EXHIBIT 10.165
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CONTRACT
FOR
CONSTRUCTION AND SALE
OF
VESSEL
(HULL NO. HRBS6)
BETWEEN
RB EXPLORATION CO.
AND
HYUNDAI HEAVY INDUSTRIES CO., LTD.
AND
HYUNDAI CORPORATION
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INDEX
PREAMBLE
ARTICLE I - DESCRIPTION AND CLASS
1. Description:
2. Dimensions and Characteristics:
3. The Classification, Rules and Regulations:
4. Registration:
ARTICLE II - CONTRACT PRICE, TERMS OF PAYMENT & OPTIONS
1. Contract Price:
2. Adjustment of Contract Price:
3. Currency:
4. Terms of Payment:
5. Method of Payment:
6. Notice of Payment before Delivery:
7. Expenses:
8. Prepayment:
9. Options
ARTICLE III - ADJUSTMENT OF CONTRACT PRICE
1. Delivery:
2. Displacement:
3. Weight Control
4. Effect of Rescission:
ARTICLE IV - APPROVAL OF PLANS ANDDRAWINGS AND INSPECTION DURING
CONSTRUCTION
1. Approval of Plans and Drawings:
2. Appointment of OWNER's Supervisor:
3. Inspection by the Supervisor:
4. Facilities:
5. Liability of BUILDER and OWNER:
6. Responsibility of OWNER:
7. Delivery and Construction Schedule:
8. Responsibility of BUILDER:
ARTICLE V - MODIFICATIONS, CHANGES AND EXTRAS
1. How Effected:
2. Changes in Rules of Classification Society, Regulations, etc.:
3. Substitution of Materials:
ARTICLE VI - TRIALS AND ACCEPTANCE
1. Notice:
2. Weather Condition:
3. How Conducted:
4. Method of Acceptance or Rejection:
5. Effect of Acceptance:
6. Disposition of Surplus Consumable Stores:
ARTICLE VII - DELIVERY
1. Time and Place:
2. When and How Effected:
3. Documents to be delivered to OWNER:
4. Tender of VESSEL:
5. Title and Risk:
6. Removal of VESSEL:
ARTICLE VIII - DELAYS AND EXTENSION OF TIME FOR DELIVERY (FORCE MAJEURE)
1. Causes of Delay (Force Majeure):
2. Notice of Delay:
3. Definition of Permissible Delay:
4. Right to Rescind for Excessive Delay:
ARTICLE IX - WARRANTY OF QUALITY
1. Guarantee:
2. Notice of Defects:
3. Remedy of Defects:
4. Extent of BUILDER's Responsibility:
5. Guarantee Engineer:
ARTICLE X - RESCISSION BY OWNER
1. Notice:
2. Refundment by BUILDER:
3. Discharge of Obligations:
ARTICLE XI - OWNER'S DEFAULT
1. Definition of Default:
2. Effect of Default on or before Delivery of VESSEL:
3. Disposal of VESSEL:
4. Dispute:
ARTICLE XII - ARBITRATION
1. Decision by the Classification Society:
2. Proceedings of Arbitration:
3. Notice of Award:
4. Expenses:
5. Entry in Court:
6. Alteration of Delivery Date:
ARTICLE XIII - SUCCESSOR AND ASSIGNS
ARTICLE XIV - TAXES AND DUTIES
1. Taxes and Duties Incurred in Korea:
2. Taxes and Duties Incurred Outside Korea:
ARTICLE XV - PATENTS, TRADEMARKS, COPYRIGHTS, ETC.
1. Patents:
2. General Plans, Specifications and Working Drawings:
ARTICLE XVI - OWNER'S SUPPLIES
1. Responsibility of OWNER:
2. Responsibility of BUILDER:
3. Title:
4. OWNER's Supplies Refundment:
ARTICLE XVII - INSURANCE
1. Extent of Insurance Coverage:
2. Application of the Recovered Amounts:
3. Termination of BUILDER's Obligation to Insure:
ARTICLE XVIII - NOTICE
1. Address:
2. Language:
3. Effective Date of Notice:
ARTICLE XIX - EFFECTIVE DATE OF CONTRACT
ARTICLE XX - INTERPRETATION
1. Laws Applicable:
2. Discrepancies:
3. Entire Agreement:
4. Amendments and Supplements:
ARTICLE XXI - CONFIDENTIALITY
END OF CONTRACT
EXHIBIT "A" LETTER OF REFUNDMENT GUARANTEE
EXHIBIT "B" OPTION VESSEL PRICE AND DELIVERY
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THIS CONTRACT, made and entered into on this 14th day of November,
1997 by and between RB EXPLORATION CO., a corporation existing under the
laws of Nevada, and having an office at 000 Xxxxxxxxxxxx, Xxxxxxx, Xxxxx
00000-0000 (hereinafter called the "OWNER"), on the one part and HYUNDAI
HEAVY INDUSTRIES CO., LTD., a corporation incorporated and existing under
the laws the Republic of Korea, having its registered office at #0, Xxxxxxx-
Xxxx, Xxxxx, Xxxxx and HYUNDAI CORPORATION, a corporation incorporated and
existing under the laws the Republic of Korea, having its registered office
at 000-0 Xxx-Xxxx, Xxxxxxx-Xx, Xxxxx, Xxxxx (hereinafter collectively
called the "BUILDER"), on the other part.
W I T N E S S E T H:
In consideration of the mutual covenants herein contained, the BUILDER
agrees to build One (1) VESSEL as described in the specification attached
hereto as Exhibit 1 of this Contract (hereinafter referred to as the
"VESSEL") and in accordance with (i) the BUILDER's Approved Vendor List
attached hereto as Exhibit 2, (ii) the Delivery and Construction Schedule
attached hereto as Exhibit 3 and (iii) the BUILDER's Unit Rates attached
hereto as Exhibit 4 (said Exhibits 1 through 4 being hereinafter
collectively called the "Specifications") which Specifications have been
initialed by representatives of the parties hereto for identification and
which Specifications hereby are each incorporated herein by reference
hereto and made an integral part of this Contract, at the BUILDER's
shipyard located in Ulsan, Korea (hereinafter referred to as the
"Shipyard") and to deliver and sell the same to the OWNER, and the OWNER
hereby agrees to purchase and accept delivery of the VESSEL from the
BUILDER, upon the terms and conditions hereinafter set forth.
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ARTICLE I - DESCRIPTION AND CLASS
1. Description:
The VESSEL, having the BUILDER's Hull No. HRBS6, shall be
constructed, equipped and completed in accordance with the provisions
of this Contract, and the Specifications (as heretofore defined),
which Specifications are an integral part of this Contract as
heretofore provided.
2. Dimensions and Characteristics:
NOTE: U. S. Units are approximate
Metric Units U.S. Units
Overall Structure
Length 109 .0 m 357.61 ft.
Breadth 78.0 m 255.91 ft.
Upper Hull
Length 74.0 m 242.78 ft.
Breadth 61.0 m 200.13 ft.
Depth 8.5 m 27.89 ft.
Pontoons (two each)
Length 109.0 m 357.61 ft.
Breadth (amidship) 13.4 m 43.96 ft.
Breadth (ends) 16.5 m 54.13 ft.
Depth 9.1 m 29.86 ft.
Corner Radius 3.0 m 9.84 ft.
Transverse Distance (c. to c.)61.50 m 201.77 ft.
Draft
Operating Condition 23.0 m 75.46 ft.
Survival Condition 16.50 m 54.13 ft.
Transit Condition 8.80 m 28.87 ft.
SURVIVAL CONDITION (DRAFT 16.5 M) Weight KG
Lightweight 21,900 t 26.3 m
VDL 6,800 t 35.4 m
Pontoon Load 1,100 t 4.6 m
Vert. Mooring Force 1,250 t 23.5 m
Water Ballast 6,520 t 4.0 m
Displacement Guaranteed 37,560 t
KG 23.5 m
KB 5.7 m
GOML 2.3 m
GOMT 4.1 m
OPERATING CONDITION (DRAFT 23.0 M) Weight KG
Lightweight 21,900 t 26.3 m
VDL 6,800 t 36.3 m
Pontoon Load 1,100 t 4.6 m
Vert. Mooring Force 1,370 t 23.5 m
Water Ballast 12,110 t 4.2 m
Displacement Guaranteed 43,280 t
KG 21.0 m
KB 7.6 m
GOML 6.7 m
GOMT 4.4 m
The details of the aforementioned particulars, as well as the
definitions and the methods of measurements and calculations shall be
as indicated in the Specifications and shall be subject to adjustment
with design development.
3. The Classification, Rules and Regulations:
The Vessel, including hull, machinery, equipment and outfitting,
shall be constructed in accordance with the Rules and Regulations
(edition and amendments thereto being in effect as of the signing date
of the Contract) of the Classification Society and under survey of the
Classification Society (hereinafter called as "the Class") and shall
be distinguished in register by symbol of:
American Bureau of Shipping
+A1 (M), "Semisubmersible Drilling Unit", CDS, P, PAS
ABS statement of fact for UK/Den/HSE compliance, and
Drilling System Compliance.
Decisions of the Classification Society as to compliance or non-
compliance with the classification rules and regulations shall be
final and binding upon both parties hereto. Details of Class
notation shall be in accordance with the Specifications.
The VESSEL shall also comply with the rules, regulations and
requirements of the regulatory bodies as described and listed in the
Specifications.
The VESSEL will be built and delivered (i) in accordance with the
terms of this Contract and the Specifications, (ii) in full compliance
and certification to and with the IMO MODU code with amendments, (iii)
in full compliance with the regulations, provisions, and requirements
included in the Specifications, (iv) in full compliance with the
requirements of the Classification Society so as to be classed with
the Classification Society as a MODU, and (v) so that the VESSEL will
be approved to operate worldwide. BUILDER will take all action
necessary, and remedy at its cost and expense, any deficiency which
constitutes a failure to comply with the above requirements.
All the fees and charges incidental to the Classification Society
and in respect to compliance with the above referred rules,
regulations and requirements, as well as all VESSEL design fees and/or
royalties (except for any fees and/or royalties for the basic design,
specifications and OWNER's Supplies), shall be for account of the
BUILDER.
BUILDER shall be responsible for obtaining the Classification
Society's approval of all required plans and drawings of the VESSEL.
4. Registration:
The VESSEL, at the time of its delivery and acceptance, shall be
registered at the port of registry by the OWNER under the flag of the
United States of America at the OWNER's expense.
(End of Article)
ARTICLE II - CONTRACT PRICE, TERMS OF PAYMENT & OPTIONS
1. Contract Price:
The purchase price of the VESSEL, net receivable by the BUILDER
and exclusive of the OWNER's Supplies (as defined in Paragraph 1 of
Article XVI hereof) is United States Dollars One Hundred and Thirty-
Eight Million Nine Hundred Thousand (US$138,900,000) (hereinafter
referred to as the "Contract Price"). The Contract Price shall be
subject to upward or downward adjustment, if any, as hereinafter set
forth in this Contract.
2. Adjustment of Contract Price:
Increase or decrease of the Contract Price, if any, due to
adjustments thereof made in accordance with the provisions of this
Contract shall be adjusted by way of addition to or subtraction from
the Contract Price upon delivery of the VESSEL in the manner as
hereinafter provided.
3. Currency:
Any and all payments by the OWNER to the BUILDER, or vice versa
if any which are due under this Contract shall be made in United
States Dollars.
4. Terms of Payment:
The Contract Price shall be due and payable by the OWNER to the
BUILDER in the installments as follows:
(a) First Installment:
The First Installment amounting to United States Dollars Thirteen
Million Eight Hundred Ninety Thousand (10%, US$13,890,000) shall
be due and payable within five (5) banking days after execution
of this Contract, provided that the Letter of Refundment
Guarantee required under Article X has been received by the OWNER
or its designee.
(b) Second Installment:
The Second Installment amounting to United States Dollars
Thirteen Million Eight Hundred Ninety Thousand (10%,
US$13,890,000) shall be due and payable seven (7) months after
execution of the Contract.
(c) Third Installment:
The Third Installment amounting to United States Dollars Thirty-
Four Million Seven Hundred and Twenty-five Thousand (25%,
US$34,725,000) shall be due and payable nine (9) months after
execution of the Contract.
