Document:

CHIPS-UniversityHotelPurchaseandSaleAgreementFinal9-10-13

                        

PURCHASE AND SALE AGREEMENT 

BETWEEN 

CRI HOTEL INCOME OF MINNESOTA, LLC
a Delaware limited liability company

AS SELLER 

AND 

UNITED PROPERTIES INVESTMENT LLC 
a Minnesota limited liability company 

AS BUYER 

September 10, 2013
 

1

 PURCHASE AND SALE AGREEMENT
THIS PURCHASE AND SALE AGREEMENT (the "Agreement") is made as of the 10th day of September, 2013 (the "Effective Date"), by and between CRI HOTEL INCOME OF MINNESOTA, LLC, a Delaware limited liability company ("Seller"), having an office at 11200 Rockville Pike, Suite 300, Rockville, Maryland 20852, and UNITED PROPERTIES INVESTMENT LLC, a Minnesota limited liability company ("Buyer"), having an office at 3600 American Blvd. W., Suite 750, Minneapolis, Minnesota 55431.
 
ARTICLE I
PURCHASE AND SALE
    
1.1    Agreement of Purchase and Sale. Subject to the terms and on the conditions set forth in this Agreement, Seller agrees to sell and convey and Buyer agrees to purchase the following any and all of Seller’s right, title and interest in the following: 

		
	(a)
	Two adjacent parcels of land that total approximately 2.45 acres and are situated in Minneapolis, Hennepin County, Minnesota, more particularly described on Exhibit A, together with all and singular the rights and appurtenances pertaining to such property, including any right, title and interest of Seller in and to adjacent streets, alleys or rights-of-way (the property described in clause (a) of this Section 1.1 is referred to collectively as the "Land"); 

		
	(b)
	the buildings, structures, fixtures and other improvements on the Land, including, without limitation, that certain hotel facility ("Hotel") having approximately 130 guest rooms with a street address of 2407 University Avenue SE, Minneapolis, MN, and commonly known as the "University Days Inn Minneapolis", and that building with a street address of 2425 University Avenue SE, Minneapolis, MN, and related facilities and improvements (collectively, the "Improvements"); 

		
	(c)
	all tangible personal property upon the Land or within the Improvements, and other items of personal property used exclusively in connection with the operation of the Land and the Improvements including, without limitation, Seller's interest as lessee with respect to any such tangible personal property, listed in Exhibit B (the property described in clause (c) of this Section 1.1 is referred to collectively as the "Personal Property");  

		
	(d)
	all of Seller's right, title and interest in and to those certain leases (the "Leases") more fully described on Exhibit C (the "Lease Schedule"); 

		
	(e)
	all of Seller's right, title and interest in and to (i) all assignable service, equipment, supply and maintenance contracts and agreements (collectively, the "Service Contracts") listed and described on Exhibit D (the "Service Contracts Schedule") not being terminated on or before the Closing in accordance with this Agreement, relating to the upkeep, repair, maintenance or operation of the Land, Improvements or Personal Property which will extend beyond the date of "Closing" (as such term is defined in Section 4.1), and (ii)  all assignable existing warranties and guaranties issued to Seller in connection with the Improvements or the Personal Property (the property described in clause (e) of this Section 1.1 is referred to collectively as the "Intangibles"); 

		
	(f)
	all transferable consents, authorizations, variances or waivers, licenses, permits and approvals from any governmental or quasi-governmental agency, department, board, commission, bureau 

2

or other entity or instrumentality,  including, without limitation, those with respect to use, utilities, building, fire, life safety, traffic and zoning (collectively, the "Licenses"); 

		
	(g)
	all inventories of supplies used in connection with the operation of the Hotel, including, without limitation, linens, towels, paper goods, brochures, office supplies, soap, gasoline, fuel oil, and other operational and guest supplies currently located at the Hotel, subject to depletions, replacements and additions in the ordinary course of operating the Hotel (provided that Seller shall maintain its normal replenishment and replacement expenditures for such inventories until the date of Closing, which means supplies for general operation shall be adequate to cover a minimum of two weeks and shall include a minimum of two par of linens on hand), and subject to any applicable transfer and use restrictions set forth in the Service Contracts or the Leases (collectively, the "Inventory"); 

 
		
	(h)
	to the extent in the possession or control of Seller, the books, records, files, guest registers, maintenance records, rental and reservation records, and any customer or frequent guest lists of Seller in connection with the operation and maintenance of the Hotel (collectively, the "Books"), exclusive of (i) original Books which Seller desires to retain, provided that Seller provides copies thereof to Buyer, (ii) Seller's income tax and accounting records, and (iii) any other materials that Seller is not entitled to transfer, assign or deliver to Buyer under the Hotel Management Agreement or the Franchise Agreement (both as hereinafter defined); 

		
	(i)
	the advance reservations and bookings for the Hotel, as the same may be amended, canceled and renewed (the "Reservations") and advance deposits made in respect thereof (the "Reservation Deposits"); and 

		
	(j)
	all of Seller's right, title and interest in and to all intangible personal property relating to ownership and operation of the Property and the goodwill pertaining thereto, to the extent assignable, but excluding the name "Days Inn" and all websites and domains used exclusively for the Hotel which are owned and controlled by a third party other than Seller (the property described in clause (j) of this Section 1.1 is referred to as the "Intellectual Property").   

1.2    Property Defined. The Property described in Section 1.1 is referred to collectively as the "Property." 

1.3    Permitted Exceptions. The Property shall be conveyed subject to the matters which are, or are deemed to be, permitted exceptions pursuant to Article II (collectively, the "Permitted Exceptions").

1.4     Purchase Price. Seller shall sell and Buyer shall purchase the Property for a total of Twelve Million and No/100 Dollars ($12,000,000.00) (the "Purchase Price"). 

1.5    Payment of Purchase Price. The Purchase Price, as increased or decreased by prorations and adjustments as provided for in this Agreement, shall be payable as follows:

		
	1.5.1
	to Escrow Agent (as hereinafter defined), an amount in cash equal to $300,000.00 (such amount, exclusive of all interest and other amounts earned thereon but giving effect to any reductions thereto while held on deposit with the Escrow Agent, in accordance with the Escrow Agreement (as hereinafter defined), referred to herein as the "Escrow Cash"), to be held and invested in a segregated account pursuant to the terms of the Escrow Agreement, as a reserve to satisfy potential claims by Buyer as more specifically provided herein; and.

3

		
	1.5.2
	The remainder to Seller at Closing in cash by wire transfer of immediately available federal funds to a bank account designated by Seller to the Title Company prior to the Closing.

1.6    Post-Closing Escrow. At closing, the Escrow Cash shall be placed into an escrow account (the "Escrow Account").  Upon receipt of Seller's written consent (which consent will  not be withheld or conditioned unless Seller has a good-faith, reasonable objection to any Buyer claim under this section), Buyer may withdraw from the Escrow Account an amount equal to pay all claims, liabilities and obligations of the Seller as more specifically provided in Section 12.1(a) through (f).  Any disputed claims regarding the Escrow Account will be submitted to binding arbitration, as more fully described in the Escrow Agreement, and the prevailing party in such binding arbitration will be entitled to collect its attorney's fees and costs from the non-prevailing party.  The Escrow Account shall be held in an interest bearing account.  The Escrow Agent will disburse to the Seller any funds remaining in the Escrow Account on the first anniversary of the date of the date of Closing, unless (i) a claim, action, suit or proceeding for indemnification has been commenced in good faith by the Buyer and notice of this action or a request for disbursement has been provided by the Buyer to the Escrow Agent and Seller and (ii) after such action has been commenced or request for disbursement made, neither Seller nor Buyer has sent written notice to the other and Escrow Agent disputing the disbursement.  Only the amount of any such disputed claim shall be withheld by the Escrow Agent and not disbursed by Escrow Agent to the Seller.  At Closing, Escrow Agent, Buyer and Seller shall enter into an escrow agreement (the "Escrow Agreement") consistent with the foregoing provisions in the form attached hereto as Exhibit M.  

1.7    Deposit.  Within two (2) business days of the Effective Date, Buyer shall deposit with First American Title Insurance Company (the "Title Company" or “Escrow Agent”), having its office at 801 Nicollet Mall, Suite 1900, Minneapolis, MN 55402, Attention: Linda Cross, the sum of Two Hundred Thousand and No/100 Dollars ($200,000.00) (the "Second Deposit") in good funds, either by certified bank or cashier's check or by federal wire transfer.  Buyer has previously deposited the sum of One Hundred Thousand and No/100 Dollars ($100,000.00) (the “First Deposit”) with the Title Company. If Buyer shall fail to deposit the Second Deposit within the time period provided for above, Seller may terminate this Agreement at any time prior to deposit of the Second Deposit, in which case this Agreement shall be null and void ab initio and in such event the Title Company shall immediately deliver to Seller all copies of this Agreement in its possession, return the First Deposit to Buyer, and thereafter neither party shall have any further rights or obligations to the other hereunder, except as otherwise set forth in this Agreement.  The Title Company shall hold the First Deposit and the Second Deposit in an interest-bearing account in accordance with the terms and conditions of a deposit escrow agreement entered into among Seller, Buyer and Title Company.  The First Deposit and the Second Deposit, together with all interest earned on such sums, are referred to collectively as the "Deposit."  After the expiration of the Inspection Period (as hereinafter defined), if Buyer does not elect to terminate this Agreement in accordance with Section 3.2, the Deposit shall be wholly non-refundable to Buyer, except as expressly set forth otherwise herein (including but not limited to, in the event of Seller’s failure to perform its obligations under this Agreement, title objection, casualty, condemnation, failure to obtain the Estoppel Certificate or SNDA, change in Seller’s representation as set forth in Section 5.2, failure of Buyer to obtain the franchise agreement or management agreement as set forth in Section 4.17).  The Deposit shall remain at all times applicable to the Purchase Price.   

1.8    Delivery to Title Company.  Upon mutual execution of this Agreement, the parties shall deposit an executed copy of this Agreement with Title Company for execution and this Agreement shall (along with such supplementary instructions not inconsistent with this Agreement as either party hereto may deliver to Title Company) serve as escrow instructions to Title Company for the consummation of the purchase and sale contemplated hereby.  Seller and Buyer agree to execute such additional escrow instructions as Title Company may reasonably require and which are not inconsistent with the provisions hereof; provided, 

4

however, that in the event of any conflict between the provisions of this Agreement and any supplementary escrow instructions, the terms of this Agreement shall control. 

ARTICLE II
TITLE AND SURVEY

2.1     Title Examination; Commitment for Title Insurance.  Buyer hereby acknowledges receipt of the most recent title insurance commitment and/or policy covering the Property in Seller's possession issued by Old Republic National Title Insurance Company.  Buyer shall apply for a title insurance commitment (the "Title Commitment") for an Owner's Policy of Title Insurance, issued by the Title Company, covering the Real Property, together with a copy of all exceptions set forth therein.  Buyer shall instruct the Title Company to deliver a copy of the Title Commitment and all exceptions to Seller. Buyer shall have until the date (the "Title Exam Deadline") which is the later of thirty (30) days after it receives the Title Commitment or thirty (30) days after the Effective Date, but in no event shall the Title Exam Deadline be a date later than sixty (60) days after the Effective Date, to review the Title Commitment.

2.2    Survey.   Buyer hereby acknowledges receipt of the most recent survey of the Property.  During the Inspection Period, Buyer may order, at its own cost and expense, an updated survey of the Property (the “Survey”) and shall instruct the surveyor to deliver a copy of the Survey to Seller and the Title Company simultaneously with its delivery to Buyer. 

2.3    Title Objections; Cure of Title Objections. Buyer shall have until the expiration of the Title Exam Deadline to notify Seller, in writing, of such objections as Buyer may have to anything contained in the Title Commitment or the Survey (including Permitted Exceptions).  Any item contained in the Title Commitment or any matter shown on the Survey to which Buyer does not object prior to the Title Exam Deadline shall be deemed a Permitted Exception.  In the event Buyer shall notify Seller of objections to title or to matters shown on the Survey prior to the Title Exam Deadline, Seller shall have the right, but not the obligation, to undertake any action or incur any expense in order to effectuate any such removal, correction, cure or satisfaction of cure such objections.  Within ten (10) days after receipt of Buyer's notice of objections, Seller shall notify Buyer in writing whether Seller elects to attempt to cure such objections. If Seller elects to attempt to cure, and provided that Buyer shall not have terminated this Agreement in accordance with Section 3.2, Seller shall have until the date of Closing to attempt to remove, satisfy or cure the same and for this purpose Seller shall be entitled to a reasonable adjournment of the Closing if additional time is required, but in no event shall the adjournment exceed sixty (60) days after the date for Closing set forth in Section 4.1.  If Seller elects not to cure any objections specified in Buyer's notice, or if Seller is unable to effect a cure prior to the Closing (or any date to which the Closing has been adjourned), Buyer shall have the following options: (i) to accept a conveyance of the Property subject to the Permitted Exceptions, specifically including any matter objected to by Buyer which Seller is unwilling or unable to cure, and without reduction of the Purchase Price; or (ii) to terminate this Agreement by sending written notice thereof to Seller, and upon delivery of such notice of termination, this Agreement shall terminate and the entire Deposit (including both the First Deposit and Second Deposit, and whether or not the Inspection Period was extended)  shall be returned to Buyer, and thereafter neither party shall have any further rights, obligations or liabilities hereunder except to the extent that any right, obligation or liability set forth herein expressly survives termination of this Agreement.  If Seller notifies Buyer that Seller does not intend to attempt to cure any title objection; or if, having commenced attempts to cure any objection, Seller later notifies Buyer that Seller will be unable to effect a cure thereof, Buyer shall, within five (5) days after such notice has been given, notify Seller in writing whether Buyer shall elect to accept the conveyance under clause (i) or to terminate this Agreement under clause (ii) of this Section 2.3.  

5

Notwithstanding anything to the contrary contained in this Agreement, Seller shall satisfy, release or cure (or bond against in a manner sufficient to cause the Title Company to insure over such objection) at Closing any encumbrance or lien of a fixed amount that is objected to by Buyer and is a result of Seller’s actions such as mortgages, mechanic’s liens, utility liens and tax liens.  

2.4    Conveyance of Title.  At Closing, Seller shall convey and transfer to Buyer such title to the Property as will enable the Title Company to issue to Buyer, at Buyer's expense, an ALTA owner's policy of title insurance (the "Title Policy") covering the Property, in the full amount of the Purchase Price. Notwithstanding anything contained herein to the contrary, the Property shall be conveyed subject only to the following matters, which shall be deemed to be Permitted Exceptions: 

		
	(a)
	the rights of the tenants, as tenants only, under the Leases;  

		
	(b)
	the lien of all ad valorem real estate taxes and assessments not yet due and payable as of the date of Closing, subject to adjustment as herein provided; 

		
	(c)
	local, state and federal laws, ordinances or governmental regulations, including but not limited to, building and zoning laws, ordinances and regulations, now or hereafter in effect relating to the Property; 

		
	(d)
	rights of utility companies to maintain pipes, poles, cables and wires over, on or under the street and/or the part of the Property next  to the street or running to or serving any building or improvement on the Property;

		
	(e)
	applicable zoning ordinances;

		
	(f)
	 the title matters set forth on Exhibit E attached hereto; matters to which Buyer does not object pursuant to this Article II; 

		
	(g)
	any and all matters that might have been shown on a survey if Buyer does not order a survey, except to the extent the same were raised as Title Objections to the Title Commitment; 

		
	(h)
	all matters created by or on behalf of Buyer, including, without limitation, any documents or instruments to be recorded as part of any financing for the acquisition of the Property by Buyer; and 

		
	(i)
	 items appearing of record or shown on the Survey, general and specific plans and planned development permits, and, in either case, not objected to by Buyer or waived or deemed waived by Buyer in accordance with Sections 2.3 or 2.5. 

2.5    Pre-Closing "Gap" Title Defects.  Buyer may, at or prior to Closing, notify Seller in writing of any objections to title between (a) the expiration of the Inspection Period and (b) the date on which the transaction contemplated herein is scheduled to close.  With respect to any objections to title set forth in such notice, Seller shall have the same option to cure and Buyer shall have the same option to accept title subject to such matters or to terminate this Agreement as those which apply to any notice of objections made by Buyer before the expiration of the Inspection Period.  If Seller elects to attempt to cure any such matters, the date for Closing shall be automatically extended by a reasonable additional time to effect such a cure, but in no event shall the extension exceed sixty (60) days after the date for Closing set forth in Section 4.1.  Seller shall not, after the Effective Date, subject the Property to or permit or suffer to exist any liens, encumbrances, covenants, conditions, restrictions, easements or other title matters or seek any zoning changes without Buyer's prior written consent. 

ARTICLE III
INSPECTION PERIOD; CERTAIN AGREEMENTS

6

3.1    Right of Inspection.  The inspection period (“Inspection Period”) shall begin on the Effective Date and terminate sixty (60) days after the Effective Date.  Buyer shall have the right to extend the original Inspection Period for one additional thirty (30) day period, provided that (i) Buyer notifies Seller in writing of its intention to extend the Inspection Period prior to the end of the original sixty (60) day period and (ii) $100,000.00 of the Deposit becomes non-refundable to Buyer upon the extension of the Inspection Period, except in the event of Seller’s failure to perform its obligations under this Agreement, title objection, casualty, condemnation, failure to obtain the Estoppel Certificate or SNDA, failure of Buyer to obtain the franchise agreement or management agreement as set forth in Section 4.17, or change in Seller’s representations as set forth in Section 5.2, in which event the Deposit shall be distributed as set forth in this Agreement.  The remaining amount of the Deposit shall remain refundable through the expiration of the Inspection Period as extended and as otherwise set forth in this Agreement.  Except as otherwise expressly set forth herein, upon extension of the original Inspection Period by Buyer, any reference in this Agreement to the Inspection Period shall mean the period as extended.  

From and after the Effective Date, Buyer shall have the right to make a physical inspection of the Property and to examine at such place or places at the Property designated by Seller, or elsewhere as the same may be located in the Minneapolis, MN metropolitan area, any operating files maintained by Seller or Manager in connection with the operations, current maintenance and management of the Property, including, without limitation, the Leases, lease files, Service Contracts, insurance policies, bills, invoices, receipts and other general records relating to the income and expenses of the Property, correspondence, surveys, plans and specifications, warranties for services and materials provided to the Property, environmental audits and similar materials, but excluding materials not directly related to the operations, current maintenance or management of the Property such as, without limitation, Seller's internal memoranda, financial projections, budgets, appraisals, accounting and tax records and similar proprietary, elective or confidential information.  If such operating files are not located in the Minneapolis, MN metropolitan area, then Seller shall provide copies of all such operating files to Buyer within five (5) days after request.  Buyer understands and agrees that any on-site inspections of the Property shall be conducted upon at least twenty-four (24) hours' prior written notice to Seller and in the presence of Seller or its representative, unless a representative of Seller is not available after Buyer uses good faith efforts to include a representative of Seller, in which event Buyer may conduct the inspection without a representative of Seller.  Such physical inspection shall not unreasonably interfere with the use of the Property by Seller or its tenant or Hotel guests nor shall Buyer's inspection damage the Property in any respect.  Such physical inspection shall not be invasive in any respect (unless Buyer obtains Seller's prior written consent, not to be unreasonably withheld), and in any event shall be conducted in accordance with standards customarily employed in the industry and in compliance with all governmental laws, rules and regulations.  Following each entry by Buyer with respect to inspections or tests on the Property, Buyer shall restore the Property to a condition which is as near to its original condition as existed prior to any such inspections or tests.  Seller shall cooperate with Buyer in its due diligence but shall not be obligated to incur any liability or expense in connection therewith.  Buyer shall not contact any guests of the Property without obtaining Seller's prior written consent and shall not disrupt Seller's or any tenant's activities on the Property.  Buyer agrees to indemnify against and hold Seller harmless from any claim for liabilities, costs, expenses (including reasonable attorneys' fees actually incurred) damages or injuries arising out of or resulting from the inspection of the Property by Buyer or its agents, and notwithstanding anything to the contrary in this Agreement, such obligation to indemnify and hold harmless Seller shall survive Closing or any termination of this Agreement.  These obligations of Buyer shall not be construed to require Buyer to perform any removal or remediation of any hazardous substances revealed by Buyer’s actions, and Buyer shall not be liable for any damages to Seller resulting from Buyer’s reporting of any hazardous substances revealed by Buyer’s actions under this Section 3.1.  

All inspections shall occur at reasonable times agreed upon by Seller and Buyer.  

7

Seller has delivered to Buyer or made the same available for reviewing, to the extent in Seller’s or Manager’s possession, custody or control, but excluding any and all confidential and proprietary information of Seller and Manager, the following documents (the “Due Diligence Documents”: 

		
	1.
	Copies of the Service Contracts, the Leases and agreements for any leased items of personal property.

		
	2.
	To the extent in Seller's possession, copies of all Licenses, together with any known work orders, notices of violation or similar letters or requests from governmental authority related to the Licenses whether existing or pending.

		
	3.
	A list of Reservations.

		
	4.
	The monthly and annual financial and operating statements for the Property for the current calendar year (including audited statements, if available), and, to the extent in Seller's possession or reasonably available to Seller, for the previous three (3) calendar years.

		
	5.
	Copies of receipts for all personal property taxes and ad valorem taxes and special assessments assessed against the Property for the current calendar year and prior three calendar years.

		
	6.
	To the extent available, a complete list of all warranties and guaranties.

		
	7.
	Copies of any environmental assessments and health reports for the Property in Seller's possession

		
	8.
	Copies of any parking, structural, mechanical or other engineering reports or studies related to the Property in Seller's possession.

		
	9.
	A copy of Seller's existing and most recent title insurance commitment and/or policy and survey

		
	10.
	A schedule of pending litigation affecting the Property.

		
	11.
	A copy of the most recent STAR Report.  

		
	12.
	Copies of any zoning and utility letters affecting the Property.

		
	13.
	List of any unpaid leasing commissions and tenant inducement costs under the Leases as of the Effective Date.

3.2    Right of Termination.  In the event Buyer determines (such determination to be made in Buyer's sole discretion) that the Property is not suitable for its purposes, Buyer shall have the right to terminate this Agreement by giving written notice thereof to Seller prior to the expiration of the Inspection Period.  If Buyer gives such notice of termination within the Inspection Period, this Agreement shall terminate and, except as otherwise expressly provided herein, the Deposit shall be returned to Buyer and thereupon neither party shall have any further rights or obligations to the other hereunder except as expressly provided herein.  If Buyer shall fail to timely notify Seller in writing of its election to terminate this Agreement on or before the expiration of the Inspection Period, time being of the essence, the termination right described in this Section 3.2 shall be immediately null and void and of no further force or effect, the Buyer shall be deemed to have accepted the financial and physical condition of the Property and the entire Deposit shall be deemed non-refundable, except in the event of Seller’s failure to perform its obligations under this Agreement, title objection, casualty, condemnation, failure to obtain the Estoppel Certificate or SNDA, failure of Buyer to obtain the franchise agreement or management agreement as set forth in Section 4.17, or change in Seller’s representations as set forth in Section 5.2, or as otherwise set forth in this Agreement, in which event the Deposit shall be distributed as set forth in this Agreement.  Buyer’s failure to provide such notice on or before the end of the Inspection Period shall constitute Buyer’s waiver of the herein-described termination right.     

3.3    Hotel Management Agreement. The Property is subject to a Hotel Management Agreement (as amended, the "Hotel Management Agreement") dated as of March 1, 2008 by and between Seller and Oak 

8

Hotels, Inc. (“Manager”).   The Hotel Management Agreement will be terminated as of the Closing Date.  Seller shall indemnify and hold harmless Buyer and its successors or assigns from any and all claims, liabilities, damages and costs, including reasonable attorneys’ fees, arising from or relating to the Hotel Management Agreement.   This indemnification obligation of Seller shall survive Closing or any termination of this Agreement.  

3.4    Franchise Agreement. The Property is subject to that certain License Agreement (as amended and assigned, the "Franchise Agreement") dated as of January 31, 1992 by and between Seller and Days Inn  Worldwide, Inc. (“Licensor”).   The Franchise Agreement will be terminated as of the Closing Date.   Seller shall indemnify and hold harmless Buyer and its successors or assigns from any and all claims, liabilities, damages and costs, including reasonable attorneys’ fees, arising from or relating to the Franchise Agreement.   This indemnification obligation of Seller shall survive Closing or any termination of this Agreement.  

3.5    Buyer Contact with Parties.  Seller shall provide Buyer with contact information for the tenants under the Leases, the Manager and the Licensor within five (5) days after the Effective Date.  Buyer or its agent shall be allowed to contact and interview these parties directly, provided that Seller shall have the first opportunity to coordinate contact.  Buyer shall provide Seller with notice of interviews with the tenants under the Leases and Seller or its agent is entitled to participate in the interviews with the tenants under the Leases.  Buyer shall make known to the tenant under the Leases that Buyer has no right to obligate or commit Seller to any agreements.  Seller shall not be entitled to any compensation in connection with such activities.  

3.6    Service Contracts.  Unless otherwise directed by Buyer on or before the expiration of the original sixty (60) day Inspection Period, the Service Contracts shall not be terminated by Seller as of Closing but shall be assigned to and assumed by Buyer at Closing; provided, however, in no event shall Seller be required to terminate any Service Contracts which by their terms are not terminable prior to the Closing or otherwise not terminable without payment by Seller of a penalty, charge or premium, and further provided that in no event shall Buyer be required to assume such Service Contracts.  Notwithstanding the foregoing or anything to the contrary contained in this Agreement, the Buyer acknowledges that it has received a copy of the following agreements:  (1) that certain Building Space/Rooftop Lease Agreement between Seller and T-Mobile Central LLC, (2) that certain antennae lease between Seller and (3) that certain contract between Seller and NOVA Consulting Group, Inc. and Buyer acknowledges that the aforementioned agreements are not terminable at Closing. 

ARTICLE IV
CLOSING

4.1    Time and Place. The Parties shall conduct an escrow closing (the "Closing") on or before the date which is thirty (30) days after the expiration of the Inspection Period, or such later date as the same may be extended to pursuant to Section 2.3 or 2.5 (the "Closing Date").  Buyer may specify a Closing Date by written notice to Seller at least seven (7) business days in advance of said date.  At Closing, Seller and Buyer shall perform the obligations set forth in, respectively, Section 4.2 and Section 4.3, the performance of which obligations shall be concurrent conditions to the obligations of Seller and Buyer to close.  The Closing shall occur through an escrow with the Title Company, whereby the Seller, Buyer and their attorneys need not be physically present at the Closing and may deliver documents by overnight air courier or other means. 

4.2    Seller's Obligations at Closing.  Not less than one business day prior to Closing, Seller shall deliver to Title Company: 

9

		
	(a)
	a duly executed limited warranty deed (the “Deed”) in the form of Exhibit F or as otherwise reasonably required by the Title Company, conveying the Land and Improvements, subject only to the Permitted Exceptions; the warranty of title in the Deed will be only as to claims made by, through or under Seller and not otherwise; 

		
	(b)
	two (2) duly executed counterparts of a bill of sale (the “Bill of Sale”) in the form of Exhibit G; 

		
	(c)
	two (2) duly executed counterparts of an assignment and assumption agreement with respect to the Leases and any security deposits as reasonably agreed upon by the parties (the “Assignment of Lease”);

		
	(d)
	for those Service Contracts being assumed subject to the provisions of Section 3.6, two (2) duly executed counterparts of an assignment and assumption agreement with respect to the Service Contracts, License, Intangibles and the Intellectual Property, in the form of Exhibit H (the “Assignment of Service Contracts, Licenses, Intangibles and Intellectual Property”); 

		
	(e)
	for those Service Contracts being terminated, two (2) duly executed counterparts of a termination agreement with respect to the Service Contracts;

		
	(f)
	 two (2) duly executed counterparts of a notice in the form of Exhibit I which Buyer shall send to the tenants informing them of the sale of the Property and of the assignment to Buyer of Seller's interest in, and obligations under, the Leases (including any security deposits) and directing that all rent and other sums payable after the Closing under the Leases shall be paid as set forth in the notice (the “Notice Letter to Tenants”); 

		
	(g)
	such evidence as the Title Company may reasonably require as to the authority of the person or persons executing documents on behalf of Seller; 

		
	(h)
	two (2) duly executed counterparts of an affidavit by Seller stating that Seller is not a "foreign person" as defined in the Federal Foreign Investment in Real Property Tax Act of 1980 and the 1984 Tax Reform Act in the form of Exhibit J (the “FIRPTA Affidavit”); 

		
	(i)
	the Leases, Service Contracts and Licenses, if any, in the possession of Seller or Seller's agents, together with such property files and records which are material in connection with the continued operation, leasing and maintenance of the Property which will remain at the Property on the Closing Date; 

		
	(j)
	Seller shall use commercially reasonable efforts deliver an estoppel certificate to the tenant under the lease between Seller and Asian Mill, Inc. (“Asian Mill”), as more particularly described on Exhibit C attached hereto (the “Asian Mill Lease”) in a form reasonably satisfactory to Buyer and its lender (the “Estoppel Certificate”).   Within twenty (20) days from the Effective Date, Buyer may provide Seller with a different form of the Estoppel Certificate, unless such form is contrary to the terms of said lease, in which event Seller shall deliver an Estoppel Certificate consistent with said lease or as set forth in Exhibit K.  Seller shall deliver the Estoppel Certificate to Asian Mill and provide Buyer with contact information for Asian Mill.  If no form of estoppel certificate is delivered to Seller by Buyer as provided above, then Seller shall deliver an Estoppel Certificate to Asian Mill consistent with its lease or as set forth in Exhibit K.  Seller shall cooperate with Buyer in trying to obtain an executed Estoppel Certificate, but it shall be the responsibility of Buyer to obtain the executed Estoppel Certificate.   In no event shall the Estoppel Certificate be dated earlier than twenty (20) days prior to Closing.  

		
	(k)
	Seller shall deliver a subordination, non-disturbance and attornment agreement (“SNDA”) to the Asian Mill in a form reasonably satisfactory to Buyer and its lender.  Within twenty (20) days after the Effective Date, Buyer may provide Seller with a form of the SNDA to be executed by Asian Mill, unless such form is contrary to the terms of said lease, in which event Seller shall deliver a SNDA consistent with said lease.  Seller shall deliver the SNDA to Asian Mill and provide Buyer with contact information of Asian Mill.  Seller shall cooperate with Buyer in trying to obtain an executed SNDA from Asian Mill, but it shall be the responsibility of Buyer 

10

to obtain the executed SNDA.  In no event shall the SNDA be dated earlier than twenty (20) days prior to Closing.  
		
