Document:

ex10_1.htm

EXHIBIT 10.1

Confidential Treatment Requested.  Confidential portions of this document have been redacted and have been separately filed with the

Securities and Exchange Commission (the “Commission”).

***** Confidential material redacted and filed separately with the Commission.

Dated this 14th day of January 2011

RIG CONSTRUCTION CONTRACT

For 3rd Rig

(Pacific Class 400 jack up drilling rig)

Between

ATWOOD OCEANICS PACIFIC LIMITED

(as “Buyer”)

and

PPL SHIPYARD PTE LTD

(as “Builder”)

PPL HULL NO. P2033

  

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CONTENTS

	
ARTICLE I SUBJECT OF THE CONTRACT

	 	
8

	
ARTICLE II DELIVERY FREE FROM CLAIMS AND LIENS

	 	
9

	
ARTICLE III CONTRACT PRICE AND PAYMENT

	 	
10

	
ARTICLE IV MASTER CONSTRUCTION SCHEDULE

	 	
12

	
ARTICLE V SUBMISSION OF DRAWINGS DURING CONSTRUCTION

	 	
13

	
ARTICLE VI CHANGE IN LAWS, RULES OR REGULATIONS

	 	
15

	
ARTICLE VII PROPERTY

	 	
17

	
ARTICLE VIII TEST AND TRIALS

	 	
18

	
ARTICLE IX DELIVERY

	 	
22

	
ARTICLE X FORCE MAJEURE AND PERMISSIBLE DELAYS

	 	
25

	
ARTICLE XI DAMAGES FOR DELAYS / INCENTIVE FOR EARLY COMPLETION

	 	
28

	
ARTICLE XII OWNER’S REPRESENTATIVE AND BUILDER’S REPRESENTATIVE

	 	
31

	
ARTICLE XIII VARIATIONS

	 	
34

	
ARTICLE XIV INSURANCE OF OWNER’S SERVANTS AND REPRESENTATIVE

	 	
38

	
ARTICLE XV WARRANTIES

	 	
39

	
ARTICLE XVI TAXES AND CHARGES

	 	
42

	
ARTICLE XVII DOCUMENTS TO BE FURNISHED

	 	
43

	
ARTICLE XVIII CONFLICTS BETWEEN CONTRACT, SPECIFICATIONS AND CONTRACT DRAWINGS

	 	
44

	
ARTICLE XIX GOVERNING LAW AND DISPUTE RESOLUTION

	 	
45

	
ARTICLE XX TECHNICAL DISPUTES

	 	
47

	
ARTICLE XXI

	 	  

  

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SUBCONTRACTING AND SUPPLY

	 	
48

	
ARTICLE XXII ASSIGNMENT

	 	
49

	
ARTICLE XXIII INVENTORIES ON THE RIG AT DELIVERY

	 	
50

	
ARTICLE XXIV INSURANCE

	 	
51

	
ARTICLE XXV BUILDER’S AND OWNER’S INDEMNITIES

	 	
54

	
ARTICLE XXVI PATENT INDEMNITIES

	 	
55

	
ARTICLE XXVII USE OF CRANES

	 	
57

	
ARTICLE XXVIII EVENTS OF DEFAULT

	 	
58

	
ARTICLE XXIX COMPLIANCE WITH LAWS

	 	
62

	
ARTICLE XXX LIMITATION ON BUILDER’S LIABILITY

	 	
63

	
ARTICLE XXXI MISCELLANEOUS

	 	
64

	
ARTICLE XXXII EFFECTIVE DATE OF CONTRACT

	 	
66

	
ARTICLE XXXIII NOTICES

	 	
68

 

ANNEX A

Pacific Class 400 Jack Up Drilling Unit Standard Construction Specification (the “Specifications”).

ANNEX B

Schedule of Rates.

 

ANNEX C

Variation Order Form.

 

ANNEX D

Preliminary Construction Schedule.

  

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RIG CONSTRUCTION CONTRACT

This agreement for the construction of a rig (the “Contract”) is made this 14th day of January 2011.

 

BETWEEN

ATWOOD OCEANICS PACIFIC LIMITED incorporated under the laws of the Cayman Islands and having its registered office at M&C Corporate Services Limited, P.O. Box 309GT, Ugland House, South Church Street, George Town, Grand Cayman, Cayman Islands (hereinafter called "Buyer").

AND

PPL SHIPYARD PTE LTD, a Singapore corporation, with its registered office situated at 21, Pandan Road, Singapore 609273 (hereinafter called "Builder").

 

WHEREAS

	
A.

	
Builder has the capability and expertise to design and construct a PPL Pacific Class 400 jack-up drilling unit (the “Rig”) in accordance with the Specifications.

	
B.

	
Buyer desires to procure from Builder and Builder is able and willing to construct and deliver one unit of the Rig to Buyer.

  

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NOW IT IS HEREBY AGREED AS FOLLOWS

 

DEFINITIONS

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

“Affiliate” means any wholly owned subsidiary of Buyer, its holding company or any wholly owned subsidiary of the holding company.

“Article” or “Articles” means the articles herein.

“BFE” means the equipment or materials furnished by Builder.

“Builder” means PPL SHIPYARD PTE LTD.

“Builder’s Representative” means the authorized representative appointed by Builder to act on its behalf pursuant to Article 12.6.

“Buyer” means Atwood Oceanics Pacific Limited.

“Buyer’s Representative” means the authorized representative appointed by Buyer to act on its behalf pursuant to Article 12.1.

“Classification Society” means the American Bureau of Shipping.

“Contract” means the agreement of the parties set out in the Articles herein and the Annexes A to D attached thereto.

“Contract Price” means the amount of the Builder’s compensation for fabricating, outfitting, constructing, testing, completing and delivering the Rig and in performance of the Works as described in Article 3.1.

  

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“Delivery Date” means the date 30 June 2013 and as such date may be amended or extended from time to time in accordance with this Contract.

“First Rig Option Agreement” means the agreement entered into between Builder and Buyer for the purchase of one (1) option rig (3rd rig) dated 1 October 2010 as amended by a supplemental agreement between Builder and Buyer dated 20 December 2010.

“Force Majeure” means the contingencies or circumstances described in Article 10.1.

“Effective Date” means the date when all the conditions under Article 32.2 are met and the Contract becomes effective and legally binding on the parties.

“LIBOR” means the interest rate per annum which Hongkong & Shanghai Banking Corporation, London is offering to prime banks in the London Interbank market for deposits in United States Dollars for a one month period, determined at 11.00am London time, as quoted on the date from which interest is accrued under this Contract.

“OEM” means original equipment manufacturers or vendors who supply any component or equipment forming part of the RIg.

“OFE” means the equipment or materials furnished and delivered to Builder’s shipyard by Buyer at its costs for Builder to incorporate into the Rig.

“Rig” means the Pacific Class 400 jack-up drilling rig as described in the Specifications.

“Specifications” means the B0100-Z100-01 A[1] Revision A[1] dated 5 February 2010 in Annex A and any additions or amendments thereto hereafter agreed between the parties.

  

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“Suspension Notice” means the notice given by Builder pursuant to Article 28.6.

“Termination Notice” means the notice given by Builder pursuant to Article 28.6.

“UNCITRAL” means United Nations Commission on International Trade Law.

“Variation” means any change, addition, alteration or deletion to the Works by way of a Variation Order as agreed between Buyer and Builder as more fully described in Article 13.1.

“Variation Order” means the agreement in writing executed by Buyer and Builder approving a Variation, as described in Article XIII (Variations) in the form set out in Annex C.

“Warranty Period” means the period of twelve (12) months after the delivery by Builder and acceptance by Buyer of the completed Rig or such longer period as is provided for in Article XV (Warranties).

“Works” shall have the meaning set out in Article II (Delivery Free from Claims and Liens).

  

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ARTICLE I

SUBJECT OF THE CONTRACT

	
1.1

	
Builder agrees for the consideration and on the terms and conditions herein set forth, to construct, launch, equip, complete, test and deliver in a good and workmanlike manner one (1) unit of Offshore Jack-up Drilling Rig (hereinafter called "Rig") and bearing Builder's Hull number of P2033 for Buyer at Builder's shipyard in Singapore. The Rig is to be constructed in conformity with this Contract and the Specifications.

  

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ARTICLE II

DELIVERY FREE FROM CLAIMS AND LIENS

	
2.1

	
Builder agrees to perform all work necessary to fabricate, construct, launch, equip, complete and test the Rig, in accordance with this Contract and the Specifications, and to deliver the Rig to Buyer free and clear of all liens, security, interests, claims and encumbrances afloat alongside Builder's shipyard, all of which are herein sometimes referred to generally as the " Works".

 

  

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***** Confidential material redacted and filed separately with the Commission.

ARTICLE III

CONTRACT PRICE AND PAYMENT

	
3.1

	
In full payment for the Rig and as Builder's compensation for fabricating, launching, equipping, testing, completing and delivering the Rig and in the performance of the Works, Buyer agrees to pay Builder a total consideration (hereinafter referred to as the "Contract Price") of United States Dollars ****** only (US$******) provided however that the said Contract Price shall be subject to adjustment in accordance with the provisions of Article XIII (Variations) and this Article III (Contract Price and Payment).

	
3.2

	
The Contract Price shall be paid to Builder in instalments which shall be due and payable as follows:

	
  

	
(a)

	
US$34,400,000 within seven (7) days from the date when all three (3) conditions in clauses 1.2(a), (b) and (c) of the First Rig Option Agreement are fulfilled.

	
  

	
(b)

	
US$****** on delivery ex-Builder’s yard.

	
  

	
(c)

	
US$****** – Provisional Cost Sum (“PC Sum”).

The PC Sum shall be used by Builder to make payments on behalf of Buyer in respect of any purchase at Buyer’s request of loose tools, handling equipment, drill string, and consumables for the Rig, together with the related services for these items provided by the vendors (and all such items and services being negotiated by Buyer with the vendors). Buyer shall be obliged to make payment to Builder within fourteen (14) days of any purchases of the aforesaid items from vendors the cost of the same to put Builder in funds such that Builder will be able to make payment to the

  

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***** Confidential material redacted and filed separately with the Commission.

 

vendors in time. Builder shall only be obliged to make payments to vendors for the aforesaid items from funds making up the PC Sum in its account received from Buyer.  Builder’s obligation in relation to the items in the PC Sum is limited to placing the relevant purchase orders and making payment if required as aforesaid, and Buyer shall be solely responsible for selecting and negotiating with vendors for the purchase of the aforesaid items.

 

Any amount paid by Buyer to Builder in respect of the PC Sum facility shall in the calculation of the closing accounts on delivery of the Rig be a reduction of the Contract Price. Any un-used portion of the PC Sum shall reduce the Contract Price on delivery of the Rig. For the avoidance of doubt, there shall be no refundment of the un-used portion of the PC Sum as the PC Sum facility is a provisional facility.

	
3.3

	
All amounts not paid on due date by Buyer to Builder shall bear interest at United States Dollars LIBOR plus two percent (2%).

	
3.4

	
The Contract Price is inclusive of one percent (1%) commission payable by Builder to Pareto Offshore AS (“Pareto”).  For the purpose of clarification and avoidance of doubt, the said commission is calculated on a price of United States Dollars ****** (US$******) and will be payable by Builder to Pareto from each progress payment received by Builder from Buyer under this Contract in the pro-rated percentage that the one percent (1%) bears to the amount received.

  

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ARTICLE IV

MASTER CONSTRUCTION SCHEDULE

	
4.1

	
A Preliminary Construction Schedule (Annex D) is attached herewith, showing dates for commencement of construction work, key events and delivery of the Rig.  Within thirty (30) days from the Effective Date as defined in Article XXXII (Effective Date of Contract), Builder shall provide to Buyer a Master Construction Schedule (hereinafter sometimes referred to as the “Schedule") which shall set forth in detail:

	
  

	
(a)

	
dates of delivery of the bulk material and equipment;

	
  

	
(b)

	
the time table for construction of the Rig; and

	
  

	
(c)

	
time table for testing and commissioning;

	
 

	
all as per the Specifications.

The Schedule shall be brought up to date as and when there is:

	
  

	
(a)

	
a change in the construction methodology;

	
  

	
(b)

	
a permissible delay as per Article X (Force Majeure and Permissible Delays); and

	
  

	
(c)

	
an extension of time as per Article XIII (Variations).

	
4.2

	
In the event the actual progress of the Works is lagging behind the Schedule, Builder shall within fifteen (15) days of a request from Buyer issue a recovery plan to overcome such lagging so that the Delivery Date shall not be affected.

  

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ARTICLE V

SUBMISSION OF DRAWINGS DURING CONSTRUCTION

	
5.1

	
Builder shall be responsible for the design and construction of the Rig in accordance with the requirements specified in Article I and shall prepare and send in duplicate to Buyer for review and comment if any all detailed construction drawings.

These drawings shall be returned from Buyer duly signed by or on behalf of Buyer and bearing Buyer's comments within a period of thirty (30) calendar days from receipt thereof, failing which Buyer shall be deemed to have accepted the drawings with no comments.

In addition, as from the actual commencement of the construction of the Rig, Builder shall send to Buyer a Plan Progress Schedule (PPS) on monthly basis.

	
5.2

	
Review of the drawings by Buyer shall not relieve Builder of the responsibility for compliance with the Specifications and satisfactory, efficient and safe operation of the Rig or of any parts thereof.

	
5.3

	
Builder shall take monthly progress photographs illustrating the progress of the Rig's construction up to and including trials and delivery.

	
5.4

	
Builder shall also supply Buyer with photographs as provided in the Specifications. Additional copies of photographs and transparencies will be made available by Builder at Buyer's request and expense.

	
5.5

	
Notwithstanding the foregoing, Builder shall not be required to provide or disclose to Buyer for review or comment any design, calculations, drawings, specifications or information relating to the design and construction of the Rig which are proprietary in nature to Builder and/or its subsidiaries. Builder shall also not be required to submit to Buyer for review or comment any workshop sketches such as for example piping spool drawings, steel material nestings, panel/block fabrications and erection sequences.

  

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However, Builder must provide Buyer with any calculation or design that Buyer needs to satisfy customers’/clients’ request for information regarding the system or components. Builder shall not be required to give any design or calculation with regards to legs, hulls, or other items which are proprietary to Builder and OEMs.

For the purpose of clarification, proprietary information would include (but is not limited to) the following categories of information:

	
  

	
(a)

	
basic design and calculation relating to the scantling and performance for the hull, cantilever and drill floor, leg and spud can and helideck;

	
  

	
(b)

	
global analysis for the Rig;

	
  

	
(c)

	
naval architecture aspect of the Rig relating to but not limited to motion analysis etc.;

	
  

	
(d)

	
components designed and manufactured by Baker Marine such as the jacking system, pedestal cranes, and mooring winches;

	
  

	
(e)

	
vendors’ proprietary information relating to design calculation and know-how for their equipment.

 

  

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ARTICLE VI

CHANGE  IN LAWS, RULES OR REGULATIONS

	
6.1

	
Save as provided below, it is recognized that should any changes in any applicable international or governmental laws, rules or regulations be made subsequent to 1 October 2010, that make it necessary to modify the Specifications and/or detailed construction drawings for the Rig in order to achieve the agreed classification notation for the Rig, such modifications shall be treated as a Variation pursuant to Article XIII (Variations).

If any modification referred to above resulting from an announcement made during the performance of the Works would be mandatory in order for the Rig to achieve the agreed classification notation, Builder will carry out the modification at its own cost.

If any modification referred to above resulting from an announcement made during the performance of the Works would not be mandatory in order for the Rig to achieve the agreed classification notation, such modification shall be treated as a Variation pursuant to Article XIII (Variations).

	
6.2

	
When such changes become necessary, Builder shall notify Buyer of any applicable changes including the required extension of time if any to carry out such changes contemplated under this Article. Such changes shall be accepted by Buyer prior to implementation. In the event that Buyer does not accept such changes including the responsibility to pay Builder for the additional costs and/or the need to grant additional time to Builder as required pursuant to Article XIII (Variations), and such changes are required for the construction of the Rig in terms of its certification and compliance to this Contract, Builder shall not proceed with the Variation and shall be relieved and absolved from any obligations or responsibility whatsoever relating to the failure to carry out such changes, and the consequences arising therefrom  shall be solely with Buyer.

  

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ARTICLE VII

PROPERTY

	
7.1

	
The Rig including all materials purchased and/or delivered to Builder’s shipyard for the construction of the Rig (other than OFE and items purchased using the PC Sum as described in Article 3.2, all of which shall be the property of Buyer) shall at all times until delivery of the Rig be the property of Builder.

Risk of loss or damage in respect of the items enumerated in this Article VII (Property) shall remain with Builder until delivery of the Rig pursuant to Article IX (Delivery).

  

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ARTICLE VIII

TEST AND TRIALS

	
8.1

	
Builder shall prepare a programme of tests and trials as per the Specifications.

Builder shall be responsible for the preparation and execution of these tests and trials.

Buyer shall be responsible for the tests and trials of the OFE. if any. Builder shall make available personnel to assist tests and trials on OFE.

All materials, labour, tools, instruments, services, fuel, lubricating oil, hydraulic oil and other items as may be necessary to conduct tests and trials on BFE shall be for the account of Builder.

All materials, vendors personnel, tools, instruments, services, fuel, lubricating oil, hydraulic oil and other items as may be necessary to conduct tests and trials on OFE shall be for the account of Buyer.

Buyer shall purchase any fuel, lubricating oil or consumable stores furnished by Builder at the original documented purchase net price thereof, as evidenced by invoices, and settled in accordance with Article 23.1.

	
8.2

	
All Works accomplished under the Specifications, including the Rig's main machinery, auxiliary machinery, piping, electrical ventilation and other systems will be thoroughly tested, as far as practical during these tests and trials. All tests and trials shall comply with the requirements of the Classification Society.

  

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8.3

	
When the Rig is substantially complete, the jacking tests will take place. An inclining experiment shall be conducted to establish the Rig's lightship weight, center of gravity and metacentric height. Inclining experiment for a sister rig, if any, shall not be carried out.

	
8.4

	
Any defect which may develop or become apparent during the course of the tests and trials and for which Builder is responsible, will be made good and retested by Builder at its expense and to the satisfaction of the Classification Society and Buyer's representative.

	
8.5

	
If Buyer requires any additional tests and trials which is not covered by or is in addition to that provided under the Specifications, and Builder considers in its reasonable opinion in accordance with industry standards and practices that there is no need to carry out such tests and trials, Buyer may nevertheless instruct Builder to proceed with such additional tests and trials.  If any defect is discovered upon carrying out such additional tests and trials, Builder shall rectify such defect and bear the costs of such additional tests and trials.  However, if no defect is discovered upon carrying out such additional tests and trials, Buyer shall bear the costs of such tests and trials incurred by Builder.

	
8.6

	
Buyer's Representative may test the workmanship and materials used in the construction of the Rig and attend and participate in tests and trials on materials and the Rig for which purpose Builder shall give reasonable notice of such tests and trials to Buyer’s Representative. Defects discovered by Buyer’s Representative shall be remedied by Builder. If there is disagreement between Builder and Buyer, the opinion of the surveyor of the Classification Society shall be binding.

	
8.7

	
Tests and trials performed by Buyer’s Representative shall not relieve Builder of any of its obligations hereunder. Such tests and trials performed by Buyer, if any, shall be paid for by Buyer and shall not cause any hindrance to the progress of work of Builder.

  

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8.8

	
In the event of unfavorable weather on the date(s) specified for the tests and trials, the same shall take place on the first available day thereafter that weather conditions permit.  It is agreed that if, during the tests and trials, the weather should suddenly become so unfavorable that orderly conduct of the tests and trials can no longer be continued in the opinion of the Classification Society surveyor, the tests and trials shall be discontinued and postponed until the first favourable weather condition day next following unless Buyer agrees in writing to accept the Rig (or any component part, equipment or system thereof) on the basis of the tests and trials already made before such discontinuance occurred, subject to acceptance by the Classification Society.  Any delay of the tests and trials in excess of forty eight (48) hours caused by such unfavorable weather conditions shall result in an extension of the Delivery Date by the number of days (or portion thereof) the unfavorable weather conditions cause the tests and trials to be delayed beyond forty-either (48) hours, and Builder shall document the delay and the required extension of the Delivery Date shall be confirmed by a Variation Order to be requested by Builder.  Any delay to the Delivery Date under this Article shall always be subject to the delays actually affecting the delivery of the Rig and in no circumstances shall delays under this Article 8.8 postpone the Delivery Date by more than seven (7) days.

	
8.9

	
In the event that Buyer’s Representative is unable to attend on the scheduled date(s) for the tests and trials, provided that Buyer informs Builder within two (2) days of receiving notification of the scheduled date for such tests and trials, Builder shall reschedule the date(s) for tests and trials and shall notify Buyer’s Representative of new date(s) scheduled for tests and trials. Thereafter, Buyer shall be deemed to have waived the Buyer’s Representative’s right to be present, but Buyer may nominate an alternative representative to attend instead of Buyer’s Representative.  In such case, Buyer shall accept the results of such tests and trials or approval of the Classification Society.  The presence or absence of the Buyer’s Representative at any such tests and trials shall not serve to amend, modify or otherwise reduce the obligations of Builder in this Contract.

  

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ARTICLE IX

DELIVERY

	
9.1

	
The Rig shall be delivered by Builder and accepted by Buyer in accordance with this Article IX (Delivery).  Before Buyer accepts delivery of the Rig, the Rig shall have been classed by the Classification Society (as evidenced by the attainment by Builder of an interim classification certificate) as per this Contract and Builder shall have first done the following:­

	
  

	
(a)

	
completed the construction of the Rig in accordance with this Contract and the Specifications;

	
  

	
(b)

	
completed the tests of the Rig as described in the Specifications and remedied at Builder's sole cost and expense any defects discovered in:

	
  

	
(i)

	
Builder's workmanship;

	
  

	
(ii)

	
BFE described in the Specifications; and

	
  

	
(iii)

	
Builder's installation of any equipment on the Rig,

and performed any additional tests necessary to ensure that such defects have been remedied;

	
  

	
(c)

	
delivered to Buyer certificates reflecting completion of the Rig in accordance with the Specifications and this Contract; and

	
  

	
(d)

	
delivered to Buyer all the necessary certificates, either final or preliminary, to clear the Rig through local customs and administrative authorities.