(d) Fourth Installment:
The Fourth Installment amounting to United States Dollars Thirty-
Four Million Seven Hundred and Twenty-Five Thousand (25%,
US$34,725,000) shall be due and payable twenty (20) months after
execution of the Contract.
(e) Fifth Installment:
The Fifth Installment amounting to United States Dollars Forty-
One Million Six Hundred and Seventy Thousand (30%, US$41,670,000)
plus any increase or minus any decrease due to adjustment of the
Contract Price under and pursuant to the provisions of this
Contract, shall be due and payable upon delivery of the VESSEL or
upon tender for delivery of the VESSEL pursuant to Paragraph 4 of
Article VII of this Contract.
5. Method of Payment:
(a) First Installment:
Within five (5) banking days after the date of execution of this
Contract, the OWNER shall remit by telegraphic transfer the first
installment to the BUILDER's account number in the Korea Exchange
Bank or to the banks which the BUILDER may designate (hereinafter
referred to as the "BUILDER's BANK") in favor of Hyundai Heavy
Industries, Co., Ltd.
(b) Second, Third, and Fourth Installments:
Upon the due date of the second, third and fourth installments,
in accordance with Article II, 4 (b), (c), (d) and (e) as
appropriate, the OWNER shall remit by telegraphic transfer each
of the respective installments to the account at the BUILDER's
BANK in favor of Hyundai Heavy Industries Co., Ltd.
(c) Fifth Installment:
At the time of delivery of the Vessel to the OWNER pursuant to
Section 2 of Article VII of this Contract, the OWNER shall remit
by telegraphic transfer the fifth installment to the account at
the BUILDER's BANK in favor of Hyundai Heavy Industries, Co.,
Ltd., with an irrevocable instruction that the amount so remitted
shall be payable to the BUILDER against presentation by the
BUILDER to the BUILDER's BANK of a copy of PROTOCOL OF DELIVERY
and ACCEPTANCE OF THE VESSEL executed by the OWNER and the
BUILDER.
No payment due under this Contract shall be delayed, suspended or
withheld by the OWNER on account of any dispute or disagreement
between the parties hereto. Any claim which the OWNER may have
against the BUILDER hereunder shall be settled and liquidated
separately from any payment by the OWNER to the BUILDER of the
Contract Price hereunder.
6. Notice of Payment before Delivery:
With the exception of the first installment, the BUILDER shall
give the OWNER Ten (10) banking days prior notice in writing or telex
or telefax confirmed in writing by registered mail of the anticipated
due date and amount of each installment payable before delivery of the
VESSEL.
7. Expenses:
Expenses and bank charges for remitting payments and any taxes
(other than taxes on income imposed on the BUILDER), duties, expenses
and fees applicable to remitting such payment shall be for account of
the OWNER.
8. Prepayment:
The OWNER may prepay any or all of the installments of the
Contract Price, provided that the OWNER declares the OWNER's intention
to do so in writing or by telex confirmed in writing stating in
advance the intended date of such prepayment, subject to the BUILDER's
acceptance, which shall not be unreasonably withheld.
9. Options
The BUILDER hereby grants to the OWNER options to purchase two
(2) additional deepwater semisubmersible drilling units (the "OPTION
VESSEL(S)") of the same size and Specifications as the VESSEL. In the
event OWNER exercises either option, the purchase price of the OPTION
VESSEL(S) shall be United States Dollars One Hundred and Forty-four
Million Nine Hundred Thousand (US$144,900,000) for the first OPTION
VESSEL and United States Dollars One Hundred and Forty-eight Million
Four Hundred Thousand (US$148,400,000) for the second OPTION VESSEL,
however, the price of each option vessel shall be reduced by the
amount of United States Dollars Two Hundred and Fifty Thousand
(US$250,000) should OWNER elect not to register the OPTION VESSEL(s)
under the flag of the United States of America. The notice period for
exercising such options, the delivery date for the OPTION VESSEL(S)
and the alternative of dynamically positioned VESSEL(S) shall be as
charted in Exhibit B, attached hereto. All other contract terms and
conditions shall, except as may otherwise be specifically modified
herein, be on the same terms and conditions as are set out in this
Contract for the VESSEL, mutatis mutandis. The specifications for the
OPTION VESSEL(S) shall be the same as the "Specifications" identified
and defined in this Contract. Any extras or change orders made to the
Specifications of the VESSEL subsequent to the date of this Contract
shall not be included in the specifications for the OPTION VESSEL(S)
but OWNER shall be entitled to request same pursuant to the
shipbuilding contract for the OPTION VESSEL(S) with appropriate
credits for design, engineering and other non-recurring costs and any
other price and delivery date adjustment or consequence.
(End of Article)
ARTICLE III - ADJUSTMENT OF CONTRACT PRICE
The Contract Price shall be subject to adjustment, as hereinafter set
forth, in the event of the following contingencies (it being understood by
both parties that any reduction of the Contract Price is by way of
liquidated damages and not by way of penalty):
1. Delivery:
(a) No adjustment shall be made and the Contract Price shall remain
unchanged for the first Thirty (30) days of delay in delivery of
the VESSEL beyond the Delivery Date as defined in Article VII
hereof (ending as of twelve o'clock midnight of the Thirtieth
(30th) day of delay).
(b) If the delivery of the VESSEL is delayed more than Thirty (30)
days after the Delivery Date, then, in such event, beginning at
twelve o'clock midnight of the Thirtieth (30th) day after the
Delivery Date, the Contract Price shall be reduced by the sum of
Twenty Thousand United Dollars (US$20,000) for each full day
thereafter for which delivery is delayed.
However, the total reduction in the Contract Price pursuant to
this Paragraph (b) shall not be more than as would be the case
for a delay of One Hundred Fifty (150) days counting from
midnight of the Thirtieth (30th) day after the Delivery Date at
the above specified rate of reduction.
(c) However, if the delay in delivery of the VESSEL should continue
for a period of One Hundred Eighty (180) days from the Delivery
Date in Paragraph 1 of Article VII, then in such event, and after
such period has expired, the OWNER may, at its option, rescind
this Contract in accordance with the provisions of Article X
hereof.
The BUILDER may, at any time after the expiration of the
aforementioned One Hundred Eighty (180) days of delay in
delivery, if the OWNER has not served notice of rescission as
provided in Article X hereof, demand in writing that the OWNER
shall make an election, in which case the OWNER shall, within
Twenty (20) days after such demand is received by the OWNER,
notify the BUILDER of its intention either to rescind this
Contract or to consent to the acceptance of the VESSEL at a
specified future date which date BUILDER represents to OWNER is
the earliest date BUILDER can deliver the VESSEL to OWNER under
this Contract, based on the circumstances then known. If the
OWNER shall not make an election within Twenty (20) days as
provided hereinabove, the OWNER shall be deemed to have accepted
such extension of the Delivery Date to the future delivery date
indicated by the BUILDER and it being understood by the parties
hereto that if the VESSEL is not delivered by such specified
date, the OWNER shall have the same right of rescission upon the
same terms and conditions as hereinabove provided.
(d) In addition to any liquidated damages provided for in subsection
(b) above, BUILDER shall reimburse OWNER for any demurrage paid
to the company towing the VESSEL from Korea to the United States
Gulf of Mexico, subject to the OWNER providing notice (well in
advance), to the BUILDER of the anticipated tow commencement date
at the time of the signing of a towage contract between the OWNER
and towing company, with such tow commencement date not to be
earlier than the DELIVERY DATE.
After the Delivery Date, should OWNER decide to keep the VESSEL
at BUILDER's facility prior to tow-out, OWNER shall pay to
BUILDER the reasonable cost of any services associated with the
VESSEL's stay during such period of time.
(e) If the delivery of the VESSEL is made more than thirty (30) days
earlier than the Delivery Date, then, in such event, beginning
with the thirty-first (31) day prior to the Delivery Date, the
Contract Price of the VESSEL shall be increased by adding thereto
Twenty Thousand United States Dollars (US$20,000) for each full
day. However, the total increase in the Contract Price pursuant
to this Paragraph (d) shall not be more than as would be the case
for an early delivery of Sixty (60) days counting from the Thirty-
first (31) day prior to the Delivery Date at the above specified
rate of increase.
(f) For the purpose of this Article, the delivery of the VESSEL shall
be deemed to be delayed when and if the VESSEL, after taking into
account all postponements of the Delivery Date by reason of
permissible delay as defined in Article VIII and/or any other
reason under this Contract, is not delivered by the date upon
which delivery is required under the terms of this Contract.
2. Displacement:
(a) The guaranteed displacement of the VESSEL is 37,560 metric tons
at 16.5 meters draft and 43,280 metric tons at 23.0 meters draft,
subject to adjustment with design development.
(b) In the event of a discrepancy (whether higher or lower) in either
guaranteed displacement of the VESSEL being one thousand (1,000)
metric tons or more, then, the OWNER may, at its option, reject
the VESSEL and rescind this Contract in accordance with the
provisions of Article X hereof or accept the VESSEL at a
reduction in the Xxxxxxxx Xxxxx xx Xxx Xxxxxxx Xxxxxx Xxxxxx
Dollars (US$ 1,000,000).
3. Weight Control
The BUILDER shall negotiate reasonable steel weight tolerances
with the mill to meet minimum ABS xxxxxxxxx requirements and appraise
the OWNER of this value.
The BUILDER shall develop and implement a weight control
procedure in accordance with the Specifications and track actual
weights by periodically weighing some of the major assemblies as they
are being completed.
The BUILDER shall earn a weight performance bonus of United
States Dollars Two Thousand (US$2,000) per ton steel of actual
lightship weight below the agreed contract lightship weight.
Likewise, the BUILDER shall accrue a weight penalty of United States
Dollars Two Thousand (US$2,000) per ton steel of actual lightship
weight over agreed contract lightship weight. Actual lightship weight
shall be determined on the basis of the ABS approved inclining test.
The agreed lightship weight will be set by the BUILDER and the
OWNER within four (4) months following ABS approval of the basic
design package.
4. Effect of Rescission:
It is expressly understood and agreed by the parties that in any
case, if the OWNER rescinds this Contract under this Article, the
OWNER shall not be entitled to any liquidated damages, or any other
recourse unless by means of the provisions of Article X hereof.
(End of Article)
ARTICLE IV - APPROVAL OF PLANS AND
DRAWINGS AND INSPECTION DURING CONSTRUCTION
1. Approval of Plans and Drawings:
The BUILDER shall obtain the approval of the OWNER for the plans
and drawings in accordance with the procedures set forth in the
Specifications.
2. Appointment of OWNER's Supervisor:
The OWNER may send to and maintain at the Shipyard and/or the
Engineering Office, at the OWNER's own cost and expense, one
supervisor (herein called the "Supervisor") who shall be duly
authorized in writing by the OWNER, which authorization shall be
described in a separate letter to be sent to the BUILDER prior to the
Supervisor's arrival, to act on behalf of the OWNER in connection with
the modifications of the Specifications, adjustments of the Contract
Price and Delivery Date in writing, approval of the plans and
drawings, attendance to the tests and inspections relating to the
VESSEL, its machinery, equipment and outfitting, and any other matters
for which he is specifically authorized by the OWNER. The Supervisor
may appoint assistant(s) to attend at the Shipyard and/or the
Engineering Office for the purposes as aforesaid.
3. Inspection by the Supervisor:
The necessary inspections of the VESSEL, its machinery, equipment
and outfitting shall be carried out by the Classification Society,
other regulatory bodies and/or the Supervisor throughout the entire
period of construction in order to ensure that the construction of the
VESSEL is duly performed in accordance with the Specifications. The
Supervisor shall have, during construction of the VESSEL, the right to
attend such tests and inspections of the VESSEL, its machinery and
equipment within the premises of either the BUILDER or its
subcontractors. Detailed procedures of the inspection and the tests
thereof shall be in accordance with Specifications.
The Supervisor shall, within the limits of the authority
conferred upon him by the OWNER, make decisions or give advice to the
BUILDER on behalf of the OWNER promptly on all problems arising out
of, or in connection with, the construction of the VESSEL and
generally act in a reasonable manner with a view to cooperating to the
utmost with the BUILDER in the construction process of the VESSEL.
