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EXHIBIT 2.31
ADDENDUM NO. 2
TO
CONTRACT FOR CONSTRUCTION AND SALE OF
HULL NO. S-656
With reference to the Contract for Construction and Sale of Hull No. S-656 (the
"Contract") dated 9th April, 1998 between the undersigned it is agreed as
follows:
1. The definition of "Specification" on page 1 of the Contract is hereby
amended by inserting ", revised 26th April 1998" at the end of the
definition.
2. Article I.2.1 of the Contract is hereby amended by (i) increasing the
Vessel's number of passenger cabins from 1,048 cabins to 1,070 cabins,
(ii) decreasing the Vessel's number of crew cabins from 477 cabins to
472 cabins, and (iii) increasing the Vessel's deadweight from 8,500
metric tons to 8,900 metric tons
3. Article I.2.2 of the Contract is hereby amended in its entirety to
read as follows:
2.2. MACHINERY
The machinery to consist of two (2) gas turbine generator
sets and one (1) steam turbine generator set (COGES type),
having a total maximum continuous rating of 57,800 kW
electric power under the reference conditions set forth in
the GE S&S-specification for this plant, to supply power to
two (2) electric propulsion motors and the remaining electric
systems of the Vessel as stipulated in the Specification.
4. Article I.4 of the Contract the deadweight has to be changed from
"eight thousand five hundred (8,500) metric tons" to "eight thousand
nine hundred (8,900) metric tons"
5. Article I.5 of the Contract is hereby amended in its entirety to read
as follows:
5. FUEL CONSUMPTION
The fuel consumption of each of the Vessel's two (2) gas
turbine generator sets shall be determined on the test bed
under conditions stipulated in the GE S&S-specification for
this plant, and shall not exceed 242.2 grams per kW per hour
when developing 100% of Maximum Continuous Rating.
6. Article II of the Contract is hereby amended as follows:
The Contract Price under Article II.1 shall be increased by
US$6,200,000 (United States Dollars six million two hundred thousand)
The Terms of Payment for this amount shall be the same as for the
Contract Price as stipulated in Article II.2 of the Contract.
[PORTIONS OF THIS DOCUMENT HAVE BEEN OMITTED PURSUANT TO AN APPLICATION
FOR AN ORDER FOR CONFIDENTIAL TREATMENT PURSUANT TO RULE 24b-2 UNDER
THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED].
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7. Article III.3 of the Contract is hereby amended in its entirety to
read as follows:
3. EXCESSIVE FUEL CONSUMPTION
The BUILDER guarantees that the fuel consumption of each of
the two (2) gas turbine generator sets at the test bed runs
as stipulated in Article I.5 shall not exceed 242.2 grams per
kW per hour. The Contract Price shall not be affected or
changed if the actual fuel consumption of both generators is
not greater than [*] above 242.2 grams per kW per hour.
If the actual fuel consumption of either generator is over
[*] greater than 242.2 grams per kW per hour, then, as sole
compensation, the Contract Price shall be reduced by the sum
of [*] for each full [*] increase in fuel consumption above
said [*] (fractions of a percent to be prorated) for each
generator.
If such actual fuel consumption of either generator is more
than [*] greater than 242.2 grams per kW per hour, then the
Buyer may, at its option, as an alternative to receiving the
above mentioned liquidated damages by way of Contract Price
reduction, rescind this Contract.
The remaining provisions of the Contract shall be unaffected hereby.
The provisions of Articles XIII and XIX of the Contract shall be deemed
incorporated herein.
All conditions other than those modified by this Addendum No. 2 shall remain
unchanged and in full force and effect.
In witness whereof, the parties have caused this Addendum No. 2 to be duly
executed the 26th day of April, 1998.
For and on behalf of For and on behalf of
the Buyer the Builder
ROYAL CARIBBEAN CRUISES LTD. ▇▇▇. ▇. ▇▇▇▇▇ GMBH & CO.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
----------------- --------------------
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
President Managing Partner
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*MARKED TEXT OMITTED PURSURANT TO AN APPLICATION FOR AN ORDER FOR CONFIDENTIAL
TREATMENT PURSURANT TO RULE 24b-2 UNDER THE SECURITIES AND EXCHANGE ACT OF
1934, AS AMENDED.
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ADDENDUM NO. 1
TO THE CONTRACT FOR CONSTRUCTION AND SALE OF
HULL NO. S-656
With reference to the Contract for Construction and Sale of Hull No. S-656 (the
"Contract") dated ___ April, 1998 between the undersigned it is agreed as
follows:
Based on the finally agreed Specification including the declaration of options
by the Buyer as of the date hereof the Contract Price shall be increased by
US$6,500,000 (United States Dollars Six Million Five Hundred Thousand).
The Terms of Payment for this amount shall be the same as for the Contract
Price as stipulated in Article II of the Contract.
The remaining provisions of the Contract shall be unaffected hereby.
The provisions of Articles XIII and XIX of the Contract shall be deemed
incorporated herein.
All conditions other than those modified by this Addendum No. 1 shall remain
unchanged and in full force and effect.
IN WITNESS WHEREOF the parties have caused this Addendum No. 1 to be duly
executed the 9th day of April, 1998.
For and on behalf of For and on behalf of
the Buyer the Builder
ROYAL CARIBBEAN CRUISES LTD. ▇▇▇. ▇. ▇▇▇▇▇ GMBH & CO.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
------------------- --------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
Chairman and Chief Managing Partner
Executive Officer
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CONTRACT FOR CONSTRUCTION AND SALE
OF
HULL NO. S-656
BETWEEN
ROYAL CARIBBEAN CRUISES LTD.
AS BUYER
AND
▇▇▇. ▇. ▇▇▇▇▇ GMBH & CO.
AS BUILDER
[PORTIONS OF THIS DOCUMENT HAVE BEEN OMITTED PURSUANT TO AN APPLICATION FOR AN
ORDER FOR CONFIDENTIAL TREATMENT PURSUANT TO RULE 24b-2 UNDER THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED.]
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INDEX
PAGE
ARTICLE I - Description and Class 2
1. Description
2. Dimensions and Characteristics
2.1 Hull
2.2 Machinery (Diesel-Electric)
3. Speed
4. Deadweight
5. Fuel Consumption
6. Quality Standards
7. Classification, Rules and Regulations
8. Makers and Suppliers
9. Registration
10. Design Obligations
ARTICLE II - Contract Price and Terms of Payment 6
1. Contract Price
2. Terms of Payment
3. Method of Payment
4. Installment Guarantees
ARTICLE III - Adjustment of Contract Price 8
1. Delayed Delivery
2. Insufficient Speed
3. Excessive Fuel Consumption
4. Insufficient Deadweight
5. Excessive Vibration and Sound Levels
6. Exclusion of Other Liabilities
ARTICLE IV - Approval of Plans and Drawings and Inspection 12
during Construction
1. Approval of Plans and Drawings
2. Appointment of Buyer's Representatives
3. Inspection by Representatives
4. Facilities
5. Buyer's Liability to the Representatives
6. Responsibility of Buyer
7. Interior Design
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ARTICLE V - Modifications; Workmanship and Construction 16
1. Voluntary Modifications
2. Changes in Class, etc.
3. Substitution of Materials
4. Information
5. Pricing of Modifications and Changes
ARTICLE VI - Trials 18
1. Notice
2. Weather Conditions
3. How Conducted
4. Method of Acceptance or Non-acceptance
5. Effect of Acceptance
6. Correction of Causes for Non-acceptance
7. Disposition of Surplus Consumable Stores
ARTICLE VII - Delivery 21
1. Time and Place
2. When and How Effected
3. Documents to be Delivered to the Buyer
4. Title and Risk
5. Removal of Vessel
ARTICLE VIII - Delays and Extensions of Time for Delivery 23
(Force Majeure)
1. Causes of Delay
2. Notice of Delays
3. Permissible Delays
4. Right to Rescind for Excessive Delay
ARTICLE IX - Warranty of Quality 25
1. Guarantee
2. Notice of Defects
3. Remedy of Defects
4. Extent of Builder's Responsibility
5. Guarantee Engineer
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ARTICLE X - Rescission by Buyer 28
1. Notice
2. Refund by Builder
3. Discharge of Obligations
ARTICLE XI - Buyer's Default; Builder's Default 29
1. Definition of Buyer's Default
2. Interest and Charges
3. Effect of Default
4. Sale of Vessel
5. Default by Builder
ARTICLE XII - Builder's Insurance 34
1. Extent of Builder's Insurance Coverage
2. Application of Recovered Amounts
3. Termination of Builder's Obligation to Insure
ARTICLE XIII - Dispute and Arbitration 36
1. Technical Disputes
2. Other Disputes
ARTICLE XIV - Right of Assignment 37
1. Assignment of Benefits
ARTICLE XV - Taxes and Duties 37
1. Taxes and Duties in Germany, etc.
2. Taxes and Duties Outside Germany, etc.
ARTICLE XVI - Patents, Trademarks, Copyrights, etc. 38
1. Patents, Trademarks and Copyrights etc.
2. Design of Vessel
ARTICLE XVII - Buyer's Supplies 39
1. Responsibility of Buyer
2. Responsibility of the Builder
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ARTICLE XVIII - Notice 40
1. Addresses
ARTICLE XIX - Interpretation 41
1. Law Applicable
2. Discrepancies
3. Entire Agreement
4. Language
5. Effectiveness
ARTICLE XX - Right of Cancellation 42
APPENDICES
A. Form of Installment Guarantee
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THIS CONTRACT, made as of this 9th day of April 1998 by and between ▇▇▇. ▇.
▇▇▇▇▇ GMBH & CO., a corporation organized and existing under the laws of
Germany, having its principal office at ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇, ▇-▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ (hereinafter called the "Builder") and ROYAL CARIBBEAN
CRUISES LTD., a corporation organized and existing under the laws of Liberia,
having its principal office at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
(hereinafter called the "Buyer").
WITNESSETH THAT
In consideration of the mutual covenants herein contained, the Builder agrees
to design, construct, equip and substantially complete at its shipyard in
Papenburg, Germany (hereinafter called the "Shipyard"), finally complete and
sell and deliver to the Buyer one (1) passenger cruise vessel more fully
described in Article I hereof (hereinafter called the "Vessel"), and the Buyer
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.
In this Contract the following terms, when capitalized, shall have the meanings
defined below:
"Banking Days" shall mean days on which banks are customarily
open for business in each of London, New York and Frankfurt;
"Contract Price" shall bear the meaning assigned thereto in
Article II.1;
"Effective Date" shall bear the meaning assigned thereto in
Article XIX.5;
"General Arrangement Plan" shall mean the Builder's general
arrangement plan, Project No. 8235-97 dated and initialled 27
February 1998;
"Specification" shall mean Specification Project No. 8235-97
dated and initialled 27 February 1998.
"Transfer Agreement" shall mean the Transfer Agreement dated
the date of this Contract and entered into between the
Builder and the Buyer.
Other terms of this Contract are defined hereinafter. References to
the "Vessel" shall, except where the context otherwise requires, be
deemed to
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include her hull and all machinery, equipment, gear and outfittings
installed on, or appropriated to, the Vessel.
