EXHIBIT 10.60
[DDC LOGO]
LOAN AND SECURITY AGREEMENT
(VESSEL CONSTRUCTION AND PURCHASE)
This Loan and Security Agreement ("Loan Agreement") is made this 30TH
day of AUGUST, 1995, by and between DEBIS FINANCIAL SERVICES, INC. D/B/A DDC-MTU
FINANCIAL SERVICES ("Lender"), a Delaware corporation, with its principal place
of business at 000 XXXXXXX 0, XXXXX 000, XXXXXXX, XXXXXXXXXXX 00000, as LENDER,
and XXXXX INDIANA, INC., with a principal place of business at 000 XXXXX XXXXXX,
XXXXX XXXXX, 00XX XXXXX, XXX XXXX, XX 00000, as BORROWER.
RECITALS:
WHEREAS Borrower desires to finance construction of ONE (1) 280 FOOT
2,000 PASSENGER RIVERBOAT CASINO ("Vessel") as more particularly described in
the SALES AND CONSTRUCTION CONTRACT dated JUNE 16TH, 1995 by and between
ATLANTIC MARINE, INC., a Florida corporation ("Contractor") and Borrower,
("Construction Contract"), which Vessel shall be completed pursuant to the terms
of the Contract by Contractor; and
WHEREAS Borrower desires to borrow from Lender an amount not exceeding
FIFTEEN MILLION AND XX/100 IN UNITED STATES DOLLARS in United States dollars
($15,000,000.00 USD) ("Loan Amount"), to finance construction and purchase of
the Vessel;
WHEREAS Lender is willing to consider providing financing to Borrower
because, as set forth in the Construction Contract, Borrower is installing as a
part of Vessel's construction engines manufactured by Detroit Diesel Corporation
("DDC"), which is a company related to Lender;
NOW, THEREFORE, the parties agree:
SECTION ONE
ADVANCES TO BORROWER
1.1 Lender shall loan Borrower amounts not to exceed a total of
$15,000,000.00 USD, that loan to be repaid according to the terms of a
promissory note signed contemporaneously with this Loan Agreement as evidence of
Borrower's debt to Lender ("Note").
1.2 Lender shall disburse the Loan Amount to Borrower in incremental
payments made directly to Contractor on Borrower's behalf ("Advances").
1.3 Advances shall be disbursed in arrears, for work that has
actually been completed, for materials that have been incorporated into the
vessel, and/or for value that has otherwise been added to the Vessel. Borrower
shall be entitled to request an Advance in the amounts specified below at the
following times.
(a) $2,400,000.00 to Borrower, upon execution of Loan documents;
(b) $3,600,000.00 to Contractor, upon completion of the deck,
bottom and sides of the first module of
approximately 35 feet in length;
(c) $4,800,000.00 to Contractor, upon installation of engines in
Vessel;
(d) $4,200,000.00 to Contractor, upon launching of Vessel and
satisfactory completion of sea trials.
1.4 An Advance requested shall be made following the expiration of
seven days from Lender's receipt of a certificate from Contractor that all of
the work necessary to achieve the stage of construction for which the Advance is
requested has in fact been satisfactorily completed; provided, however, that
Lender reserves the right to condition its payment of any Advance on the receipt
of additional evidence from Contractor that the level of construction certified
has in fact been satisfactorily achieved or on its independent investigation.
1.5 The aggregate amount of Advances which Lender is obligated to
make pursuant to this Loan Agreement shall not at any time exceed the aggregate
amount then payable to Contractor on the Construction Contract.
1.6 Any obligation of Lender to make Advances shall terminate on the
occurrence of an Event of Default as defined in Section 6 of this Loan
Agreement.
SECTION TWO
ADDITIONAL DOCUMENTATION
CONDITIONS PRECEDENT
2.1 As a condition precedent to Lender's being required to make any
Advance pursuant to this Loan Agreement, Borrower will furnish Lender with a
true and correct copy of the Construction Contract, which contract Lender must
approve before being obligated to make any Advance.
