Atlantic Cruising Yachts Commissioning Services

ATLANTIC CRUISING YACHTS COMMISSIONING SERVICES AGREEMENT

This Commissioning Services Agreement (this “Agreement”) is made as of the latest date listed on the signature page hereto (the “Effective Date”), by and between Yacht Sales Management, LLC, a Delaware limited liability company doing business as “Atlantic Cruising Yachts” (“hereinafter, “Atlantic Cruising Yachts” or “ACY”), and the undersigned purchaser (“Purchaser”; and together with ACY, the “Parties”).

Pursuant to a Yacht Purchase and Sale Agreement by and between ACY and Purchaser (as amended from time to time (the “Purchase Agreement”), Purchaser has engaged ACY to procure a Yacht.

ACY engages in the business of commissioning yachts with certain options and packages specified by ACY’s clients. Purchaser desires to engage ACY to provide certain commissioning services set forth in the Quotation, as defined in the Purchase Agreement (the “Commissioning Services”), which may include fitting the Yacht with ACY’s basic commissioning package, a description of which is attached hereto as Exhibit A, and Dealer Fit Options (if any) as defined and specified more fully in the Quotation. (The Yacht together with the Commissioning Services shall be referred to herein as the “Commissioned Yacht”).

ACY shall provide the Commissioning Services on the following terms and conditions:
1. Commissioning Services. Subject to the terms and conditions of this Agreement, ACY shall provide Commissioning Services with respect to the Yacht. Such Commissioning Services shall begin promptly upon arrival of the Yacht at ACY’s commissioning location specified in the Quotation as the Commissioning and Delivery Location (the “Commissioning Location”). Timing for completion of the Commissioning Services is commensurate with the scope of work specified in the Quotation, but also varies depending upon availability of parts, the weather, and the time of year. ACY shall use commercially reasonable efforts to minimize delays and provide notice of any delays to Purchaser, but Purchaser expressly acknowledges and agrees that any deadlines or timelines that may have been previously discussed between the Parties are illustrative only and not binding upon ACY. This Agreement supersedes any and all prior agreements between the Parties.

2. 2. Change Orders. Any changes to the Commissioning Services or Dealer Fit Options may only be accomplished by a written Change Order signed by ACY and the Purchaser. Any Commissioning Services deleted by a Change Order, which were the subject of a discount, shall have the corresponding discount deleted, in addition to incurring a 15% restocking fee. Each Change Order shall be subject to the terms of this Agreement, including the payment terms contained in Section 5 of this Agreement, and the Purchase Agreement. No Change Orders can be accepted nor are they valid within 3 to 6 months (depending on the options & the market status) of completion of the Yacht by the manufacturer. No Change Order will be accepted without signed acceptance by an officer of ACY and payment by the Purchaser of a 50% non-refundable deposit.

3. Purchaser’s Obligations During Commissioning.
a) Purchaser shall maintain at all times adequate insurance on the Commissioned Yacht during the Commissioning. While ACY shall use commercially reasonable efforts to inspect the Commissioned Yacht and its equipment for proper function and operation as an ongoing part of the Commissioning, ACY makes no guarantees as to the proper functioning or suitability of the Commissioned Yacht or its equipment for Purchaser’s intended purpose.

b) No Use of Yacht Prior to Acceptance. Purchaser shall not use the Yacht, shall not enter or stay onboard the Yacht, shall not store personal items on the Yacht, and shall not otherwise impact the Commissioning process or the Commissioning Services. Purchaser shall not engage other contractors to perform work on the Yacht until the Commissioning and Commissioning Services have been completed by ACY and the Purchaser has accepted the Yacht for final delivery pursuant to the terms of this Agreement, including Section 4 below. Failure to comply with these requirements may result in, among other things, interruption of work, rescheduling of work, delays, and additional costs for the Purchaser.

4. Delivery and Commissioning Inspection of the Commissioned Yacht.
a) Delivery Location. Unless otherwise agreed by ACY in writing, delivery of the Commissioned Yacht shall be at the Commissioning Location.

b) Commissioning Inspection. The Parties agree that it is Purchaser’s sole and exclusive responsibility to ensure that the Commissioned Yacht is inspected and that all of its equipment is functioning properly, in each case in accordance with the Specifications as defined in the Purchase Agreement (collectively, the “Commissioning Inspection”). Purchaser and/or Purchaser’s agent(s) may conduct the Commissioning Inspection during normal business hours for a period of three (3) business days (but no later than the time of Final Delivery (as defined below)) following notification from ACY that the Commissioning Services have been completed (the “Commissioning Inspection Period”). Purchaser is solely and exclusively responsible for: (i) selecting the surveyor notwithstanding the fact that ACY may have provided information and assisted Purchaser with hiring any such surveyor, (ii) determining the scope of the Commissioning Inspection, (iii) any damage to the Commissioned Yacht arising from or related to the Commissioning Inspection, and (iv) all costs of the Commissioning Inspection, including, but not limited to, all associated costs such as surveyor expenses, running expenses, haul out, dock charges, and/or any work performed by subcontractors, if applicable. If the Commissioned Yacht is subject to a sea trial, Purchaser agrees that such trial shall be made at Purchaser’s sole and exclusive risk and expense. To the extent that Purchaser’s agent(s) conduct the Commissioning Inspection of the Commissioned Yacht, Purchaser also acknowledges and agrees that (i) Purchaser is solely and exclusively responsible for any errors or omissions of Purchaser’s agent(s), notwithstanding the fact that ACY may have provided information and assisted Purchaser with hiring any such agent(s); and (ii) Purchaser shall instruct Purchaser’s agent(s) to examine, and/or conduct the sea trial of, the Commissioned Yacht to ensure that the Commissioned Yacht meets the Specifications. Unless ACY receives a Commissioning Defect Notice (as defined below) within the Commissioning Inspection Period, Purchaser must take delivery of the Commissioned Yacht and must ensure that the Commissioned Yacht is removed from the Commissioning Location within three (3) business days after termination or the end of the Commissioning Inspection Period.

