beyond [***]
[Confidential Treatment] will be shared 50:50 between LWE and
the Owner in reduction of the Casualty Compensation.
(c) LWB and the Shareholder have agreed to work on an open-book
basis with the Owner and the Owner's designated accountants at
PricewaterhouseCoopers GmbH, Hamburg ("PWC") before and after
redelivery of the Vessel until the Casualty Compensation has
been fully paid. Each party will bear and pay the costs of
their own designated accountants.
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(d) LWB and the Shareholder have agreed that they will promptly
provide the Owner and PWC with all such information,
documentation and assistance as may be required by the Owner
or PWC in connection with paragraphs 16 and 17 of this
Addendum and the agreement (the "KfW Agreement") referred to
in subparagraph 18(f) below and, with effect from the Vessel's
redelivery and until such time as the Owner has received the
full amount of the Casualty Compensation, LWB and the
Shareholder have also agreed to promptly provide the `Owner'
and PWC with: (i) their annual budget, annual report, (long
form) audit report (including any prepared for subsidiary
companies) and investment plan; and (ii) semi-annual
management accounts including a balance sheet, cash flow
statement, liquidity plan going forward and any proposed
changes to the investment plan.
(e) LWB and the Shareholder have agreed and will procure that: (i)
PWC shall have full and free access to the auditors (the
"Auditors") of LWB and the Shareholder as well as to all
documentation and information from time to time held by the
Auditors relating to the matters covered by paragraphs 16 and
17 of this Addendum and the KfW Agreement; (ii) PWC and the
Auditors shall have a free right to discuss the documentation
and information referred to at (d)(i) above and all related
maters; and (iii) for all purposes relating to paragraphs 16
and 17 of this Addendum and the KfW Agreement, the Auditors
are released from their duties of confidentiality to the LWB
and the Shareholder.
17.
(a) LWB and the Shareholder have agreed and will procure that PWC
shall be permitted:
(i) to monitor compliance by LWB and the Shareholder with
certain restrictions (described below) with which
they agree to comply pending full payment to the
Owner of the Casualty Compensation;
(ii) to determine the amount of any savings, profits and
other financial benefits achieved by LWB in the
course of the repair and construction completion
works; and
(iii) to determine the free cash position from time to time
of LWB and the Shareholder.
(b) LWB and the Shareholder agree and will procure that until such
time as the Owner has received the full amount of the Casualty
Compensation, the following restrictions and obligations shall
apply:
(i) neither LWB nor the Shareholder shall declare, make
or pay any dividend or other distribution (in cash or
in kind) in respect of its share capital or any other
payment to their respective shareholders or any
subsidiary, affiliated, connected or otherwise
related persons or entities whatsoever ("Related
Persons");
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(ii) neither LWB nor the Shareholder shall make any loan,
advance or provide credit to their respective
shareholders or any Related Persons, nor will either
of them enter into any other transactions or
arrangements which might reduce or delay any Casualty
Compensation payments to the Owner;
(iii) with the exception of salary and bonus payments to
the management of LWB (to be defined by PWC in
accordance with the normal past practices of LWB) and
cost of living increases on an annual basis (also to
be defined by PWC in accordance with the normal past
practices of LWB), neither LWB nor the Shareholder
shall make any payments or other distributions (in
cash or kind) to their management or any Related
Persons;
(iv) with the exception of costs expended by LWB in the
ordinary course of its business which do not exceed
the minimum necessary investment and maintenance
expenditures required to maintain the current
technical standards of LWB in accordance with an
investment plan (the terms of which are to be
approved in advance by the Owner and KfW), neither
LWB nor the Shareholder shall make any acquisitions
or investments of any nature whatsoever;
(v) with the exception of scheduled payments of interest
on principal (not on interest) at the ordinary rate
(i.e. not at a default rate or any other increased
rate) under the loan facility, hereinafter referred
to as the "LPS Loan", of up to [***] [Confidential
Treatment] granted by an agreement dated 10 March
2003, which payments may recommence only after the
end of LWB's insolvency, neither LWB nor the
Shareholder or any Related Persons shall make any
repayments or prepayments of principal, payments of
interest or of any other costs, fees, expenses or
liabilities arising from or representing indebtedness
of LWB or the Shareholder or any Related Persons;
(vi) neither LWB nor the Shareholder shall purchase,
cancel or redeem any of their respective share
capital or issue any further shares or permit any
disposals or transfers of any of their respective
shares;
(vii) LWB and the Shareholder will notify the Owner
immediately of any breach or other failure to comply
with any of the above restrictions; and
(viii) On each anniversary of the Addendum No. 3 Effective
Date, EITHER the management of LWB and the
Shareholder will certify in writing to the Owner that
throughout the previous twelve months they have
complied in full with all of their obligations under
this Addendum and that such full compliance is
continuing as of the date of the certificate OR they
will notify the Owner in writing of any past or
present non-compliance with such obligations.
