<PAGE>
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------------------
FORM 10-Q
(Mark One)
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1999
OR
/ / TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from ________________ to ____________________
Commission File Number 0-29796
MARINE SHUTTLE OPERATIONS INC.
------------------------------
(Exact name of Registrant as Specified in Its Charter)
Nevada 91-1913992
- ---------------------------------------------- ----------------------------
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
4410 Montrose Boulevard, Houston, Texas 77006
- ---------------------------------------------- ----------------------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code (713) 529-7498
---------------
Indicate by check mark whether the registrant: (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. YES /X/ NO / /
Number of outstanding shares of the issuer's common stock at
August 11, 1999: 33,707,357
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
FORM 10-Q
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION........................................... 3
ITEM 1. FINANCIAL STATEMENTS............................................ 3
CONSOLIDATED BALANCE SHEET .............................................. 3
CONSOLIDATED STATEMENTS OF LOSS AND COMPREHENSIVE LOSS................... 4
CONSOLIDATED STATEMENTS OF CASH FLOW..................................... 5
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY.......................... 6
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS........................... 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS............................. 10
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK...... 13
PART II. OTHER INFORMATION............................................... 13
ITEM 1. LEGAL PROCEEDINGS............................................... 13
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K................................ 13
SIGNATURES............................................................... 14
INDEX OF EXHIBITS........................................................ 15
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PART I.
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
MARINE SHUTTLE OPERATIONS INC. AND SUBSIDIARIES
(A development stage company)
CONSOLIDATED BALANCE SHEET
(U.S.Dollars)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1999 1998
------------ ------------
<S> <C> <C>
ASSETS (unaudited)
CURRENT
Cash and cash equivalents $ 181,617 $ 903,805
Restricted cash 94,496 128,535
Accounts receivables 32,158 16,254
Other current receivables 316,030 173,577
------------ ------------
TOTAL CURRENT ASSETS 624,301 1,222,171
Pension fund 7,765 8,017
Property, plant and equipment, net 4,655,847 2,067,287
Debt issue cost 583,726 --
Goodwill, net 29,742,889 31,389,355
Patents and agreements, net 2,993,466 3,249,396
------------ ------------
TOTAL ASSETS $ 38,607,994 $ 37,936,227
============ ============
LIABILITIES AND SHAREHOLDERS` EQUITY
CURRENT LIABILITY
Accounts payable $ 1,145,797 $ 963,908
Notes payable 2,500,000 3,605,390
Other current liabilities 542,288 241,253
------------ ------------
TOTAL CURRENT LIABILITIES 4,188,085 4,810,551
MINORITY INTEREST 408,121 555,417
Contingency (Note 3)
SHAREHOLDERS' EQUITY
Authorized 75,000,000 common shares with a par value
of $0.001. Issued and outstanding 33,707,357 common
shares at June 30, 1999 and 32,557,607 common shares
at December 31, 1998 33,708 32,558
Other paid in capital 43,251,913 37,734,263
Deficit accumulated during the development stage (9,289,763) (5,207,079)
Accumulated other comprehensive income 15,930 10,517
------------ ------------
TOTAL SHAREHOLDERS' EQUITY 34,011,788 32,570,259
TOTAL LIABILITIES AND SHAREHOLDERS`
EQUITY $ 38,607,994 $ 37,936,227
============ ============
</TABLE>
See accompanying notes to consolidated financial statements
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<PAGE>
MARINE SHUTTLE OPERATIONS INC. AND SUBSIDIARIES
(A development stage company)
CONSOLIDATED STATEMENTS OF LOSS AND COMPREHENSIVE LOSS
(U.S.Dollars)
(unaudited)
<TABLE>
<CAPTION>
CUMULATIVE TO
JUNE 30, 1999 THREE MONTHS ENDED SIX MONTHS ENDED
FROM DATE OF JUNE 30, JUNE 30,
INCEPTION --------------------------- -----------------------------
MAY 23, 1997 1999 1998 1999 1998
----------- ----------- --------- ----------- -----------
<S> <C> <C> <C> <C> <C>
OPERATING REVENUES $ 40,108 $ 23,732 $ -- $ 23,732 $ --
----------- ----------- --------- ----------- -----------
EXPENSES
Personnel costs 966,876 330,753 17,451 741,383 47,451
Legal and advisory services 936,551 97,666 196,296 183,661 224,642
Cost of cancelled financing 606,721 -- -- -- --
Financial services 555,491 21,416 49,401 116,253 61,751
General and administrative expenses 1,157,887 442,069 189,098 702,638 213,619
Marketing expenses 827,284 70,149 -- 174,794 --
Technical Development 269,054 72,465 -- 269,054 --
Depreciation and amortization 59,882 24,929 -- 49,415 --
Depreciation GW and intangibles 3,818,635 937,306 418,268 1,936,431 418,268
Write down on investment 90,000 -- -- -- 90,000
Interest expense 104,546 (5,974) 15,781 11,278 15,781
Currency exchange loss (gain) 134,721 89,350 (6,659) 104,736 (6,659)
----------- ----------- --------- ----------- -----------
TOTAL OPERATING EXPENSES $ 9,527,648 $ 2,080,129 $ 879,636 $ 4,289,643 $ 1,064,853
----------- ----------- --------- ----------- -----------
Less: interest income (50,481) (14,210) (7,207) (35,932) (7,207)
NET LOSS BEFORE MINORITY INTEREST $(9,437,059) $(2,042,186) $(872,429) $(4,229,980) $(1,057,646)
----------- ----------- --------- ----------- -----------
MINORITY INTEREST (147,296) (88,728) -- (147,296) --
----------- ----------- --------- ----------- -----------
NET LOSS $(9,289,763) $(1,953,458) $(872,429) $(4,082,684) $(1,057,646)
=========== =========== ========= =========== ===========
Other comprehensive loss:
Cummulative foreign exchange
Adjustment 15,930 58,571 (39,802) 5,413 (39,802)
----------- ----------- --------- ----------- -----------
COMPREHENSIVE LOSS $(9,273,833) $(1,894,887) $(912,231) $(4,077,271) $(1,097,448)
----------- ----------- --------- ----------- -----------
Basic and diluted loss per share $ (0.06) $ (0.03) $ (0.12) $ (0.04)
Weighted average shares outstanding 33,707,357 27,620,000 33,555,315 23,820,000
----------- ---------- ----------- -----------
</TABLE>
See accompanying notes to consolidated financial statements.
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<PAGE>
MARINE SHUTTLE OPERATIONS INC. AND SUBSIDIARIES
(A development stage company)
CONSOLIDATED STATEMENTS OF CASH FLOW
(U.S.Dollars)
(unaudited)
<TABLE>
<CAPTION>
CUMULATIVE TO
JUNE 30, 1999 SIX MONTHS ENDED
FROM DATE OF JUNE 30,
INCEPTION -----------------------------
MAY 23, 1997 1999 1998
------------ ----------- -----------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net Loss for the period $(9,289,764) $(4,082,684) $(1,057,646)
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 3,878,517 1,985,846 418,268
Minority interest (147,296) (147,296) --
Writedown of investments 90,000 -- 90,000
Unrealized loss on foreign currency 168,697 136,605 --
Accrued interest expenses, net 108,194 14,926 15,781
Changes in working capital components:
Accounts receivable (32,158) (15,904) --
Other current receivables and restricted cash (195,346) (108,415) --
Accounts payable 1,145,798 181,889 173,271
Other current liabilities (83,752) 149,505 --
Due to related party -- -- (3,854)
----------- ----------- -----------
NET CASH FLOW USED ON OPERATING ACTIVITIES $(4,357,109) $(1,885,529) $ (364,180)
----------- ----------- -----------
INVESTING ACTIVITIES
Investments (100,000) -- (100,000)
Capital expenditures (3,390,008) (2,674,333) (221,103)
Proceeds on sale of investment 10,000 -- 10,000
Advance to Marine Shuttle Operations AS (249,986) -- (249,986)
Acquisition of Marine Shuttle Operations AS 416,635 -- 416,635
Advance to Offshore Shuttle AS (100,000) -- --
Acquisition of Offshore Shuttle AS 482,476 -- --
----------- ----------- -----------
NET CASH FLOW USED ON INVESTING ACTIVITIES $(2,930,883) $(2,674,333) $ (144,454)
----------- ----------- -----------
FINANCING ACTIVITIES
Issuance of capital stock 5,918,750 5,748,750 --
Share issue cost (245,950) (229,950) (299,936)
Debt issue cost (583,726) (583,726) --
Note payable 2,500,000 (1,000,000) 1,250,000
----------- ----------- -----------
NET CASH FLOW PROVIDED BY FINANCING ACTIVITIES $ 7,589,074 $ 3,935,074 $ 950,064
----------- ----------- -----------
Effect of exchange rate change in cash and
cash equivalents (119,465) (97,400) (39,802)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIV $ 181,617 $ (722,188) $ 401,628
----------- ----------- -----------
Cash and cash equivalents at beginning of period -- 903,805 9,015
----------- ----------- -----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 181,617 $ 181,617 $ 410,643
----------- ----------- -----------
</TABLE>
See accompanying notes to consolidated financial statements.
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<PAGE>
MARINE SHUTTLE OPERATIONS INC.
AND SUBSIDIARIES
(A development stage company)
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(U.S.Dollars)
(unaudited)
<TABLE>
<CAPTION>
Deficit
Cumulative Accumulated
Common shares Other Other During the Total
----------------------------- Paid-in Comprehensive Development Shareholders'
Shares Amount Capital Income Stage Equity
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Issued on incorporation 10,000,000 $10,000 $ $ $ $ 10,000
Private placement 10,020,000 10,020 133,980 144,000
Net loss (164,931) (164,931)
- ------------------------------------------------------------------------------------------------------------------------------
Balance at December 31, 1997 20,020,000 20,020 133,980 - (164,931) (10,931)
Issued on acquisition
of MSO AS 7,600,000 7,600 22,792,400 22,800,000
Issued on acquisition OSAS 4,937,607 4,938 14,807,883 14,812,821
Other comprehensive income -
foreign currency adjustments 10,517 10,517
Net loss (5,042,148) (5,042,148)
- ------------------------------------------------------------------------------------------------------------------------------
Balance at December 31, 1998 32,557,607 $32,558 $37,734,263 $ 10,517 $ (5,207,079) $32,570,259
- ------------------------------------------------------------------------------------------------------------------------------
Private placement 1,149,750 1,150 5,517,650 5,518,800
Other comprehensive income -
foreign currency Adjustments 5,413 5,413
Net loss (4,082,684) (4,082,684)
- ------------------------------------------------------------------------------------------------------------------------------
Balance at June 30, 1999 33,707,357 $33,708 $43,251,913 $ 15,930 $ (9,289,763) $34,011,788
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to consolidated financial statements.
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<PAGE>
MARINE SHUTTLE OPERATIONS INC. AND SUBSIDIARIES
(A development stage company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the six month period ended June 30, 1999
are not necessarily indicative of the results that may be expected for the year
ended December 31, 1999. These financial statements should be read in
conjunction with the financial statements and footnotes thereto included in the
Company's annual report on Form 10-K for the year ended December 31, 1998.
The financial statements for the second quarter of 1999 and the six
month period ending June 30, 1999 are not comparable with the same periods in
the prior year since the Company's main operations are conducted through its
subsidiaries which were acquired in 1998. The subsidiaries, Marine Shuttle
Operations AS (100% owned) and Offshore Shuttle AS (68% owned) were consolidated
with effect from April 14, 1998 and December 31, 1998, respectively.
2. NATURE OF OPERATIONS
Marine Shuttle Operations Inc. (the "Company"), through its
wholly-owned Norwegian subsidiary, Marine Shuttle Operations AS ("MSOAS") and
68% owned Norwegian subsidiary, Offshore Shuttle AS ("OSAS"), is seeking to
become a leading player in the market for decommissioning, installing and
transporting of offshore oil and gas structures. The Company, being in the
development stage, has not generated any revenues from operations and does not
expect to generate any significant revenues from operations until the year 2002,
at the earliest. There can be no assurance, however, that the Company will ever
achieve commercially significant sales. To date, the Company has not entered
into any contracts for the use of its proposed services, and no assurance can be
given that any such contracts will materialize.
In 1998, the Company acquired approximately 68% of the outstanding
OSAS capital stock, and entered into two agreements to acquire an additional
686,668 shares of OSAS (approximately 14.5% of the outstanding OSAS capital
stock) in exchange for 1,030,002 shares of common stock (the "Additional OSAS
Exchanges"). The Company anticipates that the Additional OSAS Exchanges will
close in the near future, although there can be no assurance in that regard.
To benefit from a more rational and cost efficient use of the resources
in MSOAS and OSAS, the Board of Directors of the two companies proposed to merge
the two companies. The proposed merger plan was approved by the shareholders of
both companies on May 30, 1999. The merger is expected to be effective in
September 1999.
