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SHIPBUILDING CONTRACT
(Hull 003)
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THIS CONTRACT is made as of this 14th day
of February, 2005, by and between
KVAERNER PHILADELPHIA SHIPYARD INC., a
corporation organized under the laws of
Pennsylvania, having its principal office
at 2100 Kitty Hawk Avenue,
Philadelphia, PA 19112 (hereinafter called
the "BUILDER"), and MATSON NAVIGATION
COMPANY, INC., a corporation organized
under the laws of Hawaii, having its
principal office at 555 12th Street,
Oakland, CA 94607 (hereinafter called the
"BUYER").
WITNESSETH:
In consideration of the mutual covenants
herein contained and in the Right of
First Refusal Agreement (as defined
herein), the BUILDER agrees to design,
build, launch, equip and complete at its
Philadelphia shipyard (hereinafter
called the "Shipyard") and sell and deliver
to the BUYER one (1) container
VESSEL of the type Philadelphia CV 2600,
more fully described in Article 1
hereof (hereinafter called the "VESSEL"),
and the BUYER agrees to purchase and
take delivery of the VESSEL from the
BUILDER and to pay for the same, all upon
the terms and subject to the conditions
hereinafter set forth. Concurrent with
the execution of this Contract, BUYER and
BUILDER have executed the Shipbuilding
Contract of even date herewith for the
purchase of one (1) container VESSEL of
the type Independence CV 2500 (hereinafter
called the "CV 2500 Shipbuilding
Contract") and the Right of First Refusal
Agreement.
ARTICLE I - DESCRIPTION AND CLASS
1.
Description:
The VESSEL shall have the BUILDER's Hull No. 003 and shall be
designed,
constructed, equipped and completed in accordance with the
provisions
of this Contract, and the Specification, as defined herein. The
Specification for the construction of the Vessel called
"PHILADELPHIA
CV2600 - KPSI SHIP 003," Document No. 003-0101-80-202-E, dated
January
21, 2005, and the related drawings and plans identified therein,
the
General Arrangement Plan, Document No. 003-0101-80-203-D, Tank
and
Manholes Plan, Document No. 003-0101-90-206-C, and Container
Stowage
Plan, Document No. 003-0315-80-401-D, initialed by the BUILDER
on
February 3, 2005, are hereby adopted and agreed and made a part of
this
Contract with the same
force and effect as though herein set out in
full (herein collectively called the "Specification").
2.
Dimensions and Characteristics:
Dimensions:
Overall length:
217.0 m
Length between P.P.:
200.2 m
Breadth moulded:
32.2 m
Depth moulded to uppermost deck:
19.4 m
Design draft:
11.0 m
Cargo Capacity:
The VESSEL's deadweight shall be 29,400 metric tonnes,
corresponding to
a mean draft in seawater (specific gravity 1.025 metric tons/m3)
of
11.0 m (hereinafter the "guaranteed deadweight). The specified
deadweight shall
include items as listed in the Specification.
Container Carrying Capacity:
The VESSEL's container carrying capacity shall be 1,341
container
places, and as otherwise set out in the Specification.
Propulsion Machinery:
Type: Reversible slow
speed two stroke diesel engine
Max. Continuous power approx. 28,900 kW at 104 revs. /min
Auxiliary Generators:
Type 4 (four) four stroke MAK diesel generators
Max. continuous power approx. 2 (two) 1360kW @ 900 rpm
2 (two) 1530 kW@900 rpm
Speed:
The VESSEL's average speed on a sea trial undertaken in both
directions
over a measured distance, with clean hull, in calm weather, wind
and
sea not exceeding Beaufort 2 and with draft 11.0 m, shall be at
least
22.5 knots at 90% MCR and with 20% sea margin.
The speed shall be proved by converting the results of the
BUILDER's
sea trial under ballast conditions.
Fuel Consumption:
The fuel consumption of the main engine on the test bed shall
not
exceed 179.55 grams per kW per hour when the engine develops 90%
of
CMCR under the conditions stipulated in the Specification
(hereinafter
the "guaranteed fuel consumption").
3.
Classification, Rules and Regulations:
The VESSEL, including its machinery, equipment and outfittings
shall be
constructed in accordance with the rules of and under special
survey of
American Bureau of Shipping (herein called the "Classification
Society"), with the following notation; +A1 "Container CARRIER" E +
AMS
+ ACCU SH (herein referred to as the "Class").
