Vietsovpetro

Draft contract

SECTION 2.0

GENERAL TERMS AND CONDITIONS

Page 1 of 90
Vietsovpetro

Draft contract

TABLE OF CONTENTS

TABLE OF CONTENTS ..........................................................
Vietsovpetro

Draft contract

Attachments
2-1
2-2A
2-2B
2-2C
2-3
2-4
2-5
2-6
2-7
2-8
2-9
2-10
2-11
2-12
2-13
2-14

Subcont...
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Draft contract

2.1

Subcontract Term

2.1.1

(a)

This Subcontract shall commence as of the Effective Date ...
Vietsovpetro

Draft contract

(c)
2.2.2

complete the Work in accordance with the Subcontract Schedule so as to achieve Pr...
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VIETSOVPETRO shall act reasonably in deciding whether to approve any proposed
Subcontractor ...
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SUBCONTRACTOR shall promptly obtain and deliver to VIETSOVPETRO a copy of all such
consents ...
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(c)

SUBCONTRACTOR is responsible for timely preparation and submittal to VIETSOVPETRO
who w...
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VIETSOVPETRO Furnished Material (after receipt from VIETSOVPETRO), and
SUBCONTRACTOR‟s Sprea...
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(i)
(ii)

2.2.7

deduct the amount thereof from payments otherwise due to SUBCONTRACTOR; or
...
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interest on such property and assets. All SUBCONTRACTOR Group-owned
facilities, utilities, p...
Vietsovpetro

(e)

2.2.9

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Application of the foregoing provisions of this Section 2.2.8 is not contingent ...
Vietsovpetro

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(i)
(ii)

(f)

shall perform, or cause Subcontractors and Suppliers to perform, the Work in
...
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(a)

SUBCONTRACTOR acknowledges that the Subcontract documents do not set out every detail
o...
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(f)

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SUBCONTRACTOR‟s responsibilities include all of its other responsibilities and obligati...
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Engineering and Operating Practices. SUBCONTRACTOR shall comply with its environmental
manag...
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(c)

to provide the VIETSOVPETRO Furnished Materials without defect or deficiency in accorda...
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the Site and the industry-recognized offshore working season. SUBCONTRACTOR shall also ensur...
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SUBCONTRACTOR shall co-ordinate and interface with the appropriate Governmental
Authorities ...
Vietsovpetro

(c)

Draft contract

SUBCONTRACTOR shall be entitled, by means of a Change Order Authorization, to
adjustmen...
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(v)

the date of Handover (if applicable) or Provisional Acceptance; or

(vi)

upon terminat...
Vietsovpetro

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an irrevocable, royalty-free, assignable licence acceptable to VIETSOVPETRO allowing
Company...
Vietsovpetro

Draft contract

2.7

Subcontract Schedule Compliance

2.7.1

(a)

SUBCONTRACTOR shall perform the Work exped...
Vietsovpetro

2.7.3

Draft contract

(a)

If SUBCONTRACTOR fails, or has reason to believe that it is likely to fail, to r...
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Draft contract

(iii)

2.8.2

After having given a suspension notice as provided above, VIETSOVPETRO shall h...
Vietsovpetro

2.8.3

Draft contract

(a)

VIETSOVPETRO shall pay the Subcontract Price to SUBCONTRACTOR in accordance with...
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Draft contract

liquidated damages (“Delay Liquidated Damages”) the applicable sum stipulated in Attachment ...
Vietsovpetro

Draft contract

(iv)

landslides, earthquakes, fires, washouts, floods, and explosions;

(v)

acts of Govern...
Vietsovpetro

Draft contract

(g)

delays resulting from adverse weather conditions (other than in respect of operation of...
Vietsovpetro

Draft contract

(a)

particulars of the occurrence; and

(b)

the Affected Party‟s bona fide estimate of its...
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Section 2.0 general t&cs highlight

