EXHIBIT 10.1

 

 

 

A CONTRACT DATED 2 JANUARY, 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                     
____________________________________

 

 

 

 

 

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TABLE OF CONTENTS

DEFINITIONS..........................................................................................................................1

1.      PURPOSE OF THIS
CONTRACT...................................................................................3

2.      NATURE OF THE CONTRACT; CONSTRUCTION STANDARDS; DESIGN  AND    
 ENGINEERING;
CLASSIFICATION;                                                                                    
 MANDATORY  REGULATIONS;   REGISTRATION..........................................................3

Classification ...............................................................................................................................3
Mandatory
Regulations................................................................................................................3
Registration..................................................................................................................................6

3.      CONTRACT
PRICE.........................................................................................................6
4.      PAYMENT
SCHEDULE ..................................................................................................7
5.     REVIEW OF PLANS & DRAWINGS;
SUBCONTRACTING ........................................8
6.     
MODIFICATIONS...........................................................................................................9

Statutory
Modifications .............................................................................................................11
Waivers of
Compliance .............................................................................................................11
Builder’s Request for
Modification ............................................................................................11
Variation
Orders ......................................................................................................................12
Pricing of
Modifications  ...........................................................................................................12
Substitution of
Materials.............................................................................................................13
Third Party Subcontractors ..…………………………………………………….......….…….13

7.     
INSPECTION................................................................................................................13
Authorised Representative and
Supervisors................................................................................13

8.      PROJECT PLAN; PROGRESS CONTROL AND
REPORTING...................................15
Project
Plan...............................................................................................................................15

9.       
TITLE............................................................................................................................16
10.      RISK AND
INSURANCE ...........................................................................................16

Risk...........................................................................................................................................16
Insurance...................................................................................................................................16

11.      LOSS OR DAMAGE TO THE
VESSEL.......................................................................17

Partial Loss ……………………………………………………………………….…………. 17

Total Loss ……………………………………………………………………………………17

12.      TRIALS; TECHNICAL
ACCEPTANCE .....................................................................18

Trials.........................................................................................................................................18
Technical
Acceptance................................................................................................................19

13.      DELIVERY OF THE
VESSEL......................................................................................20

Delivery.....................................................................................................................................20
Documents to be provided to the
Purchaser................................................................................20

14.      EXTENSION OF TIME FOR DELIVERY; PERMISSIBLE
DELAY...........................21

Causes of
Delay.........................................................................................................................21
Notices......................................................................................................................................22
Permissible
Delay.......................................................................................................................23

15.      DELAY IN
DELIVERY.................................................................................................23

Delay in
Delivery........................................................................................................................23

16.      DEFECTS AND BUILDER'S
GUARANTEE...............................................................24

Guarantee
Period.......................................................................................................................24
Remedy of
Defects....................................................................................................................24
Assignment of Subcontractors'
Guarantees.................................................................................26
Assignment of Builder's
Guarantee.............................................................................................26

g uarantee
Engineer...................................................................................................................26
17.      DEFAULT BY THE
PURCHASER..............................................................................26

Events of Purchaser's
Default ....................................................................................................26
Termination by the
Builder..........................................................................................................27

Application of Proceeds………………………....…………………………………………….28

18.      DEFAULT BY THE
BUILDER.....................................................................................29

Events of Builder's
Default.........................................................................................................29
Termination by the
Purchaser.....................................................................................................30
Non-payment by the
Builder......................................................................................................30

19.      PATENT INDEMNITY; INTELLECTUAL
PROPERTY........................................31
20.      OWNER FURNISHED
EQUIPMENT..................................................................... 31
21.      TAXES AND
DUTIES................................................................................................33
22.     
ASSIGNMENT............................................................................................................33
23.      PRIORITY OF
DOCUMENTS..................................................................................33
24.      LIMITATION OF LIABILITY; MUTUAL
INDEMNITIES ..................................34

Limitation of
Liability..................................................................................................................34
Mutual
Indemnities.....................................................................................................................34

25.     CONTRACT (RIGHTS OF THIRD PARTIES) ACT
1999......................................35

26.     
NOTICES.....................................................................................................................35
27.     
LAW.............................................................................................................................36
28.     
DISPUTES...................................................................................................................36
30.      ENTIRE
AGREEMENT.............................................................................................38
31.     
EFFECTIVENESS.......................................................................................................38

This CONTRACT is made this
 

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, 11th 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;

            "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

“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. 11-1093,
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 Crew Habitability on Offshore
Installations – ABS Class notation HAB.

(l)     

American Bureau of Shipping Guide for Certification of Lifting Appliances – ABS
Register of Lifting Appliances

(m)     

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

(n)     

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

(o)     

The Republic of the Marshall Islands MI-293, Mobile Offshore Drilling Unit
Standards – ABS Statement of Fact

(p)     

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

(q)     

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).

(r)     

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

(s)     

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

(t)     

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

(u)     

IEEE Standard No. 45 “Recommended Practice for Electrical Installation
Shipboard”

(v)     

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

(w)     

ILO Convention 92 & 133 on Crew Accommodation.

(x)     

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

(y)     

International Telecommunications Union (ITU) Radio Regulations, 2004

(z)     

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

(aa)     

American Petroleum Institute API Spec 4F –Drilling and Well Servicing
Structures, 2nd Edition

(bb)     

American Petroleum Institute API Spec 7F –Oil Field Chain and Sprockets, 7th
Edition

(cc)     

American Petroleum Institute API RP 7G – Drill Stem Design and Operating Limits,
16th Edition

(dd)     

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

(ee)     

American Petroleum Institute API Spec 16C –Choke and Kill Systems, 1st Edition

(ff)     

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

(gg)     

American Bureau of Shipping Guidance Notes on the Application of Ergonomics to
Marine Systems

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 Two Hundred Eighty Million and Five Hundred Thousand
(US$280,500,000.00) (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.

 

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 Purchaser prior to the change of Subcontractor or
supplier.

     

Obligations Unaffected

5.10      Nothing in this Clause shall affect the other obligations of the
Builder under this Contract nor diminish the responsibility of the Builder in
respect of the Materials, design or workmanship required hereunder. It is in
this context expressly agreed and understood that the Builder shall, at its
expense, seek the necessary assistance from each of its subcontractors and
suppliers to ensure that the correct procedures are adopted and implemented with
regard to the installation, commissioning and testing of all Materials,
equipment and systems incorporated within the Vessel.

6.     MODIFICATIONS

6.1     The work to be performed under this Contract includes all work, services
and supplies as set out in the Specifications. The Purchaser shall have the
right, at any time, to request that reasonable change(s) (“Requested Change(s)”)
be made to the work and/or the Specifications (“Purchaser’s Modifications”),
provided however if such change(s) would affect the scope of the work so as to
impact Builder's commitments or if the Purchaser and the Builder cannot agree on
the lump sum prices or extension of time applicable for such change(s), the
Builder shall be entitled not to perform the same and the Purchaser undertakes
not to make or pursue any claims thereof. Save as provided in Clause 6.10
hereunder, no such changes shall be undertaken or performed until a written
Variation Order, in the form of that attached hereto as Appendix IIIA has been
executed by the Builder and the Purchaser, reflecting the agreement of the
parties to any increase in the Contract

 

 Price, weight increases and/or extension of the Delivery Date resulting from
any such modifications or changes.
     
6.2     If any modification or change necessitates an increase or decrease in
the quantity or quality of the services, equipment, or labor to be furnished by
the Builder under this Contract, then the Contract Price shall be increased or
decreased accordingly and confirmed by way of a Variation Order.
 
6.3      If any modification or change necessitates an increase or decrease in
the quantity or quality of the materials to be furnished by the Builder under
this Contract, then the Contract Price shall be increased or decreased
equivalent to the increase or decrease in the price of such materials. Any
adjustment of the Contract Price shall be confirmed by a Variation Order.
 
6.4     If any modification or change necessitates an adjustment or change in
the time agreed for completion of the work, then the Delivery Date shall be
reassessed and adjusted accordingly. Such changes shall be confirmed with a
Variation Order.

6.5     All Variation Orders shall include, but will not necessarily be limited
to, the following details:
 
(a)     a description of the work to be performed;
 
(b)     specification of the materials and equipment to be supplied and/or used;
 
(c)      a detailed schedule for the performance of the work;
 

(d)     subject to the work having been performed on a time and materials basis,
the cost, including copies of the applicable subcontractor's quotations;

(e)     the effect on the Contract Price, if any;
 
(f)     the additional time required, if any; and
 
(g)     subject to the work having been performed on a lump sum or fixed price
basis, the

timing or schedule for payments.

      Statutory Modifications

6.6     In the event of any Statutory Modification giving rise to a change in
the requirements under applicable rules, regulations and requirements for the
Vessel (a “Required Change”), the Builder shall without delay, give notice to
the Purchaser, which notice shall also advise the Purchaser of any adjustments
to the Contract Price and/or adjustment of the Contractual Delivery Date or any
other provisions of this Contract which the Required Change reasonably
necessitates.
 
6.7     On the basis of such notification, the Purchaser shall no later than
seven Working Days thereafter elect, by notice in writing to the Builder, to:-

(a)     authorise the Required Change and agree to the adjustments notified by
the Builder, in which case the Builder shall construct the Vessel in accordance
with the Required Change; or

(b)     apply for a waiver of compliance with the Required Change in accordance
with the provisions of Clause 6.8 below.

 

     If within seven (7) Working Days after such notification the Purchaser has
made no election as aforesaid, then the Purchaser shall be deemed to have
authorised the Required Change and agree to adjustments to the Contract Price
and/or adjustment to the Contractual Delivery Date to the extent outlined in the
notification from the Builder.
 

      Waivers of Compliance

6.8     The Purchaser may apply for a formal waiver of compliance with a
Required Change from the body having power to grant such waiver if the Purchaser
considers that the operation of the Vessel in its intended service would permit
such waiver. In applying for any waiver, the Purchaser may call upon the Builder
for assistance and the Builder will provide reasonable co-operation to the
Purchaser in this respect.

