Drilling Unit Construction Contract

CONTRACT DATED 4th July, 2008



BETWEEN



JURONG SHIPYARD PTE LTD





AND





ATWOOD OCEANICS PACIFIC LIMITED



____________________________________


FOR THE CONSTRUCTION AND SALE OF
ONE FRIEDE & GOLDMAN
EXD MILLENIUM MOBILE
OFFSHORE SEMI-SUBMERSIBLE
DRILLING UNIT
____________________________________




TABLE OF CONTENTS





DEFINITIONS 6

1 . PURPOSE OF THIS CONTRACT 8
2. NATURE OF THE CONTRACT; CONSTRUCTION STANDARDS; DESIGN AND ENGINEERING; CLASSIFICATION; MANDATORY REGULATIONS; REGISTRATION 8
Classification 8
Mandatory Regulations 9
Registration 11
3 . CONTRACT PRICE 11
4 . PAYMENT SCHEDULE 12
5 . REVIEW OF PLANS & DRAWINGS; SUBCONTRACTING 13
6 . MODIFICATIONS 15
Statutory Modifications 16
Waivers of Compliance 16
Builder's Request for Modification 17
Variation Orders 17
Subsitution of Materials 18
7. INSPECTION 19
Authorised Representative and Supervisors 19
8. PROJECT PLAN; PROGRESS CONTROL AND REPORTING 20
Project Plan 20
9. TITLE 21
10. RISK AND INSURANCE 21
Risk 21
Insurance 21
11 . LOSS OR DAMAGE TO THE VESSEL 22
12 . TRIALS; TECHNICAL ACCEPTANCE 23
Trails 23
Technical Acceptance 24
13. DELIVERY OF THE VESSEL 25
Delivery 25
Documents to be provided to the Purchaser 26
14. EXTENSION OF TIME FOR DELIVERY; PERMISSIBLE DELAY 27
Causes of Delay 27
Notices 27
Permissible Delay 28
15. DELAY IN DELIVERY; DEFICIENCIES IN PERFORMANCE 28
Delay in Delivery 28
16. DEFECTS AND BUILDER'S GUARANTEE 29
Guarantee Period 29
Remedy of Defects 30
Assignment of Subcontractors' Guarantees 31
Assignment of Builder's Guarantee 31
17. DEFAULT BY THE PURCHASER 32
Events of Purchaser's Default 32
Termination by the Builder 33
18. DEFAULT BY THE BUILDER 35
Events of Builder's Default 35
Termination by the Purchaser 35
Non-payment by the Builder 35
19. PATENT INDEMNITY; INTELLECTUAL PROPERTY 36
20. OWNER FURNISHED EQUIPMENT 37
21. TAXES AND DUTIES 39
22. ASSIGNMENT 39
23. PRIORITY OF DOCUMENTS 39
24. LIMITATION OF LIABILITY; MUTUAL INDEMNITIES 39
Limitation of Liability 39
Mutual Indemnities 40
25. CONTRACT (RIGHTS OF THIRD PARTIES) ACT 1999 40
26. NOTICES 40
27. LAW 41
28. DISPUTES 41
30. ENTIRE AGREEMENT 43
31. EFFECTIVENESS 44



APPENDICES

APPENDIX I SPECIFICATIONS
APPENDIX II PROJECT PLAN
APPENDIX IIIA FORM OF VARIATION ORDER
APPENDIX IIIB FORM OF PROTOCOL OF DELIVERY AND ACCEPTANCE
APPENDIX IIIC ASSIGNMENT OF GUARANTEES AND WARRANTIES
APPENDIX IV SCHEDULE OF RATES FOR MODIFICATIONS
APPENDIX V LIST OF CERTIFICATES TO BE SUPPLIED ON DELIVERY OF THE VESSEL
APPENDIX VI LIST OF OWNER FURNISHED EQUIPMENT
APPENDIX VII PAYMENT SCHEDULE
APPENDIX VIII AMENDMENTS TO THE MODU CODE
APPENDIX IX GUARANTEE
APPENDIX X OPTION AGREEMENT



This CONTRACT is made this 4th day of July 2008


BY and BETWEEN:-


(1) JURONG SHIPYARD PTE LTD, ( Singapore Company Registration Number 1999008265G),a corporation organised under the laws of Singapore, having its registered office at 29 Tanjong Kling Road, Singapore 628054 (the "Builder");

and

(2) ATWOOD OCEANICS PACIFIC LIMITED, a corporation organised under the laws of the Cayman Islands, and having an office at 332A-11C, 11 th Floor, Plaza Ampang City, Jalan Ampang, 50450 Kuala Lumpur, Malaysia (the " Purchaser").

