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OWNER: /s/ JBA
BUILDER: /s/ MJN
VESSEL CONVERSION AGREEMENT
HULL NUMBER: S-137
MAXIMUM PRICE: $6,454,432.00
REDELIVERY DATE: March 21, 2000 at Xxxxxxx, Washington
CONTRACT
This Agreement entered into as of the 20th day of August 1999
BETWEEN
XXXXXXX BROTHERS BOAT BUILDERS, INC.
(hereinafter called "BUILDER").
AND
THE DELTA QUEEN STEAMBOAT CO.
(hereinafter called "OWNER").
WITNESSETH:
ARTICLE I - SCOPE
A. All dates specified in this Agreement are material and of the essence
unless otherwise stated. Subject to the terms of this Agreement and in
exchange for the payment by OWNER to BUILDER on the Time and Materials
basis hereafter defined but not to exceed the sum of Six Million Four
Hundred Fifty Four Thousand Nine Hundred Four Hundred Thirty Two U.S.
Dollars ($6,454,432.00), BUILDER agrees, at its own risk and expense,
subject to and as qualified by the other terms and conditions of this
Agreement, to complete the scope of conversion work defined herein and
redeliver to OWNER afloat at the redelivery point specified in Article
II-D below, on or before the REDELIVERY DATE specified above, the M/V
Columbia Queen (hereinafter called the "Vessel") converted, outfitted,
trialed and issued a temporary Certificate of Inspection ("COI") by the
United States Coast Guard ("USCG") following ship conversion and outfit
approval by the USCG Marine Safety Center ("MSC") in accordance with
the following defined materials (collectively the "Contract Drawings"):
(1) A preliminary ship construction specification
("Preliminary Ship Construction Specification") prepared by the BUILDER
and agreed to by the OWNER consisting of 27 pages but which excludes
specifying the Interior of the Vessel;
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OWNER: /s/ JBA
BUILDER: /s/ MJN
(2) A package prepared by Hopeman Brothers Marine Interiors
("Hopeman"), a subcontractor of the OWNER whose work and
responsibilities are outside of the BUILDER's scope, agreed to by the
OWNER and BUILDER, to describe the Interior of the Vessel consisting of
74 pages of drawings and narrative matter amounting to an additional 12
pages (the "Interior Specification"), and when the capitalized work
"Interior" is used hereafter, it shall mean the Interior of the Vessel
as is defined in the Interior Specification;
(3) A preliminary and unfinalized general arrangement drawing
prepared by Xxxxxx X. Xxx & Associates (the "Architects"), the OWNER's
naval architects, and a drawing of the transverse sections prepared by
Xxxxxx Piacentiai (together 5 pages called the "Preliminary GA");
(4) Additional technical drawings and accompanying technical
narrative explanation as yet unprepared by the Architects in final form
but which are listed in a 14 page writing for the conversion of the
Vessel and for all of its systems and outfit excluding the Interior to
be completed by the OWNER's Architects and agreed with the BUILDER
under paragraph D(1) of this Article I and when so prepared to be known
as the "Architects Technical Conversion Plans"; and
(5) A complete and final specification for the conversion and
outfit including systems of the Vessel excluding the Interior (the
"Final Ship Construction Specification"), as yet unprepared but to be
completed by the BUILDER and agreed with the OWNER under paragraph C of
this Article I.
A true and complete copy of the Preliminary Ship Construction
Specification, the Interior Specification, the Preliminary GA and the
writing listing the drawings to be the Architects Technical Conversion
Plans have been certified by the parties by initialing each page
thereof and reflecting the date of certification as concurrent with
execution of this Agreement and are sometimes referred to collectively
hereafter as the Preliminary Conversion Scope. The Architects Technical
Conversion Plans and the Final Ship Construction Specification when
completed shall be likewise certified and when so completed, approved
and certified shall together with the Interior Specification be
sometimes collectively referred to hereafter as the Final Conversion
Scope. Should Hopeman later prepare and the OWNER and BUILDER both
assent to a more detailed specification and description of the Interior
than that certified as of the date of this Agreement, then such later
and more detailed matter shall be reduced to writing, referred to
thereafter as the Final Interior Specification and considered within
the Final Conversion Scope, and be likewise certified.
Any Additional Work required of the BUILDER in the Architects Technical
Conversion Plans or in any such Final Interior Specification which is
additional to work required of or the capacity of systems to be
supplied by the BUILDER under the Preliminary Ship Construction
Specification and considering the Interior Specification certified as
of the date of this Agreement (specifically including, without
limitation, increased main
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OWNER: /s/ JBA
BUILDER: /s/ MJN
propulsion plant, electrical power generation requirements, or
increased HVAC system cooling or heating requirements) will be subject
to the provisions of Article VII hereof.
B. OWNER shall at the times hereafter specified pay BUILDER (i) the sum of
USD ___ per hour for all production and shipyard production management
and engineering time spent on the Vessel under this Agreement; (ii) the
BUILDER's actual cost (including freight and insurance in transit) to
purchase all materials, equipment, systems and to pay all subcontract
and professional work together with a markup of ___ thereon; and (iii)
the premiums for the builder's risk and ship repairer's liability
insurance coverages required of the BUILDER together with no markup;
all not to exceed $6,454,432 (the "Maximum Price") unless the Maximum
Price is increased pursuant to Article VII hereof. The BUILDER's scope
of work within the Maximum Price and presently defined in the
Preliminary Ship Construction Specification includes an allowance of
________ for types of support work identified in the Preliminary Ship
Construction Specification on the part of the BUILDER for Hopeman's
construction and installation of the Interior (hereafter the "Hopeman
Builder Support Allowance"). If the final total of the Builder's
charges under subclauses (i) through (iii) in this paragraph B upon
Redelivery including the net expense of all changes under Article VII
(the "Final Price") is less than the Maximum Price, the savings shall
be shared equally by OWNER and BUILDER and the amount of the Article
IV-B Redelivery Payment shall be adjusted accordingly. For the
avoidance of doubt, the OWNER may not assert that BUILDER having
accomplished one particular budgeted area of its work (such as, for
example, piping) for less than the BUILDER's budgeted sum for such area
operates, taken alone, to amount to a saving below the Maximum Price.
To the contrary, the Final Price is measured and computed as provided
in this paragraph and Article and under Article VII as a single
aggregate number for all BUILDER work, then to be measured as a single
Final Price number against the Maximum Price.
C. BUILDER agrees to furnish a suitable location at its shipyard for the
conversion of the Vessel, and all labor, tools, equipment, materials,
services and fees necessary for the conversion of said Vessel, except
for the construction and installation and outfit of the Interior and
except as otherwise indicated in the Preliminary or Final Conversion
Scope. BUILDER agrees by not later than September 10, 1999, to complete
and furnish to OWNER, for OWNER'S approval to be given or withheld
within ten days of receipt thereof, and not to be withheld
unreasonably, the Final Ship Construction Specification. The Final Ship
Conversion Specification shall, except for any additional work not
identified in the Preliminary Conversion Scope but identified by the
BUILDER, OWNER or any regulatory body as necessary for USCG or U.S.
Public Health Service ("USPHS") regulatory approvals and agreed to by
both BUILDER and OWNER (which shall be deemed "Additional Work"),
comport with the scope and quality and extent of conversion, outfit and
finish work for the Vessel presently defined in The Preliminary Ship
Construction Specification and the Preliminary GA and be consistent
with the Vessel's system performance requirements derived from the
Interior Specification (as distinguished from the Final Interior
Specification); and shall comply with and be to a level of detail
adequate for USCG MSC and USPHS regulatory approval for an overnight
USCG Subchapter H vessel restricted to operate in protected harbors and
navigable
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BUILDER: /s/ MJN
inland waterways excepting the Great Lakes. Work by the BUILDER under
this Agreement is based on the understanding that the OWNER intends to
operate the Vessel east of Astoria in the Columbia/Snake/Willamette
system.
D. (1) OWNER agrees to furnish, through the Architects selected and
engaged by Owner, to BUILDER for BUILDER'S approval, to be given or
withheld within ten days of receipt thereof, and not to be withheld
unreasonably, by September 10, 1999, the entirety of the Architects
Technical Conversion Plans completed to preliminary design level or to
any greater level of detail necessary for USCG MSC and USPHS regulatory
approval for an overnight USCG Subchapter H vessel restricted to
operate in navigable inland waterways east of Astoria in the
Columbia/Snake/Willamette system. Although the Interior Specification
and not the Architects Technical Conversion Plans will specify the
Interior, it shall be the responsibility of the Architects to include
in the Architects Technical Conversion Plans such fire load and other
safety aspects of the Interior as may be required by USCG for the USCG
approvals sought. The Architects Technical Conversion Plans shall,
except for any Additional Work identified by the Architects as
necessary for USCG or USPHS Vessel regulatory approvals (which shall be
included but noted as Additional Work), comport with the scope and
quality and extent of conversion, outfit and finish work for the Vessel
and her Interior presently defined in the Preliminary Conversion Scope
and shall comply with the requirements of the USCG and USPHS for
approval of an overnight USCG Subchapter H vessel to operate in
navigable inland waterways east of Astoria in the
Columbia/Snake/Willamette system. The OWNER and the Architects shall be
solely responsible to provide in the Architects Technical Conversion
Plans, and otherwise to notify the BUILDER in writing, of any changes
or measures not already provided for in the Preliminary Conversion
Scope which the OWNER desires or requires for accesses and measures
responsive to such if any of the ADA Accessibility Guidelines as may be
applicable to the Vessel and which, if so identified in the Architects
Technical Conversion Plans or otherwise, shall be subject to the
provisions of Article VII hereof together with any Additional Work
identified in the Architects Technical Conversion Plans. The BUILDER
shall have no responsibility for compliance with the ADA except to
faithfully perform and not deviate from the scope of work identified in
this Agreement. It shall be the responsibility of OWNER and the
Architects to apply and pay all fees for and make all necessary
submissions to USCG for MSC approval; but it shall be the
responsibility of BUILDER to furnish timely to OWNER or the Architects
all matters required of the BUILDER under this Agreement which are
necessary to support such USCG MSC approval process.
