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SHIPBUILDING CONTRACT

Construction Agreement

SHIPBUILDING CONTRACT 

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This Construction Agreement involves

GULFMARK OFFSHORE INC

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Title: SHIPBUILDING CONTRACT
Date: 3/10/2006
Industry: Oil Well Services and Equipment     Sector: Energy

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Exhibit 10.27

SHIPBUILDING CONTRACT

Between

And

Hull No.

Page 1


 

LIST OF CONTENTS

 

 

 

 

 

Definitions

 

 

 

Article 1

 

Description and Class

 

 

 

Article 2

 

Contract Price and Terms of Payment

 

 

 

Article 3

 

Adjustment of Contract Price

 

 

 

Article 4

 

Approval of Plans and Drawings and Inspection during Construction

 

 

 

Article 5

 

Modifications

 

 

 

Article 6

 

Trials and Acceptance

 

 

 

Article 7

 

Delivery

 

 

 

Article 8

 

Delays and Extension of Time for Delivery (Force Majeure)

 

 

 

Article 9

 

Warranty of Quality

 

 

 

Article 10

 

Rescission by Owner

 

 

 

Article 11

 

Owner’s Default

 

 

 

Article 12

 

Insurance

 

 

 

Article 13

 

Law and Dispute Resolution

 

 

 

Article 14

 

Right of Assignment

 

 

 

Article 15

 

Taxes and Duties

 

 

 

Article 16

 

Patents, Trademarks, copyrights, etc

 

 

 

Article 17

 

Owner Furnished Equipment

 

 

 

Article 18

 

Notice

 

 

 

Article 19

 

Interpretation

 

 

 

Article 20

 

Effective Date of Contract

 

 

 

Article 21

 

Indemnities/Liabilities

Page 2


 

This CONTRACT, entered into this ___ by and between., a corporation organised and existing under the laws of Singapore, having its principal office at (hereinafter called the “Builder”), the party of the first part, and a corporation organised and existing under the laws of Delaware having its principal office at (hereinafter called the “Owner” or “Buyer”), the party of the second part,

WITNESSETH:

In consideration of the mutual covenants herein contained, the Builder agrees to erect, launch, equip and complete at its premises, in Singapore (hereinafter called the “Shipyard”) and sell and deliver to the Owner one (1) unit of Anchor Handling Tug/Supply vessel more fully described in Article 1 hereof (hereinafter called the “Vessel”), and the Owner agrees to purchase and take delivery of the Vessel from the Builder and to pay for the same, all upon the terms and conditions hereinafter set forth.

Page 3


 

DEFINITIONS

In this Contract, the following terms shall have the meaning set forth below:

1.

 

“Contract” or “this Contract” shall, unless the context otherwise requires, mean this Contract together with any addendum to this Contract, which may be mutually agreed between the Parties in writing.

 

 

 

2.

 

“Parties” shall mean the Builder and the Owner or Buyer.

 

 

 

3.

 

“Classification Society” shall mean American Bureau of Shipping.

 

 

 

4.

 

“Contract Price” shall mean price in Article 2 subject to adjustment only in accordance with Articles 3 and 5 of this Contract.

 

 

 

5.

 

“Protocol of Delivery and Acceptance” shall mean the Protocol to be executed by the Builder and the Owner on delivery of the Vessel as referred to in Article 6 and 7.

 

 

 

6.

 

“Owner’s Loose Supplies” shall mean loose items to be furnished by the Owner as referred to in the Contract, and as per Exhibit “D”.

 

 

 

7.

 

“Sea Trials” shall have the meaning set forth in Article 6 hereof.

 

 

 

8.

 

“Builder’s Bank” shall mean:

 

 

 

 

 

for payments due to the Builder, or any other first class bank nominated by the Builder and approved by the Owner.

 

 

 

9.

 

“Owner’s Bank” shall mean:

TBD

 

 

for payments due to the Owner, or any other first class bank nominated by the Owner and approved by the Builder.

 

 

 

10.

 

“Representatives” shall mean the person or persons duly authorised by the Owner to act as its representative or representatives for construction supervision in conformity with the stipulations of Article 4 hereof.

 

 

 

11.

 

“Specification” shall mean ___dated ___, signed by both Parties and forming an integral part of the Contract.

 

 

 

12.

 

“Contract Documents” shall mean documents and drawings as per Exhibit “A” signed by both Parties and forming an integral part of the Contract.

Page 4


 

 

13.

 

“Working Days” shall mean days other than Sundays and public holidays on which banks are open for business in Singapore.