  

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9.2

	
Delivery of the Rig shall be on or before the Delivery Date.

	
9.3

	
The Rig shall be ready for delivery and Buyer shall accept delivery of the Rig when Builder has secured the interim classification certificate. When Builder has already secured the interim classification certificate, Buyer shall not be entitled to reject the Rig by reason of any defect or non-conformity with the Specifications which from the point of view of international standard shipbuilding, offshore, and shipping practice, is of a minor and insubstantial significance not affecting in any way the safety or operability of the Rig, but in which case Builder shall not be released from the obligation to correct and/or remedy such minor or insubstantial items as soon as practicable after the delivery of the Rig.

	
9.4

	
To effect delivery by Builder and acceptance by Buyer of the Rig, Builder and Buyer shall perform the following:­

	
  

	
(a)

	
Builder shall execute a Bill Of Sale in favour of Buyer conveying title of the Rig to Buyer.

	
  

	
(b)

	
Builder shall deliver to Buyer possession of the Rig afloat, at Builder’s shipyard with free access to the open sea, and at a point where ocean-going tugs are allowed and able to take hold of the Rig.

	
  

	
(c)

	
The Contract Price (including any adjustments thereto and including the final instalments) shall have been paid in full by Buyer to Builder before delivery of the Rig to Buyer.

	
  

	
(d)

	
Buyer shall be responsible for registration and documentation of the Rig in the name of Buyer upon the Delivery Date and all expenses incurred with respect thereto shall be paid and be solely for the account of Buyer provided that Builder shall provide all reasonable assistance and documentation that may be necessary for same.  If original certificates are not obtainable at the time of delivery of the Rig, Builder shall furnish Buyer with provisional or interim certificates and as soon as practicable after delivery, Builder shall submit the original certificates to Buyer.

  

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(e)

	
Buyer shall provide to Builder a power of attorney (acceptable to Builder acting reasonably) authorizing a person or persons to accept delivery of the Rig for and on behalf of Buyer.

  

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***** Confidential material redacted and filed separately with the Commission.

 

ARTICLE X

FORCE MAJEURE AND PERMISSIBLE DELAYS

	
10.1

	
If, at any time before the delivery and acceptance of the Rig, either the construction of the Rig or any performance required under the provisions of this Contract and the Specifications as a prerequisite of delivery of the Rig is delayed due to war, blockade, revolution, insurrections, civil commotions, riots, strikes (other than strikes affecting only Builder’s shipyard in Singapore), sabotage, terrorism, lockouts, plague or other epidemics, quarantines, prolonged failure, shortage or restriction of electric current, or import/export embargoes or stop work orders imposed by any government; or due to acts of God including, but not limited to, earthquakes, tidal waves, or typhoons; or by damage or destruction of the shipyard or Works of Builder or its subcontractors or of the Rig, or any part thereof, by fire, flood or other causes beyond the control of Builder; or by delay in deliveries of machinery, equipment or materials supplied by ****** or ****** provided that such machinery, equipment or materials shall have been ordered in due time (based on Builder’s procurement status) by Builder, each of such contingencies shall be deemed to be included in the definition of Force Majeure as used in this Contract, and in the event of delays due to the happening of any of the aforementioned contingencies, the Delivery Date shall be extended for a period of time sufficient to cover such delay. It is agreed, however, that Builder shall make all reasonable efforts to eliminate, resolve or otherwise minimize the effects of Force Majeure.

The Delivery Date may also be extended if the construction of the Rig or any performance required under the provisions of this Contract and Specifications as a prerequisite of delivery of the Rig is delayed by reason of default in performance of this Contract by Buyer or by reason of any act of prevention or breach of this Contract by Buyer.

  

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10.2

	
Delays on account of such causes as specified in Article 10.1,  or any other delay of a nature which under the terms of this Contract {including but not limited to Articles VI (Change in Laws, Rules or Regulations), X (Force Majeure and Permissible Delays), and XIII (Variations)} permits postponement of the Delivery Date shall be understood to be permissible delays, and are to be distinguished from unauthorized delays on account of which Builder is not entitled to any extension of time.

	
10.3

	
All other delays are deemed to be non-permissible delays and unauthorized delays.

	
10.4

	
Within seven (7) days after the date of occurrence of any cause of delay, on account of which Builder claims that it is entitled under this Contract to a postponement of the Delivery Date, Builder shall notify Buyer in writing of the date such cause of delay occurred and the reasons therefor. Within fourteen (14) days after the date of occurrence of any cause of delay, on account of which Builder claims that it is entitled under this Contract to a postponement of the Delivery Date, Builder shall notify Buyer of the impact of such delay on the Delivery Date.  Within twenty one (21) days after the date of occurrence of any cause of delay, on account of which Builder claims that it is entitled under this Contract to a postponement of the Delivery Date, Builder shall give a written report to Buyer on the reasons for the postponement of the Delivery Date.

Likewise, within twenty one (21) days after the date of ending of such cause of delay, Builder shall notify Buyer of the date such cause of delay ended. Builder shall also provide Buyer with a revised construction schedule showing the maximum time period by which the time of delivery is postponed by reason of such cause of delay, with all reasonable dispatch, after such cause of delay has ended.  Buyer shall upon receipt of any such notification from Builder provide its comments and reasons for objection if any, within twenty one (21) days, and if no such comments or reasons for objection is received by Builder, Buyer shall be deemed to have accepted Builder’s claim for postponement of the Delivery Date.

  

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Failure of Buyer to object to Builder’s claim for postponement of the Delivery Date within twenty one (21) days after receipt by Buyer of such notice of claim shall be deemed to be a waiver by Buyer of its right to object to such postponement of the Delivery Date.

	
10.5

	
In any event that delays caused by Force Majeure accumulate in aggregate to 90 days, then Builder or Buyer shall be entitled to terminate this Contract and the provisions of Article 28.4 and 28.5 shall apply.

  

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ARTICLE XI

DAMAGES FOR DELAYS / INCENTIVE FOR EARLY COMPLETION

	
11.1

	
Builder agrees to prosecute the Works diligently in an expeditious and workmanlike manner. Builder agrees that subject to the provisions of this Contract {including but not limited to Articles VI (Change in Laws, Rules and Regulations), X (Force Majeure and Permissible Delays), and XIII (Variations)}, or by reason of any default in performance of Buyer or any act of prevention or breach of this Contract by Buyer, it shall make delivery of the completed outfitted and tested Rig on the Delivery Date.

	
11.2

	
In the event delivery of the completed Rig is delayed beyond the Delivery Date, then Builder shall pay to Buyer as liquidated and agreed damages, the amount of United States Dollars Fifty Thousand Dollars (US$50,000) per day for each and every day the delivery of the Rig is so delayed more than thirty (30) days (grace period) beyond the said Delivery Date, subject to a maximum of United States Dollars: Five Million Only (US$5,000,000). Such liquidated damages shall be Buyer’s sole and exclusive remedy for delay in the delivery of the Rig and shall be in lieu of all damages, which Buyer may suffer by reason of such delay, it being further understood and agreed that Builder shall not be responsible or liable to Buyer or any third party for any direct, indirect and/or consequential loss or damage (including but not limited to loss of use of the Rig, loss of time, loss of production, loss of profit or earnings, financing costs, loss of other contracts etc.), occasioned by delay in the delivery of the Rig, except for such aforementioned liquidated damages.

  

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***** Confidential material redacted and filed separately with the Commission.

	
11.3

	
Should delivery occur before the Delivery Date following a request in writing from Buyer for earlier delivery of the Rig, then in such event, the final instalment of the Contract Price due under Article 3.2 shall be increased by the sum of US$****** for each full day of early delivery subject to a cap of US$******, beginning on the day of actual delivery of the Rig until the Delivery Date (the “Bonus”).

In the event that within 60 days after the Rig commences its first operation after delivery of the Rig, Buyer suffers a loss of revenue exceeding US$****** by reason of down-time on the Rig due to a fault of Builder, Builder shall be required to return the bonus to Buyer to cover Buyer’s loss, but subject always that the amount to be returned shall not exceed the amount of the bonus received by Builder from Buyer.

	
11.4

	
Deficiency in variable Loads:

Pursuant to the Specifications, the Jacking Variable Load shall be 2,268 metric tons (“MT”), the Drilling Variable Load shall be 3,401 MT, and the Floating Variable Load shall be 2,268 MT. The Jacking Variable Load, the Drilling Variable Load, and the Floating Variable Load are hereafter also referred jointly or separately as the “Variable Loads”.

If either one or more of the Variable Loads are not achieved, the Contract Price may, subject to the decision of Buyer and as an alternative to Buyer requiring the deficiency to be remedied, be reduced as follows:

	
  

	
(a)

	
For each full MT reduction in the Floating Variable Load of more than 50MT but maximum 150MT, a reduction of the Contract Price with US$15,000 per MT of reduced capacity.

  

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(b)

	
For each full MT reduction in the Jacking Variable Load of more than 50MT but maximum 150MT, a reduction of the Contract Price with US$15,000 per MT of reduced capacity.

	
  

	
(c)

	
For each full MT reduction in the Drilling Variable Load of more than 50MT but maximum 150MT, a reduction of the Contract Price with US$15,000 per MT of reduced capacity.

	
  

	
(d)

	
The reductions pursuant to (a) to (c) above are not mutually exclusive. The total reduction of the Contract Price pursuant to this Article shall in any event not exceed US$ 2,250,000.

Every and all downward adjustments of the Contract Price provided in this Article shall be made by Builder on delivery of the Rig.

  

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ARTICLE XII

OWNER’S REPRESENTATIVE AND BUILDER’S REPRESENTATIVE

	
12.1

	
Within fourteen (14) days of the Effective Date as described in Article XXXII (Effective Date of Contract), Buyer shall appoint and notify Builder in writing the name of Buyer's Representative.  Buyer may from time to time appoint some other person as Buyer's Representative in place of the person previously so appointed and shall give notice in writing of the name of such other person to Builder without delay.  Such appointment shall be made at such a time and in such a manner as to mitigate as far as possible any adverse effect on the progress of the Works.  Such appointment shall only take effect upon receipt of such notice in writing by Builder.

	
12.2

	
Buyer's Representative shall represent and act for Buyer at all times during the currency of this Contract. All notices, instructions, orders, approvals and all other communications under the Contract shall be given by Buyer's Representative, except as herein otherwise provided. All notices, instructions, information and other communications given by Builder to Buyer under the Contract shall be given to Buyer's Representative, except as herein otherwise provided.

	
12.3

	
Buyer may send to and maintain at Builder’s shipyard, at its own cost and expense, one or more representatives, but only one of whom shall be duly authorized in writing by Buyer to Builder to be Buyer’s Representative to act on behalf of Buyer

	
12.4

	
Buyer undertakes that it shall ensure that the Buyer’s Representative and its other representatives carry out their duties in accordance with common rig building practice and in such a way as to avoid any unnecessary increase in building cost, delay in the construction and delivery of the Rig, and/or disturbance in the construction schedule of Builder.

  

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12.5

	
At all times during the construction of the Rig, Builder shall:

	
  

	
(a)

	
afford the Buyer’s Representative full access to Builder’s shipyard and shall use its best efforts to secure access to the shipyards of its subcontractors, to view the progress of the construction and to inspect Builder's work;

	
  

	
(b)

	
provide Buyer's Representative with separate air­conditioned working office space complete with desks; furniture; cupboards; meeting rooms; common photocopy machine; telephone; facsimile machine; and broadband connection facility at no extra cost in Builder’s shipyard (the costs for usage of telephone, facsimile, and broadband subscription services shall be paid by Buyer); and

	
  

	
(c)

	
cooperate with Buyer's Representative so as to keep him informed as to the progress of the Works.

	
12.6

	
Within fourteen (14) days of the Effective Date as described in Article XXXII (Effective Date of Contract), Builder shall appoint Builder’s Representative.  Builder may from time to time appoint some other person as Builder’s Representative in place of the person previously so appointed and shall give notice in writing of the name of such other person to Buyer without delay.  Such appointment shall be made at such a time and in such a manner as to mitigate as far as possible any adverse effect on the progress of the Works.  Such appointment shall only take effect upon receipt of such notice in writing by Buyer.

	
12.7

	
Builder’s Representative shall represent and act for Builder at all times during the currency of this Contract and shall give to Buyer all Builder's notices, information and all other communications under the Contract.  All notices, instructions, information and other communications given by Buyer to Builder under the Contract shall be given to Builder’s Representative, except as herein otherwise provided.

  

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ARTICLE XIII

VARIATIONS

	
13.1

	
All Works shall be performed under the conditions of this Contract, except as it may be modified in the Specifications reflecting the changes as herein provided.

Without invalidating this Contract, Buyer may request in writing Variations by altering, adding to or deducting from the Works to be performed by Builder hereunder as it is delineated in the Specifications.

Builder may also propose in writing to Buyer any modification to the Specifications, which in Builder’s opinion will improve the quality, efficiency, functionality, and design of the Rig, or the bringing forward of the Delivery Date.  Buyer may at its discretion approve or reject Builder’s proposed modifications, and if approved by Buyer, Buyer shall request Builder in writing to proceed with Variation as aforementioned and pursuant to this Article.

A “Variation” shall mean any change in the original Contract intention as deduced from this Contract as a whole describing the Works to be carried out and shall include but is not restricted to:

	
  

	
(a)

	
an increase or decrease in the quantity of any part of the Works;

	
  

	
(b)

	
an addition to or omission from the Works;

	
  

	
(c)

	
a change or substitution in the character, quality or nature, or equipment to be used in any part of the Works;

  

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(d)

	
a change in the levels, lines, positions and dimensions of any part of the Works;

	
  

	
(e)

	
the omission, demolition of, or removal of any part of the Works no longer desired by Buyer;

	
  

	
(f)

	
a requirement to complete the Works or any phase or part thereof by a date earlier than the Delivery Date (as defined in Article IX (Delivery);

	
  

	
(g)

	
a deviation from the Specifications.

Notwithstanding the foregoing, it is, however, agreed that no change will be made which affects a change in the General Description (as stated in the Specifications) unless upon the mutual written consent of both Builder and Buyer.

	
13.2

	
Upon receiving a written request for Variation from Buyer, if the Variation so requested can be reasonably undertaken having regard to the stage of construction of the Rig, Builder’s and its subcontractors’ work schedule, and Builder’s other commitments at the shipyard, then Builder will submit Buyer in writing within twenty one (21) working days a quotation of the change in the Contract Price and/or Delivery Date (if any) as a result of alterations and adjustments required to the Specifications.

The Variation and adjustment to the Contract Price and time for delivery shall be as follows:

	
  

	
(a)

	
based on a fair and reasonable agreed lump sum price and time extension to the Delivery Date, if any; or

	
  

	
(b)

	
(if above lump sum price is not agreed by Buyer) then it shall be based on the Schedule of Rates (Annex B) and an agreed time extension to the Delivery Date, if any.

  

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13.3

	
No Variation shall be made and no additional work shall be performed by Builder until the change in or addition to the work and the adjustments, if any, in the Contract Price and/or Delivery Date occasioned thereby, have been agreed in writing in a Variation Order in the form set out in Annex C, and signed for identification by authorized representatives of both parties. Such adjustments in the Contract Price and/or the Delivery Date shall be negotiated in good faith between Buyer and Builder.

	
13.4

	
Subject to Article VI (Change in laws, rules or regulations), if any Variation, modification or revision is compulsory for the Rig and its class, either party shall, upon receipt of such information from the Classification Society or such other regulatory body, promptly notify the other party in writing, and Builder shall thereupon incorporate such alterations or changes into the Works, subject to the execution of a Variation Order. Subject to Article VI (Change in laws, rules or regulations), any changes required by the Classification Society or regulatory bodies following revisions to the requirements of the Classification Society or regulatory body which occur after the Effective Date shall be for Buyer’s account.

	
13.5

	
If such amendments, modifications or revisions are not compulsory for the Rig or its classification, but Buyer desires to incorporate such amendments, modifications or revisions into the Specifications or the Works, then Buyer shall notify Builder and Builder shall proceed to perform such amendments, modifications, or revisions, subject to the execution of a Variation Order addressing appropriate adjustments (if any) to the Contract Price, Delivery Date (based on the principles set out in Article 13.2) and/or any other provisions of this Contract.  The costs and expenses incurred by Builder for such amendments, modifications or revisions shall be for Buyer’s account.

	
13.6

	
In the event that Buyer requests any change that would result in a net savings in cost then, subject to negotiations between the parties, the cost saving shall be to Buyer’s benefit and be credited in the final accounts on delivery of the Rig.

  

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13.7

	
Payment for Variation pursuant to this Article XIII (Variations) shall be paid within thirty (30) days from invoicing, or as agreed in the Variation Order.

  

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ARTICLE XIV

INSURANCE OF OWNER’S SERVANTS AND REPRESENTATIVE

	
14.1

	
If Buyer should desire to have any third party or its representatives come into Builder’s and/or Builder's subcontractor’s shipyard to inspect or assist Buyer in the performance of any work, Builder may impose on Buyer reasonable requirements with regard to said third party's or Buyer’s representatives’ insurance coverage as a condition for admittance to Builder’s and/or Builder’s subcontractor’s shipyard.  Buyer shall bear full responsibility for such third party or Buyer’s representatives and for their acts while in Builder's and/or Builder's subcontractor’s shipyard.

	
14.2

	
Buyer shall be liable for and shall defend, indemnify and hold harmless Builder against any loss of and/or damage to property and/or injury to or death of any third party (which are not already included in Article XXV Builder’s and Owner’s Indemnities) where such loss of and/or damage to property and/or injury to and/or death of such third party is howsoever caused by Buyer.

	
14.3

	
Builder shall be liable for and shall defend, indemnify and hold harmless Buyer against any loss of and/or damage to property and/or injury to or death of any third party (which are not already included in Article XXV Builder’s and Owner’s Indemnities) where such loss of and/or damage to property and/or injury to and/or death of such third party is howsoever caused by Builder.

  

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ARTICLE XV

WARRANTIES

	
15.1

	
Builder warrants that the material and workmanship employed in the construction of the Rig shall be free from defects and shall comply with this Contract.

	
15.2

	
The foregoing warranty of Builder shall be for a period of twelve (12) months (“Warranty Period”) after the delivery by Builder and acceptance by Buyer of the completed Rig provided however that the Warranty Period shall be extended for a further period of twelve (12) months in respect of any work done by Builder to remedy any defect under this Article, but provided always that the Warranty Period shall in no circumstance exceed twenty four (24) months after the delivery of the Rig.

	
15.3

	
If at any time prior to the end of said Warranty Period, the Rig or any material, or workmanship is defective or found not to comply with the foregoing warranty of Builder, Buyer has agreed to give Builder written notice thereof within fifteen (15) days after Buyer’s discovery of such failure to comply, and Builder shall promptly upon receiving such notice, and at Builder’s cost and expense, repair or replace the same in good and proper operating condition sufficient to meet the requirements of this Contract and of Builder’s said warranties hereunder. Builder shall have no obligation to Buyer for any defects discovered or notified subsequent to the expiry of the Warranty Period.

	
15.4

	
Any repair or replacement to be carried out by Builder will be treated as priority by Builder and, if possible, be performed while the Rig is on location or at such other points as may be designated by Buyer. However, if Builder shall advise Buyer in writing that such repair or replacement can be made only in Builder’s shipyard, then Buyer shall either return the Rig (or the part or item affected where feasible to detach from the Rig) at Buyer’s sole cost to Builder’s shipyard for such repair or replacement, or advise Builder in writing that it is not convenient for Buyer to so return the Rig or component to Builder’s shipyard, in which later event Builder shall pay to Buyer an amount, in lieu of Builder’s making said repair or replacement, equal to the reasonable cost to Buyer of effecting such repair or replacement which cost shall be evidenced by invoice or other written evidence.

  

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15.5

	
For component or equipment manufactured by original equipment manufacturers or vendors (collectively “OEM”), which are installed or incorporated into the Rig, the warranty provided herein to Buyer for such component or equipment shall be limited to the warranties obtained by Builder from the respective OEM.  Builder shall assign to Buyer all its rights to these warranties from the OEM on the delivery of the Rig and Buyer shall seek its remedies or enforce its rights against the OEM in the event of a warranty claim at its sole cost and expense. Builder shall use all reasonable endeavours to require OEMs to agree that their warranties shall commence on the delivery of the Rig to Buyer.  Builder shall use all reasonable endeavours to obtain for Buyer’s benefit that all warranties obtained are standard warranties from the OEM inclusive of standard terms and conditions.

	
15.6

	
The foregoing warranties are in lieu of all other warranties and/or guarantees and no other warranties and/or guarantees expressed, implied or statutory are given by Builder by virtue of this Contract. The obligations of Builder to Buyer set forth in this Article are the exclusive liabilities of Builder to Buyer for any defects in workmanship and material incorporated in the Rig under the Contract, and Builder shall not be liable to Buyer for any negligence or strict liability, or otherwise in respect of said workmanship and material. Builder shall not be responsible or liable for any defects whatsoever other than the defects specified in this Article. No employee or representative of Builder is authorised to change this warranty in any way or grant any other warranty.

  

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15.7

	
Builder shall not be responsible for any defects in any part of the Rig which have been caused subsequent to delivery of the Rig by any replacement or repair work performed by any other contractor, or for any defects to the extent the same have been caused by use in excess of specified design limitations or improper maintenance of the Rig on the part of Buyer, its servants or agents or by ordinary wear and tear.

