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EXHIBIT 10.2
VESSEL CONSTRUCTION CONTRACT
THIS VESSEL CONSTRUCTION CONTRACT (the "Contract") entered into as of
this 1st day of August, 1997 by and between Halter Marine, Inc., a corporation
organized and existing under and by virtue of the laws of the State of Nevada
(hereinafter called "Builder"), and Sea Mar Equipment, Inc., a corporation
organized and existing under and by virtue of the laws of Louisiana
(hereinafter called "Owner").
W I T N E S S E T H:
ARTICLE I - DESCRIPTION OF VESSEL:
Builder, for and in consideration of the sum to be paid it by Owner as
hereinafter set forth, unless prevented by "Force Majeure" as hereinafter
defined, agrees to design, build, equip, and complete at Builder's Yard as
designated in the attached Exhibits, free and clear from liens, claims and
encumbrances, two (2) 200 ft. Supply Vessels (hereinafter referred to as "The
Vessel", "each Vessel", or "Vessels", collectively, as the case may be), each
of which is described on the attached Exhibits "A-1" and "A-2" and which shall
be constructed in accordance with: (a) this Contract, (b) Specifications dated
July 11, 1997 (Exhibit "B" to this Contract) (the "Specifications"), and (c)
Outboard Profile and Arrangement Drawing No. 1A, dated June 5, 1997 and hand
dated July 11, 1997 (Exhibit "C" to this "Contract") (the "Drawings")
(hereinafter collectively as to each respective Vessel, the "Contract
Documents"), all of which have concurrently been identified by the parties
hereto and made a part hereof as if fully set forth herein.
Except for any Owner-furnished equipment as may be listed in the
Specifications for a particular Vessel, Builder agrees to furnish all design,
plant, labor, tools, equipment and material necessary for the construction and
delivery of such Vessel(s).
The Vessel shall be constructed to meet the applicable requirements of
regulatory bodies as set forth in the Contract Documents, and certificates
evidencing the required classifications shall be furnished by Builder to Owner.
If any enforced changes in the rules and regulations (or
interpretations thereof) of the American Bureau of Shipping or other applicable
classification society or any governmental agency (collectively, "Enforced
Changes") are made subsequent to the date of this Contract necessitating
alterations or additions to the Vessel(s); whereby the cost of any Vessel is
increased and/or the time required for completion for any Vessel is extended,
Owner shall authorize, and pay for, as a change order under this Contract, such
alterations, additional work items, outfit and/or equipment, and shall allow
Builder such additional time as may be
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required to meet the Enforced Changes, in accordance with Article IV hereof.
Owner will only be responsible for the costs of the Enforced Changes if (i)
Owner is advised of the Enforced Changes, (ii) Owner is given an opportunity to
address the Enforced Changes with the applicable regulatory body before any
work is performed and (iii) any resultant changes in the scope of work are the
subject of prior agreement as to price and schedule impact before the work is
performed; provided, however, any delay by Owner in accepting the Enforced
Changes shall be an event of "Force Majeure" hereunder, and in the event Owner
does not agree to be responsible for the Enforced Changes Builder shall be
relieved of any responsibility to comply with the requirements of the
applicable regulatory body set forth in the Contract Documents necessitated by
that Enforced Change.
All general language or requirements contained in the
Contract Documents for each Vessel and all other requirements inconsistent or
in conflict with the provisions of this Contract are superseded by this
Contract, it being the intent of the parties that the provisions of this
Contract shall prevail. If there is any conflict or inconsistency between the
Contract Plans and Specifications, the Specifications shall control.
Article II - PRICE AND PAYMENT:
Owner, in consideration of the true and faithful performance on the
part of the Builder, agrees to pay to Builder the sum of U.S. $16,550,000.00,
hereinafter called the "Contract Price". The portion of the Contract Price
attributable to each Vessel (hereinafter called the "Assigned Value") is
contained in Exhibit "A-1" and "A-2".
The Assigned Value for each Vessel shall be payable in two (2)
installments. The initial payment in an amount equal to ten percent (10%) of
the Assigned Value for each Vessel shall be payable upon execution of this
Contract. The remaining ninety percent (90%) of the Assigned Value of each
Vessel and any amounts due for extras, change orders, other additional costs
as provided in this Contract, together with interest at the Agreed Rate (as
defined below) (such payment is the "Final Payment"), shall be payable upon
delivery of the Vessel.
Owner and Builder have agreed on the following milestone events (each
a "Milestone Event") for the construction of the Vessel and on the percentage
of the Assigned Value of each Vessel allocable to each Milestone Event:
ALLOCABLE PERCENTAGE
EVENT OF ASSIGNED VALUE
----- --------------------
Receipt of approximately
400 tons steel 15%
90% hull midbody erected
on shipway, not completely welded 20%
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Erection of superstructure 15%
Setting of main engines 20%
Launch of Vessel 12%
Delivery of Vessel 8%
Interest shall accrue on each respective portion of the Assigned Value
of each Vessel at the rate of seven and one-quarter percent (7 1/4%) per annum
(the "Agreed Rate") during the period between the time Builder achieves the
corresponding Milestone Event and Builder's receipt of the Final Payment. All
accrued interest shall be payable at the time of the Final Payment. Interest
shall accrue at the Agreed Rate on that portion of the Assigned Value of each
Vessel attributable to each Milestone Event from the time that Builder achieves
such Milestone Event until Builder's receipt of the Final Payment. For
instance, interest shall accrue at the Agreed Rate on fifteen percent (15%) of
the Assigned Value for each Vessel from the time of Builder's receipt of steel
until Builder's receipt of the Final Payment. In addition, interest shall also
accrue at the Agreed Rate for that portion of the Assigned Value of each Vessel
attributable to the other Milestone Events from the time of each respective
Milestone Event until Builder's receipt of the Final Payment. The parties
agree and acknowledge that while interest shall not accrue during the Grace
Period (as hereinafter defined), interest shall continue to accrue at the
Agreed Rate during the Liquidated Damages Period (as hereinafter defined).