The decision, approval or advice of the Supervisor within the
limits of authority conferred on the Supervisor by the OWNER shall be
deemed to have been given by the OWNER. THE OWNER's Supervisor shall
notify the BUILDER promptly in writing of his discovery of any
construction or materials, which he believes do not or will not
conform to the requirements of the Contract or the Specifications and
likewise advise and consult with the BUILDER on all matters
pertaining to the construction of the VESSEL, as may be required by
the BUILDER, or as he may deem necessary.
However, if the Supervisor fails to submit to the BUILDER
promptly any such demand concerning alterations or changes with
respect to the construction, arrangement or outfit of the VESSEL which
the Supervisor has examined, inspected or attended at the test thereof
under this Contract or the Specifications, the Supervisor shall be
deemed to have approved the same and shall be precluded from making
any demand for alterations, changes, or complaints with respect
thereto at a later date.
The BUILDER shall comply with any such demand which is not
contradictory to this Contract, provided that any and all such demands
by the Supervisor with regard to construction, arrangement and outfit
of the VESSEL shall be submitted in writing to the authorized
representative of the BUILDER. The BUILDER shall notify the
Supervisor of the names of the persons who are from time to time
authorized by the BUILDER for this purpose.
It is agreed upon between the OWNER and the BUILDER that the
modifications, alterations or changes and other measures necessary to
comply with such demand may be effected at a convenient time and place
at the BUILDER's reasonable discretion in view of the construction
schedule of the VESSEL.
In the event that the Supervisor shall advise the BUILDER that he
has discovered and believes the construction or materials do not or
will not conform to the requirements of this Contract and the BUILDER
shall not agree with the views of the Supervisor in such respect,
either the OWNER or the BUILDER may either seek an opinion of the
Classification Society or request an arbitration in accordance with
the provisions of Article XII hereof. The Classification Society or
the Arbitration Board shall determine whether or not a nonconformity
with the provisions of this Contract exist. If the Classification
Society or the Arbitration Board enters a determination in favor of
the OWNER, then in such case the BUILDER shall make the necessary
alterations or changes, or if such alterations or changes cannot be
made in time to meet the construction schedule for the VESSEL the
BUILDER shall make fair and reasonable adjustment of the Contract
Price in lieu of such alterations and changes. If the Classification
Society or the Arbitration Board enters a determination in favor of
the BUILDER, then the time for delivery of the VESSEL shall be
extended for a period of delay in construction, if any, occasioned by
such proceedings, and the OWNER shall compensate the BUILDER for the
proven loss and damages (always excluding consequential damages)
incurred to the BUILDER as a result of the dispute herein referred to.
OWNER's Supervisor, at his discretion, may refuse to inspect or
attend tests where adequate safety measures have not been implemented
and in such event such tests/inspections shall not be deemed complete.
4. Facilities:
(a) The BUILDER shall furnish the Supervisor and his staff with
adequate office space and such other reasonable facilities
according to the BUILDER's practice at or in the immediate
vicinity of BUILDER's Offshore Yard and its Engineering Office as
may be necessary to enable them to effectively carry out their
duties. The OWNER shall pay for all such facilities other than
office space at the BUILDER's normal rate of charge. BUILDER
shall advise OWNER in advance of BUILDER's normal rate of charge
for any facilities for which OWNER will be required to pay.
(b) The BUILDER shall make available for OWNER's personnel at the
OWNER's request, during the VESSEL's construction, a minimum of
15 two or three bedroom apartments furnished with the BUILDER's
standard furniture, electrical facilities and utilities. If the
OWNER requests the BUILDER to provide the OWNER with special
furniture and facilities beyond the BUILDER's standard, any
additional costs which may result therefrom, if any, will be
borne by OWNER. Costs for such housing, on a monthly rental
basis, will be presented to OWNER prior to occupation and shall
be reimbursed by OWNER, along with metered utility and telephone
charges. The BUILDER will use best efforts to furnish additional
apartments requested by the OWNER.
5. Liability of BUILDER and OWNER:
The BUILDER agrees to fully protect, defend, indemnify and hold
OWNER harmless from and against all liabilities, obligations, claims
or actions for personal injury or death arising out of performance by
BUILDER or OWNER of their obligations hereunder prior to the
acceptance by OWNER of the VESSEL, and asserted by or on behalf of,
(i) any employee, agent, contractor, or subcontractor of
BUILDER, or
(ii) any employee of any agent, contractor, or subcontractor of
BUILDER,
regardless of the basis of such claims and even if such claims should
arise out of the sole or concurrent fault or negligence of OWNER, or
any employee, agent, contractor or subcontractor of OWNER.
Similarly, the OWNER agrees to fully protect, defend, indemnify and
hold BUILDER harmless from and against all liabilities, obligations,
claims or actions for personal injury or death arising out of
performance by BUILDER or OWNER of their obligations hereunder prior
to the acceptance by OWNER of the VESSEL, and asserted by or on behalf
of,
(i) any employee, agent, contractor, or subcontractor of OWNER,
or
(ii) any employee of any agent, contractor, or subcontractor of
OWNER,
regardless of the basis of such claims and even if such claims should
arise out of the sole or concurrent fault or negligence of BUILDER, or
any employee, agent or subcontractor of BUILDER.
6. Responsibility of OWNER:
The OWNER shall undertake and assure that the Supervisor shall
carry out his duties hereunder in accordance with the normal
shipbuilding practice of the BUILDER, which BUILDER represents and
confirms is in all material respects in accordance with good
international shipbuilding practice and in such a way so as to avoid
any unnecessary increase in building cost, delay in the construction
of the VESSEL, and/or any disturbance in the construction schedule of
the BUILDER. The BUILDER has the right to request the OWNER to
replace the Supervisor who is deemed unsuitable and unsatisfactory for
the proper progress of the VESSEL's construction.
The OWNER shall investigate the situation by sending its
representative(s) to the Shipyard if necessary, and if the OWNER
considers that such BUILDER's request is justified, the OWNER shall
effect such replacement as soon as conveniently arrangeable.
7. Delivery and Construction Schedule:
Attached hereto as Exhibit 4 is a tentative Delivery and
Construction Schedule, and within Sixty (60) days after the date of
this Contract, BUILDER shall deliver or cause to be delivered to OWNER
a final Delivery and Construction Schedule (herein, as from time to
time amended with the knowledge of OWNER, referred to as the
"Schedule"), prepared in reasonable detail and setting forth the
estimated time table for the construction of the VESSEL, it being
understood that the Schedule may be used by OWNER for purposes of
verifying and measuring the progress being made under the terms of
this Contract.
8. Responsibility of BUILDER:
(a) BUILDER personnel and subcontractors which, in the sole opinion
of OWNER, are found to be in violation of the safety policies
established by BUILDER or those specially in place during the
construction of the VESSEL, may be requested to be removed from
the project by the OWNER's Supervisor. BUILDER will immediately
take such actions as necessary to comply with OWNER's reasonable
request.
(b) The BUILDER is to assign a dedicated safety supervisor and a
sufficient number of safety inspectors to remain in effect
throughout the Contract to monitor employee and subcontractor
safety, scaffolding and safety netting, tank entry, work
permitting procedures, electrical safety, etc. Upon request by
the OWNER, the safety supervisor shall participate in OWNER's
daily safety and quality meetings.
(c) The BUILDER shall provide a 24 hour fire-watch at the VESSEL
construction site. In addition, at various locations around the
site, fire alarm stations will be situated whereby a manual alarm
may be sounded and a local emergency response team is notified
and activated.
(d) BUILDER shall immediately report to OWNER all incidents and/or
accidents involving injury, no matter the level of severity,
including first aid, loss of property, no matter the value, as
well as any identified hazards and/or near misses occurring.
Any and all reports of hazards, accidents, incidents, or near
misses will result in the immediate and full ceasing of
construction activities in the affected area until such time as
adequate precautions have been implemented.
(e) BUILDER hereby agrees that the cranes and other related lifting
gear of the VESSEL will not be used by BUILDER during
construction (except for the testing and commissioning stage),
without the prior written approval of OWNER. Should such
approval be given, BUILDER shall return such cranes to normal in
functional respect of operation, including, but not limited to
the changing of all wires.
(f) It is agreed by BUILDER and OWNER that no more than twenty
percent (20%), by number, of all blocks fabricated for
construction of the VESSEL will be built outside of BUILDER's own
yard and then only by local subcontractors. In case more than
twenty percent (20%) of all blocks for the VESSEL is required by
the BUILDER to be fabricated outside of BUILDER's own yard, then
the BUILDER shall obtain the OWNER's prior written consent.
(g) All initial spare parts for equipment furnished by the BUILDER,
("BUILDER Furnished Equipment"), including those necessary for
shipyard start-up testing and for the commissioning of equipment,
shall be provided by BUILDER at BUILDER's cost. Further, BUILDER
shall provide to OWNER a listing of all critical spare parts (any
long lead item and those spares causing equipment to be out of
service for extended periods of time) and two years operating
spare parts. In addition, BUILDER agrees to specifically
identify on the listing any and all ABS required spare parts.
BUILDER will provide such spare parts listing to OWNER as soon as
an order for equipment is placed, but in no case later than 90
days prior to VESSEL delivery. The OWNER is responsible for
supplying all the equipment and material in accordance with the
OWNER's Supplies list made part of the Specifications including
the spare/service parts for start-up testing and commissioning
and specialized tools and initial consumables for the OWNER's
Supplies.
(h) Attached hereto as Exhibit 2 is BUILDER's approved vendor list.
BUILDER agrees that any material and/or supplies not fabricated
by the BUILDER will originate from a vendor so specified in
Exhibit 2. In the event procurement of material and/or supplies
from the approved vendors are not available due to shortage or
delay in delivery thereof to meet the BUILDER's overall
construction schedule of the VESSEL, the BUILDER may mobilize and
originate from other equivalent with the OWNER's consent, which
shall not be unreasonably withheld.
(i) The BUILDER shall, on a monthly basis, provide OWNER with a
written progress report regarding the construction of the VESSEL
based on the BUILDER's standards in accordance with their
procedure. Such report is to include a summary of the progress
to date, the progress since the previous report and a report on
weight control. In a form and frequency to be agreed, the
BUILDER will furnish the OWNER a simple written report updating
the progress on major milestones in the production schedule.
Informal oral reports shall be furnished to the OWNER by the
BUILDER upon request.
In addition, BUILDER shall include a limited number of color
photographs relevant to the fabrication process for the
construction period of the VESSEL in the progress report.
Photographs are to be 5 x 7 inches, bound in books with dates and
descriptive captions. As soon as each volume is available,
BUILDER shall furnish three (3) sets of books of photographs and
one (1) set of negatives to the OWNER.
(j) It is the intent of the BUILDER to seek third party engineering
services in order to assist with the detailed engineering of the
VESSEL. In this regard, the BUILDER agrees that it will seek the
prior consent of the OWNER before the selection of a qualified
engineering consultant company is made. The BUILDER shall
establish a detailed scope and schedule for any such third party
work and submit same to the OWNER for approval.
(End of Article)
ARTICLE V - MODIFICATIONS, CHANGES AND EXTRAS
1. How Effected:
The Specifications may be modified and/or changed by written
request of the OWNER subject to BUILDER's approval (which approval
shall not be unreasonably withheld) provided that any modifications
and/or changes requested by the OWNER (or an accumulation of such
modifications and/or changes) will not adversely affect the BUILDER's
other commitments. In the event of an adverse effect, the BUILDER and
the OWNER shall first agree in writing, before such modifications
and/or changes are carried out, to any adjustment in the Contract
Price, time for delivery of the VESSEL or other terms and conditions
of this Contract occasioned by or resulting from such modifications
and/or changes. The BUILDER hereby agrees to exert its best efforts
to accommodate any reasonable request by the OWNER so that the said
changes and/or modifications may be made at a reasonable cost and
within the shortest period of time which is reasonably possible. Any
such agreement for modifications and/or changes shall include an
agreement as to the increase or decrease, if any, in the Contract
Price of the VESSEL together with an agreement as to any extension or
reduction in the time of delivery, or any other alterations in this
Contract occasioned by such modifications and/or changes. The
aforementioned agreement may be effected by an exchange of letters
signed by the authorized representatives of the parties hereto, or
telex or telefax confirmed in writing, manifesting such agreement.