	
15.8

	
Builder shall in all circumstances not be responsible or liable for any consequential or special losses, damages or expenses (including but not limited to loss of use of the Rig, loss of time, loss of production, loss of profit or earnings, financing costs, loss of other contracts etc.), directly or indirectly howsoever occasioned by Buyer or any third party due to defects specified in this Article, or due to repairs or other work done to remedy such defects, or as a result of the failure of any work or item of material or equipment to meet the above stated warranties of Builder.

  

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ARTICLE XVI

TAXES AND CHARGES

	
16.1

	
Builder shall pay (without seeking any reimbursement whatsoever from Buyer) all import, export, excise or other taxes or duties which may be levied by the authorities or government in Singapore in connection with all work to be performed hereunder by Builder or Builder’s subcontractors or suppliers up to delivery of the Rig including the sale and delivery in Singapore of the Rig. Buyer shall bear and pay any other sales, import and/or use taxes (except for income taxes of Builder) which may be levied or assessed upon the sale, import or use of the Rig after Delivery.

	
16.2

	
In the event that one party to this Contract (“Party A”) is obliged to make payment as a result of the failure of the other party to this Contract (“Party B”) to comply with its obligations under Article 16.1, Party B shall fully indemnify Party A upon Party A’s written demand, in respect of all costs which are incurred as a result of Party B’s failure to pay any sales, use, import, export, excise or other taxes or duties including GST.

  

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ARTICLE XVII

DOCUMENTS TO BE FURNISHED

	
17.1

	
Upon acceptance of the Rig by Buyer, Builder shall at its cost furnish four (4) hard copy and one (1) set soft copy of all detailed construction drawings such as: general arrangement, structural, mechanical, piping system, electrical system and outfitting drawings, plus drawing indexes, corrected to agree with the completed construction of the Rig to Buyer for use by Buyer or its successors or assigns, to be used for the purposes herein designated. Buyer agrees that it shall not release any such information to third parties, except as needed for specific purposes connected with the sale, lease, use, operation, maintenance and repair of the Rig, and review by governmental authorities or underwriters.  Notwithstanding the generality of the foregoing, it is agreed that Builder shall not be obliged to provide to Buyer any proprietary information relating to the design of the Rig.

	
17.2

	
Builder further agrees to deliver or cause to be delivered to Buyer upon acceptance of the Rig by Buyer all necessary certificates, either final, if available or preliminary (if final not available), to clear the Rig through customs and administrative authorities.  All fees in respect of the classification and survey of the Rig by the Classification Society shall be paid by Builder.  Builder will furnish Buyer with copies of all significant correspondence and documents relating to each such classification and survey save for any proprietary and confidential information relating to the design of the Rig.

	
17.3

	
For the purpose of clarification, proprietary information shall have the same meaning as described in Article 5.5.

  

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ARTICLE XVIII

CONFLICTS BETWEEN CONTRACT, SPECIFICATIONS AND CONTRACT DRAWINGS

	
18.1

	
The intention of the parties is that the provisions of these Articles and the Specifications are meant to supplement each other and be read and interpreted as a whole.

However, in the event there is any conflict between any of the provisions in the Articles herein and the Specifications, the provisions of the Articles herein shall prevail.

In the event there is any conflict between the Specifications and the drawings included in the Specifications, the Specifications shall prevail over the drawings.

In the event there is any conflict between drawings, the most recent drawings shall prevail.

In the event of any disputes as to conformity with Classification Society Rules, the decision of the surveyor of the Classification Society shall be final.

  

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ARTICLE XIX

GOVERNING LAW AND DISPUTE RESOLUTION

	
19.1

	
This Contract shall be governed and construed by and in accordance with English law.

	
19.2

	
If any dispute between Buyer and Builder arises as to any matter arising under or out of or in connection with this Contract or the carrying out of work under this Contract, the parties shall in the first instance attempt to settle the dispute amicably by reference of the dispute to the senior management of the parties for negotiation and resolution.

	
19.3

	
If the dispute remains unresolved within a fourteen (14) days period from the commencement of such negotiation, the parties shall attempt to settle such dispute by mediation in accordance with the Mediation Procedure of the Singapore Mediation Centre. Neither party may terminate the mediation until each party has made its opening presentation and the mediator has met each party separately. The mediation shall take place in Singapore and the language of the mediation shall be English.

	
19.4

	
If, and to the extent that, any such dispute has not been settled by mediation within fourteen (14) days of the commencement of the mediation, it shall be referred to and be finally determined by arbitration in Singapore and in accordance with the UNCITRAL Arbitration Rules for the time being in force, which rules are deemed to be incorporated by reference in this Article.

	
19.5

	
The arbitration and all documents to be employed therein shall be in the English language, and unless mutually agreed otherwise by the parties, shall be by a tribunal of three (3) arbitrators, two (2) of the arbitrators shall be separately appointed by the parties and the third shall be appointed by the Singapore International Arbitration Centre.

  

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ARTICLE XX

TECHNICAL DISPUTES

	
20.1

	
In the event that a difference of opinion between Buyer and Builder arises concerning technical matters under this Contract, or in respect of material or workmanship affecting the classification of the Rig, Builder and Buyer agree to be bound by the decision of the surveyor of the Classification Society. The decision of the surveyor of the Classification Society shall be final and binding upon the parties and shall be given within thirty (30) days of receipt of parties’ statements of position.

  

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ARTICLE XXI

SUBCONTRACTING AND SUPPLY

	
21.1

	
Without in any manner prejudicing the rights and obligations of Builder and Buyer hereunder, it is acknowledged and agreed by Buyer that:

	
  

	
(i)

	
Builder may cause part or the majority of the Works to be performed by one or more subcontractors provided however that Builder shall obtain Buyer’s consent in respect of any of the Works to be performed by a subcontractor outside of Singapore; and

	
  

	
(ii)

	
Builder shall have the discretion to select appropriate components and equipment for the Rig from OEM in respect of such component or equipment as specified in Appendix D (Drilling Equipment Rev 1) and Appendix D (Marine Equipment Rev 1) to the Specifications.

Builder shall keep Buyer informed of all major subcontract work to be performed overseas, and Builder shall use due care to select competent and efficient subcontractors and OEM.  Builder shall be fully responsible for the performance of all subcontractors and any segment of the Works performed by such subcontractors so that all production milestones and quality requirements are met.

All purchase orders issued by Builder shall contain a provision requiring the supplier to maintain spares for at least two years after delivery of the Rig and Builder shall provide all reasonable assistance to Buyer in enforcing such commitment.

  

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ARTICLE XXII

ASSIGNMENT

	
22.1

	
This Contract shall bind and be for the benefit of the successors and assigns of the parties, and either party may assign this Contract subject to prior written consent of the other party which consent may not be unreasonably withheld.

	
22.2

	
Notwithstanding the provisions of Article 22.1, Buyer shall be entitled to assign or novate this Contract to any subsidiary or Affiliate of Buyer and Buyer shall be entitled to assign the benefit of Article XV (Warranties) to any purchaser of the Rig, it being understood that under no circumstances shall there be any assignment to a third party.

  

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ARTICLE XXIII

INVENTORIES ON THE RIG AT DELIVERY

	
23.1

	
An inventory of unused lubricating oil, grease, fuel oil or other liquids, supplied by Builder and left on board in the respective tanks at delivery of the Rig shall be taken and paid for by Buyer at Builder’s documented cost. Payments therefor shall be made by Buyer to Builder immediately after receipt of invoice from Builder.

	
23.2

	
Builder shall assist Buyer to transfer Buyer’s items on board the Rig after delivery based on an agreed lump sum price or according to the Schedule of Rates (Annex B).

	
23.3

	
Subject to availability of berthing space, Buyer may request for seven (7) days of free berthing after delivery.  Buyer shall pay for the cost of any services supplied by Builder in accordance with the Schedule of Rates (Annex B).

  

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ARTICLE XXIV

INSURANCE

	
24.1

	
Prior to the commencement of the Works and until the Delivery Date, Builder shall, at its cost and expense, carry and maintain insurance policies with reputable insurance companies in amounts not less than those specified for the types of insurance described below and furnish Buyer with Certificate(s) of Insurance evidencing the  insurance coverages relating to them:-.

	
  

	
(a)

	
Work Injury Compensation Insurance and Employers Liability Insurance in accordance with Singapore law with a minimum limit of US dollars 3,500,000 for any one claim or a series of claims arising out of one event.

	
  

	
(b)

	
General Third Party Liability Insurance for death, bodily injury or property damage with a minimum limit of US dollars 5,000,000 arising from any one accident or occurrence.

	
  

	
(c)

	
Third Party Automobile Liability Insurance for death or bodily injury (unlimited) or property damage (with a limit of US dollars 350,000) in Singapore and Malaysia and arising from one claim or a series of claims.

	
  

	
(d)

	
Construction Risks Insurance in an amount equal to the Contract Price for loss or damage to the Rig and all machinery, materials and equipment (including any OFE installed pursuant to a Variation Order) (the cost of any increase in insurance premiums to be borne by Buyer as reflected in the variation order) forming part of or intended to be incorporated into the Rig from the time they are delivered to the Builder’s yard. The insurance shall include loss or damage from a tsunami, a hurricane, an earthquake or a volcanic eruption, war or strikes.

  

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24.2

	
The Construction Risks Insurance shall (a) be taken out in the name of Builder as the principal assured and include Buyer as an additional or other assured (b) provide that it will not be cancelled or its coverage reduced except upon twenty (20) days prior written notice to Buyer; and (c) contain waiver of subrogation provisions pursuant to which the insurer waives all express or implied rights of subrogation against Builder and Buyer, their parent companies, subsidiaries and associate companies.

	
24.3

	
Builder and Buyer agree that in the event the Rig (or any component part, equipment or system etc.) is damaged at any time prior to the Delivery Date and such damage does not constitute an actual or constructive total loss, the proceeds from the Construction Risks Insurance shall be applied by Builder to the repair of the damage.

	
24.4

	
In the event at any time on or before the Delivery Date, the Rig is    damaged to such an extent so as to constitute an actual or constructive total loss, and unless the parties otherwise agree in writing, Builder shall from the proceeds of the Construction Risks Insurance or, in any event, not later than nine (9) months following the date of the actual or constructive total loss, refund to Buyer the amount of all instalments of the Contract Price paid by Buyer to Builder pursuant to the Contract. Upon payment of all sums due to Buyer consistent with this clause, the Contract shall be deemed to be automatically terminated and all rights, duties and obligations of each of the parties to the other shall be considered fully discharged forthwith.

	
24.5

	
Notwithstanding Articles 24.3 and 24.4 above, if prior to the Delivery Date, the Rig is so substantially damaged that it cannot be repaired within one hundred and fifty (150) days of the Delivery Date, Buyer may at its option, terminate this Contract upon written notice to Builder.  In the event the Contract is so terminated:

  

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(a)

	
Builder shall lodge a claim under the Construction Risks Insurance

	
  

	
(b)

	
Builder shall refund to Buyer from the proceeds of the Construction Risks Insurance (or, in any event, not later than nine (9) months following the date on which the Rig was substantially damaged), the amount of all instalments of the Contract Price paid to date by Buyer.

	
24.6

	
In the event that the Delivery Date is delayed for any cause due to Buyer, any additional premium incurred by Builder to extend the Construction Risks insurance shall be paid by Buyer as agreed in the Variation Order.

  

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ARTICLE XXV

BUILDER’S AND OWNER’S INDEMNITIES

	
25.1

	
Builder agrees to protect, indemnify and hold Buyer free and harmless from and against any and all claims or liabilities (including, without limitation, the cost of the suit and reasonable attorney's fees) arising in favour of any of Builder's (or its affiliates), employees, agents, officers, invitees, subcontractors (or their servants) or representatives, or any survivor of the foregoing on account of injury to or death of any such parties or damage to any of their property attributable to the actions (or lack thereof) by any such parties in connection with the Rig and/or work performed pursuant to this Contract, regardless of whether Buyer and/or its subcontractors and/or others may be wholly, partially or solely negligent or otherwise at fault.

	
25.2

	
Buyer agrees to protect, indemnify and hold Builder and its subcontractors free and harmless from and against any and all claims or liabilities (including, without limitation, the cost of the suit and reasonable attorney's fees) arising in favour of any of Buyer's (or its affiliates) employees, agents, officers, invitees, subcontractors (or their servants) or representatives, or any survivor of any of the foregoing on account of injury to or death of any such parties or damage to any of their property except as regards Rig attributable to the actions (or lack thereof) by any such parties in connection with the Rig and/or work performed pursuant to this Contract, regardless of whether Builder or its subcontractors and/or others may be wholly, partially or solely negligent or otherwise at fault.

  

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ARTICLE XXVI

PATENT INDEMNITIES

	
26.1

	
Builder warrants that ownership or operation of the Rig shall not at any time infringe any patent rights, utility model rights, trade mark rights or copyrights in any country.  Builder shall without limit of time defend any claim, suit or proceedings brought against Buyer relating to the infringement of any of the rights aforementioned by reason of Buyer’s possession, ownership or operation of the Rig and Builder shall indemnify, defend and hold harmless Buyer from and against any such claim, suit or proceedings.  Buyer shall promptly notify Builder of any such claim suit or proceeding and shall permit Builder to take control and settlement of such claim, suit or proceedings; provided however no settlement which purports to acknowledge on Buyer’s behalf the validity of any patent shall be entered into without the Buyer’s written consent. Buyer shall provide information and assistance to Builder as may be reasonably necessary to aid in the conduct and settlement of the claim, suit or proceedings. Buyer shall be entitled to participate in the settlement through its selected representatives and/or attorneys.  Provided always that the indemnity provided herein by Builder shall not apply to OFE or items purchased using PC Sum as described in Article 3.2.

	
26.2

	
Buyer shall, without limitation of time, defend any claim, suit or proceeding brought against Builder, its parent, holding, or affiliated companies, alleging that the construction or use by Builder, pursuant to this Contract, of any design, process, device, apparatus specified or furnished by Buyer and mounted upon or used in connection with the Rig constitutes infringement of any patent, and Buyer shall indemnify, defend and save Builder, its parent, holding and affiliated companies, harmless from and against any such claim, suit or proceeding.  Builder shall promptly notify Buyer of any such claim, suit or proceeding and shall permit Buyer to control the conduct and settlement of such claim, suit or proceeding; provided however, no settlement which purports to acknowledge on Builder’s behalf the validity of any patent shall be entered into without Builder’s prior written consent.  Builder shall provide information and assistance to Buyer, at Builder’s expense, as may be reasonably necessary to aid in the conduct and settlement of the claim, suit or proceeding.  Builder shall be entitled to participate, at its own expense, in the conduct and settlement of such claim, suit or proceeding through its selected representatives and attorneys.

  

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26.3

	
Buyer acknowledges that Builder may disclose to Buyer confidential information and intellectual property relating to the Rig belonging to Builder, including the Rig’s design, construction, engineering and technical specifications, know-how, procedures, processes, drawings and plans, and Buyer agrees not to reproduce, reverse-engineer, decompile, or disassemble in any manner or form any such confidential information or intellectual property, except with the prior written consent of or express license from Builder.

  

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ARTICLE XXVII

USE OF CRANES

	
27.1

	
Builder has the right to use the Rig cranes forming a part of Builder’s furnished equipment, but only:

	
  

	
(a)

	
for the purpose of construction of the Rig;

	
  

	
(b)

	
in accordance with manufacturer's instructions; and

	
  

	
(c)

	
using duly qualified crane operators.

Any repairs to such cranes made necessary by the use by Builder shall be for the account of Builder and shall be carried out prior to the Delivery Date.

	
27.2

	
On delivery of the Rig, if any of the Rig cranes has been used by Builder for more than six hundred (600) hours, Builder shall provide to Buyer free of charge new wires for the relevant cranes.

	
27.3

	
Prior to delivery of the Rig, Builder shall ensure that the OEM has conducted a full inspection of the Rig cranes with Buyer and any deficiencies will be rectified prior to delivery.

  

Page 53 of 64

  

ARTICLE XXVIII

EVENTS OF DEFAULT

	
28.1

	
The following shall constitute events of default of Builder under the Contract:

	
  

	
(a)

	
Builder voluntarily or involuntarily being made a part to any receivership, liquidation, or bankruptcy proceeding (which proceedings are not stayed within thirty (30) days of the service of such procedings on Builder) or becoming insolvent or in the event Builder is unable to meet all or part of its financial or other obligations under this Contract, unless as a result of Buyer's failure to make payments of not less than United States Dollars Five Million (US$5,000,000) as due under this Contract.

	
  

	
(b)

	
The failure by Builder to remedy, within thirty (30) days of Buyer’s written notice to Builder a default by Builder to substantially perform any of the covenants, agreements or undertakings on its part to be performed under this Contract, or if the default is not reasonably capable of being remedied within thirty (30) days, the failure by Builder to commence remedial action within the same thirty (30) days period and to diligently proceed with such action.

	
  

	 

	
  

	
(c)

	
If the deficiency in any variable loads as set out in Article XI (Damages for delays / incentive for early completion) exceeds five percent (5%) of the specified load.

	
  

	
(d)

	
If non-permissible delays exceeds one hundred and thirty (130) days.

  

Page 54 of 64

  

	
28.2

	
The following shall constitute events of default of Buyer under this Contract:

	
  

	
(a)

	
Buyer's voluntarily or involuntarily being made a part of any receivership, liquidation or bankruptcy proceeding (which proceedings are not stayed within thirty (30) days of the service of such procedings on Buyer) or becoming insolvent or otherwise unable to meet all or part of its financial or other obligations under this Contract.

	
  

	
(b)

	
Failure to make any payments due hereunder on the due date, provided that Builder shall notify Buyer in writing of any such default and Buyer shall have a period of seven (7) days thereafter to cure any such default.

	
  

	
(c)

	
Failure by Buyer to remedy within seven (7) days (in respect of a payment default or thirty (30) days for all other defaults) of Builder's written notice to Buyer, a failure by Buyer to substantially perform any of the covenants, agreements or undertakings on its part to be performed under this Contract.

	
28.3

	
In the event of default by Builder, Buyer may at its option elect to proceed on either one of the following options:

	
  

	
(a)

	
terminate this Contract in the manner set out in Article 28.4; or

	
  

	
(b)

	
without prejudice to Buyer’s right to recover liquidated damages for delay pursuant to Article XI (Damages for Delays / Incentive for Early Completion), Buyer may allow Builder to continue to complete the construction of the Rig in the manner set out in Article 28.5.

  

Page 55 of 64

  

Buyer shall indicate its option within thirty (30) days from Builder’s request to exercise its option, failing which Buyer is deemed to have waived its right to terminate this Contract.

	
28.4

	
In the event that Buyer elects to terminate the Contract pursuant to Article 10.5 or Article 28.3(a) due to an event of default by Builder:

	
  

	
(a)

	
Buyer shall notify Builder in writing of its intention to do so and such termination shall be effective as of the date when such notice is received by Builder.

	
  

	
(b)

	
Builder shall refund (together with interest at two (2) percent above LIBOR) to Buyer the full amount of all sums received by Builder on account of the Rig excluding any PC Sum paid and shall at Buyer’s option and Builder’s costs make available the OFE at Builder’s shipyard for return to Buyer, alternatively, at Buyer’s option and without obligation on Buyer, in respect of the OFE pay to Buyer the invoiced cost of same on production by Buyer of reasonable evidence of the costs of purchase of the OFE.

	
  

	
(c)

	
Buyer shall not in the event of the termination of this Contract hereunder be entitled to any liquidated damages under Article XI (Damages for Delays / Incentive for Early Completion).

	
  

	
(d)

	
Upon such refund by Builder to Buyer as aforementioned, all obligations, duties and liabilities of each of the parties to the other under this Contract shall be forthwith completely discharged, and the uncompleted Rig shall belong to Builder and Buyer shall have no further claim on Builder.

	
28.5

	
In the event Buyer elects pursuant to Article 28.3(b) to allow Builder to continue to complete the construction of the Rig, Builder shall pay Buyer the liquidated damages due pursuant to Article XI (Damages for Delays / Incentive for Early Completion), and Builder shall work with Buyer to produce an acceptable schedule for the completion of the remaining work on the Rig and work diligently to complete the construction of the Rig.

  

Page 56 of 64

  

	
28.6

	
Should Buyer commit an act of default under Article 28.2 herein, Builder at its option, may after the expiry of any period allowed to Buyer under Article 28.2 to remedy such default:

	
  

	
(a)

	
by notice in writing to Buyer ("Suspension Notice") suspend the Works until Buyer's default is remedied, and the Delivery Date shall be extended by the length of time the Works is so suspended; and also (whether or not a Suspension Notice is, has been or will be given)

	
  

	
(b)

	
by notice in writing ("Termination Notice") terminate the Contract if the default is not remedied and continues for a further period of seven (7) days from the expiry of any period allowed to Buyer under Article 28.2 to remedy such default (which period is of the essence of the Contract).

Upon receipt by Buyer of the Termination Notice, the Contract shall forthwith become terminated, and in that event, notwithstanding any provision in this Contract herein, property in the Rig and all the materials and equipment forming part of the Rig or intended to be incorporated into it (including any OFE already installed in or affixed to the Rig) shall in accordance with Article 7.1 herein remain with Builder.  Further, it is understood that Builder shall be entitled to retain all payments made under the Contract by Buyer to Builder before termination since the Contract is not a simple contract of sale of goods and there will have been no total failure of consideration for those payments.   Any OFE which has not been installed in or affixed to the Rig shall be returned by Builder to Buyer.

The remedies set out in this clause 28.6 shall be Builder’s sole remedy in respect of Buyer’s default.

  

Page 57 of 64

  

ARTICLE XXIX

COMPLIANCE WITH LAWS

	
29.1

	
Builder shall abide by and comply with all valid laws and regulations of Singapore.  Builder will avoid or refrain from performing any work or services under the Contract that may be an actual or possible breach of any sanctions, prohibition or requirement imposed by the laws, regulations, resolutions, or administrative orders of the United States of America, applicable to any of Builder’s obligations under the Contract.  Where Builder is so prevented from performing any work or services under the Contract, Builder shall have no liability to Buyer.