In the event the down payment required for each Vessel shall not be
tendered to Builder in immediately available funds by the close of business
within ten (10) business days of Owner's execution of this Contract, either
party shall have the right to terminate this Contract, in which event neither
party shall have any further liability to the other. In the event Builder
chooses not to terminate this Contract, then the Stipulated Date of Delivery as
described in Article III shall be extended one day for every day that any
portion of the deposit is made after the foregoing deadline.
The Builder shall submit appropriate invoices and/or certificates to
evidence the occurrence of each Milestone Event for
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each Vessel which shall be reviewed and approved in writing by Owner's
representatives. Payments for all extras, less credits for any deductions,
shall be made in cash upon the completion and prior to delivery of each Vessel.
The full Assigned Value, including all amounts owed for extras, change orders
and all other additional costs as provided in this Contract, must be paid prior
to delivery of each Vessel.
Should Owner (a) fail to take delivery of the Vessel within ten (10)
days of the completion of the Vessel (except for any Minor Items (as
hereinafter defined)) and Owner's receipt of written notice that the Vessel is
complete and available for Delivery in accordance with the Contract Documents
(except for any Minor Items), or (b) fail to timely pay to Builder any amounts
due hereunder, Owner shall be in default of this Contract and Builder shall
have the right to mitigate its damages and protect its rights and interests.
Without limiting the foregoing, Builder shall be entitled either to terminate
this Contract or to xxx Owner for specific performance. If Builder elects to
terminate this Contract, then Builder shall have the option, in its sole
discretion, to (i) xxx Owner for damages as a result of its breach hereunder
and apply any deposits or other payments made hereunder toward those damages,
or (ii) retain title to each Vessel and/or sell the Vessel, free of any claim
of Owner, and retain any deposits or other payments made hereunder. Provided,
however, Builder shall refund to Owner the difference, if any, between: (X) the
sum of (i) the sale price of the Vessel resulting from any sale by Builder
pursuant to the terms of this paragraph, and (ii) the aggregate of all payments
to Builder from Owner pursuant to this Contract, minus (Y) the sum of (i) the
Assigned Value of the Vessel (as adjusted pursuant to the terms of this
Contract), and (ii) the aggregate of all reasonable costs and expenses to
Builder directly resulting from the sale contemplated hereunder, including (i)
storage costs, relocation costs, and rescheduling costs and (ii) the default
by Owner or the sale of the Vessel pursuant to the provisions of this
paragraph, including the costs and expenses of the enforcement of Builder's
rights under this paragraph. If the
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sum of (X) is greater than the sum of (Y), Owner shall be reimbursed such
difference. Other than as expressly set forth herein, in any such event,
Builder shall have no further obligation whatsoever to Owner hereunder.
The making of any partial payments shall in no way estop Owner from
thereafter asserting any right or remedy accruing to its because of failure of
Builder to deliver the completed Vessel in accordance with the terms hereof.
ARTICLE III - TIME AND CONDITIONS OF DELIVERY:
Each Vessel, after required trials, completed in accordance with the
Contract Documents, shall be delivered to Owner, on or before the date
indicated on the attached Exhibits "A-1" and "A-2" for the delivery of each
Vessel (hereinafter called the "Stipulated Date of Delivery"), or on such later
date or dates as may be required by reason of agreed changes in the Vessel, or
by reason of specified delays resulting from "Force Majeure", as that term is
defined in Article VI.
Builder shall deliver each Vessel to Owner at a location set forth on
the attached Exhibit "A-1" and "A-2" (the "Place of Delivery"). All costs and
expenses of transporting each Vessel to the Place of Delivery shall be borne by
and be the obligation of the Builder. All costs and expenses of operating
and/or transporting each vessel as it has reached the Place of Delivery and
been accepted by Owner shall be borne by and be the obligation of Owner.
Builder shall furnish Owner on delivery of each Vessel a Xxxx of Sale
(if necessary) and a Builder's Certification, together with whatever other
documents may be required by law or by any regulatory agency of the United
States having relevant jurisdiction in order for Owner to document the Vessel
in its name. Any expense in connection with the furnishing of such documents
and with the documentation of such Vessel shall be paid by Owner.
Owner shall execute a Delivery and Acceptance Certificate immediately
prior to the time of delivery and acceptance of the Vessel by Owner,
substantially in the form of Exhibit "D".
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If completion and delivery of each Vessel shall be delayed more than
thirty (30) days beyond the respective Stipulated Date of Delivery (such 30 day
period is the "Grace Period"), as adjusted in accordance with the provisions of
Articles IV and VI hereof or because of some other act of the Owner, or it is
agreed that Owner will suffer damages which are difficult of ascertainment and
the parties hereby agree that Owner shall sustain, and Builder agrees to pay
as liquidated damages in accordance with the amounts noted on Exhibits "A-1"
and "A-2" for the Vessel whose delivery is delayed for each calendar day of
delayed delivery from the thirtieth (30th) day after the Stipulated Date of
Delivery (as adjusted) until such time that Builder tenders delivery of the
Vessel to the Owner in accordance with the Contract Documents (such period
during which liquidated damages may accrue is the "Liquidated Damages Period"),
except for minor items which do not adversely affect the commercial utility or
efficient and lawful operation of the vessel (collectively, the "Minor Items")
and Builder has agreed to correct such Minor Items in a timely manner, not to
exceed a total of ninety (90) days or a total sum for liquidated and agreed
damages for the Vessel not to exceed the total amount noted on Exhibits "A-1"
and "A-2". All liquidated damages accruing hereunder shall be payable upon
delivery of each affected Vessel. Except for Owner's termination rights set
forth in the following paragraph, Owner's right to such liquidated damages
shall be Owner's sole and exclusive remedy for damages or loss due to late
delivery of the Vessel and Owner specifically waives all other rights or
remedies at law or in equity therefor.
