Vessel Construction Contract

VESSEL CONSTRUCTION CONTRACT


BETWEEN


AVONDALE INDUSTRIES, INC.


AND


BELLE OF ORLEANS, L.L.C.


Page 1


TABLE OF CONTENTS


ARTICLE I - DEFINITIONS 1 ARTICLE II - DESCRIPTION OF VESSEL 3 ARTICLE III - CONTRACT 4 ARTICLE IV - REGULATORY COMPLIANCE 5 ARTICLE V - PRICE AND PAYMENT 7 ARTICLE VI - TIME AND CONDITIONS OF DELIVERY 10 ARTICLE VII - BUILDER'S DUTIES AND STATUS 13 ARTICLE VIII - SUBCONTRACTS AND OTHER AGREEMENTS 15 ARTICLE IX - OWNER'S DUTIES AND STATUS 16 ARTICLE X - OWNER'S RIGHT TO STOP WORK 18 ARTICLE XI - INSPECTION BY OWNER'S REPRESENTATIVE 19 ARTICLE XII - CHANGES IN THE WORK 20 ARTICLE XIII - FORCE MAJEURE 22 ARTICLE XIV - WARRANTY 23 ARTICLE XV - INSURANCE 25 ARTICLE XVI - INDEMNITY 27 ARTICLE XVII - TAXES 28 ARTICLE XVIII - PATENTS 28 ARTICLE XIX - USE OF THE PLANS AND SPECIFICATIONS 29 ARTICLE XX - DEFAULT 29 ARTICLE XXI - NOTICES 31 ARTICLE XXII - MEDIATION 32 ARTICLE XXIII - FINANCING MATTERS 34


ARTICLE XXIV - CONSTRUCTION 35 ARTICLE XXV - LAW APPLICABLE 35 ARTICLE XXVI - UNITED STATES APPROVAL 35 ARTICLE XXVII - ASSIGNMENT 35 ARTICLE XXVIII - AGREEMENT 36


LIST OF EXHIBITS


Exhibit "A" - Specifications Exhibit "B" - Drawings Exhibit "C" - Labor Rates for Time and Material Changes Exhibit "D" - Parent Guaranty Exhibit "E" - Standard Provisions


VESSEL CONSTRUCTION CONTRACT


THIS AGREEMENT is entered into as of this day of January, 1994 (the "Agreement"), between Avondale Industries, Inc., a corporation organized and existing under and by virtue of the laws of the State of Louisiana (the "BUILDER"), appearing herein through its duly authorized officer, and Belle of Orleans, L.L.C., (the "OWNER"), a Louisiana limited liability company, appearing herein through Metro Riverboat Associates, Inc., its duly authorized member.


W I T N E S S E T H:


ARTICLE I - DEFINITIONS


1.1 Advancement Plan - as defined in Paragraph 7.9.


1.2 Agreement - as defined in the preamble.


1.3 Analysis - as defined in Paragraph 6.12.


1.4 Arrangements - as defined in Paragraph 2.4.


1.5 Builder - as defined in the preamble.


1.6 Change Order - as defined in Paragraph 12.4.


1.7 Claim - A "Claim" shall mean a demand or assertion by one of the parties seeking, as a matter of right, adjustment or interpretation of Contract terms, payment of money, extension of Contract time or other relief with respect to the terms of the Contract. The term "Claim" also includes other disputes and matters in question between OWNER and BUILDER arising out of or relating to the Contract. Claims must be made by written notice. The responsibility of substantiating Claims shall rest with the party making the Claim.


1.8 Commission - as defined in Paragraph 4.1.


1.9 Contract - as defined in Paragraph 3.1.


1.10 Contract Price - as defined in Paragraph 5.1.


1.11 Contract Time - "Contract Time" is the time elapsed between the confirmation of the reconfiguration Arrangements by Change Order pursuant to Paragraph 2.4 and the Scheduled Delivery Date, as adjusted hereunder.