     

     If no waiver has been obtained and notified by the Purchaser to the Builder
within twenty (20) Working Days (or such other period as may be agreed between
the parties) of the receipt by the Purchaser of the Builder’s notice referred to
in Clause 6.6 above, the Purchaser shall be deemed to have authorised the
Required Change and to have agreed to the adjustments notified by the Builder,
in which case the Builder shall construct the Vessel in accordance with the
Required Change. Before the expiry of such time period, the Builder shall
continue with the construction of the Vessel in accordance with the Required
Change but it shall, in so doing, use reasonable endeavours to minimise any
costs and loss of time which might arise if a waiver were obtained. The
Purchaser will meet the Builder’s additional cost incurred in such interim
period until a waiver is obtained.

Builder’s Request for Modification

6.9 If the Purchaser's remarks or amendments on Plans submitted by the Builder
or other requests for performance of work, are not part of the Builder's
obligations under this
Contract, the Builder shall not proceed to implement these additional works but
shall issue a notice to the Purchaser setting out in sufficient detail of a
requested modification (“Builder’s Requested Change”) and any adjustment to the
Contract Price and/or Contractual Delivery Date and/or any other provision of
this Contract and/or Specifications which the Builder requires.

6.10 On the basis of such notification, the Purchaser shall no later than ten
(10) Working Days thereafter elect, by notice in writing to the Builder, to:-

a.     agree to the adjustments notified, in which case the Builder shall
construct the Vessel in accordance with the Builder’s Requested Change;
 
b.     request the Builder to withdraw the Builder’s Requested Change, in which
case it shall be withdrawn and the Vessel shall be built without reference to
the same; or

c.     disagree with the adjustments in the Builder’s Requested Change detailing
the extent of and reasons for disagreement, in which case the disagreement shall
be settled by the Parties through negotiation, failing which the dispute so
arising shall be determined in accordance with Clause 28.5. The Builder shall
continue with the construction of the Vessel in the meantime as if a Variation
Order has been signed by both Parties in accordance with Clause 6.11, provided
that such adjustment shall not exceed a value (as determined by the Builder) of
US$100,000 per incident and US$1,000,000 in aggregate.
 

     If within ten (10) Working Days after such notification the Purchaser has
made no election as aforesaid, then the Builder’s Requested Change and
adjustments notified to the Purchaser shall be deemed to have been accepted by
the Purchaser.

 

      Variation Orders

6.11     The Parties’ agreement to undertake Requested, Required Changes or
Builder’s Requested Change shall be evidenced only by a written Variation Order
in the form of that attached hereto as Appendix IIIA, which is to be executed by
the Builder and the Purchaser.

     Pricing of Modifications
 

6.12     In relation to Purchaser’s Modifications, Statutory Modifications and
to Builder’s Requested Change as aforesaid, the Builder’s quotations in respect
of any increase in the Contract Price relating thereto shall, if requested in
writing by the Purchaser, be calculated on a “time and materials” basis, in
relation to which the Builder shall apply the following parameters:

a.     

rates shall be charged at the agreed hourly, tonnage and other rates set out in
Appendix IV;

b.     

the cost of all Materials shall be charged at the documented cost to the Builder
of the same (inclusive of the costs of delivery of those Materials to the
Shipyard). Builder shall be entitled to a handling fee of 10% to the documented
Material cost of Purchaser’s Modifications.

In respect of costs not set out in Appendix IV, the Purchaser and the Builder
shall negotiate in good faith to reach an agreement on such price for the
modifications which shall reflect the level of pricing in the Contract Price.
 

Amounts due under such Variation Orders which are calculated on a time and
material basis shall be taken as completed and accepted and paid as specified in
the Variation Order.

Substitution of Materials

6.14     If at any time during the construction of the Vessel , any Materials
are not available or in short supply then, subject to the prior approval in
writing of the Purchaser (which shall not be unreasonably withheld) and, where
necessary, of the Classification Society, the Builder may use or install other
Materials provided that such other Materials used or installed in substitution
for those specified are equivalent in quality to those specified, and meet the
requirements of the Classification Society and the Mandatory Regulations.
 
 
     

Third Party Subcontractors

6.15     Unless with the express consent in writing of the Builder, the
Purchaser shall not appoint any subcontractor and/or specialist (save and except
suppliers of Purchasers’ Supplies or subcontractors hired to work on Purchasers’
Supplies) to perform works of any nature. Such subcontractor and/or specialist
must at all times comply with the Builder’s safety and insurance requirements
and all relevant statutory rules and regulations in force at the time. A
surcharge of ten percent (10%) of the invoice of subcontractors and specialists
(save and except suppliers of Purchasers’ Supplies or subcontractors hired to
work on Purchasers’ Supplies) will be paid by the Purchaser to the Builder when
Builder includes said surcharge in the written consent to Purchaser. The
Purchaser shall be responsible for and shall indemnify the Builder against any
injury or death,

loss, liability or damage suffered by or due to the negligence, omission or
default of such subcontractor or specialist, or the Authorised Representatives
or Supervisors, or the Purchaser’s crew referred to in Clause 12.4. Builder
shall schedule all Purchaser-provided services and subcontractors for
installation, start-up and commissioning of Owner Furnished Equipment per
Section 19 of the Specifications, and shall use best efforts to avoid delays in
the schedule or additional charges for standby resulting from Builder’s
scheduling of services for installation, start-up and commissioning of this
equipment.

7.      INSPECTION

      Authorised Representative and Supervisors

7.1     The Purchaser may send to and maintain at the Builder’s Yard, at the
Purchaser’s own cost and expense, a representative duly authorised in writing by
the Purchaser (“Authorised Representative”) whose name and scope of authority
shall be notified in writing to the Builder. The Authorised Representative shall
have the right to retain supervisors (“Supervisors”) permanently at the Shipyard
during all times until Delivery. The Builder shall furnish the Authorised
Representative and Supervisors with reasonable and safe access to work areas at
the Shipyard and the premises of the Subcontractors for, and permit and afford
every facility to, the Authorised Representative and Supervisors from time to
time and at all times whilst work is proceeding to examine and inspect the work
being done under this Contract and every part thereof, together with the
Materials being used or about to be used thereon, and to call for and witness
such tests as may be required. To this end, the Builder shall provide for the
Authorised Representative and Supervisors with such accommodation and facilities
to be agreed, but no less than twenty-five (25) work stations/offices.

7.2      In addition to the Authorised Representative and Supervisors, the
Purchaser may, as approved by the Builder, from time to time employ and engage
(at the cost and risk of the Purchaser and subject to Clause 6.15) the services
of specialists for the installation and commissioning of Owner Furnished
Equipment on site.

7.3     The Authorised Representative and Supervisors shall have the right to
attend all tests, trials and inspections of the Vessel, her machinery and
equipment. The Builder shall give notice to the Authorised Representative and
Supervisors in advance of the date and place of such tests, trials and
inspections in accordance with the provisions of the Specifications, such notice
to be not less than three (3) Working Days in respect of tests, trials and
inspections to be undertaken at the Shipyard. In respect of tests, trials and
inspections where the service engineers, specialists and suppliers of OFE are
required, Builder shall inform the Authorised Representative and Supervisor of
the dates of such tests, trials and inspections twenty (21) days prior to the
tentative dates of such tests, trials and inspections. The Builder shall confirm
with the Authorised Representatives and Supervisors not less than five (5)
Working Days prior to such tests, trials and inspections. Failure of the
Purchaser or its Authorised Representative or Supervisors to be present at such
tests, trials and inspections after due notice as above provided shall be deemed
to be a waiver of the Purchaser's right to be present.

7.4      The Builder shall carry out in compliance with the Specifications all
the Trials of the Vessel and commissioning of the Materials which are detailed
therein with the objective of demonstrating that the same are in accordance with
the requirements of the Specifications and that all of her systems function in
accordance therewith. Any Materials or workmanship (other than Owner Furnished
Equipment) found to be faulty or inadequate shall be replaced or made good by
the

Builder prior to Delivery, at its expense and without additional expense to the
Purchaser, by suitable and sound Materials and workmanship. 

 7.5   Nothing done or omitted to be done by or on behalf of the Purchaser under
this Clause shall be deemed to be a waiver of any objection to, or an acceptance
of, faulty or inadequate Materials or workmanship, or an admission that any
Materials or workmanship are of the standard required for due performance of
this Contract.

7.6    The Authorised Representative and Supervisors shall be deemed to be
employees of the Purchaser and not the Builder. The Builder shall be under no
liability to the Authorised Representative and Supervisors for death, personal
injury or damage to their property during the time when they are engaged in the
duties contemplated under this Contract either on the Vessel or within the
premises of the Builder or its Subcontractors.

7.7   The Purchaser shall undertake and assure that the Authorised
Representative and Supervisors shall be fluent in English and carryout their
duties in accordance with accepted offshore construction practice and in such a
way as to avoid any unnecessary increase in building cost, delay in the
construction of the Vessel, and/or any disturbance to the construction schedule
of the Builder. The Purchaser shall promptly on request by the Builder replace
any Authorised Representative or Supervisor who does not comply with this Clause
7.7.

  

                8.       PROJECT PLAN; PROGRESS CONTROL AND REPORTING

      Project Plan

8.1     The Vessel is intended to be constructed and completed in accordance
with the project plan (the “Project Plan”) which shall be submitted to the
Purchaser within thirty (30) days from the Effective Date of this Contract. The
Project Plan shall contain the following:

(a)     

dates of delivery of the Owner Furnished Equipment;

(b)     

the time table for construction of the Vessel (including an electronic copy
compatible with Microsoft Project); and

(c)     

the lists of Tests and Trials (to be provided as outlined in Clause 12.1).