WITNESSETH THAT THE PARTIES HAVE AGREED AS FOLLOWS:-


DEFINITIONS

In this Contract the following expressions shall have the meanings hereby assigned to them:-



"Banking Day" means any day on which banks in each of Singapore and New York are open for the transaction of normal banking business;
"Classification Society" means American Bureau of Shipping;

"Contract" means the agreement evidenced by the terms set out herein, including the Appendices;
"Contractual Delivery Date" means the date referred to in Clause 13.1 as the same may from time to time be extended in accordance with the provisions of this Contract;
"Delivery" means the delivery by the Builder, and acceptance by the Purchaser, of the Vessel pursuant to Clause 13.2 ;
"Design Freeze Date" means the date as agreed in writing between the Builder and Purchaser where the scope and specifications of the Owner Nominated Equipment are finalized. The Design Freeze Date shall be no later than six (6) months after execution of this Contract.
"Effective Date" shall have the meaning assigned to it in Clause 31;

"LIBOR" means the interest rate per annum which Hong Kong & Shanghai Banking Corporation, London is offering to prime banks in the London Interbank market for deposits in United States Dollars for a one (1) month period, determined at 11.00 a.m. London time, as quoted on the date from which interest is accrued under this Contract;
"Makers' List" means the agreed list of vendors and suppliers set out in the Specifications;
"Mandatory Regulations" shall have the meaning assigned to it in Clause 2.4 ;

"Materials" means all materials and supplies, including, without limitation (but specifically excluding the Owner Furnished Equipment), all machinery, equipment, outfittings and spare parts (if any), intended for the Vessel 's construction to the extent that the same have been appropriated to, or incorporated in, the Vessel ;
"Parties" means Purchaser and Builder collectively, and " Party " shall mean either one of them.
"Project Plan" means the programme for performance of this Contract by the Builder detailed in Appendix II hereto;
"Plans & Drawings" means those drawings, documents and specifications which are required under this Contract and the Specifications to be submitted to the Purchaser for review;
"Owner Furnished Equipment (or "OFE") shall have the meaning assigned to it in Clause 20.1
"Owner Nominated Equipment" (or "ONE") shall have the meaning defined in Clauses 20.13 and 20.14
"Residential Workforce" means subcontractors who perform work for the Builder in the Shipyard and are registered with the Builder as a regular subcontractor
"Specifications" means:
(a) the specification referred to in Appendix I; and
(b) any additions or amendments thereto hereafter agreed between the Parties;
"Statutory Modifications" means modifications to the Vessel which, following the date of signature of this Contract, become compulsorily applicable to the Vessel as a result of changes to any of (i) the rules, regulations and requirements of the Classification Society or (ii) the Mandatory Regulations pursuant to Clause 2.4 ;
"Variation Order" means a Variation Order as provided for in Clause 6 and in the form of Appendix IIIA
"Working Day" means any day (other than Saturdays, Sundays and public holidays in Singapore) when work is normally carried out at the Shipyard.


Further terms used in this Contract are defined hereinafter.





1. PURPOSE OF THIS CONTRACT


1.1. Upon the terms and conditions set out in this Contract, the Builder undertakes to design, construct, build, launch, equip and test at its shipyard at 29 Tanjong Kling Road, Singapore (the "Shipyard") and to sell and deliver to Purchaser one (1) Friede & Goldman ExD Millenium Mobile Offshore Semi-Submersible Drilling Unit as further described herein (the "Vessel "). The Purchaser agrees to purchase and take delivery of the Vessel when tendered for delivery in accordance with the requirements of this Contract.



1.2. References herein to the Vessel shall, except where otherwise expressly provided, be deemed to include all Materials.



2. NATURE OF THE CONTRACT; CONSTRUCTION STANDARDS; DESIGN AND ENGINEERING; CLASSIFICATION; MANDATORY REGULATIONS; REGISTRATION


Construction Standards



2.1 The Vessel, which is to be assigned the Builder's Hull No. 11-1096, shall be designed, constructed and completed in all respects in accordance with the Specifications. To the extent not defined in the Specifications, the Vessel's construction shall meet good international offshore construction standards and practices for a new vessel of a similar type and characteristics as the Vessel.