  1. 1. Vietsovpetro Draft contract SECTION 2.0 GENERAL TERMS AND CONDITIONS Page 1 of 90
  2. 2. Vietsovpetro Draft contract TABLE OF CONTENTS TABLE OF CONTENTS ....................................................................................................................... 2 2.1 2.2 2.3 2.4 2.5 2.6 2.7 2.8 2.9 2.10 2.11 2.12 2.13 2.14 2.15 2.16 2.17 2.18 2.19 2.20 2.21 2.22 2.23 2.24 2.25 2.26 2.27 2.28 2.29 2.30 2.31 2.32 2.33 Subcontract Term .......................................................................................................................... 4 SUBCONTRACTOR Responsibilities.......................................................................................... 4 VIETSOVPETRO Responsibilities ............................................................................................. 16 Offshore Operations .................................................................................................................... 17 Title ............................................................................................................................................. 20 Guaranteed Completion Date ...................................................................................................... 22 Subcontract Schedule Compliance .............................................................................................. 23 Suspension................................................................................................................................... 24 Damages for Delay ...................................................................................................................... 26 Force Majeure ............................................................................................................................. 27 Inspection .................................................................................................................................... 32 Loadout, Sailaway, Handover, Provisional Acceptance and Final Acceptance .......................... 35 Warranty, Correction of Defects and Nonconforming Work ...................................................... 40 Liens and Claims ......................................................................................................................... 46 Liabilities and Indemnities .......................................................................................................... 47 Technology, Rights Thereto and Confidentiality Thereof........................................................... 55 Insurance ..................................................................................................................................... 59 Default and Termination ............................................................................................................. 62 Dispute Resolution ...................................................................................................................... 69 Safety, Health and Environment ................................................................................................. 72 Taxes and Import Duties ............................................................................................................. 74 Assignment and Subcontracting .................................................................................................. 78 Audit ............................................................................................................................................ 78 Security........................................................................................................................................ 79 Firearms, Alcohol, Controlled Substances and Behaviour .......................................................... 81 Changes ....................................................................................................................................... 81 VIETSOVPETRO Supplied Data ............................................................................................... 83 Representations and Warranties................................................................................................... 85 Governing Law ............................................................................................................................ 87 Subcontract Price......................................................................................................................... 88 Notices/ Representatives of the Parties ....................................................................................... 88 Business Ethics ............................................................................................................................ 89 Limitation of SUBCONTRACTOR‟s Liability........................................................................... 89 Page 2 of 90
  3. 3. Vietsovpetro Draft contract Attachments 2-1 2-2A 2-2B 2-2C 2-3 2-4 2-5 2-6 2-7 2-8 2-9 2-10 2-11 2-12 2-13 2-14 Subcontract-Specific Details Approved Subcontractors and Suppliers Significant Subcontractors Not Yet Approved by VIETSOVPETRO SUBCONTRACTOR‟s Sourcing Plan Loadout, Sailaway, Handover, Provisional Acceptance and Final Acceptance NORL Sailaway Certificate Handover Certificate Provisional Acceptance Certificate Final Acceptance Certificate Performance Bond Form of Parent Company/ Corporate Indemnity Agreement Code of Ethics and Conduct Consents and Permits Health and Safety Guidelines Environmental Guidelines Page 3 of 90
  4. 4. Vietsovpetro Draft contract 2.1 Subcontract Term 2.1.1 (a) This Subcontract shall commence as of the Effective Date and shall continue in effect until whichever of the following is applicable (such period being referred to as the “Subcontract Term”): (i) (ii) such earlier date as may be agreed to in writing by the Parties; or (iii) (b) VIETSOVPETRO has issued the Final Acceptance Certificate and the warranties and guarantees contained in Section 2.13 have expired and all payments required hereby have been made; or termination as provided for herein. Notwithstanding the foregoing, the provisions contained herein which stipulate liability or which specify another continuing obligation, in each case in relation to matters occurring or arising during the Subcontract Term, shall survive the Subcontract Term according to the time periods stipulated in such provisions. If no such periods are so stipulated then relevant statutes of repose and statutes of prescription or limitation regarding prescription or limitation of Subcontract claims or causes of action shall apply. 2.1.2 VIETSOVPETRO may terminate this Subcontract as provided in Sections 2.10 and 2.18 and other provisions of this Subcontract. SUBCONTRACTOR may terminate this Subcontract only as provided in Section 2.10 and Section 2.18.9. 2.2 SUBCONTRACTOR Responsibilities 2.2.1 General In accordance with the terms of this Subcontract, SUBCONTRACTOR shall be the single point of responsibility to: (a) perform the Work: (i) (ii) in a good and workmanlike manner; (iii) to the standards included in this Subcontract; and (iv) (b) with diligent dispatch; in accordance with Good Engineering and Operating Practices. furnish, undertake, provide or cause to be provided, in a good and workmanlike manner, all management, services, supervision, testing, labour, personnel, materials, supplies, plant and equipment, machinery, facilities and other items whatsoever necessary to provide, in accordance with the Subcontract; and project management, associated engineering, associated procurement, relevant required construction, transportation, installation, associated testing, hook-up and precommissioning for the Contract Objects and Subcontract Objects in accordance with Applicable Codes and Standards, manufacturers‟ warranties and Good Engineering and Operating Practices, Applicable Law and all other requirements of this Subcontract; and Page 4 of 90
  5. 5. Vietsovpetro Draft contract (c) 2.2.2 complete the Work in accordance with the Subcontract Schedule so as to achieve Provisional Acceptance in accordance with the Guaranteed Completion Date set out in Section 9.1. Quality Management (a) (b) 2.2.3 SUBCONTRACTOR shall establish, operate and maintain a quality system for the entire Work conforming to recognized international standards, such as the ISO 9000 series of standards. SUBCONTRACTOR shall implement a quality control/ assurance program for the Work consistent with the requirements of Section 4.0. SUBCONTRACTOR, as part of its quality system, shall ensure that each Subcontractor and Supplier establishes and maintains a satisfactory quality control/ assurance program specific to the Work that it will perform. SUBCONTRACTOR‟s quality management responsibilities shall include planning and executing a satisfactory program of quality audits. Company and VIETSOVPETRO shall be entitled to participate in any quality audits conducted by SUBCONTRACTOR, and to carry out its own quality audits of any part of the Work. SUBCONTRACTOR shall co-operate fully with the Company representatives and VIETSOVPETRO representatives performing such audits. SUBCONTRACTOR shall ensure that any corrective actions identified by any quality audit are satisfactorily implemented without delay. Subcontractors and Suppliers (a) Attachment 2-2A lists SUBCONTRACTOR‟s nominated Subcontractors for certain parts of the Work to be subcontracted and SUBCONTRACTOR‟s nominated Suppliers for certain parts of SUBCONTRACTOR‟s Supply to be procured that are in each case deemed to be approved by VIETSOVPETRO as at the Effective Date. (b) Attachment 2-2B lists SUBCONTRACTOR‟s proposed candidates for certain parts of the Work to be subcontracted and proposed candidates for certain parts of SUBCONTRACTOR‟s Supply to be procured that in each case: (i) are not approved by VIETSOVPETRO as of the Effective Date; and (ii) are known as at the Effective Date to be candidates that if selected by SUBCONTRACTOR and if approved by VIETSOVPETRO shall become Significant Subcontractors. (c) Except for Subcontractors and Suppliers that are already deemed approved by VIETSOVPETRO and included in Attachment 2-2A, SUBCONTRACTOR shall seek and obtain VIETSOVPETRO‟s approval for any proposed Subcontractor for parts of the Work and/ or proposed Supplier for part of SUBCONTRACTOR‟s Supply. SUBCONTRACTOR shall seek and obtain such approval at least Forty (40) days prior to SUBCONTRACTOR‟s proposed implementation of such arrangements. (d) SUBCONTRACTOR may use any of its Affiliates to perform any part of the Work or supply any part of SUBCONTRACTOR‟s Supply subject to SUBCONTRACTOR seeking VIETSOVPETRO‟s consent in advance of any such proposed use, and VIETSOVPETRO, acting reasonably, having the right to withhold such consent if VIETSOVPETRO has good reason to do so. (e) Where VIETSOVPETRO‟s approval of SUBCONTRACTOR‟s proposed Subcontractors and Suppliers is required under the Subcontract, SUBCONTRACTOR shall not be entitled to any addition to the Subcontract Price or any changes to the Subcontract Schedule as a result of VIETSOVPETRO‟s non-approval of any proposed Subcontractor or Supplier. Page 5 of 90
  6. 6. Vietsovpetro Draft contract VIETSOVPETRO shall act reasonably in deciding whether to approve any proposed Subcontractor or Supplier, but VIETSOVPETRO‟s experience of poor performance of a proposed Subcontractor or Supplier shall, without need for further justification, be sufficient grounds for non-approval. (f) (g) SUBCONTRACTOR is solely responsible for the performance, or non-performance, of Subcontractors and Suppliers except as expressly stated otherwise in the Subcontract. (h) 2.2.4 SUBCONTRACTOR shall provide VIETSOVPETRO with copies of all SUBCONTRACTOR‟s subcontracts and purchase orders in relation to the Work. Such subcontracts and purchase orders shall be priced where they relate to Reimbursable Work, but may otherwise be unpriced. VIETSOVPETRO shall be entitled to invoke the provisions of Section 5.12.4 in the event of SUBCONTRACTOR‟s failure to honour its payment obligations towards Subcontractors and/ or Suppliers. Permits, Licences, Consents (a) SUBCONTRACTOR shall obtain and maintain in effect all permits, certificates, licences, consents, visas, customs clearances, security clearances, vessel clearances and inspections, and the like necessary or advisable for the performance of the Work in accordance with the terms of this Subcontract other than those consents and permits that are the responsibility of Company and/ or VIETSOVPETRO and are listed in Attachment 2-12. VIETSOVPETRO shall provide all reasonably necessary information and documents to SUBCONTRACTOR and shall assist SUBCONTRACTOR in obtaining the said consents and permits. SUBCONTRACTOR shall, in good time before they are required, produce a complete listing of all said consents and permits, and request VIETSOVPETRO to provide any reasonably necessary information, documents, or assistance in respect thereof. SUBCONTRACTOR shall be solely responsible for any delay or failure on SUBCONTRACTOR Group‟s part in obtaining at the due time or maintaining in effect any required consent or permit. (b) SUBCONTRACTOR shall provide all reasonably necessary information and documents to Company and/ or VIETSOVPETRO and shall assist Company and/ or VIETSOVPETRO in obtaining all applicable permits listed in Attachment 2-12 and any other permits that Company and/ or VIETSOVPETRO needs to obtain in relation to the Work. (c) SUBCONTRACTOR shall provide permitting support in relation to the Work. Such support shall include: (i) (ii) preparation of draft responses to enquiries from Governmental Authorities or any of their respective representatives; (iii) presentations at hearings or meetings with Governmental Authorities; and (iv) (d) attendance at meetings with VIETSOVPETRO and relevant Persons designated by VIETSOVPETRO; such other services in connection with SUBCONTRACTOR‟s operations as VIETSOVPETRO may request from time to time. If at any time SUBCONTRACTOR becomes aware of any required consent or permit, SUBCONTRACTOR shall immediately give notice thereof to VIETSOVPETRO. Page 6 of 90