Such letters and confirmed telex and telefax exchanged by the parties
hereto pursuant to the foregoing shall constitute an amendment, and
such letters and telex and telefax shall be incorporated into this
Contract and made a part hereof. The BUILDER may make minor changes
to the Specifications, if found necessary for introduction of improved
production methods or otherwise, provided that the BUILDER shall first
obtain the OWNER's written approval which shall not be unreasonably
withheld.
2. Changes in Rules of Classification Society, Regulations, etc.:
If, after the date of signing this Contract, any requirements as
to Classification Society, or as to the rules and regulations to which
the construction of the VESSEL is required to conform, are altered or
changed by the Classification Society or regulatory bodies authorized
to make such alterations or changes, either of the parties hereto,
upon receipt of information thereof, shall transmit such information
in full to the other party in writing, thereupon within twenty-one
(21) days after receipt of the said notice from the other party, the
OWNER shall instruct the BUILDER in writing if such alterations or
changes shall be made in the VESSEL or not, in the OWNER's sole
discretion.
The BUILDER shall promptly comply with such alterations or
changes, if any, in the construction of the VESSEL, provided that the
OWNER shall first agree:
(a) To any increase or decrease in the Contract Price of the VESSEL
that is reasonably occasioned by the cost of such compliance;
(b) To any reasonable extension in the time of delivery of the VESSEL
that is necessary due to such compliance;
(c) To any reasonable deviation in the contractual displacement of
the VESSEL, if compliance results in an altered displacement, or
any other reasonable alterations in the terms of this Contract or
of the Specifications or both, if compliance makes such
alterations of terms necessary.
Such agreement of the OWNER may be effected in the same manner as
provided in Paragraph 1 of this Article for modifications and/or
changes of the Specifications.
3. Substitution of Materials:
In the event that any of the materials required by the
Specifications or otherwise under this Contract for the construction
of the VESSEL can not be procured in time to effect delivery of the
VESSEL, or are in short supply, the BUILDER may, provided the OWNER so
agrees in writing, supply other materials and equipment of the best
available and like quality, capable of meeting the requirements of the
Classification Society and of the rules, regulations, requirements and
recommendations with which the construction of the VESSEL must comply.
Any agreement as to such substitution of materials shall be effected
in the manner as provided in Paragraph 1 of this Article, and shall,
likewise, include decrease or increase in the Contract Price and other
terms and conditions of this Contract affected by such substitution.
(End of Article)
ARTICLE VI - TRIALS AND ACCEPTANCE
1. Notice:
The sea trial shall start when the VESSEL is reasonably completed
in all material respects according to the Specifications.
The BUILDER shall give the OWNER at least Twenty(20) days
estimated prior notice and Seven (7) days confirming prior notice in
writing or by telex or telefax confirmed in writing of the time and
place of the trial run of the VESSEL, and the OWNER shall promptly
acknowledge receipt of such notice. The OWNER shall have its
representative and his assistant(s) on board the VESSEL to witness
such trial run.
Failure in attendance of the OWNER's representative at the trial
run of the VESSEL for any reason whatsoever after due notice to the
OWNER as above provided shall be deemed to be a waiver by the OWNER of
its right to have its representative on board the VESSEL at the trial
run, and the BUILDER may conduct the trial run without attendance of
the OWNER's representative, and in such case the OWNER shall be
obligated to accept the VESSEL on the basis of certificates of the
Classification Society and a certificate of the BUILDER stating that
the VESSEL, upon trial run, is found to conform to this Contract.
2. Weather Condition:
The trial run shall be carried out under the weather condition
which is deemed favorable enough by the judgement of both the OWNER
and the BUILDER. In the event of unfavorable weather on the date
specified for the trial run, the same shall take place on the first
available day thereafter that the weather condition permits. It is
agreed that, if during the trial run of the VESSEL, the weather should
suddenly become so unfavorable that orderly conduct of the trial run
can no longer be continued, the trial run shall be discontinued and
postponed until the first favorable day next following, unless the
OWNER shall assent in writing to acceptance of the VESSEL on the basis
of the trial run already made before such discontinuance has occurred.
Any delay of trial run caused by such unfavorable weather
condition shall operate to postpone the Delivery Date by the period of
the delay involved and such delay shall be deemed as permissible delay
in the delivery of the VESSEL.
3. How Conducted:
(a) The VESSEL shall run the official trial run in the manner as
specified in the Specifications.
(b) All expenses in connection with the trial run are to be for
account of the BUILDER and the BUILDER shall provide, at its own
expense, the necessary crew to comply with conditions of safe
navigation.
(c) OWNER shall furnish complete procedures and supervision for the
installation, testing and recommissioning for the BOP stack.
4. Method of Acceptance or Rejection:
(a) Upon completion of the trial run, the BUILDER shall give the
OWNER a notice by telex confirmed in writing of completion of the
trial run, as and if the BUILDER considers that the results of
trial run indicate conformity of the VESSEL to this Contract and
the Specifications. The OWNER shall, within Five (5) days after
receipt of such notice from the BUILDER, notify the BUILDER by
telex or telefax confirmed in writing of its acceptance or
rejection of the trial results.
(b) However, if the result of the trial run is unacceptable, or if
the VESSEL, or any part or equipment thereof, (except a defect in
the OWNER's Supplies not the responsibility of the BUILDER) does
not conform to the requirements of this Contract and/or the
Specifications, or if the BUILDER is in agreement to non-
conformity as specified in the OWNER's notice of rejection, then,
the BUILDER shall take necessary steps to correct such non-
conformity.
The VESSEL may be redocked in the event of unsatisfactory sea-
trial results for the dynamic positioning and/or thruster
systems, or other major system malfunction which cannot be
repaired afloat.
Upon completion of correction of such non-conformity, and re-test
or trial if necessary, the BUILDER shall give the OWNER notice
thereof by telex or telefax confirmed in writing.
The OWNER shall, within Five (5) days after receipt of such
notice from the BUILDER, notify the BUILDER of its acceptance or
rejection of the VESSEL's conformity by telex or telefax
confirmed in writing.
(c) If any event that the OWNER rejects the VESSEL, the OWNER shall
indicate in detail in its notice of rejection in what respect the
VESSEL, or any part or equipment thereof (except a defect in the
OWNER's Supplies not the responsibility of the BUILDER) does not
conform to this Contract and/or the Specifications.
(d) In the event that the OWNER fails to notify the BUILDER by telex
or telefax confirmed in writing of the acceptance of or the
rejection together with the reason therefor of the VESSEL within
the period as provided in the above Sub-paragraph (a) or (b), the
OWNER shall be deemed to have accepted the trial results and/or
the VESSEL, as appropriate.
(e) Any dispute between the BUILDER and the OWNER as to the
conformity or non-conformity of the VESSEL to the requirements of
this Contract and/or the Specifications shall be submitted for
final decision in accordance with Article XII hereof.
5. Effect of Acceptance:
Acceptance of the VESSEL as above provided in Paragraphs 4(a) or
4(b) of this Article VI shall be final and binding so far as
conformity of the VESSEL to this Contract is concerned and shall
preclude the OWNER from refusing formal delivery of the VESSEL as
hereinafter provided, if the BUILDER complies with all other
procedural requirements for delivery as provided in Article VII
hereof. However, the OWNER's acceptance of the VESSEL shall not
affect the OWNER's rights under Article IX hereof.
6. Disposition of Surplus Consumable Stores:
Any fuel oil furnished and paid for by the BUILDER for trial runs
remaining on board the VESSEL, at the time of acceptance of the VESSEL
by the OWNER, shall be bought by the OWNER from the BUILDER at the
BUILDER's purchase price for such supply and payment by the OWNER
thereof shall be made at the time of delivery of the VESSEL. The
BUILDER shall pay the OWNER at the time of delivery of the VESSEL an
amount for the consumed quantity of any lubricating oil and greases
which were furnished and paid for by the OWNER at the OWNER's purchase
price thereof.
(End of Article)
ARTICLE VII - DELIVERY
1. Time and Place:
The VESSEL shall be delivered by the BUILDER to the OWNER at the
Shipyard in Ulsan, Korea within November 1, 1999(unless delays occur
in the construction of the VESSEL or in any performance required under
this Contract due to causes which under the terms of this Contract
permit postponement of the date of delivery, in which event, the
aforementioned date for delivery of the VESSEL shall be changed
accordingly) or, such earlier date after completion of the VESSEL
according to this Contract and the Specifications.
The aforementioned date, or such earlier or later date to which
the requirement of delivery is advanced or postponed pursuant to this
Contract, is herein called the "DELIVERY DATE".
2. When and How Effected:
Provided that the BUILDER and the OWNER shall have fulfilled all
of their obligations stipulated under this Contract, the delivery of
the VESSEL shall be effected forthwith by the concurrent remittance of
the fifth installment in accordance with Article II, Section 5(c) and
delivery by each of the parties hereto to the other of the PROTOCOL OF
DELIVERY AND ACCEPTANCE, acknowledging delivery of the VESSEL by the
BUILDER and acceptance thereof by the OWNER.
3. Documents to be delivered to OWNER:
Upon delivery and acceptance of the VESSEL, the BUILDER shall
deliver to the OWNER the following documents, which shall accompany
the PROTOCOL OF DELIVERY AND ACCEPTANCE:
(a) PROTOCOL OF TRIALS of the VESSEL made pursuant to the
Specifications;
(b) PROTOCOL OF INVENTORY of the equipment of the VESSEL, including
spare parts and the like, as specified in the Specifications;
(c) PROTOCOL OF STORES OF CONSUMABLE NATURE referred to under
paragraph 6 of Article VI hereof;
(d) ALL CERTIFICATES, including the BUILDER's CERTIFICATE required to
be furnished upon delivery of the VESSEL pursuant to this
Contract and the Specifications;
It is agreed that if, through no fault on the part of the
BUILDER, the Classification certificates and/or other
certificates are not available at the time of delivery of the
VESSEL, provisional certificates shall be accepted by the OWNER,
provided that the BUILDER shall furnish the OWNER with the formal
certificates as promptly as possible after such certificates have
been issued.
Application and certificate for statutory inspections by the
United States Coast Guard shall be arranged by the OWNER at its
expense.
(e) DECLARATION OF WARRANTY of the BUILDER that the VESSEL is
delivered to the OWNER free and clear of any liens, charges,
claims, mortgages, or other encumbrances upon the OWNER's title
thereto, and in particular that the VESSEL is absolutely free of
all burdens in the nature of imposts, taxes or charges imposed by
Governmental Authorities, as well as all liabilities of the
BUILDER to its subcontractors, employees and crew, and of the
liabilities arising from the operation of the VESSEL in trial
runs, or otherwise, prior to delivery;
(f) DRAWINGS AND PLANS pertaining to the VESSEL as stipulated in the
Specifications;
(g) COMMERCIAL INVOICE;
(h) Necessary export licenses, permits, and clearances by the Korean
Government to enable the VESSEL to sail from Ulsan, Korea
following delivery; and
(i) DRAWINGS/OPERATING MANUALS. All documentation, including, but
not limited to complete, as-built drawings, operations manuals,
commissioning reports, inclining reports, major/minor equipment
certifications, sea trial reports, spare parts list and BUILDER's
vendor's documentation will be furnished by BUILDER to OWNER on
or before the delivery of the VESSEL.
4. Tender of VESSEL:
If the OWNER fails to take delivery of the VESSEL after
completion thereof according to this Contract and the Specifications
without any justifiable reason, the BUILDER shall have the right to
tender delivery of the VESSEL after accomplishment of all BUILDER's
obligations as provided herein.
5. Title and Risk:
Title to and risk of loss of the VESSEL shall pass to the OWNER
only upon the delivery and acceptance thereof having been completed as
stated above; it being expressly understood that, until such delivery
is effected, title to and risk of damage to or loss of the VESSEL and
her equipment shall be in the BUILDER.
6. Removal of VESSEL:
The OWNER shall take possession of the VESSEL immediately upon
delivery and acceptance thereof and shall remove the VESSEL from the
premises of the Shipyard within Seven (7) days after delivery and
acceptance thereof is effected.