Classification

2.2 The Vessel shall be constructed under and in accordance with the rules, regulations and requirements of the Classification Society current at the date of execution of this Contract.


2.3 Decisions of the Classification Society as to whether or not the Vessel complies with its rules, regulations and requirements shall be final and shall bind both Parties to this Contract.

Mandatory Regulations

2.4 In addition to meeting the rules, regulations and requirements of the Classification Society, the Vessel shall comply with (i) all requirements of the regulatory bodies listed in the Specifications and (ii) the following rules, regulations and requirements, in each case current at the date of execution of this Contract, (i) and (ii) being known herein jointly as the "Mandatory Regulations"):-



(a) International Code for the Construction and Equipment of Mobile Offshore Drilling Units, 1989 (IMO MODU Code 1989 with 1991 Amendments) including the draft regulations included in Appendix VIII



(b) American Bureau of Shipping (ABS) Rules for Building and Classing Mobile Offshore Drilling Units, 2008 ? Certificate of Classification as Maltese Cross A1 Column Stabilized Drilling Unit



(c) American Bureau of Shipping Rules for Building and Classing Steel Vessels, 2008 (to the extent required by the ABS MODU Rules) - Certificate of Classification as Maltese Cross A1 Column Stabilized Drilling Unit



(d) International Maritime Organization (IMO) Resolution A.649(16), Code for the Construction and Equipment of Mobile Offshore Drilling Units , Consolidated Edition 2001 ? MODU Safety Certificate issued by ABS on behalf of the Republic of the Marshall Islands



(e) International Maritime Organization International Convention for the Safety of Life at Sea , 1974 (SOLAS) and its Protocol of 1988 (to the extent required by the IMO MODU Code) ? MODU Safety Certificate issued by ABS on behalf of the Republic of the Marshall Islands



(f) International Maritime Organization International Convention on Load Lines, 1966 and Protocol of 1988 , Consolidated Edition 2002 ? International Load Line Certificate issued by ABS on behalf of the Republic of the Marshall Islands



(g) International Maritime Organization International Convention for the Prevention of Pollution from Ships 1973/1978 , (MARPOL) Consolidated Edition 2006. All MARPOL certificates are to be issued by ABS on behalf of the Republic of the Marshall Islands.


(a) Annex I ? Regulations for the Prevention of Pollution by Oil - IOPP Certificate
(b) Annex IV ? Regulations for the Prevention of Pollution by Sewage from Ships - ISPP Certificate
(c) Annex V ? Regulations for the Prevention of Pollution by Garbage from Ships ? Statement of Fact
(d) Annex VI ? Regulations for the Prevention of Air Pollution from Ships - IAPP Certificate



(h) International Maritime Organization International Code for Fire Safety Systems (FSS Code)



(i) International Maritime Organization International Code for Application of Fire Test Procedures (FTP Code)



(j) International Maritime Organization International Life-Saving Appliance Code (LSA Code)



(k) American Bureau of Shipping Guide for Certification of Lifting Appliances ? ABS Register of Lifting Appliances



(l) American Petroleum Institute (API) API Spec 2C ? Offshore Cranes, 6th Edition - ABS Statement of Fact



(m) International Maritime Organization Convention on the International Regulations for Preventing Collisions at Sea, 1972, (COLREGS) Consolidated Edition 2002 ? ABS Statement of Fact



(n) The Republic of the Marshall Islands MI-293, Mobile Offshore Drilling Unit Standards ? ABS Statement of Fact



(o) The Republic of the Marshall Islands Technical Circular Number 2 - Form MI-287 Document of Compliance issued by ABS on behalf of the Republic of the Marshall Islands



(p) Title 33 Code of Federal Regulations (CFR) 140.101(d), 143.207(b), 146.205(b), 155, 159, and 164 ? ABS Statement of Fact and any other US Coast Guard Regulations (to the extent required for Statement of Technical Compliance to be issued by ABS that Builder has complied with US Coast Guard Regulations for non US flag vessels).



(q) International Civil Aviation Organization (ICAO) Annex 14 Volume II ? ABS Statement of Fact



(r) International Maritime Organization International Convention on Tonnage Measurement of Ships, 1969 - International Tonnage Certificate issued by ABS on behalf of the Republic of the Marshall Islands



(s) UK Civil Aviation Authority (CAA) CAP 437 Offshore Helicopter Landing Areas ? Guidance on Standards ? ABS Statement of Fact



(t) IEEE Standard No. 45 "Recommended Practice for Electrical Installation Shipboard "



(u) International Electro Technical Commission (IEC) 61892-1 through -7, Mobile and fixed offshore units - Electrical installations



(v) ILO Convention 92 & 133 on Crew Accommodation.



