Shipbuilding Contract For Hull 1739

HARLAND AND WOLFF SHIPBUILDING
AND HEAVY INDUSTRIES LIMITED


and


GLOBAL MARINE INTERNATIONAL SERVICES CORPORATION


SHIPBUILDING CONTRACT


relating to


Hull No: 1739


INDEX


PARTIES CLAUSE 1 INTERPRETATION
Definitions
General Interpretation


CLAUSE 2 DESCRIPTION
Principal Particulars
Yard Number


CLAUSE 3 DESIGN RESPONSIBILITY
Owner's Responsibilities
Builder's Responsibilities
Continuing Liability of Builder
Owner's Proprietary Rights


Builder's Proprietary Rights


CLAUSE 4 CLASS AND REGULATIONS
Classification Society and Class
Changes to Classification Requirements


CLAUSE 5 CONSTRUCTION, MATERIALS AND INSPECTION
Construction
Subcontracting
Standard of Construction
Use of Substitute Materials
Lightship Weight and Center of Gravity
Departures from Contemplated Construction
Provision of Lightship Weight Updates
Preparation of Critical Path Project Schedule and
Construction
Critical Path Analysis
Variation of Contractual Price
Right to attend tests and trials
Supervision and Inspection by Owner's
Authorized Representative
Defective Workmanship
Resolution of Disputes by Classification Society
Provision of Offices and Office Equipment
Payment for office facilities
Access to Vessel and Builder's Yard
Standards applicable to Project Managers
Replacement of Authorized Representatives


CLAUSE 6 MODIFICATIONS
Change Request by Owner
Builder's Acceptance and Confirmation
Builder's Proposal
Timing of Owner's Response
Request for Further Information
Change Request by Builder
Changes to Regulatory Requirements
Authority of Project Managers
Owner's Directive
Referral to Appeals Board
Dispute resolution
Classification Society
Appeals Board
Effect of Disputes
Denomination of Project Change Orders and
Directives


CLAUSE 7 OWNER FURNISHED EQUIPMENT
Delivery
Risk
Notice of Arrival and Expenses of Delivery
Storage
Inspection by Builder
Owner's Right to Interest


CLAUSE 8 PRICE AND TERMS OF PAYMENT
Price
Guarantees
Installment Schedule
Notice of Installments Falling Due
Submission of Stage Certificates and Invoices
Payment of increases in the Contract Price
Terms of Payment
Set off of Liquidated Damages
Failure to Take Delivery


CLAUSE 9 PROPERTY AND JURISDICTION
Vesting of Property, Allocation of Risk and
Builder's Lien
Labeling of the Vessel
OFE
Appropriation of Vessel parts
Assembly other than at Builder's Yard


CLAUSE 10 INSURANCE
Owner to Insure
Builder to Insure
Payment of deductible
Insurance Recoveries
Total Loss of Vessel
Partial Loss of Vessel
Other insurances to be effected
Provision of copies of insurances effected
Risk of Vessel


CLAUSE 11 TRIALS AND PERFORMANCE
Arrangements for Trials
Notice of Sea Trials
Failure of Owner's Representative to attend
Unfavourable Weather Conditions
Fuel Consumption
Vessel not Complying with Specifications
Punch List of Defects


CLAUSE 12 DELIVERY
Time and Place
Valid Tender of Delivery
Removal of Vessel
Builder's Bonus and Liquidated Damages
Incomplete Work


CLAUSE 13 FORCE MAJEURE
Force Majeure Delays
Notice of Delays
Revised Contract Delivery Date
Owner's Rights


CLAUSE 14 DEFAULT OF THE OWNER
Events of Default
Builder's right to Cancel
Remedies following cancellation
Claims against Owner
Exercise of such rights


CLAUSE 15 DEFAULT OF THE BUILDER
Events of Default
Owner's Right to Cancel or take possession
Parent Company Guarantee and Letter of Credit
Vesting of Title
Sub-Contract Right
OFE
Set Off
Termination Without Cause