(2) Utilizing the Preliminary Conversion Scope documents and when
completed and certified the Final Conversion Scope documents, BUILDER
shall be responsible within the Maximum Price to prepare all Production
Drawings which are necessary or useful for the personnel and vendors
and subcontractors of the BUILDER to complete timely the conversion by
the Redelivery Date in accordance with the Final Conversion Scope,
except that this responsibility does not extend to preparing Production
Drawings for Hopeman's work to construct the Interior. The BUILDER
shall furnish any and all to-then completed Production Drawings
requested by OWNER or the Architects to assist in any USCG MSC or other
reviews, and BUILDER shall upon Redelivery furnish one copy
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OWNER: /s/ JBA
BUILDER: /s/ MJN
of all Production Drawings to the OWNER. BUILDER shall in addition be
responsible to prepare drawings which reflect the Vessel and all of her
converted systems as actually constructed, except for the Interior (the
"As-Built Drawings"), and shall furnish to OWNER upon Redelivery one
copy of the As-Built Drawings as are to-then completed and two copies
of all of the final As-Built Drawings within 90 days after Redelivery.
(3) If the Final Conversion Scope increases the amount of the Hopeman
Builder Support Allowance or the OWNER determines to have it include
any other contingency factor, the same shall be identified and the
Maximum Price shall be increased accordingly. In such event the cost of
any changes under Article VII shall not further increase the adjusted
Maximum Price unless, if at all, aggregate costs of changes net of
changes which decrease cost under Article VII exceed the amount of the
increased allowance and/or any such added contingency factor.
E. BUILDER will provide and install ready for use all parts, equipment
and appurtenances shown in the Final Conversion Scope and including
such OWNER Furnished Items as are identified in the Final Conversion
Scope but excepting all parts, equipment and appurtenances in the
Interior Specification. The OWNER shall supply the OWNER Furnished
Items identified in the Final Conversion Scope by the dates for the
same listed in the Final Conversion Scope (or such other dates as may
be later agreed in writing between OWNER and BUILDER). BUILDER shall
store, safeguard and handle all OWNER Furnished Items both prior to and
after placement on board and BUILDER shall allow sufficient working
area and time to allow the timely and safe installation of equipment
and loading of supplies by Redelivery.
F. BUILDER will allow OWNER and the OWNER Representative at all reasonable
times to examine the Vessel during conversion. The rights to inspect,
if and when exercised, shall not be deemed a waiver of BUILDER's
responsibilities hereunder, subject to the terms of Article XIII-B.
G. BUILDER shall, by not later than September 10, 1999, provide to
OWNER in writing for approval within five (5) business days, not to be
withheld unreasonably, an initial Construction Schedule. The
Construction Schedule shall be updated by BUILDER every thirty (30)
days thereafter if necessary to reflect changed circumstances as a
result of the Architects Technical Conversion Plans, any Final Interior
Specification, Additional Work, or changes or events otherwise arising
under Articles V or VII hereof. Any such updates to the Completion
Schedule shall identify any changes reasonably required from dates in
the Final Conversion Scope required for delivery by OWNER to BUILDER of
OWNER Furnished Items. It shall be the responsibility of OWNER to
insure that the construction and installation activities of Hopeman do
not interfere with so as to delay the BUILDER's ability to meet the
Construction Schedule. It shall be the responsibility of BUILDER timely
to provide the support in the Hopeman Builder Support Allowance and to
in good faith cooperate with the OWNER and its contractors.
H. BUILDER will do all work hereunder in a good and xxxxxxx-like manner in
accordance with the Final Conversion Scope (and, in the interim, the
Preliminary Conversion Scope).
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OWNER: /s/ JBA
BUILDER: /s/ MJN
All material and equipment shall be in accordance with the Final
Conversion Scope (and, in the interim, the Preliminary Conversion
Scope).
I. Any dispute between OWNER and BUILDER as to whether the Builder has
legitimately identified Additional Work in the Final Ship Construction
Specification or whether either party has reasonably or unreasonably
withheld their approval under paragraphs C, D(1) or G of this Article I
shall be determined summarily pursuant to paragraph B of Article XI
hereof.
ARTICLE II - DELIVERY & REDELIVERY
A. OWNER shall, at its own expense and risk, transport and deliver the
Vessel afloat on her own bottom positioned above BUILDER's launch/haul
submerged apparatus to the BUILDER close inshore within Xxxxxx Harbor
for conversion in accordance with the terms and conditions of this
Agreement to so arrive at the facility of the BUILDER no later than
September 21, 1999, and by such date the OWNER shall have performed the
OWNER's scope and extents of removal and preparatory work upon and
within the Vessel as are specified in the Preliminary Conversion Scope.
Upon delivery, the OWNER and the BUILDER shall execute a certificate of
delivery and release.
B. The BUILDER shall, at its own expense and risk, receive, store,
protect, and install aboard the Vessel all Owner Furnished Items
identified by the Final Conversion Scope (or, in the interim, the
Preliminary Conversion Scope). The BUILDER shall be liable to the OWNER
for any damage or loss of OWNER Furnished Items occurring during the
BUILDER's custody thereof except as otherwise provided in this
Agreement.
C. BUILDER agrees, subject to the other provisions of this Agreement, to
complete the conversion excepting the Interior and to redeliver the
Vessel to OWNER free and clear of all liens, claims and encumbrances,
except any arising by or through OWNER (including any of OWNER's
subcontractors and/or vendors); and OWNER agrees to accept Redelivery
and pay all unpaid sums due to the BUILDER under this Agreement upon
completion of conversion of the Vessel, satisfactory trials specified
in the Final Conversion Scope ("Trials"), and issuance of USCG
regulatory approvals for the Vessel as converted and a temporary COI
for her operation. It shall be the responsibility of the OWNER and not
the BUILDER to create and submit the Architects Technical Conversion
Plans to levels of detail and having content acceptable to MSC and
USCG, to specify and construct and install the Interior to levels and
in manners (including by selecting materials relative to fire load
calculations) likewise acceptable to MSC and USCG, and to demonstrate
to USCG the compliance and qualification of its crew and any of its
management and training and monitoring systems and facilities relating
to the Vessel which are necessary for issuance of the COI
(collectively, the "OWNER Regulatory Responsibilities"). If lack of
qualification, compliance or demonstration under the immediately
preceding sentence or if delay or default by OWNER or its Architects or
Hopeman under such OWNER Regulatory Responsibilities is the cause which
prevents one or more such issuances, OWNER shall pay BUILDER the
Redelivery
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OWNER: /s/ JBA
BUILDER: /s/ MJN
Payment notwithstanding the absence of such USCG regulatory approvals
and notwithstanding that a temporary or permanent COI has not been
issued.
D. BUILDER agrees to redeliver the Vessel to OWNER in accordance with this
Agreement at BUILDER's berth at Langley, Washington, safely afloat,
following satisfactory completion of Trials, on or before the
Redelivery Date specified on page 1 of this Agreement or such later
date as may be allowed by reason of changes in the Vessel under Article
VII hereof or Permitted Delays under Article V hereof.
E. The Vessel shall be inspected by OWNER at BUILDER's shipyard and during
Trials. BUILDER shall execute a Certificate of Completion and
Redelivery in a form reasonably acceptable to OWNER which certifies
compliance with and full performance of the obligations of the BUILDER
under this Agreement at the time of Redelivery for such Vessel. OWNER
shall accept the Vessel if it is completed in accordance with the Final
Conversion Scope and any changes performed in accordance with Article
VII hereof.
F. In the event that any work required of the BUILDER under this
Agreement is not in fact completed at the time BUILDER tenders the
Certificate of Completion and Redelivery, OWNER, shall have the option,
if it in its sole discretion deems the Vessel fit for service, to take
Redelivery of the Vessel and treat all "unfinished work" as a warranty
obligation of the BUILDER under Article IX. In that event, Builder's
Certificate of Completion and Redelivery shall specify all unfinished
work. The parties shall agree as to the amount to be withheld from the
Redelivery Payment and the Vessel shall be redelivered to OWNER upon
OWNER paying the undisputed amount to BUILDER and by withholding the
amount for "unfinished work" until such time that BUILDER completes the
"unfinished work" and OWNER accepts the "unfinished work" as complete.
BUILDER shall invoice OWNER for completion of "unfinished work" and,
provided the work meets the standards of the Final Conversion Scope,
OWNER shall, within ten (10) days of receipt of invoice, pay BUILDER.