ARTICLE I - DESCRIPTION AND CLASS
1. DESCRIPTION
The Vessel shall have the Builder's Hull Number S-656 and shall be
designed, constructed, equipped and completed in accordance with the
provisions of this Contract, the Specification and the General
Arrangement Plan signed by each of the parties hereto for
identification and delivered herewith and made an integral part
hereof.
The Vessel shall be constructed, equipped and completed as a sister
ship to Hull number S-655.
2. DIMENSIONS AND CHARACTERISTICS
2.1 HULL
The Vessel shall have the following dimensions and characteristics:
Type: Passenger Cruise Vessel
Length, overall: About 292 meters
Length between perpendiculars: 263.5 meters
Breadth moulded at waterline: 32.2 meters
Design draft moulded: 8 meters
▇▇▇▇▇▇▇▇▇ draft moulded: Min. 8.2 meters
Depth deck 1 (subdivision deck) 10.7m
Deadweight at Design Draft moulded: 8,500 metric tons
Gross tonnage: About 85,000 GT
Number of passenger cabins: 1,048 cabins
Number of crew cabins: 477 cabins
Total No. of persons (lifesaving capacity) 3,360 persons
2.2 MACHINERY (DIESEL-ELECTRIC)
The machinery to consist of five (5) diesel engines of medium
speed type, having a total maximum continuous rating of
63,000 kW driving five (5) electric generators of same
maximum continuous rating (corrected for generator
efficiency) to supply power to two (2) electric pod type
propulsion motors and the remaining electric systems of the
Vessel as stipulated in the Specification.
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3. SPEED
The Builder guarantees that the Vessel shall achieve a trial speed of
not less than twenty four (24) knots averaged over two continuous runs
(in opposite directions) on a measured course of not less than one
nautical mile, at the moulded Design Draft at an output of 87% of the
maximum continuous output of the electric propulsion motor shafts in
calm sea and deep water with clean bottom, as further described in the
Specification. In case the Vessel's trials shall be made at a
different draft from the above defined draft, the speed at such draft
shall be evaluated by using the method described in the Specification.
4. DEADWEIGHT
The Vessel, when completed, shall have a deadweight of eight thousand
five hundred (8,500) metric tons as stipulated in the Specification.
The term "Deadweight" as used in this Contract shall signify the
difference between the displacement on even keel at the moulded Design
Draft in salt water of 1.025 specific gravity on the basis of
hydrostatic curves of the Vessel and the lightweight as specified in
the Specification. The actual Deadweight of the Vessel shall be based
on the measurements and calculations by the Builder and approved by
the Buyer's Representative and the Classification Society.
5. FUEL CONSUMPTION
The average fuel consumption of the five (5) diesel engines of the
Vessel shall be determined on the test bed under conditions stipulated
in the Specification, using a fuel oil having a lower calorific value
of 10,200 kcal per kg, and shall not exceed 183 grams per kWh in ISO
3046/1 conditions without driven pumps, when developing 85% of Maximum
Continuous Rating.
6. QUALITY STANDARDS
Notwithstanding anything contained in this Contract or the
Specification to the contrary, the complexity (unless specified to the
contrary in the Specification), quality of workmanship, quality of
materials and interior design of the passenger cabins and passenger
public spaces shall not be of a lower standard than on the RHAPSODY OF
THE SEAS as built. Notwithstanding anything contained in this Contract
or the Specification to the contrary, the quality of workmanship,
quality of materials, components, equipment, machinery, function and
performance of systems
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for the remainder of the Vessel shall not be of a lower standard than
on the MERCURY as built unless otherwise specifically set forth in the
Specification.
7. CLASSIFICATION, RULES AND REGULATIONS
The Vessel shall be constructed in accordance with the rules (the
edition and amendments thereto being in force as of the Effective Date
or as announced as of the Effective Date as intended thereafter to
enter into force) and under special survey of Det Norske Veritas
(herein called the "Classification Society") and shall at delivery and
acceptance hereunder have achieved the Classification Society's
notation:
"+ 1A1 Passenger Ship ECO, RP"
clean and free of all recommendations or qualifications (i) requiring
amendment or modification(s) to the Vessel or (ii) otherwise affecting
the ability of the Vessel upon delivery to commence immediate
operations as a passenger cruise ship.
Decisions of the Classification Society as to compliance or
non-compliance with the requirements of the Classification Society
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 expressly described in the
Specification in effect as of the Effective Date or as announced as at
the Effective Date as intended thereafter to enter into force.
The Builder shall arrange with the Classification Society for the
assignment by said Society of a representative or representatives
(hereinafter referred to as the "Classification Surveyor") to the
Vessel during construction. All fees and charges incidental to the
classification and with respect to compliance with the above referred
rules, regulations and requirements shall be for the account of the
Builder. It is also expressly agreed that the Builder shall assume
exclusive responsibility for the correct interpretation and
application of the rules, regulations and requirements of the
Classification Society and the regulatory bodies expressly described
in the Specification.
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8. MAKERS AND SUPPLIERS
MAKERS' LIST
The Specification contains a list (herein called the "Makers' List")
of potential makers and suppliers of major items of machinery and
equipment, the names included therein having been agreed by the
Builder and the Buyer.
Where the Makers' List contains the name of more than one maker or
supplier in relation to any item of machinery or equipment, the
Builder shall nominate its choice of maker or supplier as early as
possible to enable the Buyer to consider such choice. In connection
with such nomination, the Builder shall provide the Buyer with such
maker's or supplier's technical specifications and allow the Buyer
sufficient time (up to, but not to exceed 10 working days) to review
such specifications prior to the Buyer's acceptance or non-acceptance
of the Builder's choice. The Buyer shall have the right not to accept
the Builder's choice but itself to choose from the Makers' List the
maker or supplier of the relevant item of machinery or equipment,
provided the Buyer's choice does not materially affect the Builder's
construction schedule or other terms and conditions of this Contract
and the Specification. In the case where the Buyer's choice of maker
or supplier prevails the Contract Price shall be adjusted upwards or
downwards to reflect the difference in cost to the Builder (as
reasonably substantiated by the Builder at the time the Buyer confirms
its choice) of purchasing and incorporating in the Vessel the item of
machinery or equipment supplied by the maker or supplier chosen by the
Buyer (as compared with the cost which would have applied had the
Builder's choice of maker or supplier prevailed).
If the Buyer wishes the Builder to select a maker or supplier not
listed on the Makers' List, the difference, if any, between that
maker's or supplier's price and the price of the equivalent maker or
supplier named in the Maker's List, together with any other related
consequential costs, shall be added to or deducted from the Contract
Price subject to the requirements set forth in the previous paragraph.
GENERAL
The Builder shall, before purchasing any important machinery or
equipment not on the Makers' List, inform the Buyer about the proposed
maker or supplier (and supply to the Buyer the relevant maker's or
supplier's technical specification) and the Buyer shall comment on
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Builder's proposal within seven (7) days following receipt of such
information. Upon the parties agreeing, the Builder shall place the
particular order.
It shall be open to the parties to modify, by agreement, the Makers'
List to take advantage of the latest developments in techniques.
Either party shall be entitled to make proposals to the other party in
this connection to which the other party will always give reasonable
consideration provided that the implementation of any such proposal
does not adversely affect the other party's obligations under this
Contract.
9. REGISTRATION
The Vessel shall, concurrently with the delivery of the Vessel to the
Buyer pursuant to Article VII hereof, be registered in the Norwegian
International Ship Registry (NIS). If Buyer determines in its
reasonable opinion that the circumstances warrant, the Buyer may
change its selection pursuant to the provisions of Article V hereof.
All fees and charges incidental to the registration of the Vessel
shall be for the account of the Buyer.
Prior to the delivery of the Vessel to the Buyer pursuant to Article
VII hereof, the Vessel shall be registered in the name of the Buyer in
accordance with the provisions of the Transfer Agreement.
10. DESIGN OBLIGATIONS
Notwithstanding (i) that elements of the Vessel's design are to be
provided to the Builder by the Buyer or its subcontractors and (ii)
that test results, plans and drawings for the Vessel are (as detailed
in the Specification) to be submitted to, and approved by, the
Classification Society and the Buyer, it is expressly understood and
agreed that the Builder shall be solely responsible for the design of
the Vessel.
ARTICLE II - CONTRACT PRICE AND TERMS OF PAYMENT
1. CONTRACT PRICE
The fixed purchase price of the Vessel is US$350,000,000 (Three
Hundred and Fifty Million United States Dollars) (the "Contract
Price"), which is exclusive of the Buyer's Supplies as provided in
Article XVII hereof and shall be subject to upward or downward
adjustment, if any, only as hereinafter set forth in this Contract.
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2. TERMS OF PAYMENT
The Contract Price shall be paid by the Buyer to the Builder in
installments as follows:
(a) FIRST INSTALLMENT
The First Installment, amounting to US$17,500,000 (Seventeen
Million Five Hundred Thousand United States Dollars) shall be
paid on 31 January 1999.
(b) SECOND INSTALLMENT
The Second Installment, amounting to US$17,500,000 (Seventeen
Million Five Hundred Thousand United States Dollars) shall be
paid on 1 June 2000.
(c) THIRD INSTALLMENT
The Third Installment, amounting to US$17,500,000 (Seventeen
Million Five Hundred Thousand United States Dollars) shall be
paid on 1 December 2000.
(d) FOURTH INSTALLMENT
The remainder of the Contract Price shall be paid upon
delivery and acceptance of the Vessel.
3. METHOD OF PAYMENT
Any and all payments, whether by the Buyer to the Builder or
vice-versa, under this Contract shall be made in United States
Dollars. Each of the respective installments shall be remitted by
telegraphic transfer to the account of the Builder to be nominated by
the Builder by at least five (5) Banking Days prior written notice.
With the exception of the installment due upon delivery and acceptance
of the Vessel and strictly without prejudice to the Buyer's rights
under Article XIII, it is understood and agreed upon that no payments
under the provisions of this Article shall be delayed or withheld by
the Buyer due to any dispute of whatever nature arising between the
parties hereto save in the case of the valid rescission by the Buyer
or other valid termination of the Contract.
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4. INSTALLMENT GUARANTEES
Notwithstanding the foregoing, the Buyer shall not be obligated to
make any of the First, Second or Third Installments until the Builder
provides it with a guarantee for the repayment of such installment,
issued by a first class international bank or insurance company
reasonably acceptable to the Buyer, in the form set forth as Appendix
A attached hereto.
ARTICLE III - ADJUSTMENT OF CONTRACT PRICE
The Contract Price shall be subject to adjustment, as hereafter set
forth, in the event of the following contingencies (it being
understood by both parties that any reduction is by way of liquidated
damages only and not by way of penalty).
1. DELAYED DELIVERY
In the event that the Vessel is delivered after the Delivery
Date, the Builder shall pay to the Buyer, upon delivery and
acceptance of the Vessel, the following liquidated damages:
[*] days or fraction
thereof of delay: [*]
Thereafter for each [*]
days or fraction thereof of delay: [*]
For this purpose, the delivery of the Vessel shall be deemed
to be delayed when and if the Vessel is not delivered by the
Delivery Date.
However, if the delay in delivery of the Vessel continues for
a period of more than [*] days after the Delivery Date then,
in such event, the Buyer may, at its option, rescind this
Contract by serving upon the Builder written notice of
rescission.