CLAUSE 16 GUARANTEE
Builder's Guarantee
Notice of Guarantee Claims
Inspection by Builder
Transportation of Builder
Remedies
Guarantees from Subcontractors
Holding of Sub-Contract Rights
Exclusion of Implied Guarantees
Builder's Warranty that Works Free from
Encumbrances
Exceptions and Limitations
Guarantee Engineer
Limitation of Guarantees


CLAUSE 17 INDEMNITIES FOR INFORMATION SUPPLIED
Builder's Indemnity
Owner's Indemnity


CLAUSE 18 TAXES AND DUTIES
For account of Builder
For account of Owners
Other Taxes


CLAUSE 19 HEALTH AND SAFETY ENVIRONMENT AND EMPLOYMENT
Precedence of Local Legislation
Compliance with Applicable Government Regulations
Sub-Contractors


CLAUSE 20 LAW AND ARBITRATION


CLAUSE 21 ASSIGNMENT


CLAUSE 22 NOTICES AND COMMUNICATIONS


CLAUSE 23 WAIVER


CLAUSE 24 ENTIRE CONTRACT AND AMENDMENTS


CLAUSE 25 LIABILITY AND INDEMNIFICATION
Definitions
Builder's Responsibilities
Owner's Responsibilities
Consequential Damages
Limit of Indemnities
Allocation of risk
Extension of Indemnities
Range of liabilities


CLAUSE 26 BENEFIT OF INDEMNITIES
Extended to Owner Group
Extended to Builder Group
Agencies for Giving and Receiving Indemnities


EXECUTION
FIRST SCHEDULE - STAGE CERTIFICATE


SECOND SCHEDULE - FINAL STAGE CERTIFICATE


THIRD SCHEDULE - LETTER OF CREDIT


FOURTH SCHEDULE - PARENT COMPANY GUARANTEE


FIFTH SCHEDULE - BUILDER'S PROPOSAL


SIXTH SCHEDULE - CHANGE ORDER REQUEST


SEVENTH SCHEDULE - PROJECT CHANGE ORDER


EIGHTH SCHEDULE - OWNER FURNISHED EQUIPMENT


NINTH SCHEDULE - SPECIFICATIONS


TENTH SCHEDULE - SUBCONTRACTORS LIST


ELEVENTH SCHEDULE - MAKER'S LIST


TWELFTH SCHEDULE - ADJUSTMENTS OF CONTRACT PRICE
BETWEEN ACTUAL AND ESTIMATED STEEL WEIGHTS


THIRTEENTH SCHEDULE -BUILDER'S RATES FOR
PROVISION OF OFFICE FACILITIES


FOURTEENTH SCHEDULE - HEALTH AND SAFETY PROVISIONS


FIFTEENTH SCHEDULE - "PHASE 2 BASIC DESIGN
PACKAGE"


SIXTEENTH SCHEDULE - INSURANCE


THIS CONTRACT is made the 27th day of February, One Thousand, Nine Hundred and Ninety Eight between:


(1) HARLAND AND WOLFF SHIPBUILDING AND HEAVY INDUSTRIES LIMITED,
a company organized and existing under the laws of Northern
Ireland and having its principal office at Queen's Island,
Belfast, Northern Ireland BT3 9DU (hereinafter called the
"Builder"); and


(2) GLOBAL MARINE INTERNATIONAL SERVICES CORPORATION, a Bahamian
company and having its principal office at c/o McKinney,
Bancroft & Hughes, Mareva House, 4 George Street, P.O. Box
N. 3937, Nassau, Bahamas, (hereinafter called the "Owner").


WHEREBY IT IS AGREED that the Builder will construct, complete and deliver to the Owner the Vessel described herein and the Owner shall duly pay the Builder therefor all in accordance with the following Clauses of this Contract:


CLAUSE 1 - INTERPRETATION


1.1 In this Contract


1.1.1 "Authorized Representative(s)" shall mean any
person who has been advised in writing by the
Owner Project Manager to the Builder or (as the
case may be) by the Builder Project Manager to the
Owner as having authority to act for the Owner or
(as the case may be) the Builder, and the extent
of such authority shall be defined in such advice;