Should the Stipulated Date of Delivery be extended pursuant to this
Contract for more than one hundred twenty (120) days from the Stipulated Date
of Delivery (as adjusted pursuant to the terms of this Contract) solely based
on delay by Builder, upon payment to Builder of all costs incurred to date by
Builder in construction of the Vessel that are not included in the first
installment of the Contract Price made to Builder as depicted in the Assigned
Value documented by the parties, as adjusted for agreed change orders less all
liquidated damages and less or without any accrued
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interest from the Stipulated Date of Delivery until Owner takes possession of
the Vessel, Owner shall have right, at its option, to terminate this Contract by
providing written notice to Builder and to have the Vessel completed by another
shipyard. If so requested by Owner, Builder shall (a) in the least expensive
manner, complete all work required to permit the Vessel to be safely removed
from the Builder's yard, (b) remove its employees, agents and contractors,
together with their equipment, and (c) render all necessary assistance to the
Vessel in leaving the Builder's yard at the earliest moment convenient to
Builder. Once Owner has documented Owner's cost to complete the Vessel, Builder
shall pay to Owner the difference, if any, between (a) the sum of (i) Owner's
reasonable auditable costs of completion and (ii) liquidated damages that have
accrued hereunder with respect to the Vessel, and (b) the Assigned Value for the
Vessel, as adjusted for change orders performed by Builder.
Notwithstanding anything contained in this Contract to the contrary,
should Owner terminate this Contract pursuant to the preceding paragraph, Owner
shall have one hundred eighty (180) days from such termination to notify Builder
of any defective materials or workmanship which were both (i) included in the
percentage completion of the construction of the Vessel to date by Builder and
(ii) represented in the amount paid to Builder upon such termination. In no
event shall Builder be liable to Owner for any sum in excess of the cost of
repairs or replacements of the materials or workmanship, nor shall Builder be
obligated to repair or replace any material or workmanship, where such repair or
replacement is caused by Owner, its contractors (except Builder), subcontractors
or employees. Builder shall have no responsibility whatsoever for such defective
materials or workmanship if Owner does not notify Builder within the period set
forth above in this paragraph.
Owner and Builder waive, remit and release each other from any claims
or causes of action for consequential damages arising out of either party's
failure to perform or timely perform under this Contract. For purposes of this
waiver and release, consequential
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damages shall be considered any and all claims for delay (other than for
liquidated damages as set forth herein), disruption, loss of profits, extended
project management costs, overhead costs, lost revenues, interest expense, loss
of revenue from other projects, or any other similar consequential damages,
irrespective of the basis of such claimed consequential damages and even if
caused or contributed to by the fault, neglect, or breach of contract of the
other party.
ARTICLE IV - CHANGES IN THE PLANS AND SPECIFICATIONS:
Subject to the requirements of other work then pending in Builder's
yard, Owner has the right to request any deletions from or additions to the
plans and Specifications for each Vessel on giving due notice in writing to
Builder, the dollar amount of any such changes to be agreed upon in advance by
Owner and Builder, and added to, or deducted from, the total Contract Price and
Assigned Value for such Vessel. If any such change shall delay the completion of
such Vessel, Builder shall be allowed a reasonable extension of time of the
Stipulated Date of Delivery sufficient to cover such delay. A statement of the
increase or decrease to the Contract Price and Assigned Value, and/or any
additional contract time required, as aforesaid, shall be submitted to Owner by
Builder in the form shown on Exhibit "E", and shall be approved by Owner in
writing before any such change is made. Notwithstanding the foregoing, no change
shall be made in the general dimensions and/or characteristics of any Vessel
which would diminish the capacity of the Vessel to perform as originally
intended by the Contract Documents, except by mutual consent of the parties.
All change orders in excess of $25,000.00 shall be handled in the
following manner. Upon the occurrence of the next Milestone Event, interest will
accrue on change orders as agreed in the written change order executed prior to
performance of the changed work.
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ARTICLE V - INSPECTION BY OWNER'S REPRESENTATIVE:
Builder will furnish reasonable space at its yard for the duly
authorized representative(s) of Owner who shall have reasonable access to the
work of Builder. Owner's representative(s) shall promptly inspect and accept all
workmanship and material which is in conformity with the Contract Documents
and shall with equal promptness, reject all workmanship and material which does
not comply with the Contract Documents, provided that the acceptance of such
workmanship and material by Owner's representative shall not prejudice the
rights of Owner under the provisions of Article VII hereof.
Access to the vessel shall be at Owner's own risk. Builder assumes no
responsibility and Owner assumes full liability for any injury that he or his
representative, agent or contractors may sustain on the vessel during its
construction and hereby fully releases and discharges Builder from any
liability with respect thereto.