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(c) The remaining Casualty Compensation which has not been paid
out of the Pride of America Project pursuant to this Addendum
shall be paid as quickly as possible after the end of LWB's
insolvency, and in any event by no later than the sixth
anniversary of the date of the Vessel's redelivery to the
Owner, from the free cash of LWB and (as and when available)
the free cash of the Shareholder pursuant to this Addendum and
the agreement referred to in subparagraph 18(f) below. Except
as provided in this Addendum and in the agreement referred to
in subparagraph 18(f) below, and without in any manner or to
any extent whatsoever relieving LWB or the Shareholder from
any of their obligations or restrictions under this Addendum
or under such Agreement, during the period commencing on the
Addendum No. 3 Effective Date and ending on the 6th
anniversary of the Vessel's redelivery under the Contract
payment of the Casualty Compensation shall be fully
subordinated to the other obligations of LWB and the
Shareholder RANGRUCKIRIN. The free cash position of LWB and
the Shareholder will be determined within 5 business days
after the end of each financial half of each of LWB and the
Shareholder, in either case counting from the end of the first
financial quarter falling after the date of the Vessel's
redelivery to the Owner, and at such other times as the Owner
may require, on the following basis:
(i) gross cash, which will be deemed to include all
income, interest and other cash items (including any
of a non-recurring or extraordinary nature) which in
PWC's opinion fail to be credited to the profit and
loss account and any asset accounts of LWB or the
Shareholder; loss
(ii) in the case of LWB, costs expended by LWB in the
ordinary course of its business provided they do not
exceed the minimum necessary investment and
maintenance expenditures required to maintain the
current technical standards of LWB in accordance with
an investment plan (the terms of which are to be
approved by the Owner and KfW) and also excluding (i)
any costs which are not of a routine operational
nature incurred on a regular basis, and (ii)
depreciation, non-cash charges, reserves,
amortization and similar bookkeeping entries;
(iii) in the case of LWB and the Shareholder, the scheduled
payment of ordinary interest under the LPS loan as
described above; and
(iv) in the case of LWB, a minimum cash reserve in an
amount approved from time to time by the Owner and
KfW.
(d) If LWB or the Shareholder or the Sachwalter or LWB's
Creditors' Committee, acting in good faith, should disagree
with any of PWC's determinations in relation to the matters
set out above, the parties will work together in good faith
and use their best efforts to resolve the disagreement through
discussions between senior management of the Owner together
with their designated PWC Partners, and LWB plus the
Shareholder together with their designated
PricewaterhouseCoopers GmbH partner.
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18. This Addendum No. 3 shall not be to any extent legally binding on the
Owner or LWB until all of the following conditions have been satisfied:
(a) LWB's financiers and LWB's Creditors' Committee shall have
given their written approval of this Addendum in terms
acceptable to LWB and the Owner;
(b) the Owner's financiers shall have given their written approval
of this Addendum and of all necessary changes to the Owner's
finance agreement, in terms acceptable to the Owner;
(c) the issuers of the Refund Guarantee shall have given written
confirmation, in terms acceptable to the Owner, that the
Refund Guarantee will remain in full force and effect;
(d) the contribution risks insurers shall have signed the
"Vareinbarung" settlement terms acceptable to LWB, the Owner
and the Owner's financiers, for payment of the sums required
to fund all necessary Casualty works, and such terms shall
have come into full force and effect;
(e) LWB and the Owner shall have agreed in writing the detailed
steps for the Casualty works;
(f) the Owner, LWB, the Shareholder and the Shareholder's
financiers shall have entered into a legally binding
agreement, in terms acceptable to the Owner, regarding payment
to the Owner of the Casualty Compensation and all related
security and subordination arrangements which shall include
provision for all indebtedness of LWB and the Shareholder
(save for scheduled interest payments under the LPS Loan) to
be fully subordinated to Owner's rights to claim and receive
the Casualty Compensation, and for the Owner's Casualty
Compensation rights to be secured through pledges (or other
legally effective arrangements) over the shares in the capital
of LWB and the Shareholder; and
(g) the Sachwalter shall have opened the account referred to in
paragraph 24 below and pledged such account to the Owner with
the consent of LWB's Bank, and the pledge shall have been
signed by or on behalf of the Owner and acknowledged by LWB's
Bank.
19. LWB acknowledge and agree that they shall not be entitled to use any
part of the Remaining Contract Price Instalments for any purpose other
than for the Pride of America Project including payments to be effected
under the insolvency plan. In particular, but without limitation, no
part of the Remaining Contract Price shall be used by LWB (directly or
indirectly) in connection with or for the purposes of any past, present
or future Casualty works.
20.
(a) Subject to satisfaction of the conditions specified in
paragraph 18, the Owner authorizes and instructs LWB pursuant
to Clause 15.6.1 of the Contract to carry
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out the Casualty works on the strict understanding that all
costs in relation to such works shall be for the account of
LWB even if the aggregate total of such costs exceeds the
aggregate total of the sums recoveries made from the
construction risks underwriters.
(b) LWB warrant that the sums to be paid by underwriters pursuant
to the insurance settlement to be made between, amongst
others, the underwriters LWB and the Owner will be sufficient
to fund due completion of all Casualty works.