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<PAGE>
MARINE SHUTTLE OPERATIONS INC. AND SUBSIDIARIES
(A development stage company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(unaudited)
2. NATURE OF OPERATIONS (continued)
The shareholders of OSAS will receive 1.5 new shares in MSOAS for each
of their OSAS shares. After the exchange of shares, the Company will own 81% of
the merged company (prior to the Additional OSAS Exchange). After the Additional
OSAS Exchange, the Company will own 89.54% of the merged company.
Upon completion of the merger process, MSOAS will be the holder of all
licensing and marketing rights to the Offshore Shuttle. Additionally, the
bilateral rights and obligations of MSOAS and OSAS under the License Agreement
will be extinguished. Pending the merger, all bilateral rights and obligations
have been suspended. To exemplify, but not to limit the generality of this
suspension, the obligations of MSOAS to place an order for the first Offshore
Shuttle no later than June 1, 1999 and also the obligation of MSOAS to pay an
exclusivity fee of $2,000,000, by June 1, 1999, have been suspended.
3. CONTINUING OPERATIONS
The accompanying financial statements have been prepared on a going
concern basis, which contemplates the realization of assets and the satisfaction
of liabilities in the normal course of business. As shown in the financial
statements, the Company is in the development stage and, at June 30, 1999 has
accumulated losses from operations amounting to $9,289,763 and a working capital
deficit of $3,563,784.
The ability of the Company to continue as a going concern is dependent
on the ability of the Company to obtain financing. To address this concern, the
Company intends to raise up to $20 million through a private placement of Common
Stock through Berliner Effektenbank AG, a German investment bank. In addition,
the Company has entered into an engagement letter with MFC Merchant Bank S.A.
pursuant to which MFC shall act, on a best-efforts basis, as an agent for the
Company in raising up to DM 215,000,000 (approximately $126,000,000). There can
be no assurance that the private placement or the MFC financing will be
consummated on reasonable terms or at all.
4. EXTERNAL FINANCING
During January and February 1999, the Company raised $5,748,750 in
gross proceeds from the sale of approximately 1.15 million shares of Common
Stock in an offshore transaction pursuant to Regulation S promulgated under the
Securities Act of 1933, as amended. Berliner Effektenbank AG, a German
investment bank, received a fee of $229,950 (renegotiated from $575,000) for
serving as placement agent in connection with the transaction. The proceeds have
been used to fund operating expenses and to pay off bridge notes.
The Company entered into a loan agreement, dated as of March 12, 1998 and
amended as of August 27, 1998 and September 24, 1998, with ValorInvest Ltd, an
investment company based in Geneva, Switzerland, pursuant to which ValorInvest
agreed to lend an aggregate of up to $3,500,000 to the Company at such times as
the Company shall request, provided that advances were to be made in increments
of $250,000 and were not to exceed $500,000 in any single month. Pursuant to the
loan agreement, the Company borrowed an aggregate of $3,500,000 which amount was
evidenced by three non-negotiable promissory notes bearing interest at the rate
of 7.5% per annum. In February 1999, the Company repaid all monies due under the
notes, including interest, and the loan agreement was terminated.
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<PAGE>
MARINE SHUTTLE OPERATIONS INC. AND SUBSIDIARIES
(A development stage company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(unaudited)
4. EXTERNAL FINANCING (continued).
On March 1, 1999, the Company entered into a new loan agreement with
ValorInvest pursuant to which ValorInvest agreed to lend an aggregate of up to
$6,000,000 to the Company at such times as the Company shall request, provided
that advances shall be made in increments of $250,000 and shall not exceed
$1,000,000 in any single month unless agreed to by ValorInvest. In connection
with the new loan agreement, the Company issued a non-negotiable promissory note
to ValorInvest in the principal amount of $6,000,000. Any monies advanced under
such note shall bear interest at the rate of 7.5% per annum and shall be due and
payable upon the earlier of December 31, 1999 or the completion of an equity
financing for gross proceeds of at least $10,000,000. As of June 30, 1999,
$2,500,000 had been advanced under such note.
5. INCOME TAX
The Company has not provided for an income tax liability due to the
availability of operating loss carry-forwards. The Company has net operating
losses which may give rise to future tax benefits of approximately $1,703,282 as
of December 31, 1998. To the extent not used, net operating loss carry-forwards
expire in varying amounts beginning in the year 2007. Based on available
evidence, including the Company's history of operating losses, the uncertainty
of future profitability and the impact of tax laws which may limit the Company's
ability to utilize such loss carry-forwards, management has recorded a valuation
allowance against the realization of the deferred tax assets.
6. RECENT PRONOUNCEMENT
In June 1998, the Financial Accounting Standards Board issued Statement
No. 133 (SFAS 133), Accounting for Derivative Instruments and Hedging
Activities, which standardizes the accounting for derivative instruments. SFAS
133, as amended, is effective for all fiscal quarters of all fiscal years
beginning after June 15, 2000. The impact on the Company's financial statements
has not been determined.
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<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULT OF OPERATIONS
The following discussion and analysis of our financial condition and
result of operations should be read in conjunction with the financial statements
and the notes thereto which appear elsewhere in this quarterly report and our
Annual Report on Form 10-K for the year ended December 31, 1998.
The information set forth below includes certain forward-looking
statements made in reliance upon the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995. Such forward-looking statements,
including statements regarding the dates on which construction of the Offshore
Shuttles will commence and be completed and the number of Offshore Shuttles to
be constructed, are based on current expectations that involve numerous risks
and uncertainties. Actual results could differ materially from those anticipated
in such forward-looking statements as result of various known and unknown
factors including, without limitation, future economics, competitive, regulatory
and market conditions, future business decisions, the receipt of financing,
construction delays, demand for our services and those risks discussed herein,
in our Registration Statement on Form S-1 declared effective by the Securities
and Exchange Commission on December 21, 1998, and in our Annual Report on Form
10-K for the year ended December 31, 1998. Words such as "believes,"
"anticipates," "expects," "intends," "may," and similar expressions are intended
to identify forward-looking statements but are not the exclusive means of
identifying such statements. Readers are cautioned not to put undue reliance on
forward looking statements. We undertake no obligation to revise any of these
forward-looking statements.
GENERAL
Through our wholly-owned Norwegian subsidiary, Marine Shuttle
Operations AS ("MSOAS"), we are seeking to become a leading player in the market
for decommissioning, installing, and transporting offshore oil and gas
structures.
There are now more than 6,500 offshore oil and gas installations
worldwide located on the continental shelf of approximately 53 countries. We
believe that over the next 30 years, most of these structures will have to be
decommissioned at an estimated cost of $20 billion to $40 billion. Offshore
Shuttle AS ("OSAS"), our majority-owned Norwegian subsidiary, has designed a new
generation of vessel, the "Offshore Shuttle", which we believe will be capable
of lifting and carrying most of the largest installations without extensive
cutting or dismantling. MSOAS has entered into a license agreement with OSAS
which gives MSOAS the exclusive right to build and operate five Offshore
Shuttles, and an exclusive option to build and operate an additional two
Offshore Shuttles thereafter.
BUSINESS STRATEGY
We are in the process of evaluating bids received from a number of
construction yards which we believe have the capacity and capability to build an
Offshore Shuttle. Subject to the receipt of financing, construction of the first
Offshore Shuttle is intended to start during summer 2000. We anticipate that the
construction of the first Offshore Shuttle will be completed by the second
quarter of 2002, at the earliest. Subject to the receipt of additional
financing, construction delays, market conditions, demand for our services, and
other factors, construction of a second Offshore Shuttle is intended to commence
two years after ordering the first Offshore Shuttle and an additional Offshore
Shuttle is intended to commence one year later, until a total of three Offshore
Shuttles are in operation.
To benefit from a more rational and cost efficient use of the resources
in MSOAS and OSAS, the Board of Directors of the two companies proposed to merge
the two companies. The proposed merger plan was approved by the shareholders of
both companies on May 30, 1999. The merger is expected to be effective in
September 1999. The shareholders of OSAS will receive 1.5 new shares in MSOAS
for each of their OSAS shares. After the exchange of shares, the Company will
own 81% of the merged company (prior to the Additional OSAS Exchange). After the
Additional OSAS Exchange, the Company will own 89.54% of THE merged company.
Following the merger, we
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<PAGE>
intend to offer the minority shareholders of MSOAS the opportunity to exchange
their MSOAS shares for shares of our company. The offer will be subject to the
condition that more than 90% of the minority shareholders accept the offer.
Upon completion of the merger process, MSOAS will be the holder of all
licensing and marketing rights to the Offshore Shuttle. Additionally, the
bilateral rights and obligations of MSOAS and OSAS under the License Agreement
will be extinguished. Pending the merger, all bilateral rights and obligations
have been suspended. To exemplify, but not to limit the generality of this
suspension, the obligations of MSOAS to place an order for the first Offshore
Shuttle no later than June 1, 1999 and also the obligation of MSOAS to pay an
exclusivity fee of $2,000,000, by June 1, 1999, have been suspended.
RESULTS OF OPERATIONS
We are in the development stage and have generated revenues to date
only from study work. Given that our main operations are conducted through MSOAS
and OSAS, both of which were acquired in 1998 and were consolidated with effect
from April 14, 1998 and December 31, 1998, respectively, we believe that any
comparison of the financial statements for the second quarter of 1999 and the
six month period ending June 30, 1999 with the same periods in the prior year
would not be meaningful. Thus, these comparisons are not discussed below.
For the three month period ended June 30, 1998, we recorded a net loss
of $872,429. The losses were mainly attributable to the amortization of goodwill
and other intangibles arising from the acquisition of MSOAS ($418,268), general
and administrative expenses ($189,098) and legal, finance and other advisory
fees ($245,697). For the three month period ended June 30, 1999 we incurred a
net loss of $1,953,459, including $937,306 attributable to the amortization of
goodwill and other intangibles arising from the acquisition of MSOAS and OSAS.
The remainder of the losses were mainly attributable to legal, financial and
other advisory fees ($119,082), general and administrative expenses ($442,069)
and personnel expenses ($330,753). We anticipate that we will continue to incur
losses at least through the year 2002, and we may continue to incur losses
thereafter.
For the six month period ended June 30, 1998, we recorded a net loss of
$1,057,646. The losses were mainly attributable to the amortization of goodwill
and other intangibles arising from the acquisition of MSOAS ($418,268), general
and administrative expenses ($213,619), legal, finance and other advisory fees
($286,393). For the six month period ended June 30, 1999, we incurred a net loss
of $4,082,684, including $1,936,431 attributable to the amortization of goodwill
arising from the acquisition of MSOAS and OSAS as well as other intangibles. The
remainder of the losses were mainly attributable to legal, financial and other
advisory fees ($299,914), general and administrative expenses ($702,638),
marketing ($174,794), technical development ($269,054) and personnel expenses
($741,383).
LIQUIDITY AND CAPITAL RESOURCES
As of June 30, 1999, we had cash of approximately $181,617, an
accumulated deficit of $9,289,763, stockholders' equity of $34,011,788 and a
working capital deficit of $3,563,784.
Net cash flow used on operating activities was $1,885,529 for the six
month period ended June 30, 1999 after accounting for an increase of $207,075 in
working capital components.
For the six month period ended June 30, 1999 we used $2,674,333 on
capital assets. The main part of this ($2,570,333) is capitalized engineering
cost for the Offshore Shuttle.
Net cash from financing activities for the six month period ended June
30, 1999 was $3,935,074 primarily due to cash received from the issuance of
capital stock offset by the repayment of certain loans.
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<PAGE>
On March 1, 1999, we entered into a loan agreement with ValorInvest
Ltd., an investment company based in Geneva, Switzerland, pursuant to which
ValorInvest agreed to lend us an aggregate of up to $6,000,000, provided that
advances shall be made in increments of $250,000 and shall not exceed $1,000,000
in any single month unless agreed to by ValorInvest. In connection with the loan
agreement, we issued a non-negotiable promissory note to ValorInvest in the
principal amount of $6,000,000. Any monies advanced under such note shall bear
interest at the rate of 7.5% per annum and shall be due and payable upon the
earlier of December 31, 1999 or the completion of an equity financing for gross
proceeds of at least $10,000,000. As of June 30, 1999, $2,500,000 had been
advanced under such note.
We have insufficient capital to finance our proposed operating
activities. To address this concern, we are seeking to raise up to an additional
$20 million through a private placement of common stock through Berliner
Effektenbank AG. We also have entered into an engagement letter with MFC
Merchant Bank S.A. pursuant to which MFC shall act, on a best-efforts basis, as
agent for us in raising up to DM 215,000,000 (approximately $126,000,000). As
consideration for its services, MFC shall receive a success fee equal to five
percent of the money raised plus DM 100,000 (approximately $60,000) per month
until the completion or termination of the MFC financing. In addition, all of
MFC's out-of-pocket expenses shall be reimbursed, and if we raise the necessary
funds through another source, MFC shall receive a break-up fee equal to the
greater of $1,200,000 or 350,000 shares of common stock.