 

 

 

14.

 

“Delivery Documents” shall mean the documents referred to in Exhibit “B”.

 

 

 

15.

 

“Effective Date” shall mean the date when the Contract becomes effective pursuant to Article 20.

 

 

 

16.

 

“Vessel” shall mean the New Building under Hull 310 as defined in the Contract and Specification.

 

 

 

17.

 

“Delivery Date” shall mean the date when the completed Vessel shall be delivered, as per Article 7, subject to modifications only in accordance with this Contract.

 

 

 

18.

 

“Owner’s Furnished Equipment” (hereinafter shall be referred to as “OFE”) shall mean all the equipment to be supplied by the Owner as per Exhibit “G”.

 

 

 

19.

 

“Corporate Guarantee” shall mean the Letter to be executed separately by the Builder and the Owner as per Exhibit H.

Page 5


 

 

ARTICLE 1 — DESCRIPTION AND CLASS

1.1

 

Description:

 

 

 

 

 

The Vessel shall have the Builder’s Hull No. and shall be constructed, equipped and completed in accordance with the provisions of this Contract, and the Specifications and the General Arrangement Plan (herein collectively called the “Specifications”) signed by each of the Parties hereto for identification and attached hereto and made an integral part hereof.

 

 

 

1.2

 

Dimensions and Characteristics:

 

 

 

 

 

Aside from the usual stability booklet, the Builder shall produce loading curves for different combination of cargoes for safe operation as approved by ABS as per Exhibit J

 

 

 

 

 

The details of the above particulars as well as the definitions and method of measurements and calculations are as indicated in the Specifications.

 

 

 

1.3

 

Classification, Rules and Regulations:

 

 

 

 

 

The Vessel, including its machinery, equipment and outfittings shall be constructed in accordance with the rules (the edition and amendments thereto which will enter into force on the date of this Contract and under special survey of American Bureau of Shipping (herein called the “Classification Society”), and shall be distinguished in the register by the symbol of .

 

 

 

 

 

Decisions of the Classification Society as to compliance or non-compliance with the classification shall be final and binding upon both parties hereto.

 

 

 

 

 

The Vessel shall also comply with the rules, regulations and requirements of other regulatory bodies as described in the Specifications in effect as of the date of this Contract. Any rules and regulations known at the Contract date to be coming into force prior to delivery date are also to be included.

 

 

 

 

 

All fees and charges incidental to the classification and with respect to compliance with the above-referred rules, regulations and requirements for OFE shall be for account of the Owner.

Page 6


 

 

1.4

 

Subcontracting:

 

 

 

 

 

The Builder may at its sole discretion and responsibility, subcontract any portion of the construction work of the Vessel. The Owner has the right to audit all Builder’s subcontractors, and be granted full access to their premises for inspection and testing. Notwithstanding, any such sub-contracting the builder shall remain responsible for compliance with obligations of this contract as if there had been no such sub-contracting.

 

 

 

1.5

 

Registration:

 

 

 

 

 

The Vessel shall be registered by the Owner at its own cost and expense.

 

 

 

1.6

 

Protection of Equipment:

 

 

 

 

 

The Builder warrants that all reasonable efforts will be made to protect equipment during storage, installation and after placement in the hull.

Page 7


 

 

ARTICLE 2 — CONTRACT PRICE AND TERMS OF PAYMENT

2.1

 

Contract Price:

 

 

 

 

 

The Contract Price of the Vessel is net receivable by the Builder, and shall be subject to upward or downward adjustment, if any, as hereinafter set forth in this Contract and as per Exhibit I.

 

 

 

 

 

All costs and fees, including taxes concerning payment imposed by authorities inside/outside Singapore, incurred or imposed by reason of the transfer of funds to the Builder referred to in paragraphs below hereof shall be borne by the Owner.

 

 

 

2.2

 

Terms of Payment:

 

 

 

 

 

The Contract Price shall be due and payable by the Owner to the Builder in the instalments as follows:

 

a)

 

First Instalment:

 

 

 

 

 

 

 

percent of the Contract Only shall be due and payable within Five (5) business days of Contract signing and after receipt of faxed copy of the signed Corporate Guarantee, or within Two (2) business days of receipt of the original Corporate Guarantee, whichever is the later. The Corporate Guarantee will be in the form as per Exhibit H.

 

 

 

 

 

b)

 

Second Instalment:

 

 

 

 

 

 

 

percent of the Contract price shall be paid when the keel has been laid but in any case not earlier than 4.months after the Contract Date.