	(l)
	such additional documents as shall be reasonably required to consummate the transaction expressly contemplated by this Agreement; 

		
	(m)
	certificate(s) or registration of title for any vehicle owned by Seller and used in connection with the Property; 

		
	(n)
	a reconciliation agreement for operating costs under the Leases, as applicable;

		
	(o)
	such agreements, affidavits or other documents as may be required by the Title Company to issue the title policy to Buyer subject only to the Permitted Title Exceptions and to eliminate such standard exceptions and to issue such endorsements thereto which may be eliminated and issued under applicable State law and which are customarily required by institutional investors purchasing property comparable to the Property; and 

		
	(p)
	a closing statement ("Closing Statement") reflecting the Purchase Price and the adjustments and prorations required hereunder and the allocation of income and expenses required hereby. 

At the Closing, Seller shall deliver to Buyer possession and occupancy of the Property subject to the Permitted Exceptions.  Buyer shall cooperate with Seller for a period of seven (7) years after the Closing in case of Seller's need in response to any legal requirements, tax audits, tax return preparation or litigation threatened or brought against Seller, by allowing Seller and its agents or representatives access, upon reasonable advance notice (which notice shall identify the nature of the information sought by Seller), at all reasonable times to examine and make copies of any and all instruments, files and records, which right shall survive the Closing.
In the event that either the Estoppel Certificate or SNDA referenced in this Section 4.2 above is not executed and an original provided by Asian Mill under its lease between Seller and Asian Mill, Inc. by the date of Closing, or either is not acceptable to Buyer or its lender, then Buyer may, at its option:  (i) terminate this Agreement after ten (10) day written notice to Seller during which time Seller may attempt to provide an Estoppel Certificate or SNDA under said lease, as applicable, acceptable to Buyer, and upon such termination, the entire Deposit (including both the First Deposit and Second Deposit, and whether or not the Inspection Period was extended) shall be returned to Buyer and thereupon, neither party shall have any further obligation or liability to the other (except for any obligations that specifically survive termination under this Agreement); or (ii) accept the Estoppel Certificate and SNDA in their existing condition or waive the requirements for the Estoppel Certificate and SNDA and proceed to Closing, in which case Seller and Buyer shall remain obligated to perform pursuant to the terms of this Agreement with no reduction of Purchase Price; or (iii) extend the Closing Date for a period not to exceed fifteen (15) days, during which time Buyer shall use its best efforts to obtain an acceptable Estoppel Certificate and SNDA, and if the Estoppel Certificate and SNDA acceptable to Buyer are not obtained within this extension period, then Buyer may exercise its options in (i) or (ii) above.  Notwithstanding anything to the contrary contained in this Agreement, in no event shall Seller be in default of this Agreement for failure to provide an Estoppel Certificate or SNDA .    
4.3    Buyer's Obligations at Closing.  At or prior to Closing, Buyer shall deliver to Title Company: 

		
	(a)
	 the full amount of the Purchase Price, as increased or decreased by prorations and adjustments as herein provided, in immediately available wire transferred funds pursuant to Section 1.5, it being agreed that at Closing the Deposit shall be applied towards payment of the Purchase Price; 

		
	(b)
	two (2) duly executed counterparts of the instruments described in Sections 4.2(b), 4.2(c), and 4.2(d); 

		
	(c)
	such evidence as the Title Company may reasonably require as to the authority of the person or persons executing documents on behalf of Buyer; 

11

		
	(d)
	such additional documents as shall be reasonably required to consummate the transaction contemplated by this Agreement; and 

		
	(e)
	the Closing Statement. 

4.4    Title Company's Obligations at Closing.  At Closing, Title Company shall: 

		
	(a)
	deliver to Seller the Purchase Price by wire transfer of immediately available federal funds to a bank account designated by Seller in writing to Title Company prior to the Closing; 

		
	(b)
	record and file the Deed in the Official Records of Hennepin County, Minnesota. 

		
	(c)
	deliver to each of Seller and Buyer one (1) fully executed counterpart original of the instruments described in Sections 4.2(b) and 4.2(c) one (1) fully executed counterpart original of the instruments described in Sections 4.2(d); 

		
	(d)
	deliver to Seller and Buyer the Closing Statement prepared by Title Company and approved by Seller and Buyer. The parties will endeavor to cause the Title Company to submit a preliminary draft of the Closing Statement not less than two (2) business days prior to Closing. 

4.5    Apportionments. The following apportionments shall be made between Seller and Buyer as of 11:59 P.M. local time at the Property, on the day immediately preceding the Closing Date (the "Apportionment Date"). Where applicable, the apportionments shall be made by the Buyer and Seller pursuant to Section 4.17. 

		
	(a)
	All rents, operating costs and other charges under any lease or other covenant at the Property shall be prorated as of the Closing Date.  At the Closing, Seller shall either deliver to Buyer any security deposit actually held by Seller pursuant to the Leases or credit to the account of Buyer the amount of such security deposit (to the extent such security deposit is not applied against delinquent rentals or otherwise as provided in the Leases).   

		
	(b)
	Unpaid and delinquent rent under the Lease collected by Seller and Buyer after the Closing Date shall be delivered as follows: (a) if Seller hereafter collects any unpaid or delinquent rent for the Property, Seller shall deliver to Buyer any such rent relating to the date of Closing and any period thereafter within fifteen (15) days after the receipt thereof, and (b) if Buyer hereafter collects any unpaid or delinquent rent from the Property, Buyer shall deliver to Seller any such rent relating to the period prior to the date of Closing within fifteen (15) days after the receipt thereof.   Seller and Buyer agree that (i) all rent received by Seller after the date of Closing shall be applied first to delinquent rentals, if any, in the order of their maturity, and then to current rentals, and (ii) all rent received by Buyer after the date of Closing shall be applied first to current rentals and then to delinquent rentals, if any, in inverse order of maturity. Buyer will make a good faith effort after Closing to collect all rents in the usual course of Buyer's operation of the Property, but Buyer will not be obligated to institute any lawsuit or other collection procedures to collect delinquent rents. Seller shall pay any unpaid leasing commissions and tenant inducement costs that exist as of the Effective Date and remain unpaid with respect to the Property under the Lease from and after the Effective Date.

Asian Mill under the Lease is paying operating costs (CAM, real estate taxes and insurance) based on an estimate of costs.  Seller shall provide Buyer with a preliminary reconciliation statement showing the amount of operating costs paid by the Asian Mill compared to an estimate of the amount of operating costs incurred by Seller as of the date of Closing.  The preliminary reconciliation statement shall reconcile to the extent practical the difference between the amounts as of the date of Closing with the Purchase Price being adjusted accordingly to account for the difference.  Post-closing, within sixty (60) after the date of Closing, Buyer and Seller shall 

12

cooperate jointly to reconcile the actual operating costs incurred by Seller to the date of Closing compared to the estimate of such amount paid at Closing, and shall make payment accordingly to the other based on the difference.  All operating costs for all years prior to the year of Closing have been reconciled and paid by or refunded to all tenants at the Property and Seller knows of no dispute or issues regarding such reconciliation.

To Seller’s actual knowledge, there are (and will be as of the Closing) no unpaid rent, accounts receivables and other amounts related to the Property owed to Seller under the Lease for any time period prior to the Effective Date.  

		
	(c)
	Any tour agents' and travel agents' commissions with respect to the Hotel incurred prior to the Closing (whether or not for any hotel bookings after the Closing) shall be paid by Seller.

		
	(d)
	On or before the Closing, Seller shall pay all general real estate taxes for the Property due and payable in years prior to the year of Closing.  General real estate taxes for the Property due and payable in the year of Closing that are not paid by the tenant under the Lease shall be apportioned between Buyer and Seller based on a 365 day calendar year as if Buyer were vested with title to the Property on the Closing.  Seller shall also pay, on or before the Closing, all special assessments levied or pending against the Property as of the Closing that are not paid by the tenant under the Lease, including, without limitation, any installments of special assessments (or estimates thereof) and interest thereon payable after the Closing.  In the event the actual amount of general real estate taxes or special assessments owed by Seller has not been determined, Seller shall pay the general real estate taxes and special assessments owed by Seller based on one hundred fifteen percent (115%) of the general real estate taxes and special assessments contained in the most recent tax bill.  The obligations of Buyer and Seller contained in this Section shall survive Closing and delivery of the Deed.  A post-Closing adjustment will be made for the actual taxes payable for the year in which the Closing shall occur.  Such adjustment shall be made within ten (10) days after a written demand therefor is made by either party hereto to the other party with a copy of the actual tax bill(s) attached.  

		
	(e)
	With respect to electricity, telephone, television, cable television, gas, water and sewer services that are metered and other utilities (collectively, the "Utilities"), Seller shall endeavor to have the respective companies providing the Utilities read the meters for the Utilities on or immediately prior to the Apportionment Date.  For periods prior to the Closing Date, Seller shall be responsible for all charges based on such final meter reading not being paid by Asian Mill under the Asian Mill Lease, and Buyer shall be responsible for all charges thereafter. If such readings are not obtainable, then, until such time as readings are obtained, charges for all Utilities for which readings were not obtained shall be prorated as of the Apportionment Date based upon the per diem rate obtained by using the last period and bills for such Utilities that are available. Upon the taking of a subsequent actual reading, such apportionment shall be adjusted to reflect the actual per diem rate for the billing period in which the date of Closing falls, and Seller or Buyer, as the case may be, shall promptly deliver to the other the amount determined to be due upon such adjustment. 

		
	(f)
	Room charges as to the Hotel for the night commencing on the Apportionment Date and ending on the morning of the date of Closing shall be split equally between the parties. 

		
	(g)
	Seller shall receive pro rata reimbursement from Buyer at Closing for each of the following items:  prepaid fees or other charges for transferable licenses, advertising expenses, permits, 

13

telephone equipment, telephone rental, or other items, if any, to the extent the rights to such prepaid fees or other charges are assigned by Seller to Buyer at Closing; provided that Buyer shall not be required to reimburse Seller for items and monies owing under Service Contracts assigned to Buyer that are not terminable and Buyer does not agree to assume in accordance with Section 3.6; and 

		
	(h)
	transferable deposits with companies providing Utilities, if any, to the extent the rights to such transferable deposits are assigned by Seller to Buyer at Closing. 

		
	(i)
	Amounts prepaid or payable under any Service Contracts assumed by Buyer.  Subject to Section 3.6, any amounts previously paid by the Seller to parties under any of the Service Contracts (as defined in Article 8) applicable to periods following the Closing Date shall be paid by the Buyer to the Seller.

		
	(j)
	Other Costs.  Any other costs pertaining to the Property not prorated in this Agreement shall be paid and prorated as follows.  Seller agrees to cause to be paid in full all expenses and charges incurred by the Seller in connection with the Property for the period prior to the date of Closing.  Buyer agrees to cause to be paid in full all expenses and charges incurred by Buyer in connection with the Property for the period from the date of Closing and thereafter.  Seller or Buyer, as the case may be, shall indemnify the other against and shall hold the other harmless from any costs, expenses or damages, including reasonable attorneys’ fees, which may result from any failure by Seller or Buyer to so pay such items.  

		
	(k)
	The provisions of this Section 4.5 shall survive Closing and delivery of the Deed.

4.6    Accounts Receivable and Accounts Payable for Hotel Guests.  As and when the same are received by Buyer, Buyer shall pay Seller the full amount of all accounts receivable outstanding as of the Closing Date owing from any present guests of the Hotel incurred during that guest’s present stay, and room charges for all guests of the Hotel for the night before the Closing Date as provided in Section 4.5(f).  Said accounts receivable are hereinafter referred to as the “Accounts Receivable.”  Buyer is not purchasing any of the receivables of the Hotel, including without limitation, the Accounts Receivable; provided, however, Buyer shall receive a credit to the Purchase Price in an amount equal to one-half (1/2)  of the room charges referred to Section 4.5(e).  Seller and Buyer agree to cooperate after the Closing Date to undertake all accountings and to make available all books, records, information and financial statements to facilitate proper collection and payment of all Accounts Receivable. If a party shall collect Accounts Receivable due and owing to the other party, such party will immediately pay over such Accounts Receivable to the other party. 

4.7    Operating Expenses.  All operating expenses, costs and charges with respect to the Hotel, excluding real estate taxes and assessments ("Operating Expenses") shall be apportioned and adjusted as of the Closing Date. Seller shall be responsible for all Operating Expenses which have accrued or become due prior to the Closing Date, and Buyer shall be responsible for all Operating Expenses which have accrued on and subsequent to the Closing Date. Seller and Buyer agree to cooperate after the Closing Date to undertake all accountings and to make available all books, records, information and financial statements to ensure proper allocation and payment of Operating Expenses. All Operating Expenses shall be read and finalized, if reasonably possible, at the Closing Date. Seller and Buyer agree to notify all payees of the closing as soon as possible after the Closing Date. With respect to any Operating Expenses which are not determined as of the Date of Closing, as soon as the exact amount of such charges or expenses can be determined, Seller and Buyer, if appropriate, shall readjust the amount of such Operating Expenses to be paid by each party with 

14

the result that Seller shall pay for those expenses and charges attributable to Seller, and Buyer shall pay for those expenses and charges attributable to Buyer.

4.8    House Banks; Reserve. The sale of the Hotel does not include cash, checks and other funds, including till money, house banks, and notes, securities and other evidence of indebtedness held at the Hotel as of the Apportionment Date, nor does it include balances on deposit to the credit of Seller or its agent, with banking institutions, or any other funds, operating accounts or reserves held by or on Seller's behalf.  

4.9    Reservation and Other Deposits. On the date of Closing, the aggregate amount of any Reservation Deposits or other advance payments and deposits (as determined by Buyer and Seller) received by Seller (which shall be retained by Seller) shall be credited against the Purchase Price. Buyer shall execute a receipt for any Reservation Deposits or other advance payments and deposits for which Buyer receives a credit against the Purchase Price, and shall indemnify and hold Seller harmless from and against all claims by, and liabilities to, future guests pertaining to the application or return of the Reservation Deposits or other advance payments and deposits for which Buyer receives a credit against the Purchase Price, in accordance with this Section 4.9.   Buyer shall also receive a credit against the Purchase Price for all gift cards and free night stays outstanding as of the date of Closing.

4.10    Safes and Baggage. On the date of Closing, Seller shall cause the delivery to Buyer of all of Seller's keys, if any, to the safes in the Hotel.  Any contents in the safes remaining in the hands of Buyer shall be the responsibility of Buyer, and Buyer hereby agrees to indemnify, defend and hold Seller harmless from and against any liability therefor.  On the date of Closing, representatives of Buyer and Seller shall take an inventory of all baggage, valises and trunks checked or left in the care of Seller.  From and after the date of Closing, Buyer shall be responsible for all baggage listed in said inventory, and Buyer hereby agrees to indemnify, defend and hold Seller harmless from and against any liability therefor.  

4.11    Employees. Seller has no employees at the Property.  Buyer shall assume no liability or responsibility for Manager’s employees.   The parties acknowledge that all employees of the Hotel are employees of Manager and not of Seller.  

4.12    Settlement of Apportionments. If the computation of the apportionments and adjustments described in this Article IV shows that a net amount is owed by Seller to Buyer, such amount shall be credited against the Purchase Price as provided for in Section 1.5. If such computation shows that a net amount is owed by Buyer to Seller, such amount shall be paid by wire transfer to Seller by Buyer on the Closing Date in addition to the payment of the cash portion of the Purchase Price to be made by Buyer under Section 1.5. 

4.13    Closing Costs. Seller shall pay (a) the fees of any counsel representing it in connection with this transaction (b)  one-half (1/2) of any escrow fee which may be charged by the Title Company; (c) the standard basic coverage portion of the premium for the Title Policy at Closing; and (d)  all real estate transfer fees and taxes imposed on or in connection with the recordation of the Deed.  Buyer shall pay (u) the fees of any counsel representing Buyer in connection with this transaction; (v) the costs of any endorsements and any premiums for any extended coverage portion of the Title Policy issued to Buyer by the Title Company at Closing and all other Title Company fees and charges; (w) the cost of the Survey; (x) all other state, county and city transfer, recordation, sales, use, excise, documentary or similar taxes and recording fees and costs in connection with the transfer of the Property; (y) the fees for recording the deed conveying the Property to Buyer; and (z) one-half (1/2) of any escrow fees charged by Title Company.  All other costs and expenses incident to this transaction and the closing thereof shall be paid by the party incurring same. 

15

4.14    Utility Services and Deposits. Seller shall be entitled to the return of any deposit(s) posted by it with any utility company not assigned to Buyer pursuant to the provisions hereof, and Seller shall notify each utility company serving the Property to terminate Seller's account effective on the Closing Date. 

4.15    Post-Closing Collections and Adjustments. Concurrently with the Closing, representatives of Seller and Buyer shall cause a preliminary closing statement to be prepared reflecting their respective closing costs, the apportionments, the payment of the Purchase Price and all other terms of this Agreement affecting or relating to the amount of and adjustments to the consideration to be paid for the Property.  In the event either Buyer or Seller becomes aware of any item in the closing statement which requires adjustment as a result of new information or the ascertainment of actual amounts for items which are the subject of estimates at Closing, it shall promptly advise the other in writing and provide such supporting documentation as shall reasonably be required.  Upon the ninetieth (90th) day following the date of Closing, or earlier upon mutual agreement of the parties, Buyer or Seller, as the case may be, shall make such additional payment or refund as shall be required by the aggregate of any such post-Closing adjustments (including, without limitation, adjustments resulting from collection of accounts receivable), and a final closing statement shall be prepared to reflect such revisions, subject only to subsequent adjustments provided for in Section 4.5.  In addition, if accurate allocations cannot be made at Closing or on the final closing statement because current bills are not then obtainable (as, for example, in the case of utility bills or real estate or personal property taxes), the parties shall allocate such revenue or expenses at Closing on the best available information, subject to adjustment upon receipt of the final bill or other evidence of the applicable revenue or expense. The obligation to make the adjustment shall survive the Closing.  Any revenue received or expense incurred by Seller or Buyer with respect to the Property after the date of Closing shall be promptly allocated in the manner described herein and the parties shall promptly pay or reimburse any amount due.  This provision shall not merge with the Deed delivered hereunder but shall survive Closing. 

4.16    Closing Statement.  On the day of or on the day prior to the day of Closing, Buyer and Seller shall make such inventories, examinations and audits of the Hotel, and of the books and records of the Hotel, as Buyer and Seller may deem necessary, make the apportionments, adjustments and prorations required under this Agreement. Buyer and Seller shall make the apportionments described in this Article IV, except as specifically set forth to the contrary herein.  The determination shall be used in the preparation of the Closing statement which will show the net amount of apportionments and adjustments due either to Seller or to Buyer as the result of the prorations and credits specified in this Article IV. 

4.17    Conditions Precedent to Obligation of Buyer. The obligation of Buyer to consummate the transaction hereunder shall be subject to the fulfillment on or before the date of Closing of all of the following conditions, any or all of which may be waived by Buyer in its sole discretion: 
		
	(a)
	Seller shall have delivered to Buyer all of the items required to be delivered to Buyer pursuant to the terms of this Agreement, including but not limited to, those provided for in Section 4.2. 

		
	(b)
	All of the representations and warranties of Seller contained in this Agreement shall be true and correct in all material respects as of the date of Closing (with appropriate modifications permitted under this Agreement or not adverse to Buyer). 

		
	(c)
	Seller shall have performed and observed, in all material respects, all covenants and agreements of this Agreement to be performed and observed by Seller as of the date of Closing, including but not limited to, those provided for in Section 5.4. 

		
	(d)
	Buyer shall have entered into a franchise agreement with a hotel franchise for the Hotel on terms acceptable to Buyer in its reasonable discretion.

16

		
	(e)
	Buyer shall have entered into a management agreement with a hotel manager to operate the Hotel on terms acceptable to Buyer in its reasonable discretion.

In the event that conditions in subsections 4.17(d) and 4.17(e) are not satisfied by the Closing Date despite Buyer’s good faith efforts, then either party may thereafter terminate this Agreement prior to satisfaction of the conditions, and upon such termination, one-half of the Deposit shall be returned to Buyer and the remaining one-half of the Deposit shall be delivered to Seller (including both the First Deposit and Second Deposit, and whether or not the Inspection Period was extended). 
4.18    Conditions Precedent to Obligation of Seller. The obligation of Seller to consummate the transaction hereunder shall be subject to the fulfillment on or before the date of Closing of all of the following conditions, any or all of which may be waived by Seller in its sole discretion: 
		
	(a)
	Seller shall have received the Purchase Price as adjusted pursuant to and payable in the manner provided for in this Agreement. 

		
	(b)
	Buyer shall have delivered to Seller all of the items required to be delivered to Seller pursuant to the terms of this Agreement, including but not limited to, those provided for in Section 4.3. 

		
	(c)
	All of the representations and warranties of Buyer contained in this Agreement shall be true and correct in all material respects as of the date of Closing.

		
	(d)
	 Buyer shall have performed and observed, in all material respects, all covenants and agreements of this Agreement to be performed and observed by Buyer as of the date of Closing. 

ARTICLE V
REPRESENTATIONS, WARRANTIES AND COVENANTS

5.1    Representations and Warranties of Seller. Seller hereby makes the following representations and warranties to Buyer as of the Effective Date: 

		
	(a)
	Organization and Authority. Seller has been duly organized and is validly existing under the laws of Delaware.  Seller has the full right and authority to enter into this Agreement and, to transfer all of the Property to be conveyed by Seller pursuant hereto and to consummate or cause to be consummated the transactions contemplated herein to be made by Seller.  The person signing this Agreement on behalf of Seller is authorized to do so. The execution and delivery of, and the performance by Seller of its obligations under this Agreement do not, and will not contravene, or constitute a default under, any provision of applicable law or regulation or any agreement, judgment, injunction, order, decree or other instrument binding upon Seller or to which the Property is subject, or result in the creation of any lien or other encumbrance on any asset of Seller. Seller has not applied for or consented to the appointment of, or the taking of possession by, a receiver, custodian, trustee or liquidator of itself or of all or a substantial part of its property, admitted in writing its inability to pay its debts as they become due, made a general assignment for the benefit of its creditors, filed a voluntary petition or commenced a voluntary case or proceeding under the Federal Bankruptcy Code (as now or hereafter in effect), been adjudicated a bankrupt or insolvent, failed to controvert in a timely and appropriate manner, or acquiesced in writing to, any petition filed against it in an involuntary case or proceeding under the Federal Bankruptcy Code (as now or hereafter in effect), or taken any corporate or partnership action for the purpose of effecting any of the foregoing. 

		
	(b)
	Pending Actions. There is no action, suit, arbitration, unsatisfied order or judgment, governmental investigation or proceeding pending, or to Seller's knowledge, threatened against the Property or the transaction contemplated by this Agreement, which, if adversely determined, 

17

could individually or in the aggregate have a material adverse effect on title to the Property or any portion thereof, could materially and adversely affect the business, financial position or results of operations of Seller or the Property, or which could in any material way interfere with the consummation by Seller of the transaction contemplated by this Agreement.   

		
	(c)
	Leases. Seller is the lessor under the Leases.  Except for the Leases, to Seller's knowledge, there are no other leases or occupancy agreements to which Seller is a party affecting the Property.  Except as otherwise disclosed to Buyer, Seller has not received any advance rent or advance compensation under the Leases in excess of one month and the tenants under the Leases are not entitled to any concession, rebate, allowance, or period of occupancy free of rent under the Leases or any other agreement with Seller.  No brokerage commissions or compensation of any kind shall hereafter be due in connection with the Leases.  To Seller's knowledge, no party is in default under the Leases.  Seller has received no notice of any intention by any of the parties to any of the Leases to cancel the same.  The Leases shall not be amended or extended by Seller, and no new leases, licenses or occupancy agreements shall be entered into that affect the Property, without the written consent of Buyer. 

		
	(d)
	Condemnation. No condemnation proceedings relating to the Property are pending or to Seller's Knowledge, threatened. 

		
	(e)
	Service Contracts.  To Seller's actual knowledge, Exhibit D identifies all Service Contracts and agreements for any leased items of Personal Property (exclusive of any purchase orders with respect to hotel supplies, operating equipment, items relating to repairs, maintenance and replacement, and similar items ordered and delivered in the ordinary course of business, except to the extent that any of the foregoing involves contracts for significant goods or services to be provided on an ongoing basis).  To Seller's knowledge, Seller has performed all of its obligations thereunder in all material respects, and is not in default thereunder in any material respect.   Subject to the provisions of Section 2.6, all Service Contracts shall be terminated as of the Closing except for those Service Contracts that Buyer agrees to assume in its discretion.

		
	(f)
	Violations. Except as otherwise provided herein or in documents provided to the Buyer, to Seller's actual knowledge, Seller has received no written notice that the use and operation of the Property is not in full compliance with applicable building codes, zoning and land use laws, and other applicable local, state and federal laws and regulations, and, except as otherwise provided to the Buyer, Seller has not received prior to the Effective Date any written notification from any governmental or public authority (i) that the Property is in violation of any applicable fire, health, building, use, occupancy or zoning laws where such violation remains outstanding and, if unaddressed, would have a material adverse effect on the use of the Property as currently owned and operated, or (ii) that any work is required to be done upon or in connection with the Property, where such work remains outstanding and, if unaddressed, would have a material adverse effect on the use of the Property as currently owned and operated.  

		
	(g)
	Taxes. To Seller's best knowledge, all federal, state and local employment taxes, payroll taxes, excise taxes, occupancy or entertainment taxes, ad valorem taxes, sales or use taxes and real property (including secured personal property) taxes and assessments due and payable as of the date of this Agreement in connection with the ownership or operation of the Hotel have been paid.  All such taxes due and payable as of the date of Closing will be timely paid by Seller.    Seller has received no written notice of threatened or pending special assessments or 

18

reassessments of the Property.   To Seller’s best knowledge, no property tax appeals related to the Property are pending or currently in process.  

		
	(h)
	Insurance.  Seller has not received prior to the Effective Date any written notice from any insurance company or board of fire underwriters of any defects or inadequacies in or on the Property or any part or component thereof that would materially and adversely affect the insurability of the Property or cause any material increase in the premiums for insurance for the Property that have not been cured or repaired.  Seller shall provide Buyer within ten (10) days after the Effective Date certificates of insurance for all liability insurance policies in existence from the Seller with respect to the Property.  The insurance certificates shall provide evidence that the coverage is through the date of Closing.       

		
	(i)
	Environmental Matters. Except as set forth in any environmental assessment reports in Seller's possession and delivered or made available to Buyer or any matter discovered by Buyer and/or its consultants, including matters discovered prior to the date hereof, Seller has received no written notification that any governmental or quasi-governmental authority has determined that there are any violations of, or remediation obligations under any, environmental statutes, ordinances or regulations affecting the Property.  To the best of Seller’s knowledge, Seller has not released any hazardous substance at the Property.  Notwithstanding the foregoing, and as previously disclosed to Buyer, Seller has received notice from applicable governmental authorities that a portion of the Property may have been previously contaminated and Buyer acknowledges the disclosure by Seller of the foregoing, and further acknowledges that the Property is being sold "as is" with no undertaking by Seller to do further investigation or remediation.  Seller has delivered to Buyer and Buyer acknowledges receipt of all environmental assessment reports and documents in Seller’s possession relating to the location of certain hazardous substances on the Property as more particularly described therein.    

		
	(j)
	Labor Matters. Neither Seller nor Manager is a party to any union or other collective bargaining agreement with employees employed in connection with the ownership, operation or maintenance of the Property.  All labor and materials which have been or will be furnished to the Property have been fully paid for or will be fully paid for prior to the Closing so that no lien for labor or materials rendered can be asserted against the Property.

		
	(k)
	Financial Information. To Seller's knowledge, all of Seller's financial information and tax information delivered or made available to Buyer ("Financial Information") is correct and complete in all material respects and presents accurately the results of the operations of the Property for the periods indicated.  Since the date of the last financial statement included in Seller's Financial Information and the date that information was provided by Seller with respect to taxes, there has been no material adverse change in the financial condition or in the operations of the Property. 

		
	(l)
	Wells.  Other than certain monitoring wells relating to the environmental remediation, Seller represents, to the best of Seller’s actual knowledge, that there are no wells located at the Property.

		
	(m)
	Storage Tanks.  Seller represents that, to the best of Seller’s actual knowledge, there are no underground or above ground storage tanks of any size or type located on the Property.

		
	(n)
	Methamphetamine Production.  To the best of Seller’s knowledge, methamphetamine production has not occurred on the Property.

19

		
	(o)
	Encumbrances.  Except as set forth in the Title Commitment, the Survey or as otherwise disclosed by Buyer to Seller, to Seller’s actual knowledge, the Property is not subject to any covenants, restrictions or easements contained in any document, whether recorded or unrecorded, that affect the use of the Property or the construction of improvements at the Property.  

		
	(p)
	Exclusive Right to Purchase.  Seller and its agents shall cease marketing the Property and shall not conduct any discussions or negotiations or respond in writing to any solicitations by third parties relating to the purchase of the Property during the term of this Agreement.  Seller has not entered into any other contracts for the sale of the Property, nor has Seller granted any rights of first refusal or options to purchase the Property or any other rights to others that might prevent the consummation of this Agreement, and Seller will not enter into any such contracts relating to the sale of the Property with any other parties.

		
	(q)
	Personal Property. To Seller’s knowledge, the list of Personal Property set forth on Exhibit B contains a correct and complete list of personal property owned by Seller and located at or used in connection with the operation of the Hotel as of the Effective Date.   Seller agrees not to transfer or remove any Personal Property from the Property after the Effective Date except for repair or replacement thereof.  Any items of Personal Property replaced after the Effective Date shall be promptly installed prior to Closing and shall be of substantially similar quality to the item of Personal Property being replaced.   

		
	(r)
	  Management Agreement.  Seller represents and warrants that the management agreement between the Seller and the Manager relating to the Property shall be terminated as of Closing.

		
	(s)
	Franchise Agreement.  Seller represents and warrants that the franchise agreement between the Seller and the franchisor relating to the Property shall be terminated as of Closing.