The Builder may at any time after the expiration of the
aforementioned [*] days period of delay in delivery, if the
Buyer has not served notice of rescission as above provided,
propose a future date for delivery of the Vessel and require
in writing that the Buyer make an election, in which case the
Buyer shall, within thirty (30) days after such demand is
received by the Buyer, either notify the Builder of its
intention to rescind this Contract or consent to delivery of
the Vessel at the specified future date, it being
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*MARKED TEXT OMITTED PURSURANT TO AN APPLICATION FOR AN ORDER FOR CONFIDENTIAL
TREATMENT PURSURANT TO RULE 24b-2 UNDER THE SECURITIES AND EXCHANGE ACT OF
1934, AS AMENDED.
8
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understood by the parties that, if the Vessel is not
delivered by such date, the Buyer's right of rescission shall
be reinstated with immediate effect.
2. INSUFFICIENT SPEED
If the Vessel on sea trials at her design draft and even keel and
under the sea and weather conditions as stipulated in this Contract
and Specification does not attain a speed of 24 knots at 87% of
maximum continuous output of the electric propulsion motor shafts,
then, as sole compensation, the Contract Price shall be reduced
according to the following:
For the first [*] of a knot [*]
For each further complete [*] of a [*] of the Contract Price,
knot up to [*] of a knot
For each further complete [*] of a [*] of the Contract Price
knot
However, if the Vessel shall not achieve a speed of [*] knots, then
the Buyer may, at its option, as an alternative to receiving the above
mentioned liquidated damages by way of Contract Price reduction,
rescind this Contract.
3. EXCESSIVE FUEL CONSUMPTION
The Builder guarantees that the average fuel consumption of the 5
diesel engines at the test bed trial runs shall be 183 grams per kW
(Kilowatt) per hour, using fuel oil which has a lower calorific value
of 10,200 kcal per kg as stipulated in Article I.5. The Contract Price
shall not be affected or changed, if the actual average fuel
consumption is not greater than [*] above 183 grams per kW (Kilowatt)
per hour, using fuel oil which has a lower calorific value of 10,200
kcal per kg.
If the actual average fuel consumption is over [*] greater than 183
grams per kW (Kilowatt) per hour, using fuel oil which has a lower
calorific value of 10,200 kcal per kg, then as sole compensation, the
Contract Price shall be reduced by the sum of [*] for each full [*]
increase in fuel consumption, above said [*] (fractions of a percent
to be prorated).
If such actual average fuel consumption is more than [*], greater than
183 grams per kW (Kilowatt) per hour, using fuel oil which
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*MARKED TEXT OMITTED PURSURANT TO AN APPLICATION FOR AN ORDER FOR CONFIDENTIAL
TREATMENT PURSURANT TO RULE 24b-2 UNDER THE SECURITIES AND EXCHANGE ACT OF
1934, AS AMENDED.
9
18
has a lower calorific value of 10,200 kcal per kg, then the Buyer may,
at its option, as an alternative to receiving the above mentioned
liquidated damages by way of Contract Price reduction, rescind this
Contract.
4. INSUFFICIENT DEADWEIGHT
If the deadweight as stipulated in Article I.4 hereof is not attained,
then the Contract Price shall be reduced as follows:
In case such deficiency [*]
is not more than
[*] tons below the
aforesaid figure:
In case such deficiency [*] for each full ton of
is more than [*] deficiency in
tons below the deadweight in excess of the
aforesaid figure: aforesaid [*] tons,
In case such deficiency is greater than [*] tons below the deadweight
stipulated in Article I.4 hereof then the Buyer may, at its option, as
an alternative to receiving the above mentioned liquidated damages by
way of Contract Price reduction, rescind this Contract.
5. EXCESSIVE VIBRATION AND SOUND LEVELS
(a) The Contractual Vibration Levels (CVL) in the passenger
cabins and passenger public spaces are the single peak values
as stated in the Specification taking into account the
margins specified in the Specification. The Measured
Vibration Levels (MVL) are the single peak levels derived
from RMS values by using the measurement procedure described
in G5.2.2 of the Specification. If in any cabin or any
passenger public space which affects more than [*], the MVL
exceeds the CVL, the Builder is to make the necessary changes
before delivery to reduce those levels to CVL figures.
If after changes made by the Builder, the final MVL exceed
the CVL by [*] or more, the Contract Price will be reduced by
[*] for each passenger cabin and/or passenger public space
affected provided, however, that such reduction shall in no
event exceed [*]. The Buyer will have the right, at its
option, to rescind this Contract if more than [*] of
passenger cabins and/or if more than [*] of the aggregated
area of passenger public spaces are affected.
------------
*MARKED TEXT OMITTED PURSURANT TO AN APPLICATION FOR AN ORDER FOR CONFIDENTIAL
TREATMENT PURSURANT TO RULE 24b-2 UNDER THE SECURITIES AND EXCHANGE ACT OF
1934, AS AMENDED.
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(b) For each passenger cabin and passenger public space, the
Contractual Sound Level (CSL) is the upper limits of noise
level as per G5.2.1 of the Specification taking into account
the margins specified in the Specification.
If Measured Sound Levels (MSL) to be taken into consideration
as per the Specification exceed the CSL, the Builder is to
make the necessary changes before the delivery to reduce
those levels to the CSL figures. If after the changes made by
the Builder, the final MSL exceed the CSL, the Contract Price
shall be reduced for each passenger cabin or passenger public
space as follows:
from [*] dBA above contractual level: [*]
from [*] dBA above contractual level: [*]
from [*] dBA above contractual level: [*]
from [*] dBA and above: [*]
In no event shall such reduction exceed an aggregate of [*].
The Buyer will have the right, at its option, to rescind the
Contract if either:
- the MSL in more than [*] of the passenger cabins
exceeds the CSL by more than [*],
- the average value of MSL in more than [*] of the
aggregate area of passenger public spaces exceeds
the CSL by more than [*].
(c) the Builder will use all reasonable efforts to take
corrective measures so as to ensure that the standards set
forth in this Article III.5 are met.
6. EXCLUSION OF OTHER LIABILITIES
The liquidated damages payable by the Builder hereunder shall
represent the sole and exclusive financial compensation payable to the
Buyer in respect of the breaches of contract to which they relate
provided, however, that such limitation shall not apply where any such
breach shall have been willful on the part of the Builder.
------------
*
MARKED TEXT OMITTED PURSURANT TO AN APPLICATION FOR AN ORDER FOR CONFIDENTIAL
TREATMENT PURSURANT TO RULE 24b-2 UNDER THE SECURITIES AND EXCHANGE ACT OF
1934, AS AMENDED.
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ARTICLE IV - APPROVAL OF PLANS AND DRAWINGS AND INSPECTION DURING CONSTRUCTION
1. APPROVAL OF PLANS AND DRAWINGS
The Builder shall, within sixty (60) days after the Effective Date,
present to the Buyer for its approval a list of typical drawings,
schematic diagrams and other documents, with their preliminary time
schedules to be presented to the Buyer for the Buyer's information.
The Builder shall at the same time present to the Buyer the Builder's
system of identifying drawings and diagrams.
Plans, drawings and other documents sent to the Buyer for approval
shall be issued in quadruplicate, two sets shall be sent to RCCL A/S
in Oslo, Norway, one set to the Buyer's local Inspection Office at the
Builder's Shipyard and one set to the Buyer's office in Miami. For the
architectural drawings and documents, two sets shall be sent to the
Buyer's consulting architect (as advised by the Buyer) for the actual
room(s) and public spaces, one set to the Buyer's Technical Department
and one set to the Buyer's office in Miami. All approvals will be
given through RCCL A/S Oslo, unless otherwise advised by the Buyer.
Unless otherwise agreed, the Buyer shall send to the Builder its
comments to the received plans, drawings, diagrams and documents
within fifteen (15) working days after having received the same for
approval. The Buyer may request an extension of such approval period,
which such approval shall not be unreasonably withheld by the Builder.
In the event that the Buyer or the Representatives shall fail to
respond with the Buyer's comments within such time limit, the Builder
shall notify the Buyer in writing of the Buyer's failure to respond.
In the event the Buyer still fails to respond with the Buyer's
comments within three (3) working days of receipt of the Builder's
notice to the Buyer of the Buyer's failure to respond, the relevant
plans and drawings shall be deemed to have been automatically approved
by the Buyer without any comment.
Unless otherwise agreed, the Builder shall send its answers to the
Buyer's comments within fifteen (15) working days after having
received the Buyer's comments. The Builder may request an extension of
such response period, which such approval shall not be unreasonably
withheld. If no response is received from the Builder within the above
time limit, the Builder will not be able to rely upon schedule
considerations to refuse the Buyer's comments to the extent that they
are within the provisions of the Specification.
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Any deemed approval of plans, drawings or other documents pursuant to
this paragraph 1 shall be strictly without prejudice to the
obligations of the Builder hereunder, in particular (but without
limitation) to complete and deliver the Vessel in accordance with this
Contract and the Specification.
2. APPOINTMENT OF BUYER'S REPRESENTATIVES
The Buyer may send to and maintain at the Shipyard, at the Buyer's own
cost and expense, one or more representatives (herein called the
"Representatives") who may act on behalf of the Buyer in connection
with any matters in relation to supervision of the construction of the
Vessel at the Shipyard, as specifically authorized in writing by the
Buyer. The Buyer shall deliver a letter to the Builder describing the
scope of authority of the Representatives prior to the arrival of the
Representatives at the Shipyard. The Builder shall be entitled to rely
upon such letter until it receives notice that such letter has been
amended or revoked.
The Builder will assist the Buyer in obtaining any necessary German
permissions or authorizations for the Representatives to carry out
their duties.
3. INSPECTION BY REPRESENTATIVES
The necessary inspections and tests of the Vessel 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
Specification.
The Representatives shall, during construction of the Vessel, have the
right to attend all such tests and inspections of the Vessel, its
machinery and equipment. On the Representatives' arrival at the
Shipyard, without prejudice to their right to attend all tests, the
Builder shall identify the kinds of tests it will conduct and will
agree with the Representatives as to which of such kinds of tests they
wish to attend.
The Builder shall give a notice to the Representatives reasonably in
advance of the date and place of such tests and inspections to be
attended by them. In the case of inspections at the Shipyard, such
notice shall be given at least twenty-four (24) hours prior to the
commencement of such tests, and in the case of tests to be conducted
away from the Shipyard, such notice shall be given at least seven (7)
days prior to the commencement of such tests. Failure of the
Representative to be present
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at such tests and inspections after due notice to him as above
provided and without proper cause shall be deemed to be a waiver of
his right to be present.
In the event that the Representative discovers any construction or
material or workmanship which does not conform to the requirements of
this Contract and/or the Specification, 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 proceed with due diligence to correct any actual
non-conformity.
At all times during the construction of the Vessel until delivery and
acceptance thereof, provided that the normal progress of the
construction is not thereby affected, the Representatives shall be
given free and ready access to the Vessel and to any other place where
work is being done, or materials are being processed or stored by the
Builder or any of its subcontractors or suppliers, in connection with
the construction of the Vessel.