ARTICLE VI - FORCE MAJEURE:
All agreements of the Builder contained in this Contract respecting
the Stipulated Date of Delivery of each Vessel shall be subject to extension by
reason of "Force Majeure", which term is hereby declared to include the
following: strikes, lockouts, or other industrial disturbances; short or late
delivery of material (including particularly steel, tubing, piping, wiring, and
all components); unavailability or interruptions or inadequacy of fuel
supplies; acts of God or of the Owner; war, preparation for war, the
requirement, urgency or intervention of Naval or Military executives or other
agencies of government; arrests and restraints of rulers and people, blockade,
sabotage, vandalism and malicious mischief, threats of vandalism and bomb
scares and insurrection; landslides, floods, hurricanes, earthquakes; collisions
and fires; any delays of carriers by land, sea or air; non-delivery and/or late
delivery of all Owner Furnished Supplies, material or equipment, delays due to
changes authorized by Owner, and delays of material which the Builder by
reasonable precaution cannot avoid. Rain shall not be considered a "Force
Majeure" event unless it
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occurrence requires a shutdown of a substantial portion of the Builder's yard
prior to 12:00 noon on a regularly scheduled work day. For each day on which
rain requires a shut down as aforesaid, Builder shall be entitled to one (1)
day's extension of the Stipulated Date of Delivery. Delays in receiving
Material, equipment, or fuel or short deliveries thereof (except Owner
Furnished Material) shall be considered a "Force Majeure" event if Builder
shows that such materials or supplies were timely ordered and that such due
diligence was exercised to obtain timely delivery thereof; and no other
alternate source of supply was reasonably available.
Within ten (10) days of knowledge of any "Force Majeure" event which
may affect the Stipulated Date of Delivery, the Builder shall notify the Owner
in writing and shall furnish an estimate, if possible, of the extent of the
probable delay. Upon receipt of any such notice, the Owner shall, within ten
(10) days, acknowledge the same in writing and indicate agreement that such
development is to be treated as a "Force Majeure" event, or state any
objections, and the reasons therefor, to acceptance of this development as a
"Force Majeure" event. If Builder fails to notify Owner of a "Force Majeure"
event within ten (10) days after knowledge of the event, Builder shall be
estopped from thereafter claiming "Force Majeure" for any period of delay more
than ten (10) days prior to said notice. If Owner should fail to respond
within ten (10) days, the extension of time shall be considered approved.
If the completion of any Vessel is delayed one or more time by "Force
Majeure", the Stipulated Date of Delivery of that Vessel and all subsequent
Vessels (including all Option Vessels [as hereinafter defined]) shall be
extended by a period equal to the period of such delay or delays; provided,
however, for any "Force Majeure" events arising due to floods, hurricanes, or
earthquakes or other similar Acts of Gods which result in any period of delay
in excess of five (5) days, no interest shall accrue on the portion of the
Assigned Value which ordinarily would be accruing interest during such extended
"Force Majeure" period.
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ARTICLE VII - WARRANTY:
During the Warranty Period, as hereinafter defined, Builder warrants
that all work furnished by Builder hereunder shall have been performed in a
good and workmanlike manner. The provisions set forth herein as to the
liabilities of the Builder are to apply also to all work furnished by
subcontractors in Builder's performance of this Contract.
Builder shall have no responsibility whatsoever with respect to any
defect, claim, or loss of the Vessel not reported in writing to Builder within
one hundred eighty (180) days from the Delivery Date (as specifically defined
in this Article VII) (such period being hereinafter referred to as the
"Warranty Period").
The Warranty granted to Owner by Builder shall extend only to those
claims reported in writing to Builder within such Warranty Period. For purposes
solely for this Article VII, "Delivery Date", shall be defined as the earlier
of the following: (1) fourteen (14) days after Owner's failure to accept
delivery of the Vessel which is complete in accordance with the Contract
Documents (except for Minor Items), or (2) the date of actual delivery of the
Vessel. In the event Owner notifies Builder of any claim covered under this
Warranty, Builder will make repairs and/or replacement (including any design
changes) at its option, at one of Builder's yards without expense to Builder
for transporting the Vessel, or any component thereof, to or from that yard;
provided, however, that if it is not practical to have the Vessel proceed to
such yard, Owner may, with prior written consent of Builder, have such repairs
and/or replacement made elsewhere, and, in such event, Builder shall reimburse
Owner a sum equivalent to (i) the amount Builder would have expended, at its
own yard at Builder's then prevailing rates, or (ii) the amount actually
expended by Owner, whichever is less. In no event shall Builder be responsible
for any sum in excess of the cost of the repairs and/or replacement as
specified herein, and Builder shall in no event be responsible for any claims
to property, persons, and/or consequential or punitive damages, including, but
not limited to claims for bodily injury, illness, disease, death, loss of
service, lose of society, maintenance, cure
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wages, and any other consequential or punitive damages arising out of any breach
of this Contract or faulty or negligent performance thereof. Owner
specifically releases Builder from any claims for personal injury, death,
property damage, delays, demurrage, loss of profit, lost revenues, or any other
consequential or punitive damages of any kind whatsoever, irrespective of the
basis of such claims and even if such claims should arise out of Builder's sole
fault, negligence, breach of this Contract, or strict liability.
As to the installation of all third-party supplied components,
materials or equipment, if the manufacturer or supplier has a representative at
the job site during such installation, and if the installation is completed to
the satisfaction of such representative, with all requirements of such
representative having been satisfied by Builder, it shall be conclusively
presumed that such installation has been completed by Builder in accordance
with the manufacturer's recommendations, in a proper and satisfactory manner.
Builder does not warrant that any equipment or materials purchased by
it from a supplier or manufacturer for installation in the Vessel is free from
manufacturers' defects and deficiencies and Owner specifically releases Builder
from any such implied warranty of fitness or workmanship or freedom from
defects relating thereto. To the extent available, Builder agrees to transfer
and assign to Owner, without warranty of Builder with respect thereto, any
warranties relative to material, equipment and/or labor furnished by others.
Should Owner be required to enforce any such warranty, Builder will cooperate
with Owner's efforts, short of instituting legal action on Owner's behalf
and/or incurring other legal fees.
Nothing contained herein shall obligate Builder at any time to repair
or replace the Vessel, or any component part thereof, where such repair and/or
replacement is caused, in whole or in part, by the negligent operation or
maintenance of the Vessel, or its equipment, by Owner or owner's agents,
employees or representatives.