2.2 As a condition precedent to Lender's being required to make any
Advance pursuant to this Loan Agreement, Borrower hereby grants to Lender an
assignment, as security, which gives Lender a first, prior and perfected
security interest in:
a) all of Borrower's rights, title and interest in the
Construction Contract; and
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b) that certain security interest given in the Project to
Borrower, by Contractor, together with all of the Borrower's
rights, title and interest in all insurance on the Vessel,
and all warranties by manufacturers, distributors and others
relating to the construction of the Vessel.
Borrower warrants that (1) the Construction Contract is valid and
constitutes the entire contract with respect thereto, (2) all names, addresses,
amounts, dates, signatures and other statements and facts contained in the
Construction Contract are true and correct, (3) the Construction Contract is and
will be legally enforceable according to the terms of each, (4) the Construction
Contract and the Vessel will be free from any liens, setoffs, counterclaims and
other defenses, (5) Borrower has the right to assign the rights assigned by this
Section 2.2, and (6) Borrower has complied with all of their obligations under
the Construction Contract.
Should Borrower default on the Promissory Note referenced herein,
Lender shall be entitled to take over Borrower's position as Buyer under the
Construction Contract and as Secured party on the Vessel, and to take any action
which Borrower would have been entitled to take.
2.3 As a condition precedent to Lender's being required to make any
Advance pursuant to this Loan Agreement, Contractor shall execute and deliver to
Lender a security agreement, in form satisfactory to Lender, which gives Lender
a first, prior, and perfected security interest in Contractor's interest in the
Vessel and any materials delivered to Contractor to be included in the Vessel.
2.4 Prior to the final Advance, and contingent upon Lender's receipt
of an executed builder's certificate from Contractor, Borrower shall a) execute
and deliver to Lender a preferred ship mortgage which gives Lender a first,
prior, and perfected security interest in the Vessel and a promissory note,
which shall evidence the loan obligation, or b) repay the Loan Amount in full,
together with all accrued but unpaid interest, costs and fees incurred. Upon
execution of the preferred ship mortgage and promissory note, or receipt by
Lender of full repayment of the Loan Amount, together with all outstanding
accrued interest, costs and fees incurred, the Note executed contemporaneously
with this Loan Agreement will be cancelled.
2.5 Borrower shall execute and deliver to Lender on request any such
additional documentation as may reasonably be requested to (a) evidence the
execution authority of any signer of this Loan Agreement or the additional
documents it contemplates, (b) substantiate Borrower's compliance with any
representations and warranties made by it, (c) evidence the debt created by this
Loan Agreement and the Note, (d) evidence and
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perfect any security interest to which Lender is entitled pursuant to this Loan
Agreement, or (e) otherwise carry out the transactions contemplated by this Loan
Agreement.
2.6 Borrower agrees to sign any additional documents which Lender
deems are necessary to protect or perfect Lender's interest in the Vessel and,
for that purpose, hereby makes Lender its attorney-in-fact for signing builder's
certificates, manufacturer's statements of origin, title certificates, or other
documents necessary to effect the purpose of this Loan Agreement without
enhancing Lender's position beyond this Loan Agreement.
SECTION THREE
BORROWER'S REPRESENTATIONS AND WARRANTIES
3.1 Borrower represents and warrants to Lender that:
(a) Borrower is a corporation duly organized and in good standing
under the laws of Delaware, is duly authorized and in good standing under the
laws of those states or nations in which it does business and has the corporate
power and authority to own its properties and assets, including the Vessel;
(b) Execution and delivery of this Loan Agreement, Borrower's
consummation of any of the transactions contemplated hereby, and Borrower's
compliance with the terms of this Loan Agreement and those transactions, do not
contravene or materially conflict with any provision of law, statute or
regulation to which Borrower is subject, any decree, license, order, or permit
applicable to Borrower, or any indenture, loan agreement, mortgage, deed of
trust, or other contract to which Borrower is a party or by which it may be
bound. No consent, approval, authorization, or order of any court or
governmental authority or third party is required in connection with execution
and delivery by Borrower of this Loan Agreement or to consummate the
transactions it contemplates;
(c) No Event of Default as defined in Section 6 of this Loan
Agreement currently exists;
(d) Borrower is not in default in any material respect under any
contract, lease, loan agreement, indenture, mortgage, security agreement, or any
other material agreement or obligation to which it is a party or by which any of
its properties are bound;
(e) There is no litigation, arbitration, or administrative
proceedings pending or (to Borrower's knowledge) threatened against Borrower
that could have a materially adverse effect on (i) the validity, performance, or
enforceability of this Loan Agreement, (ii) the financial condition or business
operations of Borrower, or (iii) the ability of Borrower to fulfill its
obligations under this Loan Agreement;
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(f) All tax returns required to be filed by Borrower in any
country or jurisdiction have been filed, and all taxes (including mortgage
recording taxes), assessments, fees, and other governmental charges due from
Borrower or charged on any of its assets have been paid. Borrower is unaware of
any assessments pending or proposed against it or its assets.