8.2     During the course of performance of this Contract the Builder shall
submit to the Purchaser on a monthly basis, commencing on the date falling
thirty (30) days after the Effective Date:

a.     

a status report on the Vessel 's construction as compared with the Project Plan,
including the critical path including an updated Project Plan in an electronic
format compatible with Microsoft Project;

b.     

a report setting out the actual progress in performance of this Contract during
the previous month as compared with the Project Plan;

c.     

a list of Purchaser's Modifications, Builders’ Requested Changes, and Statutory
Modifications (if any) agreed during the previous month; and

d.     

a report showing man hours spent and recordable injuries (safety report).

8.3     The Builder shall take monthly progress digital photographs illustrating
the progress of the Vessel ’s construction up to and including trials and
delivery. The Builder shall also supply the Purchaser with sufficient number of
photographs (size: approximately 18 x 24 cms) depicting the final stage of the
Vessel as delivered: this set will be at least 25 percent colour prints. One (1)
set of standard transparencies and one (1) set of electronic copies will be
supplied, free of charge to the Purchaser. Additional copies of photographs and
transparencies will be made available by Builder, at the Purchaser’s request and
expense. This Clause 8.3 shall not in any way limit the Purchaser’s right to
take photographs of the Vessel’s construction.

     

                                     9.              TITLE

9.1  Title to the Vessel shall vest with the Builder until Delivery and shall
pass to the Purchaser upon Delivery. Subject to the provisions of this Contract,
title to the Owner Furnished Equipment shall, however, remain with the Purchaser
at all times.

 

                                        10.            RISK AND INSURANCE

     Risk

10.1  The Vessel and all Materials (not including Purchasers’ Supplies save as
set out in Clauses 20.4 and 20.5) shall remain at the sole risk of the Builder
until Delivery.

     Insurance

10.2  From the time of Contract signing until the Vessel is completed, delivered
to and accepted by the Purchaser, the Builder shall, at its own cost and
expense, keep the Vessel and all machinery, materials and equipment either
delivered to the Shipyard or being handled by Builder for the Vessel or built
into, or installed in or upon the Vessel (including all appurtenances and
components and all Owner Furnished Equipment), fully insured.

10.3  The amount of such insurance coverage shall, up to and including the date
and time of delivery of the Vessel, be in an amount at least equal to, but not
limited to, the aggregate of the payments made by the Purchaser to the Builder
and the value of any Owner Furnished Equipment delivered to the Shipyard, which
Owner Furnished Equipment shall not exceed a delivered value of US$226,000,000.

10.4   The policy referred to hereinabove shall be taken out in the joint names
of the Builder and the Purchaser and all losses under such policy shall be
payable to the Buider and/or the Purchaser in accordance with their respective
interests. Any deductible under this insurance policy shall be for the account
of Builder.

10.5     Notwithstanding the above, the Purchaser shall compensate the Buider
for the increased insurance cost and expense under or pursuant to any part of
this Article, if any, incurred by the Builder due to the Purchaser’s default,
Permissible Delays, or Owner Furnished Equipment exceeding the delivered value
set forth in Clause 10.3.

10.6     The Purchaser shall ensure that all persons invited or sent by the
Purchaser into the Shipyard or the Subcontractor’s premises shall be properly
insured against personal injuries and death and damage to properties, and shall
furnish the Builder promptly, upon request, with certified copies of the
policies or insurance certificates and the originals shall be made available to
the Builder, its employees or agents for inspection at all reasonable times. The
Purchaser agrees that the Builder may decline the admission of such person to
the Shipyard if copies of such insurance policies or insurance certificates are
not furnished as required.
 

10.7     The Builder's obligation to insure the Vessel hereunder shall cease and
terminate forthwith upon delivery thereof and acceptance by the Buyer.

 

10.8     In addition, from the time of Contract signing until the completion,
delivery and acceptance of the Vessel, the Builder and its contractors and
subcontractors shall, at their own cost, maintain insurances customarily taken
by shipyards.
 

     

                 11.     LOSS OR DAMAGE TO THE VESSEL        

11.1     Partial Loss:
 

In the event the Vessel shall be damaged by any insured cause whatsoever prior
to acceptance and Delivery thereof by the Purchaser and in the further event
that such damage shall not constitute an actual or a constructive total loss of
the Vessel, the Buider and/or Purchaser shall apply the amount recovered under
the insurance policy referred to in Clause 10.2 to the repair of such damage,
and the Purchaser shall accept the Vessel under this Contract if completed in
accordance with this Contract and Specifications.

11.2     

Total Loss:

Should the Vessel sustain loss or damage prior to Delivery hereunder such that
it is either conceded by the insurers liable therefore, or determined by a court
of competent jurisdiction, that the Vessel has become a total loss, actual,
constructive, arranged or compromised, then the Builder and the Purchaser shall
within twenty-one (21) Working Days thereof by the mutual agreement between the
parties hereto, either:

(i)     Proceed in accordance with the terms of this Contract, in which case the
amount recovered under said insurance policy shall be applied to the
reconstruction of the Vessel's damage, provided the parties hereto shall have
first agreed in writing as to such reasonable postponement of the Delivery Date
and adjustment of other terms of this Contract including the Contract Price as
may be necessary for the completion of such reconstruction; or

(ii)     Cancel the Contract in which case the Builder shall:
 

(a)     refund promptly to the Purchaser in full the aggregate amount of
instalments of the Contract Price already paid by the Purchaser provided that
such amounts have been received by the Builder from the insurance proceeds; and

(b)     return to the Purchaser all Owner Furnished Equipment which have not
been lost.

If the Parties hereto fail to reach agreement as contemplated under Clause 11.2,
above, within 21 days after the Vessel is determined to be an actual or
constructive total loss, the provisions of Clause 11.2(ii) above shall apply.

11.3     Save as specifically provided to the contrary in this Contract, the
Parties' obligations under this Contract shall thereupon cease and terminate.
 

  

             12.         TRIALS; TECHNICAL ACCEPTANCE                    

12.1  Within twenty one (21) Working Days after submission by Builder, but no
earlier than three hundred sixty-five (365) days after the Effective Date of
this Contract, the Purchaser shall approve comprehensive testing and trials
programmes covering Tests and Trials to be submitted under Clause 8(i)(c)
(approval not to be unreasonably withheld) and the full scale Test and Trials
described in the Specifications (including the Inclining Test and Sea Trials)
are referred to in this Contract as “Trials”.

12.2 The Trials shall be conducted at the risk and expense of the Builder
(except as provided in Clause 12.4) who shall provide and pay for the personnel
necessary for the safe management of the Vessel during the same. The Builder
shall also provide and pay for all necessary ballast and fresh water and shall
meet all other costs required by it to carry out the Trials. The fuels,
lubricants and consumable stores required for the Trials shall be specified,
supplied and paid for by the Builder, who shall upon Delivery be entitled to
reimbursement from the Purchaser of the value (based on actual cost) of such
fuels, lubricants and consumable stores on board at Delivery. The Trials shall
be carried out at the Builder’s facility in Singapore or Singapore waters where
applicable. The course of the Sea Trials shall be determined by the Builder.

12.3  The Builder shall give notice to the Purchaser in advance of the date and
place of the Trials, such notice to be not less than twenty (21) days prior to
the tentative dates of the Trials. The Builder shall confirm the date and place
of commencement of each of the Trials with the Purchaser not less than five (5)
Working Days prior to such Trial. Failure of the Purchaser or its Authorised
Representative or Supervisors to be present at such Trials after due notice as
above provided shall be deemed to be a waiver of the Purchaser's right to be
present.

Trials

12.4     The Trials shall have the objective of permitting the Builder to
demonstrate fulfilment of the requirements for the Vessel as set forth in the
Specifications. The Purchaser shall be allowed (at its own cost and risk and
provided that they first sign any insurance waivers required) to maintain a
shadow crew and other necessary personnel on board the Vessel during the trials
to observe the sea/marine Trials and to familiarise themselves with the Vessel
and its operation.

 

12.5     Should the weather conditions at the time scheduled for the Trials be
such that they cannot be carried out properly, the Builder shall postpone them
or such part of them as necessary to the earliest possible time when suitable
weather conditions occur to ensure that all readings and results are obtained.
Any delay to the Trials caused by such unfavourable weather conditions shall
operate to postpone the Contractual Delivery Date by the period of delay
involved and such delay shall be deemed to be Permissible Delay as defined in
Clause 14.3.

12.6   If during the Trials any breakdown occurs which entails interruption or
irregular performance and the breakdown can be repaired by the normal means
available on board, this shall be done as soon as possible and the trial shall
be continued after repairs are completed. Any delays arising out of the Owner
Furnished Equipment shall be deemed to be Permissible Delays as defined in
Clause 14.3.

12.7   On completion of the Trials all defects or omissions found in the Vessel
shall be remedied and made good by the Builder, and the machinery closed up by
the Builder without expense to the Purchaser.

     
Technical Acceptance

12.8  The Builder shall notify the Purchaser in writing of the results of the
Trials and shall, where the same is appropriate, confirm to the Purchaser that
the Vessel conforms to the requirements of the Contract and Specifications. The
Purchaser shall, within five (5) Working Days of receipt of the Builder's notice
as aforesaid, advise the Builder in writing of its technical acceptance of the
Vessel in accordance with the procedure set out in the Specifications
(“Technical Acceptance”) if it conforms with the Contract and Specifications.

12.9  If, however, the results of the Trials demonstrate that the Vessel or any
part thereof does not conform to the requirements of this Contract and/or the
Specifications, the Builder shall thereupon take the necessary steps to correct
such non-conformities and, upon completion of such works, the Builder shall
advise the Purchaser who shall, in the reasonable exercise of its discretion, be
entitled to require the Builder to undertake further trials of the Vessel; in
such event the Builder shall give the Purchaser reasonable notice of such
further trials. Any delays arising out of the Owner Furnished Equipment shall be
deemed to be Permissible Delays as defined in Clause 14.3.