 

 

 

 

 

c)

 

Third instalment:

 

 

 

 

 

 

 

percent of the Contract price shall be paid upon delivery of the four (4) main-engines to Builder’s premise or hull fully plated whichever is the earlier, but in any case not earlier than 8 months after the Contract Date.

 

 

 

 

 

d)

 

Fourth instalment:

 

 

 

 

 

 

 

percent of the Contract price, shall be paid upon launching of the Vessel, but in in any case not earlier than 12 months after the Contract Date.

 

 

 

 

 

e)

 

Fifth instalment:

 

 

 

 

 

 

 

percent of the Contract price, plus any increase or minus any decrease due to adjustments of the Contract Price under and pursuant to the provisions of this Contract, shall be due and payable upon Delivery of the Vessel.

 

2.3

 

Method of Payment:

 

2.3.1

 

In respect of the 1st instalment, the Owner shall pay the Builder the same within 5 Working Days from the date of the Contract and the Owner shall furnish to the Builder an irrevocable and unconditional Corporate

 

 

 

 

 

 

 

Guarantee (hereinafter called the “Corporate Guarantee”) duly executed and issued within 5 working days by a guarantor acceptable to the Builder, covering and guaranteeing the due performance of the Owner’s obligations under

Page 8


 

 

 

 

 

this Contract including, but not limited to, the payment of the Contract Price and taking delivery of the Vessel in accordance with the provisions of this Contract and substantially in the form annexed hereto as Exhibit H. This Corporate Guarantee shall continue in full force and effect until the full performance of the Owner’s obligations under this Contract.

 

 

2.3.2

 

The Owner shall pay the Builder the 2nd, 3rd, 4 th , and 5 th Instalments upon presentation of the following respective documents:

 

a)

 

in respect of the 2 nd instalment, payment within three (3) Working Days of the date of presentation of stage certificate signed by Classification Society’s, and Builder’s representatives stating that the keel laying of the Vessel has been laid in the form set out in Exhibit F and a signed commercial invoice relating to the 2 nd instalment; but not earlier than 4 months after Contract date.

 

 

 

 

 

b)

 

in respect of the 3 rd instalment, payment within three (3) Working Days of the date of presentation of stage certificate signed by Classification Society’s, and Builder’s representatives stating that the main engines have arrived to the Builder’s premises or hull are fully plated whichever is the earlier in the form set out in Exhibit F and a signed commercial invoice relating to the 3 rd instalment; but not earlier than 8 months after Contract date.

 

 

 

 

 

c)

 

in respect of the 4 th instalment, payment within three (3) Working Days of presentation of stage certificate signed by Classification Society’s, and Builder’s representatives stating that the Vessel has being launched in the form set out in Exhibit F and a signed commercial invoice relating to the 4 th instalment, but not earlier than 12 months after the Contract date.

 

 

 

 

 

d)

 

in respect of the 5 th instalment, payment shall be made on Delivery of the Vessel in accordance with Article 7, presentation of a Protocol of Delivery and Acceptance of Vessel signed by both the Owner’s and the Builder’s representatives in the form set out in Exhibit E, and a signed commercial invoice relating to the 5 th instalment.

 

 

 

All amounts due and owing to the Builder and/or Owner shall be paid to the Builder and/or Owner before the Vessel leaves the Shipyard. For any disputed amount, Owner and/or Builder shall place such amount into an interest bearing Bank Account in Singapore in the joint names of the Owner and the Builder until resolution of the dispute. In respect of 2 nd , 3 rd , and 4 th payment, the due date for the payment is the date when the stage certificate is signed by the relevant parties. For 5 th payment, the payment due date is the date when the Protocol of Delivery and Acceptance is signed.

2.4

 

Payment for Modification

 

 

 

 

 

Any sum due for modifications of this Contract shall be paid as follows;

Page 9


 

a)

 

50% within 15 days after agreement on modications have been signed.

 

 

 

b)

 

Balance at delivery of the completed vessel.

Page 10


 

 

ARTICLE 3 — 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 agreed and understood by both parties that any reduction of the Contract Price is by way of liquidated damages and not by way of penalty):

3.1

 

Delivery:

 

 

 

a)

 

If the delivery of the Vessel is delayed more than twenty-one (21) days after the Delivery Date, then, in such event, beginning at twelve o’clock midnight on the twenty first (21 st ) day after the Delivery Date, the Contract Price shall be reduced by deducting there from as follows:

 

 

 

 

 

For each day delay after the twenty first day after Delivery Date            per day to be paid upto a maximum of            to the Owner.