  

Page 58 of 64

  

ARTICLE XXX

LIMITATION ON BUILDER’S LIABILITY

	
30.1

	
Notwithstanding anything to the contrary set forth herein in this Contract, neither Builder nor Buyer shall be liable to the other for any loss of use of the Rig, loss of time, loss of production, loss of profit or earnings, financing costs, loss of other contracts, or for any indirect financial or indirect economic loss, or for any indirect or consequential damages whatsoever that may be suffered by the other and howsoever the same may have been caused whether by way of indemnity or by reason of any breach of this Contract or of statutory duty or by reason of tort (including but not limited to negligence).

	
30.2

	
Notwithstanding any provision to the contrary herein (save as provided in Articles 2, 14, 16, 24.4, 25, 26, 28.4, and 29), Builder's maximum liability to Buyer arising out of or in connection with the Contract for any loss or damage including but not limited to: liquidated damages for delay, costs, claims or expenses, howsoever they may have been caused, whether arising under common law, contract, tort, equity or statute shall be limited in the aggregate to United States Dollars Eight Million Six Hundred Thousand (US$8,600,000).  Buyer agrees to release and hold harmless Builder, its officers, servants, and subcontractors from and against any liability in excess thereof.  Builder and Buyer agree that this provision is a reasonable allocation of risks between the parties.

  

Page 59 of 64

  

ARTICLE XXXI

MISCELLANEOUS

	
31.1

	
Throughout the term of this Contract, Builder shall be an independent contractor vis a vis Buyer.

	
31.2

	
The intellectual property rights relating to designs, drawings, Specifications, instructions, manuals, computer programs and other documents created or produced by Builder or its subsidiaries which are proprietary to Builder, shall be and remain the property of Builder.

	
31.3

	
This Contract and its surrounding circumstances, including all prices and any information such as documents, design, drawings, Specifications, instructions, manuals, computer programs relating to the design and construction of the Rig which are provided by Builder to Buyer or which may otherwise be acquired by Buyer, regardless of whether they are Builder’s proprietary information, shall not be disclosed to any third party (except for Buyer’s professional advisors or as may be required by any applicable law, stock exchange, or regulatory authorities) without the prior authorization of Builder.  Buyer shall be responsible for keeping confidential all such information, and shall not permit any such information to be shown, reproduced or otherwise disclosed to any third party by itself, its subcontractors or their respective personnel.

	
31.4

	
Where a provision in this Contract for any reason becomes unenforceable or invalid, the remainder of the Contract shall remain in full force and effect.  Where severance of a non-enforceable provision in the opinion of either party materially affects the other rights or obligations under the Contract, the parties shall endeavour to remedy the situation to their mutual satisfaction.

  

Page 60 of 64

  

	
31.5

	
The parties have entered into this Contract freely, willingly, and on equal commercial basis, having had the opportunity to fully consider the contents of the Contract.  It is hereby agreed that no terms or conditions herein shall be construed against a party simply by reason that the party had proffered a particular term or condition.

	
31.6

	
Save as set forth in this Contract, a person who is not a party to this Contract has no right whatsoever to enforce any term of this Contract.  For the avoidance of doubt, the parties agree that the application of any statutes which may confer rights on third parties is expressly excluded.

  

Page 61 of 64

  

ARTICLE XXXII

EFFECTIVE DATE OF CONTRACT

	
32.1

	
The rights and obligations of the parties under the following Articles are effective on and from the date of this Contract and shall not be conditional upon the fulfillment of any of the conditions set out in Article 32.2:

	
  

	
(a)

	
Article XIX (Law and Dispute Resolution);

	
  

	
(b)

	
Article XXXI (Miscellaneous);

	
  

	
(c)

	
Article XXXII (Effective Date of Contract); and

	
  

	
(d)

	
Article XXXIII (Notices).

	
32.2

	
This Contract is subject to, and shall become effective and legally binding on the parties when the following conditions shall have been complied with:

	
  

	
(a)

	
upon receipt by Builder of the sum of US$34,400,000 within seven (7) days from the date when all three (3) conditions in clauses 1.2(a), (b) and (c) of the First Rig Option Agreement are fulfilled in  accordance with Article 3.2(a) herein;

	
  

	
(b)

	
upon delivery by each party to the other of its Board of Director’s resolutions approving the execution of the Contract.

Builder and Buyer shall take all reasonable steps to cause the aforesaid conditions to be satisfied and this Contract to become effective no later than 22 January 2011.

	
32.3

	
The date upon which the above conditions in Article 32.2 shall all have been satisfied shall be known hereunder as the “Effective Date”.

	
32.4

	
If the conditions for this Contract to become effective shall for any reason not have been satisfied prior to midnight, fifteen (15) days after the award of the Contract or such other date as may be extended by mutual agreement between the parties, then this Contract shall become voidable at the option of Builder by giving of notice to Buyer.  In such event the parties hereto shall be immediately and completely discharged from all obligations to the other hereunder.

  

Page 62 of 64

  

ARTICLE XXXIII

NOTICES

	
33.1

	
All notices and communications required to be given hereunder shall be in the English language and be served by delivering the same by courier or in person to such other party, or by facsimile with a transmission report evidencing the successful transmission of the same.

	
33.2

	
Such notices and communications shall be addressed to the respective party’s authorized representative {as described in Article XII (Buyer’s Representative and Builder’s Representative)}.

	
33.3

	
Notice so given shall be effective if and when (as the case may be) it arrives by courier at the specified address or is delivered in person at the specified address or is successfully transmitted (as evidenced by a transmission report) by facsimile to the specified facsimile number, regardless of the time when it is first personally received or seen by, or otherwise comes to the attention of, the relevant party or its authorized representatives.

	
33.4

	
For the purpose of notice the addresses of the parties shall be:

BUYER

ATWOOD OCEANICS PACIFIC LIMITED

C/o: 332A-11C, 11th Floor, Plaza Ampang City

Jalan Ampang, 50450 Kuala Lumpur

Malaysia

 

	
  

	
Telephone No.

	
:

	
+603 2773 9714

	
  

	
Fax No.

	
:

	
+603 4257 9208

	
  

	
Email

	
:

	
tdyne@atwd.com

	
  

	
Attention

	
:

	
Tony Dyne (Director)

  

Page 63 of 64

  

BUILDER

PPL SHIPYARD PTE LTD

21 Pandan Road

Singapore 609273

	
  

	
Telephone No

	
:

	
(65) 6265 0477

	
  

	
Fax No

	
:

	
(65) 6264 4130 / 6268 1203

	
  

	
Attention

	
:

	
Douglas Tan (Managing Director)

IN WITNESS WHEREOF, the parties hereto have executed this Contract in multiple originals effective as of the day and year first above written.

	
For and on behalf of Buyer

	 	
For and on behalf of Builder

	
ATWOOD OCEANICS

	 	
PPL SHIPYARD PTE LTD

	
PACIFIC LIMITED

	 	  
	  	 	  
	  	 	  
	
/s/ Noel Baldwin

	 	
/s/ Douglas Tan Ah Hwa

	
Name: Noel Baldwin

	 	
Name: Douglas Tan Ah Hwa

	
Director

	 	
Managing Director

	  	 	  
	  	 	  
	
WITNESS: /s/ Gerald Ng

	 	
WITNESS:  /s/ Kim Yung Tan

	  	 	  
	
Date: January 14, 2011

	 	
Date: January 14, 2011

 

Page 1 of 64ex10_2.htm

EXHIBIT 10.2

CONTRACT

FOR

THE CONSTRUCTION AND SALE

OF DRILLSHIP

BY AND BETWEEN

ATWOOD OCEANICS PACIFIC LIMITED

AS BUYER

AND

DAEWOO SHIPBUILDING & MARINE ENGINEERING CO., LTD.

AS BUILDER

  

  

  

I N D E X

	
ARTICLE I  DESCRIPTION AND CLASS

	 	
2

	
1.  Definitions

	 	
2

	
2.  Certain Interpretive Provisions

	 	
3

	
3.  Description

	 	
5

	
4.  Dimensions and Characteristics

	 	
5

	
5.  Classification

	 	
5

	
6.  Rules and Regulations

	 	
5

	
7.  Subcontracting of Construction Work

	 	
5

	
8.  Registration

	 	
5

	
9.  Production Schedule and Erection Plan

	 	
5

	
ARTICLE II  CONTRACT PRICE AND TERMS OF PAYMENT

	 	
7

	
1.  Contract Price

	 	
7

	
2.  Currency

	 	
7

	
3.  Terms of Payment

	 	
7

	
4.  Method of Payment

	 	
7

	
ARTICLE III  ADJUSTMENT OF CONTRACT PRICE

	 	
9

	
1.  Delay in Delivery

	 	
9

	
2.  Shortfalls in Variable Load Capacity

	 	
10

	
3.  Insufficient Speed

	 	
10

	
4.  Conclusive Pecuniary Compensation

	 	
10

	
ARTICLE IV  APPROVAL OF PLANS AND DRAWINGS AND INSPECTION DURING CONSTRUCTION

	 	
11

	
1.  Approval of Plans and Drawings

	 	
11

	
2.  Appointment of Representative

	 	
11

	
3.  Inspection

	 	
11

	
4.  Facilities

	 	
13

	
5.  Liability of BUILDER and BUYER

	 	
13

	
6.  Responsibility of BUYER

	 	
14

	
ARTICLE V  MODIFICATIONS

	 	
15

	
1.  Modification of SPECIFICATIONS

	 	
15

	
2.  Change in Class and Statutory Requirements

	 	
15

	
3.  Substitution of Materials

	 	
16

	
4.  Adjustment to Contract Price and Delivery by MODIFICATIONS

	 	
16

	
5.  Payment for MODIFICATIONS

	 	
17

	
ARTICLE VI  SEA TRIAL

	 	
18

	
1.  Notices

	 	
18

  

  

  

	
2.  Weather Conditions

	 	
18

	
3.  How Conducted

	 	
18

	
4.  Method of Acceptance or Rejection

	 	
19

	
5.  Effect of Acceptance

	 	
19

	
ARTICLE VII  DELIVERY DATE AND DELIVERY

	 	
21

	
1.  Delivery

	 	
21

	
2.  Time and Place

	 	
21

	
3.  When and How Effected

	 	
21

	
4.  Documents to be Delivered to BUYER

	 	
21

	
5.  Title and Risk

	 	
22

	
6.  Removal of DRILLSHIP

	 	
22

	
7.  Tender of DRILLSHIP

	 	
22

	
8.  Delivery during Dispute.

	 	
23

	
ARTICLE VIII  DELAYS AND EXTENSION OF TIME FOR DELIVERY (FORCE MAJEURE)

	 	
24

	
1.  Causes of Delay

	 	
24

	
2.  Definition of Permissible Delay

	 	
24

	
3.  Notice of Delay

	 	
24

	
4.  Right to Terminate CONTRACT for Excessive Delay

	 	
24

	
ARTICLE IX  WARRANTY OF QUALITY

	 	
26

	
1.  Guarantee

	 	
26

	
2.  Extent of BUILDER’s Responsibility

	 	
26

	
3.  Remedy of Defects

	 	
26

	
4.  Notice of Defects

	 	
27

	
ARTICLE X  REMEDIES OF BUYER

	 	
28

	
1.  Defaults of BUILDER

	 	
28

	
2.  Remedies

	 	
28

	
3.  Notice

	 	
29

	
4.  Refund by BUILDER

	 	
29

	
5.  Discharge of Obligations

	 	
29

	
ARTICLE XI  REMEDIES OF BUILDER

	 	
30

	
1.  Definition of Default

	 	
30

	
2.  Interest and Charges

	 	
30

	
3.  Effect of Default

	 	
30

	
4.  Sale of DRILLSHIP

	 	
31

	
5.  Remedies Cumulative

	 	
32

	
ARTICLE XII  INSURANCE

	 	
33

	
1.  Extent of Insurance Coverage

	 	
33

	
2.  Application of Recovered Amount

	 	
33

  

  

  

	
3.  Redelivery of BUYER’S SUPPLIES

	 	
34

	
4.  Termination of BUILDER’s Obligation to Insure

	 	
34

	
ARTICLE XIII  DISPUTES AND ARBITRATION

	 	
35

	
1.  Proceedings

	 	
35

	
2.  Alteration of Delivery of the DRILLSHIP

	 	
36

	
3.  Entry in Court

	 	
36

	
ARTICLE XIV  RIGHT OF ASSIGNMENT

	 	
37

	
1.  Assignment and Transfer

	 	
37

	
2.  Associated Costs

	 	
37

	
3.  Security Assignments

	 	
37

	
4.  Binding Nature

	 	
37

	
ARTICLE XV  TAXES AND DUTIES

	 	
38

	
1.  Taxes and Duties in Korea

	 	
38

	
2.  Taxes and Duties outside Korea

	 	
38

	
ARTICLE XVI  PATENTS, TRADEMARKS, COPYRIGHTS, ETC.

	 	
39

	
1.  Patents, Trademarks and Copyrights

	 	
39

	
2.  General Plans, Specifications and Working Drawings

	 	
39

	
ARTICLE XVII  BUYER’S SUPPLIES

	 	
40

	
1.  Responsibility of BUYER

	 	
40

	
2.  Responsibility of BUILDER

	 	
40

	
3.  Return of BUYER’S SUPPLIES

	 	
41

	
ARTICLE XVIII  REPRESENTATIVES

	 	
42

	
1.  BUYER’s REPRESENTATIVE

	 	
42

	
2.  BUILDER’s Representative

	 	
42

	
ARTICLE XIX  NOTICE AND LANGUAGE

	 	
43

	
1.  Notice

	 	
43

	
2.  Language

	 	
43

	
3.  Writing

	 	
43

	
ARTICLE XX  EFFECTIVE DATE OF CONTRACT

	 	
44

	
ARTICLE XXI  INTERPRETATION AND OTHER MATTERS

	 	
45

	
1.  Laws Applicable

	 	
45

	
2.  Discrepancies

	 	
45

	
3.  Entire Agreement

	 	
45

	
4.  Amendment

	 	
45

	
5.  Headings

	 	
45

	
6.  Severability

	 	
45

	
7.  Order of precedence of Contract Documents

	 	
45

	
8.  Confidentiality

	 	
45

  

  

  

	
9.  Public Announcements

	 	
46

	
10.  Foreign Corrupt Practices Act

	 	
46

	
11.  COUNTERPARTS

	 	
47

 

	
EXHIBIT A -

	
IRREVOCABLE STAND-BY LETTER OF CREDIT (OPTIONAL)

	
EXHIBIT B -

	
SCHEDULE OF COMPENSATION LABOR, MATERIAL AND FACILITY UNIT PRICES FOR VARIATION WORK

	
EXHIBIT C-

	
PROTOCOL OF DELIVERY AND ACCEPTANCE

	
EXHIBIT D-

	
PC SUM

	
EXHIBIT E-

	
AGREED MODIFICATIONS TO SPECIFICATIONS

  

  

  

CONTRACT

BY THIS CONTRACT made the ___ day of _______, 2011 by and between Atwood Oceanics Pacific Limited, a corporation organized and existing under the laws of Cayman Islands and having its registered office at M&C Corporate Services Limited, P.O. Box 309GT, Ugland House, South Church Street, George Town, Grand Cayman, Cayman Islands (“BUYER”), and DAEWOO SHIPBUILDING & MARINE ENGINEERING CO., LTD., a corporation organized and existing under the laws of the Republic of Korea, having its principal office at 85, Da-dong, Jung-gu, Seoul, Korea (“BUILDER”).

IT IS AGREED AND DECLARED as follows:

BUILDER agrees on a TURNKEY basis to design, construct, build, equip, launch, test, complete, commission and load all BUYER’s equipment located at the SHIPYARD on the DELIVERY DATE one (1) DRILLSHIP more fully described in the SPECIFICATIONS (the “DRILLSHIP”) at BUILDER’s shipyard located at Okpo, Koje Island, Korea (the “SHIPYARD”), and to sell and deliver the same to BUYER, and BUYER hereby agrees to purchase and take delivery of the DRILLSHIP from BUILDER, on the terms and conditions herein set out.  Upon DELIVERY, the DRILLSHIP shall be capable of performing its designed functions as stated in the SPECIFICATIONS.

  

1

  

ARTICLE I

DESCRIPTION AND CLASS

1.              Definitions:

(a)           “AFFILIATE” of a specified PERSON means any other PERSON that directly or indirectly, through one or more intermediaries, CONTROLS, is CONTROLLED by or is under common CONTROL with the specified PERSON.  For the purposes of this definition, “CONTROL,” when used with respect to any specified PERSON, means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such PERSON, whether through the ownership of voting securities, by contract, or otherwise, and the terms “CONTROLLING” and “CONTROLLED” have correlative meanings; provided that, “CONTROL” shall be deemed to exist by virtue of the direct or indirect ownership of fifty percent (50%) or more of the equity securities of such specified PERSON.

(b)           “BANKING DAY” means a day on which commercial banks are open for domestic and foreign exchange business in New York and Houston.

(c)           “BUYER’S SUPPLIES” means the equipment or materials furnished and delivered to the SHIPYARD by BUYER at its costs for BUILDER to incorporate into the DRILLSHIP.

(d)           “CONTRACT” means the agreement of the parties set out in the Articles herein and the Annexes attached thereto.

(e)           “GOVERNMENTAL AUTHORITY” means (a) any domestic or foreign national, state, local, municipal, provisional other government, (b) any instrumentality, subdivision, department, ministry, board, court, governmental tribunal, regulatory or administrative agency, commission or other Governmental Authority, or instrumentality or political subdivision thereof or (c) any quasi-governmental or private authority or body exercising or entitled to exercise any administrative, executive, judicial, legislative, police, regulatory, taxing or other governmental functions or power.

(f)            “PC SUM” has the meaning set forth on Exhibit D attached hereto.

(g)           “LAWS” means any and all applicable laws, statutes, rules, regulations, codes, ordinances, orders, decrees, requirements, judgments, permits, writs and injunctions of any GOVERNMENTAL AUTHORITY to which a specified PERSON or its assets is subject, in each case as amended and in effect from time to time.

(h)           “PERSON” means any individual, corporation, association, partnership, joint venture, limited liability company, unincorporated organization, trust, estate, GOVERNMENTAL AUTHORITY or any other entity not a party to this CONTRACT.

(i)            “SPECIFICATIONS” means the H3614-FS-R0 dated 28 January 2011 and any additions or amendments thereto hereafter agreed between the parties, as modified by Exhibit E attached hereto.

(j)            “TURNKEY” means project management, supervision, skilled and unskilled labor, design, engineering, drawings, work procedures, materials, machinery, tools, working area, equipment, plant, consumables, facilities, classification and regulatory fees, design fees, licenses, permits, transportation, loading and offloading, in-yard movements, scheduling, procurement (not including BUYER’S SUPPLIES), fabrication, assembly, integration, quality control, inspection, mechanical completion, commissioning, tests and trials, and other obligations as are expressly stated as the responsibility of BUYER “or reasonably inferred” to complete the construction and DELIVERY of the DRILLSHIP except for items and obligations expressly stated as BUYER’s responsibilities in this CONTRACT.

  

2

  

(k)            “MODIFICATION” means any change in the original CONTRACT intention as deduced from this CONTRACT as a whole and shall include but is not restricted to:

(1)            a change or substitution in the character, quality or nature of equipment to be used in any part of the SPECIFICATIONS;

(2)            a change in the levels, lines, positions and dimensions of any part of the SPECIFICATIONS; or

(3)            the omission, demolition of, or removal of any part of the WORKS no longer desired by BUYER or BUILDER.

(l)            “WORKS” means all work necessary to fabricate, construct, launch, equip, complete and test the DRILLSHIP, in accordance with this CONTRACT and the SPECIFICATIONS, and to deliver the DRILLSHIP to BUYER free and clear of all liens, security, interests, claims and encumbrances afloat alongside the SHIPYARD.

2.           Certain Interpretive Provisions:

In this Agreement, unless the context otherwise requires:

(a)            the singular number includes the plural number and vice versa;

(b)            reference to any PERSON includes such PERSON’s successors and assigns but, if applicable, only if such successors and assigns are permitted by this CONTRACT, and reference to a PERSON in a particular capacity excludes such PERSON in any other capacity;

(c)            reference to any gender includes each other gender;

(d)            reference to any agreement (including this CONTRACT), document or instrument means such agreement, document or instrument as amended or modified (including any waiver or consent) and in effect from time to time in accordance with the terms thereof and, if applicable, the terms hereof;

(e)            reference to any Article, Section, Schedule or Exhibit means such Article, Section, Schedule or Exhibit of or to this CONTRACT, and references in any Article, Section, Schedule, Exhibit or definition to any clause means such clause of such Article, Section, Schedule, Exhibit or definition;

(f)            the words “this CONTRACT,” “herein,” “hereby,” “hereunder,” “hereof,” “hereto” and words of similar import are references to this CONTRACT as a whole and not to any particular Article or other provision hereof or thereof, unless expressly so limited;

  

3

  

(g)           the word “including” and its derivatives means “including, but not limited to,” and corresponding derivative expressions;

(h)           relative to the determination of any period of time, “from” means “from and including,” “to” means “to but excluding” and “through” means “through and including;”

(i)             whenever the parties have agreed that any approval or consent shall not be unreasonably withheld, such phrase includes the parties’ agreement that the approval or consent shall not be unreasonably delayed or conditioned;

(j)             no consideration shall be given to the captions of the articles, sections, subsections, or clauses, which are inserted for convenience in locating the provisions of this CONTRACT and not as an aid in its construction;

(k)            no consideration shall be given to the fact or presumption that one party had a greater or lesser hand in drafting this CONTRACT; every covenant, term and provision of this CONTRACT shall be construed simply according to its fair meaning and not strictly for or against any party (notwithstanding any rule of LAW requiring an agreement to be strictly construed against the drafting party), it being understood that the parties to this CONTRACT are sophisticated and have had adequate opportunity and means to retain counsel to represent their interests and to otherwise negotiate the provisions of this CONTRACT;

(l)             examples shall not be construed to limit, expressly or by implication, the matter they illustrate;

(m)           a defined term has its defined meaning throughout this CONTRACT, and each Exhibit and Schedule to this CONTRACT, regardless of whether it appears before or after the place where it is defined;

(n)            all references to prices, values or monetary amounts refer to United States Dollars, unless expressly provided otherwise;

(o)            each Exhibit and Schedule to this CONTRACT is a part of this CONTRACT, but if there is any conflict or inconsistency between the main body of this CONTRACT and any Exhibit or Schedule, the provisions of the main body of this CONTRACT shall prevail; and

(p)            the word “or” may not be mutually exclusive, and can be construed to mean “and” where the context requires there to be a multiple rather than an alternative obligation.