If OWNER does not exercise such option, BUILDER shall completely finish
all contract work.
G. BUILDER shall furnish OWNER on redelivery of the Vessel a Xxxx of
Sale for the Vessel excepting the Interior, together with an assignment
of all warranties by makers and manufacturers and the originals of all
such warranties, and with such other documents as may be required by
law or by any other regulatory agency of the United States having
jurisdiction in the premises in order for OWNER to redocument the
Vessel (excepting that BUILDER has no such responsibility relating to
the Interior); and will assist OWNER, or its agent, in acquiring all
required information to enable OWNER to obtain all documentation
necessary to operate the Vessel as intended. However, it is understood
that the required USCG approved drawings, the Interior and the OWNER
Regulatory Responsibilities are the responsibility of the OWNER and/or
the Architects and/or Hopeman. Any expense in connection with
documentation of the Vessel shall be paid by OWNER.
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OWNER: /s/ JBA
BUILDER: /s/ MJN
ARTICLE III - DOWN PAYMENT
Before the date of this Agreement OWNER paid BUILDER the sum of
$150,000 US dollars towards the OWNER down payment. Concurrent with the
execution of this Agreement, OWNER shall pay BUILDER by wire transfer
to the bank and account designated by BUILDER the additional sum of
$815,765 which, together with the $150,000 so paid, equals $965,765 or
approximately 15% of the Maximum Price.
ARTICLE IV - SUBSEQUENT PAYMENTS
A. OWNER agrees to pay to BUILDER by wire transfer at the place and in the
manner specified in preceding Article III-A the following additional
Interim Installment Payments for such Vessel:
(i) 15% ($965,765) on September 2, 1999 provided that, by such date,
the Vessel has been hauled at BUILDER's yard (unless the OWNER did not
deliver it by September 1st in which case this element is eliminated),
60% of all materials and equipment have been ordered, 15% of
engineering is complete, and 10% of steel prefabrication is complete;
and
(ii) 15% ($965,765) on October 4, 1999 provided that, by such date, the
BUILDER has delivered the proposed Final Ship Construction
Specification to OWNER, 90% of all materials and equipment have been
ordered, 30% of engineering is complete, 70% of steel prefabrication is
complete, and 20% of steel construction is complete; and
(iii) 10% ($643,843) on November 1, 1999 provided that, by such date,
50% of engineering is complete, 70% of steel construction is complete,
and 15% of all new Vessel systems preassembly or installation is
complete; and
(iv) 10% ($643,843) on November 29, 1999 provided that, by such date,
75% of engineering is complete, 90% of steel construction is complete
and 50% of all new Vessel systems preassembly or installation is
complete; and
(v) 10% ($643,843) on December 27, 1999 provided that, by such date,
90% of engineering is complete, 70% of all new Vessel systems
preassembly or installation is complete, and the main engines and
reduction gears have been received at Builder's facility; and
(vi) 10% ($643,843) on January 24, 2000 provided that, by such date,
80% of all new Vessel systems preassembly or installation is complete,
10% of exterior painting is complete, and 65% of deck equipment has
been installed; and
(vii) 10% ($643,843) on February 14, 2000 provided that, by such date,
the main engines and reduction gears have been installed with the
propulsion system 95% complete, 90% of all new Vessel systems
installation is complete, 50% of exterior painting is complete,
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OWNER: /s/ JBA
BUILDER: /s/ MJN
90% of deck equipment has been installed, and 50% of the bridge
equipment has been installed. In addition:
B. Upon Redelivery of the Vessel in accordance with this Agreement, and
upon acceptance thereof by OWNER at BUILDER's shipyard in accordance
with the Agreement, OWNER agrees to pay the BUILDER against BUILDER's
invoice the Redelivery Payment consisting of:
1. $321,922 (5%).
2. Any applicable State or Local Sales and/or Use Taxes none
of which will be due for the State of Washington provided
OWNER timely executes and files its certificate of tax
exemption for a Vessel exported from such State's waters
within 45 days of completion.
3. Plus any changes resulting from agreed or determined
changes under Article VII in the Preliminary Conversion Scope
or in the Final Conversion Scope, or if the Final Price is
less than the Maximum Price, then instead Less one-half the
savings achieved.
4. Less any liquidated damages for delay in accordance with
Article VI below.
The parties agree that the sum of the foregoing installment payments
and the Down Payment are $16,000 less than the Maximum Price. The
Maximum Price includes an allowance of $16,000 towards the estimated
cost of the Builder's Risk Insurance premiums for 6 months for which
OWNER is responsible under this Agreement but which are to be billed
monthly by BUILDER to OWNER and paid by OWNER separate from the
foregoing installment payments. Notwithstanding the foregoing, OWNER
may initiate and BUILDER shall approve a change in accordance with
Article VII for the full amount of any Builder's Risk premium included
in the Maximum Price. In such case, OWNER shall be obligated to place
the Builder's Risk Insurance required under this Agreement and tender
the policy to the BUILDER.
C. BUILDER will give OWNER notice of intended date of issuance of each
"Stage Completion Certificate" not less than seven days calendar before
issuance and OWNER's Representative shall forthwith inspect progress
claimed in such Certificate so that payment for work if completed as
claimed is not delayed. All Interim Installment Payments and the
Redelivery Payment will be due by wire transfer to such bank and
account for the BUILDER as BUILDER specifies to OWNER in writing.
D. Each of the Interim Installment Payments shall be payable within seven
calendar days after presentation of BUILDER's invoice and the
accompanying BUILDER's Stage Completion Certificate provided that
BUILDER is then not in breach of this Agreement; and the Redelivery
Payment shall be payable upon BUILDER's invoice at time of Redelivery
provided that BUILDER has fulfilled its obligations due under this
Agreement to OWNER and owed at or before the time of Redelivery.
E. The BUILDER shall furnish a Stage Completion Certificate for each
Interim Installment Payment which shall state (i) the stage of contract
work achieved in specific relation to
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the subparts of paragraph A of Article IV hereof; (ii) that the
contract work completed complies with the Final Conversion Scope (or,
if before the Final Conversion Scope is defined, with the Preliminary
Conversion Scope) and this Agreement; and (iii) that there are no liens
or claims upon said Vessel for labor, materials or equipment for said
Vessels, except those created by or through the OWNER. The Stage
Completion Completion Certificate shall be executed and certified by an
officer of BUILDER.
F. If OWNER objects upon receipt of the Stage Completion Certificate on
grounds that the pertinent stage has not been reached, or for any other
bona fide reason, any such dispute shall be summarily determined under
paragraph B of Article XI hereof. The OWNER shall be entitled to
withhold payment until the matter is determined, but if the dispute is
determined in favor of the BUILDER the OWNER shall be obligated to pay
BUILDER (irrespective of whether or not expressly stated in the
decision) forthwith the stage payment due and in addition interest at
the prime rate plus two percent (on a per annum basis) for the period
during which payment was withheld.
G. The BUILDER shall certify in the Certificate of Completion and
Redelivery that, excepting that no representation is made as to the
Interior: (i) the Vessel has been completed; (ii) all Trials have been
satisfactorily completed; (iii) the Vessel complies with the Final
Conversion Scope and this Agreement and is free from defects in
materials and workmanship; (iv) there are no liens or claims upon the
Vessel for materials, equipment or labor for said Vessel except any
created or incurred by or through the OWNER; and (v) the BUILDER has
performed all obligations due from it to the OWNER under this Agreement
at time of Redelivery.
H. The making of the Interim Installment Payments or Redelivery Payment
with respect to the Vessel shall not stop the OWNER from thereafter
asserting any right or remedy accruing to it because of the failure of
the BUILDER to convert and redeliver the completed Vessel in accordance
with the terms hereof.
ARTICLE V - PERMITTED DELAYS
A. All agreements of the BUILDER contained in this Contract respecting
the Date of Redelivery of the Vessel shall be subject to extension by
one day for each day: (i) after September 21, 1999 that the Vessel is
delivered by OWNER to BUILDER; (ii) that the OWNER is in violation of
its payment obligations under this Agreement (excluding any periods of
withholding permitted under paragraph F of preceding Article IV); (iii)
that the Architects Technical Conversion Plans are late, that activity
by Hopeman delays BUILDER meeting the Construction Schedule, that
Hopeman completes the Interior after March 20, 2000, or that the OWNER
is late in delivering OWNER Furnished Items by the dates required under
this Agreement; and (iv) by reason of "Force Majeure," which term is
hereby declared to be actual delay (subject to the limitation on delay
in paragraph B of this Article) in the course of conversion caused by
natural forces, fire, explosion, or persons not under the control of
BUILDER and not caused or contributed to by the negligence of the
BUILDER and subject to the succeeding paragraphs of this Article V.
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B. Delays in receiving supplies, materials and equipment shall not be
considered Force Majeure unless (a) caused by strikes or lockouts of
workmen other than employees of the BUILDER or (b) BUILDER establishes
to the reasonable satisfaction of OWNER that (1) BUILDER timely ordered
such supplies, materials and equipment, (2) BUILDER exercised due
diligence to obtain delivery, and (3) no other source of supply was
reasonably available (relative price being a factor to be considered).