The inspections exercised by the Buyer's Representatives under this
Article or otherwise under this Contract shall not diminish the
Builder' obligations under this Contract, including, but not limited
to, the Builder's responsibility under this Contract with respect to
time of delivery of the Vessel hereunder, workmanship, design or
material.
4. FACILITIES
The Builder shall furnish promptly, without additional charge, such
reasonable facilities and materials at the Shipyard, including
suitably furnished offices with telephone, desks, drawing tables, and
filing cabinets, as are necessary for the safe and convenient
supervision of the Vessel's construction by the Representatives.
Provided, however, that the Buyer shall reimburse to the Builder the
cost of the Representatives' use of telephone, fax and telex
facilities.
5. BUILDER'S LIABILITY TO THE REPRESENTATIVES
The Representatives shall, at all times, be deemed to be employees of
the Buyer. The Builder shall be under no liability whatsoever to the
Buyer or to its Representatives or employees or agents for personal
injuries, including death, to such Representatives, employees or
agents, or any of them during the time they, or any of them, are on
the Vessel or within the premises of the Builder or its subcontractors
or are otherwise engaged in and about the construction of the Vessel
unless, however, such personal
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injuries, including death, were caused by the negligence of the
Builder or of its employees or agents. Nor shall the Builder be under
any liability whatsoever for damage to, or loss or destruction of
property of, the Buyer or its Representatives, employees or agents in
Germany or elsewhere, unless such damage, loss or destruction was
caused by the negligence of the Builder or of its employees or agents.
6. RESPONSIBILITY OF BUYER
The Builder may request the recall of any or all of the
Representatives who are deemed unsuitable or unsatisfactory. If after
investigations, the Buyer is satisfied that the request is justified,
then it will within thirty (30) days after such request is received
effect such recall and if it so desires, may provide replacements
thereof simultaneously, or if not so satisfied, it will advise the
Builder accordingly within above same period.
7. INTERIOR DESIGN
The Buyer will work directly with certain interior designers in
connection with the design of certain areas of the Vessel. The Builder
and the Buyer shall, within sixty (60) days after the Effective Date,
agree on the detailed scope of this work. The Builder shall provide
the Buyer and such interior designers with such drawings, schematic
diagrams and other information as may be required in connection with
the development of such designs in a timely manner so as to allow such
schedule to be adhered to. Any delays in the receipt of such
information from the Builder shall result in a corresponding delay in
the schedule for the development of such designs.
Unless otherwise agreed, the Builder shall send to the Buyer and the
relevant interior designer its comments to received plans, drawings,
diagrams and documents within fifteen (15) working days after having
received the same for approval. The Builder may request an extension
of such response period, which such approval shall not be unreasonably
withheld. In the event that the Builder shall fail to respond with the
Builder's comments within such time limit, the Buyer shall notify the
Builder of the Builder's failure to respond. In the event the Builder
still fails to respond with the Builder's comments within three (3)
working days of receipt of the Buyer's notice to the Builder of the
Builder's failure to respond, the relevant plans and drawings shall be
deemed to have been automatically approved by the Builder without any
comment.
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ARTICLE V - MODIFICATIONS; WORKMANSHIP AND CONSTRUCTION
1. VOLUNTARY MODIFICATIONS
The Specification may be modified and/or changed at the request of the
Buyer provided that such modifications and/or changes or an
accumulation thereof will not in the Builder's reasonable judgment
materially and adversely affect the Builder's ability to meet its
other commitments, and provided, further, that the parties shall first
agree, before such modifications and/or changes are carried out, to
reasonable alterations, if any, in the Contract Price, the Delivery
Date and other terms and conditions of this Contract and Specification
directly occasioned by or resulting from such modifications and/or
changes. Such agreement may be effected by exchange of letters signed
by the authorized representatives of the parties hereto which shall
constitute amendments to this Contract and/or the Specification.
The Builder acknowledges that the design of a cruise vessel requires a
great deal of flexibility and agrees to use all reasonable efforts to
accommodate all reasonable requests by the Buyer so that said changes
and/or modifications will be made at a reasonable cost reflecting the
Builder's actual incremental cost or savings for carrying out such
changes and/or modifications, if any, and within the shortest period
of time reasonably possible.
2. CHANGES IN CLASS, ETC.
In the event that after the Effective Date of this Contract the
requirements of the Classification Society or any other rule or
regulations to which the construction of the Vessel is required to
conform should be altered or changed from those (a) in effect at the
Effective Date or (b) as announced as at the Effective Date as
intended thereafter to enter into force, the following provisions
shall apply:
COMPULSORY CHANGES
If such alterations or changes are compulsory for the Vessel, either
of the parties hereto, upon receipt of such information from the
Classification Society or such other regulatory bodies, shall promptly
transmit the same to the other in writing, and the Builder shall
thereupon incorporate such alterations or changes into the
construction of the Vessel, provided that the Buyer shall first agree
to any adjustments reasonably required by the Builder in the Contract
Price, the Delivery Date and other terms and
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conditions of this Contract and the Specification directly occasioned
by or resulting from such alterations or changes.
Agreements as to such alterations or changes under this Paragraph
shall be made in the same manner as provided in Article V.1 for
modifications or changes to the Specification.
NON-COMPULSORY CHANGES
If such alterations or changes are not compulsory for the Vessel, but
the Buyer desires to incorporate such alterations or changes into the
construction of the Vessel, then, the Buyer shall notify the Builder
of such intention. The Builder shall accept such alterations or
changes, and provided, further, that the Buyer shall first agree to
any adjustments reasonably required by the Builder in the Contract
Price, the Delivery Date and other terms and conditions of this
Contract and the Specification directly occasioned by or resulting
from such alterations or changes.
CHANGES IN INTERPRETATION OF EXISTING RULES ETC.
It is expressly agreed and understood that, should there occur any
alteration in the interpretation by the Classification Society or
other relevant regulatory bodies of any of their rules, regulations
and requirements from that applied at the Effective Date, the Builder
shall, at its own cost and without reference to the provisions of this
Article, make appropriate changes to the Specification to implement
the same.
3. SUBSTITUTION OF MATERIALS
In the event that, notwithstanding the exercise of reasonable
diligence on the part of the Builder, any of the materials required by
the Specification 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 Buyer shall so agree in writing (which agreement
shall not be unreasonably withheld), supply other materials of
comparable quality 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.
4. INFORMATION
When requested by the Buyer, the Builder will provide reasonable
information relating to the basis and method of formulating any
adjustment referred to in this Article.
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5. PRICING OF MODIFICATIONS AND CHANGES
Any increase or decrease in the Contract Price resulting from any
change or modification shall be priced in United States Dollars.
ARTICLE VI - TRIALS
1. NOTICE
The Buyer shall receive from the Builder at least thirty (30) days'
preliminary prior notice in writing and seven (7) days' final prior
notice in writing of the time and place of the Vessel's trials, and
the Buyer shall promptly acknowledge receipt of such notice. At the
time of trials, the Vessel shall be substantially completed so as to
enable the test program to be performed as specified.
The Buyer shall have its Representatives on board the Vessel to
witness the trials. Failure in attendance of the Representatives of
the Buyer at the trials of the Vessel for any reason whatsoever after
due notice to the Buyer as above provided shall be deemed to be a
waiver by the Buyer of its right to have its Representatives on board
of the Vessel at the trials, and the Builder may conduct the trials
without the Buyer's Representatives being present, and in such case
the Buyer shall be obliged to accept the Vessel on the basis of a
certificate of the Builder and of the Classification Society that the
Vessel, upon her trials, is found to conform to this Contract and the
Specification and is satisfactory in all respects.
2. WEATHER CONDITIONS
The trials shall be carried out under weather conditions which are
deemed favorable enough in the reasonable judgment of the Builder, in
deep water, with clean bottom and in a ballast condition, all as set
out in the Specification. In the event of unfavorable weather on the
date specified for the trials, the same shall take place on the first
available day thereafter that the weather conditions permit. It is
agreed that, if during the trials of the Vessel, the weather should
suddenly become so unfavorable that orderly conduct of the trials can
no longer be continued, the trials shall be discontinued and postponed
until the first favorable day next following, unless the Buyer shall
assent in writing to acceptance of the Vessel on the basis of the
trials already made before such discontinuance has occurred. In the
event that the commencement of trials is postponed or the trials are
discontinued by reason of unfavorable weather conditions as aforesaid
and the number of days thereafter during which the trials cannot be
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undertaken exceed four (4) in total, any further days during which the
weather conditions remain unfavorable for the holding of the trials
will count as permissible delay within the meaning of this Contract,
provided the delivery of the Vessel is actually delayed thereby.
3. HOW CONDUCTED
All expenses in connection with the trials are to be for the account
of the Builder and the Builder shall provide at its own expense the
required quantities of ballast water (if any), freshwater, fuel oil,
lubricating oil, greases and ship's stores, as well as the necessary
crew to comply with conditions of safe navigation. The trials shall be
conducted in the manner prescribed in the Specification, and shall
prove fulfillment of the performance requirements for the Vessel as
set forth in the Specification. The course of the trials shall be
determined by the Builder.
4. METHOD OF ACCEPTANCE OR NON-ACCEPTANCE
Within two (2) days of receipt from the Builder of the results of the
Vessel's trials, the Buyer shall notify the Builder in writing of its
acceptance of the Vessel or its non-acceptance of the Vessel.
5. EFFECT OF ACCEPTANCE
Acceptance of the Vessel as above provided shall be final and binding
in so far as conformity of the Vessel (as the Vessel is then built and
equipped) to this Contract as demonstrated on the trials is concerned
and shall preclude the Buyer from refusing to take delivery of the
Vessel as hereinafter provided, if the Builder completes the Vessel in
accordance with the provisions of the Contract and otherwise complies
with all other requirements for delivery as provided in this Contract.
It is agreed in this context that the Buyer shall not have the right
to refuse to accept the Vessel by reason of minor defects which do not
affect the normal operation of the Vessel provided that the Builder
agrees in writing to remedy such defects at its own cost as soon as
possible after the delivery of the Vessel.
6. CORRECTION OF CAUSES FOR NON-ACCEPTANCE
In the event that the Buyer shall notify the Builder of its
non-acceptance of the Vessel, the Buyer's notice to such effect shall
advise the Builder in writing in what particular or particulars the
Vessel, as she is then built and equipped, does not conform to this
Contract.
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If the Builder is in agreement with the Buyer's determination as to
such non-conformity, the Builder shall forthwith make such alterations
and/or corrections as may be necessary to remedy such non-conformity
to the satisfaction of the Buyer.
Promptly after completion of the necessary alterations and/or
corrections, and the giving of notice to such effect by the Builder to
the Buyer, the Buyer shall inspect the Vessel and shall within two (2)
days thereafter notify the Builder of its acceptance or non-acceptance
of the Vessel; where the same is reasonably necessary to prove the
Vessel's compliance with the requirements of this Contract, the Buyer
may alternatively (by notice to the Builder in writing or by
telecopy), demand that new tests or trials be undertaken, in which
event the Buyer's notification to the Builder of its acceptance or
non-acceptance of the Vessel shall be issued to the Builder promptly
after completion of such tests and trials.
In the event of the Buyer's non-acceptance of the Vessel, its notice
to the Builder shall again indicate in what particular or particulars
the Vessel, as she is then built and equipped, does not conform to
this Contract.