If the OWNER shall not remove the VESSEL from the premises of the
Shipyard within the aforesaid Seven (7) days, in such event, the OWNER
shall pay to the BUILDER the reasonable mooring charges of the VESSEL.
(End of Article)
ARTICLE VIII - DELAYS AND EXTENSION OF TIME FOR
DELIVERY (FORCE MAJEURE)
1. Causes of Delay (Force Majeure):
If, at any time either the construction or delivery of the VESSEL
or any performance required hereunder as a prerequisite to the
delivery thereof is delayed by any of the following events; namely
war, acts of state or government, blockade, revolution, insurrections,
mobilization, civil commotion, riots, strikes, sabotage, lockouts,
Acts of God or the public enemy, plague or other epidemics,
quarantines, prolonged failure of electric current, freight embargoes,
or defects in major forgings or castings, if any, or shortage of
materials, machinery or equipment in inability to obtain delivery or
delays in delivery of materials, machinery or equipment, provided that
at the time of ordering the same could reasonably be expected by the
BUILDER to be delivered in time, or defects in materials, machinery or
equipment which could not have been detected by the BUILDER using
reasonable care, or earthquakes, tidal waves, typhoons, hurricanes,
prolonged or unusually severe weather conditions or delay in the
construction of the BUILDER's other newbuilding projects in the same
yard due to any such causes as described in this Article which in turn
delay the keel laying and eventual delivery of the VESSEL in view of
the Shipyard's overall building program or the BUILDER's performance
under this Contract, or by destruction of the premises or works of the
BUILDER or its sub-contractors, or of the VESSEL, or any part thereof,
by fire, landslides, flood, lightning, explosion, or other causes
beyond the control of the BUILDER, or its sub-contractors, as the case
may be, or for any other causes which, under terms of this Contract,
authorize and permit extension of the time for delivery of the VESSEL,
then, in the event of delays due to the happening of any of the
aforementioned contingencies, the Delivery Date of the VESSEL under
this Contract shall be extended for a period of time which shall not
exceed the total accumulated time of all such delays.
2. Notice of Delay:
Within Fourteen (14) days after the date of occurrence of any
cause of delay, on account of which the BUILDER claims that it is
entitled under this Contract to a postponement of the Delivery Date,
the BUILDER shall notify the OWNER in writing or by telex or telefax
confirmed in writing of the date when such cause of delay occurred.
Likewise, within Fourteen (14) days after the date of ending of such
cause of delay, the BUILDER shall notify the OWNER in writing or by
telex or telefax confirmed in writing of the date when such cause of
delay ended. The BUILDER shall also notify promptly the OWNER of the
period, by which the Delivery Date is postponed by reason of such
cause of delay. If the BUILDER does not give the timely advice as
above, the BUILDER shall lose the right to claim such delays as
permissible delay.
Failure of the OWNER to acknowledge the BUILDER's claim for
postponement of the Delivery Date within fourteen (14) days after
receipt by the OWNER of such notice of claim shall be deemed to be a
waiver by the OWNER of its right to object to such postponement of the
Delivery Date.
3. Definition of Permissible Delay:
Delays on account of such causes as specified in Paragraph 1 of
this Article and any other delay which under the terms of this
Contract permits postponement of the Delivery Date shall be understood
to be permissible delays and are to be distinguished from unauthorized
delays on account of which the Contract Price is subject to adjustment
as provided for in Article III hereof.
4. Right to Rescind for Excessive Delay:
(a) If the total accumulated time of all delays claimed by the
BUILDER on account of the causes specified in Paragraph 1 of this
Article, excluding other delays of the nature which under the
terms of this Contract permit postponement of the Delivery Date,
amounts to One Hundred Eighty (180) days or more, then, in such
event, the OWNER may rescind this Contract in accordance with the
provisions of Article X hereof.
The BUILDER may, at any time after the accumulated time of the
aforementioned delays justifying rescission by the OWNER, demand
in writing that the OWNER shall make an election, in which case
the OWNER shall, within fourteen (14) working days after such
demand is received by the OWNER either notify the BUILDER of its
intention to rescind this Contract, or consent to a postponement
of the Delivery Date to a specified future date, which date
BUILDER represents to OWNER is the earliest date BUILDER can
deliver the VESSEL to OWNER, based on the circumstances then
known, it being understood by the parties hereto that if the
VESSEL is not delivered by such future date, the OWNER shall have
the same right of rescission upon the same terms and conditions
as hereinabove provided.
(b) If at any time during the term of this Contract, BUILDER falls
more than 270 days behind in the construction of the VESSEL
according to the Delivery and Construction Schedule, for any
reason whatsoever, and whether as a result of permissible delay
or otherwise, OWNER shall be entitled to give written notice to
BUILDER that OWNER considers BUILDER in material default of its
obligations under this Contract, and if BUILDER has not cured
such default within Thirty (30) days after receipt of such
notice, OWNER shall have the right to rescind this Contract in
accordance with the provisions of Article X hereof.
(End of Article)
ARTICLE IX - WARRANTY OF QUALITY
1. Guarantee:
The BUILDER, for the period of Twelve (12) months after delivery
of the VESSEL (hereinafter called "Guarantee Period"), guarantees the
VESSEL and her engines, including all parts and equipment
manufactured, furnished or installed by the BUILDER or its
subcontractors under this Contract, and including the machinery,
equipment and appurtenances thereof (including the installation work
performed or required to be performed by BUILDER under this Contract
for the OWNER supplied or furnished equipment), under the Contract but
excluding any item which is supplied or designated by the OWNER or by
any other bodies on behalf of the OWNER, against all defects and all
damages to the VESSEL resulting therefrom occurring within the
Guarantee Period which are due to defective material, design and/or
poor workmanship or negligent or other improper acts or omissions on
the part of the BUILDER or its subcontractors (hereinafter called the
"Defect" or "Defects") and are not a result of accident, ordinary wear
and tear, misuse, mismanagement, negligent or other improper acts or
omissions or neglect on the part of the OWNER, its employee or agents.
The BUILDER shall arrange for the OWNER to obtain a five (5) year
guarantee after delivery of the VESSEL for the paint materials and the
ballast tank coatings through the paint manufacturer selected by the
BUILDER. But, the BUILDER's guarantee for the ballast tank coating
shall be in no event longer than one (1) year after delivery of the
VESSEL unless major repairs as defined in Clause 3 of this Article
have arisen. Such additional extended guarantee shall proceed between
the OWNER and the selected manufacturer arranged by the BUILDER. Final
selection of the ballast tank coatings manufacturer is subject to the
approval of the OWNER, not to be unreasonably withheld.
2. Notice of Defects:
The OWNER shall notify the BUILDER in writing, or by telex
confirmed in writing, of any Defect for which claim is made under this
guarantee, as promptly as possible after discovery thereof. The
OWNER's written notice shall describe in detail the nature, cause and
extent of the Defects.
The BUILDER shall have no obligation for any Defect discovered
prior to the expiry date of the Guarantee Period, unless notice of
such Defect or any damage resulting therefrom is received by the
BUILDER not later than Ten (10) BUILDER's working days after the
expiry date of the Guarantee Period.
3. Remedy of Defects:
(a) The BUILDER shall remedy, at its expense, any Defect against
which the VESSEL is guaranteed under this Article, by making all
necessary repairs or replacements at the Shipyard.
(b) However, if it is impracticable to bring the VESSEL to the
Shipyard, the OWNER may cause the necessary repairs or
replacements to be made elsewhere which is deemed suitable for
the purpose, provided that, in such event, the BUILDER may
forward or supply replacement parts or materials to the VESSEL,
unless forwarding or supplying thereof to the VESSEL would impair
or delay the operation or working schedule of the VESSEL. In the
event that the OWNER proposes to cause the necessary repairs or
replacements for the VESSEL to be made at any other shipyard or
works than the Shipyard, the OWNER shall first, but in all events
as soon as possible, give the BUILDER notice in writing or by
telex or telefax confirmed in writing of the time and place when
and where such repairs will be made, and if the VESSEL is not
thereby delayed, or her operation or working schedule is not
thereby impaired, the BUILDER shall have the right to verify by
its own representative(s) the nature, cause and extent of the
Defects complained of. The BUILDER shall, in such case, promptly
advise the OWNER by telex or telefax, after such examination has
been completed, of its acceptance or rejection of the Defects as
ones that are covered by the guarantee herein provided. Upon the
BUILDER's acceptance of the Defects as justifying remedy under
this Article, or upon award of the arbitration so determining,
the BUILDER shall pay to the OWNER for such repairs or
replacements a sum equal to the reasonable cost of making the
same repairs or replacements in a first class Korean shipyard, at
the prices prevailing at the time of such repairs or replacements
are made. The guarantee works shall be settled regularly during
the Guarantee Period. The actual reimbursement for the guarantee
shall be made in a lump sum at the expiry of the Guarantee
Period.
(c) In any case, the VESSEL shall be taken, at the OWNER's cost and
responsibility, to the place elected, ready in all respects for
such repairs or replacement.
(d) Any dispute under this Article shall be referred to arbitration
in accordance with the provisions of Article XII hereof.
(e) Repairs under this Article are guaranteed for the balance of the
period set out in paragraph 1 of this Article but for major
repairs are guaranteed for the longer of the balance of the
period set out in paragraph 1 of this Article or 6 months from
the date of completion of major repairs, but in no event longer
than 18 months after the Delivery Date. For purposes hereof,
"major repairs" shall be defined as a repair costing more than
Xxx Xxxxxxx Xxxxx Xxxxxxxx Xxxxxx Xxxxxx Dollars (US$150,000)
4. Extent of BUILDER's Responsibility:
(a) The BUILDER shall have no responsibility or liability for any
other defect whatsoever in the VESSEL other than the Defects
specified in Paragraph 1 of this Article, other than to repair
all damages to the VESSEL discovered within the Guarantee Period
and resulting from or caused by the Defects which are not
attributable to the OWNER's (i) improper acts or omissions, (ii)
negligence, or (iii) misuse.
Nor shall the BUILDER in any circumstances be responsible or
liable for any consequential or special loss, damage or expense,
including, but not limited to, loss of time, loss of profit or
earnings or demurrage directly or indirectly occasioned to the
OWNER by reason of the Defects specified in Paragraph 1 of this
Article or due to repairs or other works done to the VESSEL to
remedy such Defects.
(b) The BUILDER shall not be responsible for any defect in any part
of the VESSEL which may, subsequently to delivery of the VESSEL,
have been replaced or repaired in any way by any other
contractor, unless done pursuant to Paragraph 3 (b) of this
Article, or for any defect which have been caused or aggravated
by omission or improper use and maintenance of the VESSEL on the
part of the OWNER, its servants or agents or by ordinary wear and
tear or by any other cause beyond control of the BUILDER (other
than aggravation of defect or results of defect resulting from
the use or operation of the VESSEL after knowledge of same by
OWNER, where such continued use or operation was unavoidable to
preserve or protect the safety of the VESSEL or her crew).
(c) The guarantee contained as hereinabove in this Article replaces
and excludes any other liability, guarantee, warranty and/ or
condition imposed or implied by the law, customary, statutory or
otherwise, by reason of the construction and sale of the VESSEL
by the BUILDER for and to the OWNER.
5. Guarantee Engineer:
The BUILDER shall, at the request of the OWNER, appoint a maximum
of two (2) Guarantee Engineers to serve on the VESSEL as its
representative for a period of up to Three (3) months from the date
the VESSEL is delivered. However, if the OWNER shall deem it
necessary to keep the Guarantee Engineers on the VESSEL for a longer
period, then they shall remain on board the VESSEL after the said
three (3) months, up to but not longer than Six (6) months from the
delivery of the VESSEL.
The OWNER, and its employees, shall give such Guarantee Engineers
full cooperation in carrying out their duties as the representative of
the BUILDER on board the VESSEL.
The OWNER shall accord the Guarantee Engineers treatment
comparable to the VESSEL's Chief Engineer, and shall provide board and
lodging at no cost to the BUILDER or the Guarantee Engineers. The
BUILDER and the OWNER shall, prior to delivery of the VESSEL, execute
a separate agreement regarding the Guarantee Engineers, including an
appropriate mutual hold harmless agreement.
