Exhibit 10.2
AGREEMENT TO
PERFORM
CONSTRUCTION MANAGEMENT
SERVICES
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Owner’s Initials
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Construction Manager’s
Initials
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TABLE OF CONTENTS
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Construction
Manager’s Responsibilities
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12
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Authority
and Independent Counsel
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12
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Owner’s Initials
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Construction Manager’s
Initials
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AGREEMENT TO PERFORM
CONSTRUCTION MANAGEMENT SERVICES
This AGREEMENT
TO PERFORM CONSTRUCTION MANAGEMENT SERVICES (the
“Agreement”) is made and entered into by and between
Mandarin Drilling Corporation, a corporation organized under the
laws of the Marshall Islands, having its registered office Trust
Company Complex, Ajeltake Road, Ajeltake Island Majuro, Marshall
Islands, MH 96960 (“Mandarin” or “Owner”),
and Vantage International Management Company, a Cayman Islands
exempted company, having its registered office at P.O. Box 309,
Ugland House, Grand Cayman KY1-1104, Cayman Islands
(“VIMCO” or “Construction Manager”); each
individually referred to as a “Party” and collectively
as the “Parties”.
W I T N E S S E T H:
WHEREAS,
Mandarin is owned 45% by Vantage Deepwater Company, an affiliate of
VIMCO, and the remaining 55% by F3 Capital; and
WHEREAS, on 13
September 2007 Mandarin, as Buyer, entered into a contract with
Daewoo Shipbuilding & Marine Engineering Co., Ltd.
(“Construction Contract”), a corporation organized and
existing under the laws of the Republic of Korea, having its
principal office at 85, Da-dong, Jung-gu, Seoul, Korea
(“Daewoo” or “Builder”), to design,
construct, launch, equip, commission and complete one (1)
drillship, hull number H3601 (“the First Drillship”) at
Daewoo’s shipyard located at Okpo, Koje Island, Korea
(“Shipyard”); and
WHEREAS
Mandarin (or its affiliates on its behalf) has entered into two
further contracts with Daewoo to design, construct, launch, equip,
commission and complete two (2) further drillships (the
“Second Drillship” and the “Third
Drillship” respectively) at the Shipyard. The First
Drillship, the Second Drillship and the Third Drillship shall be
collectively referred to as the “Drillships”, and each
individually as a “Drillship”, and the design,
construction, launch, commission and completion of the Drillships
shall be referred to as the “Project”.
WHEREAS,
Mandarin’s shareholders have determined that it is in their
mutual best interest to have VIMCO provide Construction Management
Services during the construction of the Drillships.
NOW THEREFORE,
in consideration of these premises and the covenants, terms and
conditions contained herein, Construction Manager hereby obligates
itself to undertake the performance of the Construction Management
Services and other work further described herein in accordance with
this Agreement as follows:
This Agreement
specifically includes the Construction Contract. Unless
otherwise stated, all definitions used in the Construction Contract
shall apply in this Agreement. If any conflict or
inconsistency arises between any provisions of this Agreement and
the Construction Contract, the provisions of this Agreement
control.
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Owner’s Initials
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Construction Manager’s
Initials
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Relationship
of Parties . The Construction Manager accepts
the relationship of trust and confidence established with the Owner
by this Agreement, and covenants with the Owner to furnish the
Construction Manager's reasonable skill and judgment in furthering
the interests of the Owner. The Construction Manager shall furnish
construction administration and management services and use the
Construction Manager's best efforts to perform its scope of work in
an expeditious and economical manner consistent with the interests
of the Owner. The Owner shall endeavor to promote harmony and
cooperation among the Owner, Builder, Construction Manager and
other persons or entities employed by the Owner for the
Project.
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Independent
Contractor. This
Agreement shall not be deemed to constitute, create, give effect
to, or otherwise recognize a joint venture, partnership, or formal
business entity, other than that which may be subsequently created
pursuant to the terms hereof. During the term of this
Agreement, the Parties shall be independent contractors, and,
except as specifically set out and agreed, no Party shall have the
right or authority to act on behalf of any other Party or to take
any action that may bind another Party, without the prior written
consent of such other Party. Nothing in this Agreement
shall be construed as a limitation of the power or rights of a
Party to carry on its separate business for its sole
benefit. Additionally, nothing in this Agreement shall
be construed as a transfer of any intellectual property
rights.