Decisions of the Classification Society as to compliance or
non-compliance with the rules thereof shall be final and binding
upon
both parties hereto.
The VESSEL shall be built and equipped in compliance with all rules
and
regulations for registration under the flag of the United States
of
America with a Coastwise endorsement.
The VESSEL shall also comply with the rules, regulations and
requirements of other regulatory bodies as described in the
Specification.
All fees and charges incidental to the classification and with
respect
to compliance with the above referred rules, regulations and
requirements shall be for account of the BUILDER.
4.
Subcontracting:
The BUILDER may in general, at its sole discretion and
responsibility,
subcontract portions of the construction work of the VESSEL.
However,
to subcontract more than 150 tonnes of the total hull steel weight,
the
BUILDER will need the prior written consent of the BUYER. The
BUILDER
shall nevertheless always be responsible under the contract for
the
quality, workmanship and materials of the VESSEL. The BUYER's
rights
hereunder shall not be in any way reduced in respect of such
subcontracted work.
If the BUYER requests the BUILDER to order any equipment or
machinery
from a particular supplier, the BUILDER will take all reasonable
steps
to comply with such request, but the BUILDER may refuse to comply
with
the request unless the BUYER assumes the responsibility for the
price
and schedule impacts and for possible technical deficiencies, if
any,
compared with the BUILDER nominated supplier.
5.
Registration:
The VESSEL shall be registered by the BUYER at its own cost and
expense.
6.
Financing Documentation:
a. If
the BUYER elects to treat the VESSEL as a qualified vessel
for purposes of using its capital construction fund pursuant
to Section 607 of the Merchant Marine Act, 1936, as amended,
the BUILDER will provide the BUYER, promptly upon the BUYER's
written request, all documentation reasonably necessary to
assist the BUYER with such election.
b. If
the BUYER elects to finance the VESSEL by using Title XI of
the Merchant Marine Act, 1936, as amended, the BUILDER will
provide the BUYER, promptly upon the BUYER's written request,
all documentation requested by the U. S. Maritime
Administration that may be necessary to support a waiver
request by the BUYER under 46 CFR 298.13 (b) (2) (ii).
ARTICLE II - CONTRACT PRICE, TERMS OF PAYMENT
AND EFFECTIVE DATE
1.
Contract Price:
a. The
purchase price of the VESSEL is ONE HUNDRED FORTY FOUR
MILLION THREE HUNDRED AND NINETY-ONE THOUSAND DOLLARS
($144,391,000) plus the cost incurred by the BUILDER with
respect to the construction period financing for the VESSEL as
provided for in paragraph (c) below, net receivable by the
BUILDER, which is exclusive of the BUYER's Supplies as
provided in Article XVIII hereof and shall be subject to
upward or downward adjustment, if any, as hereinafter set
forth in this Contract (herein called the "Contract Price").
The Contract Price is due and payable to the BUILDER upon and
concurrent with delivery of the VESSEL to the BUYER. Payment
shall be made by wire transfer to Citizens Bank (collectively
with any successor thereto, "Builders Bank") for account of
the BUILDER.
b. The
Contract Price includes a BUYER's allowance of up to ONE
MILLION NINE HUNDRED THOUSAND DOLLARS ($1,900,000) for spares
and supplies to be selected by the BUYER. Any unexpended
amounts shall be paid to the BUYER at delivery of the VESSEL
or offset against amounts due the BUILDER.
c. With
respect to the cost of the construction period financing,
the BUYER shall reimburse the BUILDER for construction
financing costs on the portion of the Contract Price set forth
below from the respective dates set forth below until the
Delivery Date at an interest rate of three-month LIBOR plus
350 basis points:
22.5% of the Contract Price
February 25, 2005
7.5% of the Contract Price
Float out of the VESSEL
2.
Terms of Payment:
The BUYER shall pay the BUILDER the full amount of the Contract
Price
at delivery of the VESSEL.
3.
Effective Date of Contract:
This Contract shall be binding with immediate effect upon
execution,
provided, however, that the occurrence of the following events
shall be
a condition to the parties' respective obligations to perform
hereunder:
a.
Written consent of the respective boards of directors of the
BUYER and the BUILDER of this Contract and the CV 2500
Shipbuilding Contract, provided that if such consents are not
received by February 24, 2005, this Contract shall
automatically terminate;
b. All
necessary approvals of the Contract by and any required
assignments to Caterpillar Financial Services Corporation, who
is providing the construction period financing for the VESSEL
by February 18, 2005;
c.