  

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3.             Description:

The DRILLSHIP shall have BUILDER’s Hull No. 3614 and shall be designed, constructed, equipped and completed in accordance with the provisions of this CONTRACT, and the SPECIFICATIONS signed by the parties hereto for identification and made an integral part hereof.

 

4.             Dimensions and Characteristics:

Details of the DRILLSHIP’s dimension and characteristics including capabilities, length, breadth, depth, draft, machinery, speed and variable load capacity and all other particulars are as shown in the SPECIFICATIONS.

 

5.             Classification:

The DRILLSHIP, including her machinery, equipment and outfit, shall be constructed in accordance with the edition and amendments thereto in force at the date of this CONTRACT of the rules and regulations of and under special survey of Det Norske Veritas (the “CLASSIFICATION SOCIETY”), and shall be distinguished in the CLASSIFICATION SOCIETY’s register by the symbols DYNPOS-AUTRO, CRANE, HLDK-SH, DRILL, BIS or EO.   Decisions of the CLASSIFICATION SOCIETY as to compliance or non-compliance of the DRILLSHIP with the said rules and regulations of the CLASSIFICATION SOCIETY shall be final and binding upon the parties.

 

6.             Rules and Regulations:

The DRILLSHIP shall comply with the applicable rules, regulations and requirements of the other regulatory bodies referred to in the SPECIFICATIONS as in effect at the date of this CONTRACT.

 

7.             Subcontracting of Construction Work:

BUILDER may cause part or the majority of the work on the DRILLSHIP to be performed by one or more subcontractors; provided, however, that BUILDER shall obtain BUYER’s consent in respect of any of the work on the DRILLSHIP to be performed by a subcontractor outside of Korea.  Where such part of the work is subcontracted, BUILDER shall nevertheless always remain responsible for the performance of the same work under the CONTRACT.  BUYER’s rights hereunder shall not be in any way reduced in respect of such subcontracted work.

8.             Registration:

The DRILLSHIP shall be registered by the BUYER at its own cost and expense under the LAWS of the Republic of the Marshall Islands at the time of delivery.

 

9.             Production Schedule and Erection Plan:

(a)           BUILDER and BUYER have agreed to a production schedule, as follows (the “PRODUCTION SCHEDULE”):

(1)           within thirty (30) days of the EFFECTIVE DATE, BUILDER shall provide BUYER with a level 1 PRODUCTION SCHEDULE;

(2)           no later than the date that is six (6) months prior to steel-cutting, BUILDER shall provide BUYER with a level 3 PRODUCTION SCHEDULE;

  

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(3)           from steel-cutting to launch of the DRILLSHIP, BUILDER shall provide BUYER with a level 3 PRODUCTION SCHEDULE on a monthly basis; and

(4)           from launch of the DRILLSHIP through DELIVERY, BUILDER shall provide BUYER with a level 3 PRODUCTION SCHEDULE on a bi-weekly basis.

(b)           The PRODUCTION SCHEDULE shall provide for completion and DELIVERY of the DRILLSHIP by the scheduled DELIVERY DATE and shall be used to measure BUILDER’s progress in performing its obligations under this CONTRACT. The PRODUCTION SCHEDULE may be adjusted from time to time for any delays or extensions of time permitted under this CONTRACT or as otherwise modified by mutual agreement and shall be the basis of interpretation of actual construction progress of the DRILLSHIP.

(c)           BUILDER shall also develop an overall DRILLSHIP erection plan that integrates material delivery and assembly actions needed to schedule workflow during all phases of construction.  This plan shall encompass sufficient planning data to assure that all phases of construction can be adequately accomplished so as to DELIVER the DRILLSHIP on or before the scheduled DELIVERY DATE.

  

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ARTICLE II

CONTRACT PRICE AND TERMS OF PAYMENT

1.             Contract Price:

The contract price of the DRILLSHIP, including the drilling equipment package and the subsea equipment package, is United States Dollars Five Hundred Fifty Million Three Hundred Ninety Three Thousand (USD 550,393,000.00) (the “CONTRACT PRICE”), inclusive of the PC SUM and a One Million Dollar (USD 1,000,000.00) non-refundable design fee, net receivable by BUILDER, which is exclusive of BUYER’S SUPPLIES.  The CONTRACT PRICE shall be subject to upward or downward adjustment as set out in this CONTRACT.  Any such adjustment shall be determined prior to DELIVERY of the DRILLSHIP.

2.             Currency:

All payments required to be made by either party under this CONTRACT shall be made in United States Dollars.

3.             Terms of Payment:

The CONTRACT PRICE shall be paid by BUYER to BUILDER in instalments (“PAYMENT MILESTONE(S)”) as follows:

(a)           PAYMENT MILESTONE 1:

United States Dollars One Hundred Fifty Eight Million Eight Hundred Seventeen Thousand (USD 158,817,900.00) shall be paid within five (5) BANKING DAYS from the date of receipt by BUYER of a copy of the Irrevocable Stand-by Letter of Credit attached hereto as Exhibit A for the DRILLSHIP. At the same time the PAYMENT MILESTONE 1 is paid, the non-refundable One Million Dollar (USD 1,000,000.00) design fee shall be paid to the BUILDER.

(b)           PAYMENT MILESTONE 2 (Final Installment):

United States Dollars Three Hundred Seventy Million Five Hundred Seventy Five Thousand One Hundred (USD 370,575,100.00), plus other sums due to BUILDER under this CONTRACT and any increase or any decrease due to adjustments, if any, to the CONTRACT PRICE as per Article III.1, Article III.2 and Article V shall be paid upon delivery of the DRILLSHIP.

4.             Method of Payment:

(a)           PAYMENT MILESTONE before DELIVERY:

Upon receipt of a notice from BUILDER, BUYER shall, at its own cost and expense, remit the PAYMENT MILESTONE before DELIVERY of the DRILLSHIP as provided in Article II.3 by telegraphic transfer to Account No. 100-910003-74332 with Hana Bank, 9-10, 2-Ka, Euljiro, Chung-Ku, Seoul, Korea (SWIFT BIC HNBNKRSE) (hereinafter called “HB”) through HB’s Account No. 011 1 545027 with JPMorgan Chase Bank, NY, 270 Park Avenue, New York, NY 10017, USA (SWIFT BIC CHASUS33) (hereinafter called “JPMC NY”) or to the account of a bank designated by the BUILDER (“BUILDER’S BANK”) as indicated by BUILDER at least two (2) BANKING DAYS before the due date thereof in favor of Daewoo Shipbuilding & Marine Engineering Co., Ltd. under advice by authenticated SWIFT Message or telex to K-EXIM by remitting bank.

  

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(b)           PAYMENT MILESTONE on DELIVERY:

PAYMENT MILESTONE 2 shall be payable upon DELIVERY of the DRILLSHIP (as provided in Article II.3) by telegraphic transfer to the account of HB (Account No. 011 1 545027 with JPMC NY) or BUILDER’S BANK in favor of Daewoo Shipbuilding & Marine Engineering Co., Ltd., under advice by authenticated SWIFT Message to HB or BUILDER’S BANK by the remitting bank, against presentation by BUILDER to HB or BUILDER’S BANK of a duplicate original copy of the Protocol of Delivery and Acceptance attached hereto as Exhibit C of the DRILLSHIP signed by BUILDER and BUYER.

(c)           Prompt payment:

No payment due under this CONTRACT shall be delayed or withheld by BUYER on account of any dispute or disagreement of whatsoever nature arising between the parties hereto or by the reason of reference of the said dispute or disagreement to arbitration provided for in Article XIII; provided, however, that in the event of a dispute with respect to PAYMENT MILESTONE 2, BUYER may provide BUILDER with a surety bond or bank guarantee in the disputed amount.

(d)           Expenses and Bank Charges

Expenses and bank charges outside of Korea for remitting payments and any taxes, duties, expenses and fees outside of Korea connected with such payment shall be for account of the BUYER.  However, bank charges of HB or BUILDER’S BANK shall be borne by the BUILDER.

  

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ARTICLE III

ADJUSTMENT OF CONTRACT PRICE

The CONTRACT PRICE shall be subject to adjustment as hereinafter set out in the following circumstances.

1.             Delay in DELIVERY:

In the event that DELIVERY is beyond midnight Korean time at the SHIPYARD on the DELIVERY DATE, the BUILDER shall, subject to the provisions of Article VIII.2, pay to the BUYER by way of liquidated damages, which the parties stipulate is a reasonable and genuine pre-estimate of actual damages and, not by way of penalty, for loss of use of the DRILLSHIP, the amounts set out below.

(a)           No adjustment shall be made and the CONTRACT PRICE shall remain unchanged for the first thirty (30) days of delay in DELIVERY of the DRILLSHIP beyond the DELIVERY DATE (ending as of twelve o’clock midnight, Korean time of the thirtieth (30th) day of delay).

(b)           If the DELIVERY of the DRILLSHIP, for causes for which BUILDER is liable, is delayed more than thirty (30) days after the DELIVERY DATE, then, in such event, beginning at twelve o’clock midnight of the thirtieth (30th) day after the DELIVERY DATE, the liquidated damages, as follows, shall be due at the date of actual DELIVERY of the DRILLSHIP by means of an adjustment to the CONTRACT PRICE:

(1)           31st   -  120th day of delay USD 125,000.00 per day; and

(2)           121st  -  210th day of delay USD 155,000.00 per day.

However, the total of liquidated damages shall not exceed the amount due to cover a delay of one hundred eighty (180) days counting from midnight of the thirtieth (30th) day after the DELIVERY DATE at the above specified rate of reduction.

(c)           If such delay in DELIVERY of the DRILLSHIP continues, for which BUILDER is liable, for a period of one hundred eighty (180) days or more from the thirty-first (31st) day after the DELIVERY DATE, in such event and after such period has expired, BUYER may, at its option, terminate this CONTRACT in accordance with the provisions of Article X.1(c) or accept the DRILLSHIP with a total reduction in the CONTRACT PRICE equal to five percent (5%) of the CONTRACT PRICE less the PC SUM.

BUILDER may, at any time after the expiration of the aforementioned two hundred and ten (210) days of delay in DELIVERY and if BUYER has not served notice of termination as provided in Article X, notify BUYER of the expected future date for DELIVERY and demand in writing that BUYER shall make an election, in which case BUYER shall, within ten (10) BANKING DAYS after such demand is delivered to BUYER, notify BUILDER of its termination of this CONTRACT or acceptance of the revised future date for DELIVERY.  If the DRILLSHIP is not delivered by such revised future date for DELIVERY plus thirty (30) days, BUYER shall have a right to terminate this CONTRACT but without any right to recover any further liquidated damages.  If BUYER fails to notify BUILDER of its termination of this CONTRACT as specified above within such ten (10) BANKING DAY period, BUYER shall be deemed to have consented to the DELIVERY of the DRILLSHIP at the future date for DELIVERY proposed by BUILDER.

  

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(d)           For the purpose of this Article III.1, the DELIVERY of the DRILLSHIP shall be deemed to be delayed when and if the DRILLSHIP, after taking into full account of all postponements of the DELIVERY DATE by reason of permissible delays as defined in this CONTRACT, is not delivered by the date upon which the DELIVERY is required under the terms of this CONTRACT.

2.             Shortfalls in Variable Load Capacity:

The DRILLSHIP shall on DELIVERY have a variable deck load of at least 22,800 Metric Tons at operating draft (“SPECIFIED OPERATING VARIABLE DECK LOAD”).  However, if the actual operating variable deck load of the DRILLSHIP on DELIVERY is reduced by more than five percent (5%) of the SPECIFIED OPERATING VARIABLE DECK LOAD, the CONTRACT PRICE shall be reduced by USD 3,000.00 per Metric Ton for a deficiency in excess of five percent (5%) of the SPECIFIED OPERATING VARIABLE DECK LOAD.  If the deficiency in any variable loads as set out in this Article III.2 exceeds ten percent (10%) of the SPECIFIED OPERATING VARIABLE DECK LOAD, BUYER shall have the right to terminate this CONTRACT.

 

3.             Insufficient Speed:

(a)           The CONTRACT PRICE of the DRILLSHIP shall not be affected or changed if the actual speed, as determined by sea trials, is less than the guaranteed speed under the SPECIFICATIONS, provided such deficiency in actual speed is not more than four-tenths (4/10) of a knot below the guaranteed speed.

(b)           However, as for the deficiency of more than four-tenths (4/10) of a knot in actual speed below the speed guaranteed under this CONTRACT, the CONTRACT PRICE shall be reduced by USD 100,000.00 for each full one-tenth (1/10) of a knot in excess of the said four-tenths (4/10) of a knot of deficiency in speed; provided that fractions of less than one-tenth (1/10) of a knot shall be regarded as a full one-tenth (1/10) of a knot.  However, unless the parties agree otherwise, the total amount of reduction from the CONTRACT PRICE shall not exceed the amount due to cover the deficiency of one (1) full knot below the guaranteed speed at the rate of reduction as specified above.

(c)           If the deficiency in actual speed of the DRILLSHIP is more than one (1) full knot below the speed guaranteed under this CONTRACT, BUYER, at its option, may, subject to the BUILDER’s right to effect alterations or corrections, cancel this CONTRACT or may accept the DRILLSHIP at a reduction in the CONTRACT PRICE as above provided for one (1) full knot of deficiency only.

4.             Conclusive Pecuniary Compensation:

The liquidated damages, being applicable for Articles III.1, III.2 and III.3 hereunder shall be the conclusive pecuniary compensation recoverable in connection with each particular event stated herein, and BUILDER shall not be liable for any additional compensation claimed by BUYER in relation to such particular event and its consequential events.

  

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ARTICLE IV

APPROVAL OF PLANS AND DRAWINGS AND INSPECTION DURING CONSTRUCTION

1.             Approval of Plans and Drawings:

BUILDER shall submit to BUYER three (3) copies of each of the plans and drawings, the list of which shall be mutually agreed upon between the parties hereto, for its approval.  BUYER shall, within seventeen (17) days after receipt thereof, return to BUILDER one (1) copy of such plans and drawings with BUYER’s approval or comments (if any) written thereon, provided always that:

 

(a)           if the REPRESENTATIVE (as hereinafter defined) shall have been sent by BUYER to the SHIPYARD as set out in Article IV.2, BUILDER may submit any remaining plans and drawings to the REPRESENTATIVE for his approval.  The REPRESENTATIVE shall, within seven (7) days after receipt thereof, return to BUILDER one (1) copy of such plans and drawings with his approval or comments (if any) written thereon.  Approval by the REPRESENTATIVE of the plans and drawings duly submitted to him shall be deemed to be approval by BUYER for all purposes of this CONTRACT.

(b)           If the above comments made by BUYER are not clearly specified or detailed, BUILDER shall seek clarification from BUYER, and BUYER shall give its explanation thereto without undue delay and with reasonably sufficient detail.  If BUYER fails to comply, BUILDER may place its own interpretation on such comments in implementing the same.

(c)           If BUYER or the REPRESENTATIVE shall fail to return the plans and drawings to BUILDER within the time limits as above provided, such plans and drawings shall be deemed to have been approved or confirmed without any comment.

Any approval or absence of approval by BUYER shall not relieve BUILDER of its obligations to build the DRILLSHIP in accordance with the SPECIFICATIONS.

2.             Appointment of REPRESENTATIVE:

BUYER shall in due time despatch to and maintain at the SHIPYARD, at BUYER’s own cost and expense, up to a maximum of five (5) representative(s) (the “REPRESENTATIVE” or the “REPRESENTATIVES”) who shall be duly authorized in writing by BUYER to act on behalf of BUYER in connection with modifications of the SPECIFICATIONS, adjustment of the CONTRACT PRICE and the DELIVERY DATE, confirmation of the PRODUCTION SCHEDULE, approval of the plans and drawings, attendance to the tests and inspections relating to the DRILLSHIP, her machinery, equipment and outfit and any other matters for which such REPRESENTATIVE is authorized by BUYER.

3.             Inspection:

(a)           The necessary tests and inspections of the DRILLSHIP, her machinery, equipment and outfit either as required by the CLASSIFICATION SOCIETY or by other applicable regulatory bodies or as agreed by the parties hereto, shall be carried out by the CLASSIFICATION SOCIETY, other regulatory bodies and/or an inspection team of BUILDER throughout the entire period of construction, in order to ensure that the construction of the DRILLSHIP is duly performed in accordance with this CONTRACT and the SPECIFICATIONS.  During construction of the DRILLSHIP the REPRESENTATIVE shall have the right to attend such tests and inspections of the DRILLSHIP, her machinery and equipment as mutually agreed between BUYER and BUILDER.

  

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(b)           BUILDER shall give a reasonable advance notice to the REPRESENTATIVE of the date and place of such tests, trials and inspections which may be attended by him.  Failure by the REPRESENTATIVE to be present at such tests, trials and inspections after due notice to him as aforesaid shall be deemed to be a waiver of the REPRESENTATIVE’s right to be present.  In the event that BUILDER needs an inspection for coating work to be made during non-working hours for smooth progress of work, the REPRESENTATIVE shall exercise his best endeavours to attend such inspection provided that BUILDER has given a reasonable advance notice to the REPRESENTATIVE.

(c)           In working hours during construction of the DRILLSHIP until DELIVERY thereof, the REPRESENTATIVE shall, subject to the reasonable requirements of the SHIPYARD’s work program and safety control, be permitted free and ready access to the DRILLSHIP, her machinery and equipment, and to any other place where work on the DRILLSHIP is being done, or materials are being processed or stored in connection with the construction of the DRILLSHIP, including the yards, workshops, stores and offices of BUILDER, and the premises of subcontractors of BUILDER, who are doing work or storing materials in connection with the DRILLSHIP’s construction.

(d)           If the REPRESENTATIVE discovers any construction, material or workmanship which he considers not to conform to the requirements of this CONTRACT and/or the SPECIFICATIONS, the REPRESENTATIVE shall promptly give BUILDER a notice in writing specifying the alleged non-conformity. Upon receipt of such notice from the REPRESENTATIVE, BUILDER shall correct such non-conformity, if BUILDER agrees to his view.  Any disagreement shall be resolved in accordance with Article XIII.1.

(e)           If the CLASSIFICATION SOCIETY, TECHNICAL EXPERT or arbitrator enters a determination in favour of BUYER, then in such case BUILDER shall correct such non-conformity, or if such corrections cannot be made in time to meet the construction schedule for the DRILLSHIP, the then parties shall mutually agree to an adjustment of the CONTRACT PRICE in lieu of such corrections.  If the CLASSIFICATION SOCIETY, TECHNICAL EXPERT or the arbitrator enters a determination in favour of BUILDER, then the time for DELIVERY of the DRILLSHIP shall be extended for the period of delay in construction, if any, occasioned by such proceedings, and BUYER shall compensate BUILDER for the proven loss and damages directly incurred by BUILDER under this CONTRACT as a result of such dispute; provided that BUILDER shall be required to take reasonable endeavors to mitigate any losses and/or damages incurred in connection with such dispute and no special or consequential damages may be recouped.

(f)             In the event the arbitrator enters a determination in favour of BUYER and determines that such corrections cannot be made prior to the two hundred tenth (210th) day following the DELIVERY DATE pursuant to Article III.1, then BUYER is entitled to terminate this CONTRACT.

4.             Facilities:

(a)           BUILDER shall furnish BUYER with office space to accommodate a forty-five (45) person site team including a locker room and coffee room equipped with refrigerator and industrial-sized coffee maker; office space to accommodate a forty-five (45) person operations team, including a locker room and coffee room equipped with a refrigerator and industrial-sized coffee maker; and each of the above-listed office spaces is to have a minimum of six (6) private offices, with all desks to be outfitted with an Internet connection and electrical plugs, a large dedicated file room, one (1) meeting room able to accommodate fifty (50) persons and complete with a large table and chairs; fifty (50) bicycles upon BUYER’s request on a reimbursable basis; fifteen (15) dedicated parking spaces; bottled water and dispensers upon BUYER’S request on a reimbursable basis; unlimited high speed internet service upon BUYER’S request on a reimbursable basis; three (3) print/scan/email workstations networked and all required paper upon BUYER’s request on a reimbursable basis; a full size plotter and all required paper upon BUYER’s request on a reimbursable basis; storage space for BUYER’S SUPPLIES, with BUILDER to transport from storage and load onto the DRILLSHIP all BUYER’S SUPPLIES.

  

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(b)           Upon exercise of the FIRST OPTION (as defined in the Option Agreement), BUILDER agrees to furnish BUYER with the office facilities and parking spaces referenced in subclause (a) above with the amounts set forth therein multiplied by 1.33; provided, however, that with respect to the number of bicycles provided, an additional fifty (50) bicycles shall be provided upon BUYER’s request on a reimbursable basis; and, provided, further, that a second meeting room capable of accommodating fifty (50) people shall also be provided upon exercise of the FIRST OPTION.

(c)           Upon exercise of the SECOND OPTION (as defined in the Option Agreement), BUILDER agrees to furnish BUYER with the office facilities and parking spaces referenced in subclause (a) above with a maximum of the amounts set forth therein multiplied by 1.67; provided, however, that upon BUYER’s request on a reimbursable basis a total of one hundred fifty (150) bicycles shall be provided.