C. Delays caused by weather conditions shall not be Force Majeure except
where caused by lightning, flood, windstorm, hurricane, tornado,
calamitous act of God or nature, or by extraordinary rains which
prevent work for three (3) consecutive days.
D. BUILDER may rely on the provisions of this Article V to complete the
conversion and redeliver without liquidated damages later than the
Redelivery Date specified at page 1 of this Agreement provided that
BUILDER informs the OWNER in writing of the occurrence of a
circumstance of Permitted Delays within five (5) business days of its
occurrence and to include with that notice a description of the event
and its expected duration; but there shall be no such requirement for
such notice or notice under the next following sentence as to any
circumstance of Permitted Delay under subclauses (i) or (ii) of
paragraph A of this Article. BUILDER shall inform OWNER of the end of a
circumstance of Permitted Delay within five (5) business days of its
cessation and include an estimate of the delay in Redelivery Date, if
any, caused by that event. Failing such notices, BUILDER shall not have
the benefit of this Article for said event. The BUILDER shall maintain
records of such delays and allow OWNER to inspect same upon request at
all reasonable times. The Redelivery Date for the Vessel shall
automatically be extended for the period specified in paragraph A of
this Article unless the OWNER, within five (5) business days after
receiving either of the aforesaid notices, shall state with
particularity its objections in writing to BUILDER, in which event any
such dispute shall be determined summarily under the provisions of
paragraph B of Article XI hereof.
ARTICLE VI - LIQUIDATED DAMAGES PROVISIONS
A. All work on the Vessel contemplated hereunder shall be completed
(including completion of satisfactory Trials) and redelivery on the
Vessel effected on or before the Redelivery Date set forth on the first
page of this Agreement or such extensions of time as are provided for
herein, except that BUILDER has no responsibility for the Interior and
no responsibility for late Redelivery if construction or installation
of the Interior delays Redelivery, except that BUILDER must timely
perform its defined work tasks within the Hopeman Builder Support
Allowance. Both parties recognize that during conversion OWNER will
make contracts depending upon the use of the Vessel so that redelivery
time is of the essence and that redelivery delay will result in
substantial damages not susceptible of accurate calculation. In the
event the Vessel is not converted and redelivered to the OWNER on the
Redelivery Date (or on such later date as is permitted to the BUILDER
without liability under Article V hereof), OWNER will deduct from
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OWNER: /s/ JBA
BUILDER: /s/ MJN
Redelivery Payment for the Vessel the sum of _____________ U.S.
Currency (US _________) per day for the first twenty-one (21) days
after which redelivery was due but not made until the actual
redelivery, and the additional sum of ____________________ U.S.
currency ____________ per day for each day after the first twenty-one
days after which redelivery was due but not made until actual
redelivery, but with such deduction to in no event exceed in the
aggregate the sum of ______________________________________ ($_______).
This agreement for the payment of liquidated damages for late delivery
is not a penalty but a good faith agreement to compensate the OWNER for
foreseeable damages presently difficult or impossible later to
calculate; is in lieu of all other damages, direct or consequential,
which may result to OWNER from delay; and is OWNER'S sole and exclusive
remedy for late redelivery.
B. In the event the parties are unable to agree on the above reduction of
the Redelivery Payment, the Vessel shall nevertheless be redelivered to
OWNER upon OWNER paying the undisputed amount to BUILDER and by placing
the disputed portion of the delivery in a Certificate of Deposit with a
bank or in prime grade commercial paper of OWNER's choice, withdrawable
only upon signatures of both OWNER's and BUILDER's attorneys, interest
to be accumulated and payable in proportion to the resolution of the
dispute, and the certificate to be held by BUILDER'S attorneys. Funds
shall be disbursed according to the determination made as to the
disputed portion under Article XI.
ARTICLE VII - CHANGES IN SPECIFICATIONS AND CONTRACT DRAWINGS
A. Subject to the provisions of this Article, the right is reserved by
OWNER to make any deductions for or additions or substitutions to the
Preliminary Conversion Scope and to the Final Conversion Scope on
giving due notice in writing to BUILDER. If so, the cost (if any) of
any such changes shall be paid to the BUILDER under this Article and if
applicable added to the Maximum Price to the extent permitted under
paragraph B of Article I hereof. If any such change will delay the
completion of the work, BUILDER will be allowed additional time
sufficient to cover such delay. Within three (3) business days after
receiving a proposed change order from OWNER, the BUILDER shall advise
the OWNER in writing of the increased or reduced cost and any
additional time required or any reduction in conversion completion time
occasioned by the change, if the change is performed, and the OWNER
shall accept or reject the advised impacts from the BUILDER within
three (3) further business days after receipt of the advised impacts
from BUILDER. The provisions of the last sentence of paragraph B of
Article I shall apply if aggregate changes decrease the Maximum Price
of the Final Conversion Scope. BUILDER also may propose changes in
writing to OWNER and if so shall include advised impacts. If so, OWNER,
while hereby agreed to be under no obligation to agree to any of the
same, promises to give good faith consideration to any changes proposed
which will reduce cost without sacrifice in Vessel outfit, finish or
performance.
B. The BUILDER shall advise the cost (or reduced cost impact) of any
change on a fixed price or fixed sum basis unless, in an unusual
circumstance where the BUILDER states and the OWNER agrees that unknown
variables involved with a change make fixed price
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BUILDER: /s/ MJN
performance not reasonably possible, the OWNER and BUILDER instead
agree to effect a change on a time at ___/hour and
materials/subcontract at cost plus ___ markup basis (with or without
overtime at ___/hour to mitigate delay impacts), but in such event not
to exceed a specified overall limit for the cost of the change.
C. Changes from the Final Conversion Scope (or, when earlier
applicable, from the Preliminary Conversion Scope) and which are
Additional Work or are required by the Architects based upon regulatory
considerations or required by the USCG or other regulatory body shall
be performed by the BUILDER notwithstanding paragraph E of this
Article. All such mandatory changes shall be considered as if coming
from the OWNER under paragraph A of this Article and handled and
determined under this Article; but if mandatory changes require work
different from that specified in the Final Ship Construction
Specification because the Final Ship Construction Specification failed
or omitted to identify work required by regulatory considerations
published as of the date of this Agreement, the cost of such work shall
be absorbed by the BUILDER without charge or expense to the OWNER and
without increase in the Maximum Price or extension of the Redelivery
Date.
D. BUILDER's scope of work under this Agreement assumes that construction
work previously performed by the first builder of the Vessel on those
portions of the Vessel not to be repaired or modified by BUILDER under
this Agreement were then and will remain acceptable to USCG. Rework in
such areas to the extent required by USCG shall be deemed a change for
purposes of this Article except for defects actually observed by the
BUILDER during preliminary inspection of the Vessel at berth in
Louisiana before the date of this Agreement and which were neither
informally reported by BUILDER to OWNER as representing a risk of
required work nor provided to be performed within the Preliminary
Conversion Scope. Work and assistance by the BUILDER for Hopeman to the
extent provided for in the ________ Hopeman Builder Support Allowance
shall not be a change under this Article; but if work requested by
Hopeman or by OWNER for Hopeman exceeds such Hopeman Builder Support
Allowance and there is then no increase of such Allowance or other
contingency factor in the Final Conversion Scope for such excess, then
any such Additional Work request relating to Hopeman shall be deemed a
request for a change coming from the OWNER under paragraph A of this
Article and to be determined in accordance with the applicable
provisions of this Article.
E. Except for changes falling under paragraph C of this Article, BUILDER
shall not be obligated to perform a change directed by OWNER unless the
amount and impacts have first been agreed under this Article or have
otherwise been summarily determined, as all such disputes over proposed
changes under this Article shall be, under paragraph B of Article XI
hereof.
F. No provision has been made for the performance of overtime work by the
BUILDER which, if authorized by the OWNER and performed, will require a
labor charge of ___ per hour. The OWNER shall not be required to pay
overtime labor rates unless OWNER expressly agrees or is otherwise
specifically required to do so under this Article on account of a
change.
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BUILDER: /s/ MJN
G. Notwithstanding any provision of this Article, the OWNER may not
propose by change order to redesignate any major ship's systems
specified by BUILDER in the Preliminary Ship Construction Specification
or in the Final Ship Construction Specification (such as main
propulsion, electrical power generation, HVAC, LSA, communications aids
or navigation or monitoring/alarm systems, to be removed from the
BUILDER's scope and responsibility and instead to be supplied as OWNER
Furnished Items. For the avoidance of doubt, the OWNER may further
specify the detail of Vessel systems and outfit but may not delete
entire systems from BUILDER's scope.
H. If aggregate OWNER changes so reduce the Final Conversion Scope as to
reduce the Maximum Price below __________, then BUILDER is relieved of
its agreement to have charged ___/hour for labor and shall instead be
deemed to have charged, and the OWNER deemed to have agreed to pay,
from inception, the sum of ___/hour for labor.