3.2 Each Advance made pursuant to this Loan Agreement shall
constitute, without the need for a specific written statement, a representation
and warranty by Borrower that no Event of Default exists hereunder, and that all
representations and warranties contained in this Section 3 are true and correct
as of the date of any such Advance.
SECTION FOUR
CREATION OF SECURITY
4.1 Borrower hereby grants Lender a security interest in the
following:
(a) the Vessel, together with all its appurtenances and
equipment, currently or hereafter attached, excluding any and all equipment
relating to gaming operations;
(b) all materials or equipment delivered to Borrower for, or
identified for, incorporation into the Vessel,
4.2 Borrower shall execute whatever further documentation Lender may
reasonably request to evidence or perfect the security interests granted by this
Loan Agreement.
SECTION FIVE
INSURANCE
5.1 During construction of the Vessel, if insurance acceptable to
Lender is not provided by Contractor, Borrower will, at its own expense, cause
to be carried and maintained on the Vessel, insurance in such amounts, against
such risk, in such form (including, without limitation, a loss payable clause
which shall be in favor of Lender, and a cancellation clause and designation of
named assured, which shall include Lender), and with such insurance companies,
underwriters or funds as shall be in the reasonable judgment of Lender necessary
or advisable for the protection of Lender's interest in the Vessel; provided,
however, that Borrower will in any event cause the following minimum insurance
to be carried or maintained:
(a) Marine Insurance on the Vessel in an amount at least equal to
110% of the Note or the full market value of the Vessel, whichever is greater,
covering the Vessel against all such usual marine risks.
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(b) Evidence of protection and Indemnity Insurance, in an amount
not less than the full market value of the Vessel;
(c) Breach of Warranty Insurance for the full amount of the Note,
in favor of Lender.
5.2 Borrower may substitute different forms for any of the above forms
of insurance if such substitute forms furnish at least equal coverage, and
Borrower may eliminate from any such insurance any risk customarily covered
thereunder if such risk is insured under a separate but different form of policy
furnishing at least equal coverage. The deductible of any such insurance shall
not exceed five percent (5.0%) of Vessel cost. Coverage limits shall be stated
in United States currency. Copies of all policies or certificates evidencing
such insurance shall be given to Lender, for its approval and retention at least
ten (10) days prior to the effective date thereof.
5.3 All policies or certificates evidencing insurance required to be
carried and maintained by this Section 5 shall provide that underwriters shall
give at least thirty (30) days prior written notice to Lender in the event of
cancellation.
5.4 The underwriters of the insurance referred to in this Section 5
shall make no payments to Borrower, nor shall Borrower accept such payments,
without the express written permission of Lender. Lender may waive the terms of
this provision at its option.
5.5 On behalf of Lender, Borrower will make all proofs of loss and
take all other action necessary or appropriate to collect on insurance carried
on the Vessel. To that end, Lender, at Borrower's expense, will execute such
claim papers and other documents, take such action and furnish such information,
as Borrower may reasonably request in writing, including tendering abandonment
of the Vessel to underwriters.