Written confirmation from the BUILDER by February 18, 2005
that all contractual rights of third parties to acquire the
VESSEL have been terminated with appropriate releases;
d.
Written confirmation from the BUYER that it has reviewed and
accepted the Specification as provided in Paragraph 1(c) of
Article V, by February 18, 2005;
e.
Agreement by the parties on a list of non-compulsory changes
pursuant to Paragraph 2(b) of Article V by February 18, 2005;
and
f. By
February 18, 2005, the BUILDER shall provide the BUYER with
a guarantee of Kvaerner ASA of (i) the BUILDER's obligations
to make warranty repairs under Article IX hereof, (ii) the
BUILDER's indemnification obligations under Paragraph 2 of
Article XXI hereof, and (iii) the BUILDER's obligation under
that certain Right of First Refusal Agreement dated of even
date herewith signed by the parties relating to certain rights
with respect to future CV 2600 and CV 2500 type container
vessel building positions at the Shipyard (the "Right of First
Refusal Agreement").
g. By
February 18, 2005, the BUILDER shall provide to the BUYER
an enforceable release agreement, satisfactory to the BUYER,
from OceanBlue Express, Inc. and each of its current and
former shareholders, obtained in exchange for adequate
consideration, fully releasing and forever discharging the
BUYER, its parent, subsidiaries, affiliates, agents,
subcontractors, directors, officers and employees from any and
all claims, demands, obligations, liens and suits of every
nature whatsoever arising out of or based on the purchase of
the VESSEL by the BUYER.
h. By
February 18, 2005, the parties will agree on any necessary
amendment to Paragraph 2 of Article XXI.
4.
Method of Payment:
Upon receipt of notice from the BUILDER, the BUYER shall remit
the
amount of the delivery payment by wire transfer to Citizens
Bank
(collectively with any successor thereto, "Builder's Bank") for
the
account of the BUILDER.
ARTICLE III - ADJUSTMENT OF CONTRACT PRICE
It is understood and agreed that
the damage arising from failure of BUILDER to
comply with the terms of the
Specification regarding timing of delivery,
speed, fuel consumption, carrying
capacity, and dead weight (collectively,
"Performance Guarantees"), would
be difficult to determine.
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). The BUILDER shall pay the BUYER,
concurrently with delivery of the
VESSEL, liquidated damages upon the
occurrence of the following:
1. Delivery:
a. The
BUILDER shall not pay liquidated damages for the first
fifteen (15) days in delay of the delivery of the VESSEL
beyond the Delivery Date as defined in Article VII hereof
(ending at twelve o'clock midnight of the fifteenth (15th) day
of delay.
b. If
the delivery of the VESSEL is delayed more than fifteen
(15) days after the Delivery Date, then, in such event,
beginning at twelve o'clock midnight of the fifteenth (15th)
day after the Delivery Date, the BUILDER shall pay liquidated
damages to the BUYER as follows:
16th - 210th day US$ 20,000 per day (Twenty Thousand U.S.
dollars)
c. But,
if the delay in delivery of the VESSEL should continue
for a period of one hundred and ninety-five (195) days from
the sixteenth (16th) day after the Delivery Date, then in such
event, and after such period has expired, the BUYER may at its
option terminate this Contract in accordance with the
provisions of Article X hereof. The BUILDER may, at any time
after the expiration of the aforementioned hundred ninety-five
(195) and days of delay in delivery, if the BUYER has not
served notice of termination as provided in Article X hereof,
demand in writing that the BUYER shall make an election, in
which case the BUYER shall, within fifteen (15) days after
such demand is received by the BUYER, notify the BUILDER of
its intention either to terminate this Contract or to consent
to the acceptance of the VESSEL at an agreed future date it
being understood by the parties hereto that, if the VESSEL is
not delivered by such future date, the BUYER shall have the
same right of termination upon the same terms and conditions
as hereinabove provided.
2.
Container Carrying Capacity:
a. The
VESSEL shall be capable of carrying 1,341 container units.
Alternate loadings shall be according to the specification.
b. The
BUILDER shall not pay liquidated damages by reason of the
actual container capacity of the VESSEL being less than 10
containers of the 1,341 container capacity of the VESSEL under
conditions according to the VESSEL's Container Stowage Plan as
given in the Specification.
c.