5.2    Change in Representation/Waiver.  Notwithstanding anything to the contrary contained herein, Buyer acknowledges that Buyer shall not be entitled to rely on any representation made by Seller in this Article V to the extent, prior to or at Closing, Buyer shall have or obtain actual knowledge of any information that was contradictory to such representation or warranty; provided, however, if Buyer determines prior to Closing that there is a material breach of any of the representations and warranties made by Seller above or learns of any pending legal proceedings or administrative actions or any violations of existing laws, ordinances, regulations and building, codes affecting the Property which would otherwise enable Buyer to terminate this Agreement in accordance with its terms, then Buyer may, at its option, by sending to Seller written notice of its election either (i) terminate this Agreement or (ii) waive such breach and/or conditions and proceed to Closing with no adjustment in the Purchase Price and Seller shall have no further liability as to such matter thereafter.  In the event Buyer terminates this Agreement for the reasons set forth above, the entire Deposit (including both the First Deposit and Second Deposit, and whether or not the Inspection Period was extended) shall be immediately returned to Buyer and neither Buyer nor Seller shall thereafter have any other rights or remedies hereunder other than as specifically stated otherwise.  In furtherance thereof, Seller shall have no liability with respect to any of the foregoing representations and warranties or any representations and warranties made in any other document executed and delivered by Seller to Buyer, to the extent that, prior to the Closing, Buyer discovers or learns of information (from whatever source, including, without limitation the Manager, as a result of Buyer’s due diligence tests, investigations and inspections of the Property, or disclosure by Seller or Seller’s agents and employees) that contradicts any such representations and warranties, or renders any such representations and warranties untrue or incorrect, and Buyer nevertheless consummates the transaction contemplated by this Agreement.  If, after the Effective Date but prior to Closing, 

20

a material and adverse change occurs to any of the above representations or warranties that is not caused by Seller so that such is no longer accurate or true and constitutes a breach by Seller, the party obtaining knowledge of such change shall promptly notify the other party in writing of the change.  Under said circumstances, and in the event that such change in the representation or warranty is not caused by the intentional or grossly negligent acts of Seller and is material and adverse to Buyer, Seller shall have at least five (5) business days to cure after notice from Buyer.  In the event the Seller is unwilling or unable to cure, then Buyer, as its sole remedy, may terminate this Agreement without further liability by giving written notice to Seller, in which event the entire Deposit (including both the First Deposit and Second Deposit, and whether or not the Inspection Period was extended) shall be returned to Buyer.  Notwithstanding anything to the contrary contained in this Agreement, Seller shall have no liability for any change caused by Buyer to any of the above representations or warranties, and Buyer shall have no right to terminate this Agreement because of such change.

5.3    Covenants of Seller. Seller hereby covenants with Buyer as follows: 

		
	(a)
	From the Effective Date hereof until the Closing or earlier termination of this Agreement, Seller shall use reasonable efforts to cause Manager to operate and maintain the Property in a manner generally consistent with the manner in which it has been operated and maintained prior to the date hereof. 

		
	(b)
	A copy of any modification of the Leases which Seller wishes to execute between the Effective Date and the date of Closing will be submitted to Buyer for its approval prior to execution by Seller. Buyer agrees to notify Seller in writing within ten (10) business days after its receipt thereof of either its approval or disapproval, including all tenant inducement costs and leasing commissions to be incurred in connection therewith.  In the event Buyer informs Seller that Buyer does not approve such modification of the Leases, which approval shall not be unreasonably withheld, Seller shall not enter into such agreement.  In the event Buyer fails to notify Seller in writing of its approval or disapproval within ten (10) business days, such failure shall be deemed the approval by Buyer.  

		
	(c)
	Seller and Manager shall have the right to make and accept reservations for use of the Hotel's rooms, banquet and restaurant facilities and meeting and convention facilities (and accept cancellations of such Reservations) in the ordinary course of business at Seller's customary rates and charges and Buyer agrees to honor and assume all such Reservations following Closing.  

		
	(d)
	After the expiration of the Inspection Period, without the consent of Buyer (which shall not be unreasonably withheld or delayed), Seller shall not enter into any Service Contracts which are not terminable by Closing or which are not terminable with thirty (30) day notice.

		
	(e)
	Seller shall not release or modify any warranties and guaranties, if any, except with the prior written consent of Buyer. 

		
	(f)
	Seller shall cause to be paid prior to delinquency all ad valorem, occupancy and sales taxes due and payable with respect to the Property or the operation of the Hotel. 

		
	(g)
	In addition to the Due Diligence Documents already provided to Buyer as set forth in Section 3.1,  if not already provided to Buyer, Seller shall deliver to Buyer, or make available at the Property, at Seller’s sole discretion, within five (5) days after the Effective Date, copies of all of the following relating to or affecting the Property which Seller has access to or are in Seller’s possession or control:  soil and environmental reports and tests, including any existing Phase 1 Environmental Site Assessment; engineering reports; any other property condition reports (whether land, building or equipment), including roof and structural reports, HVAC and building system reports; inspection notices, reports and results; surveys; site plans; title work; architectural 

21

and engineering plans and drawings; property tax and special assessment bills together with any notices concerning assessment, valuation or property tax or special assessment; certificates of occupancy; building permits; agreements with any governmental authority; notices of violation from and other correspondences with governmental authority (including correspondences with the MPCA); governmental authority and third party consultants responses and conclusions with respect to review of the Property; and correspondences and other pertinent documents, notices and items relating to or affecting the Property.  
		
	(h)
	If not already provided to Buyer, Seller shall also deliver to Buyer, or make available to Buyer at the Property, at Seller’s sole discretion, within five (5) days after the Effective Date, correct and complete copies of all Service Contract and other existing agreements or contracts related to or affecting the Property which Seller has access to or are in Seller’s possession or control, including, but not limited to: any easements, licenses, covenants and use restrictions; any warranties for equipment or improvements; and any maintenance, management and service contracts, whether or not being assumed by Buyer.  

		
	(i)
	The obligation of Seller to provide the above referenced items is ongoing through Closing in the event that Seller gains access to, or possession or control of, any additional or updated above referenced items after the Effective Date.  Seller shall, at no cost, expense or liability to Seller, cooperate in all reasonable respects with Buyer’s due diligence efforts.  Seller shall not be entitled to any compensation in connection with such cooperation.  

		
	(j)
	Seller shall at its own cost and expense operate, lease and maintain the Property in the same manner as it has been operated and maintained heretofore, free from waste and neglect, reasonable wear and tear excepted.

		
	(k)
	Seller shall, at no cost, expense or liability to Seller, cooperate in all reasonable respects and in good faith with Buyer in obtaining governmental and third party approvals, consents and agreements, and shall execute such applications, permits, agreements and other documents as may be reasonably required by Buyer, provided that such items may be effective as of the Closing. Seller shall not be entitled to any compensation or reimbursement of costs in connection with such cooperation.

5.4    Representations and Warranties of Buyer.  Buyer hereby represents and warrants to Seller: 
		
	(a)
	Buyer has the full right, power and authority to purchase the Property as provided in this Agreement and to carry out Buyer's obligations hereunder, and all requisite action necessary to authorize Buyer to enter into this Agreement and to carry out its obligations hereunder have been, or by the Closing will have been, taken.  The person signing this Agreement on behalf of Buyer is authorized to do so.  The execution and delivery of, and the performance by Buyer of its obligations under this Agreement do not, and will not contravene, or constitute a default under, any provision of applicable law or regulation or any agreement, judgment, injunction, order, decree or other instrument binding upon Buyer, or result in the creation of any lien or other encumbrance on any asset of Buyer.  Buyer has not applied for or consented to the appointment of, or the taking of possession by, a receiver, custodian, trustee or liquidator of itself or of all or a substantial part of its property, admitted in writing its inability to pay its debts as they become due, made a general assignment for the benefit of its creditors, filed a voluntary petition or commence a voluntary case or proceeding under the Federal Bankruptcy Code (as now or hereafter in effect), been adjudicated a bankrupt or insolvent, failed to controvert in a timely and appropriate manner, or acquiesced in writing to, any petition filed against it in an involuntary case or proceeding under the Federal Bankruptcy Code (as now or hereafter in effect), or taken any corporate or partnership action for the purpose of effecting any of the foregoing. 

22

		
	(b)
	There is no action, suit, arbitration, unsatisfied order or judgment, government investigation or proceeding pending, or to Buyer's knowledge, threatened against Buyer which, if adversely determined, could individually or in the aggregate materially interfere with the consummation of the transaction contemplated by this Agreement. 

		
	(c)
	Buyer has funds available to it (including cash, other liquid assets and debt available for the within transaction) sufficient to pay the Purchase Price and otherwise fulfill Buyer's obligations under this Agreement. 

		
	(d)
	The execution, delivery and performance by Buyer of this Agreement will not (i) conflict with, or result in any breach or violation of or default (or give rise to any right of termination, cancellation or acceleration) under any note, bond, indenture, lease, license, permit, agreement or other instrument or obligation to which Buyer is a party or by which it is or may be bound, or (ii) violate any law, order, rule, regulation, judgment, order, decree, writ or injunction applicable to Buyer. 

		
	(e)
	Buyer acknowledges that the Property has been entered into the Voluntary Investigative and Cleanup (VIC) Program (the “VIC Program”) administered by the Minnesota Pollution and Control Agency (“MPCA”) and that Seller is currently undergoing remediation efforts in accordance with the recommendations of MPCA and that all undertakings by Seller to do further investigation or remediation shall cease as of the Closing Date and Buyer shall waive any claim against Seller arising from the presence of hazardous substances identified under the VIC Program on the Property.  In addition, Buyer acknowledges that the Buyer and/or its consultants may have discovered the presence of certain additional hazardous substances, including petroleum, prior to the Effective Date, and that all Seller shall take no action with respect to such matter and notwithstanding any other provision to the contrary contained in this Agreement, Buyer shall waive any claim against Seller arising from the presence of any hazardous substances on the Property. 

5.5    Covenants of Buyer.  Buyer hereby covenants with Seller that Buyer shall, in connection with its investigation of the Property during the Inspection Period and subject to Seller's consent to any invasive testing (not to be unreasonably withheld), inspect the Property for the presence of hazardous substances, and shall furnish to Seller copies of any reports received by Buyer in connection with any such inspection.  Buyer shall also furnish to Seller copies of any other reports received by Buyer relating to any other inspections of the Property conducted on Buyer's behalf, if any (including, specifically, without limitation, any reports analyzing compliance of the Property with the provisions of the Americans with Disabilities Act (42 U.S.C. 12101, et seq., if applicable).  These obligations of Buyer shall not be construed to require Buyer to perform any removal or remediation of any hazardous substances revealed by Buyer’s actions.  Seller agrees to hold Buyer harmless from all claims, costs or damages, including reasonable attorneys’ fees, for damages resulting from Buyer’s reporting of any hazardous substances revealed by Buyer’s actions under this Section 5.6.  These obligations shall survive Closing or any termination of this Agreement.
ARTICLE VI
DEFAULT

6.1    Default.  Buyer or Seller shall be in default under this Agreement if either fails to observe, perform or comply with any material term, condition or obligation of this Agreement and such failure continues for a period of ten (10) days after written notice of the failure from the other party.

6.2    Seller’s Remedies.   IF THE SALE IS NOT CONSUMMATED DUE TO ANY DEFAULT BY BUYER HEREUNDER, THEN SELLER’S SOLE AND EXCLUSIVE REMEDY SHALL BE TO TERMINATE THIS AGREEMENT AND RETAIN THE DEPOSIT AS LIQUIDATED DAMAGES. THE 

23

PARTIES HAVE AGREED THAT SELLER's ACTUAL DAMAGES, IN THE EVENT OF A FAILURE TO CONSUMMATE THIS SALE DUE TO BUYER's DEFAULT, WOULD BE EXTREMELY DIFFICULT OR IMPRACTICABLE TO DETERMINE.  AFTER NEGOTIATION, THE PARTIES HAVE AGREED THAT, CONSIDERING ALL THE CIRCUMSTANCES EXISTING ON THE DATE OF THIS AGREEMENT, THE AMOUNT OF THE DEPOSIT IS A REASONABLE ESTIMATE OF THE DAMAGES THAT SELLER WOULD INCUR IN SUCH EVENT.  BY PLACING THEIR INITIALS BELOW, EACH PARTY SPECIFICALLY CONFIRMS THE ACCURACY OF THE STATEMENTS MADE ABOVE AND THE FACT THAT EACH PARTY WAS REPRESENTED BY COUNSEL WHO EXPLAINED, AT THE TIME THIS AGREEMENT WAS MADE, THE CONSEQUENCES OF THIS LIQUIDATED DAMAGES PROVISION. THE FOREGOING IS NOT INTENDED TO LIMIT BUYER's INDEMNITY OBLIGATIONS UNDER OTHER SECTIONS HEREOF. The rights and remedies of this Section 6.2 shall survive Closing or any termination of this Agreement.

6.3    Buyer’s Remedies.  If the Closing has not occurred due to a breach by Seller in any material respect any of its obligations or representations or warranties contained in this Agreement, or if Seller fails to consummate this Agreement for any reason other than Buyer's default or the permitted termination of this Agreement by Seller or Buyer as herein expressly provided, Buyer shall be entitled, as its sole remedy, either (a) to terminate this Agreement and receive the return of the entire Deposit (including both the First Deposit and Second Deposit, and whether or not the Inspection Period was extended), which return shall operate to terminate this Agreement and release Seller from any and all liability hereunder, or (b) to enforce specific performance of Seller's obligation to execute the documents required to convey the Property to Buyer, it being understood and agreed that the remedy of specific performance shall not be available to enforce any other obligation of Seller hereunder.  Buyer shall be deemed to have elected to terminate this Agreement (as provided in subsection (a) above) if Buyer fails to file a cause of action for specific performance against Seller on or before ninety (90) days after written notice of termination from Seller or ninety (90) days after the originally scheduled Closing Date, whichever shall occur first.  If specific performance is not available due to the fact that Seller has conveyed the Property to a third party, then upon termination of this Agreement by Buyer, in addition to receiving the immediate return of the Deposit, anything in the Agreement contained to the contrary notwithstanding, Buyer shall also receive from Seller, upon demand, Buyer’s actual, documented out-of-pocket costs and expenses associated with conducting its due diligence related to the Property; provided, however, Seller’s  maximum reimbursement liability with respect to the foregoing shall not exceed $300,000.00.  
The rights and remedies of this Article VI shall survive Closing or any termination of this Agreement. THE FOREGOING REMEDIES ARE IN ADDITION TO AND ARE NOT INTENDED TO LIMIT SELLER'S OR BUYER’S INDEMNITY OBLIGATIONS UNDER OTHER SECTIONS HEREOF.
ARTICLE VII    
RISK OF LOSS

7.1    Minor Damage.  In the event of loss or damage to the Property or any portion thereof which is not "major" (as hereinafter defined), this Agreement shall remain in full force and effect provided Seller performs any necessary repairs or, at Seller's option, assigns to Buyer all of Seller's right, title and interest to any claims and proceeds Seller may have with respect to any casualty insurance policies relating to the premises in question.  In the event that Seller elects to perform repairs upon the Property, Seller shall use reasonable efforts to complete such repairs promptly to a condition similar to that which existed prior to such damage, and the date of Closing shall be extended a reasonable time in order to allow for the completion of such repairs, but not to exceed fifteen (15) days.  If Seller elects to assign a casualty claim to Buyer, the Purchase Price shall be reduced by an amount equal to the deductible amount under Seller's insurance policy and the 

24

costs to repair any uninsured or uncompensated damage.  Upon Closing, full risk of loss with respect to the Property shall pass to Buyer. 

7.2    Major Damage.  In the event of a "major" loss or damage, either Seller or Buyer may terminate this Agreement by written notice to the other party, in which event the entire Deposit (including both the First Deposit and Second Deposit, and whether or not the Inspection Period was extended) shall be returned to Buyer.  If neither Seller nor Buyer elects to terminate this Agreement within twenty (20)  days after Seller sends Buyer written notice of the occurrence of major loss or damage, then Seller and Buyer shall be deemed to have elected to proceed with Closing, in which event Seller shall, at Seller's option, either (a) perform any necessary repairs to a condition similar to that which existed prior to such damage, or (b) assign to Buyer all of Seller's right, title and interest to any claims and proceeds Seller may have with respect to any casualty insurance policies or condemnation awards relating to the premises in question.  In the event that Seller elects to perform repairs upon the Property, Seller shall use reasonable efforts to complete such repairs promptly and the date of Closing shall be extended a reasonable time in order to allow for the completion of such repairs, but not to exceed fifteen (15) days.  If Seller elects to assign a casualty claim to Buyer, the Purchase Price shall be reduced by an amount equal to the deductible amount under Seller's insurance policy and the costs to repair any uninsured or uncompensated damage. Upon Closing, full risk of loss with respect to the Property shall pass to Buyer. 

7.3    Definition of "Major" Loss or Damage.  For purposes of Sections 7.1 and 7.2, "major" loss or damage refers to the following: (i) loss or damage to the Property or any portion thereof such that the cost of repairing or restoring the premises in question to a condition substantially identical to that of the premises in question prior to the event of damage would be, in the opinion of an architect selected by Seller and reasonably approved by Buyer, equal to or greater than $200,000.00, or (ii) any loss due to a condemnation which permanently and materially impairs the current use of the Property.  If Buyer does not give notice to Seller of Buyer's reasons for disapproving an architect within five (5) business days after receipt of notice of the proposed architect, Buyer shall be deemed to have approved the architect selected by Seller. 

7.4    Condemnation.  If, subsequent to the expiration of the Inspection Period and prior to the Closing Date, any proceeding, judicial, administrative or otherwise, which relates to the proposed taking of all or any substantial portion of the Property by condemnation or eminent domain or like action, or the taking or closing of any right of access to the Property, is commenced, Seller shall promptly furnish Buyer written notification of any such proceedings after Seller’s receipt of any such notification.  Buyer shall have the right and option to terminate this Agreement by giving Seller written notice to such effect within twenty (20) days after receipt of notification from Seller of any such occurrence or occurrences.  Failure to notify Seller within such time of Buyer’s election to terminate this Agreement shall be deemed to be an election to proceed to close the transaction.  Should Buyer elect to terminate this Agreement under this Section 7.4, the entire Deposit (including both the First Deposit and Second Deposit, and whether or not the Inspection Period was extended) shall be returned forthwith to Buyer, and thereupon the parties hereto shall be released from any further obligation except as expressly set forth in this Agreement.  

ARTICLE VIII
COMMISSIONS
    
Seller represents and warrants to the Buyer that it has not dealt with any person or entity entitled to a brokerage commission, finder's fee or other compensation with respect to the transaction contemplated hereby other than Marcus & Millichap (the “Seller’s Agency”).  Buyer represents and warrants to the Seller that it has not dealt with any person or entity entitled to a brokerage commission, finder's fee or other compensation with respect to the transaction contemplated hereby other than Marcus & Millichap and 

25

Strategic Management/Wakota Commercial Advisors (collectively, “Buyer’s Agency”).  The responsibility for payment of the compensation owed to Seller’s Agency and Buyer’s Agency (the “Commission”) shall be the sole responsibility of Seller.  The Commission shall be split 50/50 between the Seller’s Agency and the Buyer’s Agency; provided, however, the portion of the Commission payable to Buyer’s Agency shall not be less than two percent (2%) of the gross Purchase Price. The Seller’s Agency and the Buyer’s Agency shall be paid only upon the Closing of the purchase and sale contemplated hereby pursuant to a separate agreement.  Buyer hereby agrees to indemnify, defend, and hold Seller harmless from and against any losses, damages, costs and expenses (including, but not limited to, attorneys' fees and costs) incurred by Seller by reason of any breach or inaccuracy of the Buyer’s ( or its nominee's) representations and warranties contained in this Article VIII.  Seller hereby agrees to indemnify, defend, and hold Buyer harmless from and against any losses, damages, costs and expenses (including, but not limited to, attorneys' fees and costs) incurred by Buyer by reason of any breach or inaccuracy of Seller's representations and warranties contained in this Article VIII.  Seller and Buyer agree that it is their specific intent that no broker shall be a party to or a third party beneficiary of this Agreement or the Deposit, that no broker shall have any rights or cause of action hereunder, and further that the consent of a broker shall not be necessary to any agreement, amendment, or document with respect to the transaction contemplated by this Agreement.  The provisions of this Article VIII shall survive the Closing and/or termination of this Agreement.

ARTICLE IX
DISCLAIMERS AND WAIVERS

9.1    No Reliance on Documents.  Except as expressly stated herein, Seller makes no representation or warranty as to the truth, accuracy or completeness of any materials, data or information delivered by Seller or its agents to Buyer in connection with the transaction contemplated hereby. Buyer acknowledges and agrees that all materials, data and information delivered by Seller to Buyer in connection with the transaction contemplated hereby are provided to Buyer as a convenience only and that any reliance on or use of such materials, data or information by Buyer shall be at the sole risk of Buyer, except as otherwise expressly stated herein. Without limiting the generality of the foregoing provisions, Buyer acknowledges and agrees that (a) any environmental or other report with respect to the Property which is delivered by Seller to Buyer shall be for general informational purposes only, (b) Buyer shall not have any right to rely on any such report delivered by Seller to Buyer, but rather will rely on its own inspections and investigations of the Property and any reports commissioned by Buyer with respect thereto, and (c) neither Seller, any affiliate of Seller nor the person or entity which prepared any such report delivered by Seller to Buyer shall have any liability to Buyer for any inaccuracy in or omission from any such report or in verbal communication. 

9.2    Disclaimers. EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, IT IS UNDERSTOOD AND AGREED THAT SELLER IS NOT MAKING AND HAS NOT AT ANY TIME MADE ANY WARRANTIES OR REPRESENTATIONS OF ANY KIND OR CHARACTER, EXPRESSED OR IMPLIED, WITH RESPECT TO THE PROPERTY, INCLUDING, BUT NOT LIMITED TO, ANY WARRANTIES OR REPRESENTATIONS AS TO HABITABILITY, MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, TITLE (OTHER THAN SELLER's LIMITED WARRANTY OF TITLE TO BE SET FORTH IN THE DEED), ZONING, TAX CONSEQUENCES, LATENT OR PATENT PHYSICAL OR ENVIRONMENTAL CONDITION, UTILITIES, OPERATING HISTORY OR PROJECTIONS, VALUATION, GOVERNMENTAL APPROVALS, THE COMPLIANCE OF THE PROPERTY WITH GOVERNMENTAL LAWS, THE TRUTH, ACCURACY OR COMPLETENESS OF THE PROPERTY DOCUMENTS OR ANY OTHER INFORMATION PROVIDED BY OR ON BEHALF OF SELLER TO BUYER, OR ANY OTHER MATTER OR THING REGARDING THE PROPERTY. BUYER ACKNOWLEDGES AND AGREES THAT UPON CLOSING SELLER SHALL SELL AND CONVEY TO BUYER AND BUYER SHALL ACCEPT THE PROPERTY "AS IS, WHERE IS, WITH 

26

ALL FAULTS", EXCEPT TO THE EXTENT EXPRESSLY PROVIDED OTHERWISE IN THIS AGREEMENT. BUYER HAS NOT RELIED AND WILL NOT RELY ON, AND SELLER IS NOT LIABLE FOR OR BOUND BY, ANY EXPRESSED OR IMPLIED WARRANTIES, GUARANTIES, STATEMENTS, REPRESENTATIONS OR INFORMATION PERTAINING TO THE PROPERTY OR RELATING THERETO (INCLUDING SPECIFICALLY, WITHOUT LIMITATION, PROPERTY INFORMATION PACKAGES DISTRIBUTED WITH RESPECT TO THE PROPERTY) MADE OR FURNISHED BY SELLER, THE MANAGER OF THE PROPERTY, OR ANY REAL ESTATE BROKER OR AGENT REPRESENTING OR PURPORTING TO REPRESENT SELLER, TO WHOMEVER MADE OR GIVEN, DIRECTLY OR INDIRECTLY, ORALLY OR IN WRITING, UNLESS SPECIFICALLY SET FORTH IN THIS AGREEMENT.  BUYER REPRESENTS TO SELLER THAT BUYER HAS CONDUCTED, OR WILL CONDUCT PRIOR TO CLOSING, SUCH INVESTIGATIONS OF THE PROPERTY, INCLUDING BUT NOT LIMITED TO, THE PHYSICAL AND ENVIRONMENTAL CONDITIONS THEREOF, AS BUYER DEEMS NECESSARY TO SATISFY ITSELF AS TO THE CONDITION OF THE PROPERTY AND THE EXISTENCE OR NONEXISTENCE OR CURATIVE ACTION TO BE TAKEN WITH RESPECT TO ANY HAZARDOUS OR TOXIC SUBSTANCES ON OR DISCHARGED FROM THE PROPERTY, AND WILL RELY SOLELY UPON SAME AND NOT UPON ANY INFORMATION PROVIDED BY OR ON BEHALF OF SELLER OR ITS AGENTS OR EMPLOYEES WITH RESPECT THERETO, OTHER THAN SUCH REPRESENTATIONS, WARRANTIES AND COVENANTS OF SELLER AS ARE EXPRESSLY SET FORTH IN THIS AGREEMENT. OTHER THAN SUCH REPRESENTATIONS, WARRANTIES AND COVENANTS OF SELLER AS ARE EXPRESSLY SET FORTH IN THIS AGREEMENT, UPON CLOSING, BUYER SHALL ASSUME THE RISK THAT ADVERSE MATTERS, INCLUDING BUT NOT LIMITED TO, CONSTRUCTION DEFECTS AND ADVERSE PHYSICAL AND ENVIRONMENTAL CONDITIONS, MAY NOT HAVE BEEN REVEALED BY BUYER's INVESTIGATIONS, AND EXCEPT PURSUANT TO THIS AGREEMENT BUYER, UPON CLOSING, SHALL BE DEEMED TO HAVE WAIVED, RELINQUISHED AND RELEASED SELLER (AND SELLER's OFFICERS, DIRECTORS, SHAREHOLDERS, EMPLOYEES AND AGENTS) FROM AND AGAINST ANY AND ALL CLAIMS, DEMANDS, CAUSES OF ACTION (INCLUDING CAUSES OF ACTION IN TORT), LOSSES, DAMAGES, LIABILITIES, COSTS AND EXPENSES (INCLUDING ATTORNEYS' FEES AND COURT COSTS) OF ANY AND EVERY KIND OR CHARACTER, KNOWN OR UNKNOWN, WHICH BUYER MIGHT HAVE ASSERTED OR ALLEGED AGAINST SELLER (AND SELLER's OFFICERS, DIRECTORS, SHAREHOLDERS, EMPLOYEES AND AGENTS) AT ANY TIME BY REASON OF OR ARISING OUT OF ANY LATENT OR PATENT CONSTRUCTION DEFECTS OR PHYSICAL CONDITIONS, VIOLATIONS OF ANY APPLICABLE LAWS (INCLUDING, WITHOUT LIMITATION, ANY ENVIRONMENTAL LAWS) AND ANY AND ALL OTHER ACTS, OMISSIONS, EVENTS, CIRCUMSTANCES OR MATTERS REGARDING THE PROPERTY. BUYER AGREES THAT SHOULD ANY CLEANUP, REMEDIATION OR REMOVAL OF HAZARDOUS SUBSTANCES OR OTHER ENVIRONMENTAL CONDITIONS ON THE PROPERTY BE REQUIRED AFTER THE DATE OF CLOSING, SUCH CLEAN-UP, REMOVAL OR REMEDIATION SHALL BE THE RESPONSIBILITY OF AND SHALL BE PERFORMED AT THE SOLE COST AND EXPENSE OF BUYER AND SELLER SHALL NOT BE LIABLE TO BUYER FOR SUCH CLEAN-UP, REMOVAL OR REMEDIATION.  AS PART OF THE PROVISIONS OF THIS SECTION 9.2, BUT NOT AS A LIMITATION THEREON, BUYER HEREBY AGREES, REPRESENTS AND WARRANTS THAT THE MATTERS RELEASED HEREIN ARE NOT LIMITED TO MATTERS WHICH ARE KNOWN OR DISCLOSED, AND BUYER HEREBY WAIVES ANY AND ALL RIGHTS AND BENEFITS WHICH IT NOW HAS, OR IN THE FUTURE MAY HAVE CONFERRED UPON IT, BY VIRTUE OF THE PROVISIONS OF FEDERAL, STATE OR LOCAL LAW, RULES OF REGULATIONS. 
    
ARTICLE X

27

ESCROW PROVISIONS

10.1    The parties acknowledge that Escrow Agent is acting solely as a stakeholder at their request and for their convenience, that Escrow Agent shall not be liable in its capacity as escrow agent to either of the parties for any act or omission on its part unless taken or suffered in bad faith, in willful disregard of this Agreement or involving gross negligence.  The Escrow Agent shall be responsible only for the safekeeping of the Deposit and shall not be responsible for the resolution of any questions of fact or law.

10.2    The Escrow Agent is authorized to act upon any document believed by it to be genuine and to be signed by the person purported to have signed it and will incur no liability in so acting.  The Escrow Agent shall not be bound by any waiver, modification, amendment, termination or revision of this Agreement unless delivered in writing to the Escrow Agent and, if the duties of the Escrow Agent are affected, unless it shall have given its prior written consent.  The Escrow Agent may cease to serve at any time without incurring any liability hereunder.

10.3    In the event that the Escrow Agent designated herein is for any reason unable or unwilling to serve or to continue to serve as escrow agent, Buyer and Seller shall appoint a new escrow agent.  If for any reason Buyer fails to designate a new escrow agent within five (5) business days after notice by the Escrow Agent of its resignation, the Escrow Agent shall be free to resign and to pick a substitute escrow agent of its choice (in its sole discretion), provided that such new escrow agent shall be a title insurance company or agency authorized to do business in Minnesota.  The new escrow agent shall have all of the rights and perform all of the duties and obligations of the Escrow Agent as set forth in this Agreement, provided that no person shall serve as escrow agent unless he has executed a consent to abide by the terms of this Agreement.

10.4    If Buyer or Seller asserts any claim against the Escrow Agent concerning the Deposit, then the party asserting such claim (and its respective principals) shall indemnify and hold harmless the Escrow Agent for its costs in connection therewith if the Escrow Agent successfully defends such claim.

10.5    Escrow Agent is executing Exhibit L this Agreement to acknowledge receipt of the First Deposit and Escrow Agent’s responsibilities hereunder.  Any amendment to this Agreement that is not signed by Escrow Agent shall be effective as to the parties thereto, but shall not be binding on Escrow Agent.  Escrow Agent shall accept the First Deposit and the Second Deposit with the understanding of the parties that Escrow Agent is not a party to this Agreement except to the extent of its specific responsibilities hereunder, and does not assume or have any liability of the performance or non-performance of Buyer or Seller hereunder to either of them.

ARTICLE XI
MISCELLANEOUS

11.1    Confidentiality.  Intentionally omitted.  

11.2    Survival.  All of the terms of this Agreement, including, without limitation, the representations and warranties contained in Article 5 and the indemnification provisions contained in Article 12, shall survive and be enforceable for a period of one (1) year after the Closing and delivery of the deed; provided, however, that any action, suit or proceeding with respect to the terms of this Agreement shall be commenced, if at all, on or before the date which is one (1) year after the date of the Closing and, if not commenced on or before such date, thereafter such terms of this Agreement shall be void and of no force or effect.   

28

11.3    Assignment.  Buyer may not assign its rights under this Agreement without first obtaining Seller's written approval, which approval may be given or withheld in Seller's sole discretion, except that Buyer may assign all or any portion of its rights hereunder at Closing to one or more Affiliates (as hereinafter defined) of Buyer or an entity in which the majority of interests are owned by Buyer without the consent of Seller, however, any such assignment shall not relieve Buyer of its obligations under this Agreement.   For purposes hereof, any entity in which Buyer or any entity controlling, controlled by, or under common control with Buyer shall be deemed an “Affiliate.”  