 

12.10 Upon satisfactory completion of such remedial works and/or trials, the
Purchaser shall, within five (5) Working Days after receipt of a further notice
from the Builder notify the Builder of its Technical Acceptance of the Vessel if
it conforms with the requirements of the Contract and Specifications.

12.11  If the Purchaser fails to notify the Builder in writing of its Technical
Acceptance or otherwise of the Vessel within the periods as provided above the
Purchaser shall be deemed to have accepted the Vessel .

12.12     The Purchaser's Technical Acceptance of the Vessel as above provided
shall preclude the Purchaser from refusing Delivery of the Vessel as hereinafter
provided, if the Builder complies with the procedural requirements for Delivery
of the Vessel as provided in Clause 13 hereof.
 
12.13     The Purchaser shall not refuse Technical Acceptance of the Vessel by
reason of any nonconformity which does not impair the safe or efficient
operation of the Vessel or which is minor or unsubstantial in terms of normal
rig-building practice. The decision of the Classification Society (for vessel
nonconformities) and/or original equipment manufacturer (for equipment
nonconformities) shall be taken as the final decision should the opinions of the
Builder and Purchaser differ as to whether a non-conformity impairs the safe
operation of the Vessel or is minor. The Builder shall remain obliged to correct
or remedy such nonconformity as soon as reasonably practicable. In any case, all
Certification, Registration and Operating documentation required for the safe
operation of the Vessel shall be submitted to the Purchaser prior to Technical
Acceptance.

13.     

DELIVERY OF THE VESSEL

     Delivery

13.1    The Vessel shall be delivered by the Builder to the Purchaser safely
afloat secured in safe waters in or around Singapore or another mutually agreed
location ready for ocean tow or load-out for dry tow as approved by the
Purchaser’s underwriters' surveyors, on a date falling on or before 15 January
2011, except that, in the event of Permissible Delay as defined in Clause 14
hereof, (and as provided for elsewhere herein) the aforementioned date shall be
postponed accordingly. The aforementioned date, or such later date to which the
requirement to deliver may be postponed, is herein called the "Contractual
Delivery Date" or “Delivery Date”.

13.2  Delivery shall take place on a Banking Day to be nominated by the Builder
following Technical Acceptance of the Vessel by the Purchaser with not less than
three (3) Working Days' advance notice to the Purchaser. The Builder shall be
entitled to claim as Permissible Delay any day falling between expiry of three
(3) Working Days’ notice and the earliest Banking Day on which the Vessel can be
delivered up to a maximum of two days of Permissible Delay. Delivery shall be
effected by the execution by the Parties of a Protocol of Delivery and
Acceptance in the form set out in Appendix IIIB, acknowledging delivery by the
Builder and acceptance thereof by the Purchaser.

13.3  The Builder warrants and represents to the Purchaser that at the time of
Delivery title to the Vessel and every part thereof shall pass to the Purchaser
free and clear of any and all liens, claims, mortgages or other encumbrances
upon it and in particular, but without limitation, that she shall be free of all
burdens in the nature of imposts, taxes or charges imposed by any liabilities
arising from the construction of the Vessel or from its operation on Trials or
otherwise (“Warranty”).

     Documents to be provided to the Purchaser

13.5     The Builder shall as a condition of Delivery provide to the Purchaser
the following documents:-

a.     

Protocol of Trials;

b.     

Records of inventory of the Vessel's equipment including spare gear and the like
as detailed in the Specifications (including manufacturer warranty information
for Materials supplied by Builder);

c.     

Records of any and all fuels, lubricants, consumable stores and fresh water
supplied pursuant to this Contract by either the Builder or the Purchaser
together with such quantities of the same as remain on board at Delivery;

d.     

All certificates (including Class and other regulatory certificates) required to
be furnished by the Builder prior to or upon Delivery of the Vessel pursuant to
the Specifications and as specified in Appendix V. It is agreed that if
certificates are not available at the time of Delivery, provisional or interim
certificates shall be accepted by Purchaser and final certificates shall be
furnished as promptly as possible;

e.     Declaration of Warranty of the Builder in accordance with Clause 13.3
above;

f.     

The following technical documentation:-

f.1.     

Four (4) copies and one (1) reproducible of all the “As Built” drawings of the
Vessel which the Builder has in its possession..

f2.     Four (4) copies of complete documentation and instructions (Operation
and Maintenance) books covering Builder supplied Materials.

f.3.     

Four (4) sets of Preliminary Operating Manuals and Instruction Books (according
to the MODU CODE in effect at the time of Delivery). The Purchaser will assist
the Builder with operational experience and input in preparing such Operating
Manuals.

f.4.     

Four (4) copies of a maintenance guide including all drawings.

f.5.     

One (1) copy of all the test and commissioning trials and results which have
been done prior to delivery.

f.6.     

Lightship weight and centre of gravity of lightship weight calculations.

f.7.     

The certificates listed in Appendix V.

13.6     

The documents listed in sub-clauses 13.5.f.1 to 6 above are also to be supplied
in an electronic format (Tribon 2D, AutoCad, CadWorx, Microsoft Office or in PDF
Format) or as otherwise agreed between the Parties.

14.     

EXTENSION OF TIME FOR DELIVERY; PERMISSIBLE DELAY

     Causes of Delay

14.1      If at any time the Delivery of the Vessel is delayed due to war or
other hostilities or preparations therefore, blockade, revolution,
insurrections, civil commotion, riots, strikes or other labour disturbances
(excluding labour disturbances limited to Builder’s personnel), sabotage,
lockouts, plague, SARS or other epidemics, quarantines, import embargoes imposed
by any government authorities, or requirements or intervention of government
authorities, or acts of princes or rulers, changes in government authorities,
rules and regulations, or due to Acts of God, including but not limited to
earthquakes, tidal waves, or typhoons, hurricanes, windstorms, lightning or
other abnormal weather conditions, explosions, collisions or stranding, shortage
or late delivery of Materials (arising from force majeure events similar to
those set out herein affecting the availability of materials required by
Subcontractors, or delivery of Materials from the Subcontractors), defects in
Materials, machinery or equipment which could not have been detected by the
Builder using reasonable care, casting or forging rejects which could not have
been detected by the Builder using reasonable care, unusual delays caused by
Classification Society or other bodies whose documents are required which are
considered unusual by both the Builder and the Purchaser, prolonged failure,
shortage or restriction of electric current, oil or gas or destruction of or
damage to the Shipyard or works of the Builder or its Subcontractors by any
causes herein described or loss or damage to the Vessel  or any part thereof, or
any other similar events or circumstances  which the Builder is not reasonably
able to prevent or foresee, the Contractual Delivery Date shall be postponed for
the period of time during which construction, Trials or delivery of the Vessel 
or any step which is a precondition to delivery of the Vessel is directly
delayed by the same provided that the Builder shall take all reasonable steps to
mitigate any delay.

     Notices

14.2 Upon the occurrence of any of the events listed in sub-clause (1) above,
the Builder shall:-

a.     

within seven (7) Working Days of the date on which it became aware of the event,
give the Purchaser notice in writing of the occurrence of the event;

b.     

as soon as possible thereafter, and in any event not more than seven (7) Working
Days after the giving of the said notice, submit to the Purchaser a statement in
writing, specifying as far as possible, with full particulars, the nature and
the cause of the event, the effect on the item involved, the likely overall
effect computed from the Project Plan upon the Contractual Delivery Date and the
steps which are being taken by it to mitigate any delay which may result from
the event;

c.     within five (5) Working Days after the date on which it becomes aware
that the event is at an end, give the Purchaser notice in writing of the date
when the event ended; and

d.     within seven (7) Working Days of the date of the Builder's notice under
sub-paragraph (c), notify the Purchaser of the period of time by which it claims
the Contractual Delivery Date of the Vessel should be extended by reason of the
event. The Purchaser shall be deemed to have accepted the claim unless it
objects in writing within a further five (5) Working Days of receipt of such
notice

     
Permissible Delay

14.3  Delays on account of such causes specified in (a) Clause 14.1 above or (b)
Clauses 6, 12.5, 12.6, 12.9, 17.2 or 20.4 or 20.8 hereof and any other delay
caused by non-fulfilment by the Purchaser of its obligations hereunder or any
other delays of a nature which under the terms of the Contract permit
postponement of the Delivery shall be defined herein as "Permissible Delay" and
shall extend the Contractual Delivery Date for any delay caused thereby

14.4  If the construction, Trials or Delivery of the Vessel is delayed by more
than 270 days due to reasons set out in Clause 14.1, either the Builder or the
Purchaser may terminate this Contract by notice. Such notice shall be effective
from receipt thereof by the Purchaser or the Builder, as the case may be.

                                          15.     

DELAY IN DELIVERY

     Delay in Delivery

15.1  In the event that Delivery should be delayed beyond midnight local time of
the forty-fifth (45th) day following the Contractual Delivery Date, the Builder
shall pay to the Purchaser by way of liquidated damages for loss of use of the
Vessel the amounts set out in sub-clause 2 below.

15.2  If the delivery of the Vessel is delayed, then, in such event, beginning
at twelve o’clock midnight on the forty-sixth (46th) day following Contractual
Delivery Date, the Builder shall pay to the Purchaser as agreed liquidated
damages and not by way of penalty, the sum of USD75,000 per day for each day of
delay up to the seventy-fifth (75th) day following the Contractual Delivery
Date. If the delivery of the Vessel is delayed, then, in such event, beginning
at twelve o’clock midnight on the seventy-sixth (76th) day following Contractual
Delivery Date, the Builder shall pay to the Purchaser as agreed liquidated
damages and not by way of penalty, the sum of USD150,000 per day for each day of
delay up to the one hundred and fifth (105th) day following the Contractual
Delivery Date. If the delivery of the Vessel is delayed, then, in such event,
beginning at twelve o’clock midnight on the one hundred and sixth (106th) day
following Contractual Delivery Date, the Builder shall pay to the Purchaser as
agreed liquidated damages and not by way of penalty, the sum of USD300,000 per
day for each day of delay up to a maximum amount of 5% of the Contract Price.
The Builder’s liability to pay liquidated damages for delay shall represent the
Builder’s only liability to the Purchaser for delay in delivery of the Vessel
beyond the Contractual Delivery Date.