If funds are raised by issuing equity securities, it may result in
substantial dilution to existing stockholders. If capital is raised through a
debt financing with financial institutions, we would likely become subject to
restrictive covenants relating to our operations and finances. There can be no
assurance that the private placement or the MFC financing will be consummated on
reasonable terms or at all. If either financing is not completed, we may be
required to significantly curtail or cease our proposed activities. Although we
believe that the proceeds from the MFC financing, if completed, will enable us
to construct the first Offshore Shuttle, no assurance can be given in that
regard. Moreover, even if the MFC financing is consummated, our future capital
requirements could vary significantly and will depend on certain factors, many
of which are not within our control. Such factors include, but are not limited
to, the need for cash to fund the construction of additional Offshore Shuttles,
greater than anticipated expenses, and longer engineering, development, and
construction times than now contemplated. If we are successful in completing the
first Offshore Shuttle, we believe we will be able to fund the construction of
additional Offshore Shuttles from our future operating cash flows and/or short
or medium term debt financing. However, no assurance can be given in that
regard.
YEAR 2000 ISSUE
Many computer systems record years in a two-digit format. Such systems,
if not modified, will be unable to recognize and properly process information
with dates beyond the year 1999. The potential problems arising out of this
inability commonly are referred to as the "Year 2000 Issue." Our current
operations utilize computer hardware and software acquired during 1997 and 1998
which manufacturers have warranted to be Year 2000 compliant. Since we currently
do not have any material relationships with any suppliers or clients, no
assessment can be made at this time as to the effect third party non-compliance
will have on our proposed operations. In the future, we intend to verify that
any suppliers or clients with whom we may develop a material relationship are
Year 2000 compliant. However, no assurance can be given that our operations will
not be adversely affected by unforeseen Year 2000 problems or third party
non-compliance.
INTERNATIONAL OPERATIONS
We intend to market our services in international markets.
International operations entail various risks, including economic instability
and recessions, exposure to currency fluctuations, difficulties of administering
foreign operations generally, and obligations to comply with a wide variety of
foreign laws and other regulatory requirements. A portion of our sales, if any,
and expenditures may be collected or paid, as the case may be, in currencies
other than U.S. dollar. Therefore, significant exchange rate fluctuations could
have an effect on our results of operations. In addition, the laws of certain
foreign countries may not protect our proprietary rights to the same extent as
the laws of the United States.
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<PAGE>
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We anticipate our primary market risks, if any, will be related to
fluctuations in interest rates and exchange rates. Interest rate risk may arise
if we are successful in obtaining debt financing to finance the building of the
first Offshore Shuttle. In such an event, we will assess the extent of our
interest rate risk and may enter into hedging transactions to reduce our
exposure and to ensure our ability to service our debt. Exchange rate risk may
arise if we are required to use different currencies for various aspects of our
operations. Although the principal currency used in the offshore decommissioning
industry is the U.S. dollar, the local expenses of our subsidiaries (e.g., rent,
telephone, payroll, etc.) are likely to be paid in Norwegian kroner, and it is
possible that the contract for construction of the first Offshore Shuttle will
be denominated in a currency other than the U.S. dollar or the Norwegian kroner.
We intend to monitor our exchange rate risk and take necessary actions to reduce
our exposure. We do not intend to purchase and/or sell derivative financial
instruments for speculative purposes.
PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
On June 14, 1999, Nordas Invest AS and AS Einar Nistad Finans og
Eiendom (collectively, "Nistad") brought a claim for preliminary injunction
against us in a civil proceeding before Sandnes City court in Norway. Nistad
exchanged 304,900 shares in OSAS for 457,350 of our shares pursuant to an
exchange agreement between Nistad and us. Nistad alleged breach of contract and
demanded that the OSAS shares be transferred back to Nistad. Sandnes City court
delivered its decision on July 7, 1999 and held that we were not in breach of
contract to Nistad. The court denied Nistad's motion for preliminary injunction
against us. Since we won the case, Nistad was ordered to pay the costs of the
case. Nistad has appealed to Gulating Lagmannsrett, which is the appeal court,
against the decision for the reimbursement of our costs.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
The following exhibits are filed herewith:
10.1 - Frame Agreement for Procurement Services between
Marine Shuttle Operations AS and Thyssen Stahlunion
GmbH
27. - Financial Data Schedule
(b) Reports on Form 8-K
Three reports on Form 8-K were filed during the second quarter
of 1999. Two of them, dated May 17, 1999 and June 10, 1999,
respectively, pertained to the discontinuing of the services of
Deloitte & Touche, LLP as independent accountants. The third, dated
June 22, 1999, pertained to the engagement of Ernst & Young LLP as our
new independent accountants to audit our financial statements for the
year ending December 31, 1999.
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<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
MARINE SHUTTLE OPERATIONS INC.
/s/ Franz Eder
------------------------------------------
Date: August 11, 1999 Franz Eder, Chairman of the Board and
President (principal executive officer)
/s/ G.W. Norman Wareham
------------------------------------------
G.W. Norman Wareham, Chief Financial
Officer (principal financial and accounting
officer)
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<PAGE>
INDEX TO EXHIBITS
EXHIBIT # DOCUMENT PAGE
--------- -------- ----
10.1 Frame Agreement for Procurement Services between Marine
Shuttle Operations AS and Thyssen Stahlunion GmbH
27. Financial Data Schedule
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<PAGE>
Exhibit 10.1
FRAME AGREEMENT
F O R
PROCUREMENT SERVICES
BETWEEN
MARINE SHUTTLE OPERATIONS A/S
("COMPANY")
AND
THYSSEN STAHLUNION GMBH
("CONTRACTOR")
<PAGE>
CONTRACT INDEX
CONTRACT DOCUMENT TITLE NUMBER OF PAGES
- ----------------------- ---------------
COVER PAGE 1
CONTRACT INDEX 1
CONTRACT AGREEMENT W/ CONDITIONS OF CONTRACT 8+14
EXHIBIT "A" - SCOPE OF WORK 5+3+5
EXHIBIT "B" - TECHNICAL SPECIFICATIONS 6
EXHIBIT "C" - PROCUREMENT REPORTING PROCEDURE 9
EXHIBIT "D" - SECRECY DECLARATION 3
<PAGE>
CONTRACT AGREEMENT W/ CONDITIONS OF CONTRACT
F O R
PROCUREMENT SERVICES
BETWEEN
MARINE SHUTTLE OPERATIONS A/S
("COMPANY")
AND
THYSSEN STAHLUNION GMBH
("CONTRACTOR")
<PAGE>
CONTRACT AGREEMENT W/ CONDITIONS OF CONTRACT
TABLE OF CONTENTS
ITEM DESCRIPTION PAGE
- ---- ----------- ----
- - COVER PAGE 1
- - TABLE OF CONTENTS 2
1.0 INTRODUCTION 3
2.0 ALTERATIONS 3
3.0 GOVERNING LAW AND DISPUTES 4
4.0 VALIDITY 4
5.0 REPRESENTATIVES OF THE PARTIES 4
6.0 NOTICES 5
7.0 MONITORING 6
8.0 CONFIDINTIALITY 6
9.0 GENERAL CONDITIONS FOR SALE AND PURCHASE 6
10.0 QUALITY ASSURANCE 6
11.0 YEAR 2000 CAPABILITIES 7
12.0 ORDER OF PRECEDENCE 9
13.0 ASSIGNMENT 9
14.0 ATTACHMENT 9
- - SIGNATURE OF THE PARTIES 10
- - LAST PAGE 10
- - ATTACHMENT 1 - GENERAL CONDITIONS FOR SALE AND PURCHASE
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<PAGE>
CONTRACT AGREEMENT W/ CONDITIONS OF CONTRACT
1.0 INTRODUCTION
1.1 DEFINITIONS
AGREEMENT This Head of AGREEMENT herein called the "AGREEMENT".
PARTIES MSO AS, Stavanger, Norway, hereinafter-called
COMPANY, and Thyssen Stahlunion GmbH, Dusseldorf,
Germany, hereinafter called CONTRACTOR
CALL OFF ORDER A project specific ORDER issued by COMPANY for a
delivery of goods in accordance with this AGREEMENT
PURCHASER COMPANY or any successor or assignee of COMPANY.
SCOPE OF WORK Shall mean the activities described under Article 1.2
below as well as in Exhibit "A"
COMPANY
REPRESENTATIVE Shall mean the person appointed by COMPANY in
accordance with Article 5 to act for and on behalf of
COMPANY
CONTRACTOR
REPRESENTATIVE Shall mean the person appointed by CONTRACTOR in
accordance with Article 5 to act for and on behalf of
CONTRACTOR
Other terms used in this AGREEMENT shall have the same meaning as given
in the actual General Conditions for Sale and Purchase.
This AGREEMENT shall provide the basis for individual project
requirements, as they become known. Those individual project
requirements not addressed in this AGREEMENT, will be addressed in a
separate CALL OFF ORDER(S) on a project by project basis or in a
CONTRACT AMENDMENT.
1.2 PURPOSE
The main purpose of this AGREEMENT is to serve as a governing framework
for all procurement activities between the PARTIES and with a duration
as further described under Article 4 below.
CONTRACTOR will provide procurement services and act as a fully
responsible supplier of the items and materials in question to COMPANY.
Procurement shall be performed in its own name and it will subsequently
resell its items and materials to COMPANY in its own name.
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<PAGE>
This AGEEMENT may be used by future Offshore Shuttle projects, up to
the expiration of this AGREEMENT.
In this context this AGREEMENT will be followed by CALL OFF ORDERS
issued by COMPANY or PURCHASER. This AGREEMENT together with the
subsequent CALL OFF ORDER(S) will define all requirements for the scope
of supply.
1.3 OBJECTIVES
The principles described in this AGREEMENT are important key elements
in the overall strategy of both PARTIES for execution of the project.
The objective of this AGREEMENT is to achieve significant savings
through the consentrated purchasing power of CONTRACTOR related to the
following main areas:
- Improved overall cost reductions
- Standardisation of types and dimensions
- Optimum delivery terms
- Optimum prices for products in the specified quality
Any rebates and discounts shall be for the benefit of COMPANY.
2.0 ALTERATIONS
This AGREEMENT may be altered, modified or abridged only by the issue
of a CONTRACT AMENDMENT duly signed by both PARTIES.
This AGREEMENT is signed in 2 originals, each PARTY will retain one
original.
3.0 GOVERNING LAW AND DISPUTES
The COMPANY Project Manager together with the CONTRACTOR Project
Manager are granted full authority by the PARTIES to settle any
disputes arising between CONTRACTOR and the PURCHASER over the
interpretation or application of this AGREEMENT including the General
Conditions for Sale and Purchase. If failing to reach agreement all
disputes shall be brought to the attention of the Management Committee
for settlement, due regard being taken to the particular interests of
both parties as well as their common objectives.
This agreement shall be governed by and construed in accordance with
the laws of Norway.
4.0 VALIDITY
This AGREEMENT is valid until 31.12.2001. Thereafter, it is valid for
the next Shuttle projects until one of the PARTIES cancels the
AGREEMENT. Such cancellation must be notified 6 months before the end
of each year.
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<PAGE>
5.0 REPRESENTATIVES OF THE PARTIES
5.1 Each of the PARTIES shall appoint a REPRESENTATIVE who shall have the
authority to act for and on behalf of the PARTY in question in all
matters concerning the CONTRACT.
5.2 The REPRESENTATIVE may delegate specific duties to one or more other
person(s). The other PARTY's REPRESENTATIVE shall be informed by NOTICE
in writing of the specific authorities delegated. The person(s) to whom
specific duties are thus delegated shall have no authority except as
expressly provided for in the NOTICE.
5.3 Each of the PARTIES shall appoint a person who shall be responsible for
the day to day administration of the WORK insofar as the results to be
achieved are concerned, if different from the PARTY's REPRESENTATIVE.
5.4 The appointments, substitutions and delegations of authority under this
Article shall be made by means of NOTICE to the other PARTY.
5.5 CONTRACTOR shall ensure that performance of the WORK is supervised and
controlled by competent personnel to the satisfaction of the COMPANY
REPRESENTATIVE.
6.0 NOTICES
6.1 All notices submitted and all communications exchanged under this
AGREEMENT shall be in English and in writing, marked with AGREEMENT
number, CALL OFF ORDER number, project reference, and addressed to the
PARTIES as follows:
COMPANY: MSO AS
Luramyrveien 29
301 Sandnes
Norway
Tel.: (47) 51 96 23 00
Fax.: (47( 51 96 23 01
Attn: Nigel Rose
e-mail: [email protected]
CONTRACTOR; Thyssen Stahlunion Gmbh
Hans-Gunther-Sohl-Str. 1
P.O. Box 101046
40001 Dusseldorf
Germany
Tel.: (049) 211 967-9072
Attn: Frank Samuels
e-mail: [email protected]
6.2 All NOTICES shall be submitted per telefax. NOTICES can also be
submitted per mail or electronic mail, but only after specific
agreement between the parties.