In the event that the Buyer fails to notify the Builder as aforesaid
of the acceptance or non-acceptance of the Vessel, together with the
reason therefor, within the periods as provided above, the Buyer shall
be deemed to have accepted her.
The above process shall be repeated as necessary until the earlier of
(a) the Buyer's acceptance of the Vessel or (b) the valid and proper
rescission of this Contract by either party.
7. DISPOSITION OF SURPLUS CONSUMABLE STORES
Should any fuel oil, lubricating oil, greases and ship's stores,
including fresh water (except, if the Builder determines, in its sole
discretion, to use any fresh water for ballast) furnished by the
Builder for the trials remain on board the Vessel at the time of
acceptance thereof by the Buyer, the Buyer agrees to buy the same from
the Builder at a reasonable price not to exceed that paid by the
Builder, and payment by the Buyer shall be effected upon the delivery
of the Vessel.
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ARTICLE VII - DELIVERY
1. TIME AND PLACE
The Vessel shall be delivered by the Builder to the Buyer at a safe
berth with unimpeded access to international waters on 1 June 2002,
except that, in the event of delays in the construction of the Vessel
or any performance required under this Contract due to (i) agreed
changes to the Delivery Date pursuant to Article V or (ii) permissible
delays pursuant to Articles VI.2 or VIII, which under the terms of
this Contract permit postponement of the date for delivery
("Permissible Delays"), the aforementioned date shall be postponed
accordingly. The aforementioned date, or such later date to which the
requirement of delivery is postponed pursuant to the terms of this
Contract as set forth in the preceding sentence, is herein called the
"Delivery Date."
The Builder shall notify the Buyer of the estimated date of actual
delivery of the Vessel at least six (6) months prior thereto.
2. WHEN AND HOW EFFECTED
Provided that the Buyer shall have fulfilled all of its obligations
stipulated in Article II of this Contract, delivery of the Vessel
shall be effected 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 thereby by the Buyer.
3. DOCUMENTS TO BE DELIVERED TO THE BUYER
Acceptance of the Vessel by the Buyer shall be conditional upon
receipt by the Buyer of the following duly authenticated documents
which shall accompany the aforementioned Protocol of Delivery and
Acceptance:
A) PROTOCOL OF TRIALS of the Vessel made pursuant to this
Contract;
B) PROTOCOL OF INVENTORY of the equipment of the Vessel
including spare parts and the like;
C) PROTOCOL OF STORES OF CONSUMABLE NATURE such as fuel oil,
lubricating oils and greases, fresh water and the like
including the purchase price thereof;
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D) ALL DRAWINGS AND PLANS pertaining to the Vessel as stipulated
in the Specification and which shall be furnished to the
Buyer at no additional cost;
E) ALL CERTIFICATES required to be furnished upon delivery of
the Vessel pursuant to the Contract and Specification and
according to customary shipbuilding practice in the cruise
vessel sector;
F) DECLARATION OF WARRANTY of the Builder that the Vessel is
delivered to the Buyer free and clean of any liens, charges,
claims, mortgages or other encumbrances upon the Buyer's
title thereto and in particular that the Vessel is free from
any burden in the nature of imposts, taxes or charges imposed
by the state or country of the port of delivery, as well as
all liabilities of the Builder to its subcontractors,
employees and crew and of all liabilities arising from the
operation of the Vessel in trial runs, or otherwise , prior
to delivery, except as otherwise provided under this
Contract;
G) COMMERCIAL INVOICE; and
H) BUILDER'S CERTIFICATE.
4. TITLE AND RISK
(a) Title to, and ownership of, the Vessel during construction
from keel laying shall pass to the Buyer in accordance with
the provisions of the Transfer Agreement.
(b) Such transfer of title and ownership is strictly without
prejudice to any and all of the obligations of the Builder
under or in connection with this Contract, including (but
without limitation) the Builder's obligation to complete and
deliver the Vessel in accordance with the provisions of this
Contract.
(c) Notwithstanding the provisions of the Transfer Agreement, all
risk of loss of, or damage to, the Vessel shall pass to the
Buyer only upon delivery and acceptance of the Vessel having
taken place in accordance with the foregoing provisions of
this Article VII; it being expressly understood that, until
such delivery and acceptance is effected, all risk of loss
of, or damage to, the Vessel shall rest exclusively with the
Builder.
(d) Upon acceptance of the Vessel hereunder the Builder shall
transfer to the Buyer physical possession of the Vessel.
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5. REMOVAL OF VESSEL
The Buyer shall take possession of the Vessel immediately upon
delivery and acceptance thereof and, where appropriate and if so
requested, shall remove the Vessel from the premises of the shipyard
within seven (7) days after delivery thereof is effected.
ARTICLE VIII - DELAYS AND EXTENSIONS OF TIME FOR DELIVERY (FORCE MAJEURE)
1. CAUSES OF DELAY
The Delivery Date is subject to force majeure reservations. Force
majeure shall occur if at any time either the construction of the
Vessel or any performance required hereunder as a prerequisite of
delivery of the Vessel is delayed due to acts of princes or rulers,
war, blockade, revolution, insurrections, mobilization, civil
commotions, riots, strikes, lockouts, Acts of God or the public enemy,
plague or other epidemics, quarantines, prolonged failure of electric
current, freight embargoes, earthquakes, tidal waves, typhoons,
hurricanes or by destruction of, or severe damage to, the Vessel or of
the works of the Builder or its subcontractors for important parts of
the Vessel by fire or flood, defects in materials and equipment
(including casting or forging or machining rejects or the like) which
could not have been detected by the Builder using reasonable care, or
other causes of similar type and quality. Force majeure shall moreover
be regarded as occurring if the delivery is prevented or delayed by
delayed deliveries of major parts or important performances by
subcontractors, where the cause of the delay would be force majeure
under this Article if it had affected the Builder, provided that such
circumstances shall not constitute force majeure if they arise within
two months of the Delivery Date. No event shall be considered to be
force majeure unless it is reasonably beyond the control of the
Builder or its subcontractors and could not reasonably have been
anticipated by the Builder when signing this Contract.
In force majeure circumstances, the Builder may (subject as
hereinafter provided) require an extension of the Delivery Date by as
many working days as the delivery has been delayed on account of such
circumstances. However, up to five (5) force majeure events giving
rise to delay(s) lasting for only one (1) working day or less shall
not be considered as permissible delay. For the purposes of this
Article, if any series of force majeure events occur which are due to
a single cause, then, in such case, all such events shall be regarded
as one event.
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In all events the Builder undertakes to take all reasonable steps to
minimize the effects of such delay.
2. NOTICE OF DELAYS
Within five (5) days from the date of commencement of any delay on
account of which the Builder claims that he is entitled under this
Contract to an extension of the Delivery Date, the Builder shall
advise the Buyer in writing the date such delay commenced and the
reasons therefor. Likewise, within ten (10) days after such delay
ends, the Builder shall advise the Buyer in writing the date that such
delay ended and also shall specify the period of time it claims the
Delivery Date is extended by reason of such delay.
Failure of the Builder to give notice as aforesaid shall constitute a
waiver of its right to extension of the Delivery Date.
Failure of the Buyer to acknowledge the Builder's notification of any
claim for extension of the Delivery Date within ten (10) days after
receipt by the Buyer of such notification in writing shall be deemed
to be a waiver of its right to object to such extension.
The Builder shall promptly advise the Buyer of the status of any
pending delay upon the request of the Buyer.
3. PERMISSIBLE DELAYS
Delays on account of the foregoing causes shall be understood to be
permissible delays and are to be distinguished from unauthorized
delays on account of which the price of the Vessel, may be subject to
adjustment or liquidated damages payable as provided in Article III
hereof.
4. RIGHT TO RESCIND FOR EXCESSIVE DELAY
If the total accumulated time of all delays for any reason (except
only for delays due to default by the Buyer) amounts to Two Hundred
and Forty (240) days or more beyond 1 June 2002 then in such event,
the Buyer may, at its option, rescind this Contract. Such right of
rescission shall be exercised by appropriate notice to the Builder
within thirty (30) days from the lapse of such period of Two Hundred
and Forty (240) days and is exercisable regardless of any other
provision of this Contract, including, but not limited to, the
provisions of Article III.1 hereof.
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ARTICLE IX - WARRANTY OF QUALITY
1. GUARANTEE
Subject to the provisions hereinafter set forth, the Builder
undertakes to remedy, free of charge to the Buyer, any defects in the
Vessel which are due to defective design and/or material and/or
workmanship provided that the defects are discovered within a period
of twelve (12) months after the date of delivery of the Vessel, as
such period may be extended as provided below, and a notice thereof is
duly given to the Builder as hereinafter provided. In addition, the
Builder shall secure the extension to the Buyer of the full benefit of
all guarantees of greater than twelve months' duration which the
Builder may be given by subcontractors and suppliers, if any, and
shall assist the Buyer in securing performance thereunder.
For the purpose of this Article, the Vessel excludes any parts for the
Vessel which have been supplied by the Buyer. This guarantee extends
to installation of the Buyer's Supplies only if such installation is
done by the Builder or its subcontractors. Any parts repaired or
replaced by the Builder pursuant to this Article shall be guaranteed
on similar terms for a period of twelve months from the date of such
replacement or repair but subject to an overall time limit of
twenty-four (24) months (thirty-six months in the case of those major
components as listed in the Specification) counted from the date of
actual delivery of the Vessel.
2. NOTICE OF DEFECTS
The Buyer shall notify the Builder in writing of any defects for which
claim is made under this guarantee as promptly as practical after
discovery thereof. For purposes of this Article, notice to the
Guarantee Engineer shall be deemed to be notice to the Builder. The
Buyer's written notice shall describe the nature and extent of the
defects. The Builder shall have no obligation for any defects, even if
discovered prior to the expiry date of the said guarantee period,
unless notice of such defects is received by the Builder not later
than thirty (30) days after such expiry date.
Notwithstanding the foregoing, in the case of defects which could only
be discovered on dry docking of the Vessel the Builder will be liable
under this guarantee in relation thereto if the Buyer gives notice
thereof to the Builder as soon as possible after the first dry docking
of the Vessel after delivery to the Buyer hereunder (whether or not
such notice is given prior
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to the expiration of the said thirty day period) provided that such
dry docking occurs within four (4) years after the delivery of the
Vessel.
3. REMEDY OF DEFECTS
(a) The Builder shall remedy, at its expense, any defects,
against which the Vessel is guaranteed under this Article, by
making all necessary repairs or replacements.
(b) In the event that the Buyer proposes to cause the necessary
repairs or replacements to be made to the Vessel under its
own direction, the Buyer shall first give the Builder notice
in writing or by telecopy confirmed in writing of the time
and place such repairs are intended to be made by it. Prior
to commencement of such repair work, provided that the Vessel
is not thereby delayed or her operation or working schedule
is not thereby impaired, the Builder shall have the right to
verify by its own representative(s) the nature and extent of
the defects complained of. The Builder shall, in such case,
promptly advise the Buyer by telecopy, after such examination
has been completed, of its acceptance or rejection of the
defects as covered by the guarantee herein provided. Upon the
Builder's acceptance of the defects as justifying remedy
under this Article, or upon award of the arbitration so
determining, the Builder shall immediately pay to the Buyer
the actual cost for such repairs or replacements. The Buyer
shall use the normal diligence and business practices of a
competent shipowner to minimize such cost of repairs or
replacements.