11.4    Notices.  Any notice pursuant to this Agreement shall be given in writing by (a) personal delivery, or (b) nationally recognized overnight delivery service with proof of delivery, or (c) United States Mail, postage prepaid, registered or certified mail, return receipt requested, or (d) email transmission sent to the intended addressee at the address set forth below, or to such other address or to the attention of such other person as the addressee shall have designated by written notice sent in accordance herewith, and shall be deemed to have been given either at the time of personal delivery, or, in the case of expedited delivery service or mail, as of the date of first attempted delivery at the address and in the manner provided herein, or, in the case of email transmission, as of the date of the email transmission. Unless changed in accordance with the preceding sentence, the addresses for notices given pursuant to this Agreement shall be as follows: 

	
					
	 
	 
	 
	 
	 

	 
	 
	If to Seller:
	 
	CRI Hotel Income of Minnesota, LLC
c/o C.R.I., Inc.
11200 Rockville Pike, Suite 300
Rockville, MD 20852
Attention:  Michael F. Murphy
Telephone: 301.231.0221
Email:  mmurphy@crimail.com; meck@crimail.com 

	 
	 
	 
	 
	 

	 
	 
	 
	 
	 

	 
	 
	If to Buyer:
	 
	United Properties Investment LLC 
3600 American Blvd. W., Suite 750 
Minneapolis, Minnesota 55431
Attention:  Brandon Champeau
Telephone: 952) 837-8653

	 
	 
	 
	 
	Email:  bchampeau@uproperties.com 

	 
	 
	 
	 
	 

With a copy to:    Fafinski Mark & Johnson, P.A.
Attn:   Greg Brenny
775 Prairie Center Drive, Suite 400
Eden Prairie, Minnesota  55344
Email:  greg.brenny@fmjlaw.comPhone:  (952) 995-9500

11.5    Binding Effect. This Agreement shall not be binding in any way upon Seller unless and until Seller shall execute and deliver the same to Buyer. 

11.6    Modifications. This Agreement cannot be changed orally, and no executory agreement shall be effective to waive, change, modify or discharge it in whole or in part unless such executory agreement is in 

29

writing and is signed by the parties against whom enforcement of any waiver, change, modification or discharge is sought. 

11.7    Calculation of Time Periods. Unless otherwise specified, in computing any period of time described in this Agreement, the day of the act or event after which the designated period of time begins to run is not to be included and the last day of the period so computed is to be included, unless such last day is a Saturday, Sunday or legal holiday under the laws of the State in which the Property is located, in which event the period shall run until the end of the next day which is neither a Saturday, Sunday or legal holiday. The final day of any such period shall be deemed to end at 5 p.m., local time at the Property.

11.8    Successors and Assigns. The terms and provisions of this Agreement are to apply to and bind the permitted successors and assigns of the parties hereto. 

11.9    Entire Agreement. This Agreement, including the Exhibits, contains the entire agreement between the parties pertaining to the subject matter hereof and fully supersedes all prior written or oral agreements and understandings between the parties pertaining to such subject matter. 

11.10    Further Assurances. Each party agrees that it will without further consideration execute and deliver such other documents and take such other action, whether prior or subsequent to Closing, as may be reasonably requested by the other party to consummate more effectively the purposes or subject matter of this Agreement. Without limiting the generality of the foregoing, Buyer shall, if requested by Seller, execute acknowledgments of receipt with respect to any materials delivered by Seller to Buyer with respect to the Property. The provisions of this Section 11.10 shall survive Closing.

11.11     Counterparts; Signatures. This Agreement may be executed in any number of counterparts by original, facsimile or email signature.  All executed counterparts shall constitute one Agreement not withstanding that all signatories are not signatories to the original or the same counterpart.

11.12    Severability. If any provision of this Agreement is determined by a court of competent jurisdiction to be invalid or unenforceable, the remainder of this Agreement shall nonetheless remain in full force and effect. 

11.13    Applicable Law. THIS AGREEMENT IS PERFORMABLE IN THE STATE IN WHICH THE PROPERTY IS LOCATED AND SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE SUBSTANTIVE FEDERAL LAWS OF THE UNITED STATES AND THE LAWS OF SUCH STATE. SELLER AND BUYER HEREBY IRREVOCABLY SUBMIT TO THE JURISDICTION OF ANY STATE OR FEDERAL COURT SITTING IN THE STATE IN WHICH THE PROPERTY IS LOCATED IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT AND HEREBY IRREVOCABLY AGREE THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING SHALL BE HEARD AND DETERMINED IN A STATE OR FEDERAL COURT SITTING IN THE STATE IN WHICH THE PROPERTY IS LOCATED. BUYER AND SELLER AGREE THAT THE PROVISIONS OF THIS SECTION 11.13 SHALL SURVIVE THE CLOSING OF THE TRANSACTION CONTEMPLATED BY THIS AGREEMENT. 

11.14    No Third Party Beneficiary. The provisions of this Agreement and of the documents to be executed and delivered at Closing are and will be for the benefit of Seller and Buyer only and are not for the benefit of any third party (including, without limitation, Title Company and Broker), and accordingly, no third party shall have the right to enforce the provisions of this Agreement or of the documents to be executed and delivered at Closing. 

30

11.15    Exhibits. The exhibits, which are attached to this Agreement, are incorporated in and shall be deemed to be an integral part of this Agreement.

11.16    Captions. References in this Agreement to "Section" are to the numbered Sections herein. The section headings appearing in this Agreement are for convenience of reference only and are not intended, to any extent and for any purpose, to limit or define the text of any section or any subsection hereof. 

11.17    Construction. The parties acknowledge that the parties and their counsel have reviewed and revised this Agreement and that the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of this Agreement or any exhibits or amendments hereto. 

11.18    Termination of Agreement. It is understood and agreed that if either Buyer or Seller terminates this Agreement pursuant to a right of termination granted hereunder, such termination shall operate to relieve Seller and Buyer from all obligations under this Agreement, except for such obligations as are specifically stated herein to survive the termination of this Agreement. In the event this Agreement is terminated or Buyer fails to perform hereunder, Buyer shall promptly return to Seller any statements, documents, schedules, exhibits or other written information obtained from Seller in connection with this Agreement or the transaction contemplated herein.  

11.19    No Personal Liability. No member or manager of Seller, no officer, director or partner of a member or manager of Seller, no disclosed or undisclosed principal of Seller and no person in any way affiliated with Seller shall have any personal liability with respect to this Agreement, any instrument delivered by Seller at the Closing or the transaction contemplated hereby, nor shall the property of any such person or entity be subject to attachment, levy, execution or other judicial process.  No member or manager of Buyer, no officer, director or partner of a member or manager of Buyer, no disclosed or undisclosed principal of Buyer and no person in any way affiliated with Buyer shall have any personal liability with respect to this Agreement, any instrument delivered by Buyer at the Closing or the transaction contemplated hereby, nor shall the property of any such person or entity be subject to attachment, levy, execution or other judicial process.

11.20    Agreement Not to Market.  Seller agrees that after the execution of this Agreement and prior to termination or settlement hereunder, Seller shall take the Property off the market and not solicit or accept any offers nor engage in any discussions concerning the sale of the Property other than the transaction contemplated herein.

11.21    Attorneys’ Fees and Costs.  Buyer and Seller will pay their own attorneys’ fees for the transaction contemplated by this Agreement, except as follows.  In the event of litigation arising out of breach or claimed breach of this Agreement, the prevailing party shall be entitled to recover from the other party all costs and expenses incurred as a result, including attorneys’ fees and costs.

ARTICLE XII
INDEMNIFICATION

12.1    By Seller.  In the event the Closing has occurred, except as otherwise expressly set forth in this Agreement, Seller hereby agrees to indemnify and hold harmless Buyer and its successors or assigns from and against any and all actual (but not consequential) liabilities, claims, actions, suits, proceedings, damages, costs and expenses (including, without limitation, reasonable attorney’s fees, expenses and court costs) arising from or relating to:

31

 
(a)    Seller’s actions or the obligations of Seller related to the Property accruing prior to the Closing Date; 
(b)    Seller’s operation of the Hotel prior to the Closing Date;
(c)    the breach or inaccuracy of any warranty or representation by Seller herein or any misstatement of a fact or facts herein made by Seller;
(d)    the failure of Seller to state or disclose a material fact herein necessary in order to make the facts herein stated or disclosed not misleading;
(e)    any failure of Seller to perform or observe any term, provision, covenant or condition hereunder to be performed or observed; or
(f)    any act performed, transaction entered into, or state of facts suffered to exist by Seller in violation of the terms of this Agreement.

Notwithstanding the foregoing, Seller shall not be required to indemnify the Buyer where this Agreement provides otherwise.  In addition, and notwithstanding any other provision to the contrary contained herein, Seller’s maximum aggregate liability for any matter under this Agreement shall be limited to the $300,000 deposited as Escrow Cash into the Escrow Account by Seller, except for the below exception.  

Notwithstanding the $300,000 maximum Seller aggregate liability limitation, in the event Seller receives insurance proceeds relating to any claim by Buyer that exceeds $300,000 hereunder and Seller’s insurance proceeds exceed $300,000 for such claim, Seller shall, in addition to agreeing to the delivery of the Escrow Cash under the Escrow Agreement, remit the excess of the $300,000 in insurance proceeds actually received by Seller (net of any deductible) to the Buyer.  

Subject to such limitation, Buyer’s claims hereunder are limited to actual, documented third party out-of-pocket costs or damages suffered by Buyer and not consequential, special or indirect damages.  

12.2    By Buyer.  In the event the Closing has occurred, except as otherwise expressly set forth in this Agreement, Buyer hereby agrees to indemnify and hold harmless Seller and its successors or assigns from and against any and all actual (but not consequential) liabilities, claims, actions, suits, proceedings, damages, costs and expenses (including, without limitation, reasonable attorney’s fees, expenses and court costs) arising from or relating to:

(a)    Buyer’s actions or the obligations of Buyer related to the Property accruing from and after the Closing; 
(b)    Buyer’s operation of the Hotel on and after the Closing Date; 
(c)    the breach or inaccuracy of any warranty or representation by the Buyer herein or any misstatement of a fact or facts herein made by the Buyer;
(d)    the failure by the Buyer to state or disclose a material fact herein necessary in order to make the facts herein stated or disclosed not misleading;
(e)    any failure of the Buyer to perform or observe any term, provision, covenant or condition hereunder to be performed or observed; or
(f)    any act performed, transaction entered into, or state of facts suffered to exist by the Buyer  in violation of the terms of this Agreement     

Notwithstanding the foregoing, Buyer shall not be required to indemnify the Seller where this Agreement provides otherwise.  In addition, and notwithstanding any other provision to the contrary contained herein (except for the indemnity provided by Buyer in Section 3.1 which shall have no limitation), Buyer’s maximum 

32

aggregate liability for any matter under this Agreement shall be limited to  $300,000, except for the following exception.  

Notwithstanding the $300,000 maximum Buyer aggregate liability limitation, in the event Buyer receives insurance proceeds relating to any claim by Seller that exceeds $300,000 hereunder and Buyer’s insurance proceeds exceed $300,000 for such claim, Buyer shall, in addition to agreeing to the delivery of $300,000 under the Escrow Agreement, remit the excess of the $300,000 in insurance proceeds actually received by Buyer (net of any deductible) to the Seller.  

12.3    General.  The indemnification provided in this Article XII shall be the sole and exclusive remedy after the Closing Date for damages available to the parties to this Agreement for breach of any of the terms, conditions, covenants, representations or warranties contained herein or any right, claim or action arising from the transactions contemplated by this Agreement.  Notwithstanding anything contained in this Agreement to the contrary, no party shall be liable to the other party for indirect, special, punitive, exemplary or consequential loss or damage arising out of this Agreement.  In addition, any claim, action, suit or proceeding for indemnification under any other provision of the Agreement or the Escrow Agreement shall be commenced or, with respect to the Escrow Agreement, requested as more specifically provided in the Escrow Agreement, if at all, on or before the date which is one (1) year after the date of the Closing and, if not commenced or with respect to the Escrow Agreement, requested, as more specifically provided in the Escrow Agreement, by either party on or before such date, thereafter such indemnification shall be of no force or effect and the Escrow Cash shall be released to Seller in accordance with the Escrow Agreement.

[Signature page follows immediately]

33

 IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the Effective Date. 

SELLER: 

CRI HOTEL INCOME OF MINNESOTA, LLC, a Delaware limited liability company

By:     CRI Hotel Income Partners, L. P., its sole member

By:     CRICO Hotel Associates I, L. P., its General Partner

                   By:     C.R.I., Inc., its General Partner

                             By:                         
Michael F. Murphy
Senior Vice President 

BUYER: 

UNITED PROPERTIES INVESTMENT LLC, 
a Minnesota limited liability company

By:                        
Brandon Champeau
Assistant Vice President

By:                         
Name:                         
Title:                        

34

EXHIBIT A

Legal Description

Parcel 1:
Lot 1, Block 1, University Cricket Inn Addition, Hennepin County, Minnesota.
Abstract Property
Parcel 2:
Lot 2, Block 1, University Cricket Inn Addition, Hennepin County, Minnesota.
Abstract Property

35

EXHIBIT B

Personal Property Included in Sale

See List dated 7-17-13 Previously Provided to Buyer 

36

EXHIBIT C

Lease Information

That certain Lease dated June 22, 2009, as assigned, by and between Assignor and Asian Mill, Inc.

That certain antenna lease dated May 21, 2013 by and between Assignor (or Assignor’s Manager) and Verizon (VAW) Wireless.

That certain Rooftop Lease with Option dated as of August 1, 2010 by and between Assignor and T-Mobile Central LLC.

That certain Vehicle Lease (Hotel Van).

37

EXHIBIT D

List of Service Contracts

	
		
	 
	 

	Comcast Cable
	Cable TV

	ThyssenKrup/R&O
	Elevator Service

	Konica
	Copier Maintenance

	Konica
	Copier Lease

	Lodgenet
	Movies

	DeepBlue Wireless
	Internet Service

	Plunkett's
	Pest Control

	Capitol 2-Way
	Van Radio

	Aspen Waste
	Trash/Recycling

	Reliable Vending
	Vending Machines

	Nova Consulting Group, Inc.
	Environmental Remediation

38

EXHIBIT E

Title Matters

		
	1.
	Real estate taxes, a lien not yet due and payable and all general and special assessments.

		
	2.
	Local, state and federal laws, ordinances or governmental regulations, including, but not limited to, building and zoning laws, ordinances and regulations, now or hereafter in effect relating to the Property.

		
	3.
	Rights of parties in possession as tenants only pursuant to unrecorded leases.

		
	4.
	Easement for right of way as contained in Agreement for Easement recorded in Book 1235 of Deeds page 226 as Document No. 1618445.

		
	5.
	Easement for street purposes as set forth in Deed recorded in Book 167 of Deeds page 578.

39

EXHIBIT F

Form of Limited Warranty Deed

DEED TAX DUE:  __________                DATE:                  

FOR VALUABLE CONSIDERATION, CRI HOTEL INCOME OF MINNESOTA, LLC, a Delaware limited liability company (“Grantor”), hereby conveys and quitclaims to ________________________, a ________________________(“Grantee”), real property in Hennepin County, Minnesota, legally described as follows:

See Exhibit A attached hereto and made a part hereof.

Check here if all or part of the described property is Registered (Torrens) þ

together with all hereditaments and appurtenances belonging thereto.  This Deed conveys after-acquired title.  Grantor warrants that Grantor has not done or suffered anything to encumber the property, except:

See Exhibit B attached hereto and made a part hereof.

Check applicable box:
		
	o
	The Seller certifies that the Seller does not know of any wells on the described property.

		
	o
	A well disclosure certificate accompanies this document.

		
	o
	I am familiar with the property described in this instrument and I certify that the status and number of wells on the described real property have not changed since the last previously filed well disclosure certificate.

[Signature Pages Follow]

40

CRI HOTEL INCOME OF MINNESOTA, LLC, a Delaware limited liability company

By:     CRI Hotel Income Partners, L. P., its sole member

By:     CRICO Hotel Associates I, L. P., its General Partner

                   By:     C.R.I., Inc., its General Partner

                             By:                     
Name:                     
                             Title:                                                                

STATE OF MARYLAND        )
) ss.
COUNTY OF    MONTGOMERY    )

This instrument was acknowledged before me on _________________, 20__, by ________________________, the ____________________ of C.R.I., Inc., the general partner of CRICO Hotel Associates I, L.P., the general partner of CRI Hotel Income Partners, L.P., the sole member of CRI Hotel Income of Minnesota, LLC, on behalf of the limited liability company.

(Seal, if any)                __________________________________ 
                            Notary Public

THIS INSTRUMENT WAS DRAFTED BY:            TAX STATEMENTS FOR THE REAL PROPERTY
DESCRIBED IN THIS INSTRUMENT SHOULD BE
SENT TO:
                                                
                                                
                                                

EXHIBIT A - LEGAL DESCRIPTION OF REAL PROPERTY

EXHIBIT B - PERMITTED ENCUMBRANCES

41

EXHIBIT G

Bill of Sale

BILL OF SALE, dated as of                 , 20__, by CRI Hotel Income of Minnesota, LLC, a Delaware limited liability company ("Grantor") to ____________________________________________("Grantee").

In consideration of Ten Dollars ($10.00) and other valuable consideration to Grantor in hand paid by Grantee, the receipt and sufficiency of which are hereby acknowledged, Grantor has sold, conveyed, transferred, assigned, and delivered, and by this Bill of Sale does sell, convey, transfer, assign and deliver to Grantee, its successors and assigns, forever, all of the right, title and interest of Grantor in and to all machinery, equipment, furnishings, and all other tangible personal property described in Exhibit A or otherwise owned by Grantor and situated on or upon or used in connection with the land described in Exhibit B attached hereto and made a part hereof, or any part thereof, (collectively, the "Personalty"), and Grantor warrants that the Personalty is owned by Grantor free of liens and encumbrances.

TO HAVE AND TO HOLD, unto Grantee, its successors and assigns, FOREVER, and Grantor warrants specially the Personalty granted hereby against any party claiming or to claim by, through or under Grantor.

1.    Grantor hereby covenants that, from time to time after the delivery of this instrument, at Grantee's request and without further consideration, Grantor will execute and deliver, or will cause to be executed and delivered, all further conveyances, transfers, assignments, and assurances as reasonably may be required to convey, transfer to and vest in Grantee any of the Personalty.

2.     Grantor hereby assigns, transfers and conveys to Grantee any and all rights it may have under any manufacturer’s or vendor’s warranties, guarantees, or contracts relating to the Personalty and agrees to execute any and all further documents as may be necessary now or in the future in order to transfer and convey such rights to Grantee. 
 
3.    Grantee, by its acceptance of the Personalty conveyed hereby, acknowledges that such Personalty is being conveyed in its present "as is" condition and that Grantor makes no representation or warranty with respect to the physical condition of the Personalty, its merchantability or its fitness for a particular use.

42

IN WITNESS WHEREOF, Grantor and the Grantee have caused this Bill of Sale to be signed by their duly authorized representative as of the date first above written.

GRANTOR:

CRI HOTEL INCOME OF MINNESOTA, LLC, a Delaware limited liability company

By:     CRI Hotel Income Partners, L. P., its sole member

By:     CRICO Hotel Associates I, L. P., its General Partner

                   By:     C.R.I., Inc., its General Partner

                             By:                                                               
                   Name:                                                           
                             Title:                                                            

GRANTEE:

,
                            

By:                            
Name:                            
Title:                            

EXHIBIT “A”
(List of Personal Property)

EXHIBIT “B”
(Legal Description)

 

43

EXHIBIT H

Assignment and Assumption of Service Contracts, Licenses
and Intellectual Property

As of _____________________, 20__, CRI HOTEL INCOME OF MINNESOTA, LLC, a Delaware limited liability company ("Assignor"), in consideration of the sum of Ten Dollars ($10.00) and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, paid by _______________________, a ________________ ("Assignee"), does hereby sell, convey and assign unto Assignee, its successors and assigns, all of the Assignor's right, title and interest in and to any and all: 

		
	1.
	Service Contracts

All written agreements pertaining to the use and operation of the real property described in Exhibit A attached hereto and made a part hereof and the buildings or other structures located thereon (the "Property"), all to the extent assignable, other than insurance.  A list of the Service Contracts is attached hereto as Exhibit D.

		
	2.
	Licenses

All transferable consents, authorizations, variances or waivers, licenses, permits and approvals from any governmental or quasi-governmental agency, department, board, commission, bureau or other entity or instrumentality, including, without limitation, those with respect to use, utilities, building, fire, life safety, traffic and zoning (collectively, the “Licenses”).  

		
	3.
	Intellectual Property

All of Seller's right, title and interest in and to all intangible personal property relating to ownership and operation of the Property and the goodwill pertaining thereto, to the extent assignable, but excluding the name "Days Inn" and all websites and domains used exclusively for the Hotel.

Assignee hereby assumes Assignor's right, title and interest under the Service Contracts, Lease, Licenses and Security Deposits, and agrees to keep, observe and perform all the terms, covenants and conditions contained therein and in this Assignment.

Assignee covenants to hold Assignor harmless from and indemnify Assignor for any claim, loss, damage, cost or expense (including reasonable attorneys' fees) that Assignor may incur from and after the date hereof as a result of the failure of Assignee to perform any of its obligations under the Service Contracts, Licenses and accruing from and after the date hereof.  

Assignor covenants to hold Assignee harmless from and indemnify Assignee for any claim, loss, damage, cost or expense (including reasonable attorneys' fees) that Assignee may incur from and after the date hereof as a result of the failure of Assignor to perform any of its obligations under the Service Contracts, Lease, Licenses and Security Deposits accruing before the date hereof.  

Assignor and Assignee each agree to execute and deliver to the other such further agreements and instruments as may be necessary or appropriate to effectuate this Assignment.

This Assignment may be executed in counterparts, each of which shall constitute an original, and all of which taken together shall constitute one and the same instrument.

44

EXECUTED by their duly authorized representatives on                 , 2013.

ASSIGNOR:

CRI HOTEL INCOME OF MINNESOTA, LLC, a Delaware limited liability company

By:     CRI Hotel Income Partners, L. P., its sole member

By:     CRICO Hotel Associates I, L. P., its General Partner

                   By:     C.R.I., Inc., its General Partner

                             By:                                                               
Name:                                                           
                             Title:                                                            

ASSIGNEE:

                        

By:                        
Name:                        
Title:                        

45

EXHIBIT I

Notice Letter to Tenant

________________, 

Dear Tenant:

We are pleased to advise you that the building in which your premises are located at _______________, ______________________ has been sold by CRI HOTEL INCOME OF MINNESOTA, LLC to ___________________ (the "Buyer") effective as of ____________,         .  Your lease agreement has been assigned to and accepted by Buyer and Buyer has agreed to assume all responsibility for security deposits currently held under your lease.

All future correspondence relating to your tenancy, as well as rent checks and other charges, should be made payable and mailed to ___________ c/o ________.

The Buyer looks forward to working with you in the operation of this Property.

Very truly yours,

CRI HOTEL INCOME OF MINNESOTA, LLC, a Delaware limited liability company

By:     CRI Hotel Income Partners, L. P., its sole member

By:     CRICO Hotel Associates I, L. P., its General Partner

By:     C.R.I., Inc., its General Partner

                             By:                                                               
Name:                                                           
                             Title:                                                            

 [BUYER]

,
a                             

By:                            
Title:                            

46

EXHIBIT J

FIRPTA Affidavit

		
	RE:
	Transfer from CRI Hotel Income of Minnesota, LLC (“Seller”), a Delaware limited liability company, to _____________________________________, of the improved real property known as the ___________________ and  located in Minneapolis, Hennepin County, Minnesota.

Section 1445 of the Internal Revenue Code provides that a transferee of a U.S. real property interest must withhold tax if the transferor is a foreign person.  To inform the transferee that withholding of tax is not required upon the disposition of a U.S. real property interest by Woodwinds, the undersigned hereby certifies the following on behalf of Woodwinds:

1. Seller is not a foreign corporation, foreign partnership, foreign trust or foreign estate (as those terms are defined in the Internal Revenue Code and Income Tax Regulations);

2.  Seller’s U.S. employer identification number is             ; and

3. Seller’s office address is c/o                                     .

Seller understands that this certification may be disclosed to the Internal Revenue Service by the transferee and that any false statement contained herein could be punished by fine, imprisonment, or both.

Under penalties of perjury, we declare that we have examined this certification and to the best of our knowledge and belief it is true, correct, and complete, and we further declare that we have authority to sign this document on behalf of Seller.

Executed as of                  , 20_.

CRI HOTEL INCOME OF MINNESOTA, LLC, a Delaware limited liability company

By:     CRI Hotel Income Partners, L. P., its sole member

By:     CRICO Hotel Associates I, L. P., its General Partner

                   By:     C.R.I., Inc., its General Partner

                                By:                                                               
Name:                                                           
                                Title:                                                            

47

EXHIBIT K

Form of Asian Mill Estoppel Certificate

TENANT ESTOPPEL CERTIFICATE

ASIAN MILL, INC. (the "Tenant") hereby certifies to CRI HOTEL INCOME OF MINNESOTA, LLC, a Delaware limited liability company (the "Owner") and _______________________, its successors or assigns ("Buyer") as follows:

1.Pursuant to that  certain Lease dated ____________, 20____ (the "Lease") with Tenant, Tenant leases approximately ________________ square feet of space (the "Premises").  The Lease, as amended, modified and supplemented, is in full force and effect, and represents the entire agreement between Tenant and Landlord for the Property.  There are no amendments, modifications or supplements to the Lease, whether oral or written, except as follows (include the date of each amendment, modification or supplement):                            .  A true and correct copy of the Lease, as amended, modified and supplemented, is attached hereto as Exhibit A.

2.The term of the Lease began on             , 20___ and will end on     ________, 20___.

3.The Lease does/does not provide for an option to extend the term of the Lease for __ years.   Except as expressly provided in the Lease, Tenant does not have any right or option to renew or extend the term of the Lease, to lease other space at the Property, nor any preferential right to purchase all or any part of the Premises or the Property.

4.Tenant has neither sent nor received any notice of default under the Lease which remains uncured except as follows:                                 .

5.Tenant is currently paying [Base Monthly] Rent under the Lease in the amount of $_________ and estimated monthly pass throughs in the amount of $________________.

6.Tenant has not prepaid any rent or other charge under the Lease to Owner other than the following:                                                 .

7.A cash security deposit in the amount of $             has been paid to Owner under the Lease, and Tenant has not given Owner any other security or similar deposit.

Dated this          day of ______________,         .

ASIAN MILL, INC.

By:                            

48

EXHIBIT L

Acknowledgement by Escrow Agent

The Escrow Agent hereby executes this Agreement for the sole purpose of acknowledging receipt of the Deposit and its responsibilities hereunder and to evidence its consent to serve as Escrow Agent in accordance with the terms of this Agreement.

FIRST AMERICAN TITLE INSURANCE COMPANY
 

By:  __________________________ 
Name:  _______________________
Title:                    

49

EXHIBIT M

Form of Escrow Agreement

This Escrow Agreement (“Agreement”) is made as of  ______________________, by and between CRI HOTEL INCOME OF MINNESOTA, LLC, a Delaware limited liability company (“Seller”), and UNITED PROPERTIES INVESTMENT LLC, a Minnesota limited liability company (“Buyer”), and FIRST AMERICAN TITLE INSURANCE COMPANY (“Escrow Agent”).

RECITALS:

A.    Seller and Buyer have entered into a purchase and sale agreement dated __________, 2013 (“Purchase Agreement”) for a hotel facility and additional building, site improvements, land and certain other assets used in the operation of the hotel facility commonly known as the University Days Inn Minneapolis, and with street addresses of 2407 University Avenue SE, Minneapolis, MN and 2425 University Avenue SE, Minneapolis, MN, as further described in the Purchase Agreement (“Property”).

B.    The Deposit (as hereinafter defined) is being deposited by Seller at the closing under the Purchase Agreement from a portion of the purchase price to provide available funds in the event that Seller is required to pay certain indemnification obligations arising from or related to Sections 12.1(a) through (f) of the Purchase Agreement.

C.    The Deposit and disbursement of the Deposit shall be made in accordance with this Agreement and Sections 1.6 and Article 12 of the Purchase Agreement.   

NOW, THEREFORE, In consideration of the foregoing recitals and the mutual agreements contained herein, Buyer, Seller and Escrow Agent agree as follows:

1.Incorporation of Recitals.  The recitals are incorporated herein as if fully restated. 

2.Capitalized Terms.  Capitalized terms not otherwise defined herein shall have the meanings ascribed to them in the Purchase Agreement.

3.Deposit.  Simultaneously with Closing of the sale of the Property, Seller has deposited with the Escrow Agent the sum of three hundred thousand and no/100 dollars ($300,000.00) (“Deposit”).  The Deposit may be paid from good funds from a portion of the purchase price paid at Closing by Buyer and shall be held and disbursed by Escrow Agent in accordance with the terms and conditions of this Agreement.  The Deposit shall be deposited with the Minneapolis office of Escrow Agent.

4.Deposit Held in Trust.  Escrow Agent hereby acknowledges receipt of the Deposit and agrees to hold and disburse the same only in accordance with this Agreement.  The Deposit is to be held in trust by Escrow Agent in an interest bearing escrow account established by the Escrow Agent.

5.Procedure for Disbursement of the Deposit.  Subject to the requirements and limitations contained in this Agreement, Buyer may withdraw from the Deposit an amount equal to pay certain indemnification obligations of the Seller arising from or related to Sections 12.1(a) through (f) of the Purchase Agreement, which sections are restated as follows:  

50

(a)    Seller’s actions or the obligations of Seller related to the Property accruing prior to the Closing; 
(b)    Seller’s operation of the hotel prior to the Closing Date; 
(c)    the breach or inaccuracy of any warranty or representation by the Seller or any misstatement of a fact or facts made by the Seller under the Purchase Agreement;
(d)    the failure of the Seller to state or disclose a material fact under the Purchase Agreement necessary in order to make the facts therein stated or disclosed not misleading;
(e)    any failure of the Seller to perform or observe any term, provision, covenant or condition under the Purchase Agreement to be performed or observed; or
(f)    any act performed, transaction entered into, or state of facts suffered to exist by the Seller in violation of the terms of the Purchase Agreement.