6.3 NOTICES shall be deemed received when actually sent.
6.4 NOTICE shall be deemed as served when received in the office of the
PARTY in question within normal working hours. Upon request, receipt of
NOTICE shall be confirmed in writing.
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<PAGE>
7.0 MONITORING
7.1 MANAGEMENT COMMITTEE
A management committee with two (2) representatives from each PARTY
shall monitor the AGREEMENT and the development of co-operation between
the PARTIES. Each PARTY is free to appoint their representatives, but
shall inform each other in writing prior to such action.
The Management Committee shall meet on request from one of the PARTIES
unless otherwise agreed.
7.2 QUALITY SURVEILLANCE
Quality Surveillance shall be performed according to COMPANY'S Quality
Surveillance Plan
7.3 REPORTING
Progress reporting shall take place in accordance with the reporting
procedure as enclosed in Exhibit "C".
8.0 CONFIDENTIALITY
Both PARTIES shall treat as confidential all information received from
the other PARTY and all information arising out of the co-operation
under the purpose of this AGREEMENT. Neither PARTY will divulge to any
third party the said information without the written consent of the
other PARTY. In addition to the above, the confidentiality provisions
of the CALL OFF ORDER shall apply between the PARTIES.
All CONTRACTOR and subcontractor personnel shall sign Secrecy
Declarations in accordance with the format as enclosed in Exhibit "D".
See also Article 25 Confidential Information in Attachment 1 hereto.
9.0 GENERAL CONDITIONS FOR SALE AND PURCHASE
This AGREEMENT shall be executed strictly in accordance with General
Conditions of Sale and Purchase, enclosed in Attachment 1 hereto. These
General Conditions shall govern all of CONTRACTOR'S procurement
activities as well as its resale activities on a back to back basis.
10.0 QUALITY ASSURANCE
10.1 QUALITY SYSTEM REQUIREMENTS
CONTRACTOR shall document and maintain a workable, functioning Quality
System that meets the requirements of ISO 9002 or an equivalent
standard that is accepted on an individual basis by COMPANY. CONTRACTOR
shall further ensure that a Quality System of similar
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<PAGE>
standard mentioned above is in place for any and all of its
subcontractors under the CONTRACT.
10.2 QUALITY ASSURANCE PRINCIPLES
10.2-A Based on CONTRACTOR's existing Quality System, CONTRACTOR shall
establish and maintain a Supplier Surveillance Program (SSP)/(Project
Manual) for all work under this CONTRACT. The Quality Plan, which
describes the SCOPE OF WORK and how it is to be performed, shall
include or give reference to all procedures, activities, qualifications
and resources to be valid for the WORK. The SSP shall be approved by
COMPANY.
10.2-B Procedures may be either standard CONTRACTOR procedures or specific
project procedures. COMPANY specifications, premises and requirements
shall be covered by the procedures.
10.2-C Procedures shall be approved and implemented by CONTRACTOR before the
actual work commences.
10.2-D CONTRACTOR shall issue the SSP within thirty (30) DAYS of award of each
individual P.O. COMPANY shall review and approve the SSP at the latest
30 days prior to start of any manufacturing or fabrication activities
under the P.O.
10.2-E CONTRACTOR shall submit to COMPANY, and keep updated throughout the
CONTRACT period, three (3) controlled copies of the Quality Manual and
the SSP. containing, information based on supplier's Quality Control
Plan (QCP) and the Audit Plan.
10.2-F If at any time CONTRACTOR, in COMPANY's opinion, is not properly
implementing the provisions of the SSP, COMPANY shall inform CONTRACTOR
accordingly and may withhold up to 10% of the amounts invoiced each
month until such time as the provisions of the SSP are fully
implemented. The retention money is to be deducted from the performance
bond (bank guarantee).
10.2-G COMPANY shall have the right to make unscheduled audits of CONTRACTOR's
and subcontractor's Quality System, and also perform unscheduled
Quality Surveillance activities.
10.2-H CONTRACTOR shall perform audits of its internal Quality System. Both
CONTRACTOR's internal systems and subcontractor's internal systems
shall be audited. These audits shall be comprehensive and shall ensure
that the Quality Systems are functioning, and shall verify that the
agreed procedures fulfil their objective.
11.0 YEAR 2000 CAPABILITIES
11.01 In addition to, and without limiting in any respect any other
warranties, indemnities or obligations given or undertaken by
CONTRACTOR under this CONTRACT, CONTRACTOR warrants that:
a) All computer applications and systems software and all
instrumentation and control systems which include embedded
processing (together "software/systems") supplied or licensed
to or developed for COMPANY under or pursuant to this
CONTRACT, (including, without limitation, upgrades and
modifications to software/systems previously supplied or
licensed to or developed for COMPANY); and
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<PAGE>
b) all computer hardware with embedded processing, and any
upgrades or modifications thereto, supplied to COMPANY under
or pursuant to this CONTRACT; and
c) all other equipment, machinery or materials of whatsoever
nature supplied, provided or made available to COMPANY under
or pursuant to this CONTRACT which includes software/systems
or computer hardware with embedded processing; and
d) all software/systems and computer hardware with embedded
processing and all equipment, manufacturing processes,
machinery or materials which include or involve the use of
such software/systems or hardware, utilized by CONTRACTOR
directly or indirectly in or in connection with the
performance of the WORK or supply of goods or the performance
by CONTRACTOR of any of its obligations under this CONTRACT
whether supplied, licensed, developed, made available or
utilized before, during or after the Year 2000, shall include
Year 2000 Capabilities at no added cost to COMPANY.
11.02 For the purpose of this Article, "Year 2000 Capabilities" means that:
(1) in relation to software/systems, it or they will:
a) completely and accurately address, produce, store and
calculate data for dates before, during and after the
year 2000; and
b) provide that all data-related functionalities and
data fields include the indication of century and
millennium either explicitly or by unambiguous
algorithms or inferencing rules; and
c) correctly perform calculations which involve a
four-digit field; and
d) not produce abnormally ending or incorrect results
involving dates, before during or after the year 2000
as used in any forward or regression datebased
functions; and
e) recognize the year 2000 as a leap year; and
(2) in relation to any such hardware, it will operate accurately
and correctly with regard to all functions involving dates
before, during and after the year 2000.
11.03 This warranty shall survive the expiry or termination of this CONTRACT
and the expiry of any warranty or guarantee period contained in this
CONTRACT.
11.04 Without prejudice to CONTRACTOR`s obligations hereunder and to any
other right of inspection and audit given to COMPANY hereunder, the
COMPANY may carry out such audits or inspections as it considers
appropriate to establish compliance by CONTRACTOR and its
Subcontractors with this Article and CONTRACTOR shall co-operate fully
with all reasonable requests made by COMPANY for this purpose.
11.05 CONTRACTOR shall include an Article in the same terms as this Article,
appropriately adapted, in any contract or sub-contract entered into by
it in connection with the subject matter of this CONTRACT.
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<PAGE>
12.0 ORDER OF PRECEDENCE
Documents provided as part of this AGREEMENT shall, in the event that
they conflict, be considered in the following ORDER of precedence:
A) THIS CONTRACT AGREEMENT
B) EXHIBIT ,,A" - SCOPE OF WORK WITH ATTACHMENTs
C) THE CALL OFF ORDER.
D) GENERAL CONDITIONS FOR SALE AND PURCHASE
E) EXHIBIT "B" - TECHNICAL SPECIFICATIONS
F) EXHIBIT "C" - PROCUREMENT REPORTING PROCEDURE
G) EXHIBIT "D".- SECRECY DECLARATION
13.0 ASSIGNMENT
13.1 CONTRACTOR shall not assign its rights and obligations under this
CONTRACT without prior written approval from COMPANY. Such approval
shall not be unreasonably withheld.
13.2 Subject to prior written NOTICE to CONTRACTOR, COMPANY may assign its
rights and obligations under this CONTRACT to any third party that
COMPANY documents to be financially sound and capable of fulfilling the
financial obligations of COMPANY under the CONTRACT.
13.3 This CONTRACT shall and be binding upon the respective successors and
assignees of the PARTIES hereto.
14.0 ATTACHMENT
The following attachment. is enclosed below:
ATTACHMENT 1 - GENERAL CONDITIONS FOR SALE AND PURCHASE
IN WITNESS WHEREOF, the authorised representatives of the PARTIES have executed
this document.
CONTRACTOR: COMPANY:
Thyssen Stahlunion Gmbh Marine Shuttle Operations A/S
By;____________________________ By;______________________________
Name; _________________________ Name; ___________________________
Title; ________________________ Title; __________________________
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<PAGE>
Date of Signature;_____________ Date of Signature;_______________
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<PAGE>
CONTRACT NO. C99-005
CONTRACT AGREEMENT - ATTACHMENT 1
FRAME AGREEMENT FOR PROCUREMENT SERVICES
CONTRACT AGREEMENT - ATTACHMENT 1
GENERAL CONDITIONS
FOR
SALE AND PURCHASE
-1-
<PAGE>
GENERAL CONDITIONS FOR SALE AND PURCHASE
TABLE OF CONTENTS
ITEM DESCRIPTION PAGE
- ---- ----------- ----
- - COVER PAGE 1
- - TABLE OF CONTENTS 2
1.0 DEFINITIONS 4
2.0 AGREEMENT DOCUMENTS INTERPRETATION 4
3.0 SELLERS PRIMARY OBLIGATIONS 4
4.0 ASSIGNMENT AND SUBCONTRACTS 5
5.0 QUALITY ASSURANCE 5
6.0 INSPECTIONS AND TESTS 5
7.0 PROGRESS 6
8.0 CHANGE ORDERS 6
9.0 APPLICABLE LAW AND REGULATION 7
10.0 DELIVERY OF THE GOODS 7
11.0 ERECTION 8
12.0 GUARANTEES AND ACCEPTANCE OF THE GOODS 8
13.0 SELLER'S BANK GUARANTEE OR EQUIVALENT SECURITY 8
14.0 PAYMENT OF THE CONTRACT PRICE, INVOICING AND AUDIT 9
15.0 TITLE TO AND CARE OF THE GOODS 9
16.0 SELLER'S DELAY 9
17.0 SELLER'S LIABILITY FOR DEFECTS AND BREACH OF GUARANTEES 9
18.0 TERMINATION BECAUSE OF SELLER'S DEFAULT 10
19.0 PURCHASER'S BREACH OF AGREEMENT 11
20.0 FORCE MAJEURE 11
21.0 CANCELLATION 11
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22.0 SUSPENSION 12
23.0 INDEMNITY 12
24.0 INSURANCES 12
25.0 CONFIDENTIAL INFORMATION 12
26.0 RIGHTS TO DOCUMENTS AND COMPUTER PROGRAMS 13
27.0 INVENTIONS/PATENTS 14
28.0 GOVERNING LAW AND DISPUTES 14
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GENERAL CONDITIONS FOR SALE AND PURCHASE
1.0 DEFINITIONS
1.1 "AGREEMENT" means the Purchase Order Form, these General Conditions,
and other documentation which is made part of the AGREEMENT by special
reference in the Purchase Order Form.
1.2 "FORCE MAJEURE" means any occurrence beyond a party's control and which
he could not reasonably have foreseen when the AGREEMENT was entered
into and whose effects he cannot reasonably be expected to overcome or
avoid.
1.3 "GOODS" means all items to be provided under this AGREEMENT whether raw
materials, equipment, processed materials, fabricated products,
drawings, documents and other items as applicable.
1.4 "CONTRACT PRICE" means the total sum due to SELLER and specified as
such in the Purchase Order Form, or as such sum is increased or
decreased in accordance with the provisions of this AGREEMENT.
1.5 "PURCHASER" means the buyer of the GOODS as stated on the front page of
the Purchase Order Form.
1.6 "SELLER" means the supplier of the GOODS as stated on the front page of
the Purchaser Order Form.
1.7 "PURCHASER GROUP" means PURCHASER, his affiliated companies
participating in the work, his subcontractors and their contractors and
subcontractors, participating companies in an enterprise established
for the performance of the work, and the employees of the
aforementioned companies.
1.8 SELLER GROUP" means SELLER, his affiliated companies participating in
the work, his subcontractors and their contractors and subcontractors,
participating companies in an enterprise established for the
performance of the work, and the employees of the aforementioned
companies.
1.9 "WORK" means all work and services, including but not limited to the
GOODS, which SELLER shall perform or cause to be performed as defined
in SCOPE OF WORK.
2.0 AGREEMENT DOCUMENTS INTERPRETATION
The AGREEMENT consists of the documents mentioned in this Article. In
the event of any conflict between the documents, they shall be given
priority as outlined in the Conditions of Contract Article 12.