The Builder shall also reimburse the Buyer for the travel
costs charged to the Buyer by contractors carrying out
guarantee works on board the Vessel, provided, however, that
no such claim by the Buyer shall be paid unless the Buyer
shall reasonably demonstrate that the works in question could
not have been carried out by either (a) the Vessel's crew or
(b) a suitably qualified contractor carrying on business at
the Vessel's location during the repairs.
In the event that it is necessary to forward the replacement
for the defective part under the Builder's guarantee, the
Builder shall forward same by sea, road or railfreight at its
own expense. However, if the Buyer requires the part to be
sent by air, the Buyer shall meet the difference in cost but
shall be entitled to reimbursement from the Builder in
circumstances in which the Buyer can reasonably demonstrate
that provision of an immediate replacement was vital to the
continued operation of the ▇▇▇▇▇▇.
▇▇
▇▇
(c) Any dispute under this Article shall be referred to
arbitration in accordance of Article XIII hereof.
4. EXTENT OF BUILDER'S RESPONSIBILITY
(a) The liability of the Builder under this provision shall be
limited to defects directly caused by defective design and/or
material and/or workmanship as above provided. If the defect
has led to damage to the Vessel or any part thereof, the
repair obligation is limited to the repair or renewal of the
defective part and/or of the Vessel's part or parts that has
(have) been damaged as a direct and immediate consequence of
the defect.
(b) The Builder shall be under no obligation with respect to
defects discovered after the expiration of the period of
guarantee specified above nor in any event shall the Builder
be liable for any consequential damage or expense occasioned
by any defect or for any loss of time in operating the Vessel
or for any loss of time due to repair, or both, caused by any
defect.
(c) In no event shall there be any liability for defects in the
Vessel, or any part or equipment thereof, caused by perils of
the sea, rivers or navigation or normal wear and tear or fire
or accidents at sea or elsewhere or by mismanagement,
accidents, negligence, willful neglect, alteration or
addition on the part of the Buyer, its employees or agents or
any person other than employees or agents of the Builder, on
or doing work on the Vessel, including the Vessel's officers,
crew and passengers.
(d) Likewise, the Builder shall not be liable for defects in the
Vessel or any part or equipment thereof that are due to
repairs which were made at the direction of the Buyer as
hereinabove provided unless such repairs were made by the
Builder or with the approval of the Builder.
5. GUARANTEE ENGINEER
The Builder shall appoint a Guarantee Engineer to serve on the Vessel
as its representative for the full guarantee period unless otherwise
agreed by the parties hereto. The Buyer will give reasonable
consideration to requests of the Builder for earlier release of the
Guarantee Engineer. The Buyer and its employees shall give the
Guarantee Engineer full cooperation in carrying out his duties as the
representative of the Builder
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on board the Vessel. The Buyer shall accord the Guarantee Engineer
treatment comparable to the Vessel's Chief Engineer and shall provide
him with a reasonable passenger cabin and subsistence at no cost to
the Builder and/or the Guarantee Engineer.
All other expenses for the Guarantee Engineer, including wages and
traveling expenses, shall be for Builder's account.
The Buyer shall be under no liability whatsoever to the Guarantee
Engineer or the Builder for personal injuries, including death or loss
or damage to the Guarantee Engineer's property unless the same shall
have been caused by the negligence of the Buyer, its subcontractors or
its employees or agents acting within the scope of their employment.
ARTICLE X - RESCISSION BY BUYER
1. NOTICE
The payments to be made by the Buyer prior to the delivery of the
Vessel shall be in the nature of advances to the Builder. In the event
that the Buyer shall exercise its right of rescission of this Contract
under and pursuant to any of the provisions of this Contract
specifically permitting the Buyer to do so, then the Buyer shall
notify the Builder in writing, and such rescission shall be effective
as of the date notice thereof is received by the Builder.
2. REFUND BY BUILDER
Thereupon the Builder shall within ten (10) days after receipt of such
notice refund to the Buyer the full amount of all sums paid by the
Buyer to the Builder on account of the Vessel, unless the Builder
disputes the Buyer's rescission and proceeds to the arbitration under
the provisions of Article XIII hereof within such ten (10) day period.
Any such refund shall be sent by telegraphic transfer to the Buyer at
a Bank to be designated by the Buyer.
In such event the Builder shall also pay the Buyer interest at the
rate of eight percent (8%) per annum on the amount required herein to
be refunded to the Buyer, computed from the respective dates on which
such sums were paid by the Buyer to the Builder to the date of
remittance by transfer of such refund to the Buyer by the Builder. In
addition, the Builder shall return all Buyer's Supplies to the Buyer
or, to the extent not so returned, pay to the Buyer the original cost
of such items.
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3. DISCHARGE OF OBLIGATIONS
Upon such performance by the Builder of its obligations hereunder to
the Buyer, all obligations, duties and liabilities of each of the
parties hereto to the other under this Contract shall be forthwith
completely discharged, and such title to the Vessel as has been vested
in the Buyer under the Transfer Agreement shall revert to the Builder,
unless the rescission by the Buyer arose out of a willful breach of
the Contract by the Builder.
ARTICLE XI - BUYER'S DEFAULT; BUILDER'S DEFAULT
1. DEFINITION OF BUYER'S DEFAULT
The Buyer shall be deemed to be in default of performance of its
obligations under this Contract in the following cases:
(a) The Buyer fails to pay any of the First, Second, Third or
Fourth Installments of the Contract Price to the Builder when
such Installment becomes due and payable under the provisions
of Article II hereof and fails to remedy such default within
three (3) Banking Days of receipt of notice of such
nonpayment from the Builder; or
(b) The Buyer fails to take delivery of the Vessel, when the
Vessel is duly tendered for delivery by the Builder under the
provisions of Article VII hereof; or
(c) The Buyer becomes or is declared, either by effective
resolution of the Buyer or by order of any court of competent
jurisdiction, insolvent or bankrupt; or
(d) The Buyer files a voluntary petition, or an effective
resolution is passed, for winding-up or dissolution of the
Buyer, save for the purposes of amalgamation or
reorganization not involving or arising out of insolvency, or
the Buyer enters into an arrangement or composition with its
creditors generally; or
(e) A receiver, trustee or liquidator of the Buyer is appointed
and such appointment is not terminated within thirty (30)
days; or
(f) Any bona fide petition for the winding-up of the Buyer is
filed and not dismissed within thirty (30) days.
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2. INTEREST AND CHARGES
If the Buyer is in default of payment as to any Installment as
provided in Paragraph 1(a) of this Article, the Buyer shall pay
interest on such Installment at the rate of eight percent (8%) per
annum from the due date thereof to the date of payment to the Builder
of the full amount including interest; in case the Buyer shall fail to
take delivery of the Vessel as provided in paragraph 1(b) of this
Article, the Buyer shall be deemed in default as regards the whole of
the Fourth Installment of the Contract Price and shall pay interest
thereon at the same rate as aforesaid from and including the day on
which the Vessel is duly tendered for delivery by the Builder.
3. EFFECT OF DEFAULT
(a) If any default by the Buyer occurs as provided hereinbefore,
the Delivery Date shall be automatically postponed for a
period of continuance of such default by the Buyer provided,
however, that if the Buyer cures such default within five (5)
days, then no such postponement shall occur.
(b) Except as set forth in Paragraph 3(c) of this Article, if any
default by the Buyer continues for a period of thirty (30)
days after notice of such default is given by the Builder to
the Buyer in writing, the Builder may, at its option, rescind
this Contract by giving notice of such effect to the Buyer by
facsimile confirmed in writing. Upon receipt by the Buyer of
such notice of rescission, this Contract shall forthwith
become null and void and such title to the Vessel as shall
have vested in the Buyer under the Transfer Agreement,
together with any of the Buyer's Supplies which have become
permanently affixed to the Vessel, shall revert to and become
the sole property of the Builder and the Buyer shall return
any Installment Guarantee to the Guarantor marked
"Cancelled".
In the event of such rescission of this Contract, the Builder
shall be entitled to retain any Installment or Installments
theretofore paid by the Buyer to the Builder on account of
this Contract to the extent of proven damages and losses
including costs and expenses permitted by English law.
(c) In the event that Kreditanstalt fur Wiederaufbau fails for
any reason to make available the funds to pay the Fourth
Installment of the Contract Price pursuant to the Credit
Terms and the Buyer fails
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to pay the Fourth Installment to the Builder when due, then the Buyer
and the Builder shall meet in good faith to attempt to resolve the
situation to the mutual satisfaction of the Buyer and the Builder. In
the event the Buyer and the Builder are unable to come to an agreement
to resolve the situation within thirty (30) days, then either party
may, upon written notice to the other party, rescind this Contract,
whereupon the Builder and the Buyer shall enter into a joint venture
for the sole purpose of finding a third party to whom the Vessel may
be disposed in an attempt to realize the highest practical value for
the Vessel. Upon entering into the joint venture, the Buyer will
transfer to the Builder, at the Builder's expense, such title to the
Vessel as shall have vested in the Buyer under the Transfer Agreement
and return any Installment Guarantee to the Guarantor marked
"Cancelled". All decisions to be made by such joint venture shall
require the consent of both the Builder and the Buyer and the proceeds
from the disposition of the Vessel shall be distributed 85% to the
Builder and 15% to the Buyer. In the event the Buyer and the Builder
are unable to mutually agree upon any decision required to be made by
the joint venture, either party may refer the dispute to arbitration
pursuant to Article XIII. Except as set forth in this Paragraph (c),
neither party shall have any further obligations, duties or
liabilities to the other party in the event of a rescission as set
forth in this Paragraph (c).
The term "Credit Terms" shall mean financing of 80% of the Contract
Price over a term of 8 1/2 years, repayable in 17 semi-annual
installments, in arrears, bearing interest at a market rate not to
exceed 8% per annum and provided on an unsecured basis with no
financial covenants.
4. SALE OF VESSEL
The following is applicable only in the case of a rescission effected
pursuant to Paragraph 3 (b) above.
(a) In the event rescission by the Builder of this Contract as
provided in Article XI.3(b), 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 public or
private sale on such terms and conditions as the Builder
thinks fit.
(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 proven damages and
losses permitted by English
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law attending such sale, and then to payment of all unpaid
Installments of the Contract Price and interest on such
Installments at the rate of eight percent (8%) per annum from
the respective due dates thereof to the date of application.
(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 proven damages and losses permitted by English
law attending such sale, and then to payment of all costs of
construction of the Vessel and compensation to the Builder
for a loss of reasonable profit due to the rescission of this
Contract together with the appropriate interest at the rate
of eight percent (8%) per annum, less the Installments
retained by the Builder.
(d) In either of the above events of sale, if the proceeds of
sale exceed the total of amounts to which such proceeds are
to be applied as aforesaid, the Builder shall promptly pay
the excess to the Buyer without interest.
(e) If the proceeds of sale are insufficient to pay to the
Builder such total amounts payable as aforesaid, the Buyer
shall promptly pay the deficiency to the Builder upon
request.