With respect to paint, Builder warrants that it will purchase paint of
good marine quality and that it will apply the paint in
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accordance with the manufacturer's specifications and recommendations, and
Builder makes no warranty, express or implied, with respect to the fitness of
the paint or the manufacturer's specifications and recommendations.
For any claim for damages to or loss of the Vessel, and/or damages to
persons and/or property (including, but not limited to claims, demands, or
actions for bodily injury, illness, disease, death, loss of service, loss of
society, maintenance and cure, wages or property) made as a result of any
defect in the Vessel, or any component parts thereof, after the said Warranty
Period, Owner shall have no claim or actions whatsoever against Builder,
regardless of any negligence, tort, fault, strict liability or otherwise of
Builder, its employees or sub-contractors, and Owner hereby waives and releases
Builder and its employees and sub-contractors from and against any and all
liability and any and all damages resulting therefrom, including, but not
limited to, for personal injury, death, property damage, damage to and/or loss
of the Vessel, delay, demurrage, loss of profits, loss of use, or any other
consequential or punitive damages of any kind, whether such claim is based in
contract, redhibition, negligence, strict liability, or otherwise, arising out
of any defect and/or negligent design, the selection or choice of
specifications and/or materials and/or component parts, manufacture,
construction, fabrication, workmanship, labor and/or installation of equipment,
materials and/or components or from any unseaworthy condition or any other
defective condition of the Vessel, it being specifically understood and agreed
that any such defects reported and/or occurring after the Warranty Period and
all damages, loss of profits, demurrages, delay, losses of use or other
consequential or punitive damage of any kind whatsoever resulting therefrom,
shall not be the responsibility of Builder, but shall be borne exclusively by
Owner.
"THIS WARRANTY IS EXPRESSLY IN LIEU OF ALL OTHER WARRANTIES EXPRESS OR
IMPLIED, INCLUDING ANY WARRANTY OF MERCHANTABILITY OR THAT THE
VESSELS, MATERIAL OR SERVICES ARE FIT FOR ANY PARTICULAR PURPOSE OR
USE, AND SPECIFICALLY IN LIEU OF ALL INDIRECT, SPECIAL, PUNITIVE OR
CONSEQUENTIAL DAMAGES".
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ARTICLE VIII - INSURANCE:
A. Prior to the Delivery Date (as defined in Article VII) the
Builder shall protect, maintain, care for, and be responsible and liable for
property damage to the Vessel, its components, and all Owner-furnished
equipment delivered to Builder's yard. To the extent of any property damage or
loss during such period to the Vessel, the work, the components, or the
Owner-furnished equipment delivered to Builder's yard, the Builder shall be
responsible and liable for replacing same at its sole cost.
Until the Vessel has been completed, physically delivered at the
Place of Delivery and accepted by Owner, the Vessel and all materials,
outfitting, equipment, and appliances to be installed in the Vessel, including
all materials, outfitting, equipment and appliances provided by Owner and
delivered to Builder's yard for and to be used in the construction thereof,
shall be declared under the Builder's Risk Policy of Builder in force and
effect at the time that the Vessel's keel is laid, all at Builder's expenses.
Owner shall be named a joint loss payee, as their interest may appear, under
the terms of said Builder's Risk Policy.
Partial losses, if any, shall be payable to Builder and the proceeds
thereof devoted by Builder to the repair and/or replacement of the damage.
Builder shall advise Owner promptly of any such occurrence. In the event that
an "actual total loss" or a "constructive total loss" (as these terms are
defined in the Builder's Risk Policy) should occur prior to the Vessel being
complete and ready for delivery, Owner shall be reimbursed out of the proceeds
of each policy all progress payments made to Builder and the cost of any Owner
furnished equipment or materials destroyed as a result of such total loss. All
other proceeds of the policy shall be paid to Builder. Following payment of
such insurance proceeds upon a total loss, Builder shall have the option, in
its sole discretion, either to terminate this Contract or to reinstate the
Contract and to reconstruct the Vessel pursuant to the terms of the Contract,
with completion being accomplished within a period of time equal to the time
originally allowed under the Contract.
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B. Builder shall also purchase and maintain, at its expense,
during the life of this Contract, Workmen's Compensation Insurance at statutory
amounts, with Longshoreman & Harbor Workers Compensation Act coverage
endorsement, Employer's Liability Insurance in the amount of at least one
million and no/100 ($1,000,000.00) dollars and Public Liability Insurance
against property damage, death and physical injury in the amount of not less
than One Million and no/100 ($1,000,000.00) dollars.
C. A Confirmation of Insurance outlining the pertinent terms and
conditions of the Builder's Risk Policy referred to in subparagraph A above
shall be available to the Owner at Builder's office and Owner, at its request,
shall be furnished a certificate of insurance as to all other policies required
hereunder. All of the policies of insurance and certificates referred to herein
shall contain a provision requiring the insurer at risk to give Owner thirty
(30) days' notice, in writing, prior to the cancellation of any such insurance.
All deductibles in connection with the insurance required under this Article
XIII shall be for Builder's account.
ARTICLE IX - INDEMNITY:
Builder agrees to fully protect, defend, indemnify and hold Owner
harmless from and against all claims and causes of action for damages on
account of personal injury or death or property damage, arising prior to the
acceptance by Owner of the Vessel, out of performance by Builder of its
obligations hereunder, and asserted by any employee or any sub-contractor of
Builder, irrespective of the basis of such claims and even if such claims
should arise out of the sole fault, negligence, strict liability or breach of
Contract of Owner.
Similarly, Owner agrees to fully protect, defend, indemnify and hold
Builder harmless from and against all liabilities, obligations, claims or
actions, on account of personal injury or death or property damage arising
prior to the acceptance by Owner of the Vessel out of performance by Builder or
Owner of their obligations hereunder, and asserted by or on behalf of any
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employee, agent, contractor, or sub-contractor of Owner, irrespective of the
basis for such negligence, fault or strict liability of Builder or any
employee, agent or sub-contractor of Builder, or out of Builder's breach of
this Contract.