Upon written request for disbursement from Buyer to Seller and Escrow Agent, together with copies of the actual third party out of pocket invoices or other evidence of the costs or damages incurred by Buyer for which Seller may be obligated to indemnify Buyer as provided above, periodic disbursements from the Deposit shall be made by Escrow Agent as provided herein.  Buyer shall provide a written request for disbursement with the backup information required above simultaneously to Seller and Escrow Agent.  No disbursement shall be made by the Escrow Agent until Seller has provided its written consent to the disbursement (which consent will not be withheld, conditioned or delayed unless Seller has a good-faith, reasonable objection to any Buyer claim under this section).  Upon Seller’s approval of the disbursement, the Escrow Agent shall disburse either directly to the Buyer or a third party directed to be paid by Buyer, as applicable, that portion of the Deposit as specified in the invoice or evidence that has been approved by Seller.  In the event that Seller has not provided (i) its written consent to the disbursement or (ii) a writing objecting to the Buyer’s requested disbursement, within ten (10) days after Buyer’s request for disbursement, and after Buyer has provided additional written notice to Seller of Seller’s failure and provided Seller with an additional five (5) business days to consent or object, then the Escrow Agent shall immediately release the requested disbursement as directed by Buyer. If objection to Buyer’s requested disbursement is made in writing by Seller within the aforesaid period, Escrow Agent shall not make any disbursement but instead shall retain the Deposit until instructed otherwise in writing jointly by Buyer and Seller, or, if appropriate, by the arbitrator in accordance with Section 8 hereof.  The Escrow Agent shall be responsible only for the safekeeping of the Deposit and shall not be responsible for the resolution of any questions of fact or law.
 
6.Termination.  The Escrow Agent will disburse to the Seller the Deposit or any funds remaining in the Escrow Agent’s account on the first anniversary of the date of Closing, unless (i) a claim, action, suit or proceeding for indemnification has been commenced in good faith by the Buyer and notice of this action or a request for disbursement has been provided by the Buyer to the Escrow Agent and Seller and (ii) after such action has been commenced or request for disbursement made, neither Seller nor Buyer has sent written notice to the other and Escrow Agent disputing the disbursement.  Only the amount of any such disputed claim shall be withheld by the Escrow Agent and not disbursed by Escrow Agent to the Seller.
 
7.No Consequential Damages.  Notwithstanding anything contained in this Agreement to the contrary, no part of the Deposit shall be used to indemnify indirect, special, punitive, exemplary or consequential loss or damages, and Seller’s liability under this Agreement shall be limited to the Deposit.
 
8.Arbitration.  Any disputed claims regarding the Deposit or this Agreement shall be submitted to binding arbitration in accordance with the following.  The submitting party may elect to submit the arbitration to the American Arbitration Association, or propose independent arbitrators.  In the event that the parties are unable to agree upon an independent arbitrator, the dispute shall be submitted to the AAA.  The AAA Commercial Arbitration Rules and Procedures shall govern any arbitration between the parties, including 

51

the rule pertaining to the designation of arbitration procedures for standard, expedited or large, complex commercial disputes consistent with the amount of claim or counterclaim, and judgment upon the award rendered by the arbitrator may be entered in any court having jurisdiction thereof.  The arbitrator shall follow the law selected in this Agreement.  The prevailing party in such binding arbitration shall be entitled to collect its attorney's fees and costs from the non-prevailing party, but the arbitrator shall have no authority to award punitive damages.  Notwithstanding the foregoing, binding arbitration shall not be required, and the right of either party to apply to a court of competent jurisdiction shall remain, for a temporary restraining order, preliminary injunction or other equitable relief to preserve the status quo or prevent irreparable harm pending the selection and confirmation of the arbitrator(s).  The arbitration shall take place in Minnesota or at such other place as may be mutually agreeable to the parties.

9.Books and Records.  Escrow Agent shall keep and maintain, at all times, full, true and accurate books and records to reflect the investment and disbursements of the Deposit made under this Agreement.  The Buyer and Seller shall have access to these records during normal business hours. A copy of the books and records shall be provided to Buyer and Seller upon disbursement of the Deposit.

10.Escrow Agent’s Liability.  Escrow Agent’s responsibilities and obligations under this Agreement shall terminate upon disbursement of the entire Deposit without any further act of the parties to this Agreement.  Buyer and Seller acknowledge that Escrow Agent is acting solely as an escrowee at their request and for their convenience, that Escrow Agent as such escrowee shall not be deemed to be the agent of either Buyer or Seller, and that Escrow Agent shall not be liable to either Buyer or Seller for any act or omission on its part with respect to the Deposit, if any, unless taken or suffered in bad faith, in willful disregard of this Agreement or involving gross negligence.  Escrow Agent assumes no liability except that expressed in this Agreement and shall have no responsibility or liability to Buyer or Seller or their respective successors or assigns for any action taken by Escrow Agent in good faith upon receipt of any instrument or other writing believed by Escrow Agent to be genuine and believed to be properly signed and presented.  Escrow Agent shall not be liable or responsible for the validity, enforceability or sufficiency of any documents furnished under this Agreement; nor shall Escrow Agent be responsible for any representation or statements of the parties, provided, however, that if Escrow Agent obtains actual knowledge of any misrepresentation in any documents furnished under this Agreement, it shall promptly notify the parties in writing.  If any dispute arises with respect to the disbursement of the Deposit, Escrow Agent may, in its sole discretion, do one or more of the following:  (a) perform its obligations in accordance with this Agreement; (b) continue to hold the Deposit until directed by written instructions from both the Buyer and Seller or a final judgment of a court with jurisdiction; or (c) commence an action in interpleader and in connection therewith remit the same to a court of competent jurisdiction pending resolution of such dispute.  Buyer and Seller jointly and severally agree to indemnify and hold harmless Escrow Agent from any and all liabilities, claims, demands, causes of action, loss, cost or expense (including without limitation reasonable attorneys’ fees either paid to retained attorneys), either at law or in equity, which may arise out of or are in any way connected with Escrow Agent’s being a party to this Agreement or to its performance of its duties under this Agreement; provided, however, that Buyer and Seller do not assume liability for and shall not indemnify Escrow Agent in the event of the willful misconduct or gross negligence on the part of Escrow Agent.

11.Notice.  Any notice, demand or request which may be permitted, required or desired to be given in connection with this Agreement shall be given in writing and directed to a party as the case may be, as follows:
    

If to Seller:        CRI Hotel Income of Minnesota, LLC
c/o C.R.I., Inc.

52

11200 Rockville Pike, Suite 300
Rockville, MD 20852    
Attention:  Michael F. Murphy
Telephone: 301.231.0221
Email:  mmurphy@crimail.com; meck@crimail.com
If to Buyer:        United Properties Investment LLC 
3600 American Blvd. W., Suite 750 
Minneapolis, Minnesota 55431
Attention:  Brandon Champeau
Telephone: (952) 837-8653
Email:  bchampeau@uproperties.com
With a copy to:    Fafinski Mark & Johnson, P.A.
775 Prairie Center Drive, Suite 400
Eden Prairie, Minnesota  55344
Attn:   Greg Brenny
Email:  greg.brenny@fmjlaw.comPhone:  (952) 995-9500
    
If  to Escrow Agent:        First American Title Insurance Company
Attn:  Escrow Department
National Commercial Services 
801 Nicollet Mall
Suite 1900
Minneapolis, MN  55402 
Attention:____________________________
Email:_______________________________
Phone: ____________ 

Any notice required or permitted pursuant to this Agreement shall be in writing and delivered by (a) personal delivery, (b) reputable overnight delivery service with proof of delivery, (c) United States mail, postage prepaid, either certified or first class mail, or (d) email or other electronic transmission.  All notices shall be sent to a party at the address set forth above, or to such other address or person as the party shall have designated in writing.  Notices shall be deemed given upon the earlier of the date of actual receipt or (i) as of the date of delivery or first attempted delivery if by personal delivery, overnight delivery or certified mail, or (ii) upon receipt by email or other electronic transmission as evidenced by the transmission record.   

12.Entire Agreement.  This Agreement and the Purchase Agreement constitute the entire agreement between the parties with respect to the Deposit and any alterations or additions thereto shall be effective only if reduced to writing, dated and signed by the parties or their authorized representatives.

13.Authorization.  Each person executing this Agreement is authorized to do so on behalf of the party for which that execution occurs.

14.Successors and Assigns.  This Agreement shall be binding upon and shall inure to the benefit of and be enforceable by the parties hereto and their respective successors and assigns; provided, however, that Escrow Agent may not delegate its duties hereunder without the prior written consent of the parties.  This 

53

Agreement is made solely by the signatory parties and no other person (except successors and assigns) shall have any right to rely on, enforce or have the benefit of any provision of this Agreement.

15.Governing Law.  This Agreement shall be construed and enforced in accordance with the laws of the State of Minnesota.

16.Counterparts.  This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, and all of which, taken together, shall constitute one and the same instrument.

17.Electronic or Facsimile Copies.  A signature on an electronic or facsimile copy of this Agreement shall have the same force and effect as an original and shall bind a party to the terms and conditions hereof.  All parties shall execute up to four originals of any signed electronic or facsimile copy of this Agreement.

signature page follows

54

IN WITNESS WHEREOF, the parties hereto have executed and delivered this Escrow Agreement as of the day and year first written above.

SELLER: 

CRI HOTEL INCOME OF MINNESOTA, LLC, a Delaware limited liability company

By:     CRI Hotel Income Partners, L. P., its sole member

By:     CRICO Hotel Associates I, L. P., its General Partner

                   By:     C.R.I., Inc., its General Partner

                             By:                         
Michael F. Murphy
Senior Vice President 

BUYER: 

UNITED PROPERTIES INVESTMENT LLC, 
a Minnesota limited liability company

By:                        
Brandon Champeau
Assistant Vice President

By:                         
Name:                         
Title:                        

ESCROW AGENT:

FIRST AMERICAN TITLE INSURANCE

By:    _________________________________              
Name:    _________________________________ 
Title:    _________________________________ 

55exh10-1.htm

EXHIBIT 10.1

 

 

	
SECTION 1

	
SUMMARY OF AGREEMENT

 

	
BUILDER:

 

Jurong Shipyard Pte Ltd

No. 29 Tanjong Kling Road

Singapore 628054

 

 

 

hereinafter referred to as Builder

	
OWNERS:

 

Helix Q7000 Vessel Holdings S.à r.l.

3505 West Sam Houston Pkwy North

Suite 400

Houston, TX 77043

USA

 

hereinafter referred to as Owners

 

WHEREAS, Owners wish to construct a  well intervention semi-submersible to be known as the Q7000 (herein defined as the Vessel), according to requirements in the Specifications and relevant design project drawings, bearing JSPL Hull No. 11-1115 and Builder is willing to perform the Work on the terms and conditions hereinafter set forth,

 

NOW THEREFORE, the Parties hereby agree as follows:

 

	
1.

	
Builder shall construct the Vessel in accordance with the Contract, and Amendments and Variation Orders thereto;

 

	
2.

	
The Contract shall consist of, and in the event of conflict, discrepancies or inconsistencies the following order of precedence shall apply:

 

SECTION 1         SUMMARY OF AGREEMENT;

SECTION 2         TERMS AND CONDITIONS OF CONTRACT;

SECTION 3         SCHEDULE OF PRICES;

SECTION 4         PROGRAMME;

SECTION 5         ADMINISTRATION INSTRUCTIONS;

SECTION 6         TECHNICAL SPECIFICATIONS;

SECTION 7         DRAWINGS; and

SECTION 8         FACILITIES FOR OWNERS.

 

	
3.

	
Owners shall pay to Builder the Contract Price determined in accordance with the Terms and Conditions of Contract;

 

	
4.

	
The Contract is between Builder and Owners and nothing herein shall entitle Builder to commence proceedings against its parents or any affiliate, holding, subsidiary or associated company of Owners;

 

	
5.

	
The Contract constitutes the entire agreement between the Parties and supersedes all previous negotiations, representations or agreements either written or oral preceding the Contract.

 

  

1

  

 

This Contract is entered into in duplicate original and shall become effective upon the signature by the Parties, and upon receipt by Builder of the first Installment Payment from the Owners.

 

 

For and on behalf of BUILDER:                                                                    For and on behalf of OWNERS:

 

	Signed	:	/s/ William Gu Wei Guang	Signed	:	/s/ Owen Kratz
	 	 	 	 	 	 
	Name	:	William Gu Wei Guang	Name	:	Owen Kratz
	 	 	 	 	 	 
	Position	:	General Manager (Offshore)	Position	:	CEO
	 	 	 	 	 	 
	Date	:	11 September, 2013	Date	:	September 11, 2013

 

  

2

  

 

	
Section 2

	
TERMS AND CONDITIONS

 

	
Article

	
Heading

 

	
1  

	
Definitions

 

	
2  

	
Interpretation

 

	
3  

	
Construction and Parties representatives

 

	
4  

	
Design responsibility

 

	
5  

	
Review of drawings and documentation

 

	
6  

	
Permits, laws, regulations and classification

 

	
7  

	
OFE

 

	
8  

	
Information supplied by Owners

 

	
9  

	
The Work

 

	
10  

	
Builder's representations

 

	
11  

	
Subcontracts

 

	
12  

	
Work Schedule and Programme

 

	
13  

	
Inspection

 

	
14  

	
Cooperation with Others

 

	
15  

	
Facilities for Owners

 

	
16  

	
Variations

 

	
17  

	
[Not Used]

 

	
18  

	
[Not Used]

 

	
19  

	
Force Majeure

 

	
20  

	
Tests and sea trials

 

	
21  

	
Delivery and Acceptance

 

	
22  

	
Contract Price and terms of payment

 

	
23  

	
Guarantee

 

	
24  

	
Indemnities

 

	
25  

	
Insurance by Builder

 

	
26  

	
Taxation

 

	
27  

	
Audit rights of Owners

 

	
28  

	
Patents and Proprietary Information

 

	
29  

	
Liens

 

	
30  

	
Ownership

 

	
31  

	
Commencement, completion, liquidated damages and incentives

 

	
32  

	
[Not Used]

 

	
33  

	
Termination for Builder's default

 

	
34  

	
Remedies for Owners’ default

 

	
35  

	
Conflict of interest

 

	
36  

	
Independent Contractor

 

  

3

  

 

	
37  

	
Confidentiality

 

	
38  

	
Consequential damages and exclusion of liability

 

	
39  

	
Amendments and Contract changes

 

	
40  

	
Waiver

 

	
41  

	
Assignment

 

	
42  

	
Notices

 

	
43  

	
Performance bond/Refund Guarantees

 

	
44  

	
Governing law and disputes

 

	
45  

	
Business practices

 

  

4

  

 

	
Article 1

	
Definitions

 

For the purposes of this Contract the following terms shall have the following meanings:

 

	
1.1  

	
Amendment shall mean a duly authorised and signed amendment to the Contract.

 

	
1.2  

	
Authorities shall mean all National and International Regulatory Bodies as listed in Section 6 - Technical Specifications (including the Classification Society).

 

	
1.3  

	
Banking Day shall mean a day that the bank that is the administrative agent for Owner’s revolving credit facility and Builder's bank are open and are in every respect able to perform banking functions between themselves, including the transfer of funds.

 

	
1.4  

	
BFE shall mean the items of material and equipment provided by Builder or Subcontractors, including without limitation the items set forth in Section 6 – Technical Specifications.

 

	
1.5  

	
BFE Commissioning Procedures shall mean the documents and procedures jointly agreed by Builder and Owners with procedures and acceptance criteria for commissioning the BFE prior to Delivery.

 

	
1.6  

	
Bridging Agreement means the Exclusive Bridging Agreement dated 24 November, 2012 between Builder and Owners.  As at the Effective Date the Bridging Agreement shall automatically terminate and shall be considered null and void without further reference and any and all rights and liabilities which so arise under the Bridging Agreement in respect of work performed thereunder shall be transferred to the Contract and for all intents and purposes be regarded as Work performed under the Contract.  Any claims either Party has in respect of the work performed under the Bridging Agreement shall only be made under the Contract.

 

	
1.7  

	
Builder shall mean Jurong Shipyard Pte Ltd and its permitted assigns.

 

	
1.8  

	
Builder Group shall mean Builder and its subsidiaries, affiliated and associated companies including Subcontractors of any tier and their agents, servants, consultants, directors, officers and employees and Invitees.

 

	
1.9  

	
Classification Society means Det Norske Veritas (“DNV”).

 

	
1.10  

	
Contract shall mean the agreement between the Parties dated on the date of signing hereof consisting of the following:

 

Section 1           Summary of Agreement;

Section 2           Terms and Conditions of Contract;

Section 3           Schedule of Prices;

Section 4           Programme;

Section 5           Administration Instructions;

Section 6           Technical Specifications;

Section 7           Drawings; and

Section 8           Facilities for Owners.

 

	
1.11  

	
Completion Certificate shall mean the certificate of the Builder to the Owner pursuant to Section 20.5 hereof certifying that the Vessel is ready for Delivery.

 

  

5

  

 

	
1.12  

	
Contract Price shall mean the sum or sums stated in Section 3 - Schedule of Prices, together with any Variation or Amendment thereof.

 

	
1.13  

	
[Not used]

 

	
1.14  

	
Day shall mean a calendar day.

 

	
1.15  

	
Delivery shall mean the completion of all the obligations as stated in Articles 20 and 21.

 

	
1.16  

	
Delivery Date shall mean the date stated in the Programme for the Delivery to take place as adjusted from time to time by Permissible Delays, or Amendment, or by Variation Orders, Owners’ opinion on a Disputed Variation Order.

 

	
1.17  

	
Drawings means those drawings contained in Section 7 of the Contract.

 

	
1.18  

	
Disputed Variation Order shall mean a document issued by Owners, signifying Owners’ approval for the Work described by Owners thereon or other changes to the Work, Contract Price or the Programme, which is to be executed by Builder; provided that the Parties are in disagreement as to the validity and/or effects associated therewith on the scope of the Work, the Contract Price or associated changes in the Programme.

 

	
1.19  

	
DP System means the dynamic positioning system manufactured by Kongsberg AS to be installed in the Vessel.

 

	
1.20  

	
Effective Date shall mean the date on which the Construction Contract becomes binding on the Parties in accordance with Section 1 - Summary of Agreement.

 

	
1.21  

	
EPCC shall mean engineering, procurement, construction and commissioning.

 

	
1.22  

	
Guarantee shall mean all warranties and guarantees provided by Builder under Article 23 of this Contract.

 

	
1.23  

	
Guarantee Period shall mean the period commencing on the date of actual Delivery of the Vessel to Owners and ending on the first anniversary thereof, subject to extension under Article 23.

 

	
1.24  

	
Instruction shall mean any instruction issued by Owners for Builder to execute Work described in the Instruction forthwith prior to the issuance of a Variation Order.

 

	
1.25  

	
Interface Information shall mean the information regarding the interconnection or interaction between (a) an item of equipment or machinery or attachment, including BFE and OFE, and (b) the Vessel or other item of equipment or machinery or attachment, including BFE and OFE.  Such information may include, without limitation, foundation templates, coupling templates, drawings, design, calculation, sizes, diagrams, signal information, forces, reactions, weights, movements, noise, vibration and performance data.

 

	
1.26  

	
Invitee shall mean any person not a party to the Contract or any Subcontract whose presence at the Worksite is at the invitation of a Party to the Contract.

 

	
1.27  

	
Key Personnel shall mean Builder's representative, deputy representative, supervisors, the lead engineer of each discipline and the corresponding personnel of Subcontractors.

 

  

6

  

 

	
1.28  

	
Milestone shall mean the total amount of Work required to be completed by Builder as of the corresponding date in the Programme for such Milestone.  The descriptions appended to Section 4 - Programme are not to be construed as defining or in a way limiting the Work to be performed by Builder within a Milestone or the date thereof.

 

	
1.29  

	
Notice shall mean any Contractual Notice required to be given by either Party to the other under the Contract which meets the requirements set forth in Article 42.

 

	
1.30  

	
OFE means the items of material and equipment provided by Owners or Vendors as more fully set forth in Section 6 – Technical Specifications; provided that any OFE or contracts for acquisition of OFE are transferred by Owners to Builder, such OFE shall upon such transfer be deemed to be BFE.

 

	
1.31  

	
OFE Commissioning Procedures shall mean the documents and procedures jointly agreed by Builder and Owners with procedures and acceptance criteria for commissioning the OFE prior to Delivery.

 

	
1.32  

	
ONE shall mean Owner Nominated Equipment as described in Article 7A.

 

	
1.33  

	
Owners means Helix Q7000 Vessel Holdings S.à r.l. and its permitted assigns.

 

	
1.34  

	
Owners Group shall mean Owners and their parent, holding, subsidiaries, affiliated and associated companies including their Vendors, contractors, subcontractors, agents, consultants, servants, directors, officers, employees, any shadow crew pursuant to Article 20.4 and Invitees.

 

	
1.35  

	
Parties shall mean Builder and Owners.

 

	
1.36  

	
Permissible Delays shall mean delays to the Delivery Date on account of (i) such causes specified in the Contract which under the terms of this Contract  permits the postponement of the Delivery Date, (ii) delays and disruptions in the Work caused by Owner and (iii) payment delays caused by Owner for undisputed amounts.

 

	
1.37  

	
Programme shall mean the dates or sequence of dates for the Contract performance as stated in Section 4 - Programme together with any Variation or Amendment thereof.

 

	
1.38  

	
Proprietary Information shall mean any information passed to Builder by Owners or Vendors or any information generated by Builder or its Subcontractors in connection with the Contract.

 

	
1.39  

	
Sea Trials Procedures shall mean the documents and procedures jointly agreed by Builder and Owners with procedures and acceptance criteria for commissioning the Vessel at sea prior to Delivery.

 

	
1.40  

	
Shipyard shall mean the principal facility where the Work is from time to time being performed including all adjacent and associated facilities.

 

	
1.41  

	
Specifications shall mean the Technical Specifications contained in Section 6 of the Contract.

 

	
1.42  

	
Subcontract shall mean any agreement between Builder and a Subcontractor respecting the Work or the Vessel.

 

	
1.43  

	
Subcontractor shall mean any legal entity (other than employees) engaged by Builder for the execution of any part of the Work or the supply of materials, parts, components or machinery for the Vessel and shall include Builder's sub-suppliers.

 

  

7

  

 

	
1.44  

	
Temporary Works shall mean all scaffolding, staging, weather proofing and all temporary works of any kind required in connection with the Work.

 

	
1.45  

	
Third Party shall mean any person or entity other than Builder Group or Owner Group.

 

	
1.46  

	
Variation shall mean any alteration to the Contract and/or to the Specifications, including without limitation any changes to the Programme, made by or approved by Owners in accordance with Article 16 and confirmed by a Variation Order.

 

	
1.47  

	
Variation Order shall mean a document issued by Owners signifying Owners’ approval of a Variation and the Parties’ agreement as to the effect of such Variation, if any, on the Programme or the Contract Price.

 

	
1.48  

	
Vendor/s shall mean the supplier of services, goods, equipment, parts or components, under a purchase order or Contract with Owners, where such goods, equipment, parts or components are to be incorporated into the Vessel by Builder.

 

	
1.49  

	
Vessel or Unit shall mean the Well Intervention Semisubmersible Unit throughout all stages of the Work, together with all its equipment, machinery, spare parts, and any other attachments or appurtenances.

 

	
1.50  

	
Work shall mean all the work, supplies and services to be performed or provided by Builder in accordance with the Contract, subject to any Variation Order or Amendment.

 

	
1.51  

	
Worksite shall mean the locations and the facilities used for the performance of the Work, or any part thereof, including but not limited to the Shipyard, fabrication yards, Subcontractor premises, testing facilities, offices, warehouses, storage and handling areas.

 

 

	
Article 2

	
Interpretation

 

	
2.1  

	
No index, title, subtitle, subheading, marginal note, singular or plural of the Contract shall limit, alter or affect the meaning or operation of the Contract.

 

	
2.2  

	
All correspondence, documentation and discussions shall be in the English language. Only clearly legible documents in the English language and transferred between the Parties in accordance with the instructions given in Section 5 - Administration Instructions, or in the event of Notices as specified in Article 42, shall be recognised as valid communications under the Contract.

 

	
2.3  

	
Any review, inspection, approval, expression of satisfaction, acceptance, payment, attendance of tests, acknowledgement, or otherwise, by Owners or Authorities, whether written or otherwise shall not relieve Builder from any liability or obligation under the Contract and shall be without prejudice to the Contractual and legal rights of Owners.

 

	
2.4  

	
The use of words such as provide, supply, require, perform, undertake, oblige, obligation, warrant, represents, responsible and guarantee shall be deemed to be a Contractual obligation and/or liability on the part of the Party referred to and shall imply that the said Party shall bear the cost of performing the obligation and/or bear the risks of undertaking the liability, except specified elsewhere or agreed by both Parties in writing.

 

Notwithstanding the above, the use of the words mentioned therein shall not be considered as limiting Builder’s scope of Work and/or the obligations and duties of Builder or Owner under the Contract.

 

  

8

  

 

	
Article 3

	
Construction and Parties Representatives

 

	
3.1  

	
Builder undertakes to build at the Shipyard and to deliver to Owners, who order and undertake to accept delivery of, the Vessel, subject to and in accordance with this Contract and the Specifications. 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 the Drawings, the provisions of the Specifications shall prevail.

 

Notwithstanding the above, it is understood that the Specifications and Drawings are complementary and that everything contained in the Drawings and not mentioned in the Specifications and vice versa is to be understood as included in both the foregoing documents. The Vessel shall have the dimensions and characteristics stated in the Specifications.

 

	
3.2  

	
The Vessel shall, for the purpose of identification only, be known as Hull number 11-1115. Builder shall at all times identify parts, spares, equipment and materials for the Contract by affixing the hull number thereto and placing or storing such spares, parts, equipment and materials in a segregated area at the Shipyard specifically designated for the Vessel and identified by the hull number, free from exposure to precipitation, excessive heat or excessive cold and, if needed, from exposure to oxygen.

 

	
3.3  

	
The Vessel shall comply with the laws, rules, regulations and enactments published and in force in the United States of America and in the country of the Vessel’s proposed registration on the date of signing this Contract as stated in the Specifications.

 

Subject to Article 6.5, the Vessel shall be built under the survey of the Classification Society to the classification listed in Section G8 of Section 6 – Technical Specifications and in accordance with normal offshore vessel construction practices in Singapore for new vessels of the type and general characteristics of the Vessel. The Vessel shall also comply with the rules, regulations and requirements of other relevant Authorities as set out in the Specifications. Classification, survey and testing charges relating to Builder's obligations and items of supply under this Contract shall be for the account of Builder. The registration of the Vessel shall be carried out by Owners and the costs and expenses thereof shall be for Owners’ account.

 

	
3.4  

	
Each Party shall appoint, in writing on the Effective Date, a representative who shall be available and be legally empowered, as a company officer or through a power of attorney, to accept, commit and act on behalf of the respective Party with such authority as may be specified by the Parties in matters arising in connection with the Contract.

 

	
3.5  

	
Builder's representative shall be available and assigned full time to the Work.

 

	
3.6  

	
Owners' representative or any person authorised by Owners' representative, shall have access at all times to the Vessel, the Work and the Worksite.

 

	
3.7  

	
Not used.

 

	
3.8  

	
Owners may change their representative at any time upon giving Builder seven days prior written Notice thereof.

 

  

9

  

 

	
3.9  

	
Builder shall use its best efforts to maintain its Key Personnel in their respective positions and functions through the Delivery Date.  In the event that it should be necessary to substitute Key Personnel, Builder shall be responsible for providing an adequate period for the hand-over of the activity concerned, such period shall be at least ten (10) Days.  Prior to the appointment of a substitute, Owners shall be allowed the opportunity to approve the selection of personnel intended as a substitute.  The substitute shall have an equivalent level of qualification and experience.  All Key Personnel shall be fluent in written and spoken English.

 

	
3.10  

	
Owners may, upon Notice to Builder, require that Builder remove any Key Personnel from the Work in the event of any misconduct, inadequacy, inability to perform, or other reasonable cause of dissatisfaction that materially affects the quality of workmanship, the safety of personnel or property or the schedule. Builder shall address Owners’ concern and if unable to satisfy Owners’ concerns within a reasonable time, Builder shall effect the removal of such Key Personnel immediately.  The requirement for removal or such personnel shall be without liability on the part of Owners and shall not of itself be cause for any disciplinary action against such personnel.

 

All costs incurred in the removal and replacement of any personnel shall be for the account of Builder.

 

 

	
Article 4

	
Design responsibility

 

	
4.1  

	
Owner shall be responsible for the design as set out in Section 6 Annex 11A of the Contract.

 

	
4.2  

	
The  drawings produced by Builder under the Bridging Agreement is set out in Section 6 Annex 11B of the Contract and further  drawings listed in Section 6 Annex 11C shall be produced by Builder in accordance with the Programme.

 

	
4.3  

	
Builder shall develop and keep fully updated at all times a matrix of all permits, law, legislation, rules, regulations and guidelines applicable to the Work, which shall include a description of their specific application to the Work, and timetable of action taken and still to be taken by Builder to ensure compliance therewith.  Copies of such matrix shall be provided to Owners as part of Builder’s progress reports pursuant to the Contract.

 

 

	
Article 5

	
Review of drawings and documentation

 

	
5.1

	
The Builder shall produce the remaining detailed plans and drawings required under Section 6 Annex 11C of the Contract. In respect of all plans, drawings and documentation, the same shall be submitted to the Owners in three (3) copies as soon as possible following their production.  The Owners shall, within fourteen (14) Days after receipt thereof, return to the Builder one copy of such drawings and documentation with the Owners' final remarks and amendments (if any) written thereon.

 

	
5.2

	
In the event that the Owners shall fail to return the plans, drawings and documentation to the Builder within the time limit as hereinabove provided, such plans, drawings and documentation shall be deemed to have been approved by the Owners provided always that the Owners is provided with such plans, drawings and documentation at regular intervals and not all plans, drawings and documentation simultaneously.

 

  

10

  

 

	
5.3

	
The Builder shall take due note of the Owners' remarks and amendments (if any) on plans, drawings and documentation submitted pursuant to this Article and, if such remarks or amendments are not of such a nature or extent as to constitute variations of the Specifications within the meaning of Article 16 Variations hereof, and subject to Classification Society’s approval, then the Builder shall commence or continue construction of the Vessel  in accordance with the corrected or amended drawings and documentation.  If such remarks or amendments are not clearly specified or detailed, the Builder shall in all cases seek clarification of the same from the Owners before implementing the same provided Work on other unaffected parts of the Vessel shall continue.

 

	
5.4

	
Copies of all correspondence to and from the Classification Society and the regulatory authorities referred to in the Specifications, together with all drawings and documentation approved by the Classification Society, shall be furnished to the Owners by the Builder as soon as practicable upon dispatch and receipt save for correspondence and drawings and documentation which contain proprietary or confidential information relating to the design. Builder will promptly inform Owners if any shortcomings or deficiencies in the design are brought to its attention.  Builder shall be in position to have a resolution plan for all outstanding DNV correspondences within 14 (fourteen) calendar days, after DNV comments are issued.