5. DEFAULT BY BUILDER
The Buyer shall be entitled but not bound to declare the Builder in
default in any one of the following cases:
(a) The Builder becomes or is declared, either by effective
resolution of the Builder or by order of any court of
competent jurisdiction, insolvent or bankrupt; or
(b) The Builder files a voluntary petition, or an effective
resolution is passed, for winding-up or dissolution of the
Builder, save for the purposes of amalgamation or
reorganization not involving or arising out of insolvency, or
the Builder enters into an arrangement or composition with
its creditors generally; or
(c) A receiver, trustee or liquidator of the Builder is appointed
and such appointment is not terminated within thirty (30)
days; or
(d) Any bona fide petition for the winding-up of the Builder is
filed and not dismissed within thirty (30) days; or
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(e) Any of the circumstances set out in (a) - (d) above
(inclusive) or anything analogous thereto arises under the
laws of Germany; or
(f) Any of the circumstances set out in (a) - (d) above
(inclusive) or anything analogous thereto under the laws of
the country of its incorporation or domicile arises in
relation to any party providing an installment guarantee
pursuant to Article II.4 hereof, and such guarantee is not
replaced by another guarantee issued by another first class
international bank or insurance company reasonably acceptable
to the Buyer within thirty (30) days; or
(g) The Builder, without prior written consent of the Buyer,
removes the Vessel from the Shipyard or assigns, sub-lets or
subcontracts performance of the whole or substantial part of
its obligations, except as provided for in this Contract and
the Specification; or
(h) The Builder fails to comply with its obligations under the
Transfer Agreement in any material way; or
(i) The Builder fails, without due cause, to proceed with the
construction of the Vessel in accordance with usual
international shipbuilding standards such that in the Buyer's
reasonable opinion she cannot be delivered to the Buyer on or
before Delivery Date and, after receipt of written
notification from the Buyer, the Builder does not forthwith
initiate appropriate corrective measures to cure such
failure.
Upon the occurrence of any of the above events and following the
Buyer's declaration as aforesaid, the Buyer shall be entitled to
exercise the following remedies (at its option):
(a) to complete the Vessel in accordance with the Specification,
and for this purpose to enter the Shipyard, to take
possession of the Vessel in its then state of completion
together with all other property transferred to the Buyer
pursuant to the Transfer Agreement and Buyer's Supplies, and
transfer the Vessel, all such other property and Buyer's
Supplies to another shipyard to complete her. The Buyer shall
also be entitled to exercise its rights under the
subcontractor assignments referred to in the Transfer
Agreement and to exercise its rights in the Expectancies
therein defined. In such event, the reasonable expenses
incurred by the Buyer in so completing the Vessel shall be
deducted from, and go to reduce, the unpaid portion of the
Contract Price (and, for the avoidance of doubt, any part of
the Contract Price paid to the Builder's bank
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in in accordance with Clause 3.4 of the Bank Undertaking
referred to in the Transfer Agreement shall be regarded as
having been paid for this purpose). The balance, if any, of
the unpaid portion of the Contract Price remaining after such
reduction shall be paid by the Buyer to the Builder upon
completion of the Vessel and the placement of the Vessel in
the Buyer's service. In the event that any such costs and
expenses cannot be offset in this manner against the unpaid
portion of the Contract Price, then the Builder shall pay
such remaining amount upon the completion of the Vessel and
the placement of the Vessel in the Buyer's service out of the
Installments of the Contract Price previously paid to the
Builder by the Buyer under this Contract; or (then or at any
time thereafter)
(b) to rescind this Contract, in which event the Builder shall
make immediate refundment by the Builder of all previously
paid installments of the Contract Price, together with
interest thereon at the rate of eight percent (8%) per annum
from the date of payment by the Buyer, and upon such
repayment, such title to the Vessel as shall have vested in
the Buyer pursuant to the Transfer Agreement shall revert to
the Builder, and the Builder may freely dispose of the Vessel
free of claim by the Buyer of any sort; provided, however,
that the Builder shall additionally pay the Buyer the costs
of the Buyer's Supplies delivered by the Buyer to the
Shipyard for inclusion in the Vessel.
ARTICLE XII - BUILDER'S INSURANCE
The following provisions of this Article XII shall apply
notwithstanding the transfer of title to, and ownership of, the Vessel
to the Buyer under the Transfer Agreement.
1. EXTENT OF BUILDER'S INSURANCE COVERAGE
From the date on which erection of the Vessel is commenced in the
building dock until the Vessel is delivered to and accepted by the
Buyer, the Builder shall, at its own cost and expense, keep the Vessel
and all Buyer's Supplies delivered to the Builder insured under
Builder's Risk Policies, in accordance with the ILU "Institute Clauses
for Builders Risks" with first-class insurance companies. From the
date of her launching, the Vessel shall also be insured for war risks
in accordance with the ILU "Institute Clauses for Builders Risks". A
copy of the Builder's broker's cover notes evidencing such coverages
shall be provided by the Builder to the Buyer within twenty (20) days
of the commencement of keel-laying of the ▇▇▇▇▇▇.
▇▇
▇▇
The amount of such insurance shall not be less than (a) the value from
time to time of the Buyer's Supplies delivered to the Builder and (b)
the Contract Price, which latter element shall be increased to one
hundred and ten percent (110%) of the Contract Price at the latest
three (3) months before the scheduled date of delivery. The additional
10% shall be covered as owner's interest.
The policies referred to herein shall be taken out in the joint names
of the Builder and the Buyer as their respective interests may appear,
with no liability of the Buyer for any premiums, and all losses under
such policies shall be payable to the Builder and the Buyer as their
respective interests may appear.
2. APPLICATION OF RECOVERED AMOUNTS
PARTIAL LOSSES
Should the Vessel be damaged prior to delivery to the Buyer and such
does not constitute an actual or constructive total loss of the Vessel
under the insurance policies thereon, the Builder shall apply any
amount recovered under the insurance policies to the repair of such
damage, satisfactory to the Classification Society and the Buyer's
Representatives, without remarks, exceptions or recommendations.
TOTAL LOSS
In the event that the Vessel is agreed by the Underwriters subscribing
to the Builder's policies of insurance to be an actual or constructive
total loss, the Builder may decide either:
(i) Proceed in accordance with the terms of this Contract, in
which event the amount recovered under the said insurance
cover shall be applied to the reconstruction and/or repair of
the Vessel, provided the parties hereto shall first have
agreed in writing as to such reasonable postponement of the
Delivery Date as may be reasonably necessary for the
completion of such reconstruction and/or repair; or
(ii) Refund immediately to the Buyer the aggregate of (1) all
Installments paid to the Builder under this Contract and (2)
interest thereon at eight per cent (8%) from the date of
payment to the date of refundment. The Builder shall also pay
to the Buyer a sum equivalent to the value at the date of the
loss of any Buyer's
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Supplies delivered to the Builder. Upon payment in full as
aforesaid this Contract shall be deemed to be at an end on
the basis that all rights, duties, liabilities and
obligations of each of the parties towards the other shall
terminate immediately.
The Builder will, unless agreed by the Buyer, exercise the first
alternative unless it is unable to do so as a result of capacity
restrictions resulting from other fixed commitments.
3. TERMINATION OF BUILDER'S OBLIGATION TO INSURE
The Builder's obligation to insure the Vessel hereunder shall cease
and terminate forthwith upon delivery and acceptance thereof by the
Buyer.
ARTICLE XIII - DISPUTE AND ARBITRATION
1. TECHNICAL DISPUTES
Should any dispute of a technical nature arise between the parties
hereto it may, by mutual agreement, be referred to the decision of the
Classification Society (or such other third party as the parties
hereto shall mutually agree) which shall act in determining such
dispute as an expert (rather than an arbitrator) and whose views in
relation to that dispute shall be binding upon the parties hereto.
2. OTHER DISPUTES
All other disputes arising in connection with the interpretation and
the performance of this Contract which cannot be amicably resolved
shall be referred to arbitration under the Rules applicable at the
time of commencement of the arbitration proceedings of the London
Maritime Arbitrators' Association in London, which rules shall apply
subject to the provisions of this Article XIII.2.
Unless the parties agree, within seven (7) days from the receipt of
the notice to arbitrate by the other party, upon arbitration before a
sole arbitrator and on his identity, the dispute shall be settled by a
panel of three arbitrators, with one arbitrator to be appointed by
each party within a further period of seven (7) days. The arbitrators
so appointed shall within seven (7) days from the later of their
appointments appoint the third arbitrator, failing which the third
arbitrator shall be appointed within a further period of seven (7)
days by the Secretary for the time being of the London Maritime
Arbitrators' Association. The third arbitrator shall act as the
Chairman of the panel. If either party fails to
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appoint an arbitrator as aforementioned, the appointment shall be made
by the Secretary for the time being of the London Maritime
Arbitrators' Association within seven (7) days from any such request
by the other party.
If either of the appointed arbitrators refuses to act or is incapable
of acting, the party who appointed him shall, within seven (7) days
from notice having been received by the other party of the refusal or
incapacity respectively appoint a new arbitrator in his place. If no
new arbitrator has been appointed within that seven day period, he
shall be appointed by the Secretary for the time being of the London
Maritime Arbitrators' Association within seven (7) days from any such
request by the other party.
The arbitrator or arbitrators shall have the power to award costs.
The decision or award of the arbitrators shall be final and binding
upon both parties, the parties waiving in advance and in any case the
right of appeal against decision or award.
Judgment on any decision or award may be entered in any court of
competent jurisdiction.
In the event of reference to arbitration of any dispute arising out of
matters occurring prior to delivery of the Vessel, the award may
include any postponement of the Delivery Date which the arbitration
tribunal may deem appropriate to reflect any delay caused by such
reference.
ARTICLE XIV - RIGHT OF ASSIGNMENT
1. ASSIGNMENT OF BENEFITS
The Buyer may (a) transfer its rights and obligations under this
Contract to another Royal Caribbean Cruises Ltd. subsidiary or
affiliate upon condition that the Buyer guarantees the obligations of
such transferee hereunder in a manner reasonably satisfactory to the
Builder or (b) assign the benefit, but not obligations, of this
Contract to any bank or financial institution involved in the
provision of finance for the Vessel's purchase by the Buyer.
Neither of the parties hereto may otherwise assign this Contract
without the prior written consent thereto of the other party.
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This Contract shall inure to the benefit of and shall be binding upon
the lawful successors or the legitimate assigns of either of the
parties hereto.
ARTICLE XV - TAXES AND DUTIES
1. TAXES AND DUTIES IN GERMANY, ETC.
The Builder shall bear and pay all taxes, duties and similar
impositions imposed in Germany, and in the country in which the Vessel
is delivered to the Buyer, in connection with execution and/or
performance of this Contract.
2. TAXES AND DUTIES OUTSIDE GERMANY, ETC.
The Buyer shall bear and pay all taxes, duties and similar impositions
imposed outside Germany, or the country in which the Vessel is
delivered to the Buyer, in connection with execution and/or
performance of this Contract other than those imposed upon machinery,
equipment and supplies (other than Buyer's Supplies) purchased in
connection with the construction of the Vessel.
ARTICLE XVI - PATENTS, TRADEMARKS, COPYRIGHTS, ETC.