While the Guarantee Engineers are on board the VESSEL, the OWNER
shall pay to the Guarantee Engineers the sum of US$5,000 per month,
the expenses of their repatriation to Korea by air upon termination of
their service, the expenses of their communication with the BUILDER
incurred in performing their duties and expenses, if any, of their
medical and hospital care in the VESSEL's hospital.
BUILDER will have the option, at BUILDER's sole risk and expense,
to place a maximum of two (2) Guarantee Engineers on board the VESSEL
for a period of up to six (6) months. The OWNER will provide board,
lodging, communications and general working support services at no
cost to the BUILDER or the Guarantee Engineers but all other expenses
shall be for the sole account of BUILDER.
(End of Article)
ARTICLE X - RESCISSION BY OWNER
1. Notice:
The payments made by the OWNER prior to delivery of the VESSEL
shall be in the nature of advances to the BUILDER, and in the event
that the VESSEL after sea trial is rejected by the OWNER or the
Contract is rescinded by the OWNER in accordance with the terms of
this Contract under and pursuant to any of the provisions of this
Contract specifically permitting the OWNER to do so, then the OWNER
shall notify the BUILDER in writing or by telex confirmed in writing,
and such rescission shall be effective as of the date when notice
thereof is received by the BUILDER.
2. Refundment by BUILDER:
In case the BUILDER receives the notice stipulated in Paragraph 1
of this Article, the BUILDER shall promptly refund to the OWNER the
full amount of all sums paid by the OWNER to the BUILDER on account of
the VESSEL, together with the interest thereon, unless the BUILDER
proceeds to the arbitration under the provisions of Article XII
hereof.
In the event of such rescission by the OWNER, the BUILDER shall
pay the OWNER interest at the rate of Eight percent (8%) per annum on
the amount required herein to be refunded to the OWNER, computed from
the date following the respective date on which such sums were paid by
the OWNER to the BUILDER to the date of remittance by transfer of such
refund to the OWNER by the BUILDER, provided, however, that if the
said rescission by the OWNER is made under the provisions of Paragraph
4 of Article VIII hereof, then in such event the BUILDER shall pay the
OWNER interest at the rate of Four percent (4%) per annum on the sums
refundable.
As security for refund of installments prior to delivery of the
VESSEL, the BUILDER shall furnish to OWNER, prior to the due date of
the first installment, with a letter of guarantee covering the amount
of such pre-delivery installments and issued by the BUILDER's BANK in
favor of the OWNER. Such letter of guarantee shall have substantially
the same form and substance as Exhibit "A" annexed hereto.
3. Discharge of Obligations:
Upon such refund by the BUILDER to the OWNER, all obligations,
duties and liabilities of each of the parties hereto to the other
under this Contract shall be forthwith completely discharged, without
prejudice, however, to any claims either party may have resulting from
the other party's breach of any of its obligations under this
Contract.
(End of Article)
ARTICLE XI - OWNER'S DEFAULT
1. Definition of Default:
The OWNER shall be deemed to be in default of its performance of
obligations under this Contract in the following cases:
(a) If the first, second, third, or fourth installment is not paid by
the OWNER to the BUILDER within Five (5) banking days in New York
after such installment becomes due and payable as provided in
Article II hereof; or
(b) If the fifth installment is not paid by the OWNER to the BUILDER
in New York at the time such installment becomes due and payable
upon delivery of the Vessel as provided in Article II hereof; or
(c) If the increased amount in the Contract Price as adjusted due and
payable upon delivery of the VESSEL is not paid by the OWNER
concurrently with delivery of the VESSEL as provided in Article
II hereof; or
(d) If the OWNER, when the VESSEL is duly tendered for delivery by
the BUILDER in accordance with the provisions of this Contract,
fails to accept the VESSEL within Five (5) days from the tendered
date without any specific and valid ground thereof under this
Contract.
2. Effect of Default on or before Delivery of VESSEL:
(a) Should the OWNER make default in payment of any installment of
the Contract Price on or before delivery of the VESSEL, the OWNER
shall pay the installment(s) in default plus accrued interest
thereon at the rate of eight percent (8%) per annum computed from
the due date of such installment to the date when the BUILDER
receives the payment, and, for the purpose of Paragraph 1 of
Article VII hereof, the Delivery Date of the VESSEL shall be
automatically extended by a period of continuance of such default
by the OWNER.
In any event of default by the OWNER, the OWNER shall also pay all charges
and expenses incurred to the BUILDER in direct consequence of such default.
(b) If any default by the OWNER continues for a period of Ten (10)
days, the BUILDER may, at its option, rescind this Contract by
giving notice of such effect to the OWNER by telex or telefax
confirmed in writing.
Upon dispatch by the BUILDER of such notice of rescission, this
Contract shall be forthwith rescinded and terminated. In the
event of such rescission of this Contract, the BUILDER shall be
entitled to retain any installment or installments already paid
by the OWNER to the BUILDER on account of this Contract and the
OWNER's Supplies, if any.
3. Disposal of VESSEL:
(a) In the event that this Contract is rescinded by the BUILDER under
the provisions of Paragraph 2(b) of this Article, the BUILDER
must, at its sole discretion, either complete the VESSEL and sell
the same, or sell the VESSEL in its incomplete state, free of any
right or claim of the OWNER. Such sale of the VESSEL by the
BUILDER shall be either by public auction or private contract at
the BUILDER's sole discretion and on such terms and conditions as
the BUILDER shall deem fit.
(b) On sale of the VESSEL, the amount of the sale proceeds received
by the BUILDER shall be applied firstly to all expenses attending
such sale or otherwise incurred to the BUILDER as a result of the
OWNER's default, secondly to the payment of all costs and
expenses of construction of the VESSEL incurred to the BUILDER
less OWNER's Supplies and the installments already paid by the
OWNER, and then to the compensation to the BUILDER for a
reasonable loss of profit due to rescission of this Contract, and
finally to the repayment to the OWNER if any balance is obtained.
(c) If the proceeds of sale are insufficient to pay such total costs
and loss of profit as aforesaid, the OWNER shall promptly pay the
deficiency to the BUILDER upon request.
4. Dispute:
Any dispute under this Article shall be referred to arbitration
in accordance with the provisions of Article XII hereof.
(End of Article)
ARTICLE XII - ARBITRATION
1. Decision by the Classification Society:
If any dispute arises between the parties hereto in regard to the
design and/or construction of the VESSEL, its machinery and equipment,
and/or in respect of the materials and/or workmanship thereof and/or
thereon, and/or in respect of interpretations of this Contract, the
parties may by mutual agreement refer the dispute to the
Classification Society or to such other expert as may be mutually
agreed between the parties hereto, and whose decision shall be final,
conclusive and binding upon the parties hereto.
2. Proceedings of Arbitration:
In the event that the parties hereto do not agree to settle a
dispute according to Paragraph 1 of this Article and/or in the event
of any other dispute of any kind whatsoever between the parties and
relating to this Contract or its rescission or any stipulation herein,
such dispute shall be submitted to arbitration in London. Each party
shall appoint an arbitrator and the two arbitrators so appointed shall
appoint an Umpire. If the two arbitrators are unable to agree upon an
Umpire within Twenty (20) days after appointment of the second
arbitrator, either of the said two arbitrators may apply to the
President for the time being of the London Maritime Arbitrators
Association to appoint the Umpire, and the two arbitrators and the
Umpire shall constitute the Arbitration Board. Such arbitration shall
be in accordance with and subject to the provisions of the British
Arbitration Xxx 0000, or any statutory modification or re-enactment
thereof for the time being in force.
Either party may demand arbitration of any such dispute by giving
notice to the other party. Any demand for arbitration by either of
the parties hereto shall state the name of the arbitrator appointed by
such party and shall also state specifically the question or questions
as to which such party is demanding arbitration. Within Fourteen (14)
days after receipt of notice of such demand for arbitration, the other
party shall in turn appoint a second arbitrator and give notice in
writing of such appointment to the party demanding arbitration. If a
party fails to appoint an arbitrator as aforementioned within Fourteen
(14) days following receipt of notice of demand for arbitration by the
other party, the party failing to appoint an arbitrator shall be
deemed to have accepted and appointed, as its own arbitrator, the
arbitrator appointed by the party demanding arbitration and the
arbitration shall proceed before this sole arbitrator who alone in
such event shall constitute the Arbitration Board.
The award of the Arbitration Board shall be final and binding on
both parties.
3. Notice of Award:
The award decision shall immediately be communicated to the OWNER
and the BUILDER by facsimile and confirmed in writing.
4. Expenses:
The Arbitration Board shall determine which party shall bear the
expenses of the arbitration or the portion of such expenses which each
party shall bear.
5. Entry in Court:
In case of failure by either party to respect the award of the
Arbitration Board, the judgement may be entered in any proper court
having jurisdiction thereof to enforce such award.
6. Alteration of Delivery Date:
In the event of reference to arbitration of any dispute arising
out of matters occurring prior to delivery of the VESSEL, the award
may include any adjustment of the Delivery Date which the Arbitration
Board may deem appropriate.
(End of Article)
ARTICLE XIII - SUCCESSOR AND ASSIGNS
Neither of the parties hereto shall assign this Contract to any other
individual or company unless prior consent of the other party is given in
writing, such consent not to be unreasonably withheld, provided however,
that the OWNER shall be freely entitled to assign this Contract to an
Affiliated Company without the prior approval of BUILDER. For the purposes
of any such assignment, "Affiliated Company" means a company or other legal
entity which controls or is controlled by OWNER, or which is controlled by
an entity which controls the OWNER. For purposes hereof, control means the
ownership, directly or indirectly, of fifty percent (50%) or more of the
shares or voting rights in a company or legal entity. Upon giving notice
to the BUILDER of such assignment, the assignor shall, to the extent
assigned, have no further obligation thereunder. The notice given by OWNER
of such assignment shall include a reasonable explanation of the purpose of
the assignment and shall provide sufficient information so as to allow the
BUILDER to advise the BUILDER's Bank regarding any amendment of the name of
the beneficiary of the Refund Guarantee provided for in Article X hereof.
Upon such assignment, the OWNER shall provide to BUILDER a copy of any
assignment made pursuant hereto.
In the event of any assignment pursuant to the terms of this Contract,
the assignee shall succeed to all of the assigned rights, responsibilities,
duties and obligations of the assignor under this Contract and, to the
extent assigned, the assignor shall have no further right or obligation
hereunder. Should OWNER assign this Contract, any assignee or subsequent
assignee of this Contract shall succeed to the rights of the OWNER to
further assign this Contract under this Article XIII.
(End of Article)
ARTICLE XIV - TAXES AND DUTIES
1. Taxes and Duties Incurred in Korea:
The BUILDER shall bear and pay all taxes, duties, stamps and fees
incurred in Korea in connection with execution and/or performance of
this Contract as the BUILDER, and any taxes and duties imposed in
Korea upon the OWNER's Supplies resulting from the failure
attributable to the BUILDER in taking all appropriate action to have
such OWNER's Supplies imported into Korea under bond for ultimate
export with the VESSEL following delivery.
2. Taxes and Duties Incurred Outside Korea:
The OWNER shall bear and pay all taxes (other than taxes on
income imposed on BUILDER), duties, stamps and fees incurred outside
Korea in connection with execution and/or performance of this Contract
as the OWNER, except for taxes and duties imposed upon those items
(other than OWNER's Supplies) to be procured by or for the BUILDER for
construction of the VESSEL which shall be the responsibility of the
BUILDER.
(End of Article)
ARTICLE XV - PATENTS, TRADEMARKS, COPYRIGHTS, ETC.
1. Patents:
Except as to OWNER's provided basic design, specifications and
OWNER's Supplies, BUILDER agrees to defend, indemnify and hold OWNER
harmless from any liability or claims of patent infringement of any
nature or kind (including legal fees and expenses) relating to the
infringement or claimed infringement of patent rights of any third
party with respect to any material, service, process, or apparatus
covered by this Contract, or their use for their intended purpose.
With regards to the performance of the current Contract, OWNER
shall defend, indemnify and hold BUILDER harmless from all claims of
infringement of patent rights of any third party related to (i)
processes supplied by OWNER or (ii) OWNER's Supplies.
Except as otherwise provided for in this Agreement, nothing
contained herein shall be construed as transferring any rights in any
patents, trademarks or copyrights utilized in the performance of this
Contract.