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Cross
Indemnity . EACH PARTY
(AS THE “INDEMNIFYING PARTY”) DOES HEREBY AGREE TO
INDEMNIFY, DEFEND AND HOLD THE OTHER PARTY, AND ITS AFFILIATES, AND
THEIR STOCKHOLDERS, OFFICERS, AND EMPLOYEES (AS THE
“INDEMNIFIED PARTIES”) HARMLESS OF, FROM AND AGAINST
THE FULL AMOUNT OF ANY AND ALL LOSS, COST, EXPENSE OR LIABILITY OF
ANY NATURE WHATSOEVER CAUSED BY OR ATTRIBUTABLE THE DIRECT OR
INDIRECT BREACH OR NEGLIGENT PERFORMANCE OR FAILURE OR DELAY IN
PERFORMANCE OF THIS AGREEMENT.
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In further
consideration for the covenants, terms and conditions set forth
herein and performance of the services by the
Construction Manager set forth in Article 3 below (the
“Construction Manager Services”), the Owner shall pay
the Construction Manager a fee of US$5,000,000 per annum pro rata
for each Drillship (“Construction Manager’s Fee”)
from the date the Builder begins constructing the
Drillships (or the date of this agreement, whichever is
the later) until the date the final Drillship is delivered and
accepted by the Owner.
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Owner’s Initials
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Construction Manager’s
Initials
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In respect of
the calendar year ending on 31 December 2008, and in the case of
the First Drillship only, the Owner shall pay the Construction
Manager a fee of US$1,500,000. For all further calendar years the
provisions set out clause 2.1 shall apply.
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In addition to
the Construction Manager’s Fee, the Owner shall reimburse the
Construction Manager for all of its costs, including, but not
limited to, the following (the “Reimbursable
Costs”):
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Costs,
including transportation, of materials and equipment incorporated
or to be incorporated in the completed construction;
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Costs of the
Construction Manager's personnel;
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That portion of
the reasonable travel and subsistence expenses of the Construction
Manager's personnel incurred while traveling in discharge of duties
connected with the Construction Management Services;
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Reproduction
costs, costs of telegrams, facsimile transmissions and
long–distance telephone calls, postage and express delivery
charges, telephone at the site and reasonable petty cash expenses
of the Construction Manager;
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All taxes
imposed by any governmental authority which are related to the Work
and for which are incurred by the Construction Manager;
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Fees of any
testing laboratories for tests reasonably necessary to ensure that
the Builder’s work conforms with the
Specifications;
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Legal,
mediation and arbitration costs, other than those arising from
disputes between the Owner and Construction Manager, reasonably
incurred by the Construction Manager in the performance of the
Construction Management Services;
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Expenses to
obtain visas and other administrative costs in order to send
employees to the Project;
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Expenses
incurred in accordance with Construction Manager's standard
personnel policy for relocation and temporary living allowances of
personnel required for the Construction Management Services;
and
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Other costs
incurred by the Construction Manager in the performance of the
Construction Management Services if and to the extent approved in
advance in writing by the Owner.
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Owner’s Initials
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Construction Manager’s
Initials
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The
Construction Manager’s Fee and Reimbursable Costs shall be
paid by the Owner to the Construction Manager within thirty (30)
days of receipt of a written request for payment from the
Construction Manager. If the Owner fails to pay any
amount which is properly due and payable by it under this Agreement
within 30 days of receipt of a written request for payment, the
Construction Manager may charge the Owner interest on the overdue
amount from the due date up to the date of actual payment, after as
well as before judgment, at the rate of 8% per
annum. Such interest shall accrue on a daily basis and
be compounded quarterly and the Owner shall pay the interest
immediately on demand.
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Construction
Manager’s Responsibilities.
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The
Construction Manager covenants with the Owner to provide sufficient
organization, personnel and management to further the interests of
the Owner in providing the following services:
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Administrative,
management and related services as required to perform the
Owner’s material obligations under the Construction Contract
and in accordance with the Owner’s objectives for cost, time
and quality;
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Monitor,
supervise and approve the design, construction and testing of the
Drillships and the procurement, delivery, installation and testing
of all materials to be installed in and/or used on the
Drillships;
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Prepare a
budget to be approved by the Owner for the completion of the
Project that covers the construction, fit out, spare parts,
equipment, personnel, systems and training to ensure that the
Drillships is properly constructed and prepared for
operations;
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Remit payment
of all construction costs incurred in construction of the
Drillships that have been advanced by the Owner. The
Construction Manager is not responsible for payment of any costs
that have not been advanced by the Owner;
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Schedule and
conduct construction and progress meetings with the Builder,
subcontractors, suppliers, and any o
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