If Delivery should not have occurred prior to the expiry of 270 days (including
any delay caused by reasons set out in Clause 14.1) from the Contractual
Delivery Date the Purchaser may elect to terminate this Contract by notice in
writing to the Builder. If the Purchaser elects to terminate this Contract, then
the Purchaser shall give notice in writing to the Builder, in which case Clause
18.2 shall apply.

The Purchaser shall have no other right or remedy, and the Builder no obligation
or liability, in respect of late delivery of the Vessel, howsoever caused,
except as provided in this Clause 15.2, and whether or not this Contract is
terminated.

15.3     The Builder may, at any time after the expiration of the aforementioned
270 days of delay in Delivery, if the Purchaser has not served notice of
rescission as provided in Clause 18.2 hereof, notify the Purchaser of the
earliest date on which it can effect Delivery in accordance with this Contract
and the Specification (the “Revised Delivery Date”) and demand in writing that
the Purchaser shall make an election either (a) to terminate the Contract, in
which case the Purchaser shall, within fifteen (15) Working Days after such
demand is received, notify the Builder of its intention to terminate this
Contract or (b) to consent to Delivery on or before the Revised Delivery Date so
notified by the Builder. The Purchaser shall in such latter circumstance remain
entitled to all liquidated damages which would otherwise have been payable by
the Builder hereunder but if the Vessel is not delivered by the Revised Delivery
Date, the Purchaser shall have a further right of rescission upon the same terms
and conditions as hereinabove provided. If the Purchaser fails to revert within
15 Working Days of the Builder’s notice Purchaser shall be deemed to have
consented to the Revised Delivery Date.
 
15.4     It is expressly understood and agreed by the Parties that if the
Purchaser terminates the Contract for any reason, the Purchaser shall not be
entitled to any liquidated or other damages.

                                      16.     

DEFECTS AND BUILDER'S GUARANTEE

     Guarantee Period

16.1  The Builder guarantees the Vessel for a period of twelve (12) months (“the
Guarantee”) from Delivery against all defects in Materials or workmanship or non
conformity with the Specifications ("Defects"). The aforesaid period of twelve
(12) months from Delivery shall be known herein as the "Guarantee Period". The
guarantee provided herein excludes defects arising after Delivery due to normal
wear and tear or improper handling of the Vessel or caused by or aggravated by
omission or improper use or maintenance of the Vessel by the Purchaser its
employees or agents, or is attributable to Owner Furnished Equipment (except as
may be due to defective installation by the Builder).

16.2  The Builder guarantees repairs or replacements to the Vessel made under
the guarantee in Clause 16.1 above for a further period of twelve (12) months
from the date of completion of such repair or replacement but the Builder shall
have no further obligation under Clause 16.1 or this Clause 16.2 after the
expiry of 24 months from Delivery.

     Remedy of Defects

16.3     The Purchaser shall notify the Builder in writing as soon as reasonably
possible and in any event within fourteen (14) days after discovery of any
Defect and the Builder shall only be liable to the Purchaser hereunder where
this requirement has been satisfied. The Purchaser's notice shall include such
particulars as can reasonably be given as to the nature of
such Defect, the date of discovery and the place at which the Vessel can be made
available for earliest inspection by or on behalf of the Builder. The Purchaser
shall furnish to the Builder as soon as practicable copies of any relevant
survey or inspection reports.

16.4     The Builder shall repair or replace any Defect for which the Builder is
liable under this Clause 16. Any parts replaced shall on their removal become
the property of and shall be at the risk of the Builder whilst the replacement
parts fitted to the Vessel shall upon fitting become the property of the
Purchaser.

16.5  The Builder shall execute the necessary work including the carrying out of
any essential dismantling and reassembling with all reasonable despatch in
accordance with the quality standards which are applicable hereunder to the
Vessel's original construction.

16.6  In the event that the Builder is unable to make good any Defect at the
Shipyard, it shall forthwith nominate a yard suitable for such purpose for the
Purchaser's approval (which approval shall not be unreasonably withheld or
delayed), and should the Purchaser consider such yard acceptable the Builder
shall arrange for the making good of the Defect and the carrying out of any
essential dismantling and reassembling at its own expense. Alternatively, and
providing adequate and permanent repairs can be so effected, the Builder shall
have the option of carrying out all such repairs on board the Vessel at sea or
on location, providing such repairs do not interfere with the operation of the
Vessel. It shall in all cases be the Purchaser’s responsibility and expense to
take the Vessel to the place where any work under this Clause is to be carried
out, ready in all respects for the work to be carried out.

16.7  Should the Purchaser not approve (in a case where it is entitled to
withhold approval under Clause 16.6) the yard nominated by the Builder the
Purchaser may elect to have the work referred to above carried out elsewhere
than at the Shipyard, the Purchaser shall nominate a yard acceptable to the
Builder, such acceptance not to be unreasonably withheld. In such case the
Builder shall pay to the Purchaser for repairs and/or replacements such sum as
would equate to the costs of effecting such repairs at the Builder’s yard based
on Builder’s tariff rate for time and material. The Builder may, at its own
expense, have its representative in attendance during execution of the work. The
Purchaser shall ensure that any parts replaced under this sub-clause are
returned to the Builder (if required by the Builder) at the Builder's expenses,
and in such case those parts returned shall on their replacement become the
property of and shall be at the risk of the Builder.

16.8  The Builder shall be liable only for the repair or replacement of the
defective Material or workmanship, and shall have no responsibility or liability
for any defects whatsoever in the Vessel other than as specified in this Clause,
and the sole remedy of the Purchaser in relation to the guarantee given in
Clauses 16.1 and 16.2 is as set out in Clauses 16.3 - 16.8, and (for the
avoidance of doubt), the liability of the Builder under or arising out of this
Clause 16 is also subject to the limitations in Clause 24. The Builder shall not
be responsible for defects in any part of the Vessel, subsequent to the delivery
of the Vessel , arising from any replacement or repair work performed by others,
or for any defects caused by an omission or improper use of the Vessel or its
Materials in excess of specified design limitations or improper maintenance of
the Vessel by Purchaser, its employees or agents or by ordinary wear and tear,
or by perils of the sea, rivers or navigation, or fire or accidents at sea or
elsewhere.

16.9  The Guarantee herein shall replace and exclude any other liability,
guarantee, warranty and/or condition imposed by custom or law or otherwise
including but not limited to:

(a)     

any guarantee, condition, warranty, term or other obligation of the Builder in
relation to the Vessel or anything done or to be done, sold or supplied by the
Builder under this Contract, and whether to her quality, fitness for purpose, or
the exercise of skill and care by the Builder, or otherwise, and whether or not
implied by or arising under statute, common law, custom or course of dealing or
otherwise; and

(b)     

any liability whatsoever of the Builder in relation to the Vessel or defects in
the Vessel, or anything done or to be done, sold or supplied by the Builder
under this Contract (including without limitation, in relation to her
construction and design), howsoever arising including through negligence, and
whether arising in contract, tort or otherwise

     Assignment of Subcontractors' Guarantees

16.10     The Builder agrees upon the expiry of the Guarantee Period to assign
(to the extent to which it may validly do so) to the Purchaser, or as the
Purchaser may direct, all the right, title and interest of the Builder in and to
all guarantees or warranties given by the Subcontractors save insofar as the
same relate to existing claims by the Purchaser against the Builder.

     Assignment of Builder's Guarantee

16.12   It is expressly agreed and understood that the benefit of this Guarantee
shall be capable of assignment by the Purchaser to any assignee.

     Guarantee Engineer

16.13     The Builder shall have the right to appoint a Guarantee Engineer to
serve on the Vessel as its representative for such portion of the warranty
period as the Builder may decide at the Builder’s costs and risks. The Purchaser
and its employees shall give the Guarantee Engineer full co-operation in
carrying out his duties as the representative of the Builder on board the
Vessel. The Purchaser shall accord the Guarantee Engineer the treatment
reasonably comparable to the Vessel’s Chief Engineer and shall provide him with
suitable accomodation and subsistence on the Vessel at no cost to the Builder
and/or the Guarantee Engineer.
 

                                   17.     

DEFAULT BY THE PURCHASER

     Events of Purchaser's Default

17.1  The Purchaser shall be deemed to be in default of performance of its
obligations under this Contract in the following cases:-

a.     

if the Purchaser fails to pay the amount of any of the instalment of the
Contract Price or any other payment due to the Builder on the due date for
payment thereof;

b.     

if the Purchaser fails to take delivery of the Vessel in accordance with Clause
13;

c.     

if the Purchaser commits a material breach of this Contract; or

d.     

if an order or an effective resolution is passed for the winding up of the
Purchaser (otherwise than for the purposes of a reconstruction or amalgamation
previously approved by the Builder) or if a receiver is appointed over the whole
or any part of the undertaking or property of the Purchaser or if the Purchaser
becomes insolvent or suspends payment generally of its debts or ceases to carry
on its business or makes any special arrangement or composition with its
creditors.

and fails (in the case of (a) and (c) only) to rectify such default within
fourteen (14) calendar days after written notice of breach from the Builder.