ARTICLE X - TAXES:
Any transportation, sales, use or other tax which may be levied on, or
imposed by any governmental agency, in connection with the construction or
delivery of the Vessel, and any personal property tax which may be levied or
imposed with respect to the Vessel, shall be paid by Owner. Builder agrees that
it will not pay any such tax on behalf of Owner, or concede any liability on
behalf of Owner for same, without prior notice to Owner.
ARTICLE XI - PATENTS:
Builder agrees to protect and hold harmless Owner against claims of
third parties for damage sustained by reason of the infringement of the patent
rights with respect to materials, processes, machinery, equipment, and hull form
selected and used by Builder in such works; and Owner agrees to protect and hold
harmless Builder against claims of third persons for damages sustained by reason
of infringement of patent rights with respect to materials, designs, processes,
machinery and equipment supplied or specifically acquired by Owner or required
by any plans and specifications furnished by Owner.
ARTICLE XII - USE OF THE PLANS AND SPECIFICATIONS:
Any Owner furnished specifications, contract plans and drawings of
each Vessel shall remain the property of the Owner and any specifications,
contract plans or working drawings of each Vessel furnished or prepared by
Builder shall remain the property of the Builder.
Builder is to provide Owner as-built plans showing the actual work
performed by Builder and the final design and construction of the Vessel within
thirty (30) days following delivery of the Vessel. Further, Builder shall
provide Owner with standard vendor
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supplied operating manuals for all items of equipment placed on the Vessel for
which such manuals are available.
ARTICLE XIII - BANKRUPTCY:
If either party hereto shall be adjudicated a bankrupt or an order
appointing a receiver of it or of the major part of its property shall be made
or an order shall be made approving a petition or answer seeking its
reorganization under the Federal Bankruptcy Act, as amended, or either party
shall institute proceedings for voluntary bankruptcy or apply for or consent to
the appointment of a receiver of itself or its property, or shall make an
assignment for the benefit of its creditors, or shall admit in writing its
inability to pay its debts generally as they become due, for the purpose of
seeking a reorganization under the Federal Bankruptcy Laws, or otherwise, then
in any one or more of such events the other party to this Contract shall have
the option forthwith to terminate this Contract to all intents and for all
purposes by giving written notice of its intention so to do. Any termination of
this Contract made pursuant to the provisions of this Article shall not relieve
either party from any accrued obligations hereunder due and owing at the date
of such termination.
ARTICLE XIV - NOTICES:
Notices required by this Contract to be given by owner to Builder or
to be given Owner by Builder shall be in writing and will be delivered in
person or by registered mail return receipt requested, or by overnight courier
service providing evidence of receipt, to Builder or Owner, or the designated
representative of either, as the case may be.
Notices to Builder shall be addressed to: Halter Marine, Inc.,
Attention: Xx. Xxxx Xxxx, III, President, 13085 Industrial Seaway Road, X.X. Xxx
0000, Xxxxxxxx, Xxxxxxxxxxx 00000.
Notices to Owner shall be addressed to: Sea Mar Equipment, Inc.,
Attention: Xx. Xxxxxx Xxxxxxxxx, 0000 Xxxx Xxxxxxx Xxxxx, Xxx Xxxxxx, Xxxxxxxxx
00000.
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In all matters relating to this Contract except warranty claims, which
are covered by Article VII, the parties will be represented by none other than
the following named persons for the Owner, Xx. Xxxx Xxxx, III and for the
Builder, Xx. Xx Xxxxxxxxx.
Each party agrees that at least one of its named representatives will
be available for consultation during normal working hours. Both parties agree
that no one other than the named individuals shall be considered as an agent of
either party for making of admissions or giving of instructions. Except as
herein authorized, no change or modification in this Contract or its
specifications shall be valid or binding on either party unless the same is in
writing and signed by one of the above designated representatives of each
party. Any change in the "Contract Price" resulting from change in
specifications shall be agreed upon in writing in advance.
Any other person may be designed to act for either party upon written
notice of such designation accomplished in accordance with the provisions of
this paragraph.
ARTICLE XV - CONSTRUCTION:
The headings of the Articles, sections or other provisions have been
inserted as a convenience for reference only, and are not to be considered in
any construction or interpretation of this Contract.
ARTICLE XVI - LAW APPLICABLE:
This Contract shall be governed by the Laws of the State of
Louisiana, U.S.A. The title to the Vessel and all component parts thereof shall
remain vested in Builder during the term of this Contract, and shall vest in
Owner only when Builder has received the full Assigned Value for the Vessel.
ARTICLE XVII - ASSIGNMENT:
Subject to the terms and conditions contained herein, this Contract,
including all rights under Article VII, the benefit of any payments made
hereunder and title to all Owner furnished
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materials going into the construction of the Vessel, may be assigned by Owner,
provided that Owner guarantees the performance of the obligations of such
assignee or transferee hereunder to Builder and the Owner's Guarantee shall
remain in effect.
ARTICLE XVIII - UNITED STATES APPROVAL:
All obligations of the Builder herein are subject to compliance with
all applicable laws and regulations of the United States Government and
agencies hereof and, if required, the prior approval of the Departments of
Commerce, Defense, and State.