5.6 Borrower will not commit any act, nor voluntarily suffer or permit
any act to be committed or omitted, whereby any insurance required to be carried
and maintained hereunder shall or may be suspended, impaired, or defeated;
5.7 Lender is hereby appointed owner's attorney-in-fact as respects to
insurance claims, and Lender, should it elect to exercise its authority, shall
have full power and authority to make, compromise, pursue, and collect on any
claim which could be made on insurance on the Vessel or insurance provided
pursuant to this Loan Agreement; provided, however, that Lender shall not act
unreasonably as respects to its exercise of that authority and shall pay to
Borrower any amount it collects which is in excess of amounts owed Lender by
Borrower.
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SECTION SIX
EVENTS OF DEFAULT
6.1 Borrower shall be in default on this Loan Agreement, and Lender
shall have the right to declare the entire indebtedness hereunder and on the
Note to be due and payable at once, with no obligation of Lender to make further
Advances, upon the happening of any of the following events ("Events of
Default"):
(a) Borrower's failure to timely pay any amount due on the Note;
(b) Borrower's failure to execute a preferred ship mortgage
satisfactory to Lender on completion of the Vessel and/or prior to causing the
Vessel to be moved from the Contractor's yard;
(c) Contractor's failure to reasonably meet the construction
schedule set forth in the Construction Contract or to timely complete the Vessel
in accordance with that contract;
(d) Borrowers' failure to take delivery of the Vessel on its
completion or on its tender by Contractor;
(e) Entry against Borrower of any judgment in an amount over
$100,000 USD in any court of competent jurisdiction which remains unsatisfied
after expiration of thirty (30) days from the date of entry of such judgement;
(f) Failure of any guaranty of Borrower's obligations under this
Loan Agreement or the Note to remain in full force and effect, including the
filing of any bankruptcy, or similar occurrence by or against any such
guarantor;
(g) Assignment by Borrower of all or any part of this Loan
Agreement or Advances made pursuant to it without first having obtained Lender's
written consent;
(h) Contractor's failure to construct the Vessel in a workmanlike
manner, in accordance with all applicable laws and regulations and in accordance
with the Construction Contract, which Contract includes the installation of DDC
engines;
(i) Borrower's failure to maintain insurance on the Vessel as
required by Section 5 of this Agreement;
(j) Destruction of or serious damage to the Vessel prior to its
completion and delivery to Borrower, in such case as the Vessel is not covered
by insurance as required by section 5 of this Agreement;
(k) Borrower's filing, or the filing against Borrower, of a
petition under the bankruptcy laws or any similar
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statute, Borrower's making a general assignment for the benefit of creditors, or
appointment of a receiver for Borrower;
(l) Borrower's failure to comply with any of the terms of this
Loan Agreement;
(m) Seizure of the Vessel by any person acting under color of
government authority;
(n) Contractor fails to permit Lender or its agents, acting on
Lender's behalf, to inspect the Vessel at reasonable times; or
(o) Borrower's failure to keep the Vessel in good repair and
condition.
SECTION SEVEN
TAXES
7.1 All payments (whether of principal, interest, or otherwise) to be
made by the Borrower to the Lender hereunder shall be made free and clear of and
without deduction for any taxes, levies, duties, charges, fees, deductions or
withholdings of any nature now or hereinafter imposed. If at any time applicable
law requires the Borrower to make any such deduction or withholding, the sum due
from the Borrower shall be increased to the extent necessary to ensure that the
Lender receives an after tax sum equal to the sum which it would have received
after taxes had no such deduction or withholding been required.
SECTION EIGHT
MISCELLANEOUS
8.1 On completion of construction of the Vessel, Borrower shall insure
the Vessel with a company and in a form acceptable to Lender, in an amount not
less than the amount then owing Lender by Borrower under this Loan Agreement and
the Note.
8.2 As between Borrower and Lender, Borrower is responsible for and
will pay when due any fees, taxes, and other charges imposed against the Vessel
or as a result of this Loan Agreement or any additional transactions or
documents contemplated by it. Lender has the right to pay any such amounts on
Borrower's behalf, for which Borrower will promptly reimburse Lender on demand.
8.3 Should any liens or other encumbrances attach to or be asserted
against the Vessel, Borrower will act promptly to discharge them, and, if
Borrower disputes such liens or encumbrances or the debt associated with them,
Borrower will post such bond as is necessary to permanently discharge the liens
or encumbrances while Borrower resolves the disputed debt. Lender has the right
to pay on Borrower's behalf any amount necessary to discharge any liens or
encumbrances which may attach to or be
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asserted against the Vessel, for which amount Borrower will promptly reimburse
Lender on demand.