Provided, however, that BUYER shall pay telecommunication charges including telephone and email, and shall reimburse costs and expenses for supply and installation of telefax or external telephone lines and other facilities and office equipment and furniture, if any, provided in addition to the above upon BUYER’s request.

5.             Liability of BUILDER and BUYER:

(a)           The REPRESENTATIVE(S) shall at all times be deemed to be the employee(s) of BUYER and not of BUILDER.

(b)           BUILDER agrees to protect, indemnify and hold BUYER free and harmless from and against any and all claims or liabilities (including, without limitation, the cost of the suit and reasonable attorney’s fees) arising in favour of any of BUILDER’s (or its AFFILIATES), employees, agents, officers, invitees, subcontractors (or their servants) or representatives, or any survivor of the foregoing on account of injury to or death of any such parties or damage to any of their property attributable to the actions (or lack thereof) by any such parties in connection with the DRILLSHIP and/or work performed pursuant to this CONTRACT, regardless of whether BUYER and/or its subcontractors and/or others may be wholly, partially or solely negligent or otherwise at fault.

(c)           BUYER agrees to protect, indemnify and hold BUILDER and its subcontractors free and harmless from and against any and all claims or liabilities (including, without limitation, the cost of the suit and reasonable attorney’s fees) arising in favour of any of BUYER’s (or its AFFILIATES) employees, agents, officers, invitees, subcontractors (or their servants) or representatives, or any survivor of any of the foregoing on account of injury to or death of any such parties or damage to any of their property except as regards DRILLSHIP attributable to the actions (or lack thereof) by any such parties in connection with the DRILLSHIP and/or work performed pursuant to this CONTRACT, regardless of whether BUILDER or its subcontractors and/or others may be wholly, partially or solely negligent or otherwise at fault.

  

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6.             Responsibility of BUYER:

(a)           BUYER shall advise BUILDER in advance of the names, experiences and scope of authority of the REPRESENTATIVE(s) and of any other information pertaining to their qualifications.  If BUILDER shall have reasonable cause to disapprove of any of the REPRESENTATIVE(s), it shall so advise BUYER and BUYER shall take proper action.

(b)           BUYER shall undertake and assure that its REPRESENTATIVE(s) shall carry out their duties hereunder in accordance with BUILDER’s good practice and in such a way as to avoid any unnecessary increase in building cost or delay in the production schedules of BUILDER.  The REPRESENTATIVE(s) shall abide by the work rules and regulations prevailing at the premises of BUILDER and its subcontractors.

(c)           BUILDER has the right to request BUYER to replace any REPRESENTATIVE(s) if deemed unsuitable and unsatisfactory for the proper progress of the DRILLSHIP’s construction.  If BUYER considers that such BUILDER’s request is justified, BUYER shall effect such replacement as soon as practicable

  

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ARTICLE V

MODIFICATIONS

1.             Modification of SPECIFICATIONS:

(a)           Any MODIFICATION or variation of or amendment to the SPECIFICATIONS shall be evidenced by written agreement of the parties hereto (a “CHANGE ORDER”); provided, prior to any MODIFICATION or variation being effected by the BUILDER, the parties shall first agree to alterations in the CONTRACT PRICE, the DELIVERY DATE, lightship weight and other terms and conditions of this CONTRACT and SPECIFICATIONS occasioned by or resulting from such MODIFICATION or variation within seven (7) days from the receipt by BUYER of BUILDER’s proposal.  BUILDER has the right to continue construction of the DRILLSHIP on the basis of the SPECIFICATIONS until agreement to the above has been reached.

(b)           Notwithstanding the foregoing, BUILDER may also make minor changes to the SPECIFICATIONS including, but not limited to, the dimensions and characteristics of the DRILLSHIP, if found necessary to suit the SHIPYARD’s local conditions and facilities, the availability of materials and equipment, introduction of improved methods or otherwise, provided that BUILDER shall first obtain BUYER’s written (which expression includes e-mail communication) approval, which shall not be unreasonably withheld or delayed.

(c)           Upon receiving a written request for MODIFICATION from BUYER, BUILDER will submit to BUYER in writing within twenty one (21) working days a quotation of the change in the CONTRACT PRICE and/or DELIVERY DATE (if any) as a result of alterations and adjustments required to the SPECIFICATIONS.

(d)           In the event that BUYER requests any change that would result in a net savings in cost then, subject to negotiations between the parties, the cost saving shall be to BUYER’s benefit and be credited in the final accounts on delivery of the DRILLSHIP.

2.             Change in Class and Statutory Requirements

(a)           If after the EFFECTIVE DATE, any requirements of the CLASSIFICATION SOCIETY, or of other rules and regulations specified in Article I.4 (or the interpretation thereof by the relevant body) to which the construction of the DRILLSHIP is required to conform, are changed by the CLASSIFICATION SOCIETY or other regulatory bodies authorized to make such changes, the following provisions shall apply unless a waiver of the changed requirement, rule, regulation or interpretation is obtained pursuant to BUYER’s request:

(1)           If the changes are compulsory for the DRILLSHIP, either of the parties hereto, upon receipt of information from the CLASSIFICATION SOCIETY or such other regulatory bodies, shall promptly transmit the same to the other in writing, and BUILDER shall thereupon incorporate such changes into the construction of the DRILLSHIP, provided that BUYER shall first have agreed to adjustments required by BUILDER in the CONTRACT PRICE, the DELIVERY DATE, lightship weight and other terms and conditions of this CONTRACT and the SPECIFICATIONS occasioned by or resulting from such changes within seven (7) days from the receipt by BUYER of BUILDER’s proposal.

  

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(2)           If the changes are not compulsory for the DRILLSHIP, but BUYER desires to incorporate any of them into the construction of the DRILLSHIP, BUYER shall notify BUILDER of that intention.  BUILDER may accept such changes, provided that such changes will not in its reasonable judgment adversely affect BUILDER’s planning or program in relation to BUILDER’s other commitments, and provided, further, that BUYER shall first have agreed to adjustments required by BUILDER in the CONTRACT PRICE, the DELIVERY DATE, and other terms and conditions of this CONTRACT and the SPECIFICATIONS occasioned by or resulting from such changes within seven (7) days from the receipt by BUYER of BUILDER’s proposal.

(b)           Agreements as to any changes under this Article V.2 shall be made in the same manner as provided in Article V.1 for MODIFICATIONS or changes to the SPECIFICATIONS.

(c)           Any delay in the construction of the DRILLSHIP caused by BUYER’s delay in making a decision or agreement as above shall constitute a permissible delay under this CONTRACT.

3.             Substitution of Materials:

If any of the materials or equipment required by the SPECIFICATIONS or otherwise under this CONTRACT for the construction of the DRILLSHIP are in short supply or cannot be procured in time to maintain the DELIVERY DATE of the DRILLSHIP or are unreasonably high in price as compared with prevailing international market rates, BUILDER may, provided that BUYER shall so agree in writing (which agreement shall not be unreasonably withheld), supply other materials capable of meeting the requirements of the CLASSIFICATION SOCIETY and of the rules, regulations and requirements with which the construction of the DRILLSHIP must comply.  Any agreement as to substitution of materials shall be effected in the manner as provided in Article V.1.

4.             Adjustment to CONTRACT PRICE and DELIVERY by MODIFICATIONS:

In relation to this Article V, the BUILDER’s quotations in respect of any increase or decrease in the CONTRACT PRICE or any MODIFICATION shall be calculated and submitted on “lump sum” basis for the adjustment to the CONTRACT PRICE.  BUYER may contest the reasonableness of BUILDER’s proposal based on a lump sum.  In case such contest by BUYER is on reasonable grounds only and BUILDER agrees on the BUYER’s contest and opinion therein, then “time and materials” basis shall be applied to settle pricing of the modifications as defined below in subparagraphs (a) and (b).  BUYER’s written notification shall be received by BUILDER within ten (10) days of the date of BUILDER’s quotations.

(a)           Labour costs shall be charged at the agreed hourly rates set out in EXHIBIT B.

(b)           The cost of materials and equipment shall be fifteen per cent (15%) in addition to the cost of the BUILDER.

In respect of costs not set out in EXHIBIT B, the BUYER and the BUILDER shall negotiate in good faith to reach an agreement on such price for the modifications. If no agreement is reached within thirty (30) days following receipt by BUILDER of BUYER’s written notification as set out in this paragraph above, the dispute shall be referred to the TECHNICAL EXPERT in accordance with Article XIII.1(b) of this CONTRACT.

  

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Adjustment to the contractual DELIVERY DATE in respect of this Article V shall be subject to effect on critical paths in the DRILLSHIP’s construction and completion.

5.             Payment for MODIFICATIONS:

Any sums due to either party under Article V as a result of MODIFICATIONS shall be paid as follows but in any event prior to DELIVERY of the DRILLSHIP:

 

(a)           50% of any lump sum amount shall be paid upon the agreement of MODIFICATIONS or immediately following a decision by the TECHNICAL EXPERT in accordance with Article XIII.1(b) of this CONTRACT. Any amount based on time and materials shall be paid as accrued.

(b)           The remaining 50% of the lump sum amount shall be paid upon the completion of MODIFICATIONS in accordance with the CONTRACT.

  

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ARTICLE VI

SEA TRIAL

1.             Notices:

BUILDER shall notify BUYER at least fourteen (14) days in advance of the expected time and place of the sea trial of the DRILLSHIP, and BUYER shall promptly acknowledge receipt of such notice.  Such date shall be confirmed by BUILDER at least five (5) days in advance.  However, if the sea trial of the DRILLSHIP is postponed or delayed due to unfavourable weather conditions and/or unreadiness of the DRILLSHIP for the sea trial then BUILDER shall give BUYER as much advance notice of the new date of sea trials as practicable.

BUYER shall have the REPRESENTATIVE(S) and such other persons as BUYER may require in writing on board the DRILLSHIP to witness the sea trial.  Failure by the REPRESENTATIVE(S) to attend the sea trial of the DRILLSHIP for any reason whatsoever after due notice to BUYER as above provided shall be deemed to be a waiver by BUYER of its right to have the REPRESENTATIVE(S) on board the DRILLSHIP at the sea trial, and BUILDER may conduct the sea trial without the REPRESENTATIVE(S) being present, provided that a representative of the CLASSIFICATION SOCIETY shall be on board the DRILLSHIP for such sea trial. In such case BUYER shall be obliged to accept the DRILLSHIP on the basis of a certificate of BUILDER, confirmed by the CLASSIFICATION SOCIETY, if applicable, that the DRILLSHIP, on the sea trial, is found to conform to this CONTRACT and the SPECIFICATIONS.  In any event BUILDER shall promptly supply to BUYER a copy of all records of tests and trials carried out with regard to the DRILLSHIP, her machinery and equipment.

2.             Weather Conditions:

The sea trial shall be carried out under weather conditions which are deemed favourable enough in the reasonable judgement of BUILDER in accordance with the SPECIFICATIONS.  In the event of unfavourable weather on the date specified for the sea trial, the same shall take place on the first available day thereafter that weather conditions permit.

It is agreed that if during the sea trial the weather should suddenly become so unfavourable that the satisfactory conduct of the sea trial can no longer be continued, the sea trial shall be discontinued and postponed until the next following favourable day, unless BUYER shall assent in writing to a request from BUILDER to accept the DRILLSHIP on the basis of the sea trial already made before such discontinuance occurred.

Any delay in the sea trial caused by unfavourable weather conditions shall be deemed a permissible delay in the delivery of the DRILLSHIP and shall operate to postpone the DELIVERY DATE by the period of delay involved.

3.             How Conducted:

(a)           All expenses in connection with the sea trial are for the account of BUILDER, and BUILDER shall provide at its own expense the necessary crew to comply with the requirements of safe navigation.  The sea trial shall be conducted in the manner prescribed in the SPECIFICATIONS and shall prove fulfillment of the performance requirements for the sea trial as set forth in the SPECIFICATIONS.  The course of the sea trial shall be determined by BUILDER.  BUILDER shall have the right to conduct preliminary trials and to repeat any trial whatsoever as it deems necessary.

(b)           Lubricating oils, fuel oils, hydraulic oils and greases or other consumable stores (excluding fresh water) necessary for sea trials shall be supplied by BUILDER, as specified by BUYER prior to conducting such sea trials, and BUYER shall pay BUILDER the documented cost of the lubricating oils, fuel oils, hydraulic oils and grease, inclusive of any quantities remaining in machinery or piping, as applicable, remaining at the time of DELIVERY.

  

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4.             Method of Acceptance or Rejection:

(a)            If during sea trial any breakdowns occur entailing interruption or irregular performance which can be repaired on board, the trial shall be continued after repairs and be valid in all respects.

(b)           As soon as practicable after satisfactory completion of the sea trial, BUILDER shall give BUYER a report thereon and notice that the results of the sea trial indicate conformity of the DRILLSHIP to this CONTRACT and the SPECIFICATIONS.  BUYER shall, within seven (7) days after receipt of such notice from BUILDER, notify BUILDER of its acceptance or rejection of the DRILLSHIP on the basis of its conformity with the requirements of this CONTRACT and the SPECIFICATIONS.

(c)            If the results of the sea trial indicate that the DRILLSHIP or any part or equipment thereof does not conform to the requirements of this CONTRACT and/or the SPECIFICATIONS, then BUILDER shall take the necessary steps to correct such non-conformity.  Upon completion of the correction of such non-conformity, BUILDER shall give BUYER notice thereof.  BUYER shall, within seven (7) days after receipt of such notice from BUILDER, notify BUILDER of its acceptance or rejection of the DRILLSHIP.  However, BUYER shall not be entitled to reject the DRILLSHIP by reason of any minor or insubstantial defect or non-conformity, which can be judged from the viewpoint of standard building practice as applied to international offshore drillships and which does not effect the issuance of required certificates from the CLASSIFICATION SOCIETY and other regulatory bodies or the operability, function or performance of the DRILLSHIP, but in such case, the BUILDER shall not be released from its obligation to correct and/or remedy such minor or insubstantial non-conformity as far as practicable during the WARRANTY PERIOD.

(d)           If BUYER considers that the results of the sea trial indicate that the DRILLSHIP or any part or equipment thereof does not conform to this CONTRACT and/or the SPECIFICATIONS, BUYER shall indicate in detail in a notice of rejection in what respect the DRILLSHIP or any part or equipment thereof, does not in its opinion conform to this CONTRACT and/or the SPECIFICATIONS.

(e)            If BUYER fails to notify BUILDER in writing or email confirmed in writing of the acceptance or rejection of the DRILLSHIP together with the reason therefore within the period as provided in Article VI.4 (b) or (c), BUYER shall be deemed to have accepted the DRILLSHIP.

(f)             BUILDER may dispute the rejection of the DRILLSHIP by BUYER under this Article VI.4, in which case the matter shall be submitted for final decision by arbitration in accordance with Article XIII.

5.              Effect of Acceptance:

Acceptance of the DRILLSHIP as above provided shall be final and binding so far as the conformity of the DRILLSHIP to this CONTRACT and the SPECIFICATIONS is concerned, and shall preclude BUYER from refusing formal delivery of the DRILLSHIP as hereinafter provided, if BUILDER complies with all procedural requirements for DELIVERY of the DRILLSHIP as provided in Article VII.

  

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ARTICLE VII

DELIVERY DATE AND DELIVERY

1.             Delivery:

Delivery of the DRILLSHIP shall occur upon completion of the sea trials in accordance with Article VI above, issuance of a classification certificate (or an interim classification certificate) by the CLASSIFICATION SOCIETY and acceptance of the DRILLSHIP by BUYER (“DELIVERY”).

2.             Time and Place:

(a)           The DRILLSHIP shall be DELIVERED safely afloat by BUILDER to BUYER at a berth in the SHIPYARD on or before 30 September 2013, except that, in the event of delays in the construction of the DRILLSHIP or any performance required under this CONTRACT due to causes which under the terms of this CONTRACT permit postponement of the date for DELIVERY, the aforementioned date for DELIVERY of the DRILLSHIP shall be postponed accordingly.  The aforementioned date, or such later date to which the requirement of DELIVERY is postponed pursuant to such terms, is herein called the “DELIVERY DATE”.

(b)           With sixty (60) days prior written notice to BUYER, BUILDER shall be entitled to advance the DELIVERY DATE of the DRILLSHIP by up to sixty (60) days.

(c)           The date on which BUILDER shall have actually DELIVERED the DRILLSHIP to BUYER is herein called the “ACTUAL DELIVERY DATE”.  In the event the BUYER defaults pursuant to Article XI.1(b), the date on which BUILDER shall have formally tendered the DRILLSHIP for DELIVERY under Article VII.7 shall be regarded as the ACTUAL DELIVERY DATE.

3.             When and How Effected:

Provided that BUYER shall have fulfilled all of its obligations under this CONTRACT (including, but not limited to, full payment of the CONTRACT PRICE and settlement of any indebtedness to BUILDER), DELIVERY of the DRILLSHIP shall be duly made hereunder by BUILDER, and such DELIVERY shall be evidenced by a Protocol of Delivery and Acceptance (attached hereto as Exhibit C) signed by the parties hereto, acknowledging DELIVERY of the DRILLSHIP by BUILDER and acceptance thereof by BUYER.

4.             Documents to be Delivered to BUYER:

Upon DELIVERY and acceptance of the DRILLSHIP, BUILDER shall deliver to BUYER the following documents which shall accompany the Protocol of Delivery and Acceptance:

(a)           Protocol of Trials of the DRILLSHIP made pursuant to the SPECIFICATIONS.

(b)           Protocol of Inventory of the equipment of the DRILLSHIP, including spare parts and the like, all as specified in the SPECIFICATIONS.

(c)           Protocol of Stores of Consumable Nature referred to under Article VI.3(b), including the original purchase price thereof.

(d)           Certificates including Builder’s Certificate required to be furnished upon delivery of the DRILLSHIP pursuant to this CONTRACT and the SPECIFICATIONS. It is agreed that if, through no fault on the part of BUILDER, the classification certificate and/or other certificates are not available at the time of DELIVERY of the DRILLSHIP, provisional certificates shall be accepted by BUYER, provided that BUILDER shall furnish to BUYER the final certificates as promptly as possible after such final certificates have been issued.

  

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(e)           Declaration of Warranty of BUILDER that the DRILLSHIP is delivered to BUYER free and clear of any liens, charges, claims, mortgages, or other encumbrances and in particular, that the DRILLSHIP is absolutely free of all burdens in the nature of imposts, taxes or charges imposed by the Korean GOVERNMENTAL AUTHORITIES, as well as of all liabilities of BUILDER to its subcontractors, employees and crew, and of all liabilities arising from the operation of the DRILLSHIP in trial runs, or otherwise, prior to delivery except as otherwise provided under this CONTRACT.

(f)            Drawings and Plans pertaining to the DRILLSHIP as stipulated in the SPECIFICATIONS.

(g)           Commercial Invoice.

(h)           Bill of Sale.

(i)             All operating manuals in BUILDER’s possession to be delivered on the DRILLSHIP.

(j)             All other documents required to be provided on or before the DELIVERY by the SPECIFICATIONS.

5.             Title and Risk:

Title to and risk of the DRILLSHIP shall pass to BUYER only upon delivery and acceptance thereof having been completed as stated above.  Until such delivery is consummated, title to and risk of the DRILLSHIP and her equipment shall remain with BUILDER; provided, however, that, in the event of a BUILDER DEFAULT, BUYER shall have the right to take early DELIVERY of the DRILLSHIP under construction subject to the condition that the parties shall first have reached prior mutual agreement on the terms and conditions for such early DELIVERY, at which time, title to and risk shall pass to BUYER.

6.             Removal of DRILLSHIP:

BUYER shall take possession of the DRILLSHIP immediately upon delivery and acceptance thereof and shall remove the DRILLSHIP from the premises of the SHIPYARD within five (5) days after delivery and acceptance thereof is affected.  If BUYER shall not remove the DRILLSHIP from the premises of the SHIPYARD within the aforesaid five (5) days, then, in such event BUYER shall pay to BUILDER reasonable mooring and storage charges for the DRILLSHIP.

7.             Tender of DRILLSHIP:

If BUYER fails to take DELIVERY of the DRILLSHIP after completion thereof according to this CONTRACT and the SPECIFICATIONS, BUILDER shall have the right formally to tender the DRILLSHIP to BUYER for DELIVERY for the purposes of Article XI.1(b).  Such tender shall be made by BUILDER by a notice to BUYER stating that the DRILLSHIP is tendered for delivery pursuant to Article VII.7 of the CONTRACT.

  

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8.             DELIVERY during Dispute.

BUILDER shall not delay or withhold DELIVERY of the DRILLSHIP pending resolution of any dispute between BUYER and BUILDER provided that BUYER has provided BUILDER  with a surety bond or bank guarantee in the amount of such dispute in accordance with Article II.4.(c).

  

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ARTICLE VIII

DELAYS AND EXTENSION OF TIME FOR DELIVERY (FORCE MAJEURE)

1.             Causes of Delay:

If at any time before the DELIVERY of the DRILLSHIP, either the construction of the DRILLSHIP or any performance required hereunder is delayed due to Acts of God; acts of princes or rulers; requirements of government authorities; war or acts of war or preparations therefore; blockade, revolution, insurrections, mobilization of armed forces, civil war, civil commotion or riots; vandalism; sabotage; strikes, lockouts or other labour disturbances by such reasons not related to BUILDER or its AFFILIATES; plague or other epidemics; quarantines; flood, typhoons, hurricanes or cyclonic storms; earthquakes; tidal waves; landslides; fires, lightning strikes, or explosions; embargoes; prolonged failure, shortage or restriction of electric current, oil or gas supplies; and delays in deliveries of major parts (inclusive of the drilling equipment package and the subsea equipment package) or performance of major obligations by subcontractors or suppliers by such causes described herein; then and in any such case, the DELIVERY DATE shall be postponed for such period as the DELIVERY of the DRILLSHIP is delayed thereby.