(c) LWB will endeavour to dispose of all scrap and (with the prior
written approval of the Owner) to sell all other materials
relating to the Vessel that become surplus to the Owner's
needs as a result of the repair of the Vessel by LWB, and all
proceeds of any such disposals or sales will be shared 50:50
between LWB and the Owner in reduction of the Casualty
Compensation.
(d) For the avoidance of doubt, LWB acknowledge and agree that
they are obligated to carry out all necessary Casualty works
(including, without limitation, the works specified in the
Addendum to the Specification) and to complete all of the
remaining Works so that the Vessel will be completed and
rendered for redelivery in accordance with the Contract and
the Specification and (save only in respect of reconditioning
works, the scope of which have been expressly accepted by the
Owner, for specified damaged parts of the Vessel rather than
the renewal of such parts) as if the Casualty had not
occurred.
(e) If any Casualty works are not specified in the Addendum, or if
any additional Casualty works or other Works are required to
enable LWB to render the Vessel for redelivery in accordance
with the Contract and the Specification and (subject to the
reservation specified in the preceding paragraph) as if the
Casualty had not occurred, such works or Works will be deemed
to be included within the scope of the Addendum to the
Specification or (as the case may be) in the Specification,
all related costs will be fully absorbed by LWB, there will be
no increase in the Contract Price or the Remaining Contract
Price, and there will be no extension of the Date for
Completion in respect of any additional time required to
complete the additional works or Works.
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21. The Owner and LWB agree that neither Xx. Xxxxxxxx van Betteray as
Sachwalter nor the Sachwalter's representatives shall be personally
liable for any actual or alleged default under or in connection with
the Contract or this Addendum but the Sachwalter and his
representatives shall be liable, to the scope of coverage and financial
limits of their respective professional negligence insurance policies,
if they are proven to have acted, or to have failed to act,
negligently, or with the intention of causing damage or harm.
22. The Owner and LWB agree that, notwithstanding any express or implied
terms or conditions to the contrary, the termination provisions
contained in the Contract will prevail over those referred to in the
settlement terms referred to in subparagraph 18(d) above.
23. By way of security for the due performance of their obligations under
this Contract as indicated by this Addendum, LWB hereby assign and
agree to assign to the Owner all of LWB's rights under and in
connection with the contracts and other agreements made after 31 May
2004 with Subcontractors who are hereafter designated by the Owner to
be material Subcontractors for the purposes of the Contract, and hereby
agree to provide the Owner with full details of such subcontracts and
other agreements, to sign such further documents and to take such
further steps as may be required by the Owner to implement and give
full effect to the assignments contemplated by this paragraph.
24. The Sachwalter will open a new account with LWB's Bank for receipt of
the Remaining Contract Price (the parties agreeing that, from the time
of its opening, such account will be deemed to be the account defined
in the Contract as "LWB'S ACCOUNT") and will execute a pledge of this
account in favour of the Owner (the parties agreeing that, from the
time of its signature by or on behalf of the Sachwalter, LWB, the Owner
and LWB's Bank, such pledge will be deemed to be the pledge defined in
the Contract as the "PLEDGE OF LWB'S ACCOUNT").
25. LWB acknowledge and agree that nothing contained in this Addendum shall
in any manner or to any extent reduce or impair the Owner's entitlement
to obtain the full and timely benefit of the lump sum allowance
specified in Clause 11.2.2 of the Contract.
26. If the Addendum No. 3 Effective Date has not occurred by 1 July 2004,
either party shall be entitled to cancel this Addendum by written
notice to the other in which event this Addendum No. 3 shall be null
and void.
27. This Addendum replaces Addendum No. 2 which, with affect from
occurrence of the Addendum No. 3 Effective Date, shall be deemed
cancelled in all respects.
28. Save as expressly provided in this Addendum, all other terms and
conditions of the Contract (and previous addenda thereto) shall remain
unamended and in full force and effect. By their signature of this
Addendum each of the Owner, LWB, the Shareholder and the Sachwalter
fully and unconditionally affirm the Contract as amended by this
Addendum.
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29. Words and expressions defined in the Contract shall have the same
meanings when used in this Addendum.
SIGNATURES
Signed on 1 July, 2004 by:
/s/
-------------------------------------
For and on behalf of
Ship Holding LLC
Signed on 1 July, 2004 by:
/s/
-------------------------------------
For and on behalf of
Xxxxx Werit Bramerhaven GmbH
Signed on 1 July, 2004 by:
/s/
-------------------------------------
Xx. Xxxxxxxx van Betteray as Sachwalter of LWB
Signed on 1 July, 2004 by:
/s/
-------------------------------------
For and on behalf of
LPS Diemelalattings und Verwaltuagagesgeshaft Bramerhaven GmbH
Signed on 1 July, 2004 by:
/s/
-------------------------------------
For and on behalf of
X.X. Xxxxxx Xxxxx Verwaltungs-und Bettallgungs GmbH
(END OF ADDENDUM NO. 3)
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