3.0 SELLER'S PRIMARY OBLIGATIONS
3.1 SELLER shall manufacture and/or deliver the GOODS and perform the WORK
in a professional and workmanlike manner and in accordance with the
provisions of this AGREEMENT.
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<PAGE>
3.2 The major spare parts for the GOODS shall be available throughout the
normal lifetime of the GOODS, limited upwards to 20 years.
3. 3 Seller shall search for defects, discrepancies, omissions and
inconsistencies ("errors") in the AGREEMENT documents provided by
PURCHASER and shall without undue delay notify in writing PURCHASER of
any such "errors" discovered.
3.4 If SELLER fails to notify PURCHASER of such "errors" in the AGREEMENT
documents, and which SELLER has or ought to have discovered, all direct
extra costs resulting therefrom shall be borne by SELLER:
3.5 Upon receipt of notice from SELLER according to Article 3.3., PURCHASER
shall, without undue delay, either have the necessary corrections made,
or give SELLER instructions according to Article 8.0 as to how he shall
proceed.
3.6 SELLER shall in a timely manner obtain and maintain all authorisations
and permits as may be necessary for the manufacturing and/or delivery
of the GOODS an/or performance of the WORK and which are required to be
and can be obtained in the name of SELLER. PURCHASER shall free of
charge to the SELLER provide any necessary assistance in this
connection.
3.7 SELLER shall give PURCHASER such information regarding the manufacture
of the GOODS and/or performance of the WORK and about SELLER GROUP
which PURCHASER is bound to give to the authorities.
4.0 ASSIGNMENT AND SUBCONTRACTS
4.1 SELLER shall not assign this AGREEMENT or subcontract any part of this
AGREEMENT without PURCHASER's prior written approval. Use of hired
labour and minor purchases shall, however, not be subject to such
approval.
4.2 PURCHASER may assign any or all of his rights or obligations under this
AGREEMENT to a third party, provided that PURCHASER can demonstrate
that the assignee has the financial strength and the necessary
resources required under the AGREEMENT.
5.0 QUALITY ASSURANCE
5.1 SELLER shall have an implemented and documented system for quality
assurance in accordance with applicable parts of IS0 9000 or
equivalent. PURCHASER or his representative shall have the right to
undertake reasonably qualify audits and verification of SELLER's and
any subcontractor's quality assurance system.
6.0 INSPECTIONS AND TESTS
6.1 PURCHASER, or his authorised representative, has, to a reasonable
extent, the right to make inspections in order to verify that the GOODS
will be manufactured and/or delivered in accordance with the conditions
of this AGREEMENT.
In addition, PURCHASER has the right to have implemented tests and
attend the same as specified in this AGREEMENT. Such inspections and
tests may be made at SELLER's facilities, and/or at any of his
subcontractor's facilities. The tests at the manufacturers facilities
shall be included in the QA plan/Supplier Surveillance Plan.
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6.2 SELLER shall give necessary assistance in carrying out these
inspections. SELLER shall, if requested by PURCHASER, supply to
PURCHASER test reports, material certificates, calculations etc.
6.3 The above mentioned inspections and tests do not exempt SELLER from the
responsibility for the GOODS according to this AGREEMENT. The same
applies if SELLER provides PURCHASER with technical or other
documentation for PURCHASER's review or approval. Supplier technical
documentation shall have to be approved by PURCHASER.
7.0 PROGRESS
If SELLER has reason to believe that any part of the GOODS or WORK will
be delayed, he shall without undue delay notify PURCHASER in writing.
SELLER shall within 7 calendar days after receiving such notice inform
PURCHASER in writing about the following:
a) The reason for and extent of the delay, and
b) efforts that SELLER considers appropriate to avoid, limit or
recover the delay.
7.2 If the measures proposed or implemented by SELLER are insufficient to
avoid or recover the delay, then PURCHASER may require SELLER to take
measures considered necessary. If SELLER maintains that he has no
obligation to implement the measures required by PURCHASER, the change
order provisions in ARTICLE 8 apply accordingly.
8.0 CHANGE ORDERS
8.1 PURCHASER has the right to order changes to the WORK. Such changes may
include an increase or decrease in the quantity, character, quality,
kind or manufacture of the WORK or part thereof, and adjustments to the
schedule, provided that such changes do not exceed that which SELLER
could reasonably have expected when this AGREEMENT was signed. Such
order of changes shall be made by means of a Change Order issued by
PURCHASER.
8.2 Before PURCHASER issues a Change Order, he may require that SELLER
without undue delay shall submit to PURCHASER an estimate containing:
a) A description of the work to be performed under the Change
Order
b) The effect on the CONTRACT PRICE
c) The effects on the schedule, including the payment schedule .
SELLER shall inform PURCHASER as soon as possible and within the time
limit specified in the change order for such an estimate.
8.3 A Change Order shall be clearly identified as such and issued on a
standard form, and contain a complete description of its effect on the
AGREEMENT.
8.4 Unless otherwise agreed in the AGREEMENT, the effect of the Change
Order shall be agreed between the parties based on the general level of
pricing in the AGREEMENT
8.5 SELLER shall upon PURCHASER's request according to Article 8.3
implement a Change Order, even if the parries have not agreed upon the
Change Order's effect on the AGREEMENT, including CONTRACT PRICE and
schedule
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8.6 In the event that the parties have not agreed upon the Change Order's
effect on the CONTRACT PRICE or the schedule, PURCHASER shall pay the
undisputed amount. The disputed amount shall then be presented to the
Management Committee for final decision.
8.7 If PURCHASER requests changes which in SELLER's opinion is not part of
his obligations, then SELLER shall request PURCHASER to issue a Change
Order and shall, as soon as possible, prepare an estimate in accordance
with Article 8.2.
If SELLER has not presented a request for a Change Order without delay
after PURCHASER has requested the changes, then he loses the right to
consider the changes have any effect on the CONTRACT PRICE or schedule.
A request for a variation order shall be presented by means of a
prescribed form known as a Change Order request. It shall contain a
specified description of the work the request relates to and the
effects, which in SELLERS's opinion it will have on the Schedule and
the CONTRACT PRICE.
8.8 When SELLER has made a request within the time limit specified in
Article 8.7, PURCHASER shall, within a reasonable time, issue a Change
Order in accordance with the provisions of Article 8. If PURCHASER is
of the opinion that this work is included in the WORK, it shall be
expressly recorded that the variation order is disputed (Disputed
Change Order). A Disputed Change Order shall be expressly identified as
such and shall be issued on a special form, which shall identify the
work in dispute between the parties and state PURCHASER's reason for
regarding the Change Order as disputed. Article 8.6 shall apply
accordingly.
9.0 APPLICABLE LAWS AND REGULATXONS
9.1. SELLER shall keep himself informed of and comply with the applicable
laws and regulations, requirements and orders of certifying agencies
and public authorities. If such laws and regulations adopted after
signing of this AGREEMENT necessitate changes, and this affects
SELLER's cost or progress, SELLER may require an adjustment of the
CONTRACT PRlCE and/or schedule reflecting the effect of such laws and
regulations.
9.2. The above provisions shall not apply to changes in laws and regulations
relating to taxation or National Insurance or similar contributions.
10.0 DELIVERY OF THE GOODS
10.1 The GOODS shall be delivered properly packed and marked at the agreed
place of delivery and within the stipulated time(s) as set out in the
Purchase Order Form. Delivery terms shall be interpreted in accordance
with INCOTERMS 1990.
10.2 In the absence of applicable specification for storage, preservation,
packaging and marking, SELLER shall nevertheless ensure that all items
to be delivered are properly stored, preserved, packed and marked so as
to avoid deterioration, damage or loss,
10.3 If it has been agreed that SELLER shall erect the GOODS or that
functional tests shall be carried out in connection with the delivery,
SELLER's obligations are not completed until tests as specified or the
erection work has been carried out.
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11.0 ERECTION
11.1. Erection work shall not be part of the AGREEMENT unless expressly
agreed in the Purchase Order Form. In such case the following terms
shall apply:
11.2. In adequate time before the erection, SELLER shall present a plan for
the assistance to be rendered by PURCHASER according to the AGREEMENT.
11.3 If the erection is carried out according to an agreed firm price, such
price shall include all expenses and services not expressly excluded in
the Purchase Order Form. Such price shall also include a test run and
commissioning if this is expressly stated.
11.4 The erection work shall be carried out within the framework of the
regulations imposed by public authorities, and the safety, security and
control procedures applicable at the place of erection. PURCHASER may
request that SELLER or his representative as well as SELLER's employees
sign reasonable confidentiality undertakings required by PURCHASER.
12.0 GUARANTEES AND ACCEPTANCE OF THE GOODS
12.1 SELLER guarantees that the WORK conforms to the requirements of this
AGREEMENT. SELLER also guarantees that materials and equipment provided
by SELLER for incorporation into the GOODS are new and that the WORK is
free of defects in design, material and workmanship.
12.2 Unless otherwise stated in the AGREEMENT, the guarantee period for the
WORK commences when the GOODS have been delivered and all other work
under the AGREEMENT has been completed, and expires 12 months from the
date the GOODS are taken into use for their intended purpose, but
limited to 30 months from the date of delivery.
12.3 The guarantee period for the WORK shall not run as long as the GOODS
are inoperative as a result of repairs necessary for the GOODS to meet
the requirements of the AGREEMENT.
12.4 If SELLER has performed guarantee work during the guarantee period,
SELLER shall guarantee the parts of the WORK so repaired, for a period
of 12 months from the date of completion of the guarantee work unless
the remaining part of the guarantee period in Article 12.2 is longer.
The length of the guarantee for such parts of the work shall, however,
under no circumstances extend beyond 30 months after the completion of
the first guarantee work.
13.0 SELLERS'S BANK GUARANTEE OR EQUIVALENT SECURITY
13.1 If it is required in the Purchase Order Form, SELLER shall at his cost
furnish a Bank Guarantee or other security in a form acceptable to
PURCHASER which shall equal 10% of the CONTRACT PRICE at the effective
date of this AGREEMENT.
13.2 The Guarantee or equivalent security shall be effective from the date
of SELLER's acceptance of the Purchase Order Form, and remain effective
for its full value from the date of issue until expiry of the guarantee
period according to Article 12.2. From the expiration of the guarantee
period according to Article 12.2 a Bank Guarantee or other security in
a form acceptable to PURCHASER shall be provided for an amount equal to
the cost of any remaining guarantee work.
13.3 In the event of advance payments, SELLER shall at his cost provide
another Bank Guarantee or other security in a form acceptable to
PURCHASER, which shall at all times equal the amount which exceeds the
value of PURCHASER's title to the GOODS. The Guarantee or equivalent
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<PAGE>
security shall be furnished to PURCHASER before the time of
presentation of SELLER's invoice in accordance with Article 14. The
guarantee shall remain effective until delivery has taken place.
14.0 PAYMENT OF THE CONTRACT PRICE, INVOICING AND AUDIT
14.1 PURCHASER shall pay the CONTRACT PRICE to SELLER according to the
payment schedule as set out in the Purchase Order Form.
14.2. Unless otherwise agreed the undisputed part of an invoice shall be paid
within 30 days after delivery and receipt of correct invoice.
14.3 PURCHASER or his authorised representative has the right to audit
during business hours, all documentation insofar as it relates to
reimbursable work. PURCHASER shall have this right for a period from
date of the AGREEMENT until two years after the expiration of the year
in which delivery of GOODS took place.
14.4 In the event of late payment, SELLER has the right to claim interest in
accordance with the Norwegian "Interest on late Payments Act"
(Morarenteloven).
15.0 TITLE TO AND CARE OF THE GOODS
15.1 Title to the GOODS shall pass to PURCHASER as parts of the GOODS are
identified, marked or separated for the purpose of this AGREEMENT, or
when GOODS are paid for by PURCHASER if this occurs earlier.
Notwithstanding the passing of title, SELLER shall retain
responsibility for care and custody of the GOODS until delivery.
15.2 Any part of the GOODS with respect to which title has passed to
PURCHASER, but which remain in the possession of SELLER, shall be
clearly marked and registered as being held for delivery to PURCHASER
and as being the property of PURCHASER.
16.0 SELLER'S DELAY
16.1 Delay occurs when SELLER fails, due to circumstances for which SELLER
is responsible for, to meet any penalty milestone described in the
AGREEMENT.
16.2 In the event of delay in relation to penalty milestones, SELLER shall
pay liquidated damages equal to 0,l5 % of the non-delivered material
value per day to PURCHASER. The cumulative liability for delay shall,
however, not exceed 10% of the CONTRACT PRICE. PURCHASER shall have no
other remedy for delay than that specified in this Article and Article
18.1.
16.3 Accrued liquidated damages shall be settled in connection with the
final account.