 

	
5.5

	
The Builder shall take due note of the Owners’ remarks and amendments associated with DNV correspondences, and prepare and execute a resolution plan for handling said Owner remarks and amendments, within 14 (fourteen) calendar dates upon receiving Owner’s information.

 

 

	
Article 6

	
Permits, laws, regulations and classification

 

	
6.1  

	
Builder shall be responsible for ensuring that the Work complies with the rules, regulations and requirements of Authorities and for obtaining all documents relating thereto to enable Owners to obtain any necessary certificates. Subject to Article 6.5, the aforementioned rules, regulations and requirements including all alterations, modifications and additional requirements published on or before the actual date of the Delivery of the Vessel, shall be incorporated within the Work.

 

	
6.2  

	
Builder shall at its cost secure the approval of Authorities for welding procedure qualifications, welding qualification and certification of Subcontracted Work.  Other attendant costs levied by Authorities shall be for the account of Owners.

 

	
6.3  

	
Builder shall provide Owners with copies of all correspondence, minutes of meetings and documents exchanged between Authorities and Builder.  Builder shall provide Owners three (3) Days prior Notice of any meetings with Authorities and will allow Owners to attend and participate in such meetings.  Copies of all minutes, notes and correspondence shall be forwarded to Owners at the time of creation or receipt by Builder.

 

	
6.4  

	
If after the Effective Date and prior to the Delivery Date any requirements, with which the Vessel or the Work is required to conform, are altered or changed by Authorities (or the bodies authorised to make such alterations or changes) and the Parties are unable to obtain a dispensation therefor or waiver of compliance therewith, Builder shall comply with such alteration or changes.

 

	
6.5  

	
Builder may deliver a request to Owners for a Variation Order if Builder can adequately demonstrate that Builder has suffered or will suffer delays or additional costs as a direct result of such alterations or changes and has

 

  

11

  

 

	
 

	
taken all reasonable steps to mitigate the impact of such alternation or changes.

 

	
6.6  

	
Builder shall obtain, at its own costs, all licences, permits, authorizations, including any overtime working permits, necessary for the performance of the Work on the Worksite, and shall comply with all laws, rules and regulations or any other applicable requirements of the Work and shall be responsible for ensuring compliance by its Subcontractors therewith.  Builder shall notify Owners of any non-compliance by Vendors with such regulations of which Builder becomes aware.

 

 

	
Article 7

	
OFE

 

	
7.1  

	
Owners shall at their own risk and cost deliver the OFE to the Shipyard or other places as may be agreed by Owners, together with any special attachments necessary for safe off-loading, in a condition ready for installation in or on the Vessel in accordance with the Programme. Any protective materials furnished by the manufacturer or shipper of the OFE shall remain in place until the relevant OFE is safely installed on the Vessel.

 

	
7.2  

	
Builder shall be responsible for receiving, off-loading, handling, joint visual inspection with Owners, safe storage, maintenance and preservation of OFE expressly specified in the Specifications.  Builder shall not be responsible for defects that would not be reasonably discoverable upon a visual inspection thereof.  Safe storage shall include the preservation of OFE free from exposure to precipitation, excessive heat or excessive cold and, if needed, from exposure to oxygen. The risk of loss of any item of OFE shall remain with Owners until such item of OFE is offloaded into the possession of Builder.

 

	
7.3  

	
Builder shall promptly notify Owners of any discrepancy, loss or damage to the OFE of which it becomes aware. Owners shall be liable for the cost incurred by Builder in the repair of the OFE occasioned by their defective material or poor workmanship or failure to perform, or by damage caused to them during transportation to the Shipyard or otherwise prior to delivery to Builder.

 

	
7.4  

	
Owners shall take responsibility and liability for the correctness, or otherwise of markings, including weight marking, adequacy of slings, and lifting locations, as may be indicated on any materials and equipment provided by a Vendor.

 

	
  

	
Builder shall assist to secure all the customs formalities for the importation of the OFE to the Shipyard, provided that markings with respect thereto have been correctly prepared by Owners or Vendors.  Custom duties for OFE, and other related charges, if any, shall be for Owners’ account.

 

	
7.5  

	
Builder shall be responsible for the safe custody of and for the correct installation of the OFE, which shall be effected in accordance with accompanying manuals with the instructions of Owners or Vendors.

 

In order to facilitate the installation of the OFE in or on the Vessel by Builder, Owners shall at their own expense furnish Builder with the necessary specifications, drawings, manuals, plans, instruction books, test reports and certificates required by applicable rules or regulations, and if requested by Builder, shall, at the expense of Owners and in accordance with the Programme, cause the manufacturers of the OFE to assist Builder in the installation thereof or to make any necessary adjustment thereto at the Shipyard at the cost of Owners.

 

	
7.6  

	
[Not Used.]

 

  

12

  

 

	
7.7  

	
Builder shall also be responsible to assist Owners with the co-ordination of commissioning of OFE, which commissioning shall be conducted by Owners in accordance with the OFE Commissioning Procedures.

 

	
7.8  

	
Mobilisation and demobilisation of Vendor’s technicians shall be mutually agreed in advance between Owners and Builder.

 

	
7.9  

	
The assistance of such technicians will be provided in accordance with Vendor’s requirements at no cost to Builder for a reasonable period of time to allow installation and commissioning to be carried out in accordance with the OFE Commissioning Procedures.

 

	
7.10  

	
The dates for delivery of OFE to the Shipyard shall be in accordance with Section 6 – Technical Specifications and the Programme.

 

	
7.11  

	
If there is a delay in the Work as a consequence of the defect or late delivery of OFE, Builder shall be entitled to extend the Delivery Date by such time as Builder can demonstrate that the Programme is actually affected by such delay in delivery, and the adjustment to the Contract Price.

 

 

	
Article 7A

	
Owner Nominated Equipment ("ONE")

 

	
7A.1

	
The Owner has negotiated, assessed and selected the Drilling Package and Huisman Cranes, both of which shall be regarded as “ONE” for the purposes of this Contract.  The Owner and the Builder agree that the contracts for the ONE entered into by the Owner with the ONE Vendors shall be novated to the Builder at which time the ONE Vendors shall be Subcontractors of Builder, subject to this Article 7A.The contracts for the ONE shall be referred to as "ONE Contract" individually or "ONE Contracts" collectively in this Contract.

 

	
7A.2

	
Subject to Clause 7A.3, Builder shall be responsible for the safe custody of and for the installation, design interface, mechanical completion and assistance in commissioning of the ONE, which shall be effected in accordance with accompanying manuals with the instructions of the ONE Vendors, and for managing the manufacturing process of the ONE.

 

	
7A.3  

	
The Owner assumes all responsibility and all risks in respect of design, design engineering, specification, suitability and fitness for purpose of ONE for its intended use or to meet the Specifications of this Contract. Any delays  caused  by this shall be counted as Permissible Delay and any costs arising shall be borne by the Owner.

 

	
7A.4  

	
If any or all of ONE are unsuitable or not in a fit condition for incorporation into the Works due to its design and/or engineering and/or other reasons, the Owner may nevertheless require the Builder to proceed to install such ONE for the Works and the Owner shall be deemed to have assumed all risk of and liability for any loss, damage or liability that may result from the Works hereunder by reason of failure or defects in such ONE. The Builder may, if so requested by the Owner, repair or adjust ONE subject to agreement of a Variation Order.

 

	
7A.5  

	
Builder does not warrant that the ONE is compatible with BFE, OFE or the Vessel. Builder shall perform and procure the performance of the ONE contracts pursuant the terms and conditions of the ONE contracts but under no circumstances (notwithstanding anything to the contrary in the Contract) shall Builder:

 

  

13

  

 

	
(i)  

	
assume any greater liability or responsibility in respect of ONE equipment to the Owner than what the ONE vendors are liable to the Builder under the ONE Contracts, 

 

	
(ii)  

	
have any liabilities to the Owner in respect of matters set out in Articles 7A.3 and 7A.4, and

 

	
(iii)  

	
have greater liabilities whatsoever (in nature or quantum) to the ONE vendors under the ONE contracts than what the Builder has to the Owner under this Contract, and the Owner shall indemnify and hold harmless the Builder for any such liabilities.

 

	
(iv)  

	
Owner shall indemnify, defend and hold the Builder harmless against any and all claims, damages, expenses and liabilities of every kind and nature that may arise in the event any ONE contract is terminated, which shall include an indemnity against ONE contractors claims for costs arising out of the termination and claims for compensation arising out of the termination. This indemnity shall not apply if the ONE contract is terminated by the ONE vendor as a result of the sole default of the Builder.

 

	
7A.6

	
Builder shall not be obliged to pursue any Claims (as defined below) against any ONE contractor under any ONE contracts on behalf of Owner.  If so requested by Owner, Builder shall assign absolutely and unconditionally to Owner all its rights, title and interest in respect of any and all Claims (as defined below) it may have arising out of, or in connection with, any ONE contract. Owner shall, irrevocably, unconditionally, regardless of cause or default (including negligence), be solely responsible for and shall defend, protect, indemnify and hold harmless Builder from and against any liabilities, losses, charges, costs (including legal costs), expenses or claims whatsoever arising out of, or in connection with, the Owner’s claim against the ONE vendors.  If the Builder unjustifiably refuses to assign any Claim to the Owner, the Builder shall be responsible to the Owner for that Claim.

 

"Claim" means any claim, action or other proceeding for damages, costs, demands, losses, delays, liabilities, expenses of any kind or nature (including legal costs on a full indemnity basis and penalties or fines) or any other obligations of whatever nature.

 

 

	
Article 8

	
Information supplied by Owners

 

	
8.1  

	
Builder shall check all information supplied by Owners or Vendors relating to the OFE for any omission, conflict, discrepancy or inconsistency and shall report any such omission, conflict discrepancy or inconsistency to Owners immediately in writing.

 

	
8.2  

	
Owners shall notify Builder of Owner’s decision on the resolution of any such omission, conflict, discrepancy, or inconsistency within fourteen (14) Days. In case Owners fail to reply in such fourteen (14) Day period, or if Builder is of the opinion that such decision constitutes a Variation, it shall issue a request for a Variation Order in accordance with Article 16.6.

 

 

	
Article 9

	
The Work

 

	
9.1  

	
Without limiting any other undertakings contained herein, Builder shall:

 

  

14

  

 

	
a)  

	
Carry out the Work in accordance with the Contract, Authorities’ requirements, and good safety practices;

	
b)  

	
execute workshop design and engineering based upon basic and detailed design included in the Contract and shall engineer, construct, commission, test and deliver the Work in accordance with the Contract in a timely manner; and

	
c)  

	
provide all materials, equipment, Temporary Works, tools, facilities, labour, personnel, supplies, test and inspection equipment, and all other services required or necessary for the completion of the Work satisfactory to Owners and in accordance with the Contract. Builder shall ensure that all such material and/or equipment to be incorporated into the Work is fully certified to allow full traceability of all components;

	
d)  

	
not use any materials, parts or equipment, nor permit anything to be used in the performance of the Work which will not conform with the Specifications;

	
e)  

	
furnish efficient business administration, management, supervision and expertise and furnish an adequate supply of materials, parts, equipment and labour to perform the Work in the most expeditious and economical manner consistent with the interests of Owners;

	
f)  

	
continuously and diligently perform or cause the performance of the Work in accordance with the Contract; and

	
g)  

	
provide and maintain a complete record, with daily entries to Owners, of the lightship weights (including without limitation structures, outfitting, equipment) that are and are to be permanently installed on the Vessel.

 

	
9.2  

	
Where Work is necessary for the performance and completion of the construction but such Work is not specifically mentioned, described or identified in the Contract, such Work shall nevertheless be part of the overall scope of Work to be performed and completed by Builder under the Contract and any applicable Variation Order.

 

	
9.3  

	
Builder shall not alter the scantlings of the structural members of the Vessel as shown on the Approved for Construction drawings without the prior written consent of Owner and the Classification Society.

 

	
9.4  

	
Weight Control:

 

	
a)  

	
Builder shall provide a detailed weight control procedure for Owner’s approval within thirty (30) days after execution of this Contract. Builder is responsible to maintain and provide an accurate weight data base for all weight groups during the design and construction period. Weight certificates shall be provided from the Vendors for the items including steel plates, stiffeners, and equipment. For outfitting items purchased in bulk material, the data in weight per unit length or weight per unit area must be provided to Owners by the Builder as they are acquired.

 

	
b)  

	
Large construction blocks are to be weighed prior to erection on the Vessel. The associated outfitting and pre-installed equipment weights shall be surveyed as the accompanied weights in the block. A trend of weight variation against the calculated weight for the blocks shall be presented by Builder to Owner on monthly basis.

 

	
c)  

	
Builder is responsible to accomplish the design LUW (Light Unit Weight) and the VDL (Variable Deck Load) of the Vessel. In the event overweight is found in the construction process, Builder shall notify Owners immediately and promptly present a remedial solution to Owner for approval.

 

  

15

  

 

	
d)  

	
Builder shall not be permitted to change the scantling of the structures prior to or during fabrication.  Any changes of the scantling must be subject to approval by the classification society and Owner before fabrication commences. Any unauthorised changes of the scantling shall be a material default of this Contract.

 

	
9.5  

	
All steel blocks shall be fabricated primarily at the Builder’s yard in Singapore.  All blocks fabricated outside premises owned by Builder are to be staffed with Builder’s full-time construction personnel to ensure sufficient materials and manpower are allocated to ensure maintenance of the block fabrication schedule.  HSE, Dimensional Control, QA/QC and progress measures shall be managed with proper level of staffing at each of the construction sites staffed with full-time discipline construction engineers and QC staff to handle the Builder’s fabrication supervision work requirements.

 

 

	
Article 10

	
Builder's representations

 

	
  

	
Builder represents and undertakes that it:

 

	
a)  

	
has the necessary skills, knowledge and experience to perform the Work;

 

	
b)  

	
has the necessary suitably qualified and in every respect competent personnel to perform the Work;

 

	
c)  

	
has the necessary industry standard software provisions, fully verified to perform the Work;

 

	
d)  

	
has the necessary industry standard tools and equipment, properly calibrated to perform the Work;

 

	
e)  

	
is familiar with, and has knowledge of the engineering standards, recommendations, laws, regulations, certifying and Authorities’ requirements and codes of practise relating to the Work;

 

	
f)  

	
shall perform the Work to the professional and trade standards with all due diligence, safeguards and care;

 

	
g)  

	
shall only use materials and provide equipment which are new and/or the suitable types available at the time;

 

	
h)  

	
shall ensure compatibility between materials and/or equipment; and

 

	
i)  

	
shall undertake a check of locational dimensions and weights relevant to the Work.

 

 

	
Article 11

	
Subcontracts

 

	
11.1  

	
Builder shall not Subcontract any part of the Work without the express prior approval of Owners in writing except those listed and agreed in Section 6 – Technical Specifications.  Such approval shall not unreasonably be withheld.

 

	
11.2  

	
Prior to entering into a Subcontract, Builder shall submit to Owners and receive Owners’ approval of the proposed Subcontract except those listed and agreed in Section 6 – Technical Specifications. Such approval shall not unreasonably be withheld.

 

	
11.3  

	
No Subcontract shall suggest the existence of any form of Contractual relationship between Owners and the Subcontractor. The Subcontract shall not contain any conditions attaching to the payment provisions whereby payment of the Subcontractor is linked or conditional upon receipt of payment by Builder under the Contract.

 

  

16

  

 

Builder shall use reasonable efforts to procure that each Subcontractor waives any liens and rights of action in rem against the Vessel or any part thereof that such Subcontractor may have by operation of law or otherwise.

 

	
11.4  

	
Where Builder is responsible for the supply of running equipment, Builder shall arrange, at its own cost, the attendance of the Subcontractor's representatives at all commissioning tests.  On no account shall such equipment be operated without the attendance of the Subcontractor's representatives.

 

	
11.5  

	
Where Owners are responsible for the supply of running equipment, Owners shall be responsible for arranging, at their own costs, the attendance of the Vendor's representatives at all commissioning tests.  On no account shall such equipment be operated without the attendance of the Vendor's representatives.

 

	
11.6  

	
No Subcontract shall relieve or diminish the obligations or liabilities of Builder under the Contract and Builder shall be responsible for the acts, omissions and defaults of its Subcontractors and the respective officers, directors, employees, servants and agents as though they were the acts, omissions and defaults of Builder, its officers, directors, employees, servants and agents.

 

	
11.7  

	
Builder shall use its reasonable efforts to ensure that each Subcontract permits Builder to assign any warranties thereunder to Owners.  Builder shall indemnify and hold Owners harmless for any inability by Owners to assert warranty claims against any Subcontractor, where the inability to assert a warranty claim is based on the Subcontractor’s claim that it is immune from suit or liability on the basis of sovereign immunity.

 

 

	
Article 12

	
Work schedule and Programme

 

	
12.1  

	
Builder shall be responsible for scheduling, progress reporting and achieving performance of the Work in accordance with the Programme.  Builder shall monitor and report actual progress within Builder’s progress reports to Owners including the effects of any Variation Orders or Disputed Variation Orders and decisions to be made by Authorities.

 

	
12.2  

	
Builder shall provide progress reports to Owners in form and at such times as are set forth in Section 5 – Administration Instructions.

 

	
12.3  

	
If, in the opinion of Owners' representative, the progress of the Work with respect to any item on critical path is too slow to ensure completion of the Work in accordance with the Programme, unless the cause thereof is solely for reasons outside of Builder’s control or for which Builder could not reasonably plan, Builder shall prepare and submit to Owners a proposal for recovery of the Programme to Owners for review. Subject to Owners' comments, and unless the delay in the progress was Permissible Delays Builder shall take all necessary steps to expedite the rate of progress of the Work, including but not limited to re-scheduling activities, additional shifts, overtime working and supplying additional manpower, tools, equipment, resources and facilities as may be required to complete the Work in accordance with the Programme, at no cost to Owners.

 

	
12.4

	
Builder shall report to Owners in writing any possible delays in the Programme and complete a resolution plan with Owners to take corrective measure for averting any potential schedule delay.

 

 

	
Article 13

	
Inspection

 

	
13.1  

	
Owners, Authorities and all persons authorised by Owners shall have the right of access at all times to the Vessel and the Worksite and may inspect or witness the performance of the Work or testing activities.

 

  

17

  

 

	
13.2  

	
Builder shall not make any part of the Vessel inaccessible prior to giving notice to Owners and allowing Owners the opportunity to inspect or witness any test.

 

	
13.3  

	
Builder shall make provision and allow reasonable time for Owners and Vendors to perform testing and inspection activities within the Programme as they may require.

 

	
13.4  

	
The Owner’s representative shall carry out his duties hereunder in accordance with good rig building practice and in such a way as to avoid any unnecessary increase in building cost or delay in the Programme.

 

 

	
Article 14

	
Cooperation with others

 

	
14.1  

	
Builder shall fully cooperate with and shall allow access to the Vessel and Worksite to:

 

	
a)  

	
 a party having a contract for the use of the Vessel;

 

	
b)  

	
Invitees, directors and employees of Owners Group; and

 

	
c)  

	
the representatives and surveyors of the Authorities and any other regulatory bodies; and

 

	
d)  

	
Vendors, Owners' personnel or Owners' other Contractors to carry out activities which are associated with the Work and Builder’s performance of the Work or to carry out activities which are not within Builder's scope of Work, provided that Owners personnel and other Contractors and all persons mentioned above must comply with all reasonable requirements of Builder.

 

	
14.2  

	
Builder, shall provide, receive and exchange Interface Information in accordance with the dates stated in the Programme or where no date is stated in a prompt, timely and sufficient manner.

 

	
14.3  

	
Builder shall co-operate with Vendors and Owners' other contractors whose activities interface directly or indirectly with the Work, and shall develop, and keep fully updated at all times, an interface matrix to define all interfaces between Builder, the Work and the activities of Vendors.  Copies of such matrix shall be provided to Owners as part of Builder’s progress reporting pursuant to the Contract.  Builder shall develop for review and agreement by Owners, and keep fully updated at all times, all necessary procedures to regulate interface activities between Builder and Vendors.

 

 

	
Article 15

	
Facilities for Owners

 

	
15.1  

	
Builder shall provide facilities to Owners, including office facilities inclusive of office equipment, power supplies, communications equipment and car parking as specified in Section 8 - Facilities for Owners for the use of Owners Group.

 

 

	
Article 16

	
Variations

 

	
16.1  

	
Owners may, in accordance with Section 5 - Administration Instructions, order any Variation to any part of the Work by issuing a Variation Order to Builder.  Such Variations may include additions, omissions, substitutions, alterations, changes in quality or character, kind, position, dimension, level or line and changes in the specified sequence, method or timing of construction.

 

	
16.2  

	
The Contract Price, and/or the Programme shall only be subject to adjustment as a result of a Variation Order or a Disputed Variation Order signed by Owners’ representative.  Builder shall countersign each Variation Order, 

 

  

18

  

 

	
  

	
notwithstanding which Builder shall proceed with the work as proposed to be modified immediately upon receipt of the Variation Order.

 

	
16.3  

	
A Variation Order shall not affect the rights or obligations of the Parties except as expressly provided in that Variation Order. A Variation Order shall be governed by all the provisions of the Contract.

 

	
16.4  

	
The effect of a Variation Order on the Contract Price shall be determined on the basis of the rates provided in Section 3 - Schedule of Prices, or as the Parties may agree.

 

	
16.5  

	
A Variation Order will not be issued for variations that are caused by Builder’s default.

 

	
16.6  

	
Builder may, upon receipt of information from Owners or the identification of an event which Builder believes may constitute a Variation to the Work (such identification shall be at anytime prior to the Delivery of the Vessel), submit a request for a Variation Order to Owners in accordance with Section 5 - Administration Instructions.

 

Builder shall not proceed with the subject work until Owners have issued a Variation Order or a Disputed Variation Order.

 

	
16.7  

	
In the event that Builder does not submit a request for a Variation Order within thirty (30) days or such longer period as may be agreed by the Owners Builder shall forfeit any right to claim a Variation Order. This clause shall not apply to Variations requested by Owner.

 

	
16.8  

	
In the event of disagreement between the Parties as to:

 

	
a)  

	
what is or is not a Variation requiring a Variation Order;

 

	
b)  

	
the valuation of a Variation;

 

	
c)  

	
the effect of the Variation upon the Programme; or

 

	
d)  

	
any other matter appertaining to the Variation,

 

	
  

	
Owners shall issue a Disputed Variation Order in accordance with Section 5 – Administration Instructions. Builder shall countersign each Disputed Variation Order.

 

	
16.9  

	
A Disputed Variation Order shall be considered equal in all respects to a Variation Order until such time as agreement is reached on the Variation or the matter is finally determined in accordance with Article 44.

 

	
16.10  

	
Builder shall proceed immediately to execute the Work described in a Disputed Variation Order as though it were contained in a Variation Order.  The following principles shall apply subject to Article 16.12 below:

 

	
a.  

	
The Contract Price shall be the basis for any payments until the dispute is agreed or the matter is finally resolved; and

 

	
b.  

	
The Programme shall be the basis for all matters concerning Programme and Delivery in respect of all applications of such matters to provisions within the Contract; and

 

	
c.  

	
Notwithstanding a) and b) above, Builder shall schedule the Work based on its own opinions of the effects of Disputed Variation Orders as is considered necessary by Builder to diligently complete the Work.

 

	
16.11  

	
[Not used]

 

	
16.12  

	
The Owner will not be entitled to require the Builder to proceed with any work covered by a Disputed Variation Order to the extent that the amount claimed 

 

  

19

  

 

	
  

	
in good faith by Builder and disputed by Owner in relation to such work exceeds USD 500,000 (United States Dollars Five Hundred Thousand) per Disputed Variation Order or US$1,500,000 (United States Dollars One and a Half Million Dollars) in aggregate Disputed Variation Orders.

 

	
16.13  

	
Builder’s Variation Order request must contain sufficient details as to cost, time, and resources, in the format of a detailed CTR report, with costing details at the level of information in Section 3 SCHEDULE OF PRICES and other relevant detailed costing data.  Owner’s review and approval of a Variation Order shall be required only upon receipt of a reasonably complete and detailed CTR report.

 

 

	
Article 17

	
[Not Used]

 

 

	
Article 18

	
[Not Used]

 

 

	
Article 19

	
Force Majeure

 

	
19.1  

	
Notwithstanding anything else contained in this Contract no Party to the Contract shall be held to be in breach of contract for any failure to perform its obligations to the extent that such failure is due to Force Majeure. To the extent that delays resulting from the occurrence of any Force Majeure event shall count as Permissible Delay.

 

	
19.2  

	
For the purposes of this Contract, Force Majeure shall mean a circumstance or event beyond the reasonable control and contemplation of the Party affected, which affects the performance of the Contract and which could not have been prevented or avoided by the exercise of due diligence or other prudent precautions. Force Majeure shall include acts of God, accidents, epidemic, disasters, earthquake, typhoon, hurricane, abnormal weather conditions, nationwide strikes, sabotage, riot, war and terrorist activities, whether real or threatened, lockouts or other work stoppage ordered by governmental authorities for reasons outside of Builder’s reasonable control and any other cause whatsoever beyond the reasonable control of Builder or its Subcontractors whenever or wherever occurring.

 

	
19.3  

	
The Parties agree that the following events shall not be considered as Force Majeure under this Contract:

 

	
a)  

	
other strikes, lock-outs or labour disputes not specified in 19.2 and labour or labour skills shortages;

 

	
b)  

	
material, power, energy and fuel shortages;

 

	
c)  

	
breakdown of any tools, machinery, equipment or facilities;

 

	
d)  

	
weather cause, regardless of severity not specified in Article 19.2;

 

	
e)  

	
delays caused by Builder's or its Subcontractor's commitments to others, which cause a delay in the performance of the Work or a delay in the commencement of the Work, or delays in delivery of BFE;

 

	
f)  

	
fire, except when caused other than by the negligence of the Builder; and/or

 

	
g)  

	
defects in material, parts or equipment provided by Subcontractors.

 

	
19.4  

	
Builder shall not be relieved of the consequences of any default by Builder hereunder by reason of the subsequent occurrence of a Force Majeure event.  Likewise, Owner shall not be relieved of the consequences of any default by Owner hereunder by reason of the subsequent occurrence of a Force Majeure event.

 

  

20

  

 

	
19.5  

	
The Party claiming Force Majeure shall notify the other Party immediately and shall subsequently provide sufficient particulars thereof, including its intended actions to resolve the event. The Party shall be obliged to use its reasonable endeavours to mitigate the effect of the Force Majeure event, at its own cost.

 

	
19.6  

	
In the event that:

 

	
a)  

	
the effects of the Force Majeure event cannot be overcome; or

 

	
b)  

	
the Force Majeure event cannot be reasonably expected to be overcome within ninety (90) Days of the date of its first occurrence; or

 

	
c)  

	
a time period of ninety (90) Days, either consecutively or cumulatively, has passed from the Day of the first occurrence of Force Majeure and Builder has been unable to re-commence the Work;

 

	
  

	
Owners shall be entitled to terminate the Contract and Builder shall provide every assistance, at its own costs, to effect removal of the Vessel and all of its associated machinery, equipment and material from the Shipyard.  Owners shall ensure that Builder is fully paid for the Work completed up to the date of the intervening Force Majeure occurrence.

 

	
19.7  

	
If in Builder’s opinion, the Force Majeure is likely to cause an extension of the Delivery Date, Builder may submit a request for a Variation Order to Owners, requesting an extension of time equal to the length of delay caused to the Delivery Date directly attributable to the Force Majeure.

 

 

	
Article 20

	
Tests and sea trials

 

	
20.1  

	
Builder and Owners shall jointly prepare the BFE Commissioning Procedures, ONE Commissioning Procedures, the OFE Commissioning Procedures and the Sea Trials Procedures, setting forth the proposed sea trials of the Vessel and testing of the BFE and OFE to be conducted prior to Delivery.  Such documents shall be prepared no less than three (3) months prior to the expected Delivery Date, and shall include, without limitation, the procedures and tests set forth in Section 1.15 of Section 6 – Technical Specifications.  Builder and Owners shall agree to the scope of testing and the weather conditions needed to complete testing of the DP System.  Builder and Owners shall jointly determine the personnel from each Party that is to be present at each stage of tests and sea trials.

 

Builder shall provide no less than twenty-one  (21) Days prior written Notice to Owners of the time and place for the sea trials of the Vessel.  Owners shall have the right to have its representative and all necessary personnel from Vendors or Subcontractors on board the Vessel to perform the sea trials.

 

Builder shall be responsible for rendering assistance and support to Owners and Vendors for the performance of the sea trials.  Builder shall have the right to have representatives present on the Vessel during the performance of the trials, provided that the number of such representatives shall be subject to the prior approval of Owners.

 

Builder may Subcontract nautical instrument calibration, speed measurement, power measurement, and tests on the global positioning system to an independent specialist company, provided that such company is acceptable to Owners in their reasonable discretion.

 

	
20.2  

	
Builder shall make available to Owners, without charge, any of Builder’s tools or equipment available at the Worksite that may be necessary to perform any tests or inspections at any time during construction.

 

  

21

  

 

	
20.3  

	
Any test or trial of the Vessel shall be carried out in the presence of representatives from the Classification Society and/or other Authorities, and shall be conducted in a manner and to an extent prescribed in the Specifications and shall prove the Vessel's proper functioning and fulfillment of the performance requirements for the trials set forth in this Contract and the Specifications. The sea trials shall test, at a minimum, the items set forth in Section 6 – Technical Specifications, Section G15.

 

	
20.4  

	
All expenses except those of Owners’ representative and its assistant(s) and the staff of Vendors in connection with the sea trials shall be for the account of Builder. The Owner shall (at its own cost and risk and provided that they first sign any insurance waivers required) provide the marine crew on the bridge and in the engine room during sea trials and be allowed to maintain a shadow crew and other necessary personnel on board the remainder of the Vessel during the trials to observe the sea trials and to familiarize themselves with the Vessel and its operation. Builder shall also be responsible for providing the transportation to and from the Vessel, provisions, consumables such as fuel, lube oil, water, etc., during the dockside commissioning and sea trials.

 

	
20.5  

	
Upon completion of the trial run and when the trial results are available, and if the results thereof demonstrate that the Vessel conforms to the Specifications, Builder shall promptly give Owners the Completion Certificate stating that the Vessel is ready for Delivery.  Owners shall upon receipt of such notice and the test results notify Builder in writing of Owners’ acceptance or rejection of the Vessel as being in conformity with the Contract.