ARTICLE VIII - RISKS AND INSURANCE
A. Excepting all labor and the value of work for Hopeman and all materials
and components and equipment and elements intended to comprise the
Interior, all risks of damage to or destruction of the Vessel, to all
machinery, materials and equipment provided by BUILDER and any OWNER
Furnished Items timely reported by OWNER to BUILDER under this Article,
and all liability to or for labor employed by the BUILDER and
subcontracted effort arranged for by the BUILDER on or about the Vessel
from the time the Vessel is delivered and released to the BUILDER
during conversion (including Trials) and up to redelivery and
acceptance shall be the responsibility of the BUILDER. Full form
Builder's Risk Insurance acceptable to OWNER (including loss or damage
caused by strikes, locked-out workmen or persons taking part in labor
disturbances or riots, or civil commotions, without deletions of
protection and indemnity and collision clauses, and including risks of
earthquakes, with endorsements attached covering losses or damage
caused by vandalism and malicious mischief) will be maintained by
BUILDER at BUILDER's expense and cover the cash value of BUILDER's work
in progress, the value of timely reported OWNER Furnished Items and,
notwithstanding the initial sentence of this paragraph excepting the
Interior from BUILDER's uninsured risk, include in such coverage the
timely reported value of work in progress by Hopeman. BUILDER shall
invoice OWNER monthly for the premium cost of the Builder's Risk
insurance for the declared Hopeman and Owner Furnished Items and OWNER
shall pay such invoice with 14 days. BUILDER shall maintain Workmen's
Compensation, Longshoreman's and Harborworker's Compensation not less
than minimum required by statute, and Public Liability Insurance of
$5,000,000. BUILDER shall provide relevant copies of insurance policies
prior to signing of this Agreement. OWNER and OWNER's subcontractors,
including specifically but without limitation Hopeman, shall maintain
xxxxxxx'x compensation, longshoreman's and harbor worker's compensation
insurance not less than the minimum required by statute, and public
liability insurance of $5,000,000. OWNER and OWNER'S subcontractors
shall provide relevant copies of insurance policies prior to commencing
any work at BUILDER's shipyard or on Vessels.
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BUILDER: /s/ MJN
In addition, OWNER shall procure or otherwise require Hopeman to
procure and maintain in full force and effect at all times from the
date of this Agreement until redelivery, Ship Repairers Liability
Insurance (that is, third party liability with products liability or
completed operations coverage) meeting the same standards of coverage
as are required of the BUILDER's coverage under paragraphs A and B of
this Article, and which names BUILDER as an additional insured as
interests may appear. This policy shall provide physical damage loss
coverage in an amount and with insurance carriers reasonably acceptable
to BUILDER and OWNER.
B. The Builder's Risk Insurance and Public Liability Insurance
required of the BUILDER shall be taken out in the name of BUILDER and
OWNER and any "Construction Financing Entity," and all casualty losses
under such policies shall be payable to the BUILDER and OWNER and
"Construction Financing Entity," as their interests may appear. The
policy shall provide that there shall be no recourse against the OWNER
for payment of premiums or other charges and shall further provide that
at least thirty (30) days' prior written notice of any cancellation for
the non-payment of premiums or other charges shall be given to the
OWNER by the insurance underwriters. The originals of all cover notes
and policies shall be delivered to the BUILDER, with duplicates thereof
to OWNER. Policies not in conformance herewith shall be conformed or
surrendered and canceled upon direction of the OWNER and new policies
procured in conformance herewith.
C. If, prior to Redelivery and Acceptance by OWNER, the Vessel, its
machinery, equipment or material including OWNER Furnished Items timely
reported under this Article (but excluding the value of labor for and
of all materials and equipment and components and elements of the
Interior) shall be damaged, such damage shall be repaired by the
BUILDER or replacement shall be supplied by the BUILDER at its sole
cost and expense but in such event all proceeds of insurance covering
such loss shall be payable only to the BUILDER. The BUILDER shall have
no responsibility to repair damage to the Interior unless caused by or
through the BUILDER and, if not so caused by or through the BUILDER,
unless paid for such work by insurance proceeds or by the OWNER.
D. For actions from the time of Delivery and Release of the Vessel
by the OWNER to the BUILDER up to Redelivery and Acceptance of the
Vessels, the BUILDER shall at its own cost and expense indemnify,
protect and defend the Vessel and the OWNER against any and all claims
and costs and expenses incident thereto (including reasonable
Attorney's fees and costs) arising from injury to, or death of,
employees, workmen, BUILDER's subcontractors, trespassers, licensees,
invitees (other than private entity invitees of OWNER) and all other
persons (except for Hopeman and all employees, subcontractors, vendors,
freight forwarders, and agents of Hopeman) and from property damage to
the property of BUILDER, BUILDER's subcontractors, their employees,
workmen, licensees, invitees or vendors, whether in or on or about the
Vessel and the work to be performed hereunder regardless of cause
unless caused by the active negligence of OWNER or OWNER's
subcontractors, their employees, agents or vendors. It is expressly
understood that workmen other than compensated employees or
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OWNER: /s/ JBA
BUILDER: /s/ MJN
subcontractors of OWNER, engaged upon the work on the Vessel, shall at
all times be employees or subcontractors of the BUILDER and not of the
OWNER.
E. For actions prior to Redelivery and Acceptance of the Vessels,
the OWNER shall at its own cost and expense indemnify, protect and
defend the Vessel and the BUILDER against any claim and costs and
expenses incident thereto (including reasonable Attorneys' fees and
costs) arising from injury to or death of OWNER's and Hopeman's
employees, workmen, subcontractors, vendors, freight and other agents,
and private entity invitees; and from property damage to the property
of OWNER and Hopeman, OWNER's subcontractors, their employees, workmen,
freight and other agents, and private entity business invitees and
vendors, whether in or on or about the Vessel and the work to be
performed hereunder, regardless of cause but unless caused by the
active negligence of BUILDER, BUILDER's subcontractors, their agents,
employees or vendors.
F. In the event there is an actual total loss or constructive total loss
of the Vessel, this Agreement shall be terminated upon receipt of
payment of any such loss to OWNER and BUILDER, and any "Construction
Financing Entity" as interest may appear, of the proceeds of the
insurance required pursuant to this Article VIII for such actual loss
or constructive total loss, or if such actual total loss or
constructive total loss shall occur through the operation of a risk not
covered by insurance for which the BUILDER assumes the risk as herein
set forth, upon receipt by OWNER of payment of the full amount as
interest may appear.
G. For purposes of this Article VIII, it is agreed that "as interest may
appear" shall be construed to mean that OWNER and any "Construction
Finance Entity" are entitled to a refund of amounts paid by OWNER as
Down Payment and Interim Installment Payments, BUILDER is entitled to
amounts owing for conversion work completed and/or damage repair work
completed or due but not yet billed and paid, and OWNER is entitled to
the balance of any insurance proceeds.
H. OWNER shall identify and report to BUILDER the cash value and a
description in detail sufficient to BUILDER's insurer of OWNER
Furnished Items and of and for the Interior at least monthly to permit
the BUILDER's reporting to same to its insurer in order to obtain
Builder's Risk coverage therefor.
I. OWNER shall assure that OWNER and OWNER's subcontractors and vendors
and agents and private entity invitees, and all of their respective
employees, while on the premises of the BUILDER, obey all identified
shipyard safety rules and regulations (including specifically
maintaining fire watch and fire safety provisions) and obey all
applicable state and federal OSHA standards for worker safety; and do
not damage or disrupt the facilities of the BUILDER or the BUILDER's
various works in progress.
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BUILDER: /s/ MJN
ARTICLE IX - BUILDER'S WARRANTY
A. Except for the Interior, BUILDER warrants that the Vessel will be
converted in accordance with the Final Conversion Scope in a good and
workmanlike manner, free from defects in material and workmanship; and
BUILDER agrees at BUILDER's expense including transporting labor and
supplies to repair or replace any defects discovered within 365 days of
Redelivery excepting defects in Owner Furnished Items or in machinery
and equipment manufactured and warranted by others and excluded from
BUILDER's express limited warranty under this Article; and BUILDER
shall assign and subrogate to OWNER all warranties by said
manufacturers and agrees to extend full cooperation to OWNER, as
needed, to coordinate in enforcing such warranties. This express
written limited warranty is in lieu of all other express or implied
warranties.
This limited warranty is Builder's only warranty to Owner that survives
or continues in force after the Redelivery of the Vessel and is expressly in
lieu of any other warranties. THE TERMS OF THIS EXPRESS, LIMITED WARRANTY
EXCLUDE ANY AND ALL WARRANTIES WHICH ARE OR MAY BE IMPLIED BY LAW INCLUDING,
WITHOUT LIMITATION, THE IMPLIED WARRANTIES OF MERCHANTABILITY AND OF FITNESS FOR
A PARTICULAR USE OR SPECIFIED PURPOSE. TO THE MAXIMUM EXTENT PERMITTED BY LAW,
BUILDER SHALL NOT BE RESPONSIBLE FOR AND HEREBY DISCLAIMS ALL LIABILITY FOR ANY
INCIDENTAL OR CONSEQUENTIAL DAMAGES (INCLUDING WITHOUT LIMITATION ANY LOSS OF
TIME, REVENUE AND/OR USE IN OPERATING OR REPAIRING THE VESSEL) SUFFERED BY OWNER
OR ANY OTHER PERSON. Some states do not allow the exclusion or limitation of
incidental or consequential damages so the above limitation or exclusion may not
apply. This warranty gives Owner specific legal rights and Owner may have other
legal rights which vary from state to state. ALL RIGHTS GRANTED TO OWNER UNDER
THIS LIMITED WARRANTY ARE CONDITIONED UPON BEING EXERCISED IN THE TIME AND
MANNER SPECIFIED IN THIS AGREEMENT AND THERE IS A SOLE AND EXCLUSIVE REMEDY OF
REPAIR OR REPLACEMENT SPECIFIED IN THIS AGREEMENT.