8.4 Lender is not in any way responsible for Contractor's performance
under the Construction Contract, nor is Lender required in any manner to
investigate the extent of Contractor's work on the Vessel or its entitlement to
Advances requested. Even though Lender may in fact do such an investigation for
itself, Borrower is not entitled to rely on that investigation for any purpose.
Borrower is obligated to repay all Advances made by Lender whether or not
Contractor was in fact entitled to be paid the amounts paid by Lender as
Advances.
8.5 Borrower agrees to pay Lender all its reasonable attorney fees and
costs, including the fees of expert witnesses, incurred in enforcing Lender's
rights under, or interpreting, this Loan Agreement, whether incurred outside of
any litigation, at trial, on appeal, or in any bankruptcy.
8.6 Any remedies provided Lender in this Loan Agreement are not
exclusive, but are cumulative and in addition to any other remedies available to
Lender, whether existing in law, equity, admiralty, or bankruptcy.
8.7 If any provision of this Loan Agreement is inconsistent with or in
contravention of applicable law, then such provision shall be deemed inoperative
and of no force and effect, but all other terms shall remain in full force and
effect.
8.8 This Loan Agreement, the Note, and all other documents
contemplated by the Loan Agreement to be executed, shall be governed by the laws
of the state of Connecticut, U.S.A. (excluding Connecticut's conflicts of law
rules), and Borrower hereby submits to the jurisdiction of the courts of that
state; provided, however, that Lender shall have the right, but not the
obligation, to litigate in any state or country in which Borrower or any of its
assets may be located.
8.9 This Loan Agreement, together with the Note and additional
documents referred to herein as being documents to be executed, constitute the
entire agreement between Lender and Borrower. No waiver or modification to this
Loan Agreement, the Note, or those additional documents shall be effective
unless in writing. No waiver or indulgence by Lender of any deviation by
Borrower with respect to any performance required by this Loan Agreement, the
Note, or the additional documents contemplated by this Loan Agreement shall be
deemed a waiver of Lender's right to subsequent or other full and timely
performance.
8.10 If this Loan Agreement is between Lender and more than one
borrower, all references to Borrower refer not only to the borrowers
collectively but also to each of them individually
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so that, for example, an occurrence affecting one borrower which would be an
Event of Default is an occurrence with respect to both borrowers and, thus, an
Event of Default.
8.11 This Loan Agreement may be executed in one or more counterparts,
each of which shall be deemed an original, but all of which shall constitute one
and the same agreement.
IN WITNESS WHEREOF, the parties have caused this Loan Agreement to be
executed by their duly authorized officers on the date first above written.
LENDER: DEBIS FINANCIAL SERVICES, INC.
D/B/A DDC-MTU FINANCIAL SERVICES
BY: /s/ Xxxxxxx Xxxxx Xxxxxxx
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XXXXXXX XXXXX XXXXXXX
VICE-PRESIDENT
BORROWER: XXXXX INDIANA, INC.
BY: /s/ Xxxxxxxx X. Xxxxx
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XXXXXXXX X. XXXXX
PRESIDENT
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PROMISSORY NOTE
(VESSEL CONSTRUCTION)
$15,000,000.00 USD Date: August 30th, 1995
For value received, Xxxxx Indiana, Inc., a Delaware corporation, with
its principal place of business at 000 Xxxxx Xxxxxx, Xxxxx Xxxxx, 00xx Xxxxx,
Xxx Xxxx, XX 00000 as Borrower, promises to pay to the order of debis Financial
Services, Inc. d/b/a DDC-MTU Financial Services, a Delaware corporation, and its
assigns ("DDC-MTU") with its principal place of business at 000 Xxxxxxx 0, Xxxxx
000, Xxxxxxx, XX 00000, as Lender, or at such other place as may be designated
in writing by the holder of this Note, the principal sum of Fifteen Million and
XX/100 in United States Dollars ($15,000,000.00 USD) or so much thereof as may
be advanced in accordance with the provisions of the Loan And Security Agreement
between DDC-MTU and Borrower dated August 30th, 1995 (the "Loan Agreement"), on
or before the 30th day of May, 1996 with interest thereon, compounded monthly,
at the rate of one and one-half percent (1.50%) per annum, above the Prime
Commercial Rate of The Bank of America, floating.
