Vessel Construction Agreement

Exhibit 10.4


VESSEL CONSTRUCTION AGREEMENT


HULL NO.: 337

PRICE: $ Forty Million Two Hundred Fifty Thousand Dollars and No Cents

($40,250,000.00)


DELIVERY DATE: 487 Days after Receipt of Down Payment


CONTRACT

This Agreement entered into as of the 27th day of August, 2003

BETWEEN


LEEVAC INDUSTRIES, LLC

(Hereinafter called " LEEVAC" or " BUILDER" ).


AND


PNK (LAKE CHARLES), L.L.C. (Hereinafter called " OWNER" ).

WITNESSETH:


ARTICLE I SCOPE

A. For the price and sum of: FORTY MILLION TWO HUNDRED FIFTY THOUSAND DOLLARS AND NO CENTS, U.S. currency ($40,250,000.00), BUILDER agrees, at its own risk and expense, subject to and as qualified by, the other terms and conditions of this Agreement, complete and deliver to OWNER, afloat at delivery point determined by Article II-C below, on or before FOUR HUNDRED EIGHTY SEVEN (487) DAYS after receipt of Down Payment, time being of the essence, as hereinafter provided one riverboat casino (hereinafter called the " Vessel" ) constructed, outfitted and tested in accordance with the attached Specifications and Contract Drawings labeled as follows:


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SPECIFICATIONS

FOR THE CONSTRUCTION OF A

330' X 225' SINGLE LEVEL PADDLEWHEEL CASINO VESSEL

RODNEY E. LAY & ASSOCIATES, INC.

PROJECT 4075


August 20, 2003, Revision 5


Contract Drawings per Exhibit " A"


Guidance Drawing per Exhibit " B"


Matrix of Casino and Casino Support Items per Exhibit " C"


Certificate of Delivery and Acceptance per Exhibit " D"

References

1. Quotation Letter from LEEVAC dated April 28, 2003.

2. Quotation Letter from LEEVAC dated August 21, 2003.

3. The Specifications and Contract Drawings that have been identified by the signatures of the parties hereto, and are herby made a part of this Agreement.

B. BUILDER agrees to furnish a suitable location for the construction of the Vessel. BUILDER agrees to furnish all labor, tools, equipment, materials, services, and fees necessary for the construction and completion of said vessel, except as otherwise indicated herein or in said Specification or Contract Drawings.

C. BUILDER shall be responsible for the adequacy and accuracy of the Specifications and Contract Drawings with regard to compliance with any requirements or classifications mandated by USCG or any other governmental or regulatory body for the intended or actual use of the Vessel, in effect as of date of this Contract.

D.

BUILDER will provide and/or install ready for use all parts, equipment and appurtenances shown in the Specifications and Contract Drawings (including OWNER Furnished items, except those items to be installed by OWNER or its Subcontractors). BUILDER shall store, safe keep and handle OWNER' s equipment and supplies both


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prior to and after placement on board. BUILDER shall allow sufficient working area and time to allow the timely and safe installation of equipment and loading of supplies prior to Vessel' s departure voyage to its final mooring area.

E. BUILDER will allow OWNER and/or its representative' s at all reasonable times to examine the Vessel during construction. F. BUILDER will provide OWNER with a production and completion schedule at execution of this document, and update the schedule every thirty (30) days going forward.

G. BUILDER will do all work hereunder in a good and workman-like manner in accordance with the Specification and Contract Drawings. All material and equipment shall be in accordance with the Specifications, Contract Drawings, Matrices and Exhibits herein.


ARTICLE II DELIVERY

A. BUILDER agrees, subject to the other provisions of this Agreement, to complete and deliver said Vessel to aforesaid OWNER free and clear of all liens, claims and encumbrances, except such as OWNER, or its subcontractors, their employees and/or agents and/or vendors shall cause to be placed on the Vessel, and OWNER agrees to accept delivery upon completion of the vessel at the agreed delivery point set forth in Article II-C below.