2. General Plans, Specifications and Working Drawings:
(a) The OWNER retains the right to use the Specifications to inspect
and/or verify the work performed by the BUILDER hereunder or to
make repairs or modifications to the VESSEL or to use or operate
the VESSEL .
(b) It is specifically agreed that the Contract Price does not
include provision for BUILDER's obtaining or having obtained any
and all necessary design rights from Reading & Xxxxx Drilling Co.
and Ishikawajima-Harima Heavy Industries Co., Ltd. and/or their
parent, affiliated or subsidiary companies (hereinafter
"Designer") nor payment of any and all design and/or royalty fees
and that same has or will be obtained/paid by OWNER.
3. License
The VESSEL is being constructed pursuant to a design supplied by OWNER
and ISHIKAWAJIMA-HARIMA HEAVY INDUSTRIES CO., LTD. ("IHI"). It is
agreed between OWNER and BUILDER that BUILDER will not construct
another rig of the RBS6 design without seeking the agreement of OWNER
and IHI, nor will BUILDER disclose RBS6 design to any third parties
who are not related to the execution of this Contract, without prior
consent of both OWNER and IHI.
BUILDER and OWNER agree on the following principals regarding the
licensing of the OWNER/IHI design:
(a) OWNER and IHI (referred in this article collectively as
"LICENSORS") are the joint owners of the design of "RBS6" Type
semisubmersible Drilling Unit.
(b) In order to protect the rights of the LICENSORS as joint owners
of RBS6 design, LICENSORS agree to grant BUILDER a non-exclusive
license to construct and to sell RBS6 designed Drilling Units
only to OWNER.
(c) The license granted to BUILDER shall not confer the right to
grant a sublicense to any third party.
(d) The arrangement and outfitting of RBS6 may be modified by BUILDER
to suit their production facilities or for the requirement of
OWNER or by normal detail design progress.
(e) BUILDER agrees to maintain confidential all information provided
which is the property of LICENSORS and such information will be
returned upon LICENSORS' request.
(End of Article)
ARTICLE XVI - OWNER'S SUPPLIES
1. Responsibility of OWNER:
(a) The OWNER shall, at its own risk, cost and expense, supply and
deliver to the BUILDER all of the items to be furnished by the
OWNER as specified in the Specifications (herein called the
OWNER's Supplies) to a first point of arrival (the port of Pusan
or other places as may be agreed between the parties) in Korea in
good condition. Once delivered to the first point of arrival in
Korea, the OWNER's Supplies will be at the BUILDER's risk. Upon
transportation of the OWNER's Supplies to the shipyard and after
customs clearance, the BUILDER shall make a visual inspection of
OWNER's Supplies and report to OWNER any apparent damage to the
OWNER's Supplies. OWNER and BUILDER shall inspect the OWNER's
Supplies after customs clearance and upon arrival thereof at the
Shipyard to determine through visual examination whether the
OWNER's Supplies comply with the contractual specifications or
have been damaged during the transportation. If as the result of
such inspections, (i) any defect to the OWNER's Supplies is
found, or (ii) any damage to the OWNER's Supplies occurring prior
to arrival at the shipyard is found, then all the remedies and
replacements thereof are the responsibility of the OWNER. Any
delay or direct expenses regarding the construction of the VESSEL
resulting solely from OWNER's failure to have the OWNER's
Supplies delivered in Korea as agreed herein shall be the OWNER's
responsibility. Risk of transportation within Korea to the
Shipyard and risk of offloading, uncrating and storage of the
OWNER's Supplies upon their arrival at the Shipyard will be with
BUILDER. However, the cost for inland transportation, customs
clearance, insurance for inland transportation and other costs,
if any, for the OWNER's Supplies shall be one half of one percent
(0.5%) of the OWNER's Supplies amount on the C.I.F. value basis
for those delivered to Mipo port outside the shipyard, Ulsan or
one percent (1.0%) for those delivered to Pusan Port, Pusan,
which shall be paid by the OWNER to the BUILDER together with the
payment of the 5th installment pursuant to Article II hereof. In
case such OWNER's Supplies are delivered directly to the Shipyard
or Mipo Port in the Offshore Yard by the OWNER, the applicable
cost (rate) shall be reduced to zero point zero percent (0.0%) of
the OWNER's Supplies amount on the basis of C.I.F. value, except
OWNER will pay for customs clearance or any third party costs.
OWNER's Supplies sent to ports nearby the Shipyard will be
assessed charges for transportation, customs clearance fee,
harbor union fee, pilotage and other costs that are incurred by
the BUILDER to facilitate delivery of the OWNER's Supplies to the
Shipyard. These fees will be charged at actual direct cost. Any
loss of or damage to the OWNER's Supplies after they are in the
custody of the BUILDER will be for the account of the BUILDER and
BUILDER will replace or repair any OWNER's Supplies that may be
lost or damaged, and a subsequent delay due to the foregoing and
resulting cost impact will be the BUILDER's responsibility.
BUILDER agrees and acknowledges that any or all of the OWNER's
Supplies may arrive at the Shipyard in individual parts or as
component parts to be placed in or made a part of a larger system
or module. The BOP is to arrive in not more than four (4) main
components.
(b) In order to facilitate detailed design and installation by the
BUILDER of the OWNER's Supplies in or on the VESSEL, the OWNER
shall furnish the BUILDER with necessary specifications, plans,
drawings, instruction books, manuals, test reports and
certificates required by the rules and regulations of the
Specifications. If so requested by the BUILDER, the OWNER,
without any charge to the BUILDER, shall cause the
representatives of the manufacturers of the OWNER's Supplies to
advise the BUILDER in installation thereof in or on the VESSEL.
(c) Any and all of the OWNER's Supplies shall be subject to the
BUILDER's reasonable right of rejection, as and if they are found
to be unsuitable or in improper condition for installation.
(d) The insurance for the OWNER's Supplies during storage,
construction and installation at the Shipyard is covered and
handled by the BUILDER at its cost and responsibility.
(e) A preliminary Delivery Schedule of the OWNER's Supplies and
vendor data specific to the VESSEL (Hull No. HRBS6) showing the
BUILDER's requested delivery dates is attached to the
Specifications. The Delivery Schedule of the OWNER's Supplies
and vendor data shall be mutually agreed, finalized and settled
within Sixty (60) calendar days from the date of contract
signing. The delivery dates agreed to on the Delivery Schedule
will be the date OWNER's Supplies are required at the shipyard.
Should the OWNER fail to deliver any of the OWNER's Supplies
within Twenty (20) days of the time designated by the Delivery
Schedule, the Delivery Date shall be automatically extended for a
period not to exceed the actual delay, beyond twenty (20) days,
incurred by the BUILDER. If no delay in the delivery of the
VESSEL is incurred by the BUILDER, the Delivery Date shall not
change.
(f) If delay in delivery of any of the OWNER's Supplies exceeds
thirty(30) days, then, the BUILDER shall be entitled to proceed
with construction of the VESSEL without installation thereof in
or on the VESSEL as hereinabove provided, and the OWNER shall
accept and take delivery of the VESSEL so constructed, unless
such delay is caused by Force Majeure in which case the provision
Paragraph 1(e) of this Article shall apply.
2. Responsibility of BUILDER:
The BUILDER shall be responsible for storing and handling with
reasonable care of the OWNER's Supplies after delivery thereof at the
Shipyard, and shall, at its own cost and expense, install them in or
on the VESSEL, unless otherwise provided herein or agreed by the
parties hereto, provided, always, that the BUILDER shall not be
responsible for quality, efficiency and/or performance of any of the
OWNER's Supplies (other than to install same in accordance with the
manufacturer's specifications and requirements, copies of which have
been provided to BUILDER by OWNER).
It will be the BUILDER's responsibility at no cost to OWNER to:
(i) assemble the OWNER's Supplies, bulk material and
provide modularization and/or engineering, except
procurement engineering related to the OWNER's
Supplies, at the Shipyard;
(ii) test the OWNER's Supplies as necessary or appropriate;
(iii) construct modules from the OWNER's Supplies as
appropriate;
(iv) test and pre-commission the modules containing the
OWNER's Supplies and to generally test all of the
OWNER's Supplies;
(v) install the OWNER's Supplies on the VESSEL, in modules,
as required, or otherwise as required, and to integrate
the OWNER's Supplies into the overall designed system
of the VESSEL;
(vi) test and pre-commission the integrated modules and
systems; and
(vii) complete and test the entire drilling system where
practicable (i.e., equipment functional test only, not
full operational load test) to insure that it works
harmoniously as a part of the drilling process and the
VESSEL so as to be able to accomplish its intended
purpose.
In no event will BUILDER charge any additional cost for any of the
above. Pre-commission or pre-commissioning as used in this Contract
or the Specifications means the putting into service or the
commissioning to be done at the Shipyard prior to delivery and
acceptance. Pre-commission or pre-commissioning does not mean
commissioning that occurs elsewhere.
3. Title:
Title to OWNER's Supplies shall at all times remain with OWNER
during the Contract; however, BUILDER shall have the risk of loss of
or damage to such OWNER's Supplies from the time set out in
subparagraph 1(a) of this Article until delivery of the VESSEL.
4. OWNER's Supplies Refundment:
Notwithstanding anything else contained in this Contract, BUILDER
agrees that if for any reason whatsoever the VESSEL is not delivered
to OWNER, other than as a result of OWNER's default under Article XI
of this Contract, then BUILDER shall remit to OWNER the full value of
all OWNER's Supplies which have been delivered to the Shipyard or
which BUILDER has taken custody of under this Article XVI. BUILDER
shall remit all amounts due under this paragraph 4 upon written demand
by OWNER and upon BUILDER's request, OWNER will furnish BUILDER with
reasonable documentation showing OWNER's cost of OWNER's Supplies.
BUILDER shall remit all amounts due within thirty (30) days of demand.
(End of Article)
ARTICLE XVII - INSURANCE
1. Extent of Insurance Coverage:
From the time of the launching until delivery of the VESSEL, the
BUILDER shall, at its own cost and expense, keep the VESSEL and all
machinery, materials and equipment delivered to the Shipyard for the
VESSEL or built into or installed in or upon the VESSEL (except the
OWNER's Supplies) fully insured with first class insurance companies
or underwriters in Korea with coverage corresponding to the Institute
of London Underwriter's Clauses for BUILDER's Risks. From the time of
the first arrival of the OWNER's Supplies in the shipyard until
delivery of the VESSEL, the BUILDER shall keep the OWNER's Supplies
fully insured with the aforementioned insurance companies or
underwriters to cover BUILDER's Risk.
The amount of such insurance coverage shall, up to the date of
delivery of the VESSEL, be an amount at least equal to, but not
limited to, the aggregate of the payments made by the OWNER to the
BUILDER plus Eighty Million United States Dollars (US$80,000,000) to
cover OWNER's Supplies in the custody of the Shipyard.
The policy referred to in this paragraph for the OWNER's Supplies
shall be taken out in the name of the BUILDER and OWNER, as their
interests may appear, and all losses under such policy shall be
payable to the BUILDER and OWNER, as their interests may appear.
Prior to the commencement of construction of the VESSEL, the BUILDER
shall obtain, at its own cost and expense, and furnish certificates or
copies thereof to the OWNER, the following policies of insurance:
(a) Worker's compensation (including occupational disease) and
employer's liability insurance with Maritime and In Rem coverage
and in accordance with the applicable statutory requirements of
the country of Korea, with limits on the employer's liability
coverage of not less than U.S. $500,000 for bodily injury per
person, with excess liability limits of U.S. $10,000,000;
(b) Comprehensive public liability, including broad form contractual
liability coverage, with limits of not less than U.S. $500,000
for bodily injury per occurrence, and U.S. $500,000 for property
damage per occurrence with excess liability limits of U.S.