However, should there be a deficiency in said container
capacity of the VESSEL of more than 10 containers (independent
of size) i.e. less than 1,331 container units, the BUILDER
shall pay liquidated damages in the amount of $10,000 per 20'
container, $20,000 per 40' and 45' container, and $25,000 per
refrigerated container short of 1,331 container units.
d.
Should the container carrying capacity be less than 1,291
container units, then the BUYER may, at its option, reject the
VESSEL and terminate this Contract in accordance with the
provisions of ARTICLE X hereof, or may accept the VESSEL along
with the maximum liquidated damages for 1,291 container units
only.
3.
Deadweight:
a. The
BUILDER shall not pay liquidated damages by reason of the
actual deadweight of the VESSEL as determined in accordance
with the Specification if the difference is less than (300)
metric tons of the 29,400 metric tons guaranteed deadweight of
the VESSEL.
b.
However, in the event that the actual deadweight of the VESSEL
as determined in accordance with the Specification is more
than 300 metric tons below the guaranteed deadweight of the
VESSEL, the BUILDER shall pay liquidated damages in the amount
of $500 for each full metric ton of such deficiency being more
than 300 metric tons. (disregarding fractions of one (1)
metric ton).
c. In
the event of such deficiency in the actual deadweight of
the VESSEL being 1,000 metric tons or more, the BUYER may, at
its option, reject the VESSEL and terminate this Contract in
accordance with the provisions of Article X hereof or accept
the VESSEL at a reduction in the Contract Price, along with
the maximum liquidated damages of $350,000.
4.
Speed:
a. The
BUILDER shall not pay liquidated damages by reason of the
actual speed, as determined by the trial run, being less than
three-tenths (0.3) of one (1) knot below the guaranteed speed
of 22.5 knots.
b.
However, commencing with and including such deficiency of
three-tenths (0.3) of one (1) knot in actual speed below the
guaranteed speed of the VESSEL, the BUILDER shall pay
liquidated damages as follows (but disregarding fractions of
one-tenth (1/10) of a knot):
For 0.3 knots
$65,000
For 0.4 knots
$130,000
For 0.5 knots
$195,000
For 0.6 knots
$260,000
For 0.7 knots
$325,000
For 0.8
knots
$390,000
For 0.9 knots
$455,000
For 1 full knot
$520,000
If the deficiency in actual speed of the VESSEL, upon trial
run is more than one (1) full knot below the guaranteed speed
of the VESSEL, then the BUYER at its option, may reject the
VESSEL and terminate this Contract in accordance with the
provisions of Article X hereof, or may accept the VESSEL along
with maximum liquidated damages of $520,000.
5. Fuel
Consumption:
a. The
BUILDER shall not pay liquidated damages by reason of the
fuel consumption of the main engine on the test bed, as
determined per the Specification, being more than the
guaranteed fuel consumption of the VESSEL, if such excess is
not more than 1 grams over the guaranteed fuel consumption,
equaling 179.55 g/kWh (171.0 g/KWh + 5%).
b.
However, commencing with an excess of one gram in the actual
fuel consumption over the guaranteed fuel consumption, the
BUILDER shall pay liquidated damages in the amount of $50,000
for each full gram increase in fuel consumption.
c. If
such actual fuel consumption exceeds 189 g/kWh, the BUYER
may, at its option, reject the VESSEL and terminate this
Contract in accordance with the provisions of Article X
hereof, or may accept the VESSEL along with maximum liquidated
damages of $500,000.
6.
Maximum Liquidated Damages and Effect of Termination:
Notwithstanding any other provision of this Article III, it is
expressly understood and agreed by the parties hereto that in any
case:
a. The
aggregate liquidated damages due to be paid by the BUILDER
pursuant to this Article III shall not exceed five per cent
(5%) of the Contract Price.
b. If
the BUYER terminates this Contract under this Article, the
BUYER shall notify BUILDER and such termination shall be
effective as of the date notice thereof is received by the
BUILDER, and the BUYER shall not be entitled to any liquidated
damages.
c. If
the BUYER terminates this contract in accordance with the
provisions of Article X hereof, all obligations, duties and
liabilities of each of the parties to the other under this
Contract shall be forthwith completely discharged.
ARTICLE IV - SUPERVISION AND INSPECTION AND
APPROVAL OF PLANS AND DRAWINGS
1.