1.1.2 "Appeals Board" shall mean a board comprised in
accordance with Clause 6.10;


1.1.3 NOT USED


1.1.4 "Builder Project Manager" shall mean the person
appointed by Builder, and Notified in writing to
the Owner as having authority to act on behalf of
Builder, in the discharge of Builder's obligations
hereunder. The authority of Builder Project
Manager includes, but is not limited to, the
authority to sign Project Change Orders pursuant
to Clause 6. Builder Project Manager may appoint
Authorized Representatives to act on behalf of
Builder, and shall Notify Owner in writing of such
appointment, defining in such Notice the extent of
the authority of each Authorized Representative;


1.1.5 "Builder's Proposal" shall mean a document in the
form set out at Schedule Five hereto;


1.1.6 Builder's Quarterly Invoices" shall mean invoices,
other than invoices for installment payments of
the Contract Price referred to in Clause 8,
submitted by the Builder to the Owner on a
quarterly basis and in accordance with the
provisions of Clause 8 which shall include, but
not be limited to, facilities charges for
telephone and other services and charges as more
specifically described in Clauses 5.15, 5.16 and
8.10.


1.1.7 "Builders Yard" shall mean the premises of the
Builder at Queen's Island, Belfast, Northern
Ireland;


1.1.8 "Change Order Request" shall mean a request in the
form set out at Schedule Six hereto;


1.1.9 "Classification Society" shall mean the American
Bureau of Shipping (also referred to as "ABS");


1.1.10 "Constructability" shall mean, in the context of
the Builder's obligations under Clause 3.2(a),
that the Vessel is physically capable of being
built on the basis of the Phase 2 Basic Design
Package. However, confirmation by the Builder of
such constructability shall not of itself give
rise to any different obligation of the Builder
under this Contract in relation to the performance
characteristics of the Vessel than that which
would otherwise have applied as part of the Works;


1.1.11 "Contract Delivery Date" shall mean 10th October
One Thousand Nine Hundred and Ninety-Nine as from
time to time extended pursuant to this Contract by
Permissible Delay;


1.1.12 "Contract Price" shall mean the price stipulated
in Clause 8.1 as amended by the provisions of this
Contract or any Amendment thereof;


1.1.13 "Delivery" and "Delivery Date" shall mean the date
upon which the Vessel is delivered to and accepted
by the Owner in accordance with the provisions of
Clause 12.2;


1.1.14 "Force Majeure" shall mean any of the
circumstances specified in Clause 13.1;


1.1.15 "Guarantee Period" shall mean the period referred
to in Clause 16.1;


1.1.16 "Letter of Credit" shall mean a letter of credit
in the maximum amount of United States Dollars
Thirty Million (US$30,000,000) substantially in
the form set out at Schedule Three executed by a
first class Bank acceptable in all respects to the
Owner;


1.1.17 "Makers List" shall mean the list attached at
Schedule Eleven hereto;


1.1.18 "Notice" shall mean formal notice as further
provided in Clause 22;


1.1.19 "Owner Furnished Equipment" or "OFE" shall mean
any item of equipment outfit and/or stores for the
Vessel on the list attached at Schedule Eight
hereto and as may otherwise be provided for in the
Specifications;


1.1.20 "Owner Subcontractor" or "Owner Supplier" shall
mean any person under contract to the Owner in
connection with the performance of any of the
obligations of Owner hereunder;


1.1.21 "Owner Project Manager" shall mean the person
appointed by Owner, and Notified in writing to the
Builder as having authority to act on behalf of
Owner, in the discharge of Owner's obligations
hereunder. The authority of Owner Project Manager
includes, but is not limited to, the authority to
sign Project Change Orders pursuant to Clause 6.
Owner Project Manager may appoint Authorized
Representatives to act on behalf of Owner, and
shall notify Builder in writing of such
appointment, defining in such Notice the extent of
the authority of each Authorized Representative;


1.1.22 "Parent Company Guarantee" shall be a guarantee in
the form set out at Schedule Four hereto and
executed by the Parent Company Guarantor;


1.1.23 "Parent Company Guarantor" shall mean Harland and
Wolff Holdings plc, a company having its
registered office at Queen's Island, Belfast, BT3
9DU;