  7. 7. Vietsovpetro Draft contract SUBCONTRACTOR shall promptly obtain and deliver to VIETSOVPETRO a copy of all such consents and permits it is required to obtain under this Section. 2.2.5 Importation of SUBCONTRACTOR‟s Supply, the Subcontract Objects, and SUBCONTRACTOR‟s Spread (a) SUBCONTRACTOR represents and warrants that it is fully familiar with and knowledgeable of the requirements of the Government of Vietnam regarding the associated construction of goods and services both from within and from outside the Socialist Republic of Vietnam including particularly those relating to the Government of Vietnam Ministry of Planning and Investment Circular No. 04/2012/TT-BKHDT dated 13 August 2012 and other Vietnamese applicable legal document providing the list of machinery, equipment, spare parts, special-use vehicles, raw materials, supplies and semi-finished products which can be domestically produced, as from time to time. (ii) The Parties agree that each Party shall duly fulfill all its obligations with regard to the importation of items into the Socialist Republic of Vietnam, as set out in this Section 2.2.5 and other Sections of this Subcontract, so that Company and VIETSOVPETRO and SUBCONTRACTOR shall have the full benefit of the Import Tax Exemption referred to in Section 2.21.5. (iii) SUBCONTRACTOR is responsible for the preparation of all necessary data for all SUBCONTRACTOR‟s Supply, Subcontract Objects and SUBCONTRACTOR‟s Spread to be imported into the Socialist Republic of Vietnam in accordance with Applicable Laws. For avoidance of doubt, VIETSOVPETRO is responsible for the preparation of all necessary data for all VIETSOVPETRO‟s Supply; Contract Objects and any of VIETSOVPETRO‟s marine vessels and equipment to be imported into the Socialist Republic of Vietnam in accordance with Applicable Laws. (iv) Not used. (v) Company and VIETSOVPETRO will incorporate SUBCONTRACTOR‟s data into its respective overall quota and shall submit it to the relevant Governmental Authorities, obtain their approvals, and distribute a copy of the relevant parts of the approved quota to SUBCONTRACTOR. (vi) (b) (i) SUBCONTRACTOR is responsible for providing clarification in response to all questions by the Governmental Authorities of the Socialist Republic of Vietnam, or Persons acting on behalf of such Governmental Authorities, regarding the importation of SUBCONTRACTOR‟s Supply, the Subcontract Objects, and SUBCONTRACTOR‟s Spread. Without relieving SUBCONTRACTOR of its responsibility for the timely and proper provision of all data and documentation to allow the securing by Company and/ or VIETSOVPETRO of all required approvals and provision of required clarification, VIETSOVPETRO shall, if required by SUBCONTRACTOR, give SUBCONTRACTOR reasonable assistance and support in providing such clarification. SUBCONTRACTOR is responsible for the timely preparation and submittal of pro forma invoices in appropriate form in accordance with Applicable Law, and the requirements of the Government of Vietnam, to support SUBCONTRACTOR items on the Company Importation Quota. SUBCONTRACTOR shall cross-reference the pro forma invoices to the Company Importation Quota, clearly indicating the section and subsection of each invoice item‟s location on the Company Importation Quota. SUBCONTRACTOR shall submit such pro forma invoices to VIETSOVPETRO who will submit to the Company or the Government of Vietnam. Page 7 of 90
  8. 8. Vietsovpetro Draft contract (c) SUBCONTRACTOR is responsible for timely preparation and submittal to VIETSOVPETRO who will submit to the Company or the Government of Vietnam of copies of bills of lading or air waybills, actual invoices, packing lists, confirmation of quality inspection, and any other pertinent documentation. (d) SUBCONTRACTOR is responsible for arranging all inspections required by the Government of Vietnam for importation of SUBCONTRACTOR‟s Supply, Subcontract Objects and SUBCONTRACTOR‟s Spread, and for prompt and satisfactory resolution of any matters arising from such inspections. (e) SUBCONTRACTOR is responsible for all of SUBCONTRACTOR‟s costs associated with compliance with the importation regulations of the Government of Vietnam. Such costs shall include any demurrage, storage, standby or other charges arising in consequence of SUBCONTRACTOR‟s failure to comply with such regulations or to secure approvals from the Government of Vietnam in a timely and proper manner. SUBCONTRACTOR is also responsible for such costs to the extent that any failure by Company to secure Import Tax Exemption of SUBCONTRACTOR‟s Supply and/ or the Subcontract Objects and/ or SUBCONTRACTOR‟s Spread in a timely manner is attributable to SUBCONTRACTOR, including SUBCONTRACTOR‟s failure in the provision of timely and proper data and documentation. (f) SUBCONTRACTOR is responsible to import SUBCONTRACTOR‟s Supply, Subcontract Objects and SUBCONTRACTOR‟s Spread in a timely manner to meet the Subcontract Schedule. Any errors, omissions or delays in or resulting from the importation process for which SUBCONTRACTOR is responsible in accordance with the Subcontract will not be grounds for a Change. In addition, any errors, omissions or delays in or arising from Company and/ or VIETSOVPETRO failing to secure Import Tax Exemption of SUBCONTRACTOR‟s Supply and/ or the Subcontract Objects and/ or SUBCONTRACTOR‟s Spread in a timely manner that is attributable to SUBCONTRACTOR, including SUBCONTRACTOR‟s failure in the provision of timely and proper data and documentation, shall not be grounds for a Change. (g) SUBCONTRACTOR shall prepare all documentation and do everything else necessary for the importation and re-exportation (as applicable) of any items furnished by SUBCONTRACTOR not forming part of the Subcontract Objects or SUBCONTRACTOR‟s Supply, and of all consumables and temporary materials required for the Work. SUBCONTRACTOR shall also prepare for submission to Vietnamese Customs and/ or other Government of Vietnam any reports required to account satisfactorily for the final disposition of all items imported permanently and temporarily for the Work. SUBCONTRACTOR shall do all this in a timely manner to meet the Subcontract Schedule, and in accordance with all Applicable Laws. Any errors, omissions or delays in or resulting from the importation and re-exportation process for which SUBCONTRACTOR is responsible in accordance with this Subcontract will not be grounds for a Change. (h) SUBCONTRACTOR shall prepare all documentation and carry out all activities for the importation and re-exportation (as applicable) of all SUBCONTRACTOR‟s Spread. SUBCONTRACTOR shall do so in a timely manner to meet the Subcontract Schedule and in accordance with Applicable Laws. Any errors, omissions or delays in or resulting from the importation and re-exportation process for which SUBCONTRACTOR is responsible in accordance with this Subcontract will not be grounds for a Change. (i) Without prejudice to the remainder of this Section 2.2.5, SUBCONTRACTOR is solely responsible for making all necessary arrangements for the proper and timely exportation from, importation into, and re-exportation from any country of SUBCONTRACTOR‟s Supply, Page 8 of 90
  9. 9. Vietsovpetro Draft contract VIETSOVPETRO Furnished Material (after receipt from VIETSOVPETRO), and SUBCONTRACTOR‟s Spread and the Subcontract Objects in relation to the Work. Except only as expressly provided otherwise in Section 2.21.5, SUBCONTRACTOR shall make all such arrangements at its own cost, and pay all applicable taxes, duties, tariffs, levies, surcharges, fees, and other charges. SUBCONTRACTOR shall expressly be liable for any import duties, taxes, and the like applicable to the re-export by SUBCONTRACTOR Group from Vietnam, or the retention by SUBCONTRACTOR Group, of SUBCONTRACTOR items initially imported into Vietnam in connection with the Work. 2.2.6 SUBCONTRACTOR‟s Sourcing Arrangements (a) Where SUBCONTRACTOR‟s sourcing plan for the Work (Attachment 2-2C) indicates that elements of the Work will be performed in particular locations, or that items of SUBCONTRACTOR‟s Supply will be obtained from particular countries, proposed changes in such specified locations or sources of supply will require VIETSOVPETRO‟s prior written agreement. (b) VIETSOVPETRO, acting reasonably, will not be required to agree to any such proposed change referred to in Section 2.2.6(a). VIETSOVPETRO shall be entitled to make its agreement conditional upon SUBCONTRACTOR‟s reimbursement of any extra costs reasonably incurred by VIETSOVPETRO as a result of the change. (c) SUBCONTRACTOR must request VIETSOVPETRO‟s agreement to any proposed change referred to in Section 2.2.6(a) not later than Forty (40) days prior to implementation of the change, and in any event in sufficient time to be able to comply with the sourcing plan set out in Attachment 2-2C if VIETSOVPETRO, acting reasonably, does not approve the proposed change. Each such request must clearly describe the reasons for the proposed change, and provide appropriate substantiation. (d) If SUBCONTRACTOR makes a change in its intended sourcing arrangements as described in Attachment 2-2C, and as a result Company and/or VIETSOVPETRO (i) incurs an increase (on an aggregate basis) in Vietnamese value added tax imposed on goods; and/ or (ii) incurs an increase (on an aggregate basis) in Import Taxes payable on SUBCONTRACTOR‟s Supply sourced outside the Socialist Republic of Vietnam; and/ or (iii) incurs an increase (on an aggregate basis) in Vietnamese Business Income Tax that Company reimburses VIETSOVPETRO pursuant to the Contract; and/ or (iv) incurs any costs, expenses, losses and/ or penalties, of any nature whatsoever in each case and subject only to authentication by a statement from a certified public accountant and with no need for further substantiation, under Applicable Law, then all such increased costs, expenses, and/ or penalties for which VIETSOVPETRO provides reasonable substantiation shall be to SUBCONTRACTOR‟s account. (e) VIETSOVPETRO shall be entitled, having given SUBCONTRACTOR written notice of such increased costs, expenses and/ or penalties suffered or incurred by Company and/or VIETSOVPETRO, and at its option to: Page 9 of 90
  10. 10. Vietsovpetro Draft contract (i) (ii) 2.2.7 deduct the amount thereof from payments otherwise due to SUBCONTRACTOR; or allow SUBCONTRACTOR to reimburse the amount thereof, upon VIETSOVPETRO‟s first written request. General Access and Information (a) SUBCONTRACTOR shall permit full and free access to the Work at any Site, including those of Subcontractors and Suppliers, at any reasonable time by any representative of, and any personnel nominated by, Company and/ or VIETSOVPETRO. SUBCONTRACTOR, with the prior approval of VIETSOVPETRO, shall permit representatives of Governmental Authorities and Company to enter onto and inspect the Site, with reasonable advance notice and escorted access to the Work. SUBCONTRACTOR may provide, and each such person shall accept, reasonable safety and security measures implemented by SUBCONTRACTOR. SUBCONTRACTOR shall also promptly provide information reasonably requested by VIETSOVPETRO, Company, Governmental Authorities, or any of their representatives. SUBCONTRACTOR shall include appropriate provisions in all its subcontracts and purchase orders to ensure the proper enforceability of the provisions of this Section 2.2.7(a) and Section 2.11.5(a). (b) SUBCONTRACTOR hereby grants to VIETSOVPETRO and/or its invitees permission to enter upon and be present at any SUBCONTRACTOR-owned Construction Site or Fabrication Site, as further described in Section 2.2.7(d). (c) Not used. (d) SUBCONTRACTOR‟s permission pursuant to Section 2.2.7(b) shall: (i) Not used; (ii) entitle VIETSOVPETRO, Company and any VIETSOVPETRO invitees to enter upon and be present at the respective Construction Site or Fabrication Site at any time before Final Acceptance or, in the event of VIETSOVPETRO‟s termination of the Subcontract or any part thereof pursuant to Section 2.18.1, before the equivalent of Final Acceptance has been achieved by VIETSOVPETRO and any Replacement Contractor(s), in order for VIETSOVPETRO to be able to exercise quiet enjoyment of the full and free access rights granted under Section 2.2.7(a) and its rights under Section 2.18.2; and (iii) entitle VIETSOVPETRO and any Replacement Contractor(s) to perform work on the Contract Objects and/or Subcontract Objects, SUBCONTRACTOR‟s Supply, and any VIETSOVPETRO Furnished Material at the respective Site, and to remove any of the same from such Site when VIETSOVPETRO has terminated the Subcontract or any part thereof pursuant to Section 2.18.1. Furthermore, SUBCONTRACTOR shall permit VIETSOVPETRO and any Replacement Contractor(s) to use any SUBCONTRACTOR Group-owned facilities, utilities, plant and equipment at any such Site for completion or removal of the Contract Objects and/or Subcontract Objects following termination of the Subcontract or any part thereof pursuant to Section 2.18.1, and VIETSOVPETRO shall compensate SUBCONTRACTOR for such use in accordance with Section 2.18.5. For the avoidance of doubt it is here stated that SUBCONTRACTOR‟s permission pursuant to Section 2.2.7(b) is not intended as and shall not be construed to be an agreement to pledge such property and assets as security or as agreement to permit a lien, encumbrance or any other security Page 10 of 90
