Shipbuilding Contract For Hull 1740

HARLAND AND WOLFF SHIPBUILDING
AND HEAVY INDUSTRIES LIMITED


and


GLOBAL MARINE INTERNATIONAL SERVICES CORPORATION


SHIPBUILDING CONTRACT


relating to


Hull No: 1740


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


LAUSE 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 28th day of March, 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 February Two Thousand 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 Forty Million (US$40,000,000) 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 the Fourth Schedule 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 NOT USED


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.1740 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.1740 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 the Fifteenth Schedule
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 REGULATIONS


4.1The Vessel shall be built to ABS rules and under their survey to Class ( A1-E Mobile Offshore Drilling Unit - DPS-3 AMS, ACCU, R2S and to the specified rules and regulations of the Regulatory Bodies, including any alterations and modifications thereto published as at the date of signature of this Contract and including rules or regulations announced but not in effect on the date of signature of this Contract provided that they are scheduled to come into effect prior to the Contract Delivery Date, so as to enable the Vessel to be registered under the Panamanian Flag. All fees and charges incidental to classification and to compliance with the specified rules and regulations of Regulatory Bodies and the requirements of this Contract payable in connection with the construction of the Vessel shall be for the account of the Builder, except for fees, charges and expenses of the Classification Society incidental to the approval of the Phase 2 Basic Design Package and registration of the Vessel which shall be for account of the Owner.


4.2 If, after the date of signature of this Contract, any requirements of the Classification Society or of the Regulatory Bodies, with which the construction of the Vessel is required to conform including requirements announced prior to the date of signature of this Contract and scheduled to come into effect prior to the Contract Delivery Date, are altered or changed by the Classification Society or Regulatory Bodies and the parties are unable to obtain a dispensation therefrom or waiver of compliance therewith, the Builder shall comply with any such alterations or changes (if any) in the construction of the Vessel occasioned thereby, and any modifications or alterations to the Contract Price and/or Contract Delivery Date, arising out of the changes in the rules or regulations shall be determined in accordance with Clause 6.


CLAUSE 5 - CONSTRUCTION, MATERIALS AND INSPECTION


5.1 The Builder shall commence performance of the Works and shall proceed with the same with all due diligence, so as to achieve the completion of the Works and Delivery of the Vessel in accordance with this Contract and the Specifications and the Contract Delivery Date.


5.2 The Builder may sub-contract any portion of the Work of the Vessel to any of the Subcontractors or Suppliers respectively specified and/or listed in the Subcontractor's List or Maker's List attached at schedules Ten and Eleven respectively, but shall not otherwise be entitled to sub-contract such Work without the Owner's consent which shall not be unreasonably withheld.


5.3 Subject to all the terms of this Contract, the Vessel, her machinery, outfit, equipment, materials and workmanship shall be in accordance with this Contract and the Specifications and shall otherwise be in conformity with first class commercial shipbuilding practice, as applicable in Western Europe.


5.4 If any specified materials are not available when required for incorporation in the Vessel, the Builder shall be at liberty to use other suitable materials in substitution therefor subject to the approval of the Owner which approval shall not be unreasonably withheld and (where applicable)to the approval of the Classification Society and other Regulatory Bodies. If such approvals are forthcoming, any consequent modification or change shall be dealt with in accordance with the provisions of Clause 6.


5.5 Within thirty (30) days of the signature of this Contract, Owner shall supply to Builder all available estimates of weight and center of gravity of OFE items. Further, Owner shall, upon its receipt, supply Builder with certified vendor drawings for OFE as soon as is practically possible. Within sixty (60) days of the signature of this Contract, Builder shall derive an estimate of steel weight and the center of gravity of the Vessel from the Phase 2 Basic Design Package. Within one hundred and twenty (120) days of the signature of this Contract, Builder shall submit to the Owner for approval a complete estimate of the estimated weight and center of gravity of the Vessel. Agre ...