1.12 Contract Documents - as defined in Paragraph 3.1.


1.13 Construction Schedule - as defined in Paragraph 6.11.


1.14 Defect - as defined in Paragraph 14.2.


1.15 Division - as defined in Paragraph 4.2.


1.16 Drawings - The "Drawings" are the graphic and pictorial portions of the Contract Documents showing the design, location and dimensions of the Work, generally including the outboard profile and arrangement plans, elevations, sections, details, schedules and diagrams.


1.17 Force Majeure - as defined in Article XIII.


1.18 Good Shipbuilding Practices - as defined in Paragraph 7.1.


1.19 Indemnitees - "Indemnitees" shall include the party indemnified, and its subsidiaries, partners and principals and each of their respective directors, officers, agents, servants and employees.


1.20 Invoice for Payment - as defined in Paragraph 5.4.


1.21 Lender - as defined in Paragraph 23.1.


1.22 Mediator - as defined in Paragraph 22.3.


1.23 Milestones - "Milestones" are the names given to the completion of certain events of construction which are critical to the timely completion of the Work except for milestone (#l) and the thirty (30) day milestone (#2). The milestones are set forth in Paragraph 5.2.


1.24 Owner - as defined in the preamble.


1.25 Owner's Representative - as defined in Paragraph 9.5.


1.26 Payment Schedule - as defined in Paragraph 5.2.


1.27 Principal Portion of the Work - The term "Principal Portion of the Work" shall mean that which exceeds $250,000.00.


1.28 Project - The "Project" is the total construction of the Vessel of which the Work performed under the Contract Documents is a part and which includes construction by OWNER or by other contractors.


1.29 Project Manager - as defined in Paragraph 7.8.


1.30 Project Materials - as defined in Paragraph 19.1.


1.31 Scheduled Delivery Date - as defined in Paragraph 6.1.


1.32 Specifications - The "Specifications" are that portion of the Contract Documents consisting of the written requirements for materials, equipment, construction systems, standards and workmanship for the Work, and performance of related services, which are attached hereto as Exhibit "A".


1.33 Work - The term "Work" means the work required by the Contract Documents, whether completed or partially completed, and includes all other labor, materials, equipment and services provided or to be provided by the BUILDER to fulfill the BUILDER's obligations. The Work constitutes a part of the Project.


1.34 Vessel - as defined in Paragraph 2.3.


1.35 Unless otherwise stated in the Contract Documents, words which have well known technical or shipbuilding industry meanings are used in the Contract Documents in accordance with such recognized meanings.


ARTICLE II - DESCRIPTION OF VESSEL


2.1 BUILDER, for and in consideration of the sum to be paid it by OWNER as hereinafter set forth agrees to build, equip, and deliver complete to OWNER, afloat at BUILDER'S yard in Westwego, Louisiana free and clear from all liens, and encumbrances, one (1) Paddlewheel Gaming Vessel, which shall be constructed in accordance with the following documents, which have concurrently been identified by the parties hereto and made a part hereof as if fully set forth herein:


a. Specifications, dated 1/6/94, Revisions , attached
hereto as Exhibit "A".


b. Drawings numbered


93-049-001 - Outboard Profile (Revision 0)
93-049-002 - Hold Plan and Main Deck Arrangement
(Revision 0)
93-049-003 - 2nd and 3rd Deck Arrangements (Revision 0)
93-049-004 - 4th Deck and Pilothouse Arrangements,
(Revision 0) attached hereto as Exhibit "B".


2.2 The Vessel shall be assigned BUILDER'S Hull No. 114.


2.3 Except for such OWNER-furnished equipment and services as may be listed in the Specifications, BUILDER agrees to furnish all professional design services, drawing development, engineering services, submittals, procurement, fabrication, assembly, construction, testing, inspection, management, supervision, quality control, quality assurance, trials, delivery to the specified


location for delivery, plant, labor, tools, equipment and material, and miscellaneous support services, either expressly or reasonably required to produce a complete, ready-for-use Vessel, as contemplated by the Contract Documents (the "Vessel").


2.4 OWNER and BUILDER acknowledge that the Drawings and Specifications will require some reconfiguration of the Vessel's gaming and/or gaming related area(s), limited to those areas which do not include the Vessel's structural, stability, main vertical fire zones, stairway and egress routes and hull lines, layout arrangements (the "Arrangements") in order to suit OWNER'S needs. BUILDER agrees to make such reconfiguration to the Drawings and Specifications in accordance with OWNER'S reasonable wishes, and OWNER agrees to cooperate with BUILDER in determining the necessary reconfiguration of the Arrangements, provided, however that the parties agree that the reconfiguration of the Arrangements has been considered in negotiating this Agreement and such reconfiguration shall not give rise to a change in the Contract Price or in the Contract Time. Within thirty (30) days of the date hereof, the parties agree to meet to finalize the reconfiguration of the Arrangements by no cost Change Order and payment of Milestone Number 2 funds.


2.5 Title to all material furnished by BUILDER shall vest in OWNER when the same is either (a) actually installed or incorporated in the Work, or (b) delivered to the yard or other location specifically approved by OWNER and paid for by OWNER prior to incorporation into the Work, whichever occurs sooner. BUILDER shall comply with all requirements of the Louisiana Ship Mortgage Law, LA R.S. 9:5521 et seq, in connection with this Paragraph. BUILDER shall return to OWNER all OWNER supplied material not required for the completion of the Work.


2.6 The Vessel shall be constructed in accordance with the Drawings and Specifications furnished by BUILDER.


ARTICLE III - CONTRACT


3.1 The Contract Documents (the "Contract Documents") consist of this Agreement, the Drawings, the Specifications, and all written modifications issued after execution of this Agreement. These form the Contract (the "Contract"), and all are as fully a part of the Contract as if attached to this Agreement or repeated herein. An enumeration of the Contract Documents appears in Article I. The Contract may be amended or modified only by a written modification. The Contract Documents shall be signed by OWNER and BUILDER.


3.2 The intent of the parties as enumerated in the Contract


Documents is for BUILDER to design and complete a fully functional Vessel for the Contract Price and within the Contract Time. The Drawings and Specifications are to be considered as cooperative and all work necessary for the execution of the Work if shown on the Drawings and not described in the Specifications and all work described in the Specifications and not shown on the Drawings, shall be considered as a part of the Work and shall be executed by BUILDER in the same manner and with the same character of material as other portions of the Contract without extra compensation.


3.3 Unless expressly stipulated otherwise, BUILDER shall provide and pay for all services, labor, overtime labor, standby labor, methods, materials, equipment, transportation, fuel, taxes, permits and fees and all other facilities and services necessary to complete the Vessel for the Contract Price within the Contract Time.


3.4 All general language or requirements contained in the Specifications and all other requirements inconsistent or in conflict with the provisions of this Agreement are superseded by this Agreement, it being the intent of the parties that the provisions of this Agreement shall prevail. If there is any conflict or inconsistency between the Specifications and the Drawings, the Specifications shall control.


ARTICLE IV - REGULATORY COMPLIANCE


4.1 The effective date of this Contract shall be the date of execution by both parties and the receipt by BUILDER of the executed Parent Guaranty of Exhibit "D". Notwithstanding anything herein to the contrary, the parties acknowledge that pursuant to the rules and regulations of the Louisiana Riverboat Gaming Commission (the "Commission"), OWNER must file a copy of this Construction Contract with the Commission within five (5) days of execution by all parties. Should the Commission reject the Contract or fail to approve the Contract, both parties to this Contract hereby agree to cooperate in making such changes to the Contract as may be required by the commission.


4.2 BUILDER represents and warrants that the Drawings and Specifications will comply with the standards and requirements set forth in La. R.S. 4:504 et seq., and the regulations promulgated by the Commission and the Louisiana Riverboat Gaming Enforcement Division (the "Division") which are in effect as of the date of execution of this Agreement. Should revisions to the Drawings or Specifications be required by the Commission because said Drawings and Specifications do not comply with the standards set forth in the law or the regulations, BUILDER agrees to perform all such revisions at its sole cost. Any revisions in the Drawings and Specifications required by changes in the law or regulations subsequent to execution of this Agreement shall be for the account


of OWNER. If such revisions are necessary because of any reason other than an error or omission of BUILDER in failing to comply with the objective standards set forth in the law and the regulations, the revisions shall be treated as a Change Order hereunder. Any conflict between U.S. Coast Guard regulations and any other Federal, State or Local laws or regulations, the U.S. Coast Guard regulations shall prevail.


4.3 BUILDER shall provide access to the Work to any authorized representative of the Commission and Division. Upon presentation of valid identification, any member or employee of the Commission or Division shall have the right at all times to inspect all portions or component parts of the Work. BUILDER agrees to cooperate with representatives and/or members of the Commission and the Division. Such cooperation shall include but not be limited to providing any assistance required by these representatives during said inspection.


4.4 The Vessel shall be constructed to meet the applicable requirements of regulatory bodies including but not limited to U.S. Public Health Service Certified; U.S. Coast Guard Certified per Sub-Chapter "H", A.B.S. (to the extent required by the U.S. Coast Guard); and as set forth in the Contract Documents, and interim and final certificates evidencing the required classifications shall be furnished by BUILDER to OWNER. BUILDER shall pay all fees necessary to secure such certificates. The Vessel shall meet all requirements of the Specifications for the Americans with Disabilities Act.


4.5 In the event either party hereto becomes aware that any portion of the Contract Documents violate any rule or regulation of the U.S. Coast Guard or other regulatory authority, such party shall immediately notify the other of said violation. In this event, BUILDER will stop work involving the area of such violation until OWNER and BUILDER agree on the modification necessary to secure compliance. BUILDER shall be responsible for any increase in cost or time delay necessitated by a violation of U.S. Coast Guard rules or regulations in the Contract Documents in effect at the time of execution of this Contract.


4.6 If any enforced changes in the U.S. Coast Guard or U.S. Public Health Service rules or in the applicable rules of any governmental agency are made subsequent to the date of this Contract, whereby the Contract Price is increased and/or the Contract Time is extended, OWNER shall authorize and pay for, in accordance with the terms of this Contract, as a change under this Contract, such alterations, additional work items, outfit and/or equipment or additional time as may be required to meet the enforced changes.


4.7 BUILDER shall submit Drawings and Specifications to any


regulatory agencies or authorities required by law. BUILDER shall pay for all fees and permits necessary to accomplish the Work.


4.8 BUILDER shall comply with and give notices required by laws, ordinances, rules, regulations and lawful orders of public authorities bearing on performance of the Work.


4.9 BUILDER shall keep OWNER informed of any changes in law, rules, approvals or permit required by the U.S. Coast Guard or U.S. Public Health Service for the Project. BUILDER will not be responsible for informing OWNER of any changes in state law, including gaming laws, except to the extent BUILDER become aware of said changes.


4.10 BUILDER shall ensure that the Drawings and Specifications are in accordance with applicable laws, statutes, codes, and rules and regulations, except as expressly provided herein.


4.11 If BUILDER performs Work which is contrary to laws, statutes, codes and rules and regulations without such notice to OWNER, BUILDER shall assume full responsibility for the repair, removal or remediation of such Work and shall bear the attributable costs. If the laws, codes, statutes or rules change during construction and such changes which affect the Work already performed or to be performed, such changes shall be made by Change Order.


ARTICLE V - PRICE AND PAYMENT


5.1 OWNER, in consideration of the true and faithful performance on the part of BUILDER, agrees to pay to BUILDER the sum of $27,881,000.00 for the Vessel as adjusted by Change Orders issued hereunder (the "Contract Price").


5.2 OWNER agrees to pay BUILDER according to the following payment schedule (the "Payment Schedule") for the Work:


MILESTONE NUMBER* MILESTONE DEFINITION PERCENTAGE
(% of Contract Price) 1 Contract Signed Contract is signed for
construction of Vessel 1%


2 Sign-off on OWNER and BUILDER
Drawings and mutually sign-off on
Specifications Vessel Drawings and


Specs (on or before 30
days) 19%


3 Lay Keel Complete structural
fabrication of lead
innerbottom module
including bottom plate,
tank top and transverse
structure. 10%


4 Complete Complete the joining of
Erection of both innerbottom modules
innerbottom on shipway. 10%


5 Hull Erected Hull modules, from main
deck down, are erected
on shipway. 10%


6 Superstructure Complete erection of 50%
Erection 50% of Superstructure units
complete (excluding pilot house). 15%


7 Start Joiner Commence joiner work
onboard Vessel 2%


8 Set Pilot House Pilot House is set onto
Vessel superstructure. 11%


9 Launch Vessel is launched from
launchway. 11%


10 Delivery OWNER takes delivery of
Vessel. 11%


(*Subject to adjustment in accordance with Paragraph 6.11.)


5.3 Retainage in the amount of ten percent (10%) of each payment shall be withheld from each payment up to 50% of completion. Thereafter no additional retainage will be withheld.


5.4 Milestones shall be completed sequentially and no payment for any Milestones other than Numbers 1 and 2 shall be due until at least Twenty (20) days has passed from notice to OWNER of completion of the previous Milestone. Upon completion of each Milestone, BUILDER shall notify OWNER in writing by submitting an Invoice for Payment (the "Invoice for Payment"). OWNER shall be entitled to inspect the progress and confirm achievement of the Milestone. BUILDER shall invoice OWNER for the percentage of Contract Price payable for that Milestone. Within ten (10) days of receiving BUILDER'S Invoice for Payment on any Milestone, OWNER


will notify BUILDER if it determines that the Milestone has not in fact been achieved along with OWNER'S reasons for said determination. OWNER'S failure to notify BUILDER within ten (10) days of receipt of an Invoice for Payment shall constitute OWNER'S acceptance of the Milestone as complete.


5.5 BUILDER shall submit, together with each Invoice for Payment, other than Numbers 1 and 2, an affidavit including 1) BUILDER'S certification that the Milestone has been reached, and 2) BUILDER'S statement that it is aware of no liens filed against the Work by itself, any third party, supplier, vendor, laborer or subcontractor of any tier, or a description of any lien(s) which have been filed against the Work.


5.6 Providing OWNER has not rejected BUILDER'S invoice for payment pursuant to Paragraph 5.4 (except in the case of reconfiguration of the Arrangements and Delivery), OWNER shall pay such invoice not later than twenty (20) days after said submittal. OWNER shall pay that portion of all Change Orders approved as of the date of an Invoice for Payment representing the percentage of completion of the Work associated with the Milestone for which payment is requested.


5.7 A payment shall in no way lessen the responsibility of BUILDER to correct and/or replace work, if it shall be later discovered to have been improperly done or not according to this Contract or the plans, drawings, specifications or other Contract Documents. The payments requested under this Article shall not in any respect be deemed to be an acceptance of work theretofore done, nor shall they release BUILDER from any responsibility whatsoever in connection therewith.


5.8 Invoices for Milestones 1 (Contract Signing), Confirmation of Arrangements and 11 (Delivery) shall be paid upon receipt.


5.10 On the day of delivery of the Vessel, OWNER shall pay to BUILDER the full amount of the Contract Price, as adjusted, including all holdbacks, except for retainage, less any amounts previously paid.


5.11 Payment of the retainage accumulated hereunder shall be due sixty (60) days after delivery of the Vessel except for the cost of completing any unfinished Work or correcting any warranty Defects known on the sixtieth day following delivery. Said cost of completion and correction may be retained by OWNER until the correction of the warranty Defect is complete.