2.             Definition of Permissible Delay:

Delay on account of such cause as specified in Articles V.4, VI.2, VIII.1, XI.1, XVII.1 and any other delays of a nature which under the terms of this CONTRACT permit postponement of the DELIVERY DATE shall be understood to be permissible delays, which shall not be subject to adjustment of the CONTRACT PRICE as provided in Article III.1.

3.             Notice of Delay:

(a)           Within ten (10) days after the commencement of any cause of delay on account of which BUILDER claims that it is entitled under this CONTRACT to a postponement of the DELIVERY DATE, BUILDER shall (if practically possible) notify BUYER of the dates, the cause of delay which has occurred and its expected duration.

(b)           Within ten (10) days after the ending of such cause of delay, if practically possible, BUILDER shall notify BUYER in writing of the date such cause of delay ended.

(c)           BUILDER shall also notify BUYER of the period by which the DELIVERY DATE is postponed by reason of such cause of delay with all reasonable dispatch after it has been determined.  Failure by BUYER to object to BUILDER’s claim for postponement of the DELIVERY DATE within ten (10) days after receipt by BUYER of such notice of claim shall be deemed to be a waiver by BUYER of its right to object to such postponement of the DELIVERY DATE.

4.             Right to Terminate CONTRACT for Excessive Delay:

If the total accumulated time of all permissible delays on account of the causes specified in Article VIII.1 (but excluding delays caused by any error or omission on the part of BUYER and any other delays which under the terms of this CONTRACT permit postponement of the DELIVERY DATE) amounts to two hundred and ten (210) days or more, then, in such event, BUYER may terminate this CONTRACT in accordance with the provisions of Article X.  If BUYER has not served notice of termination as provided in Article X, BUILDER may, at any time after the said accumulated time justifying termination by BUYER has occurred, notify BUYER of the expected future date for DELIVERY and demand in writing that BUYER shall make an election, in which case BUYER shall, within ten (10) days after such demand is delivered to BUYER, notify BUILDER of either its termination of this CONTRACT or its acceptance of the revised future date for DELIVERY specified by BUILDER.  If the DRILLSHIP is not DELIVERED by such revised future date, BUYER shall have the same right of termination upon the same terms and conditions as above provided as if the said revised future date for DELIVERY was the DELIVERY DATE as defined in Article VII.  If BUYER fails to notify BUILDER of its termination of this CONTRACT as specified above within such ten (10) days period, BUYER shall be deemed to have consented to the DELIVERY of the DRILLSHIP at the revised future date for DELIVERY.

  

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If any termination of the CONTRACT is based on any of the permissible delays on account of the causes specified in this Article VIII.1 of the CONTRACT, no interest shall be payable by BUILDER.

  

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ARTICLE IX

WARRANTY OF QUALITY

1.             Guarantee:

BUILDER warrants that the material and workmanship employed in the construction of the DRILLSHIP shall be free from defects and shall comply with this CONTRACT.  Subject to the provisions hereinafter set out, BUILDER undertakes to remedy or replace, free of charge to BUYER, any defects in the DRILLSHIP which are due to defective material and/or improper workmanship on the part of BUILDER and/or its subcontractors, provided that the defects shall appear or be discovered during a period of twelve (12) months after the ACTUAL DELIVERY DATE (the “WARRANTY PERIOD”) if notice thereof is duly given to BUILDER; provided however that the WARRANTY PERIOD shall be extended for a further period of nine (9) months in respect of any work done by BUILDER to remedy any defect under this Article IX. For the purpose of this Article IX, the DRILLSHIP includes her hull, machinery, equipment and gear, but excludes material, machinery and equipment which have been supplied by BUYER.

2.             Extent of BUILDER’s Responsibility:

(a)           BUILDER shall have no responsibility or liability whatsoever for any defects in the DRILLSHIP other than the defects so specified in Article IX.1, and BUILDER shall not be liable in any circumstances whatsoever for any consequential or special losses, damages or expenses including, but not limited to, loss of time, loss of profit or earnings or demurrage directly or indirectly occasioned to BUYER by reason of the defects specified in Article IX.1 nor owing to repairs or other works done to the DRILLSHIP to remedy such defects.

(b)           BUILDER shall not be responsible for any defects in any part of the DRILLSHIP which may subsequent to DELIVERY of the DRILLSHIP have been replaced or in any way repaired by any other contractors (except those approved by BUILDER), nor for any defect which has been caused or aggravated by omission or improper use and maintenance of the DRILLSHIP on the part of BUYER, its servants or agents or by ordinary wear and tear or by perils of the sea, rivers or navigations or by corrosion of the materials or by accidents or fire or by any other circumstances whatsoever beyond the control of BUILDER.

(c)           The undertakings contained in this Article shall replace and exclude any other liability, guarantee, warranty and/or condition imposed or implied by LAW, customary, statutory or otherwise, by reason of the construction and sale of the DRILLSHIP by BUILDER for and to BUYER.

3.             Remedy of Defects:

(a)           BUILDER shall remedy at its expense any defects, against which the DRILLSHIP is warranted under this Article by making all necessary repairs or replacements at the SHIPYARD.

(b)           However, if it is impractical to bring the DRILLSHIP to the SHIPYARD, BUYER shall cause the necessary repairs or replacements to be made at another place suitable for the purpose, provided that, in such event, BUILDER shall forward, procure or supply replacement parts or materials to the DRILLSHIP on cost, insurance and freight (“CIF”) terms unless such forwarding or supply thereof to the DRILLSHIP would impair or delay the operation or working schedule of the DRILLSHIP.  In this case, BUYER shall be responsible for handling of the replacement parts or materials after BUILDER’s CIF delivery. Thereafter, BUYER shall first try to have the defects be remedied by the DRILLSHIP’s crew as far as practically possible, in which case no compensation by BUILDER shall be made to BUYER for the works performed by the DRILLSHIP’s crew.

  

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(1)           If BUYER proposes to cause the necessary repairs or replacements to be made to DRILLSHIP at any yard or works other than the SHIPYARD, BUYER shall before doing so, and in any event as soon as possible, give BUILDER notice of the time and place where such repairs will be made.  If the DRILLSHIP is not thereby delayed, nor her operation or working schedule thereby materially impaired, BUILDER shall have the right to verify by its own or appointed representative(s) the nature and extent of the defects complained of.  BUILDER shall, in such case, promptly advise BUYER after such examination has been completed, of its acceptance or rejection of defects as being covered by the undertakings hereby provided.

(2)           Upon BUILDER’s acceptance of defects as justifying remedy under this Article IX.3(b), or upon the final award of an arbitration so determining, BUILDER shall reimburse BUYER the documented expenses incurred by BUYER, at completion of the repair or at the time of final award of an arbitration, as the case may be, but such  reimbursement shall not exceed the reasonably estimated cost of carrying out the warranty work at the SHIPYARD.

(c)           In any case, the DRILLSHIP shall be taken at BUYER’s risk and expense to the place chosen, ready in all respects for such repairs or replacements and BUILDER shall not be responsible for towage, dockage, wharfage, port charges, inspection and underwater survey costs for defects finding, and anything else incurred in BUYER’s getting and keeping the DRILLSHIP ready for such repairs and replacements.

(d)           BUILDER shall have the option to retrieve at its own cost any of the replaced equipment and parts where the defects are remedied in accordance with the provisions of this Article IX.

(e)           Any dispute under this Article shall be referred to arbitration in accordance with the provisions of Article XIII.1(b).

4.             Notice of Defects:

BUYER shall notify BUILDER in writing of any defects for which a claim is made under this Article IX as promptly as possible after the discovery thereof.  BUYER’s notice shall describe the nature and ascertainable extent of the defects and the place at which the DRILLSHIP can be made available for earliest inspection by or on behalf of the BUILDER.  BUILDER shall in any event have no obligation in respect of any defects, unless notice of such defects is received by BUILDER not later than fifteen (15) days after expiry of the WARRANTY PERIOD.

 

ARTICLE X

REMEDIES OF BUYER

1.             Defaults of BUILDER:

The following shall constitute events of default of BUILDER under the CONTRACT (collectively, “BUILDER DEFAULTS”):

(a)           BUILDER voluntarily or involuntarily being made a part to any receivership, liquidation, or bankruptcy proceeding (which proceedings are not stayed within thirty (30) days of the service of such proceedings on BUILDER) or becoming insolvent or in the event BUILDER is unable to meet all or part of its financial or other obligations under this CONTRACT, unless as a result of BUYER’s failure to make payments of not less than United States Dollars Five Million (USD 5,000,000.00) as due under this CONTRACT;

  

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(b)           BUILDER fails to punctually, duly and fully comply with any of its material obligations (other than those obligations referred to in Article X.1.(a), (c) and (d)) under this CONTRACT and such failure is not cured within thirty (30) days of notice from BUYER or if the default is not reasonably capable of being remedied within thirty (30) days, the failure by BUILDER to commence remedial action within the same thirty (30) day period and to diligently proceed with such action;

(c)           The occurrence of any of the deficiencies or delays set out in Article III that entitle BUYER to terminate this CONTRACT; or

(d)           Breach of BUILDER’s obligations under Article XXI.10.

2.             Remedies:

In the event of a BUILDER DEFAULT, BUYER may at its option elect to proceed on either one of the following options:

(a)           terminate this CONTRACT in the manner set out in Article III; or

(b)           without prejudice to BUYER’s right to recover liquidated damages for delays or deficiencies pursuant to Article III, BUYER may allow BUILDER to continue to complete the construction of the DRILLSHIP.

BUYER shall indicate its option within thirty (30) days from BUILDER’s request to exercise its option, failing which BUYER is deemed to have waived its right to terminate this CONTRACT.

 

 

In the event that BUYER elects to terminate the CONTRACT due to a BUILDER DEFAULT:

(a)           BUYER shall notify BUILDER in writing of its intention to do so and such termination shall be effective as of the date when such notice is received by BUILDER.

(b)           BUILDER shall refund (together with interest at the DEFAULT INTEREST RATE) to BUYER the full amount of all sums received by BUILDER on account of the DRILLSHIP excluding any PC SUM paid and shall at BUYER’s option and BUILDER’s costs make available the BUYER’S SUPPLIES at the SHIPYARD for return to BUYER, alternatively, at BUYER’s option and without obligation on BUYER, in respect of the BUYER’S SUPPLIES pay to BUYER the invoiced cost of same on production by BUYER of reasonable evidence of the costs of purchase of the BUYER’S SUPPLIES.

(c)           BUYER shall not in the event of its termination of this CONTRACT be entitled to any liquidated damages for any reason whatsoever.

(d)           Upon such refund by BUILDER to BUYER as aforementioned, all obligations, duties and liabilities of each of the parties to the other under this CONTRACT shall be forthwith completely discharged, and the uncompleted DRILLSHIP shall belong to BUILDER and BUYER shall have no further claim on BUILDER.

  

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In the event BUYER elects to allow BUILDER to continue to complete the construction of the DRILLSHIP, BUILDER shall pay BUYER the liquidated damages due pursuant to Article III and BUILDER shall work with BUYER to produce an acceptable schedule for the completion of the remaining work on the DRILLSHIP and work diligently to complete the construction of the DRILLSHIP.

3.             Notice:

The payments made by BUYER prior to the DELIVERY of the DRILLSHIP shall be in the nature of advances to BUILDER.  If BUYER shall exercise its right of termination of this CONTRACT under Article III.1 or Article VIII.4, then BUYER shall immediately notify BUILDER of its termination of this CONTRACT and such termination shall be effective as of the date when the notice is received by BUILDER.

4.             Refund by BUILDER:

Unless BUILDER duly contests any termination by BUYER pursuant to Article XIII, BUILDER shall promptly refund to BUYER the full amount of all sums paid by BUYER to BUILDER on account of the DRILLSHIP.

In such event, BUILDER shall pay BUYER interest at the DEFAULT INTEREST RATE on the amount required herein to be refunded to BUYER, computed from the respective date following the date of receipt by BUILDER of each PAYMENT MILESTONE, instalment or advance payment to the date of remittance of such refund to BUYER by BUILDER; provided, however, that if the said termination by BUYER is made under the provisions of Article III, then in such event BUILDER shall not be required to pay any interest.

As security for the due performance of its obligations under this Article X, BUILDER shall provide BUYER with a transferable Irrevocable Stand-by Letter of Credit issued by HB or BUILDER’S BANK, in form and substance as annexed hereto, as Exhibit A, which cover the full amount of all sums paid by BUYER to BUILDER on account of the DRILLSHIP less the non-refundable design fee and any interest payable thereon, if a termination will become effective pursuant to this Article.

5.             Discharge of Obligations:

Upon such refundment by BUILDER to BUYER, all obligations, duties and liabilities of each of the parties to the other under this CONTRACT shall be forthwith completely discharged.

  

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ARTICLE XI

REMEDIES OF BUILDER

1.             Definition of Default:

BUYER shall be deemed to be in default under this CONTRACT in the following cases:

(a)           BUYER fails to pay either of the PAYMENT MILESTONES to BUILDER on their respective due dates pursuant to Article II.3 of this CONTRACT;

(b)           BUYER fails to take DELIVERY of the DRILLSHIP when the DRILLSHIP is duly tendered for DELIVERY by BUILDER under the provisions of Article VII;

(c)           BUYER fails to punctually, duly and fully comply with any of its material obligations (other than those obligations referred to in Article XI.1.(a), (b) and (d)) under this CONTRACT and such failure is not cured within thirty (30) days of notice from BUILDER or if the default is not reasonably capable of being remedied within thirty (30) days, the failure by BUYER to commence remedial action within the same thirty (30) day period and to diligently proceed with such action; or

(d)           BUYER voluntarily or involuntarily being made a part to any receivership, liquidation, or bankruptcy proceeding (which proceedings are not stayed within thirty (30) days of the service of such proceedings on BUYER) or becoming insolvent, unless as a result of BUILDER’s failure to make payments of not less than United States Dollars Five Million (USD 5,000,000) as due under this CONTRACT.

2.             Interest and Charges:

If BUYER shall be in default of payment of any PAYMENT MILESTONE as provided in Article XI.1(a), BUYER shall pay interest on such PAYMENT MILESTONE at the DEFAULT INTEREST RATE from the due date thereof to the date of payment of the full amount including interest to BUILDER.  In case BUYER shall fail to take DELIVERY of the DRILLSHIP as provided in Article XI.1(b), BUYER shall be deemed to be in default of payment of PAYMENT MILESTONE 2 and shall pay interest thereon at the same rate as aforesaid from and including the day on which the DRILLSHIP is duly tendered for DELIVERY by BUILDER .

3.             Effect of Default:

(a)           If any default by BUYER occurs as defined in Article XI.1(a), (b), (c) or (d),  the DELIVERY DATE shall be automatically postponed for the period of continuance of such default by BUYER and BUILDER shall not be obliged to pay any liquidated damages for the delay in delivery of the DRILLSHIP caused thereby.  In such event, BUYER shall be responsible for all costs and expenses incurred by BUILDER by reason of such postponement.

(b)           If any default by BUYER as defined in Article XI.1 (a) or (b) continues for a period of seven (7) days, or if any default by BUYER as defined in Article XI.1(c) or (d) occurs, BUILDER may, at its option, terminate this CONTRACT by giving written notice to such effect to BUYER.

(c)           In the event of termination of this CONTRACT as a result of BUYER’s default under this CONTRACT, BUILDER shall be entitled to retain and apply any PAYMENT MILESTONE paid by BUYER to BUILDER on account of this CONTRACT to the recovery of BUILDER’s loss and damage plus any reasonably estimated profit which BUILDER would have been entitled to receive if the DRILLSHIP had been completed and DELIVERED less the purchase price of any portion of the DRILLSHIP that has been utilized on BUILDER’s other projects, but excluding any consequential or special damages.

  

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4.             Sale of DRILLSHIP:

(a)           If BUILDER terminates this CONTRACT as provided in this Article XI and elects to sell the DRILLSHIP in its completed or uncompleted state, BUILDER shall be entitled to retain and apply any PAYMENT MILESTONE paid by BUYER to BUILDER on account of this CONTRACT and to apply the same in accordance with Article XI.4.  Further, BUILDER shall have the full right and power either to complete or not to complete the DRILLSHIP as it deems fit but in any event shall use its reasonable endeavours to sell the DRILLSHIP (either in its complete or incomplete form) at public or private sale on such terms and conditions as BUILDER may determine without being responsible for any loss or damage.

(b)           In the event of the sale of the DRILLSHIP in its completed state, the proceeds of sale received by BUILDER (the “COMPLETED SALE PROCEEDS”) shall be applied as follows: firstly to payment of all costs and expenses attending such sale and otherwise incurred by BUILDER as a result of BUYER’s default, and secondly to payment of all unpaid PAYMENT MILESTONES and interest on such PAYMENT MILESTONES at the DEFAULT INTEREST RATE from the respective due dates thereof to the date of application (collectively, the “COMPLETED OUTSTANDING AMOUNT”).   In the event the COMPLETED OUTSTANDING AMOUNT exceeds the sum of the COMPLETED SALE PROCEEDS, BUYER shall remit the difference to BUILDER, provided that, in no event shall such difference exceed the CONTRACT PRICE.  In the event the COMPLETED SALE PROCEEDS exceeds the COMPLETED OUTSTANDING AMOUNT, then BUILDER shall remit the difference to BUYER.

(c)           In the event of the sale of the DRILLSHIP in its uncompleted state, the proceeds of sale received by BUILDER (the “INCOMPLETE SALE PROCEEDS”) shall be applied as follows: firstly to payment of all costs and expenses attending such sale and otherwise incurred by BUILDER as a result of BUYER’s default, secondly to payment of all costs of construction of the DRILLSHIP to date of termination of the CONTRACT less the PAYMENT MILESTONE(S) retained by BUILDER pursuant to Article XI.4(a) above and, thirdly to BUILDER’s reasonably estimated profit to which it would have been entitled to receive if the DRILLSHIP had been completed and DELIVERED (collectively, the “INCOMPLETE OUTSTANDING AMOUNT”).  In the event the INCOMPLETE OUTSTANDING AMOUNT exceeds the sum of the INCOMPLETE SALE PROCEEDS plus any previously paid PAYMENT MILESTONES, BUYER shall remit the difference to BUILDER, provided that, in no event shall such difference exceed the CONTRACT PRICE.  In the event the INCOMPLETE SALE PROCEEDS plus any previously paid PAYMENT MILESTONES exceeds the INCOMPLETE OUTSTANDING AMOUNT, then BUILDER shall remit the different to BUYER.

(d)           If BUILDER sells to a third party or utilizes for its other projects any portion of the DRILLSHIP that BUILDER intends to elect to sell in accordance with Article XI.4.(b) or (c) in its completed or uncompleted state, such sale price (or the purchase price of such re-used portion) shall be deducted from the COMPLETED SALE PROCEEDS or the INCOMPLETE SALE PROCEEDS (as the case may be).

  

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5.             Remedies Cumulative:

No remedy referred to in this Article XI is intended to be exclusive, but each shall be cumulative and is in addition to, and may be exercised concurrently with, any other remedy which is referred to in this Article XI, or which may otherwise be available to BUILDER including, without limitation, the right to terminate this CONTRACT.

No express or implied waiver by BUILDER of any default of BUYER shall in any way be, or be construed to be, a waiver of any other, further or subsequent default of BUYER.

  

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ARTICLE XII

INSURANCE

1.             Extent of Insurance Coverage:

From the time of launch of the DRILLSHIP until the DRILLSHIP is completed, delivered to and accepted by BUYER, BUILDER shall, at its own cost and expense, keep the DRILLSHIP and all machinery, materials, equipment, appurtenances and outfit, delivered to the SHIPYARD for the DRILLSHIP, or built into or installed in or upon the DRILLSHIP, including BUYER’S SUPPLIES, insured with Korean insurance companies under insurance coverage corresponding to the Institute of London Underwriters Clauses for Builder’s Risks.

The amount of such insurance coverage shall, up to the ACTUAL DELIVERY DATE of the DRILLSHIP, be in an amount at least equal to, but not limited to, the aggregate of the payments made by BUYER to BUILDER plus the value of BUYER’S SUPPLIES in custody of the SHIPYARD, if any.  The insurance referred to hereinabove shall be taken out in the name of BUILDER and all losses under the insurance shall be payable to BUILDER and BUYER as their interests may appear.

If BUYER so requests, BUILDER shall at BUYER’s cost procure insurance on the DRILLSHIP and all parts, materials, machinery and equipment intended therefore against other risks not provided in this Article XII.1 and shall make all arrangements to that end.  The cost of such insurance shall be reimbursed to BUILDER by BUYER upon delivery of the DRILLSHIP.

The BUILDER shall obtain and maintain any additional insurance required by Korean law.

2.             Application of Recovered Amount:

(a)           Partial Loss

(1)           If the DRILLSHIP shall be damaged by any insured cause whatsoever prior to acceptance thereof by BUYER and in the further event that such damage shall not constitute an actual, constructive, arranged or compromised total loss of the DRILLSHIP, BUILDER shall apply the amount recovered under the insurance referred to in Article XII.1 to the repair of such damage to the CLASSIFICATION SOCIETY’s satisfaction and in accordance with the SPECIFICATIONS however subject to a reasonable postponement of the DELIVERY DATE and adjustment of other terms of this CONTRACT (including CONTRACT PRICE) as may be necessary and as agreed by the parties in writing, and BUYER shall accept the DRILLSHIP under this CONTRACT when completed in accordance with this CONTRACT and the SPECIFICATIONS.