17.2  If the Purchaser is in default as provided in (a) or (b) of sub-clause (1)
above or in respect of the payment of any amount due under this Contract, then
without prejudice to any other rights of the Builder, the Purchaser shall be
liable to pay interest at one and a half percent (1.5%) above LIBOR on the
unpaid amount (or, in the case of default under Clause 17.1(b) above, on the
sums due on delivery of the Vessel) from the day on which the same became due to
the Builder (or the date the Vessel was tendered for delivery, as the case may
be) up until the date of actual payment thereof. All interest hereunder shall be
calculated on the basis of a three hundred and sixty (360) day year and
compounded monthly and shall be paid on the date when payment is made of the sum
on which such interest is accrued.

In any event of default by the Purchaser, the Purchaser shall also pay all
charges and expenses incurred by the Builder in consequence of such default.
 

In the event the Purchaser fails to pay sums in the aggregate of USD 1 million
or more due to the Builder under or in connection with this Contract within
thirty (30) days of its due date, the Builder shall have the right, upon giving
written notice to the Purchaser to cease work on the Vessel and following a
period of suspension of twenty (20) days, be entitled to terminate this Contract
provided that if the Purchaser has provided a banker’s guarantee for the payment
of such sums, the Builder shall continue with the construction of the Vessel in
accordance with the terms of this Contract. Without prejudice to all its rights
and remedies available at law or in equity, the Builder shall be entitled to
claim as Permissible Delay within the meaning of Clause 14 any period of time
during which the construction or completion of the Vessel has been delayed in
consequence of the Purchaser's default, or the Builder’s cessation of work, as
aforesaid, and all costs incurred during such time of cessation of work.

     Termination by the Builder

17.3   If the Purchaser is in default under Clauses 17.1 or 17.2, the Builder
shall have the right at its sole discretion to terminate this Contract by giving
written notice to the Purchaser.

 

17.4   If this Contract is terminated under Clause 17.3:

 

a.     

the Builder shall cease to be under any further obligation to construct and
deliver the Vessel to the Purchaser under this Contract;

b.     

any of the Owner Furnished Equipment installed into Vessel or in custody of
Builder shall become the sole property of Builder, and if not yet built into or
installed into the Vessel may be sold by Builder on the same terms (mutatis
mutandis) as set out in Clause 17.5.

c.     

Builder shall be entitled to retain and apply any instalment of the Contract
Price or other monies paid by Purchaser to the Builder on account of this
Contract in accordance with the provisions of Clause 17.6.

17.5  The Builder may, at its option, either complete and sell the Vessel, or
sell the Vessel in an incomplete state. Any such sale shall be by public auction
or private sale, on such terms and conditions as the Builder deems fit subject
to the Builder's duty to use reasonable endeavours to obtain a fair price. If
the Builder does not either complete and sell the Vessel, or sell the Vessel in
an incomplete state, the Builder may at its option sell and/or utilise any of
the Materials as it sees fit, including the use of those Materials in other
works.

17.6  Application of Proceeds

a.     

If the Vessel is sold in a completed state, the proceeds of sale of the Vessel
together with the proceeds of any sale of the Owner Furnished Equipment referred
to in Clause 17.4.b received by the Builder shall be applied in the following
priority: (i) to payment of all reasonable expenses directly attending such sale
or any prior attempted sales, including legal fees and legal costs; (ii) all
cost and expenses incurred in maintaining the Vessel in preparation for such
sale; and (iii) to payment of the balance of the Contract Price and all sums due
by the Purchaser to the Builder (after the deduction of the amounts of any
instalments of the Contract Price paid and of other monies retained by Builder
under Clause 17.4.c) plus interest on that balance at a rate of One and a half
percent (1.5%) above LIBOR running from the respective due dates of the unpaid
instalments to the date of application.

b.     

If the Vessel is sold in an incomplete state, the proceeds of sale received by
the Builder shall be applied in the following priority: (i) to all reasonable
expenses directly attending such sale and any other prior attempted sales,
including attorneys fees and legal costs; (ii) all cost and expenses incurred in
maintaining the Vessel in preparation for such sale; and (iii) to payment of all
material, labour and other costs incurred by the Builder in accomplishing
construction of the Vessel to its incomplete state together with a reasonable
profit on such costs, and all sums due by the Purchaser to the Builder, less the
amount of all instalments of the Contract Price and other monies retained by the
Builder under Clause 17.4.c.

c.     

If the Builder is unable to sell the Vessel in an incomplete state and either
sells and/or utilises the Materials, the proceeds of sale received by the
Builder for the sale and/or the cost of Materials so utilised shall be applied
in the following priority: (i) to all reasonable expenses directly attending
such sale and any other prior attempted sales, including attorneys fees and
legal costs; (ii) all cost and expenses incurred in maintaining the Materials in
preparation for such sale; and (iii) to payment of all Material, labour and
other costs incurred by the Builder in procuring and storage of the Materials,
engineering, management and administrative costs in the procurement of Materials
and preparation for construction of the Vessel together with a reasonable profit
on such costs, and all sums due by the Purchaser to the Builder, less the amount
of all instalments of the Contract Price and other monies retained by the
Builder under Clause 17.4.c

17.7  In any of the above events of sale:

a.     

If the proceeds of sale of the Vessel and any Owner Furnished Equipment sold by
the Builder, or the proceeds of sale and/or costs credited in respect of the
Materials, exceed the sums against which such proceeds are to be applied as
aforesaid, the Builder shall, no later than sixty (60) Days after the date of
Builder’s receipt of such proceeds, pay such excess amount to Purchaser,
provided, however, that the amount of such payment to Purchaser shall in no
event exceed the total amount of instalment(s) of Contract Price and other
Purchaser monies held by the Builder hereunder, if any, and shall, at the same
time, permit Purchaser (at its option) to either remove, at Purchaser’s cost,
any Owner Furnished Equipment (if any) in Builder’s custody which are not built
into or installed on or in the Vessel or sold by Builder pursuant to Clause
17.4.b, or pay to Purchaser their second hand market value.

b.     

If the proceeds of sale of the Vessel and any Owner Furnished Equipment sold by
the Builder, or the proceeds of sale and/or costs credited in respect of the
Materials, are insufficient to pay the total amount payable by the Purchaser as
required in Clauses 17.6a, b and c, whichever is applicable, Purchaser shall pay
to Builder the amount of such deficiency, plus interest at the rate of 1.5%
above LIBOR thereon running on and from the date of the sale closing until the
date the full amount of said deficiency and interest is received by the Builder.
If the Purchaser shall have paid to Builder the full deficiency amount and
Interest thereon, Purchaser shall have the same rights of removal or payment for
Owner Furnished Equipment as described in Clause 17.6.a.

17.8  At the Builder’s option, the value of any unsold Owner Furnished Equipment
may be used as a credit against any deficiency amount owed by Purchaser under
Clause 17.7.b. In this case, those Owner Furnished Equipment are not required to
be returned to the Purchaser.

17.9  In any case where Builder is required or entitled to dispose of Owner
Furnished Equipment, the Purchaser shall be deemed to have transferred title to
Owner Furnished Equipment to the Builder with full title guarantee, free of all
liens, charges, mortgages and encumbrances.

              18.     

DEFAULT BY THE BUILDER

     Events of Builder's Default

18.1.     

In the event that any of the following events should occur:-

a.     

the Builder shall commit any material breach of this Contract and shall have
failed to commence action to remedy the same within fourteen (14) Working Days
from receipt by the Builder of written notice from the Purchaser specifying such
breach; or

b.     

the making of any order or the passing of an effective resolution for the
winding-up of the Builder (other than for the purposes of reconstruction or
amalgamation which has been previously approved in writing by the Purchaser), or
the appointment of a receiver of the undertaking or property of the Builder, or
the insolvency of or a suspension of payment by the Builder, or the cessation of
the carrying on of business by the Builder, or the making by the Builder of any
special arrangement or composition with creditors of the Builder,

the Purchaser may elect to terminate this Contract. If the Purchaser elects to
terminate this Contract, then the Purchaser shall give notice in writing to the
Builder that the Purchaser regards this Contract as terminated in which case the
provisions of sub-clause 2 below shall apply. Such notice shall be effective
from receipt thereof by the Builder.

     

Termination by the Purchaser

 

18.2  If, in accordance with (1) the provisions of sub-clause 1 above or (2)
Clause 15.2 above or (3) Clause 14.4 above or (4) any other right it may have by
reason of the Builder's breach of contract, the Purchaser exercises its right to
terminate this Contract, then the Builder shall promptly repay to the Purchaser
the amount of all monies paid by the Purchaser on account of the Contract Price
together with interest thereon at the rate of one and a half percent (1.5%)
above LIBOR from the date when such monies were paid by the Purchaser to the
Builder up to the date of the repayment thereof Provided Always that in the
event of a termination in accordance with Clause 14.4 the Builder shall not be
required to pay the aforesaid interest on the Contract Price. All interest
hereunder shall be calculated on the basis of a three hundred and sixty (360)
day year and compounded monthly and shall be paid on the date when payment is
made of the sum on which such interest is accrued. The Builder shall also
redeliver to the Purchaser at the Shipyard all of the Owner Furnished Equipment
delivered to the Builder. The Builder shall have no other obligations or
liability to the Purchaser save for those contained in this Clause 18.2.

     Non-payment by the Builder

 

18.3  Should the Builder default in payment of any amount due under this
Contract (including, without limitation, payment of liquidated damages), then
the Builder shall pay to the Purchaser interest thereon at the rate of one and a
half percent (1.5%) over LIBOR from the date when the amount became due to the
Purchaser to the date of the payment thereof. All interest hereunder shall be
calculated on the basis of a three hundred and sixty (360) day year and
compounded monthly and shall be paid on the date when payment is made of the sum
on which such interest is accrued.

18.4  It is expressly understood and agreed by the Parties that if the Purchaser
terminates this Contract for any reason, the Purchaser shall not be entitled to
any liquidated damages, or to any other damages or other remedy, except as
expressly provided in this Contract.

                  19.     