Builder's limited warranty does not apply to or include defects,
damages or claims related to or arising from:
(i) The Interior of the Vessel as defined in the Interior
Specification;
(ii) failure of Owner to perform required maintenance and
servicing;
(iii) abuse, misuse, accident, neglect, or improper operation
by Owner;
(iv) repairs or replacements not authorized by Builder or in
violation of warranty terms;
(v) normal wear and tear of any part that has a life
inherently less than one year (for example: hoses, bulbs, belts,
gaskets, filters, lubricants, etc.);
(vi) Owner Furnished Items and any items or systems which are
separately warranted by their makers
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OWNER: /s/ JBA
BUILDER: /s/ MJN
for periods of not less than 12 months from the date of delivery, such
as main engines, reduction gears, propellers, generators, watermakers,
HVAC, bilge and fire pumps, refrigerators, stoves, life rafts, radars,
navigation systems and radios, and the Interior;
(vii) erroneous, inadequate or incomplete provisions in the
Architects Technical Conversion Plans or in the Interior Specification
or in any Final Interior Specification;
(viii) latent defects in the steel hull and/or decks of the
Vessel existing upon initial delivery of the Vessel to the BUILDER and
not within the scope of BUILDER's responsibilities under this
Agreement; and
(ix) defects first appearing more than one year after
Redelivery.
B. No warranty is made by BUILDER with respect to paint, regardless of
whether procured by BUILDER, except that same will be applied neatly in
accordance with the manufacturer's recommendations and in accordance
with Final Conversion Scope.
C. In the event of any defect covered by BUILDER's guarantee,
BUILDER promptly will make repairs or replacements at the expense of
BUILDER at its yard, if practical, without expense to BUILDER for
transporting the Vessel to and from the yard. Should it be economically
impractical to deliver the Vessel to BUILDER's yard for warranty work
which it presumptively shall be for warranty work having a reasonably
foreseeable cost of less than ________, or should the warranty defect
be such that it is unsafe to deliver the Vessel to BUILDER's yard or if
the Vessel is not within 300 miles of the yard, BUILDER will pay the
cost of repair or replacement performed at a mutually agreed place at
or nearby OWNER's area of Vessel operations including all costs of
transporting labor and supplies; and if any part of warranty correction
work is not so performed by the BUILDER promptly after due notice, the
BUILDER shall reimburse the OWNER for any cost incurred by the OWNER in
effecting such repairs including, without limitation, if it does so
with its own personnel. On a warranty claim the following procedure
shall be followed:
1. OWNER shall give prompt notice and BUILDER shall have
reasonable time and opportunity, under the circumstances, to
inspect the Vessel before work is undertaken;
2. BUILDER shall have the right, reasonable time, and
opportunity, under the circumstances, to negotiate price with
the shipyard or repairman; and
3. BUILDER, at its sole option and expense, may have a
representative present during repairs.
D. BUILDER shall have no obligation under this guarantee unless such
defect becomes manifest within 365 days after Redelivery and Acceptance
of the Vessel and written notice of claim is given within ten (10) days
thereafter. The BUILDER is specifically
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OWNER: /s/ JBA
BUILDER: /s/ MJN
relieved of any responsibility for a latent defect not discovered
within 365 days after Redelivery and Acceptance of the Vessel. The
BUILDER shall not be liable for any consequential or incidental damage
occasioned by any defect.
E. To additionally assure the faithful performance by the BUILDER of
its obligations under this Article following Redelivery, the Builder
shall, at time of Redelivery, cause a national banking association of
BUILDER's choosing to issue a one-year irrevocable standby letter of
credit ("SLC") in favor of OWNER in the amount of ________ which, upon
any material payment default by BUILDER under this Agreement, may be
presented by OWNER to such issuer for a single draw in the full amount
of such SLC. As to the cash received from such issuer upon such
presentment and as to the SLC, BUILDER hereby grants OWNER a security
interest in the SLC and in its proceeds, and in and to all cash paid on
presentment of such SLC, and further agrees that OWNER alone shall be
entitled to hold and possess all such proceeds and cash and that such
possession by OWNER constitutes perfection of OWNER's security
interests. OWNER shall not be restricted as to its use and application
of any and all of such proceeds and cash and may instead use and apply
it in any manner permitted by law and consistent with the terms of this
Agreement; and may (but only for the remainder of the warranty term)
retain all cash from such a single SLC draw not expended to remedy the
particular warranted defect not remedied by the BUILDER as cash
collateral to secure BUILDER's future performance of any additional
warranty obligations hereunder, returning any unexpended portion to
BUILDER at the end of the warranty term. BUILDER agrees that OWNER
shall at all times have recourse to BUILDER and agrees that any
presentment of the SLC by OWNER shall not be deemed an election of one
sole form or type of action or of an exclusive or preclusive remedy,
except to the extent (if at all) that such presentment and receipt and
use of proceeds and cash satisfies in full all compensatory damages to
which OWNER was entitled on account of such BUILDER breach. BUILDER
shall invoice OWNER for the BUILDER's actual cost to have such SLC
issued and shall include with such invoice the issuer's actual record
of charges for such issuance; whereupon the OWNER shall pay the BUILDER
the amount so invoiced, not to exceed $5,000, within 14 days of the
date of BUILDER's invoice therefor.
ARTICLE X - DEFAULT BY BUILDER
A. BUILDER shall be considered in default under this Agreement in the
event that (a) during a period of fifteen (15) consecutive days (plus
the number of days from the beginning of such period when work has been
prevented or its continuation excused under Article V hereof), except
for progress on the Interior, no substantial progress has been made in
the conversion of the Vessel; or (b) the Vessel has not been
redelivered within forty-two (42) days after the Redelivery Date or
later date permitted under this Agreement.
B. BUILDER shall be considered in default under this Agreement if it does
not perform its obligations under this Agreement.
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C. If BUILDER is in default as that word is defined in X-A above, then at
OWNER's option OWNER may terminate this Agreement, in which event
BUILDER shall promptly repay to OWNER the Down Payment and Interim
Installment Payments made by OWNER under Articles III and IV above,
plus interest from the date monies were paid to BUILDER at the Wall
Street Journal prime rate, less any credit due the BUILDER at law or in
equity on a quantum meruit basis for net benefit conferred to the
OWNER's Vessel to the extent that OWNER or OWNER's successors or
assigns have the use and benefit of such Vessel.
D. Payment to OWNER of the Down Payment and Interim Installment Payments
in accordance with this Article by the BUILDER will not prejudice OWNER
as to all other rights and remedies available to OWNER in the event of
default in respects set out in X-A above or in any other respects.
E. X-A above lists the causes of default applicable only to the provision
for repayment of the Down Payment and Interim Installment Payments. For
any such default and any other default, OWNER shall have all rights and
remedies otherwise available to it, including specifically (but not by
way of limitation) any rights to specific performance or mandatory
injunction.
ARTICLE XI - ARBITRATION, JURISDICTION AND LAW
A. Any dispute or controversy arising under or related to this
Agreement where the amount in controversy does not exceed $500,000.00,
excepting disputes under paragraphs B and C of this Article, shall be
submitted to binding arbitration before the person or entity agreed by
the parties within 14 days of the date of this Agreement under
paragraph D of this Article or, failing agreement under said paragraph
D, then the Chief Surveyor of the American Bureau of Shipping ("ABS")
in the City of Seattle, Washington who shall be the single arbitrator
appointed jointly by the parties; or if such Chief Surveyor be
unwilling or unable to act, then such other single qualified and
unbiased individual as the ABS Chief Surveyor will name. Attorney's
fees shall be awarded to the prevailing party together with their costs
of the arbitration.
B. All disputes to be summarily determined under paragraphs B, D(1) or G
of Article I concerning Additional Work or whether an approval was
reasonably withheld, under Article V concerning Permitted Delays, or
under Article VII concerning Changes, shall be solely determined by
summary arbitration to be conducted at Builder's facility within five
(5) calendar days of the time of the dispute arising, with the sole
arbiter the same arbitrator designated or appointed to act under
paragraph A of this Article; to be paid such firm or appointee's
prevailing fees including actual travel costs but not to exceed fees of
$1,500 per day. No rules of evidence shall apply. If either party to
the dispute fails to attend the summary arbitration, the arbitrator
shall rule in favor of the attending party without requirement of proof
or argument by the attending party. The decision of the arbitrator
respecting all matters within the scope of the dispute arbitrated shall
absolutely bind the parties. The arbitrator's decision may be summary
and need not detail reasons
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BUILDER: /s/ MJN
but shall be in writing. The party which did not prevail on the dispute
shall promptly pay all of the arbitrator's fees and costs. This
paragraph B of this Article XI makes special provision for an extremely
rapid summary arbitration to address special matters which, if not
immediately resolved, are likely to frustrate both parties'
expectations or the ability of each to govern their behavior under this
Agreement.