c) Commissioning Defect Notices; Repairs. Failure of Purchaser to deliver written notice to ACY of any defects with respect to the Commissioning Services (“Commissioning Defect Notice”), within three (3) calendar days after the termination or end of the Commissioning Inspection Period, shall constitute a waiver of any right to a Commissioning Inspection, a waiver of any right to submit Commissioning Defects (as defined below), and shall be deemed to constitute full and final acceptance of the Commissioned Yacht by Purchaser. Upon receipt of a Commissioning Defect Notice, ACY shall determine in its reasonable discretion whether the items noted in the Defect Notice are in fact Commissioning Defects (“Commissioning Defects”). If ACY determines in its reasonable discretion that the items are in fact Commissioning Defects, ACY shall use commercially reasonable efforts to remedy any Commissioning Defects with respect to the Commissioning Services addressed in the Commissioning Defect Notice in accordance with sound maritime practice at no additional cost to Purchaser. In the event of a disagreement with respect to whether or not a defect set forth in the Defect Notice is in fact a defect and whether or not it is a Commissioning Defect, the Purchaser has the right, at his/her own expense, to have an independent surveyor mutually acceptable to the Parties inspect the Commissioned Yacht within a reasonable amount of time, and Purchaser shall be obligated to take delivery of the Commissioned Yacht subject to ACY’s continuing obligation to remedy within a reasonable amount of time the Commissioning Defects in accordance with sound maritime practices if the independent surveyor determined that there is in fact a Commissioning Defect. Notwithstanding anything to the contrary in this Agreement, at any time after receipt by ACY of a Commissioning Defect Notice, ACY shall have the option to terminate this Agreement, in which case (i) ACY shall refund a pro-rata portion of payments made by Purchaser pursuant to this Agreement and such refund shall be the sole and exclusive remedy of Purchaser in connection with this Agreement, and (ii) to the extent title has passed to Purchaser, Purchaser will transfer title to ACY free and clear of any and all liens .

d) Final Delivery. Removal of the Commissioned Yacht from the Commissioning Location by Purchaser (the “Final Delivery”) shall constitute and shall be deemed to constitute (i) Purchaser’s full and final acceptance of the Commissioned Yacht, (ii) Purchaser’s agreement that Purchaser is satisfied that ACY has completed any and all work other than remaining items, if any, identified on the Commissioning Defect Notice, checks, or maintenance necessary to assist Purchaser in establishing Purchaser’s warranty commitments, and (iii) Purchaser’s agreement that Purchaser accepts all of the responsibilities of the Commissioned Yacht and affirms the waiver for any and all implied warranties, including but not limited to its fitness for its intended purpose.

5. Payments; Financing; Taxes and Duties.
a) Payments. Purchaser’s account, including any open balances and holdbacks, as modified by the Change Orders (if any), shall be paid in full, in immediately available United States funds, within two (2) business days after termination of the Commissioning Inspection Period and prior to Purchaser removing the Commissioned Yacht from the Commissioning Location (the “Final Settlement”). The Commissioned Yacht will not be allowed to depart the Commissioning Location without payment and clearance in full of Purchaser’s account and all amounts owed with respect to the Commissioned Yacht.

b) Financing. Purchaser’s obligations are not contingent upon Purchaser’s obtaining financing. Purchaser represents and warrants that Purchaser will arrange financing, if necessary. Purchaser acknowledges that ACY has made no representations or warranties with respect to Purchaser’s ability to obtain financing, Purchaser’s qualifications to obtain any type of mortgage on the Commissioned Yacht, or Purchaser’s ability to document or register the Commissioned Yacht in any jurisdiction, national or international, and for any purpose, including any financing-related purpose.

c) Taxes; Duties. Any sales or use taxes and/or duties due in connection with the transactions contemplated by this Agreement shall be the sole responsibility of Purchaser and shall be collected by ACY no later than the Final Settlement. Purchaser shall indemnify and hold harmless ACY from and against any sales or use taxes and/or duties for which Purchaser is responsible.