1.1.24 "Permissible Delay" shall mean a delay in the
Delivery of the Vessel on account of causes which
under the terms of this Contract permit
postponement of the Contract Delivery Date which
delay shall be documented by a Project Change
Order countersigned by Owner;


1.1.25 "Port of entry Northern Ireland" shall mean the
point at which the OFE arrives on the territory of
Northern Ireland whether by air or freight;


1.1.26 "Project Change Order" shall mean a document in
the form set out at the Seventh Schedule hereto;

1.1.27 "Regulatory Bodies" shall mean the authorities,
imposing rules and regulations with which the
construction and outfit of the Vessel must comply
in accordance with the Specifications;


1.1.28 "Specifications" shall mean the specifications,
plans and drawings signed by the Builder and the
Owner and attached at the Ninth Schedule hereto
and identified as forming an integral part of this
Contract or such revised or supplemental
specifications, plans or drawings as may
subsequently be agreed between the Owner and the
Builder and signed by the Builder Project Manager
and the Owner Project Manager, in accordance with
Clause 6 and "Specified" shall mean stipulated in
the Specifications;


1.1.29 "Subcontract(s)" shall mean any contract entered
into by Builder for the construction or
manufacture of any materials, machinery, services
or equipment for the Works;


1.1.30 "Subcontractor(s)" shall mean any person under
contract to the Builder for the construction, or
manufacture of any materials, machinery, services
or equipment for the Works;


1.1.31 "Subcontractor's List" shall mean the List
attached at the Tenth Schedule hereto;


1.1.32 "Supplier" shall mean any person under contract to
the Builder for the supply of any materials,
machinery, services or equipment for the Works;


1.1.33 "Valid Tender of Delivery" shall mean a tender of
the Vessel for Delivery in accordance with Clause
12.2;


1.1.34 "Vessel" means the vessel bearing Hull No.1739
which is the subject of this Contract and
generally as described in Clause 2 with all the
machinery, outfit, materials and equipment
appurtenant thereto.


1.1.35 "Work" or "Works" means the works and services
(which expressions shall include the supply of
materials and equipment) to be performed by the
Builder or, to the extent permitted by Clause 5.2,
by its Subcontractors or Suppliers under this
Contract.


1.2 The order of precedence for the documents forming this
Contract shall be:


1.2.1 in case of any inconsistency between any provision
of this Contract and the Specifications, this
Contract shall prevail; and


1.2.2 in case of any inconsistency between the
Specifications and a plan or drawing, the
Specifications shall prevail; and


1.2.3 in case of any inconsistency between one plan or
drawing and another plan or drawing, the later in
date shall prevail;


1.3 Any reference to a Clause is to a Clause of this Contract.


1.4 The Index and Clause headings appearing in this Contract are
inserted for convenience of reference only and shall not
affect the construction of this Contract.


CLAUSE 2 - DESCRIPTION


2.1 The Builder shall construct and deliver to the Owner a completely outfitted and equipped Drill-ship (being, subject to Clause 3, of the Owner's design) which is capable of operating as a dynamically positioned drilling unit in water depths up to 12,000 feet and as otherwise provided for herein and in the Specifications, including supplying and installing all materials, labor, machinery, equipment, furnishings, fittings, as specified in the Specifications save and except to the extent of Owner Furnished Equipment. In the case of Owner Furnished Equipment, the Builder shall install same and provide the necessary foundations, wiring, piping and successfully- tested and commissioned interface connections to ensure the Owner Furnished Equipment functions as complete operational systems. Upon Delivery, the Vessel and all its parts and appurtenances shall be complete as specified hereinafter.


2.2 The Vessel shall have the Hull No.1739 and this number shall be placed on the Vessel, her materials and outfit during construction.