C. This Agreement shall be governed by and construed in accordance
with the laws of the State of Washington. Except for disputes required
to be submitted to arbitration under paragraph A or B of this Article,
the sole forum to adjudicate any dispute arising under or related to
this Agreement shall be the United States District Court for the
District of Washington, at Seattle, or if such Court lacks subject
matter jurisdiction, then the State Court of general jurisdiction for
King County in Seattle; and each party hereby consents to such Court
exercising jurisdiction over their person. Nothing in paragraph A or B
of this Article shall preclude either party from resorting to the
specified sole judicial forum to obtain permanent equitable remedies,
or to seek provisional equitable remedies pending the outcome of
arbitration, or to carry into effect any determination made by
arbitration. Upon any dispute arising under or related to this
Agreement, excepting matters within the scope of paragraph B of this
Article XI, attorneys fees shall be awarded to the prevailing party.
This exclusive forum provision shall not limit a party's ability to
enforce any judgment rendered by the exclusive forum in any Court or
jurisdiction useful or convenient for execution or enforcement.
D. As of the date of this Agreement, BUILDER nominates Xxxx Quick (or such
other qualified person employed by Xxxxxxxx & Associates) as arbitrator
but such person and firm is unknown to OWNER. The parties agree to
exchange nominations and information about the same and promise in good
faith to attempt to agree in writing to an individual or entity as
arbitrator within 14 days of the date of this Agreement; but in the
absence of such agreement, the existing provisions of paragraphs A and
B shall control.
ARTICLE XII - AGREEMENT CONTROLLING
A. This Agreement together with the Contract Drawings contains the
fully-integrated entire and final agreement between the BUILDER and the
OWNER; and there are no promises or representations by either of them
other than those set forth herein. This Agreement shall not be altered
or modified except by an agreement in writing signed by the parties
hereto, and no officer, agent, or employee of either the BUILDER or the
OWNER shall have the power to waive any provisions hereof unless such
waiver be in writing and signed by a duly authorized representative of
each of the parties hereto.
B. In the event of conflict between this Agreement and the Final
Conversion Scope (or, for the period before the Final Conversion Scope
comes into existence, then the Preliminary Conversion Scope), this
Agreement governs; as between the Final Ship Construction Specification
and the Architects Technical Conversion Plans, the former governs; and
in case of internal conflict within the Interior Specification, its
drawings govern over textual matters.
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OWNER: /s/ JBA
BUILDER: /s/ MJN
ARTICLE XIII - INSPECTION, ACCESS, TESTS AND OFFICIAL CERTIFICATES
A. During conversion, BUILDER shall provide OWNER, or its appointed
representative, facilities and access to inspect the Vessel, material,
workmanship, plans, tests and movements. BUILDER shall provide a
suitable office for OWNER's representative and BUILDER shall provide
access to suitable facilities and conditions such as a telephone, fax,
copy machine, heat and air conditioning. BUILDER will perform all of
the tests and Trials required of BUILDER in the Final Conversion Scope
and reasonably necessary for OWNER's acceptance of the Vessel. Except
for OWNER Furnished Items (but as to which OWNER has informed BUILDER
that no testing or vendor attendance will be necessary), BUILDER will
supply all vendor representatives necessary for installation and
Trials, and all crew, stores and ballast reasonably necessary for
Trials and for transit to the place of Redelivery. OWNER will supply
all fuel and lubricants for Trials and all licensed and employed crew
reasonably necessary for tests or demonstrations relating to the crew
or to OWNER's operations required by USCG for the COI. BUILDER will
give OWNER at least ten (10) business days' notice of the date of
commencement of Trials.
B. All of the workmanship and material required under this Agreement,
while the same is in the process of fabrication, erection,
construction, installation and performance, shall be inspected promptly
by the OWNER and his agents and shall be accepted promptly in
accordance with this Agreement and the Exhibits hereto or rejected
promptly in accordance therewith. The OWNER shall promptly notify the
BUILDER if the OWNER's Representative has actual awareness of a
particular defect.
C. OWNER hereby appoints Xxxxxx Xxxxxxxxxxx as the OWNER's
Representative. Until BUILDER is notified in writing that such OWNER`s
Representative's appointment has been revoked, said Representative
shall have full and complete authority to act for the OWNER in any and
every manner required, permitted or contemplated under this Agreement,
except that unless specially notified by the OWNER in writing to the
BUILDER the OWNER's Representative shall not have the authority to
amend this Agreement on behalf of the OWNER. BUILDER hereby appoints
Xxxxx Xxxxxxx as its Representative. Each party shall have one and only
one Representative appointed at any given time for the entire period
from the date of this Agreement until Redelivery and shall replace said
Representative within seven (7) days in the event the position is
vacated.
D. BUILDER shall provide access to the Vessel while under conversion to
inspectors from any public authority reasonably requested by OWNER and
to private business invitees of the OWNER provided that all private
business invitees are themselves or by the OWNER insured against injury
and death from any cause while on the BUILDER's premises; and OWNER
shall defend, indemnify and hold BUILDER harmless from any liability
for injury asserted by or on behalf of any such private business
invitee against BUILDER save to the extent caused by the BUILDER's
active negligence.
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OWNER: /s/ JBA
BUILDER: /s/ MJN
E. During conversion, the OWNER will from time to time be required to make
decisions on the selection of items to be purchased by the BUILDER to
complete the conversion by the Redelivery Date. The OWNER agrees that
the OWNER's Representative shall make decisions on all purchase items
requested by BUILDER within 5 business days of BUILDER requesting such
OWNER decision and having given a reasonable level of detail on the
matters requiring decision. The OWNER hereby agrees that its consent
shall be deemed given on the purchase source, color or particular item
proposed by the BUILDER if OWNER's Representative fails to so decide
within 5 business days of BUILDER making the decision request.
ARTICLE XIV - ASSIGNMENT OF THE AGREEMENT
This Agreement shall inure to the benefit of the BUILDER and OWNER and
their successors and assigns and shall be binding upon the BUILDER and
OWNER and their successors and assigns; provided, however, that BUILDER
shall not assign this Agreement or any interest hereunder without the
prior written consent of OWNER, and any assignment without said prior
written consent shall be null and void. OWNER may at any time sell,
transfer or mortgage the Vessel and/or assign this Agreement, but shall
at all times remain liable under the Agreement. BUILDER agrees that
such a sale and/or assignment shall not be grounds for termination of
this Agreement.
ARTICLE XV - COMPLIANCE WITH REGULATIONS
The BUILDER shall comply with all laws, rules, regulations and
requirements of the departments or agencies of the United Sates
affecting the construction of works, plants and vessels in or on
navigable waters and the shores thereof and all other waters subject to
the control of the United States, and shall procure at its own expense
such permits from the United States and from state and local
authorities as may be necessary in connection with beginning or
carrying on the completion of the contract work, and shall at all times
comply with all applicable and legally enforceable United States, State
and local laws in any way affecting the contract work. It shall be the
responsibility of OWNER and not BUILDER to make provision in the Vessel
and in any of OWNER's shoreside facilities for any compliance necessary
with the ADA Accessibility Guidelines now or hereafter in force.
Nothing in this Article shall reduce the OWNER's responsibility under
Article I-D hereof.
ARTICLE XVI - PATENTS
OWNER agrees to protect and hold harmless BUILDER against claims of
third persons for damages sustained by reason of the infringement of
the patent rights with respect to materials, processes, machinery,
equipment, and hull form selected and used by OWNER, Hopeman, or the
Architects in such works. OWNER agrees to protect and hold harmless
BUILDER against claims of third persons for damages sustained by reason
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OWNER: /s/ JBA
BUILDER: /s/ MJN
of infringement of patent rights with respect to materials, processes,
machinery and equipment supplied or specifically acquired by OWNER or
required by the Preliminary GA, the Architects Technical Conversion
Plans or the Interior Specification and any Final Interior
Specification. BUILDER agrees to protect and hold harmless OWNER
against claims of third persons for damages sustained by reason of
infringement of patent rights with respect to materials, processes,
machinery and equipment supplied or specifically acquired or applied by
or through BUILDER.
ARTICLE XVII - OWNERSHIP OF THE DRAWINGS AND SPECIFICATIONS
The Interior Specification, any Final Interior Specification, the
Preliminary GA and the Architects Technical Conversion Plans are and
shall remain the sole property of the OWNER. The Preliminary and Final
Ship Construction Specifications, the Production Drawings and the
As-Built Drawings are and shall be deemed jointly owned by OWNER and
BUILDER. BUILDER shall be entitled to retain permanently one archive
copy of The Interior Specification, any Final Interior Specification,
the Preliminary GA and the Architects Technical Conversion Plans.
BUILDER shall not permit any third party who may wish to contract with
BUILDER for the construction or conversion of an overnight riverboat to
utilize the archive copy of the specified materials which are the sole
or joint property of the OWNER for any material portion of a design for
another vessel unless it has first obtained the OWNER's written consent
to so allow, given or withheld in the Owner's sole and absolute
discretion.
ARTICLE XVIII - NOTICES AND COMMUNICATIONS
Communication and notices shall be in writing addressed to the OWNER
under this agreement shall be addressed to the OWNER at the following
address:
The Delta Queen Steamboat Co.
c/o American Classic Voyages Co.