ARTICLE XIX - OPTION RIGHTS:
Owner shall have a series of options (each, an "Option", collectively,
the "Options") each to be exercised on or before certain deadlines set forth
below (each such deadline being an "Option Date") for two (2) or more up to a
maximum of eight (8) additional vessels identical to the Vessels (each an
"Option Vessel", collectively, the "Option Vessels") to be constructed and
delivered according to the provisions of this Contract, subject to the
following provisions:
a. Builder and Owner agree and acknowledge that the minimum
number of Option Vessels that can be exercised at any one time
is two (2) and the aggregate of all Option Vessels hereunder
shall in no event exceed eight (8). Each Option hereunder
shall be reduced as necessary so that any such Option will be
for a number of Option Vessels not to exceed eight (8) less
the aggregate of all previous Option Vessels exercised by
Owner (the "Remaining Option Vessels"). Owner may elect not to
exercise the Option on the First Option Date and still be
entitled to exercise the remaining Options. If, however, Owner
fails to exercise any Option on any subsequent Option Date,
Owner shall forfeit any and all rights to all remaining
Options and all Remaining Option Vessels.
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b. On or before October 1, 1997 (the "First Option Date"), Owner
will have the right to exercise an option for a minimum of two
(2) up to a maximum of eight (8) Option Vessels for an
Assigned Value of $8,275,000.00 per Option Vessel to be
delivered in accordance with the delivery schedule set forth
below, as applicable. Said Option to become null and void if
written notice of Owner's election to exercise the Option is
not delivered to Builder on or before the First Option Date.
The Stipulated Dates of Delivery for the Option Vessels so
exercised shall be sixty (60) days apart, so that the
Stipulated Date of Delivery for the first Option Vessel is
sixty (60) days from the Stipulated Date of Delivery for the
second Vessel (described on Exhibit "A-2"), the Stipulated
Date of Delivery for the second Option Vessel is sixty (60)
days from the Stipulated Date of Delivery for the first Option
Vessel and so on for any other Option Vessels so exercised by
the First Option Date and for all subsequent Option Vessels as
long as Owner exercises the Option for at least two (2) Option
Vessels on each Option Date.
C. On or before December 1, 1997 (the "Second Option Date") Owner
will have the right to exercise an Option for any two (2) or
more Remaining Option Vessels for an Assigned Value per Option
Vessel equal to $8,275,000.00 plus the aggregate of any
increases in the prices of all major equipment set forth in
Exhibit "F" (the aggregate of such increases being the "Major
Item Adjustments"). Builder and Owner shall agree on the items
and base prices for each to be included on Exhibit "F" within
fifty (50) days after execution of this Contract.
d. On or before February 1,1998 (the "Third Option Date") owner
will have the right to exercise an Option for any two (2) or
more Remaining Option Vessels for an Assigned
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Value of $8,315,000.00 per Option Vessel plus any Major Item
Adjustments, as described in c. above.
e. On or before April 1, 1998 (the "Fourth Option Date"), Owner
will have the right to exercise an Option for any two (2) or
more Remaining Option Vessels for an Assigned Value of
$8,355,000.00 per Option Vessel plus any Major Item
Adjustments, as described in c. above.
f. Owner shall make a down payment at the time of exercise of any
Option for each Option Vessel so exercised in an amount equal
to ten percent (10%) of the Assigned Value of the Option
Vessel, and the balance of the Assigned Vessel for each option
Vessel shall be financed by Builder in accordance with the
terms of Article II of this Contract.
g. If Owner fails to exercise the Option for at least two (2)
Option Vessels on any Option Date after the First Option Date,
the Stipulated Dates of Delivery for any Option Vessels
exercised in connection with that Option Date and all
subsequent Option Dates shall be subject to mutual agreement
by Builder and Owner.
h. In no event shall Owner be entitled to exercise its Option
rights hereunder at any time that Owner is in default under
this Contract.
ARTICLE XX - GUARANTEE:
Upon execution of this Contract, Xx Xxxxxxxxx shall execute a guaranty
of Owner's obligations to Builder hereunder in the form of Exhibit "G" attached
hereto (the "Owner's Guarantee").
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ARTICLE XXI - MISCELLANEOUS:
The Contract Documents constitute the entire agreement, and supersedes
all prior agreements and understandings, both written and oral, between the
parties hereto. The invalidity or unenforceability of any phrase, sentence,
clause or section in this Contract shall not affect the validity or
enforceability of the remaining portions of this Contract, or any part thereof.
Any suit, action or proceeding under this Contract may be brought in the Courts
of the State of Louisiana or the United States District Court for Louisiana.
Owner consents to the jurisdiction of each such court in any such suit, action,
or proceeding and waives any objection to the venue of any such suit, action,
or proceeding in any of such courts. Owner consents to the service of process
in any suit, action, or proceeding in such courts by any method, by which
notice may be given under this Contract.
IN WITNESS WHEREOF, the parties hereto have executed this Contract as
of the day and year first above written.
WITNESSES: BUILDER:
HALTER MARINE, INC.
/s/ [ILLEGIBLE] /s/ XXXX XXXX, III
------------------------- -------------------------
BY: XXXX XXXX, III
/s/ [ILLEGIBLE] TITLE: PRESIDENT
-------------------------
WITNESSES: OWNER:
SEA MAR EQUIPMENT, INC.
/s/ [ILLEGIBLE] /s/ Xx X. Xxxxxxxxx
------------------------- -------------------------
BY:
/s/ [ILLEGIBLE] ----------------------
------------------------- TITLE: PRESIDENT
-------------------
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EXHIBIT "X-0"
XXXX NO. 1973 JOB NO. M261 NAME:___________________________
I. DESCRIPTION OF VESSEL:
1. The Vessel shall be built in accordance with the
following documents:
a. Specifications dated July 11, 1997, Exhibit
"B"
b. Outboard Profile & Arrangement Dwg. No. A1,
dated June 5, 1997 and hand dated July 11,
1997, Exhibit "C".
2. Vessel "Assigned Value" is $8,275,000.00.
II. PLACE OF DELIVERY:
The Vessel will be built and delivered at Builder's yard known
as Halter Xxxx Point.