  11. 11. Vietsovpetro Draft contract interest on such property and assets. All SUBCONTRACTOR Group-owned facilities, utilities, plant and equipment shall remain under the ownership and administrative management of the owner who is a member of the SUBCONTRACTOR Group and shall be controlled by such owner and operated by SUBCONTRACTOR Group Personnel. SUBCONTRACTOR shall instruct its Personnel to work cooperatively with VIETSOVPETRO or any Replacement Contractor(s) and to its/their direction and SUBCONTRACTOR‟s management shall not interfere with VIETSOVPETRO‟s or any Replacement Contractor(s) direction of VIETSOVPETRO‟s or its Replacement Contractor(s) day-to-day operations. 2.2.8 Emergencies (a) In the event of any emergency in relation to the Work endangering life or property, SUBCONTRACTOR shall take such action as may be reasonable and necessary to prevent, avoid or mitigate injury, damage or loss. SUBCONTRACTOR shall, as soon as possible and in any event within twenty (20) hours, report any such incidents, including SUBCONTRACTOR‟s response thereto, in writing to VIETSOVPETRO. (b) In the event of any such emergency, VIETSOVPETRO may, but shall be under no obligation to, take action itself to prevent, avoid or mitigate injury, damage or loss by causing the requisite Work to be performed and SUBCONTRACTOR‟s Supply to be furnished. VIETSOVPETRO shall have such right regardless of whether or not SUBCONTRACTOR has taken reasonable precautions for the safety of persons or the protection of the Work or of structures or property at or adjacent to the Site. VIETSOVPETRO may exercise such right with or without notice to SUBCONTRACTOR if the delay involved in giving SUBCONTRACTOR such notice would further endanger persons or property. The taking of such action by VIETSOVPETRO, or VIETSOVPETRO‟s failure to do so, shall not limit or reduce SUBCONTRACTOR‟s liability. (c) SUBCONTRACTOR shall promptly reimburse VIETSOVPETRO for the performance of any such Work or furnishing of any such SUBCONTRACTOR‟s Supply pursuant to Section 2.2.8(b) in an amount equal to the reasonable and documented costs incurred by VIETSOVPETRO in such performance of Work or furnishing of SUBCONTRACTOR‟s Supply: (i) if SUBCONTRACTOR has failed to take such reasonable and necessary action required of it hereunder; or (ii) to the extent that VIETSOVPETRO‟s intervention has resulted in SUBCONTRACTOR not incurring expenditures that otherwise would have been SUBCONTRACTOR‟s responsibility under this Subcontract. VIETSOVPETRO, at its sole option, may deduct the amount to be reimbursed by SUBCONTRACTOR from any payment due to SUBCONTRACTOR under this Subcontract or otherwise. (d) Without modifying in any way any provisions of Section 2.15, VIETSOVPETRO shall make its arrangements for medical evacuation of personnel from offshore Sites available to SUBCONTRACTOR on the same basis that VIETSOVPETRO makes such arrangements for its own employees. VIETSOVPETRO shall have no liability to SUBCONTRACTOR Group in connection with the provision of or failure to make such arrangements available for the medical evacuation of SUBCONTRACTOR Group Personnel. VIETSOVPETRO shall be entitled to recover from SUBCONTRACTOR the actual costs incurred by VIETSOVPETRO in respect of medical evacuation of SUBCONTRACTOR Group Personnel. Page 11 of 90
  12. 12. Vietsovpetro (e) 2.2.9 Draft contract Application of the foregoing provisions of this Section 2.2.8 is not contingent upon an agreement of the Parties as to i) the duration of a Weather Downtime occurrence; ii) the timing or appropriate extent of a response to a Tropical Storm; or iii) the risk to personnel or property of any Person arising from the presence of or operations by VIETSOVPETRO or VIETSOVPETRO‟s other contractors, Company or Company‟s other contractors at an Installation Site, and any failure of SUBCONTRACTOR and VIETSOVPETRO to have reached such agreements shall not affect this Section 2.2.8. Employment of Licensed Personnel; Labour Relations; Severance Payment Obligations (a) Whenever required by Applicable Law or Good Engineering and Operating Practices, SUBCONTRACTOR shall employ, and shall ensure that Subcontractors employ as applicable in respect of subcontracted Work, (i) personnel duly licensed by the appropriate Governmental Authority and/ or recognized professional body, so as to qualify them to perform associated engineering and design, or other professional services in the performance of the Work; (ii) personnel duly licensed and/ or certified by the appropriate Governmental Authority and/ or recognized professional body, so as to qualify them to perform associated construction planning services, construction execution services, and construction supervision services. SUBCONTRACTOR shall ensure, through the proper functioning of its internal control and quality systems, that no member of SUBCONTRACTOR Group employs in connection with its performance under this Subcontract any unfit person or any person not skilled in the work or exercise of responsibilities assigned to such person. (b) SUBCONTRACTOR shall employ labour and Subcontractors and Suppliers (whether directly or indirectly employed) so as to cause no conflict or interference with or between the various trades, or delay in performance of SUBCONTRACTOR‟s obligations. SUBCONTRACTOR shall be responsible for all personnel management and labour relations matters relating to the Work and shall at all times maintain harmony and cause Subcontractors and Suppliers to maintain harmony among all personnel employed in connection with the Work, and among all unions and other workers‟ representatives. SUBCONTRACTOR shall adopt and implement, and cause Subcontractors and Suppliers to adopt and implement, reasonable policies and practices designed to avoid work stoppages, slowdowns, disputes and strikes. (c) SUBCONTRACTOR shall give to VIETSOVPETRO prompt written notice of any labour dispute or anticipated labour dispute that may be expected to have a material adverse effect on the performance of the Work or the Subcontract Schedule. Such notice shall include details of the actions proposed by SUBCONTRACTOR to mitigate such effect. SUBCONTRACTOR, at its own cost, shall promptly take any measures reasonably required by VIETSOVPETRO to avoid or mitigate the effects of labour disputes. (d) SUBCONTRACTOR shall not take any unlawful action to prevent its employees from lawfully exercising their right of free association and their right to organize and bargain collectively. SUBCONTRACTOR shall observe Applicable Laws relating to a minimum age for employment of children, acceptable conditions of work, minimum wages, hours of work, and occupational health and safety; and not to use forced labour. (e) Without limiting the generality of Section 2.2.9(d), SUBCONTRACTOR further agrees that it: Page 12 of 90
  13. 13. Vietsovpetro Draft contract (i) (ii) (f) shall perform, or cause Subcontractors and Suppliers to perform, the Work in conformance with all applicable occupational health and safety standards; and shall not, in connection with the Work, employ, or permit Subcontractors or Suppliers to employ, illegal immigrants, and shall not employ, or permit Subcontractors or Suppliers to employ, workers under 18 years of age for any hazardous activities. SUBCONTRACTOR shall be responsible and liable for the payment of severance pay for its employees and of all its other obligations to its employees and Governmental Authorities as required by Applicable Law. SUBCONTRACTOR shall defend, indemnify and hold harmless VIETSOVPETRO and Company from and against any and all loss, liability, cost, claims, damages, demands and expenses (including legal fees and cost) of every kind and character, arising out of or as a result of SUBCONTRACTOR‟s failure to comply with this provision and/ or the failure of any member of SUBCONTRACTOR Group to fulfill the same obligation for its employees. 2.2.10 Co-operation and Non-interference with VIETSOVPETRO‟s Other Contractors and Company‟s Other Contractors (a) SUBCONTRACTOR shall be responsible for co-ordinating all project management, associated engineering, associated construction, installation and other activities in relation to the Work and the Contract Objects/ Subcontract Objects with VIETSOVPETRO. VIETSOVPETRO shall be responsible for co-ordinating all project management, associated engineering, associated construction, installation and other activities in relation to the work under the Contract and the Contract Objects with those of VIETSOVPETRO‟s other contractors and Company‟s other contractors carrying out concurrent activities in respect of the SVSW project or Company‟s offshore operations. SUBCONTRACTOR shall develop and maintain detailed interface matrix itemizing all interfaces for the Work. Such matrix shall include details and timing of all information to be provided by SUBCONTRACTOR to other entities, and by other entities to SUBCONTRACTOR, in relation to the Work. (b) During performance of the Work, VIETSOVPETRO and VIETSOVPETRO‟s other contractors and Company and Company‟s other contractors will be working at and around the Installation Sites. Without limiting VIETSOVPETRO‟s obligations under Section 2.4.4, SUBCONTRACTOR shall co-operate in good faith and use its reasonable efforts to co-ordinate associated construction, installation, testing, and/ or pre-commissioning of the Contract Objects and/or Subcontract Objects so as to enable any Person performing: (i) (ii) (c) the associated construction, installation, testing, pre-commissioning and/ or commissioning of other items of work in connection with the SVSW project to complete its work in a timely and efficient manner; and/or Drilling and related operations to carry out its work in a timely and efficient manner. Not used. (d) SUBCONTRACTOR shall also use all reasonable efforts to avoid any action or inaction that will or could interfere with such other activities. It may be necessary, if required by VIETSOVPETRO, to reschedule activities connected with the performance of the Work to eliminate or minimize interferences or standby time, and SUBCONTRACTOR shall co-operate fully in this effort and in accordance with SUBCONTRACTOR‟s obligations under Section 2.4, but without prejudice to Section 2.4.4(b). 2.2.11 Other SUBCONTRACTOR Responsibilities Page 13 of 90
  14. 14. Vietsovpetro Draft contract (a) SUBCONTRACTOR acknowledges that the Subcontract documents do not set out every detail of the Work. SUBCONTRACTOR shall carry out the entire Work, including all necessary associated design evolution and any part of the Work not expressly detailed in the Subcontract documents, nor specified in SUBCONTRACTOR‟s proposal for the Work, but necessary for the proper performance and completion of the Work according to the provisions of this Subcontract and for the completed Work to fulfill properly all the functions contemplated by the Subcontract. (b) SUBCONTRACTOR agrees that it shall be responsible for performing all activities and providing all services, SUBCONTRACTOR‟s Supply, and other items not specifically described in this Subcontract if: (i) it reasonably may be inferred in accordance with the high standards employed by leading international contractors in the offshore engineering and construction industry that the performance of such activities and the providing of such services, SUBCONTRACTOR‟s Supply, and other items were intended as parts of the Work; or (ii) the performance of such activities and the providing of such services, SUBCONTRACTOR‟s Supply, and other items are necessary or advisable in order for SUBCONTRACTOR to satisfy its obligations under this Subcontract. Work undertaken and SUBCONTRACTOR‟s Supply and other items provided pursuant to this Section 2.2.11 shall be performed as Work and not as Change Work. (c) SUBCONTRACTOR agrees that its designated Project Manager shall have the full authority, as between VIETSOVPETRO and SUBCONTRACTOR, to make any decisions required of SUBCONTRACTOR in relation to the Work, without referral to or the need to seek further authority from any other person or group of persons. The authority of SUBCONTRACTOR‟s Project Manager shall include the full authority to approve any commitments or expenditures by SUBCONTRACTOR under the Subcontract or any contractual arrangements with Subcontractors and Suppliers, even if these exceed SUBCONTRACTOR‟s own internal budget for the corresponding items. (d) SUBCONTRACTOR expressly agrees that if its designated Project Manager lacks the full authority to prioritize or otherwise determine the allocation of SUBCONTRACTOR‟s corporate resources to the Work, VIETSOVPETRO‟s Project Manager and other members of VIETSOVPETRO‟s project management team shall have the right of direct and unrestricted access to SUBCONTRACTOR‟s senior management having such authority. VIETSOVPETRO shall be entitled to exercise such right whenever it has concerns regarding matters actually or apparently outside SUBCONTRACTOR‟s Project Manager‟s authority, but shall generally do so only after consultation with SUBCONTRACTOR‟s Project Manager. SUBCONTRACTOR undertakes to give satisfactory consideration to any such concerns raised by VIETSOVPETRO. (e) In addition to its obligations under Sections 2.2.11 (c) and (d), each constituent member of SUBCONTRACTOR has appointed a project sponsor from its senior management not involved in the day-to-day management of the Work, as set out in Attachment 2-1. The project sponsor shall be the primary point of contact for VIETSOVPETRO‟s senior management not involved in the day-to-day management of the Subcontract, and will take prompt and effective action in respect of any concerns of VIETSOVPETRO‟s senior management regarding SUBCONTRACTOR‟s performance of the Work. There shall be regular periodic meetings between the project sponsor and VIETSOVPETRO‟s senior management. The agenda for each such meeting shall include review of the progress of the Work, review of planned activities for the next period, and identification and implementation of appropriate measures to assure the successful execution of the Work. Page 14 of 90