Approval of Plans and Drawings:
Upon execution of this Contract, the BUILDER represents and the
BUYER
acknowledges that;
a. the
basic design of the vessel has been completed; and
b. all
necessary plan approvals have been obtained or are in the
process of being obtained from the regulatory bodies; and
c. the
Specification reviewed and agreed to by BUYER, and
incorporated by reference in this Contract, reflects the
current design of the VESSEL upon effective date of this
Contract;
and
d. the
Original Contract Price for the VESSEL has been agreed to
on this basis. Included in the Specification is a list of
Basic Design Documents that are submitted to the
Classification Society and other regulatory bodies for their
approval. These plans and drawings shall be regarded as
approved by the BUYER. Any request by the BUYER for changes to
any of these plans and drawings except those required by
regulatory bodies shall be handled as a request for change to
the Specification in accordance with Paragraph 1 Article V.
2.
Appointment of Project Manager and Buyer's Representative:
The BUYER shall appoint, at his cost, one representative who shall
be
duly authorized in writing by the BUYER (herein called the
"Buyer's
Representative") to act on behalf of the BUYER in connections
with
changes of the Specification, approval of Change Orders, 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
BUYER.
In case the Buyer's Representative is not stationed at the
Shipyard,
the BUYER shall give clear instructions to the BUILDER regarding
the
authority of other personnel representing the BUYER at the
Shipyard.
The BUILDER shall appoint one representative who shall be duly
authorized in writing by the BUILDER (herein called "Builder's
Representative") to act on behalf of the BUILDER in connection
with
changes of the Specification, approval of Change orders, approval
of
the plans and drawings, attendance at the tests and inspections
relating to the VESSEL, its machinery, equipment, outfitting and
any
other matters for which he is specifically authorized by the
BUILDER.
Until the Buyer's Representative's arrival at the Shipyard, and
during
the absence of the Buyer's Representative in the Shipyard, all
inspections shall by made by the Classification Society and/or
BUILDER,
and the BUYER shall be deemed to have inspected the construction
work
performed by the BUILDER in the above manner in accordance with
the
Contract and Specification. Such acceptance by the BUYER of
inspections
made by the
Classification Society and/or BUILDER is subject to due
notices of inspections being given to the BUYER or the Buyer's
Representative.
3.
Supervision and Inspection:
a. The
necessary inspections of the VESSEL, its machinery,
equipment and outfittings shall be carried out by the
Classification Society, other regulatory bodies and/or an
inspection team of the BUILDER throughout the entire period of
construction, in order to ensure that the construction of the
VESSEL is duly performed in accordance with the Contract.
b.
Prior to the execution of the Contract, the inspections of the
VESSEL have been performed by the BUILDER and the
Classification Society without the presence of the Buyer's
Representative. All inspections performed prior to the
execution of the Contract by the BUILDER and the
Classification Society, if any, shall be accepted by the BUYER
and shall not be repeated at a later stage, subject to
Paragraph 10 of Article IV. The BUYER shall be given access to
review all such prior inspections of the Classification
Society and other regulatory bodies.
c. The
Buyer's Representative and his assistants shall have,
during the construction of the VESSEL, the right to attend all
tests, trials and inspections of the VESSEL and its Materials.
The BUILDER shall give a notice to the Buyer's Representative
reasonably in advance of the date and place of such tests and
inspections to be attended by him for his convenience. Failure
of the Buyer's Representative and/or his assistants to be
present at such tests and inspections after due notice to him
as
above provided shall be deemed a waiver of his right to be
present.
d. In
order to determine that the VESSEL is being constructed in
accordance with the terms of the Contract and the
Specification the Buyer's Representative and his assistants
shall, at all times until delivery and acceptance of the
VESSEL, have the right to inspect the VESSEL, her engines and
all accessories and all work in progress, or material utilized
in connection with the construction of the VESSEL, wherever
such work is being done, or such material is stored,
including the yards, workshops, stores and offices of the
BUILDER. The BUILDER
shall seek to arrange with its
subcontractors that the Buyer's Representative and his
assistants have a similar right of inspection and supervision
with respect to the work performed by the subcontractors.
e. In
cases requiring approval from Classification Society, such
inspections shall, to the extent possible, be carried out as
joint inspection by the Buyer's Representative and the
representative of the Classification Society.
f. The
Buyer's Representative shall, on behalf of the BUYER, make
decisions or give advice or suggestions to the BUILDER on all
problems arising during the course of or in connection with
the construction of the VESSEL with a view to co-operating to
the utmost with the BUILDER in the construction process.
g. In
the event that the Buyer's Representative discovers any
Materials, construction or workmanship which is not deemed to
conform to the requirements of the Contract, the Buyer's
Representative shall promptly give the Builder's
Representative a notice in writing as to such non-conformity.