Two Xxxxx Xxxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxx Xxxxxxxxxxx
Fax: 000-000-0000
With a copy to: Xxxxxx Xxxxx
Fax: 000-000-0000
Communications and notices shall be in writing addressed to the BUILDER
under this Agreement shall be addressed to the BUILDER at the following
address:
Xxxxxxx Brothers Boat Builders, Inc.
X.X. Xxx 000, 0000 Xxxxx Xxxxxxx Xxxx
Xxxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxxxx X. Xxxxxxx
Fax: 000-000-0000
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OWNER: /s/ JBA
BUILDER: /s/ MJN
Notices shall be personally delivered or, if not, sent both by letter
and by fax provided good transmission of the fax is electronically
confirmed; and if not so confirmed, shall be sent by Federal Express or
like overnight delivery service.
ARTICLE XIX - TITLE AND COLLATERAL SECURITY
A. OWNER shall remain the owner of the Vessel to be converted pursuant to
this Agreement. Title to all work performed, materials delivered, and
components fabricated shall vest in the OWNER as and when performed,
delivered to the shipyard, or fabricated. Title to all scrap and title
to any material surplus to the requirements of this Agreement shall be
and remain vested in the BUILDER.
B. OWNER has disclosed to BUILDER that the Vessel at time of this
Agreement is subject to a first preferred mortgage recorded in favor of
a lender to OWNER in the approximate amount of $70 million, will remain
subject to such mortgage throughout the conversion, and that such
lender is unwilling to subordinate the lien of its mortgage to the lien
of any security interest in favor of the BUILDER. To protect the
interests of BUILDER under such circumstances, OWNER acknowledges that
it has agreed to installment payments and a down payment under Articles
III and IV hereof to make BUILDER's performance of work hereunder cash
flow neutral instead of being in the nature of payments in arrears. To
additionally protect BUILDER under such disclosed circumstances, OWNER
agrees within 15 days of the date of this Agreement to cause a national
banking association of OWNER's choosing to issue a one-year irrevocable
standby letter of credit ("SLC") in favor of BUILDER in the amount of
$500,000 which, upon any material payment default by OWNER under this
Agreement, may be presented by BUILDER to such issuer for a single draw
in the full amount of such SLC. As to the cash received from such
issuer upon such presentment and as to the SLC, OWNER hereby grants
BUILDER a security interest in the SLC and in its proceeds, and in and
to all cash paid on presentment of such SLC, and further agrees that
BUILDER alone shall be entitled to hold and possess all such proceeds
and cash and that such possession by BUILDER constitutes perfection of
BUILDER's security interests. BUILDER shall not be restricted as to its
use and application of any and all of such proceeds and cash and may
instead use and apply it in any manners permitted by law and not
inconsistent with the terms of this Agreement. OWNER agrees that
BUILDER shall at all times have recourse to OWNER and agrees that any
presentment of the SLC by BUILDER shall not be deemed an election of
one sole form or type of action or of an exclusive or preclusive
remedy, except to the extent (if at all) that such presentment and
receipt and use of proceeds and cash satisfies in full all compensatory
damages to which BUILDER was entitled on account of such OWNER breach.
OWNER shall invoice BUILDER for the OWNER's actual cost to have such
SLC issued and shall include with such invoice the issuer's actual
record of charges for such issuance; whereupon the BUILDER shall pay
the OWNER the amount so invoiced, not to exceed $15,000, within 14 days
of the date of OWNER's invoice therefor. If not
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OWNER: /s/ JBA
BUILDER: /s/ MJN
sooner presented and drawn against, the SLC shall be expressly released
by the BUILDER on Redelivery.
C. To protect the OWNER's interests in having the BUILDER fully
perform its obligations under this Agreement, BUILDER agrees within 15
days of the date of this Agreement to cause a national banking
association of BUILDER's choosing to issue a one-year irrevocable
standby letter of credit ("SLC") in favor of OWNER in the amount of
$1,000,000 which, upon any material payment default by BUILDER under
this Agreement, may be presented by OWNER to such issuer for a single
draw in the full amount of such SLC. As to the cash received from such
issuer upon such presentment and as to the SLC, BUILDER hereby grants
OWNER a security interest in the SLC and in its proceeds, and in and to
all cash paid on presentment of such SLC, and further agrees that OWNER
alone shall be entitled to hold and possess all such proceeds and cash
and that such possession by OWNER constitutes perfection of OWNER's
security interests. OWNER shall not be restricted as to its use and
application of any and all of such proceeds and cash and may instead
use and apply it in any manners permitted by law and not inconsistent
with the terms of this Agreement. BUILDER agrees that OWNER shall at
all times have recourse to BUILDER and agrees that any presentment of
the SLC by OWNER shall not be deemed an election of one sole form or
type of action or of an exclusive or preclusive remedy, except to the
extent (if at all) that such presentment and receipt and use of
proceeds and cash satisfies in full all compensatory damages to which
OWNER was entitled on account of such BUILDER breach. BUILDER shall
invoice OWNER for the BUILDER's actual cost to have such SLC issued and
shall include with such invoice the issuer's actual record of charges
for such issuance; whereupon the OWNER shall pay the BUILDER the amount
so invoiced, not to exceed $30,000, within 14 days of the date of
BUILDER's invoice therefor. If not sooner presented and drawn against,
the SLC shall be expressly released by the OWNER on Redelivery.
ARTICLE XX - CERTAIN DEFAULT PROVISIONS
A. On the eleventh calendar day following any material default by the
OWNER in paying any sum due to the BUILDER under this Agreement and
which has not been fully cured, the BUILDER shall be at liberty to stop
all work in progress on the Vessel and shall be at liberty to cancel
such of its vendor and subcontract agreements which relate to the
Vessel as it is entitled to do or where affected third parties consent.
B. If a payment default by OWNER continues for 11 days after the actual
date when the defaulted payment was due and has not been fully cured:
(1) all remaining unpaid portions of the purchase price shall
be accelerated and then be all due and payable together with interest
on such sum at the rate of one and one-quarter percent (1.25%) per
month until paid, but the total indebtedness due shall subtract any
actual expense saved by the BUILDER on account of the breach from not
having to perform the balance of the contract;
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OWNER: /s/ JBA
BUILDER: /s/ MJN
(2) Owner shall in addition pay to BUILDER as liquidated
damages for involuntary productive shipyard space consumption and for
profit lost from other potential contracts delayed or prevented by the
occupation the sum of ______ for each day, after the actual date of
default, that the Vessel or the equipment and materials and components
intended to become the Vessel continue to occupy space at the BUILDER's
facility, and in addition a one-time work force demobilization fee of
_______, but all amounts under this subparagraph shall not in any event
exceed the sum of ________; and
(3) Respecting the sums specified in preceding subparagraph 2,
the parties agree that the sums are not penalties but instead a good
faith agreement to sums meant to compensate the BUILDER for damages
foreseeable but presently impossible or difficult to calculate.
XXI: SPECIAL EARLY TERMINATION PROVISION
Should the Vessel during transit from her present location in Louisiana
to the BUILDER's facility sink or be so damaged in transit that she is an actual
or implied constructive total loss for purposes of the expectations of the
parties under this Agreement (and if damage suffered in transit would
necessitate $1 million or more work beyond the scope of the Preliminary
Conversion Scope and delay the Redelivery Date by 30 days or more, the Vessel
shall conclusively be deemed an implied constructive total loss); then in such
event the OWNER may by written notice to the BUILDER declare this Agreement
terminated effective as of the date of BUILDER's receipt of such notice.
Forthwith upon receipt of such notice, the BUILDER shall notify its vendors and
subcontractors to, and shall itself, stop all work and activity under this
Agreement; and shall thereafter promptly notify the OWNER in writing of the
total of its labor, subcontract, equipment and materials charges actually paid
or incurred under this Agreement to such date less the amount of any refunds and
relief from liability insurance which BUILDER can actually effect with
commercially reasonable effort with its subcontractors, vendors and suppliers;
and if such total is greater than the sums paid by OWNER to BUILDER under
Articles III and IV of this Agreement, BUILDER shall invoice the OWNER for the
difference which OWNER shall pay within fourteen calendar days of date of
invoice; but if such total is less than such payments, BUILDER shall with such
notice refund the difference to the OWNER.
[Only a concluding single un-numbered paragraph and the signatures of the
parties appear on the single page following.]
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OWNER: /s/ JBA
BUILDER: /s/ MJN
IN WITNESS WHEREOF the parties hereto have caused this Agreement to be executed
by their proper authorized representatives, thereunto duly authorized, with this
Agreement being deemed made and completed at Freeland, Washington. This
Agreement may be executed at different places and the signatures transmitted by
facsimile which, if so done, will bind a party transmitting their signature by
facsimile as fully as if their original signature had been delivered; and, or in
addition, this Agreement may be executed in original counterparts which, if so
done, shall when taken together bind the parties fully and as if both had
originally subscribed to a single instrument. Each person signing this Agreement
individually warrants their ability to bind the party on whose behalf each
signs.
XXXXXXX BROTHERS BOAT BUILDERS, INC.
By: /s/ Xxxxxxx X. Xxxxxxx
--------------------------------------------
Name/title: Xxxxxxx X. Xxxxxxx, President
THE DELTA QUEEN STEAMBOAT CO.
By: /s/ Xxxxxx Xxxxx
--------------------------------------------
Name/title: Xxxxxx Xxxxx, Senior Vice-President