  15. 15. Vietsovpetro (f) Draft contract SUBCONTRACTOR‟s responsibilities include all of its other responsibilities and obligations provided elsewhere in this Section 2.0 and other parts of this Subcontract. 2.2.12 Compliance with Regulatory Requirements, Applicable Codes and Standards (a) SUBCONTRACTOR shall determine all the regulatory requirements affecting the performance of the Work and the associated design, installation and operation of the Contract Objects and Subcontract Objects. SUBCONTRACTOR shall prepare the technical documentation related to the Work to support VIETSOVPETRO‟s enquiries to the applicable Governmental Authorities. SUBCONTRACTOR shall not make, and shall ensure that other members of SUBCONTRACTOR Group do not make, any direct contact with Governmental Authorities or their certification agencies in relation to the Work without first informing VIETSOVPETRO and obtaining VIETSOVPETRO‟s written approval for such contact. In any contact with Governmental Authorities or their certification agencies, SUBCONTRACTOR shall not make, and shall ensure that other members of SUBCONTRACTOR Group do not make, any representations on behalf of Company or VIETSOVPETRO. (b) SUBCONTRACTOR shall co-ordinate with Company‟s Certification Contractor as necessary to secure regulatory approval of the applicable portions of the Work. Such co-ordination shall include: providing Company‟s Certification Contractor with all requested data, and inspection and testing plans (ITPs) for SUBCONTRACTOR‟s Supply, the Contract Objects and/or Subcontract Objects when applicable; and issuing notifications in good time of any upcoming hold or witness points that Company‟s Certification Contractor expects to attend pursuant to such ITPs. (c) Any approval, inspection, consent, act or omission of VIETSOVPETRO (other than a failure to perform the VIETSOVPETRO responsibilities in this Subcontract or an express release given in writing by VIETSOVPETRO) shall not affect SUBCONTRACTOR‟s responsibility for performing the Work in accordance with the provisions of this Subcontract, nor SUBCONTRACTOR‟s responsibility for any defect, deficiency, error, omission, nonconformance or default. Such SUBCONTRACTOR‟s responsibilities include, without limitation, compliance with Applicable Law, Applicable Codes and Standards, and Good Engineering and Operating Practices. (d) Such SUBCONTRACTOR‟s responsibilities shall not be released or affected by: (i) VIETSOVPETRO‟s execution of this Subcontract; (ii) any VIETSOVPETRO approval provided for under this Subcontract, including its approval of any Subcontractor or Supplier; (iii) VIETSOVPETRO‟s participation in or failure to participate in any inspection or test; or (iv) VIETSOVPETRO‟s acceptance of the Loadout Certificate, the Sailaway Certificates, any Handover Certificates, the Provisional Acceptance Certificate, or the Final Acceptance Certificate. 2.2.13 Environmental Compliance SUBCONTRACTOR shall perform the Work so that the Work shall conform to all environmental requirements of this Subcontract, Applicable Law, Applicable Codes and Standards, and Good Page 15 of 90
  16. 16. Vietsovpetro Draft contract Engineering and Operating Practices. SUBCONTRACTOR shall comply with its environmental management obligations pursuant to Section 2.20.6. 2.2.14 Compliance with Hazardous Operations Review and Quantitative Risk Assessment Requirements In addition to its own obligations in respect of safety aspects of the design of the Contract Objects and Subcontract Objects as described in Section 2.20 and Section 4.0 and Section 8.0, SUBCONTRACTOR shall participate actively in Company‟s and VIETSOVPETRO‟s jointly performed hazardous operations review and quantitative risk assessment of the design of the Contract Objects and Subcontract Objects. SUBCONTRACTOR shall implement the conclusions of the review and assessment into its design of the Contract Objects and Subcontract Objects. 2.2.15 VIETSOVPETRO Supplied Data SUBCONTRACTOR shall comply with its obligations pursuant to Section 2.27 in respect of VIETSOVPETRO Supplied Data. 2.2.16 SUBCONTRACTOR‟s Failure to Fulfill Responsibilities In addition to any specific remedies stipulated in this Section 2.2 or elsewhere in the Subcontract, if SUBCONTRACTOR fails to any material extent to fulfill any of its responsibilities hereunder despite VIETSOVPETRO, acting reasonably, having requested such fulfillment in writing and given SUBCONTRACTOR a reasonable opportunity to correct the failure, but is permitted by VIETSOVPETRO to continue performance of the Work, VIETSOVPETRO shall be entitled to a reduction in the Subcontract Price, as reasonably determined by VIETSOVPETRO, commensurate with any such failure. Alternatively, if VIETSOVPETRO, in the absence of proper performance by SUBCONTRACTOR that does not invoke termination pursuant to Section 2.18.1, and after written notice to SUBCONTRACTOR of its intention to do so, performs or has others perform any functions that are within SUBCONTRACTOR‟s responsibility under this Subcontract, it shall be entitled to recover from SUBCONTRACTOR its reasonable documented costs incurred in so doing. It‟s understood that right after SUBCONTRACTOR completes (i) the Milestone No. 03-05 for Handover of completed Pipelines and Associated Works (as evidenced by VIETSOVPETRO‟s signature on Pipelines and Associated Works Handover Certificates), (ii) Milestone No. 04-06 for Handover of completed SVSW Topside and Ancillary items (as evidenced by VIETSOVPETRO‟s signature on SVSW Topside and Ancillary items Handover Certificates), VIETSOVPETRO‟s Hookup and Commissioning Subcontractor (“HUC Subcontractor”) shall commence their work in Su Tu Vang South West Project. Notwithstanding any provision herein, in case SUBCONTRACTOR fails to comply with the Subcontract Schedule which leads to the standby of offshore hookup and commissioning work of HUC Subcontractor, SUBCONTRACTOR shall grant a full and free access for a critical team of HUC Subcontractor to enter into the SUBCONTRACTOR‟s Spread for performing their work. 2.3 VIETSOVPETRO Responsibilities 2.3.1 VIETSOVPETRO has the following responsibilities under this Subcontract: (a) to pay obligations, including the Subcontract Price, that are the responsibility of VIETSOVPETRO in accordance with the terms of this Subcontract; (b) to provide the VIETSOVPETRO Supplied Data in accordance with Section 2.27 and Section 8.0; Page 16 of 90
  17. 17. Vietsovpetro Draft contract (c) to provide the VIETSOVPETRO Furnished Materials without defect or deficiency in accordance with Section 7.0 and the schedule and conditions as provided for in the Subcontract; (d) to provide the VIETSOVPETRO Contract Object (except for that not to be provided to SUBCONTRACTOR under the Subcontract) without defect/deficiency in accordance with the schedule and conditions as provided for in the Subcontract; (e) to obtain the consents and permits as described in Attachment 2-12 in a timely manner to allow SUBCONTRACTOR to complete the Work in accordance with the Subcontract Schedule; (f) to give approvals and reasonable assistance required of it pursuant to the Subcontract, without undue delay; (g) to arrange, subject to Section 2.4.4, for reasonable access for SUBCONTRACTOR to the Installation Site at the times reasonably required by SUBCONTRACTOR in accordance with the Subcontract Schedule; and (h) all other responsibilities and obligations of VIETSOVPETRO provided elsewhere in this Subcontract. 2.4 Offshore Operations 2.4.1 SUBCONTRACTOR and Subcontractors shall afford representatives of VIETSOVPETRO, Company and Governmental Authorities access to Sites and SUBCONTRACTOR‟s Spread for the purpose of conducting safety inspections. The execution of any such inspection shall in no way relieve SUBCONTRACTOR of any of its obligations under this Subcontract. SUBCONTRACTOR shall promptly rectify, at its cost, any defects, nonconformances or deficiencies identified in any such inspection. With respect to any safety inspection prior to movement of any part of SUBCONTRACTOR‟s Spread to perform Work at a Fabrication Site or Construction Site, or the Installation Site, such defects, nonconformances or deficiencies must be rectified prior to such movement. SUBCONTRACTOR shall not be responsible for the costs of the Persons performing such inspections (including per diem allowances, travel expenses and professional fees) unless the need for such inspections arises out of acts or omissions of SUBCONTRACTOR Group, including where re-inspection is needed because an earlier inspection revealed matters needing correction. SUBCONTRACTOR shall be responsible for vessel-time and all other SUBCONTRACTOR Group‟s costs in relation to such inspections. 2.4.2 SUBCONTRACTOR shall arrange for and, except as provided below, also pay for: (a) (b) 2.4.3 inspection by Vietnamese Governmental Authorities of SUBCONTRACTOR‟s primary vessels prior to their entry into Vietnamese territorial waters, as required by Applicable Law; and security and other clearances and/ or import and export of SUBCONTRACTOR‟s Spread to the Site. SUBCONTRACTOR shall ensure that all parts of SUBCONTRACTOR‟s Spread (including, without limitation, marine vessels, marine plant, cranes, diving facilities, pipe laying equipment, piling equipment, welding equipment, survey and inspection equipment, positioning equipment, other installation equipment and installation aids utilized in performance of the Work) are in such good condition as to permit the most efficient working thereof and with a full and competent complement of masters, officers, crews and operators. SUBCONTRACTOR shall further ensure that all parts of SUBCONTRACTOR‟s Spread are in every way fit for service in all weather conditions foreseeable for Page 17 of 90
  18. 18. Vietsovpetro Draft contract the Site and the industry-recognized offshore working season. SUBCONTRACTOR shall also ensure there are sufficient spares onboard the vessels. 2.4.4 (a) Without relieving VIETSOVPETRO of any of its obligations under this Subcontract, SUBCONTRACTOR shall ensure that every aspect of and all operations connected with the Work are carried out so as not to damage, or to interfere unnecessarily or improperly with, any of VIETSOVPETRO Group‟s offshore facilities or VIETSOVPETRO Group operations or Company Group‟s offshore facilities or Company Group operations. SUBCONTRACTOR shall provide and properly maintain necessary safeguards for protection of Company Group‟s offshore facilities and/or VIETSOVPETRO Group‟s offshore facilities in relation to SUBCONTRACTOR‟s operations. (b) Provided that SUBCONTRACTOR has properly planned and scheduled the installation of the Contract Objects and Subcontract Objects (including having coordinated and planned with VIETSOVPETRO or VIETSOVPETRO‟s other contractors and support properly VIETSOVPETRO in coordinating and planning with Company or Company‟s other contractors to avoid and/ or minimise any delay or disruption) and is working to the Subcontract Schedule, if SUBCONTRACTOR experiences an unavoidable delay or disruption or incurs additional cost during offshore installation of any of the Contract Objects and/or Subcontract Objects because: (i) the presence of or operations by VIETSOVPETRO or VIETSOVPETRO‟s other contractors or Company or Company‟s other contractors demonstrably and materially hinder(s) or interfere(s) with SUBCONTRACTOR‟s scheduled operations under this Subcontract; or (ii) the Work of VIETSOVPETRO or VIETSOVPETRO‟s other contractors or Company or Company‟s other contractors is defective or ill-timed and SUBCONTRACTOR depends upon proper and timely execution thereof in order for SUBCONTRACTOR to perform the Work in accordance with the Subcontract Schedule, then SUBCONTRACTOR shall be entitled to a Change Order Authorization, provided further that SUBCONTRACTOR gave VIETSOVPETRO timely notice of the likely implications for the Work so that VIETSOVPETRO was able to take alternative steps (whether or not actually taken) to avoid such delay, interference, or additional cost. The Change Order Authorization shall set out such adjustment to the Subcontract Price as is reasonable to compensate SUBCONTRACTOR for the time lost and additional costs incurred; and/ or such adjustment of the Subcontract Schedule, including extension, if any, to the Guaranteed Completion Date, appropriate for the delay experience. Provided, however, that there shall be no adjustment to the Subcontract Schedule to the extent that and for so long as there is any concurrent delay event due to pre-existing matters within SUBCONTRACTOR‟s risk or responsibility under the Subcontract. SUBCONTRACTOR shall use its best endeavours to minimize the effect of any such delay or disruption. SUBCONTRACTOR shall not be entitled to assert any claim or excuse in respect of any act or omission of any member of SUBCONTRACTOR Group except only if such act or omission is committed by a member of SUBCONTRACTOR Group that is otherwise a contractor to VIETSOVPETRO and/ or Company and, as such, is complying with its contractual obligations. (c) SUBCONTRACTOR shall obtain from the appropriate Governmental Authorities the necessary permit or permits to install the Contract Objects and Subcontract Objects at the offshore location with the proposed SUBCONTRACTOR‟s Spread and installation procedure, and in accordance with the Subcontract Schedule. During SUBCONTRACTOR‟s offshore installation Work, Page 18 of 90