(w) International Association of Marine Aids to Navigation and Lighthouse Authorities (IALA) Publication O-114, Recommendations for the Marking of Offshore Structures



(x) International Telecommunications Union (ITU) Radio Regulations , 2004



(y) American Institute of Steel Construction (AISC) Manual of Steel Construction - Allowable Stress Design 13 th Edition



(z) American Petroleum Institute API Spec 4F ? Drilling and Well Servicing Structures , 2 nd Edition



(aa) American Petroleum Institute API Spec 7F ? Oil Field Chain and Sprockets , 7 th Edition



(bb) American Petroleum Institute API RP 7G ? Drill Stem Design and Operating Limits , 16 th Edition



(cc) American Petroleum Institute API Spec 8C ? Specification for Drilling and Production Hoisting Equipment , 4 th Edition (ISO 13535)



(dd) American Petroleum Institute API Spec 16C ? Choke and Kill Systems , 1 st Edition



(ee) American Petroleum Institute API Spec 14A ? Specification for Subsurface Safety Valve Equipment , 11 th Edition (ISO 10423)


Changes to any of the Mandatory Regulations which becomes compulsorily applicable to the Vessel following the date of this Contract shall be resolved as Statutory Modifications in accordance with Clauses 6.6 and 6.7.



Registration

2.5 The Vessel shall upon Delivery fly the flag of any choice of the Purchaser and be registered at the port of the choice of the Purchaser. Admission of the Vessel to the above flag and the registration of the Vessel as aforesaid shall be effected by the Purchaser and all costs and expenses thereof shall be for the Purchaser's account. Any change in the Specifications as required by such flag or port shall be treated as a Statutory Modification in accordance with Clause 6.

3. CONTRACT PRICE


3.1 In consideration of the performance by the Builder of its obligations under this Contract, the Purchaser shall pay to the Builder a price of United States Dollars Four Hundred Thirty One Million, One Hundred Twenty Three Thousand (US$431,123,000) plus United State Dollars One Hundred Thirty Four Million, Seventy Thousand, Twenty Five (US$134,070,025) for Owner Nominated Equipment [ONE] (or such other purchase price of the ONE as at the Design Freeze Date) (the "Contract Price").



3.2 The Contract Price, which excludes the cost of the Owner Furnished Equipment, shall be subject to upward or downward adjustment in accordance with the express provisions of this Contract. It includes:


(i) the cost of the Vessel completed in accordance with the requirements of this Contract and the Specifications;



(ii) the cost of all tests and trials of the Vessel to be performed by the Builder;



(iii) The cost of Builder's project team dedicated to this Contract, which shall include, as a minimum, a Project Manager, a Project Scheduler, and a dedicated Project Safety Officer.

4. PAYMENT SCHEDULE



4.1 The Purchaser shall pay the Contract Price which shall become due and payable to the Builder in instalments as set out in Appendix VII.



Payment for Modifications



4.2 Any sums due to the Builder under Clause 6 as a result of Purchaser's Modifications, Builder's Requested Changes and/or Statutory Modifications shall be negotiated and agreed as part of the Modifications.

4.3 If any amount due to the Builder is not paid within the agreed period, the Purchaser shall pay interest for the unpaid amount at the rate of ten percent (10%) per annum from the due date until it is received, without prejudice to any other rights the Builder may have in respect thereof

4.4 If the Purchaser disputes any amount claimed by the Builder, the Purchaser shall without delay pay the undisputed portion on its due date and the Builder shall continue with the construction of the Vessel, notwithstanding such dispute.

4.5 Subject to the provisions of Clause 28.5, all amounts due to the Builder under this Contract shall be calculated and determined before Delivery and shall be paid on Delivery without set off or deduction.

4.6 Payment of sums due to the Builder in accordance with the provisions of this Contract shall be made, by telegraphic transfer, free of all transfer charges, to the Builder's account, details of which are as follows:




For credit: Jurong Shipyard Pte. Ltd.
Account No.: DBS Bank Ltd
Shenton Way Branch
US$ A/C No. 0001-005735-01-6-022
Swift Code: IRTVUS3N



4.7 If the date on which any payment is due in accordance with the provisions of this Contract does not fall on a Banking Day, payment shall be made on the immediately succeeding Banking Day.