B. BUILDER agrees to deliver the Vessel to OWNER after satisfactory completion as per Drawings, Plans, Specifications and Matrices at OWNER' s coffer cell (Lake Charles) on or before the Delivery Date specified, or such later date as may be required by reason of agreed changes in the Vessel or by reason of Force Majeure delays as that term is defined in Article V. C. The Vessel, after receiving USCG approvals, shall be inspected by OWNER safely afloat in the coffer cell. BUILDER shall execute a " Certificate of Completion and Acceptance" in a form reasonably acceptable to OWNER at the time of delivery for such Vessel. A form of the unsigned " Certificate of Completion and Acceptance" is attached as Exhibit " D" to this Agreement.

D.

In the event the contract work is not finished at the time BUILDER tenders the " Certificate of Completion and Acceptance" , OWNER shall have the option, if it, in its sole discretion, deems the Vessel fit for service, take Acceptance of the Vessel and treat all " unfinished work" as a Guarantee Defect as set forth in Article IX. In that event, Builder' s Certificate of Completion and Acceptance shall specify all unfinished work. The parties shall agree as to the amount to be withheld from the Acceptance Payment and the Vessel shall be delivered to OWNER upon OWNER paying the undisputed


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amount to BUILDER and by withholding the amount for " unfinished work" until such time that BUILDER completes the " unfinished work" and OWNER accepts the " unfinished work" as complete. BUILDER shall invoice OWNER for completion of " unfinished work" and, provided the work meets the standards of Article II C, OWNER shall, within thirty (30) days of receipt of Invoice, pay BUILDER. If OWNER does not exercise such option, BUILDER shall completely finish all contract work.

E. BUILDER shall furnish OWNER on delivery of the Vessel a Bill of Sale and Builder' s Certificate together with whatever other documents may be required by law or by any other regulatory agency of the United States having jurisdiction in the premises in order for OWNER to document the Vessel; and will assist OWNER, or its agent, in acquiring all required information to enable OWNER to obtain all certificates necessary to operate the Vessel as intended. Any expense in connection with documentation or Certification of the Vessel shall be paid by OWNER.

ARTICLE III DOWN PAYMENT

Down Payment of 15% shall be made upon Contract Signing.

ARTICLE IV SUBSEQUENT PAYMENTS

A. OWNER agrees to pay to BUILDER at address indicated on applicable BUILDER' s invoice the following " Interim Installment Payments" for such Vessel providing that the BUILDER has satisfactorily demonstrated completion in accordance with the completion schedule as referenced in Article I F.

5.0 % 60 days after receipt of Down Payment

5.0 % 90 days after receipt of Down Payment

5.0 % 120 days after receipt of Down Payment 5.0 % 150 days after receipt of Down Payment

5.0 % 180 days after receipt of Down Payment

5.0 % 210 days after receipt of Down Payment 5.0 % 240 days after receipt of Down Payment

5.0 % 270 days after receipt of Down Payment

5.0 % 300 days after receipt of Down Payment 5.0 % 330 days after receipt of Down Payment

5.0 % 360 days after receipt of Down Payment

5.0 % 390 days after receipt of Down Payment 5.0 % 420 days after receipt of Down Payment

5.0 % 450 days after receipt of Down Payment

5.0 % 480 days after receipt of Down Payment

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All Change Orders are to be paid monthly, based on mutually agreed percent complete. B. Upon completion of the Vessel by BUILDER and acceptance thereof by OWNER in accordance with the Agreement, OWNER agrees to pay the BUILDER at address indicated on applicable BUILDER' s invoice the " Acceptance Payment" consisting of:

1. The 10% balance due on Contract Price set out in Article 1-A above.

2. Any applicable State or Local Sales and/or Use Taxes.

3. Plus or less any changes in contract price resulting from agreed changes in the specifications and Contract Drawings in accordance with Article VII below not previously invoiced and/or paid.

4. Less any liquidated damages for delay in accordance with Article VI below.

C. BUILDER will give OWNER notice of intended date of issuance of each " Interim Installment Payments" invoice not more than 10 nor less than 7 days before issuance. All " Interim Installment Payments" and the " Acceptance Payment" will be due by wire transfer to Hibernia National Bank ABA #065000090, Final Credit: LEEVAC Industries, LLC Account # 6020041186. D. The " Interim Installment Payments" shall be payable within fifteen days after presentation of BUILDER' s invoice and the " Acceptance Payment" shall be payable upon BUILDER' s invoice and the " Certificate of Completion and Acceptance" of said Vessel signed by BUILDER and OWNER.