 

 

 

b)

 

If delivery of the Vessel is made earlier than twenty-one (21) days before the Delivery Date, then, in such event, beginning at twelve o’clock midnight on the twenty second (22 nd ) day before the Delivery Date, the Contract Price of the Vessel shall be increased as follows:

 

 

 

 

 

For each day prior to the twenty first day before Delivery Date            per day to be paid upto a maximum of            to the Builder.

 

 

 

c)

 

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 full account all postponements of the Delivery Date by reason of permissible delays as defined in Article 8 and/or any other reasons under this Contract, is not delivered by the date upon which delivery is required under the terms of this Contract.

 

 

 

d)

 

If the delay in delivery of the Vessel, after allowing for permissible delays under Article 7 and 8, continues for a period of 120 days or more from the twenty first day after the Delivery Date, in such event, and after such period has expired, the Buyer may, at its option, rescind this Contract in accordance with the provisions of Article 10 or accept the Vessel with a total reduction in the Contract Price of five (5) percent.

3.2

 

Performance:

 

 

 

a)

 

If the Continuous Bollard Pull at 100% MCR at trial is less than            metric tons (as corrected for enviromental conditions approved by Class), then the Contract Price shall be reduced by deducting on a cumaltive basis therefrom as follows:

 

 

 

 

 

If the Bollard Pull drops below            metric tons then the Owner has the right of recission as per the provisions of Article 10.

Page 11


 

 

ARTICLE 4 — APPROVAL OF PLANS AND DRAWINGS AND
INSPECTION DURING CONSTRUCTION

4.1

 

Approval of Plans and Drawings:

 

 

 

a)

 

The Builder shall submit to the Owner three (3) copies each of the plans and drawings to be submitted thereto for its address as set forth in Article 18 hereof. The Owner shall, within seven (7) days after receipt thereof, return to the Builder one (1) copy of such plans and drawings with the Owner’s approval, such approval not to be unreasonably withheld, or comments written thereon, if any. A list of the plans and drawings to be so submitted to the Owner shall be mutually agreed upon between the parties hereto.

 

 

 

b)

 

When and if the Representative (as defined in Paragraph 2 of this Article) shall have been sent by the Owner to the Shipyard in accordance with Paragraph 2 of this Article, the Builder may submit the remainder, if any, of the plans and drawings in the agreed list, to the Representative for its approval, unless otherwise agreed upon between the parties hereto. The Representative shall, within ten (10) days after receipt thereof, return to the Builder one (1) copy of such plans and drawings with his approval, such approval not to be unreasonably withheld, or comments written thereon, if any. Approval by the Representative of the plans and drawings duly submitted to him shall be deemed to be the approval by the Owner for all purposes of this Contract.

 

 

 

c)

 

In the event that the Owner or the Representative shall fail to return the plans and drawings to the Builder within the time limit as hereinabove provided, such plans and drawings shall be deemed to have been automatically approved without any comment.

 

 

 

4.2

 

Appointment of Owner’s Representative:

 

 

 

 

 

The Owner may send to and maintain at the Shipyard, at the Owner’s own cost and expense, one representative who shall be duly authorised in writing by the Owner (herein called the “Representative”) to act on behalf of the Owner in connection with modifications of the Specifications, 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 authorised by the Owner. From time to time more than one representative may be present, however, only the appointed Representative can act on behalf of the owner.

 

 

 

4.3

 

Inspection by Representative:

 

 

 

 

 

The necessary inspections of the Vessel, its machinery, equipment and outfitting 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 this Contract and the Specifications. The Representative shall have, during construction of the Vessel, the right to attend such tests and inspections of the Vessel, its machinery and equipment as are mutually agreed between the Owner and Builder. The Builder

Page 12


 

 

 

 

shall give a notice to the 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 Representative to be present at such tests and inspections after due notice to him as above provided shall be deemed to be a waiver of his right to be present, but Buyers Representatives should get test results and does not waive the yards obligations in terms of quality.

 

 

 

 

 

In the event that the Representative discovers any construction or material or workmanship which is not deemed to conform to the requirements of this Contract and/or the Specifications, the Representative shall promptly give the Builder a notice in writing as to such non-conformity. Upon receipt of such notice from the Representative, the Builder shall correct such non-conformity, if the Builder agrees with the Representative’s view.