III. DATE OF DELIVERY:
The Stipulated Date of Delivery is fourteen (14) months from
receipt of the initial installment of the Contract Price.
IV. LIQUIDATED DAMAGES:
For purposes of Article III of the Contract, liquidated damages
are to be $5,000.00 per day, not to exceed ninety (90) days,
or a total of $450,000.00.
00
XXXXXXX "X-0"
XXXX NO.1974 JOB NO. M262 NAME:___________________________
I. DESCRIPTION OF VESSEL:
1. The Vessel shall be built in accordance with the
following documents:
a. Specifications dated July 11, 1997, Exhibit
"B"
b. Outboard Profile & Arrangement Dwg. No. A1,
dated June 5, 1997 and hand dated July 11
1997, Exhibit "C".
2. Vessel "Assigned Value" is $8,275,000.00.
II. PLACE OF DELIVERY:
The Vessel will be built and delivered at Builder's
yard known as Halter Xxxx Point.
III. DATE OF DELIVERY:
The Stipulated Date of Delivery is sixty (60) days
from the Stipulated Date of Delivery for the first
Vessel described on Exhibit "A-1".
IV. LIQUIDATED DAMAGES:
For purposes of Article III of the Contract,
liquidated damages are to be $5,000.00 per day, not
to exceed ninety (90) days, or a total of
$450,000.00.
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EXHIBIT "D"
HALTER MARINE, INC.
DELIVERY AND ACCEPTANCE CERTIFICATE
BUILDER
-------------------------------------------------------------------------
NAME OF VESSEL:
-----------------------------------------------------------------
OFFICIAL NO.: HULL NO.:
------------------------------ ----------------------------
GROSS TONNAGE NET TONNAGE:
------------------------------ -------------------------
SPARE PARTS ABOARD BOAT:
--------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
EXCEPTIONS:
---------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
The above vessel and equipment is hereby accepted and deemed in compliance with
the Contract Plans, Specifications and good shipbuilding practice and Owner
hereby releases Contractor from the terms of its contract dated _______ except
as to the exceptions as noted hereon and the Contract warranty provisions which
shall remain in full force and effect.
OWNER:
--------------------------------------------------------------------------
BY:
-----------------------------------------------------------------------------
BUILDER:
------------------------------------------------------------------------
BY:
-----------------------------------------------------------------------------
DATE OF ACCEPTANCE: TIME OF ACCEPTANCE:
--------------- ---------------------------
PLACE OF ACCEPTANCE:
------------------------------------------------------------
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EXHIBIT "E"
FORM OF CHANGE ORDER
================================================================================
Change Order Date: Change Order#
--------------------------------------------------------------------------------
Owner Hull # Job #
--------------------------------------------------------------------------------
Item Description Price
--------------------------------------------------------------------------------
================================================================================
Contract Delivery Extension: Days
-----------
Approved By:
Builder: Owner:
--------------- ---------------
Date: Date:
--------------- ---------------
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EXHIBIT "F"
MAJOR EQUIPMENT LIST
ITEM DESCRIPTION
224 Femstrum Coolers
241 Manholes
243 Exterior Doors
Interior Doors
272 Shafts
Cutlass Bearings
273 Propellers
275 Rudder Stocks
Bearings
301 Main Propulsion Diesels
301 Main Propulsion Gears
302 Steering System
303 Engine Controls
306 Ship Service Diesel Generators
307 Anchor Windlass
307 Anchor Chain
Anchor
308 Bow Thruster
308 Bow Thruster Engine
330 Bulk Mud Compressors
330 Bulk Mud/Liquid Mud Drive Engines
345 Liquid Mud Pumps
350 Waste Oil/Oil Bilge Pumps
350 Drill/Ballast Pump
Bilge Pump
350 Fire Pump
353 Fuel Oil Centrifuge
Lube Oil Centrifuge
355 Potable Water Set
357 Air Compressors
358 Sanitary Set
Sewage Pump
359 Rig Fresh Water Pump
362 Air Conditioning System
402 Main Switchboard
410 Simrad Joy Stick System
415 Nav. Panel
427 Alarm Panel
450 Inflatable Life Rafts
507 Pilot Stools
535 Kearfott Windows
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EXHIBIT "G"
GUARANTY
In order to induce Halter Marine, Inc. ("Builder") to enter into that
certain Vessel Construction Contract (as amended from time to time, the
Contract) between Sea Mar Equipment, Inc. ("Owner") and Builder dated August 1,
1997, Xx Xxxxxxxxx, individually ("Guarantor"), hereby unconditionally and
irrevocably guarantees to Builder (a) the due, punctual and full payment by
Owner of all amounts of any nature whatsoever payable by Owner under the
Contract (the "Owner Guaranteed Amounts"), as and when the same shall become
due and payable in accordance with the terms of the Contract and (b) the due,
prompt and faithful performance of, and compliance with, all obligations,
covenants, terms, conditions and undertakings of Owner contained in the
Contract (the "Owner Guaranteed Obligations") in accordance with the respective
terms thereof. Such guaranty is an absolute, unconditional, present and
continuing guaranty of payment, performance and compliance. If for any reason
whatsoever Owner shall be in default under the Contract in payment of any Owner
Guaranteed Amounts or in the performance or compliance with any Owner
Guaranteed Obligation and Builder is entitled to exercise its remedies under
the Contract against Owner, then Guarantor shall forthwith pay or cause to he
paid such Owner Guaranteed Amounts to Owner or perform or comply with, or cause
to be performed or complied with, the Owner Guaranteed Obligations.
IN WITNESS WHEREOF, Guarantor has executed this Guaranty as of the 1st
day of August, 1997.
GUARANTOR:
-----------------------------------
Xx Xxxxxxxxx, individually