Upon receipt of such notice from the Buyer's Representative,
the BUILDER shall correct such non-conformity, if the BUILDER
agrees to his view. In the event of difference of opinion
between the parties hereto, the BUILDER or the BUYER may
request resolution of the matter in accordance with the
provisions of Article XIV hereof.
h. Any
acceptance or approval of the BUYER or the Buyer's
Representative shall in no way alter or diminish the BUILDER's
obligation under this Contract.
4.
Responsibility of the BUILDER:
a. The
BUILDER shall furnish the Buyer's Representative and his
assistants with one suitable standard office trailer complete
with furniture, telephone, facsimile and computer access and
parking space proximate to the location of this trailer. Such
office space and amenities shall be equivalent as those
provided to the BUYER in connection with the construction of
the BUILDER's Hull 001 and Hull 002.
b. The
BUILDER shall, at all times, until delivery of the VESSEL,
give the Buyer's Representative and his assistants free and
ready access to the VESSEL, her engines and accessories, and
reasonable access to any other place where work is being done,
or materials are being processed or stored, in connection with
the construction of the VESSEL, including the yards, workshops
and stores of the BUILDER, and the premises of subcontractors
of the BUILDER, who are doing work or storing materials in
connection with the construction of the VESSEL.
5.
Liability of the BUILDER:
The Buyer's Representative, his subcontractors and his assistants
shall
at all times be deemed to be the employee of the BUYER. The
BUILDER
shall be under no liability whatsoever for personal injuries to,
or
death of, such Buyer's Representative or employees or agents of
the
BUYER, or for damage to, or loss or destruction of, their
property,
unless such injury, death, damage, loss or destruction is shown to
have
been caused by the gross negligence or willful acts of the
BUILDER
and/or subcontractor and/or their employees or agents, while
acting
within the scope of their employment.
6.
Responsibility of the BUYER:
The BUYER shall undertake and assure that the Buyer's
Representative
shall carry out his duties hereunder in accordance with the
normal
shipbuilding practices of the BUILDER and in such a way as to avoid
any
unnecessary increase in building cost, delay in or interference
with
the design and construction of the VESSEL, and/or any disturbance
in
the construction schedule of the BUILDER. The BUILDER has the right
to
request the BUYER to replace the Buyer's Representative and/or
his
assistants who is deemed unsuitable and unsatisfactory for the
proper
progress of the VESSEL's construction. The BUYER shall investigate
the
situation by sending his representatives to the Shipyard if
necessary,
and if the BUYER considers that such BUILDER's request is
justified,
the BUYER shall effect such replacement as soon as practicable.
7.
Liability of the BUYER:
The BUILDER and his employees, agents and subcontractors shall at
all
times be deemed to be employees of the BUILDER. The BUYER shall
be
under no liability whatsoever for personal injuries to, or death
of,
such BUILDER's employees, agents, or subcontractors, or for damage
to,
or loss or destruction of, their property, unless such injury,
death,
damage, loss or destruction is shown to have been caused by the
gross
negligence or willful acts of the BUYER, Buyer's Representative
and/or
subcontractor and/or their employees or agents, while acting within
the
scope of their employment.
8.
Approval by Regulatory Bodies:
a. All
plans or data required by the Classification Society or
other relevant regulatory bodies in connection with approval
of the VESSEL shall be prepared and submitted by the BUILDER
or its subcontractors and suppliers, except such data which is
explicitly requested by the relevant regulatory body to be
submitted by the BUYER.
b. The
BUYER shall be informed by the BUILDER about discussions
of technical matters related to such approval between the
BUILDER and the regulatory bodies.
c. The
BUILDER shall facilitate regular status meetings among the
BUILDER, the Buyer's Representative and the Classification
Society to discuss issues related to approval by the
Classification Society of the Vessel.
9. The
BUILDER's Master Production Schedule:
The BUYER shall be provided with the latest official version of
the
Builder's master production schedule showing the main
production
activities for the Vessel and the main production activities for
the
final outfitting, mechanical completion and testing.