  19. 19. Vietsovpetro Draft contract SUBCONTRACTOR shall co-ordinate and interface with the appropriate Governmental Authorities regarding the daily offshore operations. Any delays, disruptions, or interferences caused by Third Parties (other than VIETSOVPETRO‟s other contractors and/ or Company‟s other contractors, as addressed in this Section 2.4.4) working in the same vicinity, shipping traffic, fishing activities and other installation complexities shall, subject to Section 2.10, be the responsibility of SUBCONTRACTOR unless and insofar as expressly provided otherwise in the Subcontract. 2.4.5 SUBCONTRACTOR shall ensure that all aspects of, and all operations connected with, the Work are carried out so as not to damage any Third Party Property including, without limitation, submarine telecommunication cables. SUBCONTRACTOR shall perform the operations in a safe manner and properly maintain necessary safeguards for protection of such Third Party Property. 2.4.6 (a) (b) SUBCONTRACTOR shall expeditiously buoy, light, raise and remove all or any part of the Project Property or any other plant, material, equipment, item, vessel or craft included in SUBCONTRACTOR‟s Spread that may be sunk or lost in the course of the performance of the Work. SUBCONTRACTOR shall carry out all such operations: (i) so as to comply with all Applicable Laws and to avoid any hazard to navigation, any delay in the completion of the Work, and any hazard or disturbances to Company‟s and VIETSOVPETRO‟s offshore operations; and (ii) at the cost of the Parties as determined in accordance with Section 2.15.8. (c) 2.4.7 SUBCONTRACTOR shall otherwise deal with such sunk or lost items as VIETSOVPETRO, acting reasonably, may direct. (a) SUBCONTRACTOR shall not, without the prior consent of VIETSOVPETRO, disrupt the Work for any SUBCONTRACTOR Group vessel to render assistance or perform salvage unless the master of the vessel is required to render assistance where the safety of persons is at risk, or by the general maritime law or other relevant code of law. SUBCONTRACTOR shall promptly notify VIETSOVPETRO in writing of any such salvage or assistance operations, and in any event within twenty (20) hours. (b) In the event of salvage, then all salvage and all proceeds from derelicts shall first be divided equally between Company and VIETSOVPETRO in accordance with the Contract after deducting the master‟s, officers‟ and crew‟s share, hire of vessel for time lost at the time-based unit rates set out in this subcontract, and other reasonable expenses incurred. SUBCONTRACTOR shall be entitled to 50% of VIETSOVPETRO‟s share of such salvage and proceeds. Subject as aforesaid, reasonable expenses (excluding any damage to or loss of the vessel or other SUBCONTRACTOR Group property) incurred in saving or attempting to save life and in unsuccessful attempts to salvage shall be borne equally by Company and VIETSOVPETRO and SUBCONTRACTOR shall be liable for 50% of VIETSOVPETRO‟s portion of such reasonable expenses. Provided, however, that Company and VIETSOVPETRO shall not be liable to contribute towards any salvage payable by SUBCONTRACTOR or any member of SUBCONTRACTOR Group arising in any way out of services rendered under this Section 2.4.7. Reasonable expenses incurred in unsuccessful salvage attempts, and reasonable expenses exceeding actually realized salvage and proceeds from derelicts, shall be borne equally by Company and VIETSOVPETRO and SUBCONTRACTOR shall be liable for 50% of VIETSOVPETRO‟s portion of such reasonable expenses. Page 19 of 90
  20. 20. Vietsovpetro (c) Draft contract SUBCONTRACTOR shall be entitled, by means of a Change Order Authorization, to adjustment of the Subcontract Schedule, including extension, if any, to the Guaranteed Completion Date, if and to the extent such adjustment is required as a result of time lost by salvage performed by SUBCONTRACTOR under this Section 2.4.7. Provided, however, that there shall be no adjustment to the Subcontract Schedule to the extent that and for so long as there is any concurrent delay event due to pre-existing matters within SUBCONTRACTOR‟s risk or responsibility under the Subcontract. SUBCONTRACTOR shall use its best endeavours to minimize the effect of any such delay or disruption. 2.4.8 SUBCONTRACTOR shall waive all salvage rights, where such rights could otherwise be exercised, should it be called upon to recover any of Company‟s or Company‟s other contractors‟ property or VIETSOVPETRO‟s or VIETSOVPETRO‟s other contractors‟ property. VIETSOVPETRO shall use all reasonable endeavours to get VIETSOVPETRO‟s other contractors and Company‟s other contractors similarly to waive salvage rights in respect of SUBCONTRACTOR Group Property. 2.4.9 SUBCONTRACTOR shall not, unless it has first obtained VIETSOVPETRO‟s written approval, which shall not be unreasonably withheld, demobilize, remove from the Work, or substitute any marine vessel used by SUBCONTRACTOR Group in the performance of the Work. 2.5 Title 2.5.1 (a) SUBCONTRACTOR warrants that it has, and undertakes that it will at all times maintain, good title, free and clear of all liens, charges and other encumbrances, to all materials, equipment, tools and supplies furnished by SUBCONTRACTOR or Subcontractors or Suppliers that are or are intended to become part of the SUBCONTRACTOR‟s Supply or the Contract Objects and/or Subcontract Objects or that are or are intended to be used by Company and/or VIETSOVPETRO in the maintenance thereof, and in all drawings, documents and associated engineering and other data prepared or furnished by SUBCONTRACTOR or Subcontractors or Suppliers in performing the Work. (b) Full title to said materials, equipment, tools, supplies, and (subject to Section 2.16.3) to drawings, documents and associated engineering and other data, shall pass to VIETSOVPETRO and/or Company progressively as the Work is performed, at the earliest of: (i) the date said materials, equipment, tools, and supplies are identified to or appropriated for the Work or this Subcontract; (ii) the date said drawings, documents and associated engineering and other data are prepared, or furnished for the Work; (iii) the date the said materials, equipment, tools and supplies are delivered: (A) (B) as to such items sourced from within the Republic of Vietnam, to the Construction Site or to the Installation Site, as applicable; or (C) (iv) as to such items sourced from outside the Republic of Vietnam, to the point of import into the Republic of Vietnam; to such point of delivery as otherwise identified in this Subcontract; the date payment for said materials, equipment, tools, supplies, drawings, documents and associated engineering and other data is made by VIETSOVPETRO to SUBCONTRACTOR; Page 20 of 90
  21. 21. Vietsovpetro Draft contract (v) the date of Handover (if applicable) or Provisional Acceptance; or (vi) upon termination of this Subcontract. Provided, however, that VIETSOVPETRO, shall have the right, but not the obligation, to take over from SUBCONTRACTOR all or any part of any surplus items of SUBCONTRACTOR‟s Supply procured for the Work but not actually used. Except as VIETSOVPETRO may elect, by written notice to SUBCONTRACTOR, to take over any such surplus items, SUBCONTRACTOR shall be responsible for disposing of surplus items. The effect upon the Subcontract Price, if any, of either or any combination of the preceding cases shall be determined in accordance with the provisions of Section 10.0 – Changes and Section 5.0 – Compensation. (c) The passing of title to VIETSOVPETRO and/or Company shall in no way affect SUBCONTRACTOR‟s obligations as set forth in other provisions of this Subcontract, including those in Section 2.2.5 relating to the importation of SUBCONTRACTOR‟s Supply. (d) Transfer of title shall in no way affect VIETSOVPETRO‟s rights (including those to reject or require correction of nonconforming items, or to require correction of defective items) nor VIETSOVPETRO‟s obligation to pay all sums due to SUBCONTRACTOR for items to which VIETSOVPETRO and or Company asserts title before VIETSOVPETRO has made payment to SUBCONTRACTOR for such items, as set forth in other provisions of this Subcontract. Notwithstanding the foregoing, for the purposes of Sections 2.5.1(b), 2.13 and 2.15.6, unless VIETSOVPETRO, at its sole discretion on a case-by-case basis, decides otherwise, the following items shall be considered as SUBCONTRACTOR Group Property and shall not be considered to be SUBCONTRACTOR‟s Supply: (i) (ii) (e) defective or nonconforming items that have been removed in order for them to be replaced with alternative items pursuant to Section 2.13, after such replacement has been completed; and items procured for the Work but not used in the Work nor taken over by VIETSOVPETRO pursuant to Section 2.5.1(b). SUBCONTRACTOR shall be responsible for the care, custody and control of said materials, equipment, tools, supplies and exercise due care thereof to protect them from loss or damage until SUBCONTRACTOR has satisfactorily delivered them into VIETSOVPETRO‟s custody on Handover or Provisional Acceptance or upon termination of this Subcontract, whichever first occurs. With regard to spares, SUBCONTRACTOR shall use due care to protect them from loss or damage, including carrying out preservation or maintenance prescribed by Suppliers, until satisfactory delivery of such spares to VIETSOVPETRO. 2.5.2 Title in all material, equipment, documentation or other property issued by VIETSOVPETRO to SUBCONTRACTOR shall at all times be and remain vested in VIETSOVPETRO and/or Company. 2.5.3 (a) Pursuant to Section 2.5.1(b), but subject to Section 2.16.3, all drawings, documents, associated engineering, computer programs, disks and/ or tapes and other data prepared or furnished by SUBCONTRACTOR or Subcontractors or Suppliers in performing the Work shall become the property of VIETSOVPETRO and/or Company at the time of preparation and may be used by VIETSOVPETRO and/or Company for any purpose whatsoever. Provided, however, that in the case of computer programs and any data derived from these and any other items that are the subject of pre-existing ownership rights, SUBCONTRACTOR may instead provide VIETSOVPETRO and/or Company, at no extra charge to VIETSOVPETRO or Company, with Page 21 of 90
  22. 22. Vietsovpetro Draft contract an irrevocable, royalty-free, assignable licence acceptable to VIETSOVPETRO allowing Company‟s unrestricted use and quiet enjoyment of such items in relation to operation, maintenance, repair, modification and use of the Contract Objects and/or Subcontract Objects, and sale of the products thereof. (b) SUBCONTRACTOR shall ensure that VIETSOVPETRO and/or Company has full rights to use, independently and at no extra charge, any software and any other items in relation to SUBCONTRACTOR‟s Supply that may be subject to a Supplier‟s licence agreement or similar contractual arrangement. SUBCONTRACTOR shall ensure that any licence and similar terms applicable to VIETSOVPETRO‟s and/or Company‟s use of the Contract Objects and/or Subcontract Objects are acceptable to VIETSOVPETRO before SUBCONTRACTOR enters into any agreement containing or pertaining to such terms. (c) SUBCONTRACTOR shall obtain for Company‟s benefit, at no extra charge, all software licences and the like that Company may need in relation to the use and quiet enjoyment of any items that SUBCONTRACTOR is to provide to VIETSOVPETRO pursuant to this Subcontract. 2.5.4 SUBCONTRACTOR shall protect VIETSOVPETRO and/or Company interest in all materials, equipment, tools, supplies, drawings, documents and associated engineering and other data with respect to which title has passed to VIETSOVPETRO and/or Company but which remain in the possession of SUBCONTRACTOR Group, or which have been issued by VIETSOVPETRO to SUBCONTRACTOR Group for use in the performance of the Work. For such purpose, SUBCONTRACTOR shall take or cause to be taken all actions necessary under the laws of the appropriate jurisdiction(s) to protect VIETSOVPETRO‟s and/or Company‟s title, and shall defend, indemnify and hold harmless VIETSOVPETRO and Company against claims by other entities with respect thereto where such claims involve or relate to SUBCONTRACTOR Group, or result from or arise out of any act or omission by SUBCONTRACTOR Group. Provided, however, that VIETSOVPETRO shall reimburse SUBCONTRACTOR for the substantiated reasonable actual costs of actions not already specified herein as SUBCONTRACTOR‟s responsibility that VIETSOVPETRO requires SUBCONTRACTOR to take to protect VIETSOVPETRO and/or Company title before VIETSOVPETRO has made full payment for the items concerned in accordance with the Subcontract. 2.5.5 Any portion of the Work for which title has passed to VIETSOVPETRO and/or Company but which remains in the care and custody of SUBCONTRACTOR Group, together with material or equipment or other property issued by VIETSOVPETRO to SUBCONTRACTOR Group, shall be clearly identified by SUBCONTRACTOR Group (by physical marking or labelling, wherever practicable) as being the property of VIETSOVPETRO and/or Company and shall be segregated or otherwise clearly distinguishable from SUBCONTRACTOR Group Property. 2.5.6 SUBCONTRACTOR shall cause all conditions of this Section 2.5 to be inserted mutatis mutandis in all contracts with Subcontractors and Suppliers so that Company and VIETSOVPETRO and SUBCONTRACTOR shall have the rights set forth herein with respect to each Subcontractor and Supplier. 2.6 Guaranteed Completion Date SUBCONTRACTOR guarantees that Provisional Acceptance for the Work shall occur not later than the date set out in Section 9.1 for such Milestone (as such date may be adjusted by a Change Order Authorization as specifically provided in this Subcontract), the “Guaranteed Completion Date”. Page 22 of 90