PATENT INDEMNITY ; INTELLECTUAL PROPERTY

19.1  The Builder shall without limit of time defend, indemnify and hold
harmless Purchaser from and against any claim, suit or proceedings brought
against the Purchaser relating to the infringement of any of the rights set out
in this sub-clause by reason of the Purchaser's possession, ship or operation of
the Vessel (excluding the Owner Furnished Equipment) provided that the Purchaser
shall promptly notify the Builder of any such claim, suit or proceeding, and not
make any admission or other step prejudicial to the defence, and shall permit
the Builder to take control and settlement of such claim, suit or proceedings;
provided however no settlement which purports to acknowledge on the Purchaser’s
behalf the validity of any patent shall be entered into without the Purchaser’s
written consent (not to be unreasonably withheld or delayed). The Purchaser
shall provide information and assistance to the Builder as may be reasonably
necessary to aid in the conduct and settlement of the claim, suit or
proceedings. The Purchaser shall be entitled to be informed about the settlement
through its selected representatives and/or attorneys.

19.2  The indemnity provided herein by Builder shall not apply to equipment and
materials from the suppliers and vendors in the “Makers List”. Builder shall
obtain from each of these suppliers and vendors an assignable indemnity in
favour of Builder for patent infringement and the rights of Builder therein
shall be assigned to Purchaser on the Delivery of the Vessel.

19.3  The Builder retains all rights with respect to the Specifications, plans
and working drawings, technical descriptions, calculations, test results and
other data information concerning the design and construction of the Vessel and
hereby grants a non-exclusive licence to the Purchaser to use such rights for
the purposes of maintaining, upgrading and operating the Vessel.

19.4  The Purchaser shall without limit of time defend, indemnify and hold
harmless Builder from and against any claim, suit or proceedings brought against
the Builder relating to the infringement of any of the rights set out in this
sub-clause by reason of the Builder’s possession, installation or use of the
Owner Furnished Equipment provided that the Builder shall promptly notify the
Purchaser of any such claim, suit or proceeding, and not make any admission or
other step prejudicial to the defence, and shall permit the Purchaser to take
control and settlement of such claim, suit or proceedings; provided however no
settlement which purports to acknowledge on the Builder’s behalf the validity of
any patent shall be entered into without the Builder’s written consent (not to
be unreasonably withheld or delayed). The Builder shall provide information and
assistance to the Purchaser as may be reasonably necessary to aid in the conduct
and settlement of the claim, suit or proceedings. The Builder shall be entitled
to be informed about the settlement through its selected representatives and/or
attorneys.

                 20.     

                 OWNER FURNISHED EQUIPMENT

20.1  The Purchaser shall supply and deliver its own equipment at its own risk
and expense, which shall not form part of the Contract Price, all materials and
articles as specifically listed in Appendix VI (collectively known as "Owner
Furnished Equipment") to the Builder at the Yard for installation on the Vessel
by the Builder. Handling of Owner Furnished Equipment in the Builder’s
facilities, and installation on the Vessel by the Builder are included in the
Contract Price.

20.2     All Owner Furnished Equipment shall be delivered and in a condition
ready for installation on the Vessel in accordance with the Project Plan. The
Owner Furnished Equipment shall be in good condition and fit for its intended
purposes for integration and installation in the Vessel.

20.3      Intentionally left blank.

20.4     Unless instructed otherwise by the Purchaser, the Builder will inspect,
or cause to be inspected, jointly with the Purchaser, all Owner Furnished
Equipment as soon as reasonably practicable upon the arrival of the Owner
Furnished Equipment at the Shipyard, but no later than twenty (20) days, after
the Builder's receipt thereof and shall notify the Purchaser of any patent
defects discovered on the external packaging of the Owner Furnished Equipment
within five (5) days of the Builder's inspection. Upon such notification, should
the Purchaser confirm the Owner Furnished Equipment be accepted notwithstanding
any such defect or if the Purchaser fails to revert to the Builder within ten
(10) days from such notification of defect as to whether such Owner Furnished
Equipment can be employed, the Builder shall proceed to employ such Owner
Furnished Equipment and the Purchaser shall be deemed to have assumed all risk
of and liability for any loss, damage or liability to the Vessel that may result
by reason of failure or defects in such Owner Furnished Equipment including all
time that may be lost as a result of such failure shall count as Permissible
Delay.

20.5  The Builder shall provide the Purchaser with storage space at the Shipyard
for the Owner Furnished Equipment, including suitable covered storage where
required. In the event that the Owner Furnished Equipment is provided at a date
earlier than the date agreed in the Project Plan, and there is no storage space
available at the Shipyard, the Purchaser shall bear the costs of storing the
Owner Furnished Equipment outside the Shipyard. The Builder shall be responsible
for storing and handling the Owner Furnished Equipment after their delivery to
the Shipyard and shall install them on the Vessel at the Purchaser's instruction
and Builder’s expense unless otherwise provided herein or agreed by the Parties
hereto, provided always, that the Builder shall not be responsible for the
quality, efficiency and/or performance of any of the Owner Furnished Equipment.
The Builder shall ensure that the Purchasers’ Supplies are fully covered by
Builder's insurance while in store at the Shipyard at all times and until
Delivery in accordance with Clause 10.2 above.

20.6  The Purchaser shall be entitled to appoint personnel for the purpose of
supervision, inspection and testing of the Owner Furnished Equipment as
necessary. Such personnel shall have the right, at no cost to the Purchaser, to
utilize the Builder's equipment and the Shipyard facilities and services
(subject to their availability) when performing such inspection and testing.
Such persons will be considered as Purchaser's Authorised Representatives for
the purpose of this Contract.

20.7  If any Owner Furnished Equipment is delivered late or is defective the
Builder's obligations pursuant to this Contract shall still apply provided that
construction of the Vessel has not reached a stage where such installation would
result in delayed Delivery of the Vessel. Such delays shall be considered
Permissible Delays under Clause 14.3.If there are increased costs in
installation, the Parties may agree to a Variation Order for completion of such
works.

20.8  Intentionally left blank.

20.9  The Builder shall not be liable for the cost incurred for the repair of
the Owner Furnished Equipment occasioned by defects, defective material or poor
workmanship or failure to perform, or by damage caused during transportation to
the Shipyard.

20.10     The Builder may, if so requested by the Purchaser, repair or adjust
the Owner Furnished Equipment pursuant to a Variation Order provided always that
the Purchaser remains responsible for the, design and engineering suitability of
the same.

20.11     In order to facilitate the installation of the Owner Furnished
Equipment, the Purchaser shall furnish the Builder with all necessary
specifications, drawings, instruction books, manuals, test reports and
certificates relating to the Owner Furnished Equipment or if the same are
unavailable, the Purchaser shall instruct the Builder accordingly.

20.12     In the event of termination of this Contract by the Purchaser for any
reason whatsoever, the Builder shall, return to the Purchaser all Purchasers’
Supplies, so far as still in existence, save as otherwise agreed in Clause 17.
 

                           

21.                    TAXES AND DUTIES

21.1  The Builder shall pay or cause to be paid all taxes, duties, fees and
stamp duties of whatsoever nature imposed on the Builder in Singapore in
connection with the execution and performance of this Contract, excluding any
taxes, duties, fees and stamp duties imposed upon the Owner Furnished Equipment
up to the time Owner Furnished Equipment are delivered to the Builder, which the
Purchaser shall pay.

    

                        22.                    ASSIGNMENT

22.1  Neither party may, without the prior written approval (such approval not
to be unreasonably withheld) of the other party, assign the benefit of this
Contract. The Builder hereby further approves the assignment by the Purchaser of
the benefit, but not the obligations of this Contract to a financial institution
in connection with its purchase of the Vessel.

         

                 23.                   PRIORITY OF DOCUMENTS

23.1  The Appendices hereto shall form an integral part of this Contract as if
the same were expressly set out herein.

23.2  If there is any discrepancy between the following documents priority
between them shall be as follows:-

a.     

between the terms of this Contract (excluding the Specifications) and the terms
of the Specifications, the terms of the former shall prevail;

b.     

Between the Specifications and the Plans and Drawings, the Specifications shall
prevail;

c.     

between one set of Plans and Drawings and another set, the later in date shall
prevail.

24.     

LIMITATION OF LIABILITY; MUTUAL INDEMNITIES

     Limitation of Liability

24.1  Notwithstanding anything to the contrary set forth herein in this
Contract, neither Builder nor the Purchaser shall be liable to the other by way
of indemnity or by reason of any breach of this Contract or of statutory duty or
by reason of tort or otherwise, for any loss of profit, loss of use, loss of
production, loss of contracts, loss or reputation or goodwill or for any
indirect or consequential damage whatsoever that may be suffered by the other
and howsoever the same may have been caused, including without limitation caused
by negligence except for liquidated damages as set out in Clause 15.2.

24.2  Notwithstanding any provision herein to the contrary or inconsistent
herewith except where Clause 11.2 or 18.2 herein applies (in which case the
provisions of Clauses 11.2 and 18.2 shall prevail over this Clause), it is
expressly agreed that the Builder’s liability under this Contract or arising out
of or in connection with its performance or non-performance, irrespective of
whether such liability arises under this Contract or in tort or under statute or
is due to negligence, or pursuant to any other cause, shall not in the aggregate
exceed 10% of the amount of the Contract Price.

     Mutual Indemnities

24.3  In this Clause 24, the “Builder’s Personnel” shall mean all employees,
agents and representatives of Builder and its subsidiaries or affiliated
companies, as well as the employees, agents and representatives of Builder’s
subcontractors and suppliers. The “Purchaser’s Personnel” shall, mutatis
mutandis, have the same meaning.

24.4  The Builder agrees to defend, indemnify and hold the Purchaser free and
harmless from and against any and all claims and/or liabilities (including,
without limitation, the cost of any lawsuit and attorney’s fees) arising in
favour of any of the Builder’s Personnel (or representatives or any survivor of
any of the foregoing) on account of illness of, injury to and/or death of any
such parties or damage to their properties arising out of or in connection with
the work performed pursuant to this Contract, regardless of whether the
Purchaser and/or Purchaser’s Personnel may be wholly or partially or solely
negligent or otherwise at fault.