5.12 In the event that any party hereto becomes aware of any materialman's or workmans liens or privileges which are filed or have arisen against the Project or any portion thereof, or any


property of OWNER in connection with this Project when such lien or privilege results from the Work of BUILDER, any of its Subcontractors, Sub-subcontractors or materialmen, BUILDER agrees to cause such liens or privileges to be removed, or file a bond in lieu thereof, within ten (10) days of learning of such lien, at its sole expense. If any such lien or privilege is filed and BUILDER does not cause such lien or privilege to be removed or bonded, OWNER shall have the right to pay all sums necessary to obtain removal of such lien or privilege and deduct all sums to be paid from the Contract Price or from the next succeeding payment until OWNER shall recoup the total amount of such lien or privilege.


ARTICLE VI - TIME AND CONDITIONS OF DELIVERY


6.1 Time is of the essence in this Contract. The Vessel, after required trials set forth in the Specifications, completed in accordance with the Specifications and the Drawings, shall be delivered to OWNER, subject to the qualifications of this Contract, on or before 12 months and 15 days from the date of the second payment required hereunder (Confirmation of Arrangements), or on such later date or dates as may be required by reason of Change Orders agreed to by BUILDER and OWNER, or by reason of specified delays resulting from "Force Majeure", as that term is defined herein, (the "Scheduled Delivery Date").


6.2 BUILDER shall furnish OWNER upon delivery of the Vessel a BUILDER'S certificate together with whatever other documents may be required by law or by any regulatory agency of the United States having jurisdiction on the premises in order for OWNER to document the Vessel in its name. Any expense in connection with the furnishing of such documents and with the documentation of such Vessel shall be paid by OWNER. In addition BUILDER shall furnish OWNER on delivery of the Vessel with the following:


a. An affidavit by BUILDER that all bills, costs and expenses related to the Vessel have been paid, or will be paid in the normal course of business, including, without limitation, all subcontractors, suppliers and materialmen and stating that the Vessel is free and clear of all liens and encumbrances.


b. A bill of sale warranting good and marketable title to the Vessel.


c. A Certificate of BUILDER that the Vessel has been constructed and completed in accordance and conformity with the Specifications and the working drawings.


d. A complete set of as-built drawings of the Vessel on mylar transparencies and on Autocad 12 or such other format as shall be subsequently in use by BUILDER.


6.3 The Vessel shall be built and delivered by BUILDER and accepted at BUILDER'S yard in Louisiana or such other location in the New Orleans area as OWNER may designate at its additional cost. OWNER shall execute a delivery and acceptance certificate at the time of delivery and acceptance of the Vessel.


6.4 In the event BUILDER shall deliver the Vessel before the Scheduled Delivery Date, OWNER shall increase the Contract Price in the amount of $5,000.00 per day for each and every day up to a maximum of thirty (30) days that the actual vessel delivery precedes the Scheduled Delivery Date set forth in Paragraph 6.1 hereof, as adjusted under the terms of this Agreement.


6.5 If completion and delivery of the Vessel shall be delayed beyond the Scheduled Delivery Date, it is agreed that OWNER will suffer damages which are difficult of ascertainment and the parties hereby agree that OWNER shall sustain liquidated damages. The liquidated damages set forth hereinafter shall be OWNER'S sole remedy for late delivery.


6.6 In the event BUILDER shall deliver the Vessel later than the seven (7) days after the Scheduled Delivery Date, but on or before twenty (20) days after the Scheduled Delivery Date, BUILDER shall pay to OWNER as liquidated damages in the form of a reduction in the Contract Price, to the extent any amounts are still owing, the amount of ($12,868.15) per day for each and every day that the actual vessel delivery date exceeds the Scheduled Delivery Date, as adjusted.


6.7 In the event BUILDER shall deliver the Vessel later than twenty (20) days a ...