17.0 SELLER'S LIABILITY FOR DEFECTS AND BREACH OF GUARANTEES
17.1 As soon as reasonably possible after delivery, PURCHASER shall check
the GOODS. PURCHASER is not obligated to check the GOODS before they
have arrived at the premises where they are to be used according to the
AGREEMENT, nor before any erection work according to Article 11 has
been completed if such erection has been agreed. PURCHASER's obligation
to check the GOODS similarly applies when SELLER has remedied defects.
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17.2 PURCHASER shall submit a notice in writing as soon as possible after he
has discovered a defect. The notice to SELLER shall contain a specific
description of the defect. The period allowed for complaints expires
under all circumstances one month after the guarantee period has
expired.
17.3 SELLER shall remedy defects caused by breach by SELLER of the guarantee
responsibilities defined in Article 12 above at his expense.
17.4 SELLER shall consult with PURCHASER as to the remedial measures SELLER
intends to effect. If SELLER is not able to remedy a defect within a
reasonable time after PURCHASER'S notification of the defect, PURCHASER
shall be entitled to perform himself, or cause to be performed by third
parties, said rectification. All necessary direct costs of such
rectification shall be borne by SELLER, provided PURCHASER acts in a
reasonable manner. In such instances SELLER shall immediately be
informed.
17.5 In addition PURCHASER may claim damages for defects according to law
limited to 15% of the CONTRACT PRICE.
17.6 SELLER's liability for rectification of defects discovered during the
guarantee period and for damages at law shall be limited to 100% of the
CONTRACT PRICE.
17.7 In case of repair or replacement offshore, PURCHASER shall arrange and
pay for dismantling of other objects to provide access to the GOODS,
transportation from onshore base to the installation and return, stay
on the installation, heavy lift operations offshore and extra costs
associated with work performed below the water level.
18.0 TERMINATION BECAUSE OF SELLER'S DEFAULT
18.1 PURCHASER has the right to terminate this AGREEMENT with immediate
effect by written notice to SELLER if one or more of the following
situations occur:
a) SELLER becomes insolvent or stops his payments
b) SELLER is in substantial breach of his obligations thereunder
c) PURCHASER has become entitled to maximum liquidated damages
according to Article 16.
18.2 If the AGREEMENT is terminated pursuant to Article 18.1., PURCHASER
shall be entitled to either:
(i) Demand restitution of any payments made and/or materials or
equipment supplied by PURCHASER, or
(ii) Demand delivery of the GOODS, materials, PURCHASER provided
items, subcontracts, documents and other rights which are
necessary to enable PURCHASER to complete the WORK by himself
or with assistance from others. If PURCHASER has demanded such
delivery, PURCHASER shall pay the CONTRACT PRICE related to
the part of the GOODS and other services taken over.
18.3 If the AGREEMENT is terminated pursuant to Article 18.1, PURCHASER
shall be entitled to enforce one or more of the following claims:
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a) PURCHASER may claim damages for delay solely in the form of
liquidated damages in accordance with the provisions of
Article 16.0 calculated on the basis of the number of calendar
days by which the final penalty milestone would have been
exceeded due to any circumstances for which SELLER would have
been responsible, if SELLER had completed and delivered the
GOODS and completed the WORK.
b) PURCHASER may claim damages for defects and other breaches of
contract subject to the limitations set out in Article 17.6.
The total liability of SELLER shall, whether the AGREEMENT is
terminated or not, under no circumstances exceed 100% of the CONTRACT
PRICE.
19.0 PURCHASER'S BREACH OF AGREEMENT
19.1 If PURCHASER is in breach of any of his obligations of the AGREEMENT,
SELLER is entitled to an adjustment of the Schedule and for the
CONTRACT PRICE in accordance with the provisions of Article 8. Such
adjustment shall reflect the consequences of the delay caused to SELLER
by PURCHASER's breach of contract. PURCHASER shall issue such a Change
Order without undue delay after receiving SELLER's request.
SELLER loses his right to request a Change Order if he has not made
such request without undue delay after discovery of the breach of
contract.
20.0 FORCE MAJEURE
20.1 Neither of the parties shall be considered in default of their
obligation according to this AGREEMENT to the extent that if can be
established that performance of such obligations was hindered by FORCE
MAJEURE.
20.2 The party affected by FORCE MAJEURE shall as soon as possible give
notice to the other party about the situation.
20.3 If a FORCE MAJEURE situation continues without interruption for a
period of 60 days or more, each of the Parties shall be entitled to
terminate the affected Purchase Order by written notice to the other
Party. The provisions of Articles 21.2 and 21.4 apply accordingly.
21.0 CANCELLATION
21.1 PURCHASER has the right to cancel this agreement at any time by giving
written notice to SELLER. For standard off the shelf items no
cancellation fee beyond documented expenses is to be paid.
21.2 For specially manufactured items that are cancelled, PURCHASER shall
pay to SELLER:
a) The unpaid balance due for the work actually performed on the
GOODS
b) All necessary direct expenses incurred by SELLER directly
attributable to the cancellation
21.3 In addition PURCHASER shall pay a cancellation fee equal to the lesser
of:
a) 4% of the CONTRACT PRICE, or
b) 6% of the part of the CONTRACT PRICE which is not paid at the
date of cancellation and which shall not be paid pursuant to
Article 21.2 a).
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PURCHASER shall be entitled to deduct from the cancellation fee such
claims as have been presented to SELLER prior to the date of
cancellation and have been accepted by SELLER and any other disputed
amounts notified to SELLER.
21.4 Payment shall be made in accordance with the provisions in Article
14.0. SELLER shall, in accordance with PURCHASER's instructions,
endeavour to cancel subcontracts on terms acceptable to PURCHASER.
21.5 SELLER shall transfer to PURCHASER in accordance with PURCHASER's
instructions the GOODS and other items for which SELLER is entitled to
receive payment under this AGREEMENT, together with copies of all
plans, drawings, specifications and other documents which PURCHASER is
entitled to use.
22.0 SUSPENSION
22.1 PURCHASER may require SELLER to suspend the performance of the work
under this AGREEMENT, for a maximum of 120 days. Thereafter the SELLER
has the right to terminate the applicable Purchase Order. PURCHASER
shall in that case have to compensate SELLER for all directly
applicable out of pocket expenses.
22.2 Upon receiving any such notice of suspension, SELLER shall promptly
suspend the work to the extent specified, and during the period of such
suspension, properly protect all work in progress and materials,
supplies and equipment which SELLER has on hand for performance of the
work.
22.3 Unless otherwise stated in this AGREEMENT, PURCHASER shall reimburse
SELLER for reasonable costs and expenses incurred as a result of any
suspension order and associated reinstatement order. In no event shall
SELLER be entitled to any compensation for loss of prospective profits
or damages caused by such suspensions or withdrawals of suspension.
23.0 INDEMNITY
23.1 Both parties shall mutually indemnify and hold each other harmless from
and against all losses or damages to their respective properties or
personnel in connection with or as a result of this AGREEMENT, whether
or not contributed to by negligence in any form.
23.2 However, this provision shall not affect SELLER's responsibility for
loss or damage to the GOODS pursuant to Articles 10, 12, 15 and 17.
23.3 PURCHASER shall indemnify SELLER GROUP from PURCHASER GROUP's own
indirect losses, and SELLER shall indemnify PURCHASER GROUP from SELLER
GROUP's own indirect losses. This applies regardless of any liability,
whether strict or by negligence, in whatever form, on the part of
either group and, except as stated in Article 21.3, and regardless of
any other provisions of the CONTRACT.
Indirect losses according to this provision include, but are not
limited to, loss of earnings, loss of profit, loss due to pollution and
loss of production and any consequential damages.
24.0 INSURANCES
24.1 SELLER shall provide and maintain an all risk insurance, or equivalent
insurance, covering the GOODS, materials and PURCHASER provided items
against physical loss or damage in accordance with the insurance
conditions, until delivery has taken place.
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24.2 SELLER shall provide and maintain the following insurance:
a) Workman's compensation or employer's liability insurance or
equivalent to the extent required by applicable laws, and
b) Liability insurance covering SELLER's liability at law for
damage to property and personal injury.
24.3 At PURCHASER's request SELLER shall furnish to PURCHASER certificates
of insurance or confirmed copies of the policies with the necessary
information, including the expiration date, relating to insurance
required under this Article.
24.4 The insurance required under Article 24.1 above shall state that
PURCHASER GROUP and SELLER GROUP are co-insured, and that the insurers
shall waive any right of subrogation against PURCHASER GROUP.
25.0 CONFIDENTLAL INFORMATION
25.1 All information furnished by the parties to each other in connection
with this AGREEMENT, shaI1 be treated as confidential. Each of the
parties may, however, disclose confidential information to third
parties to the extent necessary for the manufacture of, use and control
of the GOODS. In such case the parties shall secure written Secrecy
Declarations from third parties. SELLER is liable for any damage
PURCHASER may suffer as a result of an infringement of these
obligations.
25.2 SELLER shall not publish information concerning the AGREEMENT or work
performed hereunder without PURCHASER's written approval. Such approval
shall not unreasonably be withheld.
26.0 RIGHTS TO DOCUMENTS AND COMPUTER PROGRAMS
26.1 Documents and computer programs provided by PURCHASER to SELLER or
which are developed mainly on the basis of such documents and computer
programs, shall be the property of PURCHASER. The same applies to all
copies of the aforementioned documents and computer programs.
Such documents, computer programs or copies shall not be used by SELLER
other than for the purpose of manufacturing the GOODS. Such documents,
computer programs or copies shall be returned to PURCHASER at the
expiry of the AGREEMENT.
26.2 Documents and computer programs provided by SELLER to PURCHASER or
which are developed mainly on the basis of such documents and computer
programs and which is not part of the GOODS, shall remain the property
of SELLER. The same applies to all copies of the aforementioned
documents and computer programs.
PURCHASER shall only be entitled to use such documents, computer
programs and copies in connection with the operation, repair,
modification and maintenance of the GOODS.
26.3 All other documents computer programs and copies thereof developed by
SELLER in connection with the work, shall be the property of SELLER.
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27.0 INVENTIONS/PATENTS
27.1 Inventions made by SELLER during the manufacture of the GOODS shall be
the property of SELLER. Notwithstanding the above, inventions that are
mainly based on technical information that SELLER has received from
PURCHASER, shall be the property of PURCHASER. SELLER shall notify
PURCHASER of such inventions that are PURCHASER's property, and SELLER
shall provide the necessary assistance in order to enable PURCHASER to
acquire patents to such inventions. PURCHASER shall reimburse SELLER
for all reasonable expenses incurred in connection with acquiring such
patents, including compensation which any employee of SELLER may be
entitled to according to the applicable law.
27.2 SELLER shall grant to PURCHASER an irrevocable, royalty-free,
nonexclusive licence to inventions now or hereafter controlled by
SELLER to the extent necessary for the operation, maintenance and
repair of the GOODS.
28.0 GOVERNING LAW AND DISPUTES
28.1 This AGREEMENT shall be governed by and construed in accordance with
the laws of Norway, and any disputes shall be formally decided by
arbitration according to the rules of the Norwegian Civil Procedures
Act of August 13, 1915 chapter 32.
28.2 The proceedings shall take place in Oslo, unless both parties agree on
another legal venue.
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<PAGE>
CONTRACT NO. C99-005
EXHIBIT "A"
FRAME AGREEMENT FOR PROCUREMENT SERVICES
EXHIBIT "A"
SCOPE OF WORK
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<PAGE>
SCOPE OF WORK
TABLE OF CONTENTS
ITEM DESCRIPTION PAGE
- ---- ----------- ----
- - COVER PAGE 1
- - TABLE OF CONTENTS 2
1.0 GENERAL 3
2.0 TERMS OF DELIVERY/DELIVERY DATE 4
3.0 TERMS OF PAYMENT /INVOICE SCHEDULE 4
4.0 PLANNING PROGRESS REPORTING AND EXPEDITING 5
5.0 ATTACHMENTS 5
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SCOPE OF WORK
1.0 GENERAL
The Procurement Services performed by CONTRACTOR shall be carried out
in accordance with CONTRACTOR'S Procurement Manual (Doc.no. TSU-MSO-OS
1-MAN-001/99) as approved by COMPANY.
1.1 SCOPE OF SUPPLY
The SCOPE OF WORK comprises complete delivery of goods as listed in
this AGREEMENT and ordered by separate CALL OFF ORDERS. This includes
the Procurement Packages specified in Attachment 1 hereto.
Pre-qualification of potential suppliers shall take place as agreed
between the PARTIES.
1.2 PRICES AND PROCUREMENT FEE
Prices and conditions obtained from the individual
manufacturers/suppliers shall be disclosed to COMPANY and COMPANY and
CONTRACTOR shall make a mutual bid evaluation and decision regarding
nomination of manufacturer
For the procurement activities CONTRACTOR will be remunerated a fee of
5,0% if the Shuttle is built in Germany and 5,25% if the Shuttle is
built in Europe outside Germany and 5,5% if the Shuttle is built
outside Europe. The fee will cover all normal travel cost in connection
with the execution of this AGREEMENT.