 

	
20.6  

	
If the results of the trial run demonstrate that the Vessel or any part or equipment thereof does not conform to the requirements of the Contract, Builder shall promptly take all necessary steps to rectify such nonconformity (save that in respect of ONE equipment, Builder's obligation to do so shall be determined in accordance with the risk agreed in Article 7A). If necessary, Builder shall for its own account carry out a further trial run to ascertain that the Vessel conforms to the terms of the Contract; provided that if the non-conformity relates to the DP System, thrusters or power management system, Builder shall carry out an additional trial run. Upon demonstration by Builder that any such deficiencies have been corrected, Builder shall notify Owners that the Vessel is ready for Delivery.

 

	
20.7  

	
Owners shall in any notice of rejection give reasonably detailed particulars of the reasons for Owners’ rejection of the Vessel.  Owners shall take delivery of the Vessel if it is in conformity with the Contract, unless there are any deficiencies or conditions or recommendations imposed by the Classification Society or other Authorities preventing the Vessel to carry out its intended operation. If the deficiencies, conditions and recommendations are of minor importance and failure to immediately correct the same would not prevent safe operation of the Vessel, Builder may require Owners to take delivery of the Vessel provided Builder undertakes for its own account to remedy the deficiency or satisfy the recommendation as soon as possible, in no event later than the end of the Guarantee Period; provided that where at all possible, Builder shall at its cost travel to the location of the Vessel to remedy such deficiency.

 

The repair or remediation of defects in any OFE that are not attributable to Builder shall be for the account of Owners.

 

  

22

  

 

	
Article 21

	
Delivery and Acceptance

 

	
21.1  

	
Delivery shall take place at the Shipyard and shall be effective once both Parties have executed and delivered to each other a Protocol of Delivery and Acceptance.

 

	
21.2  

	
Delivery shall be conditional on receipt of all the necessary documentation, licences, export clearances, or permits required by Builder and the country in which the Shipyard is located.  Upon acceptance of the Vessel by Owners, Builder shall deliver to Owners the following documents:

 

	
1)  

	
a Protocol of Inventory of the equipment of the Vessel, including spare parts and the like, all as specified in the Specifications;

 

	
2)  

	
a Protocol of Stores of consumable nature;

 

	
3)  

	
All Certificates, including the Builder's Certificate required to be furnished upon delivery of the Vessel pursuant to this Contract and the Specifications. It is agreed that if the Classification Certificate and/or other Certificates are not available at the time of delivery of the Vessel, provisional Certificates shall be accepted by Owners. Builder shall provide Owners with permanent Certificates as promptly as possible after such formal Certificates have been issued;

 

	
4)  

	
a Bill of Sale including a Declaration of Warranty of Builder that the Vessel is delivered to Owners free and clear of any and all liens and other encumbrances upon the Vessel and Owners’ title thereto, and in particular, that the Vessel is absolutely free of the burdens, in the nature of imposts, taxes or charges imposed by the city, state or country of the part of delivery, as well as of all liabilities arising from the construction or operation of the Vessel or trial runs or otherwise prior to delivery and acceptance;

 

	
5)  

	
a Protocol of Final Documentation together with agreed resolution of punch list items from construction and commissioning;

 

	
6)  

	
a Protocol of Commissioning and Sea Trials documents made pursuant to agreed acceptance criteria;

 

	
7)  

	
Drawings and Plans pertaining to the Vessel as stipulated in the Specifications; and

 

	
8)  

	
a Commercial Invoice for any unpaid amount of the Contract Price.

 

	
21.3  

	
Owners and Builder shall agree to a protocol of commissioning for BFE, with a punch list of items that may be required for Delivery with respect to such equipment.  Acceptance by Owners following commissioning of such equipment shall preclude Owners from refusing Delivery of the Vessel on the basis of any alleged deficiency in such commissioned equipment.

 

	
21.4  

	
Not used.

 

	
21.5  

	
Owners and Builder shall agree to a protocol of tests and sea trials, with a punch list of items that may be required for Delivery respecting items tested in 

 

  

23

  

 

	
  

	
the tests and sea trials. Acceptance by Owners of the Vessel shall preclude Owners from refusing Delivery of the Vessel on the basis of any alleged deficiency in any parts of the Vessel which were tested during the trial runs, provided all other procedural requirements for Delivery have been met.

 

	
21.6  

	
Owners and Builder may agree to a punch list of items that Builder shall be required to resolve or perform, notwithstanding Delivery and Acceptance of the Vessel.

 

	
21.7  

	
Any fuel oil, lubricating oil, grease, fresh water or other consumable stores furnished by Builder for the trial run, remaining on board the Vessel at the time of Delivery, shall be purchased by Owners from Builder at Builder’s original purchase price thereof.

 

 

	
Article 22

	
Contract Price and terms of payment

 

	
22.1  

	
The Contract Price shall be specified in Section 3 - Schedule of Prices.  Builder warrants that it has fully considered all of its obligations hereunder with respect to the Work and the Programme in establishing the Contract Price.

 

	
22.2  

	
Upon execution of this Contract, Owner shall pay 20% of the Contract Price as indicated in the payment schedule in Section 3 – Schedule of Prices.  On or before Delivery, Owner shall pay Builder that portion of Contract Price indicated in the payment schedule contained within Section 3 - Schedule of Prices with respect to Delivery.  In respect of Variation Orders, each invoice shall describe the Work performed completed in sufficient detail, with accompanying documentation substantiating the Work performed for which such invoice is issued.

 

	
22.3  

	
Owners shall pay Builder’s invoice with respect to a Variation Order within thirty (30) Days of receipt from Builder of such invoice. Builder shall not be entitled to receive interim payments unless stated on a Variation Order. Payment by Owners of an invoice shall not prejudice Owners right to dispute the amounts paid or to make a claim under the Guarantee with respect to defects in the Work or the Vessel. In the event Owners dispute any amount of an invoice, Owners shall pay any amounts of such invoice that are not in dispute.

 

	
22.4  

	
In the event there is any dispute between the parties under this Contract for variations under Article 16 hereof, the Owner shall pay to Builder all undisputed amounts due to the Builder.  The Parties will negotiate in good faith to resolve any such dispute. If the parties are unable to resolve the dispute within thirty (30) days before the Delivery of the Vessel, Owner shall, prior to taking Delivery of the Vessel, provide a letter of credit or similar security acceptable to the Builder in the amount of the disputed portion of the Contract Price exceeding US$2,500,000 until the resolution of such dispute in accordance with Clause 44 hereof, the proceeds of which will be available to Builder upon a final unappealable award or judgment, or on the final resolution of the dispute. .

 

	
22.5  

	
Payment shall be effected by wire transfer on a Banking Day to the bank and in the currency specified in Section 3 - Schedule of Prices.

 

Builder shall designate in writing an account to which all payments under this Contract due to Builder shall be paid. Owners’ sole duty with respect to payments shall be to transfer amounts due under the Contract to such account, irrespective of whether the amounts are due to Builder or to any party to which Builder has assigned the Contract or has granted a security interest in the Contract. This provision shall be binding on any assignee of Builder, whether by an assignment, novation or collateral assignment.

 

  

24

  

 

In the event of late payment of undisputed amount caused by Owners, Builder shall be entitled to charge interest on the unpaid amount from the due date at a rate of 6% per annum until paid.

 

	
22.6  

	
Any amounts payable herein shall be paid without set off, deductions or counterclaims except where otherwise provided in this Contract.

 

	
22.7  

	
Subject to Article 22.8, In the event Owner fails to pay undisputed sums in the aggregate of USD 2,500,000 or more due to Builder under or in connection with this Contract by due date, Builder shall have the right, upon giving written notice to Owner to cease work on the Vessel and following a period of suspension of thirty (30) days from the date of the notice, be entitled to terminate this Contract. Without prejudice to all its rights and remedies available at law or in equity, Builder shall be entitled to claim as Permissible Delay any period of time during which the construction or completion of the Vessel has been delayed in consequence of Owner's default, or Builder’s cessation of work, as aforesaid, and in any event all costs incurred during such time of cessation of work shall be paid by Owner to Builder whether or not this Contract is terminated.

 

	
22.8  

	
If Owner notifies Builder that they require extension of time to pay any Milestone under the Contract as a result of:

 

	
i.  

	
global shortage of liquidity resulting in financing difficulties for Owner,  and

 

	
ii.  

	
as a result Owner requires time to procure or source financing for the payment of the Milestone that is then due,

 

Then Owners and Builder shall have thirty (30) days from the date of the notice from the Owner within which to reach an agreement on revised payment schedule for the Milestones. If the Parties are unable to reach an agreement on the revised payment schedule for the Milestones after good faith efforts, Builder may at its sole discretion extend the time for payment of the affected Milestone up to a period of no more than 30 days (save that the Delivery Date as set out by Owner in a Disputed Variation Order shall not apply to the determination of the scheduled Delivery Date under this Article 22.8).  The period for the Parties to reach an agreement, and extension granted by Builder under this provision shall be a Permissible Delay.  During the period of extension, Builder at its discretion may opt to cease work on the Vessel and interest on the unpaid amount as set out in Article 22.5 above shall continue to accrue and be payable up until such time that Milestone is paid. In the event that Milestone is not paid within the period for the Parties to reach an agreement and any extension granted by Builder, Builder shall be entitled to terminate this Contract in accordance with Article 34.1.

 

 

	
Article 23

	
Guarantee

 

	
23.1  

	
Builder agrees to build the Vessel in a good and workmanlike manner, in accordance with that degree of skill, care and diligence in accordance with internationally acceptable standards, free from defects in detailed design, material and workmanship ("Defects"), and shall exclude defects in the basic design, OFE or matters under Articles 7A.3 and 7A.4.  This Guarantee shall extend to BFE and to Builder’s installation of the OFE and any paint or coatings applied to the Vessel by Builder.  This Guarantee shall remain in force through the Guarantee Period. Any ONE guarantees under the ONE contracts shall be assigned by Builder to Owner upon Owner’s written request to Builder.

 

  

25

  

 

	
23.2  

	
In the event of the occurrence of any Defects covered by the above warranties, Builder shall undertake to repair or replace the Defects. Any parts replaced shall on their removal become the property of and shall be at the risk of the Builder whilst the replacement parts fitted to the Vessel shall upon fitting become the property of the Owner.

 

	
23.3  

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

 

	
23.4  

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

 

	
23.5  

	
Should the Owner not approve (in a case where it is entitled to withhold approval under Clause 23.4) the yard nominated by the Builder the Owner may elect to have the work referred to above carried out elsewhere than at the Shipyard, the Owner shall nominate a yard acceptable to the Builder, such acceptance not to be unreasonably withheld. In such case the Builder shall pay to the Owner for repairs and/or replacements such sum as would equate to the costs of effecting such repairs at the Builder’s yard based on Builder’s tariff rate for time and material. The Builder may, at its own expense, have its representative in attendance during execution of the work.  The Owner shall ensure that any parts replaced under this sub-clause are returned to the Builder (if required by the Builder) at the Builder's expenses, and in such case those parts returned shall on their replacement become the property of and shall be at the risk of the Builder.

 

	
23.6  

	
Any remedial measures undertaken and the associated Work shall be subject to a one (1) year Guarantee from the date such measures are completed; provided the Guarantee Period will not extend beyond two (2) years after the Delivery Date.  The Builder will use reasonable endeavours to procure its Subcontractors to provide guarantees for the Guarantee Period under this Contract.

 

	
23.7  

	
Builder hereby assigns to Owners, to the extent permitted under Contract or applicable law, all guarantees and warranties of each Subcontractor with respect to goods and services provided to the Work or the Vessel by such Subcontractor which extend beyond the Guarantee Period.

 

  

26

  

 

	
23.8  

	
The Builder shall not be obligated to repair, or to be liable for, damages to the Vessel, or to any part of the equipment thereof, due to ordinary wear and tear or caused by defects, nor shall there be any Builder's liability hereunder for defects in the Vessel, or any part of the equipment thereof, caused by fire or accidents at sea or elsewhere, or mismanagement, accidents, negligence, or willful neglect, on the part of Owners, their employees or agents, including the Vessel’s officers, crew and passengers, or any persons on or doing work on the Vessel other than Builder, its employees, agents or Subcontractors. Likewise, Builder shall not be liable for defects in the Vessel, or the equipment or any part thereof, due to repairs or replacement which were made by those other than Builder and/or its Subcontractors.

 

	
23.9  

	
Builder would not be liable for the following in remedying defects:

 

	
(i)  

	
Costs of heavy lift operations offshore or organizing the same;

	
(ii)  

	
The costs of routine maintenance of the Vessel;

	
(iii)  

	
The costs of repairing damage to the Vessel or of correcting any such defects which result from or are due to actual operating conditions being different from those specified in this Contract or any Variation Orders; and

	
(iv)  

	
Any OFE or materials or equipment supplied by Owners or for any damage caused by any defect in such materials or equipment not attributable to the Builder.

 

In addition to the above, if the remedial work requires the Builder to complete work offshore and/or such work requires work below the waterline and/or is required to be completed in dry dock, the Owner shall make all necessary arrangements at their own costs to procure such facilities for the remedial work to be performed.   In no event shall the Builder be responsible for any delay or time taken or lost, or off-hire or related costs, for events arising out of this Article 23.

 

	
23.10  

	
The warranty provided in this Article 23 and the obligations and the liabilities of Builder hereunder are exclusive and Owners hereby waive all other remedies, warranties, guarantees or liabilities, express or implied, arising by law or otherwise (including without limitation any obligations of Builder with respect to fitness, merchantability and consequential damages) or whether or not occasioned by Builder's negligence or default. This Guarantee shall not be extended, altered or varied except by a written instrument signed by the duly authorized representatives of Builder and Owners.

 

 

	
Article 24

	
Indemnities

 

	
24.1  

	
Builder shall indemnify, defend and hold harmless Owners Group in respect of any loss or damage to the property, equipment or facilities of Builder Group, whether owned, leased, rented or hired and howsoever caused (subject always to Article 24.7).

 

	
24.2  

	
Builder shall indemnify, defend and hold harmless Owners Group from and against any and all claims, damages and expenses of every kind and nature resulting from personal injury, including fatal injury and disease, to the Builder Group, howsoever caused (subject always to Article 24.7).

 

	
24.3  

	
Owners shall indemnify, defend and hold harmless Builder Group in respect of any loss of or damage to the property (other than the Vessel and ONE while in the possession of Builder and caused by Builder), equipment or facilities of 

 

  

27

  

 

	
  

	
Owners Group, whether owned, leased, rented or hired howsoever caused (subject always to Article 24.7).

 

	
24.4  

	
Owner shall indemnify, defend and hold harmless Builders Group from and against any and all claims, damages and expenses of every kind and nature resulting from personal injury, including fatal injury and disease, to the Owner Group, howsoever caused, or brought by Owner’s underwriters, whether by subrogation or otherwise (subject always to Article 24.7).

 

	
24.5  

	
Prior to Delivery of the Vessel, Builder shall defend, indemnify and hold the Owner Group harmless against any and all claims, damages and expenses of every kind and nature to the Owner Group resulting from loss of or damage to the property, equipment or facilities of Third Parties or personal injury, including fatal injury and disease of Third Parties arising out of the performance of the Contract for which the Builder Group is responsible.

 

	
24.6  

	
Owner shall defend, indemnify and hold the Builder Group harmless against any and all claims, damages and expenses of every kind and nature to the Builder Group resulting from loss of or damage to the property, equipment or facilities of Third Parties or personal injury, including fatal injury and disease of Third Parties arising out of the performance of the Contract for which the Owner Group is responsible.

 

	
24.7  

	
After Delivery of the Vessel, the Owner shall further defend, indemnify and hold the Builder Group harmless against any and all claims, damages and expenses of every kind and nature to the Builder Group resulting from the ONE Contracts (including any indemnification obligations arising under the ONE Contracts), loss of or damage to the property, equipment or facilities of Third Parties or personal injury, including fatal injury and disease of Third Parties arising out of the use, operation or maintenance of the Vessel and/or the equipment therein.

 

	
24.8  

	
ALL INDEMNITIES UNDER THIS ARTICLE 24 SHALL INCLUDE INDEMNITY FOR CLAIMS, DAMAGES AND LOSSES CAUSED BY THE NEGLIGENCE OF THE INDEMNIFIED PARTY OR ANY MEMBER OF ITS GROUP, BUT SHALL NOT INCLUDE CLAIMS, DAMAGES AND LOSSES CAUSED BY THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF THE INDEMNIFIED PARTY OR ANY MEMBER OF ITS GROUP.

 

 

	
Article 25

	
Insurance by Builder

 

	
25.1  

	
Builder shall, at its own costs and expense, maintain for the duration of the Contract the following insurances in the name of Builder Group. The insurances maintained by Builder shall at all times be primary to any insurance maintained by Owners for the duration of the Work.

 

	
a)  

	
Employer's liability insurance/workmen's compensation with unlimited and/or as may be required by statute or similar regulation in the country or countries of the Shipyard covering personal injury to, or death of, employees of Builder engaged in the performance of the Contract, and shall ensure Subcontractors maintain such insurance in respect of their employees.

 

	
b)  

	
Public liability insurance with a indemnity of USD 5,000,000 (five million US dollars) for any one incident or series of incidents arising from each and every event, unlimited in the aggregate, covering all operations of Builder.

 

  

28

  

 

	
c)  

	
Construction All-risk insurance covering the Works for an amount equivalent to the Contract Price and OFE, provided that Owners shall reimburse Builder for the extra premiums incurred by Builder to insure the OFE.

 

	
25.2  

	
Builder shall furnish to Owners certificates and renewal certificates of the insurance required by this Article evidencing the type and scope of each insurance coverage and an endorsement from the insurers that no insurance shall be cancelled during the term of the Contract without thirty (30) Days prior written notice to Owners.  Builder unless Owners are the sole cause of the loss, or the loss arises solely from defects in OFE shall be responsible for the payment of any deductibles under its insurances.

 

	
25.3

	
Should the Vessel or any items insured pursuant to the provisions of Article 25.1(c) sustain loss or damage prior to Delivery and should such loss or damage not make the Vessel a total loss, actual, constructive, arranged or compromised, the Builder shall use all proceeds of insurance received for the damage, with all due despatch, to make good such damage in accordance with the provisions of this Contract and the Specifications.

 

	
25.4  

	
Should the Vessel sustain loss or damage prior to Delivery hereunder such that it is either conceded by the insurers liable therefore, or determined by a court of competent jurisdiction, that the Vessel has become a total loss, actual, constructive, arranged or compromised, then the Builder and the Owner shall within twenty-one (21) Working Days thereof decide whether to continue with the construction of the Vessel or to cancel the Contract.  In the event that the parties are unable to agree within such time scale terms on which to continue with construction of the Vessel, the same shall be deemed cancelled.  If the Contract is cancelled the Builder shall:-

 

	
a.  

	
refund promptly to the Owner in full the aggregate amount of Instalment payment of the Contract Price already paid by the Owner; and

 

	
b.  

	
return to the Owner all OFE which have not been lost.

 

	
25.5  

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

 

 

	
Article 26

	
Taxation

 

	
26.1  

	
Except as otherwise specifically provided for in Section 3 - Schedule of Prices, Builder shall be fully and exclusively liable for the payment of all tax assessments, levies, social burdens, duties, allegations, impositions, and contributions including, but not limited to, unemployment insurances, national insurances, social security benefits, and corporate and income taxes as may be imposed by any local or national government or agency in the country of the Worksite and arising out of or in connection with the Work, the Vessel or the Contract except for taxes on the income of the Owners or taxes arising on the Vessel after acceptance by Owners.

 

	
26.2  

	
Builder agrees to indemnify, defend and hold harmless Owners Group from all claims, suits, costs, expenses, liabilities, fines, judgments and demands as may be incurred, resulting from or connected with, any tax assessment, levy, social burden, duty, allegation or imposition on the Work, Builder, or any of its Subcontractors of any tier, agents or employees, howsoever arising in the 

 

  

29

  

 

	
26.2  

	
country or countries of the Worksite, for which Builder is responsible under Article 26.1.

 

	
26.3  

	
Owner agrees to indemnify, defend and hold harmless Builder Group from all claims, suits, costs, expenses, liabilities, fines, judgments and demands as may be incurred, resulting from or connected with any tax assessment, levy, social burden, duty, allegation or imposition on the taxes on the income of the Owners or taxes arising on the Vessel after acceptance by Owners.

 

 

	
Article 27

	
Audit rights of Owners

 

	
27.1  

	
Builder shall allow Owners or their appointed representatives reasonable access to the Shipyard and documentation relating to the Work for audit purposes provided that the Owner shall not be entitled to inspect or audit any document which relates to the profits, unit rates or mark up of the Builder, or which is confidential or privileged. Where activities are performed in connection with government guaranteed loans or similar programs, audit access shall also be available to the party providing the loans or guarantees. No charges shall be made by Builder for audit access.

 

	
27.2  

	
Builder shall maintain all records respecting the Work for a period of three (3) years after the date of actual Delivery or the date of termination, whichever is the earlier.

 

 

	
Article 28

	
Patents and Proprietary Information

 

	
28.1  

	
The intellectual property rights in the drawings, designs, plans, reports, specifications, calculations, detailed design documents and/or other documents produced by Builder or procured by Builder (other than from Owner Group) shall at all times belong to and vest in the Builder provided that Builder shall provide a royalty-free irrevocable license to Owner for the use thereof, transferable to a transferee of the Vessel. The information, designs, plans, calculations, specifications and reports provided by Owner to Builder shall at all times belong to and vest in the Owner.

 

	
28.2  

	
Each Party shall indemnify and hold harmless the other Party from and against all claims, losses, damages, costs and liabilities of every kind and nature associated with, related to, or arising out of, or in connection with any actual or alleged infringement of any patent or proprietary or protected right used in the performance of the Contract, including without limitation the use of drawings respecting the scope of Work, if such infringement is caused by the indemnifying Party.

 

	
28.3  

	
Each Party shall notify the other Party of any infringement of any patent or proprietary or protected right promptly after the Party becomes aware of such infringement.

 

	
28.4  

	
In the event of Owner’s termination of the Contract under Article 33.1 and election to take a refund under Article 33.3 or the Builder’s termination of the Contract under Article 34.2, Owner agrees to provide an irrevocable royalty-free license to Builder for the use of Owner’s intellectual property  for the construction, sale and use of the Vessel and OFE (to the extent of the transfer of OFE to Builder), transferable to a transferee of the Vessel.

 

 

	
Article 29

	
Liens

 

  

30

  

 

	
29.1  

	
Builder shall indemnify and hold harmless Owners Group from and against all claims, losses, damages, costs and liabilities of every kind and nature associated with, or arising from, or in connection with liens, charges, attachments, seizures, injunctions or other encumbrances placed on the property of Owners or Owners Group by Builder or any Subcontractor or creditor of Builder.

 

	
29.2  

	
In the event of any lien, charge, attachments, seizures, injunctions or other encumbrances ascribed against the property of Owners or Owners Group as described for in Article 29.1, Owners may, at their absolute discretion, cause the removal of the lien, charge, attachments, seizures, injunction or other encumbrance and Owners may at their absolute discretion set-off the undisputed amounts owed by the Builder to the Subcontractor against payments due to Builder.

 

 

	
Article 30

	
Ownership

 

	
30.1

	
Title to the Vessel  (incuding the ONE and BFE) shall remain with the Builder until Delivery.  Title to OFE and other materials and the equipment supplied by Owners, shall at all times remain vested in Owners.

 

	
30.2

	
Builder shall provide upon Delivery a Bill of Sale and Builders Certificate, in form and substance satisfactory to Owners, transferring title and ownership of the Vessel to Owners, free of all liens and encumbrances.

 

 

	
Article 31

	
Commencement, completion, liquidated damages and incentives

 

	
31.1  

	
Builder shall commence the Work upon execution by both Parties of Contract and shall proceed with the same in accordance with the Programme.

 

	
31.2  

	
The Vessel shall be delivered to Owners on the Delivery Date.

 

	
31.3  

	
[Not Used].

 

	
31.4  

	
If Builder fails to deliver the Vessel by the Delivery Date or any extension thereof granted by Owners, Builder shall pay liquidated damages to Owners for such default as follows:

 

	
a)  

	
For the first fifteen (15) Days of delay, Builder shall not be required to pay liquidated damages; and

 

	
b)  

	
For a delay of 16 to 315 Days, a rate of US$50,000 per day will apply;

 

	
  

	
Delay for the purposes of this Article shall mean the period which elapses between the Delivery Date set forth in the Programme (as extended by a Variation Order or Force Majeure) and the actual date of the Delivery of the Vessel.

 

	
  

	
This Article 31.4 will not apply to any delay caused by the commissioning and testing of OFE. For delays arising from ONE, Builder shall only be liable to pay liquidated damages to the extent recoverable under the ONE contracts and not the amount set out in this Article.

 

	
31.5  

	
Builder shall not be liable for liquidated damages for periods covered by any settlement of Disputed Variation Orders, pursuant to which Owners have granted an extension of time for delivery.

 

	
  

	
Any sums in respect of such period which may have been recovered pursuant to Article 31.4 shall be reimbursable to Builder.

 

  

31

  

 

	
31.6  

	
The total liquidated damages recoverable from Builder shall not exceed Fifteen Million United States Dollars (US $15,000,000).

 

	
31.7  

	
Builder's payment of liquidated damages shall be Owner’s sole financial remedy in respect of Builder’s failure to deliver the Vessel on the Delivery Date. The Owner shall be entitled to set off from amounts payable to the Builder the liquidated damages so accrued under this Article.

 

	
31.8  

	
Builder agrees that the period(s) applicable to liquidated damages shall not in any way be considered or construed as additional period(s) available to Builder for the performance of the Work.  Owners may, at any time after maximum liquidated damages are reached, elect to terminate the Contract pursuant to Article 33.

 

 

	
Article 32

	
[Not Used]

 

 

	
Article 33

	
Termination for Builder's default

 

	
33.1  

	
Owners shall have the right, without prejudice to any of their other rights or remedies under, or in, or arising from, or in connection with the Contract or at law, by giving Notice to Builder, to terminate the Contract if Builder:

 

	
a)  

	
shall become insolvent, in receivership, liquidation, bankruptcy, in administration, in composition, in arrangement with its creditors, its assets are attached or seized, voluntary liquidation, voluntary winding-up, or any equivalent act or thing; or

 

	
b)  

	
is in material default of the Contract, and Owner has given notice to the Builder to remedy such Default and (i) fails to provide a plan to the Owner for the remedy of such default within fourteen (14) days from the Owner’s notice, or (ii) after providing a plan to the Owner, fails to remedy such default within thirty (30) days (or such other period as may be agreed by the Parties) from the receipt of the plan by the Owner; or

 

	
c)  

	
If the maximum liquidated damages has accrued under Article 31.

 

	
33.2  

	
In the event of termination under Article 33.1 above, Builder and Owners shall have the following rights, obligations and duties:

 

	
33.3  

	
If the Owner serves notice to terminate this Contract under Article 33.1 above, it shall specify whether it elects for a refund under this Article 33.3 or to purchase the Vessel in its incomplete state. The Builder shall, within thirty 30 days of receipt of such notice, repay to the Owner the amount of all monies paid by the Owner on account of the Contract Price together with interest thereon at the rate of 3.5% (three and one-half per cent) above LIBOR or six percent (6%), whichever is lower, from the date when such monies were paid by the Owner to the Builder up to the date of the repayment thereof. The liabilities of Builder under this Article 33.3 shall not be limited by the provisions of Article 38.2 hereof. All title to the Vessel and Works (including but not limited to BFE and ONE) shall automatically transfer on the date of payment by Builder and Owner shall take whatever steps necessary to legally perfect such rights in Builder's favour.  Owner undertakes to execute any and all formalities and/or documents to effect the same. The Builder shall also redeliver to the Owner at the Shipyard all of the OFE delivered to the Builder that has not been installed on the Vessel at the time of the Owner’s termination.  Where the OFE has been installed on the Vessel the Builder shall be entitled either to redeliver the same to the Owner or to retain it but if it 

 

  

32

  

 

	
  

	
elects to retain the same shall be obliged to pay to the Owner the cost incurred by the Owner in purchasing such OFE. In such event, Owner shall take whatever steps to legally perfect such rights in OFE in Builder’s favour.  Owner undertakes to execute any and all formalities and/or documents to effect the same.

 

	
33.4  

	
Alternatively, in lieu of a refund under Article 33.3, at the Owner’s sole discretion by notice in writing to the Builder, the Owner may elect to purchase the Vessel in its incomplete condition as at the date of termination and to, remove the Vessel and complete the construction of the Vessel. In the event Owner exercises its option to purchase the incomplete Vessel it shall forfeit its right to a refund under Article 33.3, and Builder shall:

 

	
i.  

	
provide every assistance to Owners to recover the Vessel, including any drawings, documents, engineering, calculations, electronic files, specifications and other items relating to the Vessel and the Work, and to effect the completion of the Work including, on request of Owners, the assignment of Subcontracts and shall immediately provide Owners with available drawings, documents, engineering, calculations, electronic files, computer software, tools, instruments, labour, materials, equipment and facilities;

 

	
ii.  

	
at its own expense, shall also allow, and provide every assistance with the immediate release of all other property of Owners, as Owners may direct; and

 

	
iii.  

	
execute and deliver to Owners a bill of sale respecting the Vessel or such of the Work has been completed in favour of Owners and in form and substance satisfactory to Owners

 

	
33.5  

	
In the event the Owners elect to remove the Vessel under Article 33.4 and complete the Vessel elsewhere, Owners shall deduct the costs and expenses of completing the Works from the Contract Price, less previous payments made to Builder and, in the event of a surplus, effect payment to Builder of the surplus or, in the event of a deficit, Builder shall reimburse Owners the deficit.  The liability of the Builder under this Article 33.5 is subject to the limitations in Articles 38.1 and 38.2;

 

	
33.6  

	
The remedies set out in this Article 33 shall be the sole remedies of Owner and the sole liability of Builder in the event of termination by Owner of this Contract.

 

 

	
Article 34

	
Remedies upon Owners’ default

 

	
34.1

	
Builder shall have the right, without prejudice to any of its other rights or remedies under, or in, or arising from, or in connection with the Contract or at law, by giving Notice to Owners to terminate the Contract if Owners:

 

	
a)  

	
shall become insolvent or be placed in receivership, liquidation, bankruptcy, administration, or other similar arrangement with its creditors, or substantially all of its assets are attached or seized, or Owners file for voluntary liquidation, voluntary winding-up, or any reasonable equivalent act or thing; or

 

  

33

  

 

	
b)  

	
fail to pay any amount or instalment due to Builder on its due date as provided in this Contract and such failure continues for thirty (30) Days following written Notice to Owners from Builder unless extended pursuant to Article 22, or unless Owners are disputing such amounts in good faith and have either commenced proceedings under Article 44 or have placed adequate security with Builder in the amount in dispute; or

 

	
c)  

	
fail to take delivery of the Vessel within thirty (30) Days following the date that the Vessel is duly tendered for Delivery by Builder without outstanding Work to be performed by Builder.