 

 

 

 

 

In all working hours during the construction of the Vessel until delivery thereof, the Representative shall be given free and ready access to the Vessel, its engines and accessories, and 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, stores and offices of the Builder, and the premises of subcontractors of the Builder, who are doing work or storing materials in connection with the Vessel’s construction. Representative shall comply with all yard rules and regulations,

 

4.4

 

Facilities:

 

 

 

 

 

The Builder shall furnish the Representative and his assistant(s) with adequate office space at no cost, and such other reasonable facilities according to the Builder’s practice at or in the immediate vicinity of the Shipyard as may be necessary to enable them to effectively carry out their duties.

 

 

 

4.5

 

Liability of Builder:

 

 

 

 

 

The Representative and his assistant(s) shall at all times be deemed to be the employees of the Owner and not of the Builder.

 

 

 

4.6

 

Responsibility of Owner:

 

 

 

 

 

The Owner shall undertake and assure that the Representative shall carry out his duties hereunder in accordance with the normal shipbuilding practice of the Builder and in such a way 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 Representative if the Builder deems that the Representative is 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 can be conveniently arranged.

 

 

 

4.7

 

Construction Schedule:

Page 13


 

 

 

 

Within thirty (30) days after the effective date of this Contract, the Builder shall provide the Owner with a Construction Schedule. At the beginning of every month thereafter, the Builder shall provide the Owner with actual progress plan. Furthermore the yard shall provide a dedicated contact person who will be available to the Buyers Representative during normal working hours plus one hour before start of each workday.

ARTICLE 5 — MODIFICATIONS

5.1

 

Modifications of Specifications:

 

 

 

 

 

The Specifications may 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 judgement, adversely affect the Builder’s planning or program, and provided, further, that the Owner shall first agree, 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 Specifications occasioned by or resulting from such modifications and/or changes.

 

 

 

 

 

Such agreement may be effected by exchange of letters signed by the authorised representatives of the parties hereto or by faxes confirmed by such letters manifesting agreements of the parties hereto which shall constitute amendments to this Contract and/or the Specifications.

 

 

 

 

 

The Builder may make minor changes to the Specifications, if found necessary for introduction of improved production methods or otherwise as long as they are of better or of equal quality, provided that the Builder shall first obtain the Owner’s approval which shall not be unreasonably withheld

 

 

 

5.2

 

Substitution of Materials:

 

 

 

 

 

In the event that any of the materials required by the Specifications and the Makers’ List 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 Owner shall so agree in writing, supply other materials from the Allowed Makers in the Makers’ List if applicable, 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.

 

 

 

 

 

For equipment and material not specified in the the maker list, the builder shall have the sole right to procure as long as these equipment and material meet the classification, technical specification and regulatory requirments.

Page 14


 

 

ARTICLE 6 — TRIALS AND ACCEPTANCE

6.1

 

Notice:

 

 

 

 

 

The Owner shall receive from the Builder at least fourteen (14) days prior notice in writing or by fax confirming 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 chosen Representative(s) on board the Vessel to witness such trial run. Failure in attendance of the Representative(s) of the Owner 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(s) on board the Vessel at the trial run, and the Builder may conduct the trial run without the Representative of the Owner being present, and in such case the Owner shall be obligated to accept the Vessel on the basis of a certificate of the Builder that the Vessel, upon trial run, is found to conform to this Contract and the Specifications. Non attendance by the Owner’s Representatives in no way reduces the Builder’s obligations under this Contract.

 

 

 

6.2

 

Weather Condition:

 

 

 

 

 

The trial run shall be carried out under the weather condition which is deemed favourable enough by the judgement of the Builder. In the event of unfavourable weather on the date specified for the trial run, the same shall take place on the first available day thereafter when favourable weather condition prevails. It is agreed that, if during the trial run of the Vessel, the weather should suddenly become so unfavourable that orderly conduct of the trial run can no longer be continued, the trial run shall be discontinued and postponed until the first day next following when favourable weather conditions prevail, 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.

 

 

 

6.3

 

How Conducted:

 

 

 

a)

 

All expenses in connection with the trial run are to be for the account of the Builder and the Builder shall provide at is own expense the necessary crew to comply with conditions of safe navigation. The trial run shall be conducted in the manner prescribed in the Specifications, and shall prove fulfilment of the performance requirements for the trial run as set forth in the Specifications. The course of trial run shall be determined by the Builder.

 

 

 

b)

 

Without prejudice to the generality of the foregoing, the Builder shall supply the fuel, lubricating and hydraulic oils; and grease for initial filling of the systems, including any systems associated with the OFE. The Builder shall pay the cost of the quantities of fuel, lubricating and hydraulic oils; and grease for initial fil


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