CLAUSE 3 - DESIGN


3.1 The Owner shall be responsible, at no cost to the Builder, for:


(a) the preparation of the drawings and plans for the
Vessel which drawings and plans are called the "Phase 2
Basic Design Package", a list of which is at Schedule
Fifteen hereto;


(b) obtaining the approval of the Classification Society
and the Regulatory Bodies to the Phase 2 Basic Design
Package; and


(c) furnishing the Builder, in a timely manner, with the
Phase 2 Basic Design Package, and any modifications
thereto as a result of obtaining the approvals
described in (b) above.


The Builder acknowledges that, at the date of this Contract, it is in receipt of the Phase 2 Basic Design Package together with evidence of the status of approvals of the Classification Society.


3.2 The Builder, as part of the Works and at no additional cost to the Owner, shall be responsible for:


(a) confirming the Constructability of the Phase 2 Basic
Design Package, as provided to it by the Owner, to
ensure that it provides an appropriate basis to perform
the Works hereunder, and, in particular, that the
construction and completion of the Vessel is in
accordance with this Contract and the Specifications.
Builder shall, immediately on discovery of any such
inconsistencies, advise the Owner Project Manager in
writing of any inconsistencies in the Phase 2 Basic
Design Package relative to the Constructability of the
Vessel; and


(b) the preparation of Builder's construction plans and
drawings (the "Builder's Working Drawings") based upon
the Phase 2 Basic Design Package. Such plans and
drawings shall, if required, be submitted to the Owner
and the Classification Society for approval in
accordance with the provisions of this Contract and the
Specifications; and


(c) the performance of the Works on the basis of such plans
and drawings as from time to time are approved by the
Classification Society and the Owner under paragraph
(b) above; and


(d) using all reasonable endeavors to discover any
inaccuracies in plans, drawings, and data provided by
the Owner, or provided by a third party acting on
behalf of the Owner, for the purposes of the Works.


3.3 Builder shall be and remain liable hereunder for:


(a) any defect or deficiency in the preparation of the
Builder's Working Drawings, whether or not the same
have been approved by the Owner or the Classification
Society, save to the extent that such defect or
deficiency is caused by inaccuracies in plans, drawings
and/or data supplied by Owner, unless the Builder shall
have failed to use all reasonable endeavours to
discover detectable inaccuracies in such plans,
drawings or data; and


(b) any design work undertaken by Builder in connection
with a Project Change Order.


3.4 The design of the Vessel and all plans and drawings relating to the Vessel and all intellectual property rights in the same (such design, plans and drawings and all intellectual property rights in the same being herein called the "Owner I.P.R.") shall at all times be and remain the sole and exclusive property of the Owner who reserves all proprietary rights in and to the same. The Builder will not obtain any rights of ownership or other proprietary rights in connection therewith or any part thereof and will not act in any way to indicate to any third party that he has any right in or to.


The Builder shall only be entitled to use the Owner I.P.R. for the sole purpose of (and for no other purpose than) performing the Works.


3.5 Notwithstanding anything to the contrary in Clause 3.4 above, the Builder shall retain ownership of all Builder's Working Drawings and all ownership and intellectual property rights thereto, except for those which have been developed directly from drawings, plans or other information supplied by Owner, Owner Subcontractor, Owner Supplier, or the Phase 2 Basic Design Package. For the avoidance of doubt, Owner shall own all Builder's Working Drawings and all ownership and intellectual property rights thereto, inclusive of those approved by the Classification Society, which have been developed directly from drawings, plans or other information supplied by the Owner, Owner Subcontractor, Owner Supplier or the Phase 2 Basic Design Package. With respect to all Builder's Working Drawings, regardless of ownership, the Builder shall:


(a) make copies thereof available to the Owner or
Classification Society (and Owner shall be entitled to
make the same available to Owner Subcontractor or Owner
Supplier or any third party for the purposes described
in this Clause) in the course of performance of the
Works or, at the request of the Owner, to assist the
Owner, or any third party, in the operation, repair or
maintenance of the Vessel after delivery; and


(b) not design or build any drillship or similar vessel to
the Vessel on the basis of "Owner IPR"; and


(c) not disclose Owner IPR nor Builder's Working Drawings
to third parties whether to enable them to effect such
design of any drillship or vessel similar to the Vessel
or otherwise.


CLAUSE 4 - CLASS AND REGULA ...