All cost associated with the assignment of a Procurement Co-ordinator
for the pre-construction preparation period (starting December 1, 1998)
beyond 9 month's duration shall be compensated separately. The 9-month
period is compensated as outlined under 3.1 below.
1.3 OPTIONS
1.3.1 STORAGE
COMPANY has the right to store the goods for up to 4 weeks free of
charge at the manufacturer's premises after the goods are declared
ready for delivery.
Each item must be marked with an identification number and the name of
COMPANY and be kept separated from other items.
Proper transportation conditions, storage and, care and preservation of
the goods under the storage sufficient to ensure that the guarantee is
maintained shall be the responsibility of CONTRACTOR.
If storage exceeds 4 weeks a storage fee, which has to be agreed upon,
shall apply.
1.4 MANUFACTURERS
Final approval of manufacturers shall be made by COMPANY.
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2.0 TERMS OF DELIVERY / DELIVERY DATE
2.1 TERMS OF DELIVERY
CIF, free-out fabrication yard/sub-contractor as per Incoterms 1990.
2.2 DELIVERY DATE / DELIVERY TIME
2.2.1 DELIVERY DATE
The contractual delivery date shall be the date when the ordered goods
shall be delivered in accordance with COMPANY's instructions. Deviation
from this Delivery Date shall form the basis for calculating any
applicable liquidated damages in accordance with Article 16 of the
CONTRACT AGREEMENT - ATTACHMENT 1.
2.2.2 DELIVERY TIME
According to agreed COMPANY delivery schedule.
2.3 RUSH DELIVERY
The mills shall have the flexibility to execute rush deliveries for
minor quantities. Such rush deliveries must be agreed with COMPANY on a
case by case basis as well as prices for such deliveries.
2.4 PACKING AND MARKING
If required the goods shall be packed according to COMPANY packing and
marking requirements, adequately for the transportation intended to
COMPANY's construction site. Any special marking requirements shall be
specified in the CALL OFF ORDERS from COMPANY.
3.0 TERMS OF PAYMENT / INVOICE SCHEDULE
3.1 TERMS OF PAYMENT AND INVOICE SCHEDULE
Terms of payment shall read 30 days net after date of the invoice.
100% of the price shall be invoiced upon delivery of the goods
including all documentation and certificates. Goods or material without
certificates cannot be used for construction. Thus if agreed
documentation and certificates are missing or are incomplete the items
shall NOT be considered delivered.
In order to cover CONTRACTOR's procurement and travelling expenses
prior to the first delivery, CONTRACTOR shall be entitled to invoice on
a monthly basis DM 50.000 to COMPANY starting December 1, 1998. These
payments will be set off against the procurement fees to be paid by
COMPANY on the deliveries.
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4.0 PLANNING, PROGRESS REPORTING AND EXPEDITING
CONTRACTOR shall perform all necessary expediting activities within its
own and its procurement organisation, to ensure that the goods are
delivered in accordance with the requirements of the CALL OFF ORDERS.
CONTRACTOR shall report the general status of progress in a frequency
agreed with COMPANY. Any possible delays in delivery shall be notified
immediately, together with the intended corrective actions hereto. See
Procurement Reporting Procedure under Exhibit "C".
5.0 ATTACHMENTS
The following attachments form an integral part of this AGREEMENT.
CONTRACTOR is required to comply in full with the instructions
contained herein.
ATTACHMENT 1 - PROCUREMENT PACKAGES
ATTACHMENT 2 - SUPPLIER DOCUMENTATION FOR ROLLED PROFILES/
TUBULARS/PLATES
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[MARINE SHUTTLE LOGO] [THYSSEN LOGO]
PROCUREMENT PACKAGES
GENERAL: Procurement services provided by Contractor will include the delivery
of all material, equipment and machinery and will not be limited to procurement
packages as listed below:
PACKAGE NO. PACKAGE
- ----------- -------
1. Ballast Water Pumps incl. hydraulic drive system,if any.
2. Umbilicals and connectors.
3. Hydraulic valve control system
4. Umbilical winches and retrieval reel.
5. Electrical equipment and power generation.
6. Hydraulic actuated valves,sluice,stop and check valves.
7. Instrumentation, monitoring and control system.
8. Communication and CCTV system.
9. Primary and major secondary steel material for hull and outfitting,
Grade S420M3Z.
10. Ring stiffeners and profiles, Grade S420M3Z.
11. Pipes, tubulars and fittings sized 2" and above.
- --------------------------------------------------------------------------------
THYSSEN ISSUED BY: APPROVED BY: DOC. NO. TSU-MSO-OS1 REV. DATE
STAHLUNION Da FGS PROC- 005/99 0 08/13/99
- --------------------------------------------------------------------------------
PAGE 1
<PAGE>
[MARINE SHUTTLE LOGO] [THYSSEN LOGO]
OFFSHORE SHUTTLE NO. 1
FOR
MARINE SHUTTLE OPERATIONS A.S.
SUPPLIER DOCUMENTATION
FOR
ROLLED PROFILES/TUBULARS/PLATES
THYSSEN STAHLUNION GMBH
DUSSELDORF
- --------------------------------------------------------------------------------
THYSSEN ISSUED APPROVED DOC. NO. REV. DATE NO OF PAGES:
STAHLUNION BY: BY: TSU-MSO-OS1
Da FGS GEN- 003/99 0 08/13/99 4
- --------------------------------------------------------------------------------
<PAGE>
Supplier Documentation for Rolled Tubulars/Profiles/Plates
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
Document Documentation Issue Submission after Order
SDRL-Code With
NS 5820 Bid For Review/ To site Incl. in
Par. No. Acceptance Final Doc
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
4.2 Supplier Master Document Register Yes 2WA0 NIA N/A
5.6 Typical Engineering, procurement and Yes 2WA0 N /A N/4
manufacturing schedule (EPMS)
5.7 Q-plan & Inspection and test plan N/A 2WA0 N/A N/A
List of content for manufacturing
9.1 record/fabrication dossier (for Welded Tubulars N/A Retained N/A F
only)
9.2 Certificate of compliance N/A N/A N/A F
9.2 Material certificates N/A Retained D N/A
Base Material and Weldability Documentation, see
9.3 notes 1) & 2) Yes Retained N/A N/A
9.3 Dimensional control report (for Welded N/A N/A D N/A
Tubulars only)
9.3 Surface Preparation and Coating Procedure N/A Retained N/A N/A
9.3 NDE-Procedures N/A Retained N/A N/A
9.3 Procedures for evaluation of surface defects on N /A Retained N/A N/A
seamless tubulars
9.3 Welding procedure Spec. (WPS) NIA Note 3) N/A N/A
9.3 Welding procedure qualification records (WPQR) N/A Note 3) N/A N/A
- --------------------------------------------------------------------------------------------------------------------------
PAGE 2
<PAGE>
- --------------------------------------------------------------------------------------------------------------------------
9.3 Heat Treatment Procedure N/A Note 3) N/A N/A
9.3 Hot Forming Procedures N/A Note 3) N/.4 N/A
10.8.1 List of Content for Final Doc. N/A 8WPTLD N/A F
10.8.2 Final Documentation N/A 2WALD N/A F
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
EXPLANATION NOTES TO REQUIRED DOCUMENTS:
Note 1): Base Material Documentafion
This document shall contain documentation required by :
M-120 Norsok Standard
Material Data Sheet For Structural Steel
Note 2): Weldability Documentation
This document shall contain documentation required by :
M-120 Norsok Standard
Material Data Sheet For Structural Steel
Note 3): Retained documents, but are to be established before start of
production of Welded Tubulars
Schedule for submission
WA0 = Weeks after order (telex order)
WBT = Weeks before test
WAT = Weeks after test
WPTD = Weeks prior to delivery
W-PTLD = Weeks prior to last delivery
WAD = Weeks after delivery
WALD = Weeks after last delivery
WAC0 = Weeks after call-off
WABO = Weeks after blanket order
WAWO = Weeks after written order
WAFD = Weeks after final delivery
WPFD = Weeks prior to final delivery
F Final Documentation
D Documentation to be sent with the equipment at delivery.
Retained Retained document to be established prior to start of production
for possible review by Project
PAGE 3
<PAGE>
CONTRACT NO. C99-005
EXHIBIT "B"
FRAME AGREEMENT FOR PROCUREMENT SERVICES
EXHIBIT "B"
TECHNICAL SPECIFICATIONS
-1-
<PAGE>
TECHNICAL SPECIFICATIONS
TABLE OF CONTENTS
ITEM DESCRIPTION PAGE
- ---- ----------- ----
- - COVER PAGE 1
- - TABLE OF CONTENTS 2
1.0 DESCRIPTION OF THE PROJECT 3
2.0 RULES AND REGULATIONS 3
3.0 STANDARDS 3
4.0 ENVIRONMENTAL / OPERATING CONDITIONS 4
5.0 TECHNICAL DATA / UTILITIES 4
6.0 DATA TRANSFER 5
7.0 DOCUMENTATION 5
- - LAST PAGE 6
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<PAGE>
TECHNICAL SPECIFICATION
1.0 DESCRIPTION OF THE PROJECT
1.1 THE OFFSHORE SHUTTLE
The Offshore Shuttle is a tubular framed unmanned floating vessel,
designed to transport, install and remove offshore installations. The
main dimensions are:
- Length: about 160.0 m
- Width : about. 93.5 m
- Height : about 65.0 m
- Total weights about 20.000 tonnes
- The Shuttle is constructed of 10-m diameter ring stiffened
tubulars and 11.5 m Cofferdams.
- The tubulars are connected to each other by means of nodes,
which have been designed in such a way that the tubulars are
continuous when passing through a node, thus forming the main
buoyancy chambers, together with diaphragms forming additional
buoyancy chambers for ballasting the vessel, which can be
ballasted from a horizontal to a 110(degree) vertical
position, with ballasting operations being performed from a
control module on a support vessel, connected to the Shuttle
with umbilicals.
The lifting and lowering operations are carried out using
buoyancy. The Offshore Shuttle floats on its lower
longitudinal and transversals and has no self-propulsion on
board.
2.0 RULES AND REGULATIONS
2.1 CLASSIFICATION
The certifying/classification authority shall be Det Norske Veritas (
DNV ) Class Notation : +1A1 Support Unit ( non-self propelled )
2.2 REGULATIONS
The work shall primarily comply with the Norwegian Maritime
Department's (NMD) Regulations section ss. 33 para 2 entitled ,,
Constructions, which shall not be regarded as ships ,,. The Offshore
Shuttle shall however be designed and fabricated in accordance with
normal maritime classification rules and regulations for normally
unmanned construction. The Norwegian Petroleum Directorate ( NPD )
Regulations will have jurisdiction for Operation on the Norwegian
continental shelf.
3.0 STANDARDS
3.1 GENERAL OBLIGATION
The Contractor shall have an implemented and documented system for
Quality Assurance In accordance with the requirements of ISO 9001,
9002, 9003 which ever is applicable. The NORSOK Standards, which are
applicable as at the promulgation of the contract, shall apply to all
aspects of the fabrication, assembly, pre-commissioning, testing,
transportation and delivery unless otherwise specified.
-3-
<PAGE>
Further the following standards shall apply:
- API - American Petroleum Institute
- ASME - American Society of Mech. Eng.
- ISO - Int. Org. for Standardisation
- IEC - Int. Electric. Code
- ANSI - Am. National Standard Institute
- ASTM - Am. Society for Testing of Materials
- BS - British Standard
- MSS - Manufacturers Standardisation Society
- UKOOA - UK Offshore Operators Association
- NEMKO - Norwegian Approval Board for Electrical
Materials and Appliances.
4.0 ENVIRONMENTAL / OPERATING CONDITIONS
4.1 ENVIRONMENTAL CONDITIONS
DESIGN CONSIDERATIONS:
- Air Temp - Min: -20(degree)C
- Air Temp - Max: +40(degree)C
- Water Temp - Min: 0(degree)C
- Water Temp - Max: +30(degree)C
- Humidity: - 100% (Atmosphere: Salt laden, corrosive )
- Design Life:
- Hull - 50 years
- Ancillary equipment - 20 years
4.2 OPERATING CONDITIONS
The Shuttle shall operate in both vertical and horizontal position. The
max. Inclination of approx. 110(degree) during operation shall be
considered.
- Installation Temperature min.: 4(degree)C.