E. The BUILDER shall furnish an invoice for each " Interim Installment Payment" which shall state (i) the month invoiced; (ii) that the contract work completed complies with the Contract Drawings and Specifications and this Agreement; and (iii) that lien releases for all claims upon said Vessel for labor, materials or equipment for said Vessel have been received by the OWNER, except those created by the OWNER, its subcontractors, vendors, or employees. The Interim Installment Invoice shall be executed and certified by the President or Assistant Secretary/Treasurer of BUILDER. If BUILDER has any outstanding lien on Vessel, OWNER shall not be obligated to make payment until lien is resolved, unless such liens are held by the OWNER or its vendors.

F. It is agreed that time is of the essence of this Contract and that the failure of Owner to timely pay to Builder the sums of money agreed to be paid hereunder, at the times and in the manner above set forth, shall automatically extend the agreed Delivery Dates by the number of days equal to the number of days from the Payment Due Date to the actual date of payment, provided Builder has complied with Article IV C and D.

G.

The Certificate of Completion and Acceptance shall state (i) that the Vessel has been completed; (ii) that all trials and tests have been satisfactorily completed; (iii) that the Vessel complies with the Specifications and Contract Drawings and this Agreement, and is free from defects in materials and workmanship; (iv) that there are no liens or


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claims upon said Vessel for materials, equipment or labor for said Vessel, except those created or incurred by the OWNER, its subcontractors, vendors or employees.

H. The making of the Interim Installment Payments or Acceptance Payment with respect to the Vessel shall not stop the OWNER from thereafter asserting any right or remedy accruing to it because of the failure of the BUILDER to construct and deliver the completed Vessel in accordance with the terms thereof.

ARTICLE V FORCE MAJEURE AND DELAYS

A. All agreements of the BUILDER contained in this contract respecting the Date of Delivery of the Vessel shall be subject to extension by reason of " Force Majeure" , which term is hereby declared to be any delay caused by fire, explosion, lightning, flood, windstorm, hurricane, tornado or extraordinary rains, earthquakes, act of war, strikes, or civil riot which prevent work for two (2) consecutive days and not caused, or contributed to, by BUILDER; and including non-delivery and/or late delivery of all OWNER furnished equipment subject to the further terms hereinafter set forth.

B. Delays in receiving supplies, materials and equipment shall not be considered Force Majeure unless (a) caused by strikes or lockouts of workmen or (b) BUILDER establishes to the satisfaction of OWNER that (1) BUILDER timely ordered such supplies, materials and equipment and (2) BUILDER exercised due diligence to obtain delivery and (3) no other source of supply was reasonably available (relative price being a factor to be considered).

C. Delays caused by late receipt of OWNER furnished equipment shall not be considered Force Majeure unless BUILDER has notified OWNER in writing of date by which each such item of OWNER furnished equipment must be delivered to BUILDER' s Jennings or Lake Charles Yard in time to allow OWNER by utmost diligence to cause timely delivery. BUILDER shall provide OWNER with a schedule indicating latest on-site arrival date for each OWNER furnished component.

D. Failure of OWNER to remit Interim Payments, as per Article IV, D shall be considered a delay and the delivery date of the Vessel shall be automatically extended by a period of time equal to total of said delays.

E.

BUILDER shall have no responsibility for Force Majeure delays, other than to inform the OWNER in writing of the occurrence of a Force Majeure within three business days of its occurrence and to include with that notice (i) a description of the event and (ii) its expected duration. BUILDER shall inform OWNER of the end of a Force Majeure event within three business days of its cessation and include an estimate of the delay in Deliver Date, if any, caused by that event. Failing such notices, BUILDER shall not have the benefit of the Force Majeure clause for said event. The BUILDER shall


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maintain records of such delays and allow OWNER to inspect same upon request at all reasonable times. The Delivery Date for the Vessel shall automatically be extended by a period of time equal to the total of said delays (Extended Delivery Date) relating to the Vessel unless the OWNER, within ten (10) days after receiving the aforesaid notice of a Force Majeure event, in which event the rights of both parties, with respect to treating such events as Force Majeure, shall be preserved.