  23. 23. Vietsovpetro Draft contract 2.7 Subcontract Schedule Compliance 2.7.1 (a) SUBCONTRACTOR shall perform the Work expeditiously, continuously and diligently using adequate, qualified and competent personnel together with adequate and efficient project management, associated engineering, onshore fabrication and offshore installation facilities and resources; and shall perform and complete the Work in accordance with the Subcontract Schedule. (b) SUBCONTRACTOR shall continuously monitor the progress of the Work so as to know at all times the planned and actual progress. SUBCONTRACTOR shall promptly provide such information as VIETSOVPETRO may require for monitoring and verifying the progress of the Work. (c) In the event that SUBCONTRACTOR‟s actual progress approaches a behind-schedule condition, SUBCONTRACTOR shall immediately advise VIETSOVPETRO and thereafter meet with VIETSOVPETRO to discuss causes for the adverse trend and any deficiencies in progress, and proposed corrective measures. SUBCONTRACTOR shall implement in good time all agreed corrective measures. Costs associated with implementing such measures shall be borne by the Party or Parties who caused and/or contributed to cause the delay. In the event where VIETSOVPETRO has liability, the associated costs shall be calculated using the applicable Unit Rates in Section 5.0. (d) SUBCONTRACTOR shall not give priority to work for its other clients to the detriment of the Work. (a) If SUBCONTRACTOR fails to perform and complete the Work in accordance with the Subcontract Schedule, including failing, or appearing to be failing, to accomplish a Milestone on or before the date for the completion of such Milestone as set forth in Section 9.1, VIETSOVPETRO may deliver to SUBCONTRACTOR a notice of schedule delay (the “Notice of Schedule Delay”). Within 5 (Five) days after it has received such a Notice of Schedule Delay, SUBCONTRACTOR shall deliver to VIETSOVPETRO a schedule recovery plan (the “Schedule Recovery Plan”). (b) Such Schedule Recovery Plan shall set forth in detail how SUBCONTRACTOR intends to increase the rate of performance of the Work to recover to the Subcontract Schedule as soon as practicable. SUBCONTRACTOR shall base the proposed Schedule Recovery Plan on SUBCONTRACTOR taking whatever measures are necessary to recover to the Subcontract Schedule, such as, but not limited to, rescheduling of the Work; increasing labour and supervisory levels; expediting the Work; utilizing more productive marine vessels, plant or construction equipment; introducing or increasing overtime; increasing shift work; and mobilizing additional marine vessels, plant and construction equipment. (c) SUBCONTRACTOR shall revise its proposed measures and the Schedule Recovery Plan as reasonably required by VIETSOVPETRO to assure recovery to the Subcontract Schedule is accomplished as soon as practicable. VIETSOVPETRO shall not unreasonably withhold approval of SUBCONTRACTOR‟s proposed Schedule Recovery Plan. Upon VIETSOVPETRO‟s approval of the Schedule Recovery Plan, SUBCONTRACTOR shall immediately commence diligent implementation of the measures set out therein. (d) Without prejudice to Section 2.10, Section 10.2, or Section 10.3, a Schedule Recovery Plan shall not constitute or be grounds for a change to the Subcontract Schedule. 2.7.2 Page 23 of 90
  24. 24. Vietsovpetro 2.7.3 Draft contract (a) If SUBCONTRACTOR fails, or has reason to believe that it is likely to fail, to recover to the Subcontract Schedule in accordance with the latest VIETSOVPETRO-approved Schedule Recovery Plan, SUBCONTRACTOR shall promptly give notice thereof to VIETSOVPETRO. If VIETSOVPETRO so requires, SUBCONTRACTOR shall promptly deliver to VIETSOVPETRO a further Schedule Recovery Plan complying with the requirements and in accordance with the procedures set forth in Section 2.7.2. (b) SUBCONTRACTOR shall deliver written reports to VIETSOVPETRO each week, or more frequently if required by VIETSOVPETRO, detailing SUBCONTRACTOR‟s progress under any Schedule Recovery Plan. (c) None of the foregoing shall limit SUBCONTRACTOR‟s obligation, as set forth in Section 2.7.2, to expedite the performance of the Work by taking such measures as are necessary to recover to the Subcontract Schedule as soon as practicable. 2.7.4 SUBCONTRACTOR shall bear the costs of implementing the Schedule Recovery Plan except and to the extent the need for such plan is attributable to VIETSOVPETRO‟s breach of its obligations under Section 2.3, suspension pursuant to Section 2.8.1, or recovery from the effects of a Force Majeure or a Change, in each case pursuant to a duly authorized Change Order Authorization. In the event of disagreement as to whether or not SUBCONTRACTOR is entitled to a Change Order Authorization, SUBCONTRACTOR shall promptly and assiduously implement any written instructions given by VIETSOVPETRO pending resolution of the matter. 2.7.5 Neither SUBCONTRACTOR‟s obligations nor VIETSOVPETRO‟s rights and remedies under this Section 2.7 and Section 2.18 are diminished or prejudiced in any way by the Delay Liquidated Damages provisions of Section 2.9. 2.8 Suspension 2.8.1 (a) Notwithstanding any other provisions of the Subcontract, VIETSOVPETRO at any time and from time to time may suspend without cause all or part of the Work for a reasonable period of time by giving SUBCONTRACTOR written notice specifying the part of the Work to be suspended and the effective date of the suspension. SUBCONTRACTOR shall suspend its activities accordingly, but shall continue to perform all unsuspended parts of the Work. Unless otherwise instructed by VIETSOVPETRO, SUBCONTRACTOR shall during any such suspension maintain its staff and labour on or near the Site and otherwise ready to proceed with the Work upon receipt of VIETSOVPETRO‟s further instructions. Appropriate adjustments to the Guaranteed Completion Date and/ or the Subcontract Price shall be made by means of a Change Order Authorization. Regarding adjustment to the Subcontract Price, VIETSOVPETRO shall compensate SUBCONTRACTOR at the applicable rates specified in Section 5.0 (or, in the case of a partial suspension of SUBCONTRACTOR‟s Spread, an amount equal to such portion that has been suspended) for: (i) standby of SUBCONTRACTOR Group‟s employees, SUBCONTRACTOR‟s Spread and/ or SUBCONTRACTOR Group‟s construction tools, plant and equipment during the period of suspension if and to the extent such items cannot be properly utilized by SUBCONTRACTOR Group in performance of the Work hereunder or other work for other persons as agreed by VIETSOVPETRO; (ii) demobilizing and remobilizing SUBCONTRACTOR Group‟s employees, SUBCONTRACTOR‟s Spread, and/ or SUBCONTRACTOR Group‟s construction tools, plant and equipment, if such demobilization and remobilization are authorized in advance in writing by VIETSOVPETRO; and Page 24 of 90
  25. 25. Vietsovpetro Draft contract (iii) 2.8.2 After having given a suspension notice as provided above, VIETSOVPETRO shall have the right to direct SUBCONTRACTOR to resume its activities on all or some of the suspended Work. Provided, however, that if VIETSOVPETRO suspends operations by SUBCONTRACTOR‟s Spread so as to prevent SUBCONTRACTOR completing such operations before the end of the industry-recognized offshore working season, SUBCONTRACTOR, acting reasonably, shall not be obliged to resume performance of such operations before the start of the next offshore working season. In such event, SUBCONTRACTOR shall cooperate in minimizing the total costs to be borne by VIETSOVPETRO, which shall include applicable demobilization and remobilization charges pursuant to Section 2.8.1(a). For the purpose of Section 2.8, “industryrecognized offshore working season” and “offshore working season” means the period from 1 April to 31st October inclusive. If SUBCONTRACTOR has been demobilized and instructed by VIETSOVPETRO not to retain SUBCONTRACTOR Group‟s employees, SUBCONTRACTOR‟s Spread and/ or SUBCONTRACTOR Group‟s construction tools, plant and equipment during the period of suspension, VIETSOVPETRO shall give reasonable prior notice of remobilization to SUBCONTRACTOR and SUBCONTRACTOR shall exert all reasonable efforts to meet VIETSOVPETRO‟s desired remobilization date. (iii) (c) (i) (ii) (b) other items directly related to the suspended part of the Work, such as protecting and securing any materials and equipment intended for incorporation into the suspended Work. If any such suspension by VIETSOVPETRO exceeds, or may reasonably be expected to exceed, thirty five (35) Days in the aggregate, SUBCONTRACTOR shall be entitled, after obtaining VIETSOVPETRO‟s consent (such consent not to be unreasonably withheld), to demobilize all or part of SUBCONTRACTOR‟s Spread in order to meet SUBCONTRACTOR‟s other contractual obligations. SUBCONTRACTOR, when seeking such consent, shall submit to VIETSOVPETRO a plan for remobilization which shall include an estimate of the time period required for SUBCONTRACTOR‟s remobilization taking into account such other contractual obligations and such other information as VIETSOVPETRO shall reasonably request to fully evaluate such request. SUBCONTRACTOR shall keep full and detailed records of all costs of demobilization, maintenance, and standby, and of other costs in respect of extended suspensions pursuant to this Section 2.8.1, for any of which it believes it is entitled to receive compensation. Such records shall be open to inspection by VIETSOVPETRO at all reasonable times. SUBCONTRACTOR shall provide such regular reports to VIETSOVPETRO as VIETSOVPETRO may reasonably request, which shall show cumulative costs to date and forecast costs for the entire estimated suspension period. SUBCONTRACTOR shall invoice VIETSOVPETRO on a monthly basis for such costs incurred, and provide reasonable documentary proof to establish the basis for SUBCONTRACTOR‟s calculations. VIETSOVPETRO shall have the right to suspend any portion of the Work for which SUBCONTRACTOR is in default pursuant to Section 2.18, or in violation of the safety regulations described in Section 2.20. Such suspension shall be by written notice to SUBCONTRACTOR and shall apply only to the portion of the Work cited therein. No adjustment to the Guaranteed Completion Date or the Subcontract Price shall be made as a result of such suspension and VIETSOVPETRO may suspend payments to SUBCONTRACTOR for any part of such suspended Work that was performed prior to said suspension. After having given a suspension notice as provided above, VIETSOVPETRO shall have the right to direct SUBCONTRACTOR to resume its activities on all or some of the suspended Work. Page 25 of 90
  26. 26. Vietsovpetro 2.8.3 Draft contract (a) VIETSOVPETRO shall pay the Subcontract Price to SUBCONTRACTOR in accordance with Section 5.0, provided that VIETSOVPETRO shall be entitled to withhold payment of any disputed amount, or where VIETSOVPETRO is pursuing in good faith any claim or the like against SUBCONTRACTOR in relation to the Subcontract, an amount commensurate with such claim. Any payment falling due on a Day that is not a Business Day for either VIETSOVPETRO‟s bank or SUBCONTRACTOR‟s bank shall be made on the next following Business Day. SUBCONTRACTOR shall be entitled to interest at the non-compounded rate of the three-month LIBOR for US Dollars plus 2% (200 basic points) per annum for the period of delay on undisputed amounts not paid at the due time in accordance with the Subcontract. Any interest to which SUBCONTRACTOR is entitled shall be calculated and claimed by SUBCONTRACTOR at the time of SUBCONTRACTOR‟s final invoice. Such calculation shall also take account of any amounts paid by VIETSOVPETRO earlier than the due date, using solely for this purpose, and without creating a liability for SUBCONTRACTOR, a negative interest rate of the three-month LIBOR for US Dollars plus 2% (200 basic points) applied to the period by which the payment was made early. SUBCONTRACTOR shall provide with each invoice submitted to VIETSOVPETRO a summary of payments to date, showing any cumulative interest to which SUBCONTRACTOR considers it is entitled. (b) Without prejudice to Section 2.8.3(a), if VIETSOVPETRO‟s payment of any undisputed amount is more than twenty (20) Days past due, SUBCONTRACTOR may notify VIETSOVPETRO of its intention to suspend the performance of any or all of its obligations under the Subcontract. Provided, however, that such 20-Day period shall not be deemed to have commenced until VIETSOVPETRO has received from SUBCONTRACTOR all credit notes requested by VIETSOVPETRO in respect of disputed amounts. After receipt of said notice, VIETSOVPETRO shall have fifteen (15) Days to make payment to SUBCONTRACTOR (the “Cure Period”). SUBCONTRACTOR shall continue performing its obligations during the Cure Period. If SUBCONTRACTOR does not receive payment by the end of said Cure Period, and provided that it has duly continued performance of its obligations during the Cure Period, thereafter and until it receives payment SUBCONTRACTOR may suspend all or any portion of its obligations under the Subcontract by written notice to VIETSOVPETRO. Appropriate adjustments to the Guaranteed Completion Date and/ or the Subcontract Price, which will take into consideration additional costs incurred by SUBCONTRACTOR due to late payment of undisputed amounts and any consequent suspension as contemplated by this Section 2.8.3(b), shall be made by means of a Change Order Authorization. 2.8.4 SUBCONTRACTOR shall, during the suspension of the Work, properly preserve, protect and secure the Work, including any Contract Objects and/or Subcontract Objects, as applicable, and SUBCONTRACTOR‟s Supply and VIETSOVPETRO Furnished Material in SUBCONTRACTOR Group‟s custody. 2.9 Damages for Delay 2.9.1 The Parties expressly agree that: (a) (b) 2.9.2 Delay Liquidated Damages amounts stipulated in Attachment 2-1 are appropriate; and SUBCONTRACTOR shall pay any Delay Liquidated Damages becoming due pursuant to this Section 2.9. If SUBCONTRACTOR fails to achieve a Milestone designated in Attachment 2-1 as being subject to liquidated damages by the date for such Milestone, as set out in Attachment 2-1, as any such date may be adjusted by any Change Order Authorization, SUBCONTRACTOR shall pay to VIETSOVPETRO as Page 26 of 90