Transit-empty: (no planned ballast operations):
- Max. significant wave height: 17m
- Transit speed: 4kn ( 2m/s )
- Wind speed: 82kn ( 41m/s )
Transit- full loaded ( no planned ballast operation ):
- Max. significant wave height: 8m
- Transit speed: 4kn ( 2m/s )
- Wind speed: 40kn ( 20m/s )
5.0 TECHNICAL DATA / UTILITIES
Following system design data shall apply:
- Hydraulic pressure for pumps: 230 bar
- Hydraulic pressure for control system: 200 bar
-4-
<PAGE>
- Compressed Air: 15 bar
- Rated system voltage: 690 V
- Rated secondary voltage: 400 V
- Nominal voltage (Control voltage) 230 V
- UPS 230 V
- Frequency 50 Hz
- Phases: 3
- Control-Supply Voltage: 24 V DC
6.0 DATA TRANSFER
Data transfer during the CONTRACT duration shall be transferred to the
COMPANY on the following formats:
a) 3D-CAD shall be IGES level 4 or higher STEP may be required at
the time of handover.
2D-CAD as the min. requirement for all new technical drawings
shall be IGDS (Intergraph) or IGDS level 4 or higher.
If the CONTRACTOR operates Intergraph 3D Plant Design System,
the graphical 3D model and all databases linked to the model
shall be transferred to the COMPANY at the end of the WORK.
b) Documents other than drawings shall be Microsoft Office 97.
c) Alphanumeric data as tables on flat files to be in ASCII level
7 or EBCDIC formats.
d) Spreadsheet data shall be Microsoft Excel 97 or higher.
e) Planning data shall be Artemis Project View or Primavera (still
to be defined) or a system compatible with the same.
f) All other data / documents not covered above shall be optically
scanned and stored as raster files according to CCITT group 4.
7.0 DOCUMENTATION
Suppliers shall submit with their tender relevant information of
equipment/ material.necessary for installation and operation such as
dimensions, weight, power-/ cooling-/heating-/ control requirements and
interfaces as well as a delivery schedule of binding documents to be
submitted after contract award.
The document register/ schedule will be part of the purchase order.
Apart from the electronic data transfer as described in clause 6 above
supplier shall submit with the delivery of equipment/ material:
1Original and 2 complete sets of copies of the following documentation:
- Vendors Details
- Product/ Equipment Details
- Certificates
- General Assembly Drawings
-5-
<PAGE>
- General Installation Drawings
- Calculations
- Operation Manuel
- Maintenance Manuel
- Inspection Procedure
- Spare Part Lists
All documents to be in the English language.
-6-
<PAGE>
[MARINE SHUTTLE LOGO] [THYSSEN LOGO]
OFFSHORE SHUTTLE OS 1
FOR
MARINE SHUTTLE OPERATIONS A.S.
PROCUREMENT REPORTING PROCEDURE
THYSSEN STAHLUNION GMBH
DUSSELDORF
- --------------------------------------------------------------------------------
THYSSEN ISSUED APPROVED DOC. NO. REV. DATE NO OF PAGES:
STAHLUNION BY: BY: TSU-MSO-OS1
Da FGS PROC-007/99 0 28.04.99 1 of 9
- --------------------------------------------------------------------------------
<PAGE>
PROCUREMENT REPORTING PROCEDURE
TABLE OF CONTENTS
1 PURPOSE 3
2 RESPONSIBILITY 3
3 REFERENCES 3
4 DEFINITIONS & ABBRIVIATIONS 3
5 DESCRIPTION 3
5.1 General 3
5.2 Physical Progress Measurement 4
5.3 Suppliers Progress Report 5
5.4 Financial Status Report 5
5.5 Reporting to Company 5
6 APPENDICES 6
Page 2 of 9
<PAGE>
PROCUREMENT REPORTING PROCEDURE
1. PURPOSE
This procedure describes the methods of how to define the physical progress of
procurement packages and items and how to control the payments relative to the
payment conditions agreed for each procurement package and item.
2. RESPONSIBILITY
Contractor providing procurement services for Company is responsible to inquire,
evaluate, procure, follow up, transport and deliver material, equipment and
machinery to the construction site on the required need dates.( RAS Dates )
Company is responsible to provide Contractor with approved specifications,
MTO`s, technical requirements and RAS Dates for inquiring and purchasing to
enable Contractor to procure and deliver the material, equipment and machinery
accordingly.
3. REFERENCES
o Frame Agreement for Procurement Service - Contract C99-005
o Procurement Manual TSU-MSO-OS 1-MAN-001/99
o Project Master Schedule
o Procurement System - Data based Exel Program
4. DEFINITIONS & ABBREVIATIONS
o Company: Marine Shuttle Operations A/S, Stavanger, Norway
o Contractor: Thyssen Stahlunion GmbH, Duesseldorf, Germany
o Supplier: Anyone who supplies material, equipment and machinery
for the Shuttle
o RAS : Required at Site
o PO : Purchase Order
5. DESCRIPTION
5.1 General
The procurement services provided by Contractor are based on a list of suppliers
qualified and approved by Company to deliver material, equipment and machinery
for the Offshore Shuttle OS 1
Page 3 of 9
<PAGE>
PROCUREMENT REPORTING PROCEDURE
The procurement services includes but is not limited to:
- - assistance in the pre-qualification of suppliers,
- - assistance in the qualification visits, if so required,
- - inquiries,
- - evaluation of inquiries,
- - selection of suppliers
- - purchasing,
- - review suppliers plans and procedures
- - follow up of procurement packages or items,
- - co-ordinate test and inspections
- - check completeness of documentation before delivery,
- - co-ordinate delivery and transport to construction site,
- - verify invoices,
- - release payments according to contractual payment conditions,
- - invoice Company.
5.2 Physical Progress Measurement of Procurement Activities.
The physical progress measurement of the procurement activities does not reflect
the monetary development of the individual package or item nor the progress of
the fabrication at suppliers.
The reported progress simply defines the status of event for each package and
item and for the overall procurement activities.
Physical Progress Measurement normally will start with the submission of bid
documents and end with Company's acceptance of delivery at construction
site. (Unless Procurement Activities are resumed under the guarantee
obligations).
The following milestones are considered for measuring procurement progress:
- - Submission of bid documents........................................... 10%
- - Bids evaluated and submitted to MSO for approval...................... 25%
- - Purchase order issued................................................. 50%
- - Ready for Shipment.................................................... 80%
- - Delivered at Site..................................................... 95%
- - Final Documentation delivered......................................... 100%
Depending on the number of packages or items the weighing factor per package or
item will be, regardless of its value, a linear portion of 100%.
Additional procurement items being outside the original scope of material,
equipment and machinery will be reported above 100%. The factor per additional
item will be the same as used for the original scope.
Page 4 of 9
<PAGE>
PROCUREMENT REPORTING PROCEDURE
5.3 Suppliers Progress Report
For particular deliveries a report of suppliers progress may be required and
justified, i.e. for bulk material which deliveries are spread over a long period
or for supplies which partial deliveries will follow the construction schedule.
These relevant suppliers, commonly selected with Company, will be instructed to
report their weekly fabrication progress according to Contractors surveillance
program. The progress will be then incorporated in Contractor progress report.
(5.2 above)
5.4 Financial Status Report
Each procurement contract will be subject to particular payment conditions.
When the payment conditions are agreed with suppliers Contractor will submit a
reporting format containing the following information by PO:
- - Value of PO
- - Milestone payment dates
- - Value of milestone payment
- - % of each down payment per PO and from total.
The report will inform about:
- - Total amount of material, equipment and machinery to be procured (100%)
- - Payments performed (in value and %)
- - Payments due for the next month
- - Payments outstanding
Additional procurement contracts will be reported on top of the value of the
project budget relative to its value.
5.5 Reporting to Company
The status of the procurement progress will be reported weekly, the status of
cost and variation orders monthly.
The cut-off date will be sunday for weekly and the last sunday each month for
monthly reports.
The report will be submitted by E-mail or by telefax.
Page 5 of 9
<PAGE>
PROCUREMENT REPORTING PROCEDURE
6. APPENDICES
Formats for:
Appendix 1: Procurement Activity Report
Appendix 2: Cost Report
Appendix 3: Variation Order Register
Page 6 of 9
<PAGE>
PROCUREMENT REPORTING PROCEDURE
Page 7 of 9
<PAGE>
PROCUREMENT REPORTING PROCEDURE
Page 8 of 9
<PAGE>
PROCUREMENT REPORTING PROCEDURE
Page 9 of 9
<PAGE>
EXHIBIT "D"
FRAME AGREEMENT FOR PROCUREMENT SERVICES
EXHIBIT "D
SECRECY DECLARATION
<PAGE>
EXHIBIT "D"
SECRECY DECLARATION
I the undersigned, who is presently employed by NN Consultants AS (hereinafter
called CONTRACTOR) and who will be performing work assignments in connection
with a contract CONTRACTOR has with Marine Shuttle Operation A/S (hereinafter
called COMPANY) accept the following terms and conditions on which COMPANY are
prepared to communicate to the undersigned certain CONFIDENTIAL INFORMATION as
hereinafter defined.
1.0 "CONFIDENTIAL INFORMATION" shall mean any knowledge and information at
any time disclosed to the undersigned by or on behalf of COMPANY in
writing, in drawings or in any other way or acquired by the undersigned
from COMPANY as well as all data derived therefrom, in connection with
the aforesaid work assignment with COMPANY to the extent that such
knowledge and information at the time of such disclosure or acquisition
in not:
1.1 In free possession of the undersigned, or
1.2 part of public knowledge or literature.
2.0 CONFIDENTIAL INFORMATION shall include CONFIDENTIAL RECORD.
"CONFIDENTIAL RECORD" shall mean any manual, specification, drawings,
letters, telexes and any material containing CONFIDENTIAL INFORMATION.
3.0 With respect to CONFIDENTIAL INFORMATION the undersigned shall:
3.1 Preserve the secrecy of any CONFIDENTIAL INFORMATION.
3.2 Not without the prior written consent of COMPANY:
3.2.1 For any purpose other than the performance of his aforesaid work
assignment use any CONFIDENTIAL INFORMATION, or
3.2.2 disclose to, place at the disposal of or use on behalf of any THIRD
PARTY or enable any THIRD PARTY to peruse, copy of use any CONFIDENTIAL
INFORMATION
3.2.3 THIRD PARTY as used in subparagraph 3.2.2 shall include CONTRACTOR and
its employees other than the undersigned and those employees of
CONTRACTOR designated by COMPANY.
4.0 The undertakings under paragraph 3 above shall continue in so far and
for so long as the CONFIDENTIAL INFORMATION in question has not:
4.1 Become part of public knowledge or literature;
4.2 Been disclosed to the undersigned by a THIRD PARTY (other than one
disclosing on behalf of COMPANY) whose possession of such information
is lawful and who is under no secrecy obligation with respect to the
same.
5.0 The copyright in any CONFIDENTIAL RECORD disclosed to the undersigned
by COMPANY shall, in the absence of any express provision to the
contrary thereon, be vested in COMPANY, as the case may be.
6.0 Upon termination of the aforesaid work assignment of the undersigned
with COMPANY, the undersigned shall return to COMPANY as the case may
be, all CONFIDENTIAL RECORD or, should COMPANY so request, confirm to
COMPANY in writing that the undersigned has destroyed
-2-
<PAGE>
all CONFIDENTIAL RECORD or confirm to in writing that he has left all
CONFIDENTIAL RECORD with a person employed by COMPANY.
7.0 This declaration shall be governed by and construed in accordance with
Norwegian Law.
AGREED AND SIGNED:
Place:............................ By:...........................
on......................199 Name:
-3-
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
unaudited consolidated balance sheet as of June 30, 1999 and the unaudited
Statement of Loss and comprehensive loss for the six months ended June 30, 1999
and is qualified in its entirety by reference to such financial statements.
</LEGEND>
<S> <C> <C>
<PERIOD-TYPE> 6-MOS OTHER
<FISCAL-YEAR-END> DEC-31-1999 DEC-31-1999
<PERIOD-START> JAN-01-1999 MAY-23-1997
<PERIOD-END> JUN-30-1999 JUN-30-1999
<CASH> 181,617 181,617
<SECURITIES> 0 0
<RECEIVABLES> 348,189 348,189
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 624,301 624,301
<PP&E> 4,715,729 4,715,729
<DEPRECIATION> 59,882 59,882
<TOTAL-ASSETS> 38,607,994 38,607,994
<CURRENT-LIABILITIES> 4,188,085 4,188,085
<BONDS> 0 0
0 0
0 0
<COMMON> 33,708 33,708
<OTHER-SE> 0 0
<TOTAL-LIABILITY-AND-EQUITY> 38,607,994 38,607,994
<SALES> 23,732 40,108
<TOTAL-REVENUES> 23,732 40,108
<CGS> 0 0
<TOTAL-COSTS> 4,278,365 9,423,102
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 11,278 104,546
<INCOME-PRETAX> (4,229,980) (9,437,060)
<INCOME-TAX> 0 0
<INCOME-CONTINUING> 0 0
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (4,082,684) (9,289,764)
<EPS-BASIC> (0.12) 0
<EPS-DILUTED> (0.12) 0
</TABLE>