ARTICLE VI LIQUIDATED DAMAGES PROVISION

A. All work on the Vessel contemplated hereunder shall be completed and delivery on the Vessel effected on or before the Delivery Date set forth on the first page of this Agreement or such extensions of time as are provided for herein. Both parties recognize that because during construction OWNER will make contracts depending upon the use of the Vessel and that delivery time is of the essence and that delivery delay will result in substantial damages not susceptible of accurate calculation. In the event the Vessel is not completed and delivered to the OWNER 30 days from the Delivery Date or Extended Delivery Date by the provisions of this Agreement, OWNER will deduct from Delivery Payment for the Vessel the sum of Fifteen-Thousand Dollars ($15,000.00) per day for each day following the Delivery Date, or the Extended Delivery Date until the Vessel is actually completed and accepted by OWNER. This is in lieu of all other damages, direct or consequential, which may result to OWNER from delay. The maximum Builder shall pay as liquidated damages under this agreement is Nine Hundred Thousand Dollars ($900,000). B. In the event the parties are unable to agree on the above reduction of the Acceptance Payment, the Vessel shall nevertheless be accepted by OWNER upon OWNER paying the undisputed amount to BUILDER, and by placing the disputed portion of the acceptance in a Certificate of Deposit with a bank or in prime grade commercial paper, which is mutually acceptable to both parties, to be withdrawn only upon signatures of both OWNER' s and BUILDER' s attorneys, interest to be accumulated and payable in proportion to the resolution of the dispute, and the certificate to be held by OWNER' s attorneys.

ARTICLE VII CHANGES IN SPECIFICATIONS AND CONTRACT DRAWINGS

A. The right is reserved by OWNER to make any deductions for or additions or substitutions to the said Specifications and Contract Drawings on giving due notice in writing to BUILDER; the cost of any such changes to be added to or deducted from the Contract price. If any such change will delay the completion of the work, BUILDER will be allowed additional time sufficient to cover such delay. The increased or reduced cost, or any additional time required, as aforesaid, shall be submitted to OWNER by BUILDER within three (3) business days and shall be acted upon by OWNER in three (3) business days from receipt in writing before such change is made.


7 B. Cost of any change considered an addition or a deletion shall be " labor" and " materials" and BUILDER' S mark up, unless BUILDER and OWNER have previously agreed to some other pricing. Cost of any change considered a substitution shall be the difference between cost of addition and cost of deletion.

C. Changes required by USCG or any other regulatory body shall be subject to the same Change Order procedure, provided they are not based on laws, rules or regulations, in force prior to date of execution of this Agreement that were the responsibility of BUILDER.


ARTICLE VIII RISKS AND INSURANCE

A. All risks of damage to or destruction of the Vessel, all machinery, materials and equipment provided by BUILDER and all liability, to or for labor employed by the BUILDER and subcontracted effort arranged for by the BUILDER on or about the Vessel during construction and prior to delivery and acceptance, shall be the responsibility of the BUILDER. Pre-keel and full form Builder' s Risk Insurance acceptable to OWNER (including loss or damage caused by strikes, locked-out workmen or persons taking part in labor disturbances or riots, or civil commotions, without deletions of protection and indemnity and collision clauses, and including risks of earthquakes, with endorsements attached covering losses or damage caused by vandalism and malicious mischief) will be maintained by BUILDER at BUILDER' s expense. Such insurance shall cover the completed value of the Vessel and any agreed change orders. The agreed starting value and ending value of the Vessel shall be established by OWNER and BUILDER and BUILDER' s subcontractors shall maintain Workmen' s Compensation, Longshoreman' s and Harborworker' s Compensation not less than minimum required by statute, and Public Liability Insurance of $1,000,000. BUILDER shall provide relevant copes of insurance policies prior to signing of this agreement. OWNER or OWNER' s subcontractors as the case may be, shall maintain workman' s compensation, longshoreman' s and harbor worker' s compensation insurance not less than the minimum required by statute, and public liability insurance of $1,000,000. OWNER or OWNER' s s ...