24.5  The Purchaser agrees to defend, indemnify and hold the Builder free and
harmless from and against any and all claims and/or liabilities (including,
without limitation, the cost of any lawsuit and attorney’s fees) arising in
favour of any of the Purchaser’s Personnel (or representatives or any survivor
of any of the foregoing) on account of illness of, injury to and/or death of any
such parties or damage to their properties arising out of or in connection with
the work performed pursuant to this Contract regardless of whether the Builder
and/or the Builder’s Personnel may be wholly or partially or solely negligent or
otherwise at fault.

                25.               CONTRACT (RIGHTS OF THIRD PARTIES) ACT 1999

25.1     A person who is not a Party to this Contract has no right under the
Contracts (Right of Third Parties) Act 1999 to enforce any term of this
Contract.
 

                 26.     

              NOTICES

26.1  Every notice, consent or approval (individually and collectively called
"Communications" for the purposes of this Clause 26) given or required, whether
expressly or impliedly, under this Contract shall be in writing.

26.2  Communications shall be given by the Purchaser to the Builder as follows:

     Address:      JURONG SHIPYARD PTE LTD
                         29 Tanjong Kling Road
                         Singapore 628054

     Attn:             Mr Don Lee Fook Kang

     Telephone:     +65 6262 7007

     Facsimile:       +65 6262 7243

26.3.     

Communications shall be given by the Builder to the Purchaser as follows:

     Address:     
              

     Attn:          

     Telephone:     

     Facsimile:     
 

                                27.     

                LAW

27.1  The construction, validity and performance of this Contract shall be
governed by, and construed in accordance with, English law.

                              28.                      DISPUTES

28.1     In the event of a claim, dispute or difference arising out of or in
connection with this Contract having arisen or becoming apparent, either Party
may circulate to the other Party’s Chief Executive Officer a memorandum or other
form of statement setting out its position on the matter in dispute and its
reasons for adopting such position. Each such memorandum or statement shall be
considered by the Chief Executive Officer (“CEO”) of the Parties who shall
respectively use their reasonable endeavours to resolve such dispute. A meeting
date and place shall be established by mutual agreement of the CEOs, such date
shall not exceed 45 days from the date of the first memorandum or statement.
 

28.2     If the claim, dispute or difference remains unresolved seven (7)
calendar days following such meeting or in the event of a the failure of the
meeting to be held, such claim, dispute or difference including any question
regarding its existence, validity or termination, shall be referred to and
finally resolved by arbitration in Singapore in accordance with the Arbitration
Rules of the Singapore International Arbitration Centre ("SIAC Rules") for the
time being in force, which rules are deemed to be incorporated by reference in
this clause, by three arbitrators, one appointed by the Builder, one appointed
by the Purchaser and a third appointed jointly by the aforesaid two arbitrators.
The place of arbitration shall be Singapore. The arbitration shall be conducted
in English. The decision and award resulting from such arbitration shall be
final and binding on the Parties. Judgment upon the arbitration award may be
rendered by any court of competent jurisdiction, or application may be made to
such court for a judicial acceptance of the award and an order of enforcement.
Insofar as permissible under the applicable laws, the Parties hereby waive all
rights to object to any action for judgment or execution which may be brought
before a court of competent jurisdiction on an arbitration award or on a
judgment rendered thereon.

28.3      The Purchaser hereby irrevocably acknowledges and agrees that, in the
event of any proceedings pursuant to this Contract, it shall be sufficient to
effect service of process upon the Purchaser by leaving the necessary process
papers at the address specified in Clause 26.3, and such service shall be deemed
due and proper and in compliance with all applicable laws and rules of such
arbitration proceedings.
 

28.4  Without prejudice to sub-clause (1) above and without prejudice to any
express provision contained herein for referral of any matter to an expert, any
dispute or difference of opinion between the Parties relating to conformity of
the construction of the Vessel, Materials or workmanship with this Contract may,
by agreement between the Parties, be referred to the Classification Society,
whose opinion on the matter shall be final and binding upon the Parties hereto.

 

28.5  In the event there is any dispute between the Parties under this Contract
(including claims for modifications under Clause 6 hereof), the Purchaser shall
pay to Builder all undisputed amounts due to the Builder. The Parties will
negotiate in good faith to resolve any such dispute. If the Parties are unable
to resolve the dispute within thirty (30) days before the Delivery of the
Vessel, Purchaser shall, prior to taking Delivery of the Vessel, deposit the
disputed portion of the Contract Price into an interest bearing account in the
joint names of the Purchaser and Builder until the resolution of such dispute in
accordance with Clause 28 hereof. The Party in favour of whom the dispute is
decided shall be entitled to the interest accrued in the said joint account,
which together with the amount thereon, shall then be immediately released and
paid to the said Party.

 

28.6  If the Parties shall fail to agree either (i) to submit the dispute to an
expert or (ii) upon the identity of a mutually acceptable technical expert as
aforesaid, such dispute shall be settled in the manner as defined in sub-clause
2 above.

 

29.     Confidentiality

29.1     In this Contract, the term “Confidential Information” shall mean any
data or information including but not limited to technical information, pricing
information, operational information and all other information whether written,
oral, visual or otherwise contained in any form or material pertaining to the
Contract and the Vessel, communicated to or furnished by one Party to the other
for the purposes of this Contract and during negotiations conducted by the
Parties pursuant to the same. The matters referred to in Clause 19.3 shall be
Confidential Information for the purpose of the obligations of the Purchasers.
 
29.2     Upon receiving any Confidential Information, the Parties shall keep in
confidence and shall not use the Confidential Information or disclose to any
person or entity unless agreed in writing by the other Party: -
 

(a)     

any Confidential Information disclosed by the other Party;

(b)     

that discussions are taking place between the Parties concerning the subject
matter of this Contract; or

(c)     

the identities of any of the Parties

except as otherwise provided in this Clause 29.

29.3     Each Party may disclose Confidential Information to those of its
employees, officers, directors, clients or advisors (the “Authorised Persons”)
where necessary in order to carry out the purposes contemplated herein. Each
Party shall procure that each of its Authorised Persons to whom Confidential
Information is disclosed strictly complies with the terms of this Clause 29 and
shall take all steps available to it to enforce such obligations of
confidentiality.
 

29.4  Each Party acknowledges and agrees that monetary damages are not a
sufficient remedy for any breach of this Clause 29 and that the aggrieved party
shall be entitled to specific performance or injunctive relief (as appropriate)
as a remedy for any breach or threatened breach thereof in addition to any other
remedy available in law or in equity.

 

29.5  This Clause 29 is legally binding during the term of this Contract and
will continue to be binding against each Party and its Authorised Persons for a
period of Five (5) years after Delivery of the Vessel.

 

29.6  The Parties agree to cooperate and coordinate with respect to the timing
and content of any press release regarding the execution or performance of the
Contract.

                                     30.              ENTIRE AGREEMENT

30.1     This Contract constitutes the only and entire agreement between the
Parties and supersedes and replaces any prior written or oral agreements,
representations, statements or understandings between them relating to its
subject matter.

Each Party confirms that it has not entered into this Contract and the
Specifications on the basis of any representation or statement which is not
expressly incorporated into this Contract. Without limiting the generality of
the foregoing, neither Party shall have any remedy in respect of any untrue
representation or statement made to him upon which he may have relied in
entering into this Contract and the Specifications, and a Party’s only remedy
(if any) is for breach of contract. However, nothing in this Contract or the
Specifications purports to exclude liability for any fraudulent statement or
act.

Except as provided in Clause 6, this Contract may not be released, discharged,
supplemented, interpreted, amended, varied or modified in any manner except by
an addendum in writing signed by a duly authorised representative of each of the
Parties to this Contract.

 

31.      EFFECTIVENESS

31.1     This Contract shall become effective (“Effective Date”) upon the
occurrence of the last of the events set out as follows:
 

(a)     

the receipt by the Purchaser of a certified true copy of the resolution for the
approval by the board of directors of the Builder for the Builder to enter into
this Contract;

(b)     

the receipt by the Builder of a certified true copy of the resolution for the
approval by the board of directors of the Purchaser for the Purchaser to enter
into this Contract;

(c)     

the receipt by the Builder of the payment of the full amount of the first
instalment (Clause 4.1) by the Purchaser;

(d)     

a Guarantee (in a form as contained in Appendix X) from the Builder's parent
company, SembCorp Marine, Ltd. ("Parent") guaranteeing the refund required by
the Builder under this Contract, and the receipt by Purchaser of a certified
true copy of the resolution for the approval by the board of directors of Parent
of the guarantee as provided herein; and

(e)     

execution of an Option Agreement (in a form as contained in Appendix XI)
granting to the Purchaser one (1) option requiring the Builder to design,
construct, build, launch, equip, test, commission and complete and to sell and
deliver to the Purchaser one (1) Friede & Goldman ExD Millenium Mobile Offshore
Semi-Submersible Drilling Unit similar to the Unit on similar terms and
conditions as set out therein.

31.2  In the event that any of the conditions are not fulfilled by a date
falling thirty (30) days after the execution of this Contract or such other
dates as Parties may agree in writing, this Contract shall forthwith terminate.
Thereafter, this Contract shall cease to be of effect and neither Party shall
have any claim against the other.

IN WITNESS WHEREOF the Parties hereto have caused this Contract to be duly
executed the day and year first above written.
 
                    
Atwood Oceanics Pacific Limited                    Jurong Shipyard Pte. Ltd
 
/s/ Anthony H. Dyne                              …………………………….
 
By:     Anthony H. Dyne                         By:
Title:     Director                                     Title:
Date:     January 2,
2008                        Date: