Document:

exv10w27

 

Exhibit 10.27

SHIPBUILDING CONTRACT

Between

And

Hull No.

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LIST OF CONTENTS

	 	 	 
	 

	 	Definitions
	 
	 	 
	Article 1

	 	Description and Class
	 
	 	 
	Article 2

	 	Contract Price and Terms of Payment
	 
	 	 
	Article 3

	 	Adjustment of Contract Price
	 
	 	 
	Article 4

	 	Approval of Plans and Drawings and Inspection during
Construction
	 
	 	 
	Article 5

	 	Modifications
	 
	 	 
	Article 6

	 	Trials and Acceptance
	 
	 	 
	Article 7

	 	Delivery
	 
	 	 
	Article 8

	 	Delays and Extension of Time for Delivery (Force Majeure)
	 
	 	 
	Article 9

	 	Warranty of Quality
	 
	 	 
	Article 10

	 	Rescission by Owner
	 
	 	 
	Article 11

	 	Owner’s Default
	 
	 	 
	Article 12

	 	Insurance
	 
	 	 
	Article 13

	 	Law and Dispute Resolution
	 
	 	 
	Article 14

	 	Right of Assignment
	 
	 	 
	Article 15

	 	Taxes and Duties
	 
	 	 
	Article 16

	 	Patents, Trademarks, copyrights, etc
	 
	 	 
	Article 17

	 	Owner Furnished Equipment
	 
	 	 
	Article 18

	 	Notice
	 
	 	 
	Article 19

	 	Interpretation
	 
	 	 
	Article 20

	 	Effective Date of Contract
	 
	 	 
	Article 21

	 	Indemnities/Liabilities

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This CONTRACT, entered into this ___

by and between., a corporation organised and existing under the laws of Singapore, having its principal office at

(hereinafter called the “Builder”), the party of the first part,
and
a corporation organised and existing under the laws of Delaware having its principal
office at (hereinafter called
the “Owner” or “Buyer”), the party of the second part,

WITNESSETH:

In consideration of the mutual covenants herein contained, the Builder agrees to erect, launch,
equip and complete at its premises, in Singapore (hereinafter called the “Shipyard”) and sell and
deliver to the Owner one (1) unit of Anchor Handling Tug/Supply vessel more fully described in
Article 1 hereof (hereinafter called the “Vessel”), and the Owner agrees to purchase and take
delivery of the Vessel from the Builder and to pay for the same, all upon the terms and conditions
hereinafter set forth.

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DEFINITIONS

In this Contract, the following terms shall have the meaning set forth below:

	1.	 	“Contract” or “this Contract” shall, unless the context otherwise requires, mean this
Contract together with any addendum to this Contract, which may be mutually agreed between
the Parties in writing.
	 
	2.	 	“Parties” shall mean the Builder and the Owner or Buyer.
	 
	3.	 	“Classification Society” shall mean American Bureau of Shipping.
	 
	4.	 	“Contract Price” shall mean price in Article 2 subject to adjustment only in accordance
with Articles 3 and 5 of this Contract.
	 
	5.	 	“Protocol of Delivery and Acceptance” shall mean the Protocol to be executed by the
Builder and the Owner on delivery of the Vessel as referred to in Article 6 and 7.
	 
	6.	 	“Owner’s Loose Supplies” shall mean loose items to be furnished by the Owner as referred
to in the Contract, and as per Exhibit “D”.
	 
	7.	 	“Sea Trials” shall have the meaning set forth in Article 6 hereof.
	 
	8.	 	“Builder’s Bank” shall mean:
	 
	 	 	for payments due to the Builder, or any other first class bank nominated by the Builder
and approved by the Owner.
	 
	9.	 	“Owner’s Bank” shall mean:

TBD

	 	 	for payments due to the Owner, or any other first class bank nominated by the Owner and
approved by the Builder.
	 
	10.	 	“Representatives” shall mean the person or persons duly authorised by the Owner to act as
its representative or representatives for construction supervision in conformity with the
stipulations of Article 4 hereof.
	 
	11.	 	“Specification” shall mean ___dated ___, signed by both
Parties and forming an integral part of the Contract.
	 
	12.	 	“Contract Documents” shall mean documents and drawings as per Exhibit “A” signed by both
Parties and forming an integral part of the Contract.

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	13.	 	“Working Days” shall mean days other than Sundays and public holidays on which banks are
open for business in Singapore.
	 
	14.	 	“Delivery Documents” shall mean the documents referred to in Exhibit “B”.
	 
	15.	 	“Effective Date” shall mean the date when the Contract becomes effective pursuant to
Article 20.
	 
	16.	 	“Vessel” shall mean the New Building under Hull 310 as defined in the Contract and
Specification.
	 
	17.	 	“Delivery Date” shall mean the date when the completed Vessel shall be delivered, as per
Article 7, subject to modifications only in accordance with this Contract.
	 
	18.	 	“Owner’s Furnished Equipment” (hereinafter shall be referred to as “OFE”) shall mean all
the equipment to be supplied by the Owner as per Exhibit “G”.
	 
	19.	 	“Corporate Guarantee” shall mean the Letter to be executed separately by the Builder and
the Owner as per Exhibit H.

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ARTICLE 1 — DESCRIPTION AND CLASS

	1.1	 	Description:
	 
	 	 	The Vessel shall have the Builder’s Hull No. and shall be constructed, equipped and
completed in accordance with the provisions of this Contract, and the Specifications and
the General Arrangement Plan (herein collectively called the “Specifications”) signed by
each of the Parties hereto for identification and attached hereto and made an integral part
hereof.
	 
	1.2	 	Dimensions and Characteristics:
	 
	 	 	Aside from the usual stability booklet, the Builder shall produce loading curves for
different combination of cargoes for safe operation as approved by ABS as per Exhibit J
	 
	 	 	The details of the above particulars as well as the definitions and method of measurements
and calculations are as indicated in the Specifications.
	 
	1.3	 	Classification, Rules and Regulations:
	 
	 	 	The Vessel, including its machinery, equipment and outfittings shall be constructed in
accordance with the rules (the edition and amendments thereto which will enter into force
on the date of this Contract and under special survey of American Bureau of Shipping
(herein called the “Classification Society”), and shall be distinguished in the register by
the symbol of .
	 
	 	 	Decisions of the Classification Society as to compliance or non-compliance with the
classification shall be final and binding upon both parties hereto.
	 
	 	 	The Vessel shall also comply with the rules, regulations and requirements of other
regulatory bodies as described in the Specifications in effect as of the date of this
Contract. Any rules and regulations known at the Contract date to be coming into force
prior to delivery date are also to be included.
	 
	 	 	All fees and charges incidental to the classification and with respect to compliance with
the above-referred rules, regulations and requirements for OFE shall be for account of the
Owner.

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	1.4	 	Subcontracting:
	 
	 	 	The Builder may at its sole discretion and responsibility, subcontract any portion of
the construction work of the Vessel. The Owner has the right to audit all Builder’s
subcontractors, and be granted full access to their premises for inspection and testing.
Notwithstanding, any such sub-contracting the builder shall remain responsible for
compliance with obligations of this contract as if there had been no such
sub-contracting.
	 
	1.5	 	Registration:
	 
	 	 	The Vessel shall be registered by the Owner at its own cost and expense.
	 
	1.6	 	Protection of Equipment:
	 
	 	 	The Builder warrants that all reasonable efforts will be made to protect equipment during
storage, installation and after placement in the hull.

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ARTICLE 2 — CONTRACT PRICE AND TERMS OF PAYMENT

	2.1	 	Contract Price:
	 
	 	 	The Contract Price of the Vessel is
net receivable by the Builder, and shall be subject to upward or
downward adjustment, if any, as hereinafter set forth in this Contract
and as per Exhibit I.
	 
	 	 	All costs and fees, including taxes concerning payment imposed by
authorities inside/outside Singapore, incurred or imposed by reason of
the transfer of funds to the Builder referred to in paragraphs below
hereof shall be borne by the Owner.
	 
	2.2	 	Terms of Payment:
	 
	 	 	The Contract Price shall be due and payable by the Owner to the
Builder in the instalments as follows:

	 	a)	 	First Instalment:
	 
	 	 	 	percent of the Contract Only shall be due and payable within Five (5) business days
of Contract signing and after receipt of faxed copy of the signed Corporate Guarantee,
or within Two (2) business days of receipt of the original Corporate Guarantee,
whichever is the later. The Corporate Guarantee will be in the form as per Exhibit H.
	 
	 	b)	 	Second Instalment:
	 
	 	 	 	percent of the Contract price shall be paid when the keel has been laid but in any
case not earlier than 4.months after the Contract Date.
	 
	 	c)	 	Third instalment:
	 
	 	 	 	percent of the Contract price shall be paid upon delivery of the four (4)
main-engines to Builder’s premise or hull fully plated whichever is the earlier, but in
any case not earlier than 8 months after the Contract Date.
	 
	 	d)	 	Fourth instalment:
	 
	 	 	 	percent of the Contract price, shall be paid upon launching of the Vessel, but in
in any case not earlier than 12 months after the Contract Date.
	 
	 	e)	 	Fifth instalment:
	 
	 	 	 	percent of the Contract price, plus any increase or minus any decrease due to
adjustments of the Contract Price under and pursuant to the provisions of this Contract,
shall be due and payable upon Delivery of the Vessel.

	2.3	 	Method of Payment:

	 	2.3.1	 	In respect of the 1st instalment, the Owner shall pay the Builder the same
within 5 Working Days from the date of the Contract and the Owner shall furnish to
the Builder an irrevocable and unconditional Corporate
	 
	 	 	 	Guarantee (hereinafter called the “Corporate Guarantee”) duly executed and issued within
5 working days by a guarantor acceptable to the Builder, covering
and guaranteeing the due performance of the Owner’s obligations under

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	 	 	 	this
Contract including, but not limited to, the payment of the Contract Price and
taking delivery of the Vessel in accordance with the provisions of this
Contract and substantially in the form annexed hereto as Exhibit H. This
Corporate Guarantee shall continue in full force and effect until the full
performance of the Owner’s obligations under this Contract.

	 	2.3.2	 	The Owner shall pay the Builder the 2nd, 3rd, 4th, and
5th Instalments upon presentation of the following respective documents:

	 	a)	 	in respect of the 2nd instalment, payment
within three (3) Working Days of the date of presentation of stage
certificate signed by Classification Society’s, and Builder’s
representatives stating that the keel laying of the Vessel has been laid
in the form set out in Exhibit F and a signed commercial invoice relating
to the 2nd instalment; but not earlier than 4 months after
Contract date.
	 
	 	b)	 	in respect of the 3rd instalment, payment
within three (3) Working Days of the date of presentation of stage
certificate signed by Classification Society’s, and Builder’s
representatives stating that the main engines have arrived to the
Builder’s premises or hull are fully plated whichever is the earlier in
the form set out in Exhibit F and a signed commercial invoice relating to
the 3rd instalment; but not earlier than 8 months after
Contract date.
	 
	 	c)	 	in respect of the 4th instalment, payment
within three (3) Working Days of presentation of stage certificate signed
by Classification Society’s, and Builder’s representatives stating that
the Vessel has being launched in the form set out in Exhibit F and a
signed commercial invoice relating to the 4th instalment, but
not earlier than 12 months after the Contract date.
	 
	 	d)	 	in respect of the 5th instalment, payment
shall be made on Delivery of the Vessel in accordance with Article 7,
presentation of a Protocol of Delivery and Acceptance of Vessel signed by
both the Owner’s and the Builder’s representatives in the form set out in
Exhibit E, and a signed commercial invoice relating to the 5th
instalment.

	 	 	All amounts due and owing to the Builder and/or Owner shall be paid to the Builder and/or
Owner before the Vessel leaves the Shipyard. For any disputed amount, Owner and/or
Builder shall place such amount into an interest bearing Bank Account in Singapore in the
joint names of the Owner and the Builder until resolution of the dispute. In respect of
2nd, 3rd, and 4th payment, the due date for the payment
is the date when the stage certificate is signed by the relevant parties. For
5th payment, the payment due date is the date when the Protocol of Delivery and
Acceptance is signed.

	2.4	 	Payment for Modification
	 
	 	 	Any sum due for modifications of this Contract shall be paid as follows;

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	a)	 	50% within 15 days after agreement on modications have been signed.
	 
	b)	 	Balance at delivery of the completed vessel.

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ARTICLE 3 — ADJUSTMENT OF CONTRACT PRICE

The Contract Price shall be subject to adjustment, as hereinafter set forth, in the event of the
following contingencies (it being agreed and understood by both parties that any reduction of the
Contract Price is by way of liquidated damages and not by way of penalty):

	3.1	 	Delivery:
	 
	a)	 	If the delivery of the Vessel is delayed more than twenty-one (21) days after the Delivery
Date, then, in such event, beginning at twelve o’clock midnight on the twenty first
(21st) day after the Delivery Date, the Contract Price shall be reduced by
deducting there from as follows:
	 
	 	 	For each day delay after the twenty first day after Delivery Date            per
day to be paid upto a maximum of            to the Owner.
	 
	b)	 	If delivery of the Vessel is made earlier than twenty-one (21) days before the Delivery Date,
then, in such event, beginning at twelve o’clock midnight on the twenty second
(22nd) day before the Delivery Date, the Contract Price of the Vessel shall be
increased as follows:
	 
	 	 	For each day prior to the twenty first day before Delivery Date            per
day to be paid upto a maximum of            to the Builder.
	 
	c)	 	For the purpose of this Article, the delivery of the Vessel shall be deemed to be delayed
when and if the Vessel, after taking into full account all postponements of the Delivery Date
by reason of permissible delays as defined in Article 8 and/or any other reasons under this
Contract, is not delivered by the date upon which delivery is required under the terms of this
Contract.
	 
	d)	 	If the delay in delivery of the Vessel, after allowing for permissible delays under Article 7
and 8, continues for a period of 120 days or more from the twenty first day after the Delivery
Date, in such event, and after such period has expired, the Buyer may, at its option, rescind
this Contract in accordance with the provisions of Article 10 or accept the Vessel with a
total reduction in the Contract Price of five (5) percent.

	3.2	 	Performance:
	 
	a)	 	If the Continuous Bollard Pull at 100% MCR at trial is less than            metric tons (as
corrected for enviromental conditions approved by Class), then the Contract Price shall be
reduced by deducting on a cumaltive basis therefrom as follows:
	 
	 	 	If the Bollard Pull drops below            metric tons then the Owner has the right of recission
as per the provisions of Article 10.

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ARTICLE 4 — APPROVAL OF PLANS AND DRAWINGS AND

INSPECTION DURING CONSTRUCTION

	4.1	 	Approval of Plans and Drawings:
	 
	a)	 	The Builder shall submit to the Owner three (3) copies each of the plans and drawings to be
submitted thereto for its address as set forth in Article 18 hereof. The Owner shall, within
seven (7) days after receipt thereof, return to the Builder one (1) copy of such plans and
drawings with the Owner’s approval, such approval not to be unreasonably withheld, or comments
written thereon, if any. A list of the plans and drawings to be so submitted to the Owner
shall be mutually agreed upon between the parties hereto.
	 
	b)	 	When and if the Representative (as defined in Paragraph 2 of this Article) shall have been
sent by the Owner to the Shipyard in accordance with Paragraph 2 of this Article, the Builder
may submit the remainder, if any, of the plans and drawings in the agreed list, to the
Representative for its approval, unless otherwise agreed upon between the parties hereto. The
Representative shall, within ten (10) days after receipt thereof, return to the Builder one
(1) copy of such plans and drawings with his approval, such approval not to be unreasonably
withheld, or comments written thereon, if any. Approval by the Representative of the plans
and drawings duly submitted to him shall be deemed to be the approval by the Owner for all
purposes of this Contract.
	 
	c)	 	In the event that the Owner or the Representative shall fail to return the plans and drawings
to the Builder within the time limit as hereinabove provided, such plans and drawings shall be
deemed to have been automatically approved without any comment.
	 
	4.2	 	Appointment of Owner’s Representative:
	 
	 	 	The Owner may send to and maintain at the Shipyard, at the Owner’s own
cost and expense, one representative who shall be duly authorised in
writing by the Owner (herein called the “Representative”) to act on
behalf of the Owner in connection with modifications of the
Specifications, approval of the plans and drawings, attendance to the
tests and inspections relating to the Vessel, its machinery, equipment
and outfitting, and any other matters for which he is specifically
authorised by the Owner. From time to time more than one
representative may be present, however, only the appointed
Representative can act on behalf of the owner.
	 
	4.3	 	Inspection by Representative:
	 
	 	 	The necessary inspections of the Vessel, its machinery, equipment and
outfitting shall be carried out by the Classification Society, other
regulatory bodies and/or an inspection team of the Builder throughout the entire period of construction, in order to
ensure that the construction of the Vessel is duly performed in accordance with this Contract
and the Specifications. The Representative shall have, during construction of the Vessel,
the right to attend such tests and inspections of the Vessel, its machinery and equipment as
are mutually agreed between the Owner and Builder. The Builder

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	 	 	shall give a notice to the
Representative reasonably in advance of the date and place of such tests and inspections to
be attended by him for his convenience. Failure of the Representative to be present at such
tests and inspections after due notice to him as above provided shall be deemed to be a
waiver of his right to be present, but Buyers Representatives should get test results and
does not waive the yards obligations in terms of quality.
	 
	 	 	In the event that the Representative discovers any construction or material or workmanship
which is not deemed to conform to the requirements of this Contract and/or the
Specifications, the Representative shall promptly give the Builder a notice in writing as to
such non-conformity. Upon receipt of such notice from the Representative, the Builder shall
correct such non-conformity, if the Builder agrees with the Representative’s view.
	 
	 	 	In all working hours during the construction of the Vessel until delivery thereof, the
Representative shall be given free and ready access to the Vessel, its engines and
accessories, and to any other place where work is being done, or materials are being
processed or stored, in connection with the construction of the Vessel, including the yards,
workshops, stores and offices of the Builder, and the premises of subcontractors of the
Builder, who are doing work or storing materials in connection with the Vessel’s
construction. Representative shall comply with all yard rules and regulations,

	4.4	 	Facilities:
	 
	 	 	The Builder shall furnish the Representative and his assistant(s) with
adequate office space at no cost, and such other reasonable facilities
according to the Builder’s practice at or in the immediate vicinity of
the Shipyard as may be necessary to enable them to effectively carry
out their duties.
	 
	4.5	 	Liability of Builder:
	 
	 	 	The Representative and his assistant(s) shall at all times be deemed
to be the employees of the Owner and not of the Builder.
	 
	4.6	 	Responsibility of Owner:
	 
	 	 	The Owner shall undertake and assure that the Representative shall
carry out his duties hereunder in accordance with the normal
shipbuilding practice of the Builder and in such a way as to avoid any
unnecessary increase in building cost, delay in the construction of
the Vessel, and/or any disturbance in the construction schedule of the
Builder.
	 
	 	 	The Builder has the right to request the Owner to replace the
Representative if the Builder deems that the Representative is
unsuitable and unsatisfactory for the proper progress of the Vessel’s
construction. The Owner shall investigate the situation by sending
its representative(s) to the Shipyard if necessary, and if the Owner
considers that such Builder’s request is justified, the Owner shall effect such replacement as soon as
can be conveniently arranged.
	 
	4.7	 	Construction Schedule:

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	 	 	Within thirty (30) days after the effective date of this Contract, the Builder shall provide
the Owner with a Construction Schedule. At the beginning of every month thereafter, the
Builder shall provide the Owner with actual progress plan. Furthermore the yard shall provide
a dedicated contact person who will be available to the Buyers Representative during normal
working hours plus one hour before start of each workday.

ARTICLE 5 — MODIFICATIONS

	5.1	 	Modifications of Specifications:
	 
	 	 	The Specifications may be modified and/or changed by written agreement
of the parties hereto, provided that such modifications and/or changes
or an accumulation thereof will not, in the Builder’s judgement,
adversely affect the Builder’s planning or program, and provided,
further, that the Owner shall first agree, before such modifications
and/or changes are carried out, to alterations in the Contract Price,
the Delivery Date and other terms and conditions of this Contract and
Specifications occasioned by or resulting from such modifications
and/or changes.
	 
	 	 	Such agreement may be effected by exchange of letters signed by the
authorised representatives of the parties hereto or by faxes confirmed
by such letters manifesting agreements of the parties hereto which
shall constitute amendments to this Contract and/or the
Specifications.
	 
	 	 	The Builder may make minor changes to the Specifications, if found
necessary for introduction of improved production methods or otherwise
as long as they are of better or of equal quality, provided that the
Builder shall first obtain the Owner’s approval which shall not be
unreasonably withheld
	 
	5.2	 	Substitution of Materials:
	 
	 	 	In the event that any of the materials required by the Specifications
and the Makers’ List or otherwise under this Contract for the
construction of the Vessel cannot be procured in time or are in short
supply to maintain the Delivery Date of the Vessel, the Builder may,
provided that the Owner shall so agree in writing, supply other
materials from the Allowed Makers in the Makers’ List if applicable,
capable of meeting the requirements of the Classification Society and
of the rules, regulations and requirements with which the construction
of the Vessel must comply. Any agreement as to such substitution of
materials shall be effected in the manner provided in Paragraph 1 of
this Article.
	 
	 	 	For equipment and material not specified in the the maker list, the builder shall
have the sole right to procure as long as these equipment and material meet the
classification, technical specification and regulatory requirments.

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ARTICLE 6 — TRIALS AND ACCEPTANCE

	6.1	 	Notice:
	 
	 	 	The Owner shall receive from the Builder at least fourteen (14) days
prior notice in writing or by fax confirming in writing of the time
and place of the trial run of the Vessel, and the Owner shall promptly
acknowledge receipt of such notice. The Owner shall have its chosen
Representative(s) on board the Vessel to witness such trial run.
Failure in attendance of the Representative(s) of the Owner at the
trial run of the Vessel for any reason whatsoever after due notice to
the Owner as above provided shall be deemed to be a waiver by the
Owner of its right to have its Representative(s) on board the Vessel
at the trial run, and the Builder may conduct the trial run without
the Representative of the Owner being present, and in such case the
Owner shall be obligated to accept the Vessel on the basis of a
certificate of the Builder that the Vessel, upon trial run, is found
to conform to this Contract and the Specifications. Non attendance by
the Owner’s Representatives in no way reduces the Builder’s
obligations under this Contract.
	 
	6.2	 	Weather Condition:
	 
	 	 	The trial run shall be carried out under the weather condition which
is deemed favourable enough by the judgement of the Builder. In the
event of unfavourable weather on the date specified for the trial run,
the same shall take place on the first available day thereafter when
favourable weather condition prevails. It is agreed that, if during
the trial run of the Vessel, the weather should suddenly become so
unfavourable that orderly conduct of the trial run can no longer be
continued, the trial run shall be discontinued and postponed until the
first day next following when favourable weather conditions prevail,
unless the Owner shall assent in writing to acceptance of the Vessel
on the basis of the trial run already made before such discontinuance
has occurred.
	 
	6.3	 	How Conducted:
	 
	a)	 	All expenses in connection with the trial run are to be for the account of the Builder and
the Builder shall provide at is own expense the necessary crew to comply with conditions of
safe navigation. The trial run shall be conducted in the manner prescribed in the
Specifications, and shall prove fulfilment of the performance requirements for the trial run
as set forth in the Specifications. The course of trial run shall be determined by the
Builder.
	 
	b)	 	Without prejudice to the generality of the foregoing, the Builder shall supply the fuel,
lubricating and hydraulic oils; and grease for initial filling of the systems, including any
systems associated with the OFE. The Builder shall pay the cost of the quantities of fuel,
lubricating and hydraulic oils; and grease for initial fill-up of equipment as well as
consumed during tests and trials, as per manufacturer’s specification. Prior to delivery, the
Builder and the Owner shall carry out soundings of all the tanks and the Owner shall reimburse
the Builder the quantities of remaining fuel oil and unused lubricating and hydraulic oil
onboard at the prices paid by the Builder.

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	6.4	 	Method of Acceptance or Rejection:
	 
	a)	 	Upon completion of the trial run, the Builder shall give the Owner a notice by fax confirming
in writing of completion of the trial run, as and if the Builder considers that the results of
the trial run indicate conformity of the Vessel to this Contract and the Specifications. The
Owner shall, within three (3) days after receipt of such notice from the Builder, notify the
Builder by fax confirming in writing of its acceptance or rejection of the Vessel.
	 
	b)	 	Should the results of the trial run indicate that the Vessel, or any part or equipment
thereof, does not conform to the requirements of this Contract and/or the Specifications, the
Builder shall take necessary steps to correct such non-conformity. Upon completion of
correction of such non-conformity, the Builder shall give the Owner a notice thereof by fax
confirming in writing. The Owner shall, within two (2) days after receipt of such notice from
the Builder, notify the Builder of its acceptance or rejection of the Vessel by fax confirming
in writing.
	 
	c)	 	In any event that the Owner rejects the Vessel, the Owner shall indicate in its notice of
rejection in what respect the Vessel, or any part or equipment thereof does not conform to
this Contract and/or the Specifications.
	 
	d)	 	In event that the Owner fails to notify the Builder by fax confirming in writing of the
acceptance of or the rejection together with the reason therefor of the Vessel within the
period as provided in the above Sub-paragraph (a) or (b), the Owner shall be deemed to have
accepted the Vessel.
	 
	e)	 	The Builder may dispute the rejection of the Vessel by the Owner under this Paragraph, in
which case the matter shall be submitted for final decision by dispute resolution in
accordance with Article 13 hereof.
	 
	6.5	 	Effect of Acceptance:
	 
	 	 	Acceptance of the Vessel as above provided whether by notice or
pursuant to Paragraph 6.4(d) above shall be final and binding so far
as conformity of the Vessel to this Contract and the Specifications is
concerned and shall, if the Builder complies with all other procedural
requirements for Delivery as provided in Article 7 hereof, preclude
the Owner from refusing formal delivery of the Vessel as hereinafter
provided.
	 
	6.6	 	Disposition of Surplus Consumable Stores:
	 
	 	 	Should any fresh water or other consumable stores furnished by the
Builder for the trial run remain on board the Vessel at the time of
acceptance thereof by the Owner, the Owner shall have the option to
buy the same from the Builder at the original purchase price thereof,
and payment by the Owner shall be effected upon delivery of the
Vessel.

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ARTICLE 7 — DELIVERY

	7.1	 	Time and Place:
	 
	 	 	The Vessel shall be delivered by the Builder to the Owner at the
Keppel Singmarine Singapore Shipyard not later than 23 months
effective from date of contract signing.
	 
	 	 	Except that, in the event of delays in the construction of the Vessel or any performance
required under this Contract especially due to delay in delivery of main engines of 17
months,gearboxes and CPP of 17 months, winches package of 17 months and other causes which
under the terms of this Contract permit postponement of the date for delivery, the
aforementioned date for delivery of the Vessel shall be postponed accordingly. The
aforementioned date, or such later date to which the requirement of delivery is postponed
pursuant to such term, is herein called the “Delivery Date”.
	 
	7.2	 	When and How Effected:
	 
	 	 	Provided that the Owner shall have fulfilled all of its obligations
stipulated under this Contract, delivery of the Vessel shall be
affected forthwith by the concurrent delivery by each of the parties
hereto to the other of the Protocol of Delivery and Acceptance,
acknowledging delivery of the Vessel by the Builder and acceptance
thereof by the Owner.
	 
	7.3	 	Documents to be delivered to Owner:
	 
	 	 	The Builder shall deliver to the Owner all documents as specified in Exhibit B — List of
Delivery Documents.
	 
	 	 	It is agreed that if, through no fault on the part of the Builder, the
classification and/or other certificates are not available at the time of delivery of
the Vessel, provisional or interim certificates shall be accepted by the Buyer, provided
that these provisional or interim certificates are issued without any recommendation or
condition. The Builder shall furnish the Owner with the permanent certificates as
promptly as possible after such permanent certificates have been issued.
	 
	7.4	 	Tender of Vessel:
	 
	 	 	If the Owner fails to take delivery of the Vessel after completion
thereof according to this Contract and the Specifications without any
justifiable reason, the Builder shall nevertheless have the right to
tender delivery of the Vessel after compliance with all procedural
requirements as above provided.
	 
	7.5	 	Title and Risk:
	 
	 	 	Title to all materials (procured or purchased by Builder) and works at
the Shipyard for use in connection with the construction of the
Vessel, to the extent paid for by the Owner, shall also vest in the
Owner as and when paid for, provided however, that the risk of loss or
damage to such materials shall remain with Builder until the delivery
and acceptance of the Vessel. Builder shall nonetheless always have a
right of lien on the

Page 17

 

	 	 	materials and works until such time as the Vessel
is delivered, accepted and paid for by Owner.

	7.6	 	Removal of Vessel:
	 
	 	 	The Owner shall take possession of the Vessel immediately upon
delivery and acceptance thereof and shall remove the Vessel from the
premises of the Shipyard within seven (7) days after delivery and
acceptance thereof is affected. If the Owner does not remove the
Vessel from the premises of the Shipyard within the aforesaid seven
(7) days, then, in such event the Owner shall pay to the Builder the
reasonable mooring charges of the Vessel, and other service which
charges are normally charged for vessel alongside a shipyard.
Alternatively, the Builder shall have the right to remove the Vessel
to a location outside the Shipyard at the risk and expenses of the
Owner.

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ARTICLE 8 — DELAYS AND EXTENSION OF TIME FOR

DELIVERY (FORCE MAJEURE)

	8.1	 	Causes of Delay:
	 
	 	 	If, at any time before the actual delivery, either the construction of
the Vessel or any performance required as a prerequisite of delivery
of the Vessel is delayed due to Acts of God, acts of princes or
rulers, intervention of government authorities, war (whether declared
or not), blockade, revolution, insurrections, mobilisation, civil
commotion, riots, strikes, sabotages, lockouts, labour shortages,
(Strikes, sabotages, lockouts and labour shortages occurring strictly
at the Builder’s yard shall not be cause for permissible delays)
plague, epidemics, fire, flood, typhoons, hurricanes, earthquakes,
tidal waves, landslides, explosions, collisions, stranding, embargoes,
delays in transportation, unforeseen shortage of materials or
equipment, or delay in delivery or inability to take delivery thereof
beyond the Builder’s control, prolonged failure or restriction of
energy sources including electric current and petroleum, mishaps of
casing and/or forging, or by destruction of the Shipyard or works of
the Builder or its subcontractors, or of the Vessel or any part
thereof by fire, flood, or other causes, or resulting from any such
causes hereinabove described which in turn delay the construction of
the Vessel or the Builder’s performance under this Contract or causes
beyond the reasonable control of the Builder which makes continuance
of the performance of the Contract impossible; the Delivery Date shall
be postponed for a period of time which shall not exceed the total
accumulated time of all such delays.
	 
	8.2	 	Notice of Delay:
	 
	 	 	Within seven (7) days from the date of commencement of the delay, or
the receipt of advice on the commencement of the delay (as from
subcontractors and suppliers), on account of which the Builder claims
that it is entitled under this Contract to a postponement of the
Delivery Date of the Vessel, the Builder shall advise the Owner by fax
confirming in writing of the date such delay commences and the reasons
thereof. If no notice is received during the period of the delay,
then no delay will be considered. However, if the notice of delay is
received after the seven days as noted before, then such days that the
notice of delay has not been received from the commencement of delay
until notice is given, shall not be considered.
	 
	 	 	Likewise within seven (7) days after such delay ends, the Builder
shall advise the Owner in writing or by fax confirmed in writing of
the date such delay ended, and also shall specify the period of time
by which the Delivery Date is postponed by reason of such delay.
	 
	 	 	The Owner may dispute the Builder’s claim that it is entitled under
this Contract to a postponement of the Delivery Date of the Vessel, in
which event the dispute shall be submitted for final decision by
dispute resolution in accordance with Article 13 hereof.
	 
	8.3	 	Definition of Permissible Delay:

Page 19

 

	 	 	Delays on account of such causes as specified in Paragraph 1 of this
article are to be distinguished from unauthorised delays on account of
which the Contract Price is subject to adjustment as provided for in
Article 3 hereof.
	 
	 	 	Notwithstanding the above, the Builder shall endeavour to keep the delay of the delivery of
the Vessel due to force majeure events as described hereinabove to a minimum.

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ARTICLE 9 — WARRANTY OF QUALITY

	9.1	 	Guarantee:
	 
	 	 	The Builder undertakes to use reasonable efforts to secure the best
possible guarantees and warranties from the manufacturers of machinery
and equipment, which in all cases shall be valid for not less than
twelve (12) months after the delivery of the vessel.
	 
	 	 	Subject to the provisions hereinafter set forth, the Builder undertakes and guarantees to
remedy, free of charge to the Owner, any defects in the Vessel which are due to defective
design, material or workmanship on the part of the Builder and/or its subcontractors,
provided that the defects are discovered within a period of twelve (12) months after the date
of delivery of the Vessel and a notice thereof is duly given to the Builder as herein below
provided.
	 
	 	 	The Builder shall, wherever possible, upon the end of the twelve (12) months period, assign
and transfer to the Owner in full the benefits of any unexpired guarantees and warranties.
	 
	 	 	For the purpose of this Article, the Vessel shall include her hull, machinery, equipment and
gear, but excludes the OFE or any parts for the Vessel which has been supplied by or on
behalf of the Owner. Builder shall not be responsible for any defects in any part of the
Vessel which may subsequent to delivery of the Vessel have been replaced or in any way
repaired by any other contractor, except those approved previously by the builder or for any
defects which have been caused or aggravated by omission or improper use and maintenance of
the Vessel on the part of the Owner, its servants or agents or by ordinary wear and tear or
by any other circumstances whatsoever beyond the control of the Builder.
	 
	9.2	 	Notice of Defects:
	 
	 	 	The Owner shall notify the Builder in writing, or by fax confirmed in
writing, of any defects for which a claim is made under this guarantee
as promptly as possible after discovery thereof provided such notice
is received within seven (7) days of expiry of the warranty period.
The Owner’s written notice shall describe the nature and extent of the
defects.
	 
	9.3	 	Remedy of Defects:
	 
	a)	 	The Builder shall remedy, at its expense, any defects covered by the Builder’s guarantees and
undertakings under this Article, by making all necessary repairs or replacements at the
Shipyard. Owner shall be responsible for all costs and risks associated with bringing the
Vessel to the Shipyard.

Page 21

 

	b)	 	However, if it is in the reasonable opinion of the Parties impractical to bring the Vessel to
the Shipyard, the Owner may cause the necessary repairs or replacements to be made elsewhere
which is deemed suitable by the Owner for the purpose. In such event, the Builder shall pay
to the Owner the costs of such repairs or replacements provided that Builder shall only be
liable for an amount equal to the amount that Builder would have incurred if such repairs or
replacements were carried out by Builder at the Shipyard.
	 
	9.4	 	Guarantee Engineer:
	 
	 	 	The Builder shall have the right to appoint a Guarantee Engineer to
serve on the Vessel as its representative for such portion of the
guarantee period as the Builder may decide. The Owner and its
employees shall, subject to operational requirements of the Vessel,
give the Guarantee Engineer full co-operation in carrying out his
duties as the representative of the Builder on board the Vessel.
	 
	 	 	The Owner shall accord the Guarantee Engineer the treatment comparable to the
Vessel’s Chief Engineer and shall provide him with accommodations and subsistence at no
cost to the Builder and/or the Guarantee Engineer.
	 
	9.5	 	Exclusion of other warranties:
	 
	 	 	Except as set forth above in this Article 9, Builder excludes all other representations,
obligations, liabilities and warranties of any kind, express or implied, including without
limitation any implied warranty of good and workmanlike performance or diligence, any express
or implied warranties of merchantability, fitness for a particular purpose, conformity to
models or samples, design or performance, or otherwise, and any other express or implied
warranty, whether at common law or in contract or tort or by statute or otherwise including
without limitation strict liability or negligence, for the Vessel.

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ARTICLE 10 — RESCISSION BY OWNER

10.1 Right of Rescission

Save where the termination of the Contract is mutually agreed upon between the Owner and the
Builder, the Owner is not entitled to rescind the Contract except under following conditions:

	 	a)	 	the Builder shall become insolvent, have a receiver appointed, apply for
moratorium, be declared bankrupt, go into liquidation, or if all or substantially all of
Builder’s assets shall be attached or seized; or
	 
	 	b)	 	If the Continuous Bollard Pull at 100% MCR at trial is less than 123 metric tons
and as corrected for enviromental conditions approved by Class; or
	 
	 	c)	 	If the actual speed of the Vessel upon trial run using only two (2) Main Engines
is less than 11 knots at 100 % MCR; or
	 
	 	d)	 	Late Delivery — as defined in Article 3.1

	10.2	 	Notice:
	 
	 	 	In the event that the Owner shall exercise its right of rescission of
this Contract under and pursuant to any of the provisions of this
Contract specifically permitting the Owner to do so, then the Owner
shall notify the Builder in writing or by fax confirming in writing,
and such rescission shall be effective as of the date notice thereof
is received by the Builder.
	 
	10.3	 	Rights upon Termination:
	 
	 	 	In the event this Contract is terminated by Owner pursuant to the provisions of Articles
10.1, the Builder shall promptly refund to the Owner the full amount of all sums paid by the
Owner to the Builder on account of the Vessel together with the interest thereon, unless the
Builder proceeds to the courts under the provisions of Article 13 hereof.
	 
	 	 	In such event, the Builder shall pay the Owner interest at the rate of SIBOR plus 1% per
annum on the amount required herein to be refunded to the Owner, computed from the date
following the date of receipt on which such sums were paid by the Owner to the Builder to the
date of remittance by transfer of such refund to the Owner by the Builder.

For the purpose of this Article, the Builder shall upon execution of the Contract provide the Owner
with a Corporate Guarantee as annexed hereto as Exhibit “H” Once the Builder has refunded the
Owner in full, the title in and to the materials , works and Vessel, referred to in Article 7.5
shall revert automatically to Builder.

	10.4	 	Discharge of Obligations:
	 
	 	 	Upon such refund by the Builder to the Owner, all obligations, duties and liabilities of
each of the parties hereto to the other under this Contract shall be forthwith completely
discharged.

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ARTICLE 11 — OWNER’S DEFAULT

	11.1	 	Definition of Default:
	 
	 	 	The Owner shall be deemed to be in default of performance of its
obligations under this Contract in the following cases:
	 
	a)	 	If the Owner fails to pay any of the 1st, 2nd, 3rd and 4th Instalments to the Builder within
seven (7) Working Days after such Instalment becomes due and payable under the provisions of
Article 2 hereof; or
	 
	b)	 	If the Owner fails to pay the 5th Instalment together with amounts for change
orders to the Builder concurrently with the delivery of the Vessel by the Builder to the Owner
as provided in Article 2 hereof; or
	 
	c)	 	If the Owner fails to take delivery of the Vessel, when the Vessel is duly tendered for
delivery by the Builder under the provisions of article 7 hereof
	 
	d)	 	If the Owner fails to provide to the Builder the Corporate Guarantee set out in Article 2.3
within the time period set out in Article 2.3.
	 
	11.2	 	Interest and charge:
	 
	 	 	If the Owner is in default of payment for any Instalment as provided
in Paragraph (a) and (b) of this article, the Owner shall pay
interest on such Instalment at the rate of SIBOR plus one percent
(SIBOR + 1%) per annum from the due date thereof to the date of
payment to the Builder of the full Instalment amount including
interest; in case the Owner shall fail to take delivery of the Vessel
as provided in Paragraph 1 (c) of this Article, the Owner shall be
deemed in default of payment of the Fifth Instalment and shall pay
interest thereon at the same rate as aforesaid from and including the
day on which the Vessel is tendered for delivery by the Builder to
the date of payment to the Builder of the full Instalment amount due
including interest.
	 
	11.3	 	Effect of Default:
	 
	a)	 	If any default by the Owner occurs as provided herein before, the Delivery Date shall be
automatically postponed for the period from the respective due date of continuance of such
default by the Owner.
	 
	b)	 	If any default by the Owner continues for a period of thirty (30) days or more from the
due date, the Builder may, at its option, rescind this Contract by giving notice to such
effect to the Owner by confirmed in writing.
	 
	 	 	In the event of termination, the Builder shall be entitled to claim for (a) the Vessel or
part thereof that has been completed; (b) all costs resulting from termination including but
not limited to costs of terminating contracts with suppliers and subcontractors; (c) costs of
equipment, materials and items ordered; and (d) the amount of ten percent (10%) of the
Contract Price whereby such amount is a genuine estimate of the Builder’s loss and damage
resulting from the Owner’s default and such amount shall not constitute a penalty.

Page 24

 

	11.4	 	Sale of Vessel:
	 
	a)	 	In the event of rescission of this Contract as above provided, the Builder shall have full
right and power either to complete or not to complete the Vessel as it deems fit, and to sell
the Vessel at a public or private sale on such terms and conditions as the Builder thinks fit
without being answerable for any loss or damage.
	 
	b)	 	In the event of the sale of the Vessel in its completed state, the proceeds of the sale
received by the Builder shall be applied firstly to payment of all expenses incidental to such
sale and otherwise incurred by the Builder as a result of the Owner’s default, and then to
payment of all unpaid Instalments of the Contract Price and interest on such Instalments at
the rate of SIBOR plus one percent (SIBOR +1%) per annum from the respective due dates thereof
to the date of application of such proceeds.
	 
	c)	 	In the event of sale of the Vessel in its uncompleted state, the proceeds of sale received by
the Builder shall be applied firstly to all expenses incidental to such sale and otherwise
incurred by the Builder as a result of the Owner’s default, and then to payment of all costs
of construction of the Vessel less the Instalments so retained by the Builder and compensation
to the Builder for its reasonable loss of profit due to the rescission of this Contract.
	 
	d)	 	In either of the above events of sale, if the proceeds of sale exceeds the total of amount to
which such proceeds are to be applied as aforesaid, the Builder shall promptly pay the excess
to the Owner without interest, provided, however, that the amount of such payment to the Owner
shall in no event exceed the total amount of Instalments already paid by the Owner and the
price of the OFE, if sold together with the Vessel.
	 
	e)	 	If the proceeds of sale are insufficient to pay such total amount payable as aforesaid, the
Owner shall promptly pay the deficiency to the Builder within thirty (30) days upon receipt by
the Owner of the Builder’s notice specifying the amount to be paid.

Page 25

 

ARTICLE 12 — INSURANCE

	12.1	 	Extent of Insurance Coverage:
	 
	 	 	From the time of keel-laying of the Vessel until the same is
completed, delivered to and accepted by the Owner, the Builder shall,
at its own cost and expense, keep the Vessel and all machinery,
materials, equipment, appurtenances and outfit, delivered to the
Shipyard for the Vessel or built into, or installed in or upon the
Vessel, including the OFE, fully insured with International insurance
companies under coverage corresponding to International Builder’s
Risks Insurance Clause.
	 
	 	 	The amount of such insurance coverage shall, up to the date of
delivery of the Vessel, be in an amount at least equal to, but not
limited to, the aggregate of the payment made by the Owner to the
Builder including the value of the OFE if delivered to the Builder.
	 
	 	 	The policy referred to hereinabove shall be taken out in the joint
names of the Builder and the Owner. All losses under such policy
shall be payable to the Builder who shall apply the recovered amount
in accordance with this Article.
	 
	12.2	 	Application of Recovered Amount:
	 
	a)	 	Partial Loss:
	 
	 	 	In the event the Vessel shall be damaged by any insured cause whatsoever prior to acceptance
thereof by the Owner and in the further event that such damage shall not constitute an actual
or a constructive total loss of the Vessel, the Builder shall apply the amount recovered
under the insurance policy referred to in Paragraph 1 of this Article to the repair of such
damage satisfactory to the Classification Society and the Owner, and the Owner shall accept
the Vessel under the Contract if completed in accordance with this Contract and
Specifications.
	 
	b)	 	Total Loss:
	 
	 	 	However, in the event that the Vessel is determined to be an actual or constructive total
loss, the Builder shall by the mutual agreement between the parties hereto, either:
	 
	i)	 	Proceed in accordance with the terms of this Contract, in which case the amount recovered
under said insurance policy shall be applied to the reconstruction of the Vessel’s damage,
provided the parties hereto shall have first agreed in writing as to such reasonable
postponement of the Delivery Date and adjustment of other terms of this Contract including the
Contract Price as may be necessary for the completion of such reconstruction; or
	 
	ii)	 	Refund immediately to the Owner, upon recovery from the insurers, the amount of all
Instalments paid to the Builder under this Contract and the OFE price if delivered to the
Builder, without any interest; whereupon this Contract shall be deemed to be rescinded and all
rights, duties, liabilities and obligations of each of the parties to the other shall
terminate forthwith.

Page 26

 

	 	 	If the parties hereto fail to reach such agreement within two (2) months after the
Vessel is determined to be an actual or constructive total loss, the provisions of
Sub-paragraph (b) (ii) as above shall apply
	 
	12.3	 	Termination of Builder’s Obligation to Insure:
	 
	 	 	The Builder’s obligation to insure the Vessel hereunder shall cease
and terminate forthwith upon delivery thereof and acceptance by the
Owner.
	 
	12.4	 	Insurance
	 
	 	 	Each party shall maintain insurance with reputable insurers for the duration of the work
under this Contract to support their indemnity obligations set out in Article 21. Such
insurance shall name the other party as an additional insured and shall waive all rights of
subrogation against the other party. Such insurance shall also provide for thirty (30) days
prior written notice to the other party of cancellation, material change, or reduction of
coverage. The party taking out insurance shall be responsible for any premiums and/or
deductibles under such insurance. Each party shall provide to the other party a certificate
of insurance evidencing such insurance.

Page 27

 

ARTICLE 13 — LAW AND DISPUTE RESOLUTION

	13.1	 	This Contract and all other agreements and amendments pursuant and relating to this
Contract shall be construed, interpreted and in all respects be governed by English Law.
	 
	13.2	 	Notwithstanding any translation of this Contract Document or any of the Annexes or
Exhibits hereto into any other languages, the English wording shall prevail.
	 
	13.3	 	If any dispute arises between the parties hereto in regard to the design and/or
construction of the Vessel, its machinery and equipment, and/or in respect of the materials
and/or workmanship thereof, and/or thereon, or the Specification or the Plans, the Parties
may by mutual agreement refer the dispute to the Classification Society or to such other
expert as may be mutually agreed between the parties hereto, and whose decision shall be
final, conclusive, and binding upon the parties hereto. Notwithstanding any other
provisions in this Contract, in the event that the Parties are not satisfied with the
decision of the Classification Society or such other expert, the matter shall be referred
to dispute resolution as set out in sub-paragraph 13.5.
	 
	13.4	 	In the event that the Parties hereto do not agree to settle a dispute according to
sub-paragraph 13.3 above and/or in the event of any other dispute of any kind whatsoever
between the parties and relating to this Contract or its rescission or any stipulation
therein, such dispute etc. shall be submitted to dispute resolution under sub-paragraph
13.5 below.
	 
	13.5	 	Any dispute or difference arising out of, related to or in connection with this Contract
shall be referred to and resolved by the English Courts and the Parties irrevocably submit
to such non-exclusive jurisdiction.

Page 28

 

ARTICLE 14 — RIGHT OF ASSIGNMENT

	14.1	 	Neither of the parties hereto shall assign this Contract to a third party unless prior
consent of the other party has been given in writing. Such consent shall not be unreasonably
withheld. However the Owner is permitted to (1) assign this Contract to a subsidiary provided
Owner remains fully liable for all obligations under this Contract to the Builder, and or (2)
assign the rights and benefits under this contract to any first class bank that Owner may
borrow money from.

	14.2	 	This Contract shall endure to the benefit of and shall be binding upon the lawful
successors or the legitimate assigns of either of the parties hereto.

Page 29

 

ARTICLE 15 — TAXES AND DUTIES

	15.1	 	Taxes and Duties in Singapore:
	 
	 	 	The Builder shall bear and pay all taxes and duties, including any
GST if applicable, imposed in Singapore in connection with execution
and/or performance of this Contract but excluding any taxes and
duties imposed in Singapore upon the OFE.

Page 30

 

ARTICLE 16 — PATENTS, TRADEMARKS, COPYRIGHTS, ETC.

	16.1	 	Patents, Trademarks and Copyrights:
	 
	 	 	Machinery and equipment of the Vessel may bear the patent number,
trademarks or trade names of the manufacturers.
	 
	 	 	The Builder shall defend and hold the Owner harmless from patent
liability or claims of patent infringement of any nature or kind,
including costs and expenses for, or on account of any patented or
patentable invention made or used in the performance of this Contract
and also including costs and expenses of litigation, if any.
	 
	 	 	Nothing contained herein shall be construed as transferring any
patent or trademark rights or copyright in equipment covered by this
Contract, and all such rights are hereby expressly reserved to the
true and lawful owners thereof.
	 
	 	 	Owner shall keep all designs, drawings and information provided by
the Builder under this Contract confidential and shall not disclose
the same to any third party except for the purpose of maintenance or
repair of the Vessel. Further Owner shall not be entitled to use the
designs, drawings and information provided by the Builder to build
another vessel.
	 
	 	 	The Builder’s warranty hereunder does not extend to the OFE if any.
In regard to any OFE Owner warrants to the Builder that no trademark,
patent, copyright or any other rights of third parties will be
infringed thereby by the use and/or possession of such items by the
Builder to perform the work under this Contract and Owner shall
indemnify and hold harmless Builder from and against all claims,
losses, damages, expenses and/or any other costs resulting from any
infringement of such third parties’ rights.
	 
	16.2	 	Rights to Vessel design and Drawings
	 
	 	 	Should Builder, or any other party related thereto, construct for any other party a vessel
using the design, or a substantially similar design, as the one used in this Contract,
Builder agrees to pay Owner USD 50,000 per vessel within 15 days of delivery of such vessel
to another party. Similarly, if Owner builds a vessel using the design, or a substantially
similar design, as the one used in this Contract, with any other builder, or builder not
related to the Builder, Owner agrees to pay Builder USD 50,000 per vessel within 15 days of
delivery of such vessel to Owner.
	 
	 	 	Nothing above shall create any warranty, express or implied, including any warranty of
merchantability or fitness of the vessel for any particular purpose, and neither Builder or
Owner shall have any liability for negligence or manufacturers strict liability in connection
with the design, manufacture or sale of any future vessel.
	 
	 	 	Design as defined herein to be limited to the Specification attached and the list of drawings
shown in Article 0.7 of said Specification only.

Page 31

 

ARTICLE 17- OWNER FURNISHED EQUIPMENT

	17.1	 	Responsibility of Owner:
	 
	a)	 	The Owner shall, at its own risk, cost and expense, supply and deliver to the Builder all of
the Owner Furnished Equipment as per Exhibit G at the warehouse or other storage of the
Shipyard in the proper condition ready for installation in or on the Vessel, in accordance
with the time schedule set out in the Specification. In the event of late delivery of the
Owner’s Furnished Equipment, the Delivery Date shall be extended for the same amount of time
as the delay in delivery of the OFE.
	 
	b)	 	In order to facilitate installation by the Builder of the OFE in or on the Vessel, the Owner
shall furnish the Builder with necessary specifications, plans, drawings, instruction books,
manuals, test reports and certificates required by the rules and regulations at no cost to the
Builder.
	 
	c)	 	In the event that the OFE are found to be unsuitable, in improper condition or defective in
any way Builder shall be entitled to extend the Delivery Date for any delays resulting from
such causes and claim all costs and expenses incurred by the Builder from such causes
including but not limited to the cost of repair or adjustment to the OFE.
	 
	d)	 	Supply free of charges suitable engineers for installation and commissioning of the OFE.
	 
	17.2	 	Responsibility of the Builder
	 
	 	 	The Builder shall be responsible for storing and handling with reasonable care of the OFE
after delivery thereof at the Shipyard, and shall, at its own cost and expense, install
them in or on the Vessel, unless otherwise provided herein or agreed by the parties hereto,
provided, always, that the Builder shall not be responsible for quality, efficiency and/or
performance of any of the OFE.

Page 32

 

ARTICLE 18 — NOTICE

	18.1	 	Address:
	 
	 	 	Any and all notices and communications in connection with this
Contract shall be addressed as follows:
	 
	 	 	To the Owner:
	 
	 	 	Attn
	 
	 	 	Fax No.:
	 
	 	 	To the Builder:
	 
	 	 	Attn
	 
	 	 	Fax No.:
	 
	18.2	 	Language:
	 
	 	 	Any and all notices and communications in connection with this
Contract shall be written in the English language.

ARTICLE 19 — INTERPRETATION

Page 33

 

	19.1	 	Laws:
	 
	 	 	The parties hereto agree that the validity and interpretation of this
Contract and of each article and part thereof shall be governed by
English laws.
	 
	19.2	 	Discrepancies:
	 
	 	 	All general language or requirements embodied in the Specifications
are intended to amplify, explain and implement the requirements of
this Contract. However, in the event that any language or
requirements so embodied permit an interpretation inconsistent with
any provisions of this Contract, then, in each and every such event,
the provisions of this Contract shall prevail and govern. The
Specifications and Plan are also intended to explain each other, and
anything shown on the Plan and not stipulated in the Specifications
or stipulated in the Specifications and not shown on the Plan shall
be deemed and considered as if embodied in both. In the event of
conflict between the Specifications and Plan, the Specifications
shall prevail and govern.
	 
	19.3	 	Entire Agreement:
	 
	 	 	This Contract contains the entire agreement and understanding between
the parties hereto and supersedes all prior negotiations,
representations, undertakings and agreements on any subject matter of
this Contract.

Page 34

 

ARTICLE 20 — EFFECTIVE DATE OF CONTRACT

	20.1	 	This Contract shall become effective as of the date of this Contract.
	 
	20.2	 	Any modifications of and/or changes to this Contract are only valid if executed in writing
and duly signed by all Parties.
	 
	20.3	 	This Contract has been made in good faith in the English language and has been signed in two
originals.

Page 35

 

ARTICLE 21 — INDEMNITIES / LIABILITIES

“Builder’s Personnel” shall mean all employees, agents, subcontractors, invitees, servants

or representatives of Builder.

“Owner’s Personnel” shall mean all employees, agents, subcontractors (except Builder’s Personnel),
invitees, servants or representatives of Owner.

	21.1	 	The Owner shall not be responsible for any loss of and/or damage to the property of Builder
and/or Builder’s Personnel arising out of, in connection with or related to the Contract
and/or the Vessel and the Builder agrees to defend, indemnify and hold the Owner and/or
Owner’s Personnel free and harmless from and against any and all claims and/or liabilities
(including, without limitation, the costs of any lawsuit and reasonable attorney’s fees) with
respect to any such loss and/or damage, regardless of whether such loss and/or damage is
caused by the negligence or fault of Owner and/or Owner’s Personnel.
	 
	21.2	 	The Builder shall not be responsible for any loss of and/or damage to the property of Owner
and/or Owner’s Personnel arising out of, in connection with or related to the Contract and/or
the Vessel and the Owner agrees to defend, indemnify and hold the Builder and/or Builder’s
Personnel free and harmless from and against any and all claims and/or liabilities (including,
without limitation, the costs of any lawsuit and reasonable attorney’s fees) with respect to
any such loss and/or damage, regardless of whether such loss and/or damage is caused by the
negligence or fault of Builder and/or Builder’s Personnel.
	 
	21.3	 	The Builder agrees to defend, indemnify and hold the Owner and/or Owner’s Personnel
	 
	 	 	free and harmless from and against any and all claims and /or liabilities (including, without
limitation, the cost of any lawsuit and reasonable attorney’s fees) arising in favour of any
of Builder’s Personnel (or representatives or any survivor of any of the foregoing) on
account of illness of, injury to and/or death of Builder’s Personnel arising out of, in
connection with or related to the Contract and/or the Vessel, regardless of whether the Owner
and/or Owner’s Personnel may be wholly, partially or solely negligent or otherwise at fault.
	 
	21.4	 	The Owner agrees to defend, indemnify and hold the Builder and/or Builder’s
	 
	 	 	Personnel free and harmless from and against any and all claims and /or liabilities
(including, without limitation, the cost of any lawsuit and reasonable attorney’s fees)
arising in favour of any of Owner’s Personnel (or representatives or any survivor of any of
the foregoing) on account of illness of, injury to and/or death of Owner’s Personnel arising
out of, in connection with or related to the Contract and/or the Vessel, regardless of
whether the Builder and/or Builder’s Personnel may be wholly, partially or solely negligent
or otherwise at fault.
	 
	21.5	 	Each party agrees to indemnify and hold harmless the other party, its subsidiary and
affiliated companies and their respective employees, agents and servants from and against any
and all claims and liabilities in respect of damage to or loss of third party property and
injury to, illness of or death of any third party to the extent caused by the indemnifying
party, its subsidiary and affiliated companies and their respective
employees, agents and servants, arising out of, in connection with or related to the Contract
and/or the Vessel.

Page 36

 

	21.6	 	Except as expressly provided for in the Contract, neither party shall be liable to the
other party for any consequential, direct, indirect and/or special loss and/or damage, including but not limited to loss
of earnings, loss of profit, loss of contract or loss of time in operating the Vessel and/or other assets of the Owner,
regardless of whether the Parties and/or Owner’s Personnel and/or Builder’s Personnel may be wholly, partially or solely
negligent (including but not limited to wilful misconduct or gross negligence) or otherwise at fault.
	 
	21.7	 	Notwithstanding any other provision in this Contract, the maximum liability of the Builder to
the Owner for any and all claims, damages, losses and expenses arising out of related to or in
connection with the Vessel and /or the Contract shall not exceed ten percent (10%) of the
Contract Price and such limitation shall limit such liability not only in Contract but also in
tort or otherwise at law or in equity and shall further survive the expiry or cancellation of
this Contract.

In witness whereof, the parties hereto have caused this Contract to be duly executed the day and
year first above written.

	 	 	 
	For and on behalf of

	 	Witnessed by
	 
	 	 
	For and on behalf of

	 	Witnessed by

Page 37exv10w6

 

EXHIBIT 10.6

CHANGE IN CONTROL AND TERMINATION AGREEMENT

     NiSource Inc., a Delaware corporation (“Employer”) and __________ (“Executive”) hereby enter
into a Change in Control and Termination Agreement as of __ __________, __________
(“Agreement”), which Agreement is hereinafter set forth.

WITNESSETH:

     WHEREAS, Executive is currently employed by Employer as its __________;

     WHEREAS, Employer desires to provide security to Executive in connection with Executive’s
employment with Employer in the event of a Change in Control affecting Employer; and

     WHEREAS, Executive and Employer desire to enter into this Agreement pertaining to the terms of
the security Employer is providing to Executive with respect to his employment in the event of a
Change in Control;

     NOW, THEREFORE, in consideration of the mutual covenants and promises contained herein, and
other good and valuable consideration, the receipt of which is hereby acknowledged, the parties
agree as follows:

     1. Term. The term of this Agreement shall be the period beginning on the date hereof
and terminating on the date 36 months after such date (the “Term”), provided that for each day from
and after the date hereof the Term will automatically be extended for an additional day, unless
either Employer or Executive has given written notice to the other party of its or his election to
cease such automatic extension, in which case the Term shall be the 36-month period beginning on
the date such notice is received by such other party.

     2. Definitions. For purposes of this Agreement:

 

 

     (a) “Affiliate” or “Associate” shall have the meaning set forth in Rule 12b-2 under the
Securities Exchange Act of 1934.

     (b) “Base Salary” shall mean Executive’s monthly base salary at the rate in effect on
the date of a reduction for purposes of paragraph (g) of this Section, or on the date of a
termination of employment under circumstances described in subsections 3(a) or (b) below,
whichever is higher; provided, however, that such rate shall in no event be less than the
highest rate in effect for Executive at any time during the Term.

     (c) “Beneficiary” shall mean the person or entity designated by Executive, by written
instrument delivered to Employer, to receive the benefits payable under this Agreement in
the event of his death. If Executive fails to designate a Beneficiary, or if no Beneficiary
survives Executive, such death benefits shall be paid:

	 	(i)	 	to his surviving spouse; or
	 
	 	(ii)	 	if there is no surviving spouse, to his living
descendants per stirpes; or
	 
	 	(iii)	 	if there is neither a surviving spouse nor
descendants, to his duly appointed and qualified executor or personal
representative.

     (d) “Bonus” shall mean Executive’s target annual incentive bonus compensation for the
calendar year in which the date of a termination of employment under circumstances described
in subsection 3(a) below occurs, under the incentive bonus compensation plan then maintained
by Employer; provided, however, that such target annual incentive bonus compensation shall
in no event be less than the highest target annual incentive bonus compensation of Executive
under any such incentive bonus compensation plan for any calendar year commencing during the
Term.

 

 

     (e) A “Change in Control” shall be deemed to take place on the occurrence of any of the
following events:

     (1) The acquisition by an entity, person or group (including all Affiliates or
Associates of such entity, person or group) of beneficial ownership, as that term is
defined in Rule 13d-3 under the Securities Exchange Act of 1934, of capital stock of
Employer entitled to exercise more than 30% of the outstanding voting power of all
capital stock of Employer entitled to vote in elections of directors (“Voting
Power”);

     (2) The effective time of (i) a merger or consolidation of Employer with one or
more other corporations as a result of which the holders of the outstanding Voting
Power of Employer immediately prior to such merger or consolidation (other than the
surviving or resulting corporation or any Affiliate or Associate thereof) hold less
than 50% of the Voting Power of the surviving or resulting corporation, or (ii) a
transfer of 30% of the Voting Power, or a Substantial Portion of the Property, of
Employer other than to an entity of which Employer owns at least 50% of the Voting
Power; or

     (3) The election to the Board of Directors of Employer of candidates who were
not recommended for election by the Board of Directors of Employer in office
immediately prior to the election, if such candidates constitute a majority of those
elected in that particular election.

Notwithstanding the foregoing, a Change in Control shall not be deemed to take place by virtue of
any transaction in which Executive is a participant in a group effecting an acquisition of

 

 

Employer and, after such acquisition, Executive holds an equity interest in the entity that has
acquired Employer.

     (f) “Good Cause” shall be deemed to exist if, and only if:

     (1) Executive engages in acts or omissions constituting dishonesty,
intentional breach of fiduciary obligation or intentional wrongdoing or
malfeasance, in each case that results in substantial harm to Employer or
any Affiliate; or

     (2) Executive is convicted of a criminal violation involving fraud or
dishonesty.

     (g) “Good Reason” shall be deemed to exist if, and only if:

     (1) there is a significant change in the nature or the scope of Executive’s
authorities or duties;

     (2) there is a significant reduction in Executive’s monthly rate of Base
Salary, his opportunity to earn a bonus under an incentive bonus
compensation plan maintained by Employer or his benefits; or

     (3) Employer changes by 100 miles or more the principal location in which
Executive is required to perform services.

     (h) “Pension Plan” shall mean any Retirement Plan that is a defined benefit plan as
defined in Section 3(35) of the Employee Retirement Income Security Act of 1974, as amended
(“ERISA”).

     (i) “Retirement Plan” shall mean any qualified or supplemental employee pension benefit
plan, as defined in Section 3(2) of ERISA, currently or hereinafter made available by
Employer in which Executive is eligible to participate.

 

 

     (j) “Severance Period” shall mean the period beginning on the date Executive’s
employment with Employer terminates under circumstances described in subsection 3(a) and
ending on the date 36 months thereafter.

     (k) “Substantial Portion of the Property of Employer” shall mean 50% of the aggregate
book value of the assets of Employer and its Affiliates and Associates as set forth on the
most recent balance sheet of Employer, prepared on a consolidated basis, by its regularly
employed, independent, certified public accountants.

     (l) “Welfare Plan” shall mean any health and dental plan, disability plan, survivor
income plan or life insurance plan, as defined in Section 3(1) of ERISA, currently or
hereafter made available by Employer in which Executive is eligible to participate.

     3. Benefits Upon Termination of Employment. (a) The following provisions will apply
if a Change in Control occurs during the Term, and (i) at any time during the 24 months after the
Change in Control occurs (whether during or after the expiration of the Term), the employment of
Executive with Employer is terminated by Employer for any reason other than Good Cause, or
Executive terminates his employment with Employer for Good Reason, or (ii) at any time during the
thirteenth month after the Change in Control occurs (whether during or after the expiration of the
Term), Executive terminates his employment with Employer for any reason:

     (1) Employer shall pay Executive an amount equal to 36 times the sum of (a) Executive’s
Base Salary plus (b) one-twelfth of his Bonus. Such amount shall be paid to Executive in a
lump sum within 180 days after his date of termination of employment; provided, however,
Executive, by written notice to Employer, may elect to receive such

 

 

payment on any date that is no earlier than the later to occur of (i) the date 10 days
after the date of termination, and (ii) the date 10 days after receipt of such notice.

     (2) Employer shall pay Executive an amount equal to the pro rata portion of Executive’s
target annual incentive bonus compensation for the calendar year in which the date of
termination of employment occurs, under the incentive bonus compensation plan then
maintained by Employer, that is applicable to the period commencing on the first day of such
calendar year and ending on the date of termination. Such amount shall be paid to Executive
in a lump sum within 180 days after his date of termination of employment; provided,
however, Executive, by written notice to Employer, may elect to receive such payment on any
date that is no earlier than the later to occur of (i) the date 10 days after the date of
termination, and (ii) the date 10 days after receipt of such notice.

     (3) Executive shall receive any and all benefits accrued under any Retirement Plan,
Welfare Plan or other plan or program in which he participates at the date of termination of
employment, to the date of termination of employment, the amount, form and time of payment
of such benefits to be determined by the terms of such Retirement Plan, Welfare Plan and
other plan or program, and Executive’s employment shall be deemed to have terminated by
reason of retirement, and without regard to vesting limitations in all such Plans and other
plans or programs not subject to the qualification requirements of Section 401 (a) of the
Internal Revenue Code of 1986 as amended (“Code”), under circumstances that have the most
favorable result for Executive thereunder for all purposes of such Plans and other plans or
programs. Payment shall be made at the earliest date permitted under any such Plan or other
plan or program that is not funded with a trust agreement.

 

 

     (4) (A) Employer shall pay to Executive a monthly Supplemental Pension Benefit in an
amount equal to the amount determined pursuant to clause (i) below less the amount
determined pursuant to clause (ii) below:

     (i) the aggregate monthly amount of the pension benefit (“Pension”) that would
have been payable to Executive under all Pension Plans if that Pension were computed
(A) by treating the Severance Period as service for all purposes of the Pension
Plans and (B) by considering his compensation during the Severance Period to be his
Base Salary and one-twelfth of his Bonus for all purposes of the Pension Plans;

     (ii) the aggregate monthly amount of any Pension actually paid to Executive
under all Pension Plans.

     (B) The Supplemental Pension Benefit payable to Executive hereunder shall be paid (i)
commencing at the later to occur of the last day of the Severance Period or the date payment
of his Pension commences under the Pension Plans; and (ii) in the same form as is applicable
to the Pension payable to Executive under the Pension Plans.

     (C) If Executive dies prior to commencement of payment to him of his Pension under the
Pension Plans, under circumstances in which a death benefit under the Pension Plans is
payable to his surviving spouse or other beneficiary, then Employer shall pay a monthly
Supplemental Death Benefit to Executive’s surviving spouse or other beneficiary entitled to
receive the death benefit payable with respect to Executive under the Pension Plans in an
amount equal to the amount determined pursuant to clause (i) below less the amount
determined pursuant to clause (ii) below:

 

 

     (i) the aggregate monthly amount of the death benefit that would have been
payable to the surviving spouse or other beneficiary of Executive under the Pension
Plans if that death benefit were computed (A) by treating the Severance Period as
service for all purposes of the Pension Plans and (B) by considering his
compensation during the Severance Period to be his Base Salary and one-twelfth of
his Bonus for all purposes of the Pension Plans;

     (ii) the aggregate monthly amount of any death benefit actually paid to the
surviving spouse or other beneficiary of Executive under the Pension Plans.

     (D) The Supplemental Death Benefit payable with respect to Executive hereunder shall be
payable at the same time, in the same form, and to the same persons as is applicable to the
death benefit payable with respect to Executive under the Pension Plans.

     (E) Notwithstanding the foregoing provisions, the total of the actual years of service
of Executive for purposes of each of the Pension Plans and the years of service for which
credit is given pursuant to subparagraphs (3)(A) and (C) shall not exceed the maximum number
of years of service, if any, that can be considered pursuant to the terms of such Pension
Plan.

     (F) Any actuarial adjustments made under the Pension Plans with respect to the form or
time of payment of a Pension or death benefit to Executive or his surviving spouse or other
beneficiary under the Pension Plans shall also be applicable to the Supplemental Pension
Benefit or Supplemental Death Benefit payable hereunder and shall be based upon the same
actuarial assumptions as those specified in the Pension Plans.

 

 

     (5) If upon the date of termination of Executive’s employment Executive holds any
options with respect to stock of Employer, all such options will immediately become
exercisable upon such date and will be exercisable for 200 days thereafter. Any restrictions
on stock of Employer owned by Executive on the date of termination of his employment will
lapse on such date.

     (6) During the Severance Period Executive and his spouse and other dependents will
continue to be covered by all Welfare Plans maintained by Employer in which he and his
spouse and other dependents were participating immediately prior to the date of his
termination as if he continued to be an employee of Employer and Employer will continue to
pay the costs of coverage of Executive and his spouse and other dependents under such
Welfare Plans on the same basis as is applicable to active employees covered thereunder;
provided that, if participation in any one or more of such Welfare Plans is not possible
under the terms thereof, Employer will provide substantially identical benefits. Coverage
under any such Welfare Plan will cease if and when Executive obtains employment with another
employer during the Severance Period, and becomes eligible for coverage under any
substantially similar Welfare Plan provided by his new employer.

     (7) During the Severance Period, Executive shall not be entitled to reimbursement for
fringe benefits, including without limitation, dues and expenses related to club
memberships, automobile expenses, expenses for professional services and other similar
perquisites.

     (b) If the employment of Executive with Employer is terminated by Employer or Executive other
than under circumstances set forth in subsection 3(a), Executive’s Base Salary

 

 

shall be paid through the date of his termination, and Employer shall have no further
obligation to Executive or any other person under this Agreement. Such termination shall have no
effect upon Employee’s other rights, including but not limited to, rights under the Retirement
Plans and the Welfare Plans.

     (c) Notwithstanding anything herein to the contrary, (1) in the event Employer shall terminate
the employment of Executive for Good Cause hereunder, Employer shall give Executive at least
thirty (30) days prior written notice specifying in detail the reason or reasons for Executive’s
termination, and (2) in the event Executive terminates his employment for Good Reason hereunder,
Executive shall give Employer at least thirty (30) days prior written notice specifying in detail
the reason or reasons for Executive’s termination.

     (d) This Agreement shall have no effect, and Employer shall have no obligations hereunder, if
Executive’s employment terminates for any reason at any time other than during the 24 months
following a Change in Control.

     4. Excise Tax. (a) In the event that a Change in Control shall occur, and a final
determination is made by legislation, regulation, ruling directed to Executive or Employer, by
court decision, or by independent tax counsel described in subsection (b) next below, that the
aggregate amount of any payment made to Executive (1) hereunder, and (2) pursuant to any plan,
program or policy of Employer in connection with, on account of, or as a result of, such Change in
Control (“Total Payments”) will be subject to the excise tax provisions of Section 4999 of the
Code, or any successor section thereof, Executive shall be entitled to receive from Employer, in
addition to any other amounts payable hereunder, a lump sum payment (the “Gross-Up Payment”),
sufficient to cover the full cost of such excise taxes and Executive’s federal, state and local
income and employment taxes on this additional payment so that the net amount retained

 

 

by Executive, after the payment of all such excise taxes on the Total Payments, and all
federal, state and local income and employment taxes and excise taxes on the Gross-Up Payment,
shall be equal to the Total Payments. The Total Payments, however, shall be subject to any
federal, state and local income and employment taxes thereon. For this purpose, Executive shall be
deemed to be in the highest marginal rate of federal, state and local taxes. The Gross-Up Payment
shall be made at the same time as the payments described in subsections 3(a)(1) and (2) above.

     (b) Employer and Executive shall mutually and reasonably determine the amount of the Gross-Up
Payment to be made to Executive pursuant to the preceding subsection. Prior to the making of any
such Gross-Up Payment, either party may request a determination as to the amount of such Gross-Up
Payment. If such a determination is requested, it shall be made promptly, at Employer’s expense, by
independent tax counsel selected by Executive and approved by Employer (which approval shall not
unreasonably be withheld), and such determination shall be conclusive and binding on the parties.
Employer shall provide such information as such counsel may reasonably request, and such counsel
may engage accountants or other experts at Employer’s expense to the extent that they deem
necessary or advisable to enable them to reach a determination. The term “independent tax counsel,”
as used herein, shall mean a law firm of recognized expertise in federal income tax matters that
has not previously advised or represented either party. It is hereby agreed that neither Employer
nor Executive shall engage any such firm as counsel for any purpose, other than to make the
determination provided for herein, for three years following such firm’s announcement of its
determination.

     (c) In the event the Internal Revenue Service subsequently adjusts the excise tax computation
made pursuant to subsections 4(a) and (b) above, Employer shall pay to Executive,

 

 

or Executive shall pay to Employer, as the case may be, the full amount necessary to make
either Executive or Employer whole had the excise tax initially been computed as subsequently
adjusted, including the amount of any underpaid or overpaid excise tax, and any related interest
and/or penalties due to the Internal Revenue Service.

     5. Setoff. No payments or benefits payable to or with respect to Executive pursuant
to this Agreement shall be reduced by any amount Executive or his spouse or Beneficiary, or any
other beneficiary under the Pension Plans, may earn or receive from employment with another
employer or from any other source, except as expressly provided in subsection 3(a)(6).

     6. Death. If Executive’s employment with Employer terminates under circumstances
described in subsections 3(a) or (b), then upon Executive’s subsequent death, all unpaid amounts
payable to Executive under subsections 3(a)(1), (2) or (3) or 3(b), or Section 4, if any, shall be
paid to his Beneficiary, all amounts payable under subsection 3(a)(4) shall be paid pursuant to the
terms of said subsection to his spouse or other beneficiary under the Pension Plans, and if
subsection 3(a) applies, his spouse and other dependents shall continue to be covered under all
applicable Welfare Plans during the remainder of the Severance Period, if any, pursuant to
subsection 3(a)(6).

     7. No Solicitation of Representatives and Employees. Executive agrees that he shall
not, during the Term or the Severance Period, directly or indirectly, in his individual capacity or
otherwise, induce, cause, persuade, or attempt to do any of the foregoing in order to cause, any
representative, agent or employee of Employer or any of its Affiliates to terminate such person’s
employment relationship with Employer or any of its Affiliates, or to violate the terms of any
agreement between said representative, agent or employee and Employer or any of its Affiliates.

 

 

     8. Confidentiality. Executive acknowledges that preservation of a continuing business
relationship between Employer or its Affiliates and their respective customers, representatives,
and employees is of critical importance to the continued business success of Employer and its
Affiliates and that it is the active policy of Employer and its Affiliates to guard as confidential
certain information not available to the public and relating to the business affairs of Employer
and its Affiliates. In view of the foregoing, Executive agrees that he shall not during the Term
and at any time thereafter, without the prior written consent of Employer, disclose to any person
or entity any such confidential information that was obtained by Executive in the course of his
employment by Employer or any of its Affiliates. This section shall not be applicable if and to the
extent Executive is required to testify in a legislative, judicial or regulatory proceeding
pursuant to an order of Congress, any state or local legislature, a judge, or an administrative law
judge or is otherwise required by law to disclose such information.

     9. Forfeiture. If Executive shall at any time violate any obligation of his under
Sections 7 or 8 in a manner that results in material damage to the Employer or its business, he
shall immediately forfeit his right to any benefits under this Agreement, and Employer shall
thereafter have no further obligation hereunder to Executive or his spouse, Beneficiary or any
other person.

     10. Executive Assignment. No interest of Executive, his spouse or any Beneficiary, or
any other beneficiary under the Pension Plans, under this Agreement, or any right to receive any
payment or distribution hereunder, shall be subject in any manner to sale, transfer, assignment,
pledge, attachment, garnishment, or other alienation or encumbrance of any kind, nor may such
interest or right to receive a payment or distribution be taken, voluntarily or involuntarily, for
the satisfaction of the obligations or debts of, or other claims against, Executive

 

 

or his spouse, Beneficiary or other beneficiary, including claims for alimony, support,
separate maintenance, and claims in bankruptcy proceedings.

     11. Benefits Unfunded. Except as otherwise provided in Section 13, all rights under
this Agreement of Executive and his spouse, Beneficiary or other beneficiary under the Pension
Plans, shall at all times be entirely unfunded, and no provision shall at any time be made with
respect to segregating any assets of Employer for payment of any amounts due hereunder. None of
Executive, his spouse, Beneficiary or any other beneficiary under the Pension Plans shall have any
interest in or rights against any specific assets of Employer, and Executive and his spouse,
Beneficiary or other beneficiary shall have only the rights of a general unsecured creditor of
Employer. Except as otherwise provided in Section 13, and notwithstanding the preceding provisions
of this Section, the Nominating and Compensation Committee of the Board of Directors of Employer,
in its discretion, shall have the right, at any time and from time to time, to cause amounts
payable to Executive or his Beneficiary hereunder to be paid to the trustee of the NIPSCO
Industries, Inc. Umbrella Trust For Management established effective January 1, 1991, as amended
from time to time, or any similar trust at any time established by Employer (“Trust”).

     12. Waiver. No waiver by any party at any time of any breach by the other party of,
or compliance with, any condition or provision of this Agreement to be performed by such other
party shall be deemed a waiver of any other provisions or conditions at the same time or at any
prior or subsequent time.

     13. Litigation Expenses. Employer shall pay Executive’s reasonable attorneys’ fees
and legal expenses in connection with any judicial proceeding to enforce this Agreement, or to
construe or determine the validity of this Agreement or otherwise in connection therewith,

 

 

whether or not Executive is successful in such litigation. Within 10 days following the
occurrence of a Potential Change in Control (as defined in the Trust described in Section 11), the
Nominating and Compensation Committee of the Board of Directors of Employer shall cause Employer to
contribute the sum of $100,000 to the Trust to be applied in satisfaction of Employer’s obligations
under this Section. The Nominating and Compensation Committee shall cause Employer to contribute
additional amounts to the Trust, at such time or times as the Committee deems appropriate, to the
extent the aggregate of (1) the aforementioned sum of $100,000, plus Trust earnings thereon, and
(2) any additional Employer contributions to the Trust, plus Trust earnings thereon, is not
sufficient to satisfy in full Employer’s obligations under this Section.

     14. Applicable Law. This Agreement shall be construed and interpreted pursuant to the
laws of Indiana.

     15. Entire Agreement. This Agreement contains the entire Agreement between the
Employer and Executive and supersedes any and all previous agreements; written or oral; between the
parties relating to the subject matter hereof. No amendment or modification of the terms of this
Agreement shall be binding upon the parties hereto unless reduced to writing and signed by Employer
and Executive.

     16. No Employment Contract. Nothing contained in this Agreement shall be construed to
be an employment contract between Executive and Employer.

     17. Counterparts. This Agreement may be executed in counterparts, each of which shall
be deemed an original.

     18. Severability. In the event any provision of this Agreement is held illegal or
invalid, the remaining provisions of this Agreement shall not be affected thereby.

 

 

     19. Successors. This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective heirs, representatives and successors.

     20. Employment with an Affiliate. For purposes of this Agreement, (A) employment or
termination of employment of Executive shall mean employment or termination of employment with
Employer and all Affiliates, (B) Base Salary and Bonus shall include remuneration received by
Executive from Employer and all Affiliates, and (C) the terms Pension Plan, Retirement Plan and
Welfare Plan maintained or made available by Employer shall include any such plans of any Affiliate
of Employer.

     21. Notice. Notices required under this Agreement shall be in writing and sent by
registered mail, return receipt requested, to the following addresses or to such other address as
the party being notified may have previously furnished to the other party by written notice:

	 	 	 	 	 
	If to Employer:

	 	NIPSCO Industries, Inc.
	 	 
	 

	 	5265 Hohman Avenue	 	 
	 

	 	Hammond, Indiana 46320	 	 
	 
	 	 	 	 
	 

	 	Attention: Gary L. Neale	 	 
	 
	 	 	 	 
	If to Executive:

	 	 
	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	 	 	 
	 

	 	 	 	 

 

 

     IN WITNESS WHEREOF, Executive has hereunto set his hand, and Employer has caused these
presents to be executed in its name on its behalf, all on the ___ day of __________,
___, effective _______ ___, __________.

	 	 	 	 	 
	 	 	NiSource Inc.
	 
	 	 	 	 
	 

	 	By:
	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	Title:
	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 
	 	 	 	 
	 	 	 
	 

	 	 	 	, Executive     

 

 

Schedule of Parties to Change of Control Agreements

As of December 31, 2005, the following NiSource officers have Change in Control and Termination
Agreements with NiSource: Robert C. Skaggs, Jr., Michael W. O’Donnell and Jeffrey W. Grossman.

The contracts are substantially identical in all material respects except as to the parties, the
execution dates, the amount of time following a change of control that the termination provisions
of the agreement apply (from 7-24 months), the monthly base payout (24 to 36 months), and the
extent to which the executive’s payout is grossed up for taxes.

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