(b)           Total Loss

(1)           If the DRILLSHIP is determined to be an actual, constructive, arranged or compromised total loss, BUILDER shall by 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 shall be applied to the reconstruction and repair of the DRILLSHIP’s damage, provided the parties hereto shall have further 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 and repair; or

  

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(ii)          refund immediately to BUYER the amount of all PAYMENT MILESTONES paid to BUILDER under this CONTRACT plus an amount equal to the value of any BUYER’S SUPPLIES which shall have become a total loss as aforesaid without any interest, whereupon this CONTRACT shall be deemed to be terminated and all rights, duties, liabilities and obligations of each of the parties towards the other shall terminate forthwith.

If the parties fail to reach all necessary agreements within two (2) months after the DRILLSHIP is determined to be an actual, constructive, arranged or compromised total loss, the provisions of Article XII.2(b)(ii) shall apply.

3.             Redelivery of BUYER’S SUPPLIES:

If the DRILLSHIP shall be determined to be an actual, constructive, arranged or compromised total loss and it shall not be agreed between the parties that the DRILLSHIP is to be reconstructed as aforesaid, BUILDER shall redeliver to BUYER at the SHIPYARD any BUYER’s SUPPLIES which shall not have become a total loss.

4.             Termination of BUILDER’s Obligation to Insure:

BUILDER’s obligations to insure the DRILLSHIP hereunder shall cease and terminate forthwith upon DELIVERY thereof to BUYER.

  

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ARTICLE XIII

DISPUTES AND ARBITRATION

1.             Proceedings:

If any dispute, controversy or difference shall arise between the parties hereto out of or in relation to or in connection with this CONTRACT which cannot be settled by the parties themselves, it shall be resolved as follows:

(a)           Any dispute concerning the DRILLSHIP’s compliance or non-compliance with the rules and regulations of the CLASSIFICATION SOCIETY or another regulatory body shall be referred to the principal or other appointed surveyor of the CLASSIFICATION SOCIETY (acting as assessor not as arbitrator), as the case may be, the decision of whom shall be final and binding upon the parties hereto. If the CLASSIFICATION SOCIETY declines or fails to appoint a surveyor to act as above or if the surveyor fails to make a determination of disputes referred to him in a period of ten (10) days, unless the parties agree to extend such a period, the matter shall be referred for determination in accordance with Article XIII.1(b) or (c).

(b)           Any dispute relating solely to technical matters concerning the construction, material or quality of work under this CONTRACT or the SPECIFICATIONS, except as set out in Article XIII.1(a) as well as any other matters specifically mentioned in this CONTRACT in this regard shall be referred to the CLASSIFICATION SOCIETY or, as agreed to by the parties, a suitably qualified expert who (if the parties cannot agree on his identity) shall be appointed by the President for the time being of the Royal Institute of Naval Architects, London (the “TECHNICAL EXPERT”).  The TECHNICAL EXPERT or CLASSIFICATION SOCIETY shall act as assessor and not an arbitrator and shall provide the parties with a written determination of the dispute within ten (10) days of referral of the dispute, unless the parties otherwise agree to extend such period.  Such determination shall include findings as to any required extension of the DELIVERY DATE by reason of the dispute and may also include a finding as to payment of costs incurred in the proceedings.  His determination thus made shall be final and binding on the parties.

(c)           All other disputes shall be referred to arbitration in London, England, and unless the parties shall agree within fifteen (15) days upon the appointment of a sole arbitrator, one arbitrator shall be appointed by BUILDER and the other by BUYER, and in case the arbitrators cannot agree, then to the decision of an umpire who shall be chosen and appointed by the two arbitrators.

Such arbitration shall be conducted in accordance with the Arbitration Act 1996 of United Kingdom or any re-enactment or statutory modification thereof for the time being in force and with the rules of The London Maritime Arbitrators’ Association for the time being in force.

The award of the arbitrators or the umpire shall be final and binding on the parties.

If the two arbitrators fail to choose and appoint a third arbitrator, either of the said two   arbitrators may apply to the President for the time being of The London Maritime Arbitrators’ Association to choose and appoint a third arbitrator.

2.             Alteration of Delivery of the DRILLSHIP:

In the event of reference to the CLASSIFICATION SOCIETY or other regulatory bodies or to arbitration of any dispute or disputes arising or occurring prior to delivery of the DRILLSHIP, the award by the party deciding the said dispute or disputes shall include a declaration as to any postponement of the DELIVERY DATE which the party deciding the dispute or disputes may in his/their absolute discretion deem appropriate.

  

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3.             Entry in Court:

Judgement on an award by arbitrators may be entered in any court of competent jurisdiction for enforcement thereof.

  

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ARTICLE XIV

RIGHT OF ASSIGNMENT

1.             Assignment and Transfer:

Neither party shall assign or transfer all or any part of its rights or obligations under this CONTRACT to any third party without the prior written consent thereto of the other party save that nothing herein shall prevent BUYER from assigning the benefit of this CONTRACT by way of security for any loan provided to BUYER by any one or more banks or other financial institutions to finance its purchase of the DRILLSHIP hereunder and provided further that BUYER may assign its rights under this CONTRACT or the right to take title to the DRILLSHIP upon DELIVERY to an AFFILIATE upon written notice to BUILDER.  No such assignment shall be binding upon BUILDER unless notice hereof is given to BUILDER.

2.             Associated Costs:

In the event of any such assignment by either party, all costs including legal and other costs incurred in relation thereto shall be borne and paid for by the assignor, and the assignor shall remain liable under this CONTRACT to the other party to the same extent as it was prior to the making of the assignment and shall cause the assignee to observe and respect the terms thereof.

3.             Security Assignments:

In connection with any security assignment of this CONTRACT provided to the BUYER’s banks, the BUILDER shall execute and deliver any reasonable acknowledgement of such security provided to it by the BUYER.

4.             Binding Nature:

This CONTRACT shall be binding upon the respective successors of the parties and effective for the benefit their respective assigns.

  

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ARTICLE XV

TAXES AND DUTIES

1.             Taxes and Duties in Korea:

BUILDER shall bear and pay all taxes and duties levied or imposed in Korea in connection with the execution and/or performance of this CONTRACT, except any taxes and duties imposed in Korea upon BUYER’S SUPPLIES or upon the activities or personal incomes of BUYER’s employees and agents (including the REPRESENTATIVES and representatives of the manufacturers of BUYER’S SUPPLIES).

2.             Taxes and Duties outside Korea:

BUYER shall bear and pay all taxes and duties levied or imposed upon BUYER outside Korea in connection with execution and/or performance of this CONTRACT except for any taxes and duties imposed upon those items or services to be procured by BUILDER for construction of the DRILLSHIP.

  

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ARTICLE XVI

PATENTS, TRADEMARKS, COPYRIGHTS, ETC.

1.             Patents, Trademarks and Copyrights:

(a)           BUILDER shall defend and indemnify BUYER against all damages, losses, liabilities, costs and expenses (including all legal costs and expenses but excluding BUYER’s internal costs and expenses) reasonably incurred by BUYER as a result of all actual or alleged claims for infringement of patent rights, copyrights, service marks or trademarks in connection with the construction of the DRILLSHIP by BUILDER at the SHIPYARD, but no such warranty, liability or indemnity shall extend to the BUYER’S SUPPLIES or BUYER’s operation or use of the DRILLSHIP, its equipment, apparatus or systems.

(b)           Nothing contained herein shall be construed as transferring such patent, trademark, service mark or copyright covered by this CONTRACT, and all such rights are hereby expressly reserved to the true and lawful owners thereof.

(c)           BUYER shall defend and indemnify BUILDER and its subcontractors against all damages, losses, liabilities, costs and expenses (including all legal costs and expenses) reasonably incurred by BUILDER as a result of all actual or alleged claims for infringement of patent rights brought by a third party in connection with BUYER’S SUPPLIES or BUYER’s operation or use of the DRILLSHIP, its equipment, apparatus or systems.  In order to obtain such defence and indemnity, BUILDER shall immediately notify BUYER in writing of any claims received, and BUILDER shall allow BUYER to take over the defence of the claim.  BUILDER shall provide BUYER with reasonable assistance required by BUYER to defend the claim.

2.             General Plans, Specifications and Working Drawings:

BUILDER retains all rights with respect to basic design, detailed design, plans, working drawings, technical descriptions, calculations, test results and other data, information and documents concerning the design and construction of the DRILLSHIP, and BUYER undertakes therefore not to disclose the same or divulge any information contained therein directly or indirectly to any third parties, without the prior written consent of BUILDER, except where it is necessary for the usual operation, repair and maintenance or upgrades of the DRILLSHIP. In the event that BUYER breaches its obligations and undertakings under Clause 2 of this Article, BUILDER is entitled to make a claim and/or bring suit against BUYER in respect of any loss and damage whatsoever suffered by BUILDER as result of any such breach by BUYER.

All intellectual property owned by BUYER prior to entering into this CONTRACT and all intellectual property developed solely by BUYER during the term of this CONTRACT shall belong to BUYER.  If the parties jointly develop any intellectual property associated with this CONTRACT, the parties agree to negotiate in good faith and to execute a development agreement to identify and allocate ownership rights in the jointly developed intellectual property.

ARTICLE XVII

BUYER’S SUPPLIES

1.             Responsibility of BUYER:

(a)            BUYER shall, at its own risk, cost and expense, supply and deliver to BUILDER all of the items to be furnished by BUYER as set out in the SPECIFICATIONS (“BUYER’S SUPPLIES”) at warehouse or other storage of the SHIPYARD in good condition ready for installation or use in or on the DRILLSHIP, in accordance with the time schedule designated by BUILDER to meet the building schedule of the DRILLSHIP.

  

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(b)           In order to facilitate installation or use by BUILDER of BUYER’S SUPPLIES in or on the DRILLSHIP, BUYER shall furnish BUILDER with necessary SPECIFICATIONS, plans, drawings, instruction books, manuals, test reports and certificates required by BUILDER.   BUYER, if so requested by BUILDER, shall, without any charge to BUILDER, cause representatives of the manufacturers of BUYER’S SUPPLIES to assist BUILDER in installation thereof in or on the DRILLSHIP and/or to carry out installation thereof by themselves or to make necessary adjustments, tests and inspection thereof at the SHIPYARD.

(c)           Any and all of BUYER’S SUPPLIES shall be subject to BUILDER’s reasonable right of rejection if they are found to be unsuitable or in improper condition for installation or use.  However, if so requested by BUYER, BUILDER may repair or adjust BUYER’S SUPPLIES without prejudice to BUILDER’s other rights hereunder and without being responsible for any consequences arising therefrom.  In such case, according to Articles V.4 and V.5, BUYER shall compensate BUILDER for all costs and expenses incurred by BUILDER in such repair or adjustment and the DELIVERY DATE shall be postponed for any period of delay in the construction of the DRILLSHIP caused by the making of such repair or adjustment.

(d)           Should BUYER fail to deliver any of BUYER’S SUPPLIES within the time designated by BUILDER, the DELIVERY DATE shall be extended for the period of such delay in delivery of BUYER’S SUPPLIES if such delay in delivery shall affect the DRILLSHIP’s construction or the DELIVERY DATE of the DRILLSHIP.  In such event, BUYER shall be responsible for all losses and damages incurred by BUILDER by the reason of such delay in delivery of BUYER’S SUPPLIES and such payment shall be made upon delivery of the DRILLSHIP.

(e)           If delay in delivery of any of the BUYER’S SUPPLIES exceeds fifteen (15) days, then the BUILDER shall be entitled to proceed with construction of the DRILLSHIP without installation thereof in or on the DRILLSHIP, without prejudice to the BUILDER’s other rights as hereinabove provided, and the BUYER shall accept and take delivery of the DRILLSHIP as so constructed.

2.             Responsibility of BUILDER:

BUILDER shall be responsible for the storing and handling with reasonable care of BUYER’S SUPPLIES after delivery thereof to the SHIPYARD, and shall, at its own cost and expense, install them in or on the DRILLSHIP, unless otherwise provided herein or agreed by the parties hereto, provided, always, that BUILDER shall not be responsible for quality, efficiency and/or performance of any of BUYER’S SUPPLIES and for the loss of or damage to BUYER’S SUPPLIES caused without BUILDER’s wilful misconduct or gross negligence.

3.             Return of BUYER’S SUPPLIES

Where under any provision of this CONTRACT BUILDER shall be required either to refund the value of or to return BUYER’s SUPPLIES to BUYER, then BUILDER shall lawfully discharge any such obligation by returning the BUYER’S SUPPLIES in question FOB Okpo or, in BUILDER’s option by paying to BUYER the invoiced cost to BUYER of such supplies CIF Okpo.

  

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ARTICLE XVIII

REPRESENTATIVES

1.             BUYER’s REPRESENTATIVE:

BUYER’s REPRESENTATIVE and address designated for the purpose of notices and other communications under this CONTRACT shall be as follows:

ATWOOD OCEANICS PACIFIC LIMITED

c/o: 332A-11C, 11th Floor, Plaza Ampang City

Jalan Ampang, 50450 Kuala Lumpur

Malaysia

	
Telephone No.:

	
+603 2773 9714

	
Fax No.:

	
+603 4257 9208

	
Email:

	
tdyne@atwd.com

	
Attention:

	
Tony Dyne (Director)

unless and until BUYER notifies BUILDER otherwise in writing.

2.             BUILDER’s Representative

BUILDER’s representative and address designated for the purpose of notices and other communications under this CONTRACT shall be as follows:

DAEWOO SHIPBUILDING & MARINE ENGINEERING CO., LTD.

1, Aju-dong, Geoje-si,

Gyeong nam, 656-714

Korea

	
Attention:

	
Mr. H.S. Yang

	
Telephone:

	
82 55 680 5499

	
Telefax:

	
82 55 681 7428

unless and until BUILDER notifies BUYER otherwise in writing.

  

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ARTICLE XIX

NOTICE AND LANGUAGE

1.             Notice:

Except as may be more specifically set out in any particular provision of this CONTRACT, any and all notices, requests, demands, instructions, advices and communications in connection with this CONTRACT shall be in writing and shall be conveyed by registered airmail, by express courier service, personally, or by telefax or email and shall be deemed to be given at, and become effective from, the time when the same is delivered to (or in the case of a telefax or email received at) the address of the party to be served.

2.             Language:

Any and all notices and communications in connection with this CONTRACT shall be written in the English language.

 

3.             Writing

A telefax or email message shall be deemed to be a notice “in writing” for purposes of this CONTRACT.

  

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ARTICLE XX

EFFECTIVE DATE OF CONTRACT

This CONTRACT shall become effective from the date of its execution by both BUYER and BUILDER (the “EFFECTIVE DATE”).  However, if BUILDER fails to provide BUYER with the Irrevocable Stand-by Letter of Credit referred to in Article X.4 within thirty (30) days after the date of execution of the CONTRACT, then the CONTRACT shall automatically become null and void, unless otherwise mutually agreed in writing between the parties hereto, and the parties shall be immediately and completely discharged from all of their obligations to the other party under this CONTRACT as though this CONTRACT had never been entered into at all.

  

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ARTICLE XXI

INTERPRETATION AND OTHER MATTERS

1.             Laws Applicable:

The parties hereto agree that the validity and interpretation of this CONTRACT and of each Article and part thereof shall be governed by the laws of England.

2.             Discrepancies:

In the event of any conflict between this CONTRACT and the SPECIFICATIONS, the provisions of this CONTRACT shall prevail.  In the event of any conflict between the SPECIFICATIONS and design, the provisions of the SPECIFICATIONS shall prevail.

3.             Entire Agreement:

This CONTRACT contains the entire agreement and understanding between the parties hereto and supersedes all prior negotiations, representations, undertakings and agreements on any subject matter of this CONTRACT.

4.             Amendment:

No provision of this CONTRACT may be amended, modified, waived or terminated except by an instrument in writing executed by each of the parties hereto.

5.             Headings:

The descriptive headings of Articles and Clauses herein are for convenience of reference only and are not to be used in construing or interpreting this CONTRACT.

6.             Severability:

 

Any provision of this CONTRACT which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provisions in any other jurisdiction. To the extent permitted by applicable laws, both parties hereby waive any provision of law which renders any provision hereof prohibited or unenforceable in any respect.

7.             Order of precedence of CONTRACT Documents:

In case of inconsistency between contract documents, the CONTRACT shall take precedence over the SPECIFICATIONS and the Drawings and the SPECIFICATIONS shall take precedence over the Drawings.

8.             Confidentiality:

Each party agrees that it shall hold in strict confidence and shall not disclose to any PERSON or use any CONFIDENTIAL INFORMATION (as defined below) from and after the EFFECTIVE DATE through the period ending two (2) years after the DELIVERY DATE.  Notwithstanding the foregoing, a party may, provided that each such PERSON shall be informed of the confidential nature of such information, disclose CONFIDENTIAL INFORMATION to the officers, directors, employees, representatives, investors, lenders, counsel and other professionals (including potential lenders and investors and their employees, counsel and other professionals) of a party and its AFFILIATES who need to know such information for purposes of (a) executing this CONTRACT and (b) the usual operation, repair and maintenance or upgrades of the DRILLSHIP.  In the event that a party is requested by subpoena, civil investigative demand, or any similar process to disclose any such CONFIDENTIAL INFORMATION, such party will provide the other party with prompt notice of such request, demand or interrogatories so that the other party may seek an appropriate protective order.  In the event that a protective order or injunction prohibiting disclosure is not obtained, then such party may furnish only so much of the CONFIDENTIAL INFORMATION as, in the reasonable written opinion of its legal counsel (copy being simultaneously provided to the other party), is required and shall preserve the confidentiality of the remainder in accordance with this Article XXI.8.  Should a party, its AFFILIATES or their agents or representatives disclose or use any CONFIDENTIAL INFORMATION for the direct or indirect benefit or use of themselves or any other PERSON, or otherwise breach this Article XXI.8, any benefits obtained by such party or any such other PERSON shall be held in trust for the sole benefit of the other party.  The parties agree that because an award of money damages (whether pursuant to the foregoing sentence or otherwise) would be inadequate for any breach of this Article XXI.8, any such breach would cause the each party irreparable harm and therefore the non-breaching party shall be entitled, without the requirement of posting a bond or other security, to equitable relief, including injunctive relief and specific performance.

  

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As used herein, “CONFIDENTIAL INFORMATION” shall mean this CONTRACT and all information (written or digital) relating to BUILDER, BUYER or the negotiation or substance of this CONTRACT and any other ancillary agreements, whether or not marked with any legends or other markings indicating the information to be proprietary or confidential.  CONFIDENTIAL INFORMATION shall not include information to the extent, but only to the extent, disclosure thereof (or the terms and conditions thereof) is required by LAW, information which the disclosing party can demonstrate is or becomes generally available to the public other than as a result of disclosure by such party or its AFFILIATES and information necessary for a party to enforce its rights under this CONTRACT or defend against indemnification claims under this CONTRACT.  The parties’ obligations under this Article XXI.8 shall survive the termination of this CONTRACT.

9.              Public Announcements:

No press or other public announcement, or public statement or comment in response to any inquiry, relating to the transactions contemplated by this CONTRACT shall be issued or made by either party without consultation with the other party; provided, that a press release or other public announcement, regulatory filing, statement or comment made without such consultation shall not be in violation of this Article XXI.9 if it is made (i) in order to comply with such LAW or stock exchange policies or (ii) to PERSONS holding consent or approval rights that may be applicable to the transactions contemplated by this CONTRACT.  Furthermore, in all instances, prompt notice from one party to the other shall be given with respect to any such release, announcement, statement or comment.

10.           Foreign Corrupt Practices Act:

BUILDER represents warrants and agrees that it will comply with all applicable anti-bribery laws in any country in which any aspect of this CONTRACT will take place, including the U.S. Foreign Corrupt Practices Act (“FCPA”).

BUILDER represents, warrants and agrees that, in connection with the performance of its obligations hereunder, it shall not make any direct or indirect payments, in money or any other item of value (including gifts) or make any offers or promises to pay any money or any other item of value (including gifts) to:

  

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(a)           any government or public official;

(b)           any political party;

(c)           any candidate for political office; or

(d)           any other person or entity, with the knowledge that such payment, offer or promise to pay will be made to any government official for the purpose of influencing such government official to obtain or retain business or to make any decisions favorable to BUYER, BUILDER, or both.

BUILDER further represents that no government official is a principal, owner, officer, employee or agent of any entity in which BUILDER has an interest, and no government official has any material financial interest in the business of BUILDER.

BUILDER affirms that BUYER shall have the right to audit BUILDER’s books and records, as warranted, to ensure compliance with this CONTRACT.  These audit rights do not extend beyond the records relating to BUILDER’S performance of this CONTRACT.

In the event of any breach by BUILDER of any of its representations, warranties or covenants contained in this provision, BUYER may, in its sole discretion in addition to any other remedy provided herein or otherwise provided by LAW, immediately terminate this CONTRACT without notice or indemnity and in such event, BUILDER shall forfeit all rights to all fees and commissions which shall accrue and/or have been earned but which have not been paid as of the date of such termination.

11.            COUNTERPARTS:

This CONTRACT may be executed by each of the parties hereto on any number of separate counterparts, each of which shall be an original and all of which taken together shall constitute one and the same instrument. Delivery of an executed signature page of this CONTRACT in Portable Document Format (PDF) or by facsimile transmission shall be effective as delivery of an executed original counterpart of this CONTRACT, although the original signature pages shall thereafter be appended to this CONTRACT.

  

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IN WITNESS WHEREOF, the parties hereto have caused this CONTRACT to be signed by their duly authorized signatories the day and year first above written.

	
For and on behalf of:

	  	  	
For and on behalf of:

	
ATWOOD OCEANICS

	  	  	
DAEWOO SHIPBUILDING &

	
PACIFIC LIMITED

	  	  	
MARINE ENGINEERING CO., LTD.

	  	  	  	  	  	  
	  	  	  	  	  	  
	
By:

	
/s/ Tony Dyne

	  	  	
By:

	
/s/ Sang-Tae Nam

	
Name:

	
Tony Dyne

	  	  	
Name:

	
Sang-Tae Nam

	
Title:

	
Director

	  	  	
Title:

	
President & CEO

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00189-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00189-of-00352.parquet"}]]