Interest accruing hereunder shall be due monthly as set forth herein,
and shall be calculated on the basis of a 30-day month and a 360-day year.
The first monthly interest payment shall be due thirty (30) days from
the date of the initial disbursement of funds. Subsequent payments ("Monthly
Payments") shall be due thirty days thereafter, for each and every month
("Payment Due Date") until this Note is fully paid. Monthly Payments associated
with all disbursements made in any thirty (30) day period shall be due on the
Payment Date for such thirty (30) day period.
However, for mutual convenience of DDC-MTU and Borrower, Monthly
Payments shall be calculated approximately fifteen (15) days prior to the
Payment Due Date ("Payment Calculation Date") and shall include disbursements
made prior to the Payment Calculation Date. Monthly Payments associated with
disbursements made prior to the Payment Calculation Date for a given thirty (30)
day period shall be due upon that period's Payment Due Date. Monthly Payments
associated with disbursements made after the Payment Calculation Date for a
given thirty (30) day period shall be due upon the Payment Due Date for the
following thirty (30) day period, provided, however, that DDC-MTU reserves the
right to collect such amounts on the Payment Due Date of the same period in
which the disbursements were made.
For purposes of calculating Monthly Payments, it shall be assumed
that the outstanding principal balance and the interest rate in effect as of the
Payment Calculation Date shall remain constant from the Payment Calculation Date
through the Payment Due Date. In the event the outstanding principal balance
or the interest rate should change from the Payment Calculation Date through the
Payment Due Date, any such change shall be reflected by adding or subtracting
the appropriate amount to or from the next Monthly Payment. Monthly Payments
associated with such adjusted amounts shall be due on the Payment Due Date of
the next following Monthly Payment. Any interest payment not received by DDC-MTU
when due, shall be subject to a late charge equal to five percent (5%) of the
amount of said payment.
All amounts due on this Note, including the full amount of principal,
shall at the option of DDC-MTU become immediately due and payable on the
happening of any event of default under the terms of the Loan Agreement.
DDC-MTU is entitled to recover its reasonable attorneys' fees and
costs, including expert witness fees, in any action brought on this Note,
whether at trial, on appeal, or in bankruptcy. Borrower waives demand,
presentment for payment, notice of dishonor, protest, and notice of protest. If
more than one person signs this Note, the obligations under this Note shall be
joint and several. No delay or omission on the part of DDC-MTU in demanding
payment or exercising any right under this Note shall operate as a waiver. The
obligations under this Note may be changed only by a writing signed by both
Borrower and DDC-MTU.
BORROWER: XXXXX INDIANA, INC.
BY: /s/ Xxxxxxxx X. Xxxxx
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XXXXXXXX X. XXXXX
PRESIDENT
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EXHIBIT A
One (1) new Two Hundred Eighty foot (280') 2,000 passenger Riverboat Casino,
powered by DDC engines, or the uncompleted portion thereof (the "Vessel), being
constructed under the terms of the Sales and Construction Contract dated June
16th, 1995 by and between Atlantic Marine, Inc. (the "Contractor") and Xxxxx
Indiana, Inc. ("Buyer"), together with:
i) all tangible personal property including, but not limited to, all
personal property, machinery, equipment, motors, engines, supplies,
generators, electronic components, parts, inventory, work in process,
and materials which are owned, or will be acquired by Contractor for the
purpose of constructing the Vessel, whether or not integrated into or
attached to the Vessel, excluding any and equipment relating to gaming
operations, and
ii) all intangible personal property including but not limited to, all
drawings, models, plans, specifications, documentation, and records
which are owned, or will be acquired or used by Contractor for the
purpose of constructing the Vessel.
Location: Atlantic Marine, Inc.
0000 Xxxxxxxxx Xxxxx
Xxxxxxxxxxxx, XX 00000