  27. 27. Vietsovpetro Draft contract liquidated damages (“Delay Liquidated Damages”) the applicable sum stipulated in Attachment 2-1 for each day (or part day) of delay, unless and to the extent that such delay is due to Force Majeure or other circumstances that are valid grounds for excusable delay by SUBCONTRACTOR under the Subcontract, until the key Milestone is achieved. 2.9.3 Delay Liquidated Damages shall not exceed, in the aggregate, the maximum amount set out in Attachment 2-1, such amount being equivalent to ten percent (10%) of the Subcontract Price. 2.9.4 In the event VIETSOVPETRO terminates the Subcontract pursuant to Section 2.18.1, the Extra Costs payable by SUBCONTRACTOR shall include a sum equivalent to the maximum amount of Delay Liquidated Damages specified in Section 2.9.3. Provided, however, that VIETSOVPETRO shall refund any excess Delay Liquidated Damages if and to the extent that, after termination of the Subcontract, VIETSOVPETRO and/ or any Replacement Contractor subsequently complete(s) the Work by a date which, if it had been achieved by SUBCONTRACTOR under the Subcontract, would have resulted in less than the maximum amount of Delay Liquidated Damages being payable by SUBCONTRACTOR. 2.9.5 Any Delay Liquidated Damages shall be due and payable within thirty (30) Days of SUBCONTRACTOR‟s receipt of VIETSOVPETRO‟s invoice therefor. VIETSOVPETRO may submit monthly invoices for interim amounts. VIETSOVPETRO shall have the right to offset, in whole or in part, Delay Liquidated Damages amounts invoiced to SUBCONTRACTOR, up to the maximum amount specified in Section 2.9.3, from any payments due to SUBCONTRACTOR. 2.9.6 Without prejudice to VIETSOVPETRO‟s right to terminate the Subcontract and recover Extra Costs pursuant to Section 2.18.5, to the extent that Delay Liquidated Damages are duly enforceable by VIETSOVPETRO in respect of delay that does not give rise to termination of the Subcontract, they shall be VIETSOVPETRO‟s sole remedy for the delay to which they relate, notwithstanding references to time is of the essence or other delay provisions elsewhere in the Subcontract. 2.9.7 The provisions of this Section 2.9 are without prejudice to, and shall not be construed to limit, VIETSOVPETRO‟s rights and remedies under the Subcontract or damages or any claim or cause of action based on breaches other than failure to achieve at the due time the Guaranteed Completion Date set out in Attachment 2-1. 2.10 Force Majeure 2.10.1 (a) The expression “Force Majeure” means any event or circumstance that is not reasonably foreseeable or, if reasonably foreseeable, is beyond the control and without the fault or negligence of the Party claiming Force Majeure (acting and having acted as a Reasonable and Prudent Person) and, in either case, that would make impossible (the term “impossible” in this context and for these purposes includes impracticability because of extreme and highly unreasonable difficulty, expense, injury or loss involved) the performance of all or some of its obligations hereunder, which failure in performance could not have been prevented or overcome by the exercise by it of the standard of a Reasonable and Prudent Person. (b) Subject to the conditions of, and without prejudice to the generality of, Section 2.10.1(a), “any event or circumstance” referred to therein includes: (i) strikes, lockouts, labour or other industrial disturbances (including sabotage), except as provided in Section 2.10.4(i); (ii) acts of God, or operation of the forces of nature that is unforeseeable; (iii) epidemics and quarantine restrictions; Page 27 of 90
  28. 28. Vietsovpetro Draft contract (iv) landslides, earthquakes, fires, washouts, floods, and explosions; (v) acts of Governmental Authority, acts of war or the public enemy, including blockades, insurrections, revolution, terrorism, piracy, riots, civil disturbances, arrests and restraints of rulers and peoples, or conditions arising out of or attributable to war (declared or undeclared); (vi) failure in performance by a Subcontractor or Supplier resulting from such Subcontractor or Supplier itself being affected by Force Majeure; (vii) failure in performance by a VIETSOVPETRO subcontractor or supplier resulting from such subcontractor or supplier itself being affected by Force Majeure; and (viii) failure in performance by Company resulting from the Company itself being affected by Force Majeure. 2.10.2 Subject to the provisions of this Section 2.10, neither Party shall be liable to the other for any failure to fulfill any obligation under this Subcontract to the extent it is prevented from or delayed in performing such obligation by Force Majeure. (For the purposes of this Section 2.10 the words “inability” and “unable” shall be construed to mean prevented or delayed.). 2.10.3 A Party‟s inability or failure to pay money when due hereunder shall not be treated as Force Majeure. 2.10.4 Notwithstanding anything in Sections 2.10.1 and 2.10.2, the following events or circumstances giving rise to a Party‟s or any Subcontractor‟s or Supplier‟s inability or failure to perform shall not be treated or construed as Force Majeure: (a) if the inability was primarily caused by lack of finances of the Person claiming the occurrence of Force Majeure; or by the bankruptcy, insolvency or the like of any Subcontractor or Supplier, or of any of VIETSOVPETRO‟s other contractors and Company‟s other contractors; (b) if the failure was primarily caused by the entity‟s inability to make any payment in US Dollars or other applicable currency; (c) if the inability was primarily caused by general economic or market conditions including without limitation recession, depression, inflation, deflation, exchange rate fluctuations, availability of foreign exchange funds or changes in prices or any other event that merely makes performance uneconomic or commercially impracticable; (d) the late delivery of SUBCONTRACTOR‟s Supply or SUBCONTRACTOR‟s Spread for any reason that is not otherwise Force Majeure; (e) the late performance by any entity caused by such entity‟s failure to engage qualified Subcontractors and/ or Suppliers who have sufficient capacity or to hire an adequate number of personnel or labour; (f) delays resulting from inadequacy of SUBCONTRACTOR‟s Spread or achieving less than planned productivity or experiencing harder or softer than expected ground, seabed or soil conditions during piling or similar operations; Page 28 of 90
  29. 29. Vietsovpetro Draft contract (g) delays resulting from adverse weather conditions (other than in respect of operation of the forces of nature that is unforeseeable pursuant to Section 2.10.1(b)) or unfavourable ground, seabed, soil, current, tidal or sea conditions, seabed obstructions, or other similar adverse conditions; (h) delays resulting from the presence at any Site of other contractors or Third Parties; (i) strikes or lockouts, labour or other industrial disturbances (including sabotage) involving a Party‟s and/ or Subcontractor‟s and/ or Supplier‟s own employees, except for regional, national or industry-wide strikes, labour or other industrial disturbances not attributable to such Party and/ or Subcontractor and/ or Supplier; (j) delays in obtaining approval for importation of SUBCONTRACTOR‟s Supply, Subcontract Objects and/ or SUBCONTRACTOR‟s Spread, unless the Person affected has been a Reasonable and Prudent Person in applying for such approval; (k) the withdrawal or expiration of, or failure to obtain, unless the Person affected has acted as a Reasonable and Prudent Person, any necessary consent, confirmation, authorization or other approval of any Governmental Authority which the entity, acting as a Reasonable and Prudent Person, can apply for and obtain, maintain or extend or could have applied for and obtained, maintained or extended; (l) any event or circumstance comprising, or resulting from, any Willful Misconduct by SUBCONTRACTOR Group, in the case of Force Majeure relief claimed by SUBCONTRACTOR, or by VIETSOVPETRO Group, in the case of Force Majeure relief claimed by VIETSOVPETRO, (in either case, in the performance of this Subcontract or otherwise); (m) the imposition of sanctions by any legitimate Governmental Authority due primarily to the failure of SUBCONTRACTOR Group, in the case of Force Majeure relief claimed by SUBCONTRACTOR, or of VIETSOVPETRO Group, in the case of Force Majeure relief claimed by VIETSOVPETRO, to comply with any Applicable Law; or (n) any occurrence that a Party claims as Force Majeure unless that Party shall have complied with the notice requirements set forth in Section 2.10.5. 2.10.5 A Party (the “Affected Party”) intending to seek relief under this Section 2.10 shall give notice (the “Force Majeure Estimate”) to the other Party (the “Non-Affected Party”) at each of the following times: (a) as soon as practicable but in any event within ten (10) days of the day (the “Relevant Day”) upon which the Party first knew or ought reasonably to have known of the inability to fulfill an obligation for which relief is sought hereunder; (b) at the end of each subsequent period of seven (7) days; (c) as soon as reasonably practicable whenever the Affected Party‟s bona fide estimate of the duration of the event or circumstance of Force Majeure changes; and (d) as soon as reasonably practicable when the Affected Party anticipates that it will be able to resume performance of its obligations under this Subcontract. 2.10.6 The initial Force Majeure Estimate given under Section 2.10.5 shall contain the following information relating to the event or circumstances of Force Majeure: Page 29 of 90
  30. 30. Vietsovpetro Draft contract (a) particulars of the occurrence; and (b) the Affected Party‟s bona fide estimate of its expected duration from the Relevant Day, the date that full performance will be resumed, and the expected extent of the Affected Party‟s inability to perform; and to the extent known or then reasonably ascertainable: (c) the reasons for the occurrence; (d) the actions which the Affected Party, acting as a Reasonable and Prudent Person, would take to remedy the Force Majeure event or circumstance and its bona fide estimate of the expected schedule thereof; and (e) the Affected Party‟s bona fide estimate of the date or dates of any incremental (less than full) increase or resumption of performance. Each subsequent Force Majeure Estimate shall contain any of the above information not previously notified, a full report confirming or updating and amplifying the information contained in previous Force Majeure Estimates, and such further information as the Non-Affected Party may reasonably require. 2.10.7 Upon request, an Affected Party shall, as soon as practicable, give or procure access, insofar as it is reasonably able to do so, for a reasonable number of representatives of the Non-Affected Party to examine, at the Non-Affected Party‟s sole risk and cost, the scene of the event or circumstance which gave rise to the inability to perform. 2.10.8 When the Affected Party gives notice that it anticipates that it will be able to resume performance of its obligations under this Subcontract, the Parties shall co-operate to accomplish any necessary activities during such notice period to enable resumption of full performance. 2.10.9 If an event or circumstance of Force Majeure occurs, each Affected Party shall as soon as reasonably practicable take all necessary steps as may be reasonably practicable in accordance with the standard of a Reasonable and Prudent Person to remedy the inability to perform and resume full and proper performance hereunder. Relief under this Section 2.10 shall cease to be available to a Party from the time when such Party ought to have commenced taking such steps. 2.10.10 (a) If any occurrence of Force Majeure causes a prolonged delay in performing the Work, or if an interruption in the Work through a Force Majeure occurrence may reasonably be anticipated to continue for a prolonged period, VIETSOVPETRO may terminate this Subcontract in whole or in part. Such termination shall not give rise to any claim for compensation other than the same compensation that SUBCONTRACTOR would have been entitled to receive under Section 2.18.7 if VIETSOVPETRO had terminated this Subcontract in whole or in part for its convenience, but excluding any termination fee specified in Section 2.18.7(c)(i) where SUBCONTRACTOR is the Affected Party. The meaning of “prolonged” in this Section 2.10.10 shall depend on the nature of the Work and the effect of the delay in or interruption of the Work. Within this context, a delay of less than thirty (30) consecutive days might be “prolonged,” but any delay of thirty (30) consecutive days or more shall in any event be deemed to be “prolonged” for purposes of this Section 2.10.10. (b) Without prejudice to Section 2.10.11, if any occurrence of Force Majeure causes a delay of sixty (60) consecutive days or more in performing the Work or any material part thereof, SUBCONTRACTOR may notify VIETSOVPETRO that SUBCONTRACTOR will terminate Page 30 of 90

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