$10,000,000;
(c) All-Risk BUILDER's Risk policy, including protection and
indemnity, relating to the VESSEL and OWNER Supplies and in an
amount equal to the aggregate of the payments made by the OWNER
to the BUILDER plus Eighty Million United States Dollars
(US$80,000,000) to cover OWNER's Supplies in the custody of the
Shipyard. At any time during the period of this Agreement, the
OWNER has the right by giving prior written notice to the BUILDER
to increase the amount of the insurance provided hereunder and
the OWNER will promptly reimburse the BUILDER for any premiums
resulting from such increase based on the published Lloyds of
London rates at the time of such increase. Should the Delivery
Date be later than March 1, 2000 for any cause attributable to
the OWNER, any additional premium charged to continue the policy
shall be borne solely by the OWNER to the extent that the delay
is caused by the OWNER. The OWNER agrees that the BUILDER has
the right of settlement of all losses (except for damages to or
losses of OWNER Supplies) applicable under this Paragraph 2(c)
with the underwriters provided such losses do not exceed U.S.
$300,000 each. All deductibles under the All-Risk BUILDER's Risk
policy shall be for the account of the BUILDER; and
(d) Automobile liability insurance covering automobile equipment used
in the performance of the work under this Agreement with limits
of not less than U.S. $500,000 for bodily injury per occurrence
and U.S. $500,000 for property damage per occurrence with excess
liability limits of U.S. $10,000,000;
All insurance policies shall, either on the face thereof or by
appropriate endorsement: (w) name (except for the policy specified in
Paragraph (a) hereinabove) the BUILDER and the OWNER as unqualified
assureds and provide that payments thereunder shall be made to the
extent that their respective interests may appear; (x) provide that
they shall not be cancelled or their coverage reduced except upon
thirty days' prior written notice to the BUILDER and the OWNER (if
such cancellation or reduction should be caused by the BUILDER's
failure to pay any premium when due, the OWNER will have the right to
pay any such premium within such thirty days to maintain the coverage
in effect for the benefit of the OWNER; the OWNER retains the right to
be reimbursed by the BUILDER); (y) contain waiver of subrogation
provisions pursuant to which the insurer waives all express or implied
rights of subrogation against the BUILDER and the OWNER, the BUILDER
and the OWNER hereby waiving any rights to subrogate against each
other; and (z) be maintained in full force and effect by the BUILDER
from commencement of construction until the Delivery Date.
2. Application of the Recovered Amounts:
In the event that the VESSEL shall be damaged from any insured
cause at any time before delivery of the VESSEL, and in the further
event that such damage shall not constitute an actual or constructive
total loss of the VESSEL, the amount received in respect of the
insurance shall be applied by the BUILDER in repair of such damage,
satisfactory to the Classification requirements, and the OWNER shall
accept the VESSEL under this Contract if completed in accordance with
this Contract and the Specifications, however, subject to the
extension of delivery time under Article VIII hereof (except in case
of negligence of the BUILDER).
Should the VESSEL from any cause become an actual or constructive
total loss, the BUILDER shall either:
(a) Proceed in accordance with the terms of this Contract, in which
case the amount received in respect of the insurance shall be
applied to the construction and repair of damage of the VESSEL,
provided the parties hereto shall have first agreed thereto in
writing and to such reasonable extension of delivery time as may
be necessary for the completion of such reconstruction and
repair; or
(b) Refund promptly to the OWNER the full amount of all sums paid by
the OWNER to the BUILDER as installments in advance of delivery
of the VESSEL, and deliver to the OWNER all OWNER's Supplies (or
the insurance proceeds paid with respect thereto), in which case
this Contract shall be deemed to be automatically terminated and
shall be deemed rescinded for purposes of Article X hereof and
all rights, duties, liabilities and obligations of each of the
parties to the other shall forthwith cease and terminate.
3. Termination of BUILDER's Obligation to Insure:
The BUILDER shall be under no obligation to insure the VESSEL
hereunder after delivery of the VESSEL.
(End of Article)
ARTICLE XVIII - NOTICE
1. Address:
Any and all notices and communications in connection with this
Contract shall be addressed as follows:
To the OWNER:
RB Exploration Co.
000 Xxxxxxxxxxxx
Xxxxxxx, Xxxxx 00000-0000
Attn: Project Director
Facsimile No.: (000)000-0000
To the BUILDER:
Hyundai Heavy Industries, Co. Ltd.
0, Xxxxxxx-Xxxx
Xxxxx, Xxxxx
Attn: Project Director
Facsimile No.: (00)000-00-0000
2. Language:
Any and all notices and communications in connection with this
Contract shall be written in the English language.
3. Effective Date of Notice:
The notice in connection with this Contract shall become
effective from the date when such notice is received by the OWNER or
by the BUILDER except otherwise described in the Contract. In case
any notice is made by facsimile confirmed in writing, the date when
the facsimile is received shall govern.
(End of Article)
ARTICLE XIX - EFFECTIVE DATE OF CONTRACT
This Contract shall become effective upon signing by the parties
hereto.
(End of Article)
ARTICLE XX - INTERPRETATION
1. Laws Applicable:
The parties hereto agree that the validity and the interpretation
of this Contract and of each Article and part thereof shall be
governed by the General Maritime Law of the United States of America,
not including, however, any of its conflicts of law rules which would
direct or refer to the laws of any jurisdiction.
2. Discrepancies:
All general language or requirements embodied in the
Specifications are intended to amplify, explain and implement the
requirements of this Contract. However, in the event that any
language or requirements so embodied permit an interpretation
inconsistent with any provision of this Contract text, then, in each
and every such event, the applicable provisions of this Contract text
shall prevail and govern. In the event of conflict between the
Specifications and Plans, the Specifications shall prevail and govern.
3. Entire Agreement:
This Contract contains the entire agreement and understanding
between the parties hereto and supersedes all prior negotiations,
representations, undertakings and agreements on any subject matter of
this Contract.
4. Amendments and Supplements:
Any supplement, memorandum of understanding or amendment,
whatsoever form it may be in relating to this Contract, to be made and
signed among parties hereof after signing this Contract, shall be the
integral part of this Contract and shall be predominant over the
respective corresponding Article and/or Paragraph of this Contract
when clearly identified as such.
(End of Article)
ARTICLE XXI - CONFIDENTIALITY
BUILDER and OWNER agree that the terms and conditions of this Contract
shall remain confidential and neither party shall disclose any such terms
and conditions of this Contract to any third party without first obtaining
the prior written consent of the other, provided however, that either party
shall be entitled to disclose any or all of the terms and conditions of the
Contract to the extent it is necessary to do so to implement, effectuate
and comply with the terms of the Contract or to otherwise exercise any
right or discharge any obligation that party may have pursuant to this
Contract or to comply with any law, rule, regulation of any governmental
entity having jurisdiction over a party or of a stock exchange, securities
commission and such on which stock of a party or its affiliate is traded.
BUILDER shall require the engine maker/manufacturer to sign
confidentiality agreements agreeing to keep strictly confidential all
information furnished to such party or developed in connection with the
performance of this Contract.
(End of Article)
IN WITNESS WHEREOF, the parties hereto have caused this Contract to
be duly executed on the day and year first above written.
OWNER: BUILDER:
RB EXPLORATION CO. HYUNDAI HEAVY INDUSTRIES CO., LTD.
By: Xxxxxx Xxxxxxx By: Youn Xxx Xxx
Title: President Title: Chief Operating Officer
HYUNDAI CORPORATION
By: Dong Xxx Xxx
Title: Senior Vice President
EXHIBIT "A"
LETTER OF REFUNDMENT GUARANTEE NO.
Gentlemen:
We hereby open our irrevocable letter of guarantee No. in favor of RB
Exploration Co. (hereinafter called the "OWNER") for account of
___________________, as follows in consideration of the shipbuilding
contract dated __________________, 1997 (hereinafter called the "Contract")
made by and among the OWNER and _______________ (hereinafter called the
"BUILDER") for the construction of one (1)VESSEL having BUILDER's Hull No.
___________ (hereinafter called the "VESSEL").
If in connection with the terms of the Contract the OWNER shall become
entitled to a refund of the advance payment(s) made to the BUILDER prior to
the delivery of the VESSEL, we hereby irrevocably guarantee the repayment
of the same to the OWNER immediately on demand _________________________
(Say _______________________ only) together with interest thereon at the
rate of _________ per cent per annum from the date following the date of
receipt by the BUILDER to the date of remittance by telegraphic transfer of
such refund.
The amount of this guarantee will be automatically increased, not more
than four (4 ) times, upon BUILDER's receipt of the respective installment:
each time by the amount of installment of USD ________________, USD
___________________, USD _____________________, USD and USD
_______________________ and respectively, plus interest thereon as provided
in the Contract, but in any eventuality the amount of this guarantee shall
not exceed the total sum of ____________________ (Say _________________
only) plus interest thereon at the rate of eight per cent (8%) per annum
from the date following the date of BUILDER's receipt of each installment
to the date of remittance by telegraphic transfer of the refund.
In case any refund is made to you by the BUILDER or by us under this
guarantee, our liability hereunder shall be automatically reduced by the
amount of such refund.
In the event of rescission of the Contract being based on delays due
to force majeure or other causes beyond the control of the BUILDER, as
required by Article X of the Contract, interest shall be paid at the rate
of four percent (4%) per annum from the date following the date of
BUILDER's receipt of each installment to the date of remittance by
telegraphic transfer of the refund.
This letter of guarantee is available against OWNER's simple receipt
and signed statement certifying that OWNER's demand for refund has been
made in conformity with Article X of the Contract and the BUILDER has
failed to make the refund within Thirty (30) days after your demand to the
BUILDER. Refund shall be made to you by telegraphic transfer in
__________________.
This letter of guarantee shall expire and become null and void upon
receipt by the OWNER of the sum guaranteed hereby or upon acceptance by the
OWNER of delivery of the VESSEL in accordance with the terms of the
Contract and, in either case, this letter of guarantee shall be returned to
us. This guarantee is valid from the date of this letter of guarantee
until delivery or in the event of delayed delivery until such time as the
VESSEL is delivered by the BUILDER to the OWNER in accordance with the
terms of the Contract.
Notwithstanding the provisions hereinabove, in case we receive
notification from you or the BUILDER confirmed by the Arbitration Board
stating that your claim to rescind the Contract or your claim for
refundment thereunder has been disputed and referred to Arbitration in
accordance with the provisions of the Contract, the period of validity of
this guarantee shall be extended until Thirty (30) days after the final
award shall be rendered in the Arbitration and a copy thereof acknowledged
by the Arbitration Board. In such case, this guarantee shall not be
available unless and until such acknowledged copy of the final award in the
Arbitration justifying your claim is presented to us.
This guarantee shall not be affected by any extension of time or
concession granted by the OWNER to the BUILDER or any delay or failure of
the OWNER in enforcing its rights under the Contract.
The OWNER shall have the right to assign this guarantee and all of its
benefits to any assignee to whom the Contract is assigned.
This guarantee shall be governed by the General Maritime Law of the
United States of America, not including, however, any of its conflicts of
law rules which would direct or refer to the laws of any jurisdiction.
Very truly yours,
___________________________________
EXHIBIT "B"
OPTION VESSEL PRICE AND DELIVERY
VESSEL # DELIVERY DATE NOTICE PERIOD PRICE
--------- ---------------- ------------------------------------- --------
Vessel #2 December 1, 1999 November 1, 1997 to December 31, 1997 US$144.9
million
23 Months after January 1, 1998 to April 30, 1998 US$144.9
option exercise million
22 Months after May 1, 1998 to October 31, 1998 US$144.9
option exercise million
Vessel #3 May 1, 2000 November 1,1997 to June 30, 1998 US$148.4
million
22 Months after July 1, 1998 to October 31, 1998 US$148.4
option exercise million
Note 1) OWNER has the option to place the order for an option vessel
with dynamic positioning. In such case, delivery date will be
increased by one month and price will be increased by US$1
million.
The additional work warranted by the option for dynamic
positioning shall include:
- installation of 8 OWNER furnished thrusters, engines and
transformers
- installation of piping, cabling and any other utilities
and control systems as required
- associated tests and trials
Note 2) The above prices and delivery dates for Vessel #2 and #3 are
based on the same size, drawings and specifications as the
first vessel.
Note 3) BUILDER agrees to complete a study to evaluate the impact of
compliance with NMD/NPD certification and the use of DNV for
class in connection with any option vessel(s).
Note 4) The price of the OPTION VESSELS shall be reduced by the amount
United States Dollars Two Hundred and Fifty Thousand
(US$250,000) should OWNER decided not to register the VESSEL
under the flag of the United States of America.