10. Approval
of Previously Completed Work
The BUYER acknowledges that construction of the VESSEL has begun
and
that any changes requested by the BUYER to parts of the VESSEL
that
have already been constructed shall be treated as a request for
a
change under Article V hereof. The BUILDER shall be required, at
the
BUILDER's cost, to correct any previously completed work that is
found
not to be in conformity with the Specification.
ARTICLE V - MODIFICATIONS
1.
Modifications of Specification:
The Specification may only be modified and/or changed by
written
agreement of the parties hereto, provided that such
modifications
and/or changes or an accumulation thereof will not, in the
BUILDER's
judgment, materially affect the BUILDER's planning or program
in
relation to the BUILDER's other commitments, and provided,
further,
that the BUYER shall first agree, in writing, before such
modifications
and/or changes are carried out, to alterations in the Contract
Price,
the Delivery Date and other terms and conditions of this Contract
and
Specification occasioned by or resulting from such modifications
and/or
changes.
Such agreement may be effected by an exchange of letters signed by
the
authorized representatives of the parties hereto manifesting
agreements
of the parties hereto, which shall constitute amendments to
this
Contract and/or the Specification.
The BUILDER may make minor changes to the Specification, if
found
necessary to suit the BUILDER'S local facilities, the availability
of
Materials, introduction of improved production methods or
otherwise,
provided that the BUILDER shall obtain the BUYER's prior
written
approval, which shall not be unreasonably withheld.
2.
Change in Class, etc:
In the event that, after the date of this Contract, any
requirements as
to class, or as to rules and regulations to which the construction
of
the VESSEL is required to conform, are altered or changed by
the
Classification Society or the other regulatory bodies authorized
to
make such alterations or changes, the following provisions shall
apply:
a. If
such alterations or changes are compulsory for the VESSEL,
either of the parties hereto, upon receipt of such information
from the Classification Society or such other regulatory
bodies, shall promptly transmit the same to the other in
writing, and the BUILDER shall thereupon incorporate such
alterations or changes in to the construction of the VESSEL.
The BUILDER shall present to the BUYER the adjustment required
by the BUILDER in the Contract Price, the Delivery Date and
other terms and conditions of the Contract occasioned by the
change. The adjustment shall then be agreed on as a Change
order in accordance with Paragraph 1 of this Article.
b. If
such alterations or changes are not compulsory for the
VESSEL, but the BUYER desires to incorporate such alterations
or changes into the construction of the VESSEL, then, the
BUYER shall notify the BUILDER of such intention. The BUILDER
may accept such alterations or changes, provided that such
alterations or changes will not, in the judgment of the
BUILDER, adversely affect the BUILDER's planning or program in
relation to the BUILDER's other commitments, and provided,
further, that the BUYER shall first agree to adjustments
required by the BUILDER in the Contract Price, the Delivery
Date and other terms and conditions of this Contract and the
Specification occasioned by or resulting from such alterations
or changes. By
February 18, 2005, the BUYER and the BUILDER
shall agree on a list of certain non-compulsory changes to
conform the VESSEL to the BUILDER's Hull 001 and 002, subject
to an agreement on adjustments to the Contract Price, the
Delivery Date and other terms and conditions of this Contract
and the Specification.
c.
Agreements as to such alterations or changes under this
Paragraph shall be made in the same manner as provided in
Paragraph 1 of this
Article for modifications or changes to
the Specification.
3.
Substitution of Materials:
In the event that any of the materials required by the
Specification or
otherwise under this Contract for the construction of the VESSEL
cannot
be procured in time or are in short supply to maintain the
Delivery
Date of the VESSEL, the BUILDER may, provided that the BUILDER
shall
obtain the BUYER's prior written approval, which shall not be
unreasonably withheld, supply other materials capable of meeting
the
requirements of the Classification Society and of the rules,
regulations and requirements with which the construction of the
VESSEL
must comply. Any agreement as to such substitution of materials
shall
be effected in the manner provided in Paragraph 1 of this Article,
and
shall, likewise, include alterations in the Contract Price and
other
terms and conditions of this contract occasioned by or resulting
from
such substitution.
ARTICLE VI - TRIALS
1.
Notice:
The BUYER shall receive from the BUILDER at least fourteen (14)
days
prior notice in writing of the time, place of the trial run of
the
VESSEL, and a description of the trials to be performed, and the
BUYER
shall give prompt written acknowledgment of the receipt of such
notice.
The BUYER shall have the right to have a reasonable number of
authorized representatives