1. PATENTS, TRADEMARKS AND COPYRIGHTS ETC.
For a period of fifteen (15) years from the delivery of the Vessel,
the Builder shall defend any claim, suit or proceeding brought against
the Buyer alleging that any design, process, device, apparatus, plans
or specifications or the method of construction employed by the
Builder hereunder or the tools or implements used by the Builder in
the performance of this Contract constitutes an infringement of any
patent, trademark or copyright. The Builder shall compensate the Buyer
for any security provided to release the Vessel from any arrest
brought in pursuance of such a claim and shall indemnify and save the
Buyer harmless from any judgment rendered against the Buyer or the
Vessel as a result of such claim and the costs and expenses to be
incurred by the Buyer in resisting the same.
The Buyer shall promptly notify the Builder in writing of any such
claim, suit or proceeding and shall take steps, at Builder's expense
to defend against such claim and permit the Builder to control the
conduct and settlement of such claim, suit or proceeding provided,
however, that no settlement shall be entered into without the Buyer's
consent which purports to acknowledge on the Buyer's behalf the
validity of any patent,
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trademark or copyright. The Buyer shall provide information and
assistance to the Builder, as may be reasonably necessary to aid in
the conduct and settlement of the claim, suit or proceeding and shall
cooperate with Builder in limiting the effects of such claim. The
Buyer shall be entitled to participate in the conduct and settlement
of such claim, suit or proceeding through its selected representatives
and attorneys.
The Builder's indemnity hereinabove does not extend to Buyers Supplies
provided to the Builder in accordance with Article XVII below.
2. DESIGN OF VESSEL
All Intellectual Property Rights in the design of the Vessel in as far
as the Builder has rights to such Intellectual Property Rights shall
belong to the Buyer and the Builder shall sign any documents as are
necessary or desirable to evidence Buyer's ownership of the
Intellectual Property Rights.
"Intellectual Property Rights" means all patents, registered trade
marks, trade and business names, copyrights, design rights and
registered designs, know-how and all applications for patents and
trade marks and registered designs and all other forms of protection
of a similar nature which may subsist in any part of the world for the
full term of such rights including any extensions and renewals.
ARTICLE XVII - BUYER'S SUPPLIES
1. RESPONSIBILITY OF BUYER
(a) The Buyer shall, at its own risk, cost and expense, supply
and deliver to the Builder all of the items to be furnished
by the Buyer as specified in the Specification (herein called
the "Buyer's Supplies") on board the Vessel or at a warehouse
or other storage area of the Shipyard in the proper condition
ready for installation in or on the Vessel, in accordance
with the time schedule designated by the Builder, provided
that the Builder shall give to the Buyer adequate prior
notice of the schedule. Each shipment of Buyer's Supplies
shall be identified as such and shall be plainly marked with
the Hull number of the Vessel.
(b) In order to facilitate installation by the Builder of the
Buyer's Supplies in or on the Vessel, the Buyer shall furnish
the Builder with necessary specifications, plans, drawings,
instruction books, manuals, test reports and certificates
required by the applicable
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rules and regulations. The Buyer, if reasonably requested by
the Builder, shall, without any charge to the Builder, cause
the representatives of the manufacturers of the Buyer's
Supplies to advise the Builder on installation thereof in or
on the Vessel or to make repairs to or adjustments thereof at
the Shipyard.
(c) Any and all of the Buyer's Supplies shall be subject to the
Builder's reasonable right of rejection, as and if they are
found to be unsuitable or in improper condition for
installation. However, if so requested by the Buyer, the
Builder may repair or adjust the Buyer's Supplies without
prejudice to the Builder's other rights hereunder and without
being responsible for any consequences therefrom. In such
case, the Buyer shall reimburse the Builder for all costs and
expenses incurred by the Builder in such repair or
adjustment. The Buyer shall bear the expenses of any
manufacturer's representatives for Buyer's Supplies.
(d) Should the Buyer fail to deliver any of the Buyer's Supplies
within the time designated, and such delay results in delay
of the construction of the Vessel, the Delivery Date shall be
automatically extended for a period of such delay in
construction.
If delay in the delivery of any of the Buyer's Supplies
exceeds thirty (30) days beyond the time designated, then the
Builder shall be entitled to proceed with construction of the
Vessel without installation thereof in or on the Vessel,
without prejudice to the Builder's other rights as
hereinabove provided, and the Buyer shall accept and take
delivery of the Vessel so construed.
2. RESPONSIBILITY OF THE BUILDER
The Builder, at its own cost and expense, shall be responsible for
storing and handling the Buyer's Supplies with reasonable care after
delivery thereof at the Shipyard, and shall 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 Buyer's Supplies.
The Builder shall, however, be responsible for proper installation of
the Buyer's Supplies by the Builder or its subcontractors, unless
otherwise expressly agreed.
All Buyer's Supplies shall be identified as soon as reasonably
possible after such equipment has been delivered to the Shipyard by
being plainly marked either with the Hull number or other appropriate
markings or symbols or identification.
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ARTICLE XVIII - NOTICES
1. ADDRESSES
Any and all notices and communications in connection with this
Contract shall be in writing addressed as follows (or such other
address as either party may from time to time notify the other party);
To the Buyer:
Royal Caribbean Cruises Ltd.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Chairman and Chief Executive Officer
Fax# ▇▇▇-▇▇▇ ▇▇▇▇
Copy to: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
General Counsel
Fax# ▇▇▇-▇▇▇ ▇▇▇▇
To the Builder:
▇▇▇. ▇. ▇▇▇▇▇ GmbH & Co.
▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇
▇-▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇
Managing Owner
Fax# ▇▇▇-▇▇-▇▇▇▇-▇▇-▇▇▇
Copy to: Mr. ▇▇▇▇▇ Motikat
Fax# ▇▇▇-▇▇-▇▇▇▇-▇▇-▇▇▇
Any and all notices and communications in connection with this
Contract shall be written in the English language and shall be
effective upon receipt in person or by fax at the above locations.
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ARTICLE XIX - INTERPRETATION
1. LAW APPLICABLE
The parties hereto agree that the validity and interpretation of this
Contract and of each Article and part thereof (other than the Transfer
Agreement) shall be governed by the laws of England.
2. DISCREPANCIES
All general language or requirements embodied in the Specification are
intended to amplify, explain and implement the requirements of this
Contract. However, in the event that any language or requirements so
embodied permit of an interpretation inconsistent with any provisions
of this Contract then, in each and every such event, the applicable
provisions of this Contract shall prevail and govern. The
Specification and the General Arrangement Plan are also intended to
explain each other, and anything shown on the General Arrangement Plan
and not stipulated in the Specification or stipulated in the
Specification and not shown on the General Arrangement Plan shall be
deemed and considered as if embodied in both. In the event of conflict
between the Specification and the General Arrangement Plan, the
Specification shall prevail and govern.
3. ENTIRE AGREEMENT
This Contract contains the entire agreement and understanding between
the parties hereto and supersedes all prior negotiations,
representations, undertakings and agreements on any subject matter of
this Contract.
4. LANGUAGE
Any and all notices, communications and correspondence in connection
with this Contract shall be in the English language.
5. EFFECTIVENESS
This Contract shall become effective immediately and the Effective
Date hereof shall be the date of execution hereof by the parties.
ARTICLE XX - RIGHT OF CANCELLATION
The Buyer may, at its sole option to be exercised in its unfettered discretion,
terminate this Contract upon notice to the Builder on or before January 31,
1999,
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whereupon neither party shall have any obligations or liabilities to the other
party hereunder.
IN WITNESS WHEREOF the parties hereto have caused this Contract to be duly
executed in two original copies, on the date first above written.
ROYAL CARIBBEAN CRUISES LTD. ▇▇▇. ▇. ▇▇▇▇▇ GMBH & CO.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
------------------- --------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
Chairman and Chief Managing Partner
Executive Officer
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Appendix A
Form of Installment Guarantee
Royal Caribbean Cruises Ltd.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Dear Sirs:
Reference is made to the Contract for Construction and Sale of Hull No. S-656
dated as of ___ April 1998 (the "Contract") between Royal Caribbean
Cruises Ltd. (the "Buyer") and ▇▇▇. ▇. ▇▇▇▇▇ GmbH & Co. (the "Builder").
For good and valuable consideration, the sufficiency and receipt of which is
hereby acknowledged, the undersigned, referred to herein as the "Guarantor",
hereby unconditionally and irrevocably guarantees the due and prompt repayment
to the Buyer of the ____________ Installment under the Contract, amounting to
US$17,500,000 (Seventeen Million Five Hundred Thousand United States Dollars),
together with interest thereon as specified in the Contract, (such ____________
Installment plus interest being referred to herein as the "Obligations"), upon
receipt by the Guarantor of a certificate executed on behalf of the Buyer
stating the event giving rise to the demand and the amount due and setting
forth the method of calculation provided, however, that in the event the
Builder is engaged in arbitration to dispute the Buyer's right to receive a
refund of such Installment, the Guarantor shall not be required to pay the
Obligations to the Buyer until the Buyer's right to receive a refund of such
Installment has been established in such arbitration.
The Guarantor's liability under this Guarantee shall be unconditional and shall
not be discharged or impaired by any event other than payment in full of the
Obligations to the Buyer, including, but not limited to (a) any granting of
time or other indulgence to the Builder or any other failure by the Buyer to
pursue collection of the amounts guaranteed from the Builder or any other
party; (b) any amendment or other modification of the Contract; (c) the
existence or validity of any other security taken by the Buyer in relation to
the Contract or any enforcement of, failure to enforce or the release of any
such security; (d) any insolvency, bankruptcy, reorganization, dissolution or
similar events affecting the Builder.
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Any discharge of the obligations of the Guarantor under this Guarantee as a
result of the repayment of the Obligations to the Buyer shall be deemed to be
made subject to the condition that it will be void if any payment which the
Buyer may receive or has received is set aside or proves invalid for whatever
reason.
This Guarantee is continuing security and is in addition to and not in
substitution for any other security which the Buyer may now or hereafter hold
for the obligations of the Builder under or in connection with the Contract and
may be called and/or enforced without the Buyer first having recourse to the
Builder or any other security party.
All payments to be made by or on behalf of the Guarantor to the Buyer pursuant
to this Guarantee shall be made (a) without any set-off, counterclaim or
condition whatsoever and (b) free and clear of and without deduction for or on
account of, any present or future taxes unless the Guarantor is required by law
or regulation to make any such payment subject to any taxes in which event the
Guarantor shall pay such increased amount as will ensure that the Buyer
receives, after the deduction, a net amount equal to the gross amount which it
would otherwise have received.
The Guarantor will on demand reimburse the Buyer for all costs and expenses
incurred by the Buyer in preserving or enforcing its rights under this
Guarantee after the making of a demand by the Buyer.
This Guarantee shall expire upon the earlier of (i) the payment in full by the
Guarantor to the Buyer of the Obligations and any other amounts owing
hereunder, (ii) the execution by the Buyer and the Builder of the Protocol of
Delivery and Acceptance under the Contract or (iii) the valid rescission of the
Contract by the Buyer in accordance with Article XI.3 thereof, whereupon the
Buyer will return this Guarantee to the Guarantor marked "Cancelled".
The terms of this Guarantee shall be governed by and construed in accordance
with English law and the Guarantor submits to the exclusive jurisdiction of the
English Courts in connection with any claim hereunder.
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