5. REVIEW OF PLANS & DRAWINGS; SUBCONTRACTING

Review of Plans & Drawings

5.1 In respect of all Plans & Drawings, the same shall be submitted to the Purchaser in four (4) paper copies and one electronic copy as soon as possible following their production. Builder shall indicate if the Plans & Drawings being submitted are critical Plans & Drawings. The Purchaser shall, within ten (10) Working Days after receipt thereof, return to the Builder one copy of such critical Plans & Drawings with the Purchaser's final remarks and amendments (if any) written thereon. Other non-critical Plans & Drawings shall be returned to the Builder within a reasonable time after receipt. Any Plans & Drawings submitted by Builder which are not consistent with the arrangements, or equipment being supplied, and/or which fail to provide supporting design details, such as calculation for flow, strength, electrical loads etc. shall be returned and marked NON-Conforming and Builder shall promptly update such Plans & Drawings and resubmit them for approval.


5.2 In the event that the Purchaser fails to return critical Plans & Drawings to the Builder within the time limit as hereinabove provided, such Plans & Drawings shall be deemed to have been approved by the Purchaser provided always that the Purchaser is provided with such Plans & Drawings at regular intervals and not all Plans & Drawings simultaneously.

5.3 The Builder shall take due note of the Purchaser's remarks and amendments (if any) on Plans & Drawings submitted pursuant to this Clause and the Builder shall commence or continue construction of the Vessel in accordance with the Plans and Drawings as modified by such remarks or amendments, but omitting any remark or amendment which are not consistent with this Contract, or of such a nature or extent as to constitute Purchaser's Modifications within the meaning of Clause 6 hereof (without prejudice to the Purchaser's right to request a Purchaser's Modification under Clause 6), or to which the Classification Society does not give any necessary approval. If such remarks or amendments are not clearly specified or detailed, the Builder shall in all cases seek clarification of the same from the Purchaser before implementing the same.


5.4. Copies of all correspondence between the Builder and the Classification Society and the regulatory authorities referred to in the Specifications, together with all Plans & Drawings submitted by the Builder and approved by the Classification Society, shall be furnished to the Purchaser by the Builder as soon as practicable upon dispatch and receipt by the Builder. The Builder shall not be required to furnish information or documents not within its possession or control. Builder will promptly inform Purchaser of any shortcomings or deficiencies in the design that are brought to its attention.

Subcontracting

5.5 The Builder may at its discretion and without any requirement for consent from the Purchaser subcontract the work as follows:



(a) those works delegated to those subcontractors listed in the Section 19 of the Specifications - Makers' List ("Subcontractors ?),

(b) any work it wishes to have carried out by the Residential Workforce, or

(c) any work contracted to subcontractors in Singapore with a subcontract value of less than United States Dollars One Million (USD1,000,000)



Otherwise, the Builder may at its discretion subcontract any portion of the work to a subcontractor of its choice provided always that Builder shall obtain the approval of the Purchaser if it intends to have the work performed outside Singapore, such approval to be given within a reasonable time, and not to be unreasonably withheld.

The Builder and the Purchaser shall cooperate to ensure that the Terms and Conditions in major subcontracts and purchase orders are structured in such a way as to leverage suppliers to complete the deliveries and services prior to full settlement and final acceptance.

5.6 Not used.



5.7 Not used.



5.8 Not used.



Makers' List

5.9 The Builder shall purchase the Materials in accordance with the Makers' List. The Builder shall select for the supply of each of the Materials listed in the Makers' List the Subcontractor or supplier named therein in relation to the same. Where the Makers' List provides for more than one (1) Subcontractor or supplier to supply any element of the Materials, the Builder shall advise the Purchaser of its intended choice of Subcontractor or supplier before any subcontract is awarded. If, thereafter, the Purchaser shall request the Builder to order that element of the Materials from another Subcontractor or supplier named in the Makers' List in relation thereto, then the Builder will take all reasonable steps to comply with such request, provided that to do so would have no impact on its production schedule for the Vessel or increase the liability or exposure of the Builder as a result of a change of terms in the purchase contract, and the Purchaser shall reimburse to the Builder any documented difference in price between that quoted by the Builder's chosen Subcontractor or supplier and the Subcontractor or supplier chosen by the Purchaser. The Purchaser and Builder shall first agree to possible adjustment to the Contract Price, the Delivery Date and such other terms and conditions occasioned by or resulting from the request of Pur ...