 

	
34.2  

	
In the event of termination of this Contract under Article 34.1, all title to the Vessel and Works (including but not limited to OFE, BFE and ONE) shall automatically transfer on the date of termination to Builder and Owner shall take whatever steps necessary to legally perfect such rights in Builder's favour. Owner undertakes to execute any and all formalities and/or documents to effect the same. Builder shall have full right and power at its sole option either to complete or not to complete the Work as it deems fit. Builder shall have the right to sell the Vessel, or sell the Vessel in its incomplete state, or sell the Vessel materials (if Builder is unable to sell the Vessel in an incomplete state) (whether immediately or such later date as it deems fit) at a public or private sale, with fourteen (14) Days prior notice to Owners, on such terms and conditions as are reasonable under the circumstances. Builder shall not be answerable for any loss or damage, provided that Builder shall use its best efforts to sell the Vessel at a private sale for six (6) months through a vessel broker of recognized international standing. Owner undertakes to execute any and all formalities and/or documents to effect the same. If Builder is unable to sell the incomplete the Vessel or Vessel materials, it may utilise the Vessel materials as it deems fit for other projects.  The money acquired through sale of the Vessel, or the utilisation of the Vessel materials, shall first be used to compensate the sale expenses, brokerage fees, maintenance of the Vessel, insurance, reasonable legal costs and expenses, and pay the amount owed by Owners to Builder and for work done and interests accrued under Article 22.5. The surplus, if any, shall be returned to Owners within 30 days after the sale is completed provided such amount so returned shall not exceed the portion of Contract Price received by the Builder from the Owner.  If the money acquired through sale of the Vessel, or the utilisation of the Vessel materials, is insufficient to pay the amount owed by the Owners to the Builder after deduction of the aforesaid expenses, the shortfall, shall be paid by the Owner to the Builder within 30 days after the sale is completed.

 

 

	
Article 35

	
Conflict of interest

 

	
35.1  

	
THE BUILDER GROUP SHALL NOT PAY OR PROMISE TO PAY ANY FEE, COMMISSION, REBATE OR OTHER THING OF VALUE TO THE PERSONNEL, REPRESENTATIVES AND AGENTS OF OWNERS GROUP.

 

 

	
Article 36

	
Independent Contractor

 

	
36.1  

	
Builder shall act as an independent Contractor in the performance and its other obligations of the Contract.

 

	
  

	
Builder shall be fully responsible for, and shall have exclusive direction and control of its employees, Subcontractors of any level, agents and any other entities engaged by Builder in connection with the Contract. In no event shall the relationship between the Parties be construed as that of principal and agent 

 

  

34

  

 

	
  

	
or master and servant.  No personnel of Builder or any Subcontractors, agents and any other entities engaged by Builder shall be, or purport to be, employees, representatives, agents or servants of Owners.

 

	
36.2  

	
If, in the opinion of Builder, any requirement, or instruction, or action of Owners in any way violates or otherwise restricts the ability of Builder to perform as an independent Contractor, Builder shall immediately and in any event prior to the taking of action arising from said requirement, instruction, or action of Owners, give Notice thereof to Owners.

 

 

	
Article 37

	
Confidentiality

 

	
37.1  

	
Builder and Owners shall continue to be subject to the terms of any confidentiality agreement executed in connection with any bid by Builder for the Work or request for tender by Owners for the Work.

 

	
  

	
Builder and Owners shall at no time, without the prior written approval of the other Party, disclose to any Third Party the details of the Contract or any information concerning the Work or the Vessel or make any promotional display, announcement or advertisement regarding same, except as may be required by law or the regulations of any stock exchange on which stock of a Party or any of its affiliates is traded, or as may be necessary to perform this Contract.

 

	
  

	
Builder shall cause its employees, Subcontractors and agents to comply with this Article.

 

 

	
Article 38

	
Direct and Consequential damages and exclusion of liability

 

	
38.1

	
Save in respect of Article 24 and liquidated damages under Article 31.4, notwithstanding anything to the contrary set forth herein in this Contract, neither Builder nor the Owner shall be liable to the other by way of indemnity or by reason of any breach of this Contract or of statutory duty or by reason of tort  or otherwise, for any loss of profit, loss of use, loss of production, loss of contracts, loss or reputation or goodwill or for any indirect or consequential damage whatsoever that may be suffered by the other and howsoever the same may have been caused, including without limitation caused by negligence.

 

	
38.2  

	
Notwithstanding any provision herein to the contrary or inconsistent herewith (save for Articles 24.1, 24.2 and 33.3), it is expressly agreed that the Builder's liability under this Contract or arising out of or in connection with its performance or non-performance, irrespective of whether such liability arises under this Contract or in tort or under statute or is due to negligence, or pursuant to any other cause, shall not in the aggregate exceed twelve percent (12%) of the amount of the Contract Price.

 

	
38.3  

	
Builder shall have no responsibility or liability for any defects in the Work arising after the end of the Guarantee Period and any extensions thereof.

 

	
38.4  

	
Builder shall notify Owners of all the claims and causes of action that it intends, or is already, pursuing against Owners in respect of the Work performed, if any, before the actual date of Delivery.

 

	
38.5  

	
Owners shall notify Builder of all claims and causes of action, if any, that they intend to pursue, or, are already pursuing against Builder in respect of the Work performed, with the exception of Guarantee claims, which shall be made within the Guarantee Period, before the actual date of Delivery.

 

  

35

  

 

	
38.6  

	
Not used

 

 

	
Article 39

	
Amendments and Contract changes

 

	
39.1  

	
The Contract shall only be changed or modified by a duly authorised Variation Order signed by Owners or an Amendment which shall be clearly marked as such and signed by both Parties in duplicate original. Nothing contained in any correspondence, discussions or minutes of meeting shall have any effect on the Contract unless and until subsequently incorporated in a Variation Order or Amendment.

 

	
39.2  

	
Each Party's representative, as expressly authorised by each Party in writing, shall be considered as authorised to sign and thereby commit the Party to a Variation or Amendment.

 

	
39.3  

	
Builder agrees that it will execute any Amendment that is reasonably required by any governmental agency in connection with any guaranteed financing of the Work or any security interests in the Contract granted by Owners provided such Amendment shall not affect the rights or obligations of the Builder under the Contract.

 

 

	
Article 40

	
Waiver

 

	
40.1  

	
No failure or relaxation on the part of Owners at any time or from time to time to require or enforce the strict adherence and performance of the Contract shall constitute a waiver of such requirements and provisions and obligations of the Contract whether specific or general or shall prejudice the rights and remedies of Owners to require such enforcement prior to the end of the Guarantee.

 

 

	
Article 41

	
Assignment

 

	
41.1  

	
Builder shall not assign, in part or in whole, the Contract, nor transfer the rights to receive payment to a Third Party without the prior approval of Owners; provided that such consent shall not be unreasonably withheld, including without limitation in respect of any such assignment under a national guarantee program.

 

	
41.2  

	
Builder will use reasonable efforts to procure that Subcontracts shall contain a provision to allow assignment to Owners in the event of termination of the Contract prior to Delivery. Such assignment shall be subject to Owners’ approval.

 

	
41.3  

	
Owners shall not assign, in part or in whole, the Contract nor transfer the rights to receive payment to a Third Party without the prior approval of Builder; provided that such consent shall not be unreasonably withheld, and provided further that Owners may collaterally assign this Contract as security for its senior indebtedness.  Owners may assign the Contract to its wholly owned subsidiary provided that the Owner provides the Builder with a performance guarantee described in Article 43.

 

 

	
Article 42

	
Notices

 

	
42.1  

	
Contractual Notices shall be in writing and addressed to the addresses stated Section 1 - Summary of Agreement, by registered letter, telex or facsimile and shall be deemed served:

 

  

36

  

 

	
a)  

	
if by telex or facsimile on receipt if during normal business hours or the next business opportunity; and

 

	
b)  

	
fourteen Days after the date of registered posting (unless a known disruption exists).

 

	
  

	
Address for the receipt of Notices by Owners:

 

	
  

	
Helix Q7000 Vessel Holdings S.à r.l.

	
  

	
3505 West Sam Houston Parkway North, Suite 400

	
  

	
Houston, TX 77043

	
  

	
Attention: Hin Chiu

	
  

	
Phone: (281) 618-6500

	
  

	
Fax: (281) 618-0505

	
  

	
e-mail: Hchiu@helixesg.com

 

	
  

	
With a copy to: Ajohnson@helixesg.com

 

 

	
  

	
Address for the receipt of Notices by Builder:

 

	
  

	
Jurong Shipyard Pte Ltd

	
  

	
29 Tanjong Kling Road

	
  

	
Singapore 628054

	
  

	
Attn.: William Gu Wei Guang / Wong Weng Sun

	
  

	
Phone: (65) 6262 7007 / 6262 7088

	
  

	
Fax: (65) 6261 7243

	
  

	
e-mail: william.gu@sembmarine.com  / wengsun.wong@sembmarine.com

 

 

	
Article 43

	
Performance bond

 

	
43.1  

	
On the Effective Date, but in any case before payment of the first Instalment payment, (i) Builder shall provide a performance guarantee, from its parent company in the format shown in Attachment A, and (ii) in the event Owner is a subsidiary of Helix Energy Solutions Group, Inc., the Owner shall provide a performance guarantee from Helix Energy Solutions Group, Inc. in the format shown in Attachment B.

 

	
43.2  

	
The performance guarantee shall remain valid until the end of the Guarantee Period.

 

 

	
Article 44

	
Governing law and disputes

 

	
44.1  

	
The Contract shall be governed by and construed in accordance with English laws.

 

	
44.2  

	
In the event of a dispute concerning conformity of the Vessel or its appurtenances with the rules and regulations of Authorities, the matter shall be referred to the subject Authorities and the decision of said Authorities’ head officer shall be final and binding on the Parties.  Each Party shall bear its own costs involved in the dispute, including the costs, fees and expenses of witnesses, experts and counsel.

 

	
  

	
The Party whose opinion or position on the matter is not accepted by the Authorities shall be responsible for the costs, expenses and fees of the Authorities incurred in connection with the matter, provided that each costs fees and expenses shall be equally divided between the Parties if the Authorities 

 

  

37

  

 

	
  

	
reach an accommodation that is not substantially in accord with either Party’s position.

 

	
44.3

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

 

	
44.4  

	
If the claim, dispute or difference remains unresolved seven (7) calendar days following such meeting or in the event of a the failure of the meeting to be held,  the dispute and/or disputes shall be finally settled in accordance with the rules of the Singapore Maritime Arbitration Centre. The arbitral tribunal shall be composed of three arbitrators, selected in accordance with such rules. The place of arbitration shall be London.

 

Either Party may demand arbitration by serving written Notice on the other, specifying the nature of the claim to be arbitrated.

 

	
44.3  

	
The proceedings of all disputes shall be held exclusively in the English language.  Should documents be in other than English, the Party producing the documents shall procure, at its own expense, a certified translation thereof.  Either Party shall be entitled to apply to any court of competent jurisdiction to obtain a judgment based upon awards of the arbitrators.

 

 

	
Article 45

	
Business practices

 

	
45.1  

	
In performance of this Contract and the Work, neither Party shall pay, offer, promise to pay, or authorize the payment directly or indirectly through any other person or firm, of any monies or anything of value to (i) any person or firm employed by or acting for or in behalf of any third party, whether private or governmental, or (ii) any government official or employee or any political party or candidate for political office, for the purpose of inducing or rewarding any action by such person favorable to either Party in connection with the Work (any such act being a “Prohibited Payment”). A Prohibited Payment does not include the payment of reasonable and bona fide expenditures, such as travel and lodging expenses, which are directly related to the promotion, demonstration or explanation of products or services, or the execution or performance of a contract with a customer or government or agency thereof; provided such payments are permissible under applicable law and business guidelines.

 

 

	
Article 46

	
CONTRACTS (RIGHTS OF THIRD PARTIES) ACT

 

	
46.1

	
Parties intend that no provision of this Contract shall, by virtue of the Contracts (Rights of Third Parties) Act 1999 (“the Act”) confer any benefit on, nor be enforceable by any person who is not a party to this Contract.

 

  

38

  

 

ATTACHMENT A

 

PARENT COMPANY GUARANTY

 

In consideration of the performance of services related to the construction by Jurong Shipyard Pte Ltd, a Singapore corporation (“Builder”) of a well intervention semi-submersible under JSPL Hull No. 11-1115 for [●] (“Owner”) and in order to induce such transactions and services, the undersigned Sembcorp Marine Ltd (incorporated in Singapore; with registered address 29 Tanjong Kling Road, Singapore (“Guarantor”), guarantees the prompt payment and performance of all obligations of Builder to Owner under the Agreement dated the ___ of  [   ]  2013 between Builder and Owner (the “Agreement”) upon the following terms and conditions ("the Guaranty").

 

         1.  Guaranty.

 

	
(a)  

	
Guarantor hereby unconditionally and absolutely guarantees the punctual payment of all monies due by the Builder and performance when due of Builder’s obligations arising under the Agreement, as may be amended or modified from time to time, together with any interest thereon (collectively, the “Guaranteed Obligations”).   Guarantor consents to any changes in the terms of the Agreement entered into between Builder and Owner, subject always to the terms of this Guaranty.

 

	
(b)  

	
Additionally, the obligations of the Guarantor hereunder are several from the Builder or any other person, and are primary obligations concerning which the Guarantor is the principal obligor.  There are no conditions precedent to the enforcement of this Guaranty, except as expressly contained herein.  It shall not be necessary for Owner, in order to enforce payment or performance by Guarantor under this Guaranty, to show any proof of Builder’s default, to exhaust its remedies against Builder, any other guarantor, or any other person liable for the payment or performance of the Guaranteed Obligations.

 

	
(c)  

	
This Guaranty shall continue to be effective if at any time any payment or performance of any of the Guaranteed Obligations are annulled, set aside, invalidated, declared to be fraudulent or preferential, rescinded or must otherwise be returned, refunded or repaid by Owner upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of Builder or any other guarantor, or upon or as a result of the appointment of a receiver, intervenor or conservator of, or trustee or similar officer for, Builder or any other guarantor or any substantial part of its property or otherwise, all as though such payment or payments or performance had not been made.

 

	
(d)  

	
In no circumstances whatsoever shall the liability of the Guarantor under this Guaranty exceed the liability of the Builder arising directly from the Agreement and the Guaranty shall be limited accordingly and shall also be limited by the terms of this Guaranty.

 

2.  Waiver.

 

Guarantor hereby waives:

 

	
(a)  

	
Notice of acceptance of this Guaranty, of the creation or existence of any of the Guaranteed Obligations and of any action by Owner in reliance hereon or in connection herewith.

 

	
(b)  

	
Except as expressly set forth herein, presentment, demand for payment, notice of dishonor or nonpayment, protest and notice of protest with respect to the Guaranteed Obligations; and

 

	
(c)  

	
any requirement that suit be brought against, or any other action by Owner be taken against, or any notice of default or other notice be given to, or any demand be made on, Builder or any other person, or that any other action be taken or not taken as a condition to Guarantor’s liability for the Guaranteed Obligations under this Guaranty or as a condition to the enforcement of this Guaranty against Guarantor.

 

  

39

  

 

3.  Legal Costs.  Guarantor agrees to pay on demand any legal fees that may be awarded to the Owner by the arbitration tribunal or any court and incurred by Owner, in enforcing Guarantor’s payment and performance obligations under this Guaranty.

 

4.  Subrogation.  Guarantor shall be subrogated to all rights of Owner against Builder in respect of any amounts paid by the Guarantor pursuant to the Guaranty, provided that Guarantor waives any rights it may acquire by way of subrogation under this Guaranty, by any payment made hereunder or otherwise, until all of the Guaranteed Obligations shall have been irrevocably paid to Owner in full.  If any amount shall be paid to the Guarantor on account of such subrogation rights at any time when all the Guaranteed Obligations shall not have been paid in full, such amount shall be held in trust for the benefit of Owner and shall forthwith be paid to Owner to be applied to the Guaranteed Obligations.

 

5.  Notices.  All demands, notices and other communications provided for hereunder shall (a) be in writing addressed to the party receiving the notice at the address set forth below or at such other address as may be designated by written notice, from time to time, to the other party, and (b) be effective upon delivery, when mailed by mail, registered or certified, postage prepaid, or when personally delivered, or when sent by fax (if confirmed by written notice mailed within 48 hours after the fax notice).  Notices shall be sent to the following addresses and/or fax numbers:

 

If to Builder:

	
  

	
            Attn: William Gu Wei Guang

	
  

	
            Jurong Shipyard Pte Ltd.

                                         29 Tanjong Kling Road

                                         Singapore 628054

 

            Fax: 62627243

 

 

If to Guarantor:

                                         Attn: Wong Weng Sun / Tan Cheng Tat

Sembcorp Marine Ltd

                                         29 Tanjong Kling Road

                                         Singapore 628054

                                         Fax: 6261 0486

 

If to Owner:

                                         Attn: General Counsel

                                         Helix Energy Solutions Group, Inc.

            3505 West. Sam Houston Parkway North,

            Suite 400

                                         Houston, TX 77043

                                         United States of America

                                         Fax: 001 281 618 0505

 

6.  Demand and Payment.  Any demand (“Demand”) by Owner for payment hereunder shall be in writing signed by two of Owner’s directors and delivered to the Guarantor pursuant to Section 5 hereof, and shall (a) reference this Guaranty, (b) specifically identify the Builder, the Guaranteed Obligations to be paid and the amount or nature of such Guaranteed Obligations, and that Demand has been made upon the Builder for the Guaranteed Obligations and the Builder has within 30 days failed to comply with the same, and (c) set forth payment instruments.  Such Demand upon the Guarantor shall be accompanied by either (a) the Builder’s acknowledgement in writing of its liability to Owner in respect of the sum demanded or (b) a Final Judgement of a court or arbitration tribunal of competent jurisdiction in proceedings commenced pursuant to the Agreement determining the Builder’s liability to the Owner in respect of the sum demanded.  The term “Final Judgement” shall in this context mean a judgement or award in respect of which there is no right of appeal or in respect of which the time limit for submitting an application to appeal has expired without such application having been made by either party to the Agreement.

 

  

40

  

 

7.  No Waiver; Remedies.   No failure on the part of Owner to exercise, and no delay in exercising, any right hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any right hereunder preclude any other or further exercise thereof or the exercise of any other right.  The remedies herein provided are cumulative and not exclusive of any remedies provided by law.  In no event shall Guarantor or Builder be liable for consequential, exemplary, tort, or punitive damages.

 

8.  Term; Termination.  Subject to the paragraph below, this Guaranty shall continue in full force and effect from the date hereof until the first to occur of: (a) the expiration of the Guaranty Period as defined in the Agreement, or (b) the payment to Owner by the Builder or by Guarantor of all sums secured by this Guaranty.  On occurrence of such an event the Guarantor's obligations and liabilities under this Guaranty shall cease irrespective of whether the original Guaranty is returned to the Guarantor or not for cancellation. 

 

Notwithstanding the other terms of this Guaranty, if within twenty-eight (28) days of the Guarantor’s receipt of a Demand the Guarantor receives written notice from the Owner or from the Builder stating that Owner’s claim for payment of the sums referred to in the Demand has been disputed and that such dispute will be resolved in accordance with the Agreement, then the Guarantor shall not be obliged to make any payment to the Owner under this Guaranty until thirty (30) days after the dispute has been finally determined or in the event of an appeal from an arbitration award, until thirty (30) days after delivery of the Final Judgement; or in the event that the court remits the matter to the arbitrator, until thirty (30) days after the publication of the revised final award or in the event of an appeal from the award, until thirty (30) days after delivery of the Final Judgement.  Final Judgement shall have the meaning given to it in Clause 6 above.

 

9.  Assignment; Successors and Assigns.  Neither party may assign its rights hereunder without the prior written consent of the other party, such consent not to be unreasonably withheld.  Subject to the foregoing, this Guaranty shall be binding upon and inure to the benefit of the parties hereto and their respective successors, permitted assigns, and legal representatives.

 

10.  Amendments.  No amendment of this Guaranty shall be effective unless in writing and signed by Guarantor and Owner.  No waiver of any provision of this Guaranty nor consent to any departure by Guarantor therefrom shall in any event be effective unless such waiver shall be in writing and signed by Owner.  Any such waiver shall be effective only in the specific instance and for the specific purpose for which it was given.

 

11.  Limitation by Law.  All rights, remedies and powers provided in this Guaranty may be exercised only to the extent that the exercise thereof does not violate any applicable provision of law, and all the provisions of this Guaranty are intended to be subject to all applicable mandatory provisions of law that may be controlling and to be limited to the extent necessary so that they will not render this Guaranty invalid, unenforceable, in whole or in part, or not entitled to be recorded, registered or filed under the provisions of any applicable law.

 

12.  Third Party Rights.  A person who is not a party to this Guaranty shall not have any right under or in connection with it.

 

13.  Governing Law.  This Guaranty shall be governed by, and construed in accordance with, the laws of England and Wales.  All disputes arising out of or in connection with this Guaranty shall be resolved pursuant to the dispute resolution procedures and in the location provided for under the terms of the Agreement.

IN WITNESS WHEREOF, Guarantor has caused this Guaranty to be duly executed and delivered by its duly authorized officer effective as of this _____ day of [   ] 2013.

 

                                                  SEMBCORP MARINE LTD

 

                                                  By: __________________________________

 

                                                  Its:

 

  

41

  

ATTACHMENT B

 

PARENT COMPANY GUARANTY

 

In consideration of the performance of services related to the construction by Jurong Shipyard Pte Ltd, a Singapore corporation (“Builder”) of a well intervention semi-submersible under JSPL Hull No. 11-1115 for [name of subsidiary of Helix] (“Owner”) and in order to induce such transactions and services, the undersigned Helix Energy Solutions Group, Inc. (incorporated in United States; with registered address ______________, USA (“Guarantor”), guarantees the prompt payment and performance of all obligations of Owner to Builder under the Agreement dated the ___ of July 2013 between Builder and Owner (the “Agreement”) upon the following terms and conditions ("the Guaranty").

 

         1.  Guaranty.

 

	
(a)  

	
Guarantor hereby unconditionally and absolutely guarantees the punctual payment of all monies due by the Owner and performance when due of Owner’s obligations arising under the Agreement, as may be amended or modified from time to time, together with any interest thereon (collectively, the “Guaranteed Obligations”).   Guarantor consents to any changes in the terms of the Agreement entered into between Builder and Owner, subject always to the terms of this Guaranty.

 

	
(b)  

	
Additionally, the obligations of the Guarantor hereunder are several from the Owner or any other person, and are primary obligations concerning which the Guarantor is the principal obligor.  There are no conditions precedent to the enforcement of this Guaranty, except as expressly contained herein.  It shall not be necessary for Builder, in order to enforce payment or performance by Guarantor under this Guaranty, to show any proof of Owner’s default, to exhaust its remedies against Owner, any other guarantor, or any other person liable for the payment or performance of the Guaranteed Obligations.

 

	
(c)  

	
This Guaranty shall continue to be effective if at any time any payment or performance of any of the Guaranteed Obligations are annulled, set aside, invalidated, declared to be fraudulent or preferential, rescinded or must otherwise be returned, refunded or repaid by Builder upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of Owner or any other guarantor, or upon or as a result of the appointment of a receiver, intervenor or conservator of, or trustee or similar officer for, Owner or any other guarantor or any substantial part of its property or otherwise, all as though such payment or payments or performance had not been made.

 

	
(d)  

	
In no circumstances whatsoever shall the liability of the Guarantor under this Guaranty exceed the liability of the Owner arising directly from the Agreement and the Guaranty shall be limited accordingly and shall also be limited by the terms of this Guaranty.

 

2.  Waiver.

 

Guarantor hereby waives:

 

	
(a)  

	
Notice of acceptance of this Guaranty, of the creation or existence of any of the Guaranteed Obligations and of any action by Builder in reliance hereon or in connection herewith.

 

	
(b)  

	
Except as expressly set forth herein, presentment, demand for payment, notice of dishonor or nonpayment, protest and notice of protest with respect to the Guaranteed Obligations; and

 

	
(c)  

	
any requirement that suit be brought against, or any other action by Builder be taken against, or any notice of default or other notice be given to, or any demand be made on, Owner or any other person, or that any other action be taken or not taken as a condition to Guarantor’s liability 

 

  

42

  

 

	 	
for the Guaranteed Obligations under this Guaranty or as a condition to the enforcement of this Guaranty against Guarantor.

 

3.  Legal Costs.  Guarantor agrees to pay on demand any legal fees that may be awarded to Builder by the arbitration tribunal or any court and incurred by Builder, in enforcing Guarantor’s payment and performance obligations under this Guaranty.

 

4.  Subrogation.  Guarantor shall be subrogated to all rights of Builder against Owner in respect of any amounts paid by the Guarantor pursuant to the Guaranty, provided that Guarantor waives any rights it may acquire by way of subrogation under this Guaranty, by any payment made hereunder or otherwise, until all of the Guaranteed Obligations shall have been irrevocably paid to Builder in full.  If any amount shall be paid to the Guarantor on account of such subrogation rights at any time when all the Guaranteed Obligations shall not have been paid in full, such amount shall be held in trust for the benefit of Builder and shall forthwith be paid to Biulder to be applied to the Guaranteed Obligations.

 

5.  Notices.  All demands, notices and other communications provided for hereunder shall (a) be in writing addressed to the party receiving the notice at the address set forth below or at such other address as may be designated by written notice, from time to time, to the other party, and (b) be effective upon delivery, when mailed by mail, registered or certified, postage prepaid, or when personally delivered, or when sent by fax (if confirmed by written notice mailed within 48 hours after the fax notice).  Notices shall be sent to the following addresses and/or fax numbers:

 

If to Builder:

	
  

	
            Attn: William Gu Wei Guang

	
  

	
            Jurong Shipyard Pte Ltd.

                                         29 Tanjong Kling Road

                                         Singapore 628054

 

            Fax:62627243

 

If to Guarantor:

                                         [Attn: Helix]

 

If to Owner:

                                         Attn: General Counsel

                                         Helix Energy Solutions Group, Inc.

            3505 West. Sam Houston Parkway North.,

            Suite 400

                                         Houston, TX 77043

                                         United States of America

                                         Fax: 001 281 618 0505

 

6.  Demand and Payment.  Any demand (“Demand”) by Builder for payment hereunder shall be in writing signed by two of Builder’s directors and delivered to the Guarantor pursuant to Section 5 hereof, and shall (a) reference this Guaranty, (b) specifically identify the Owner, the Guaranteed Obligations to be paid and the amount or nature of such Guaranteed Obligations, and that Demand has been made upon the Owner for the Guaranteed Obligations and the Owner has within 30 days failed to comply with the same, and (c) set forth payment instruments.  Such Demand upon the Guarantor shall be accompanied by either (a) the Builder’s acknowledgement in writing of its liability to Owner in respect of the sum demanded or (b) a Final Judgement of a court or arbitration tribunal of competent jurisdiction in proceedings commenced pursuant to the Agreement determining the Owner’s liability to the Builder in respect of the sum demanded.  The term “Final Judgement” shall in this context mean a judgement or award in respect of which there is no right of appeal or in respect of which the time limit for submitting an application to appeal has expired without such application having been made by either party to the Agreement.

 

7.  No Waiver; Remedies.   No failure on the part of Builder to exercise, and no delay in exercising, any right hereunder shall operate as a waiver thereof, nor shall any single or 

 

  

43

  

 

partial exercise of any right hereunder preclude any other or further exercise thereof or the exercise of any other right.  The remedies herein provided are cumulative and not exclusive of any remedies provided by law.  In no event shall Guarantor or Owner be liable for consequential, exemplary, tort, or punitive damages.

 

8.  Term; Termination.  Subject to the paragraph below, this Guaranty shall continue in full force and effect from the date hereof until the first to occur of: (a) the expiration of the Guaranty Period as defined in the Agreement, or (b) the payment to Builder by the Owner or by Guarantor of all sums secured by this Guaranty.  On occurrence of such an event the Guarantor's obligations and liabilities under this Guaranty shall cease irrespective of whether the original Guaranty is returned to the Guarantor or not for cancellation. 

 

Notwithstanding the other terms of this Guaranty, if within twenty-eight (28) days of the Guarantor’s receipt of a Demand the Guarantor receives written notice from the Owner or from the Builder stating that Builder’s claim for payment of the sums referred to in the Demand has been disputed and that such dispute will be resolved in accordance with the Agreement, then the Guarantor shall not be obliged to make any payment to the Builder under this Guaranty until thirty (30) days after the dispute has been finally determined or in the event of an appeal from an arbitration award, until thirty (30) days after delivery of the Final Judgement; or in the event that the court remits the matter to the arbitrator, until thirty (30) days after the publication of the revised final award or in the event of an appeal from the award, until thirty (30) days after delivery of the Final Judgement.  Final Judgement shall have the meaning given to it in Clause 6 above.

 

9.  Assignment; Successors and Assigns.  Neither party may assign its rights hereunder without the prior written consent of the other party, such consent not to be unreasonably withheld.  Subject to the foregoing, this Guaranty shall be binding upon and inure to the benefit of the parties hereto and their respective successors, permitted assigns, and legal representatives.

 

10.  Amendments.  No amendment of this Guaranty shall be effective unless in writing and signed by Guarantor and Builder.  No waiver of any provision of this Guaranty nor consent to any departure by Guarantor therefrom shall in any event be effective unless such waiver shall be in writing and signed by Builder.  Any such waiver shall be effective only in the specific instance and for the specific purpose for which it was given.

 

11.  Limitation by Law.  All rights, remedies and powers provided in this Guaranty may be exercised only to the extent that the exercise thereof does not violate any applicable provision of law, and all the provisions of this Guaranty are intended to be subject to all applicable mandatory provisions of law that may be controlling and to be limited to the extent necessary so that they will not render this Guaranty invalid, unenforceable, in whole or in part, or not entitled to be recorded, registered or filed under the provisions of any applicable law.

 

12.  Third Party Rights.  A person who is not a party to this Guaranty shall not have any right under or in connection with it.

 

13.  Governing Law.  This Guaranty shall be governed by, and construed in accordance with, the laws of England and Wales.  All disputes arising out of or in connection with this Guaranty shall be resolved pursuant to the dispute resolution procedures and in the location provided for under the terms of the Agreement.

 

IN WITNESS WHEREOF, Guarantor has caused this Guaranty to be duly executed and delivered by its duly authorized officer effective as of this _____ day of July, 2013.

 

 

                                                  HELIX ENERGY SOLUTIONS GROUP, INC

 

 

                                                  By: __________________________________

 

                                                  Its:

 

  

44

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00221-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00221-of-00352.parquet"}]]