6. Title and Risk of Loss. Other than upon a transfer of title to ACY pursuant to Section 4(c), title and risk of loss, damage, or destruction with respect to the Commissioned Yacht shall remain with Purchaser throughout the term of this Agreement. For the avoidance of doubt, Purchaser shall be solely and exclusively responsible for the Commissioned Yacht, including without limitation, for (a) protecting the Commissioned Yacht from, and insuring the Commissioned Yacht against, loss, damage, and destruction, (b) equipping the Commissioned Yacht according to the requirements of any appropriate authority, (c) recording the title and registering the Commissioned Yacht with the proper authorities, and (d) selecting the insurance carriers, financiers, captain, crew, and all other matters with respect to the Commissioned Yacht, notwithstanding the fact that ACY may have provided information and/or assisted Purchaser with hiring such third parties. Both Parties understand and agree that the Commissioning and the Commissioning Services do not create a bailment, consignment, lease, or other similar relationship between ACY and Purchaser regarding the Commissioned Yacht.

7. Representations and Warranties. Purchaser represents and warrants that he/she is aware of his/her obligations under Section 4 (Delivery and Commissioning Inspection of the Commissioned Yacht) and Section 5 (Payments, Financing, Taxes, and Duties) and Purchaser represents, warrants, and covenants that, upon Final Delivery, Purchaser shall have performed (or shall have voluntarily waived, as applicable) all rights and obligations included in Section 4 and shall have performed all rights and obligations included in Section 5. In addition, Purchaser represents and warrants that he/she/it has the requisite power and authority to enter into this Agreement and to perform its obligations, and is deemed to be signing personally or as an agent for Purchaser. ACY shall use commercially reasonable efforts to pass on any warranty related to the Commissioned Yacht or the Commissioning Services; provided, however, it is understood and agreed that any applicable warranties are between Purchaser and the applicable manufacturers or vendors (and not ACY). Further, it is Purchaser’s sole and exclusive responsibility to follow all of the manufacturers’ or vendors’, as applicable, warranty procedures. ACY warrants to Purchaser that its installation of after-market equipment shall be in accordance with the applicable manufacturer’s instructions and ACY’s workmanship shall be free from defect, in each case for a period of one (1) year after Final Delivery. THE WARRANTIES SET FORTH IN THE IMMEDIATELY PRECEDING SENTENCE SETS FORTH ACY’S SOLE WARRANTIES, EXPRESS OR IMPLIED, CONCERNING THE COMMISSIONING SERVICES, AND ARE MADE EXPRESSLY IN LIEU OF ALL OTHER WARRANTIES, EXPRESS, IMPLIED, OR STATUTORY, OR WHETHER ARISING BY COURSE OF DEALING OR PERFORMANCE, CUSTOM, USAGE IN THE TRADE OR PROFESSION OR OTHERWISE, INCLUDING BUT NOT LIMITED TO, IMPLIED WARRANTIES OF FITNESS FOR A PARTICULAR PURPOSE, MERCHANTABILITY, INTERFERENCE WITH ENJOYMENT OR OTHERWISE, ALL OF WHICH ARE HEREBY EXPRESSLY DISCLAIMED.

8. Limitations of Liability. Except to the extent finally determined by an appropriate court of law to have resulted from ACY’s gross negligence or intentional misconduct, ACY’s aggregate liability for all claims, losses, liabilities, or damages in connection with this Agreement or its subject matter, whether as a result of breach of contract, tort (including negligence), product liability, or otherwise, regardless of the theory of liability asserted, is limited to no more than that portion of the total price associated with the Commissioning Services actually paid by Purchaser to ACY pursuant to this Agreement. IN ADDITION, TO THE MAXIMUM EXTENT PERMITTED BY LAW, NEITHER PARTY NOR THEIR AFFILIATES OR AGENTS SHALL BE LIABLE, UNDER ANY CONTRACT, NEGLIGENCE, STRICT LIABILITY, OR OTHER LEGAL OR EQUITABLE THEORY FOR ANY LOST PROFITS, INDIRECT, SPECIAL, INCIDENTAL, CONSEQUENTIAL, PUNITIVE, OR EXEMPLARY DAMAGES.

9. Confidentiality. All terms of this Agreement, including but not limited to fee and expense structure and purchase price, are considered “Confidential Information” for purposes of this Agreement. Purchaser will hold all Confidential Information in strict confidence. Purchaser shall not use or disclose Confidential Information to third parties without ACY’s prior written consent, or an order of a court or other governmental body in the United States or any political subdivision thereof, and shall disclose such Confidential Information only to the extent of and for the purposes of such order; provided, however, that prior to any such disclosure, Purchaser shall immediately notify ACY in writing of the order and permit ACY to seek an appropriate protective order.

10. Default. Purchaser’s failure to make any payment in full, when due, as required hereunder or Purchaser’s breach of any term, condition, representation, warranty, covenant, or other obligation contained in this Agreement shall be deemed an immediate default (an “Event of Default”). Upon an Event of Default, ACY shall have any and all remedies available to it at law or in equity, including the option, in ACY’s sole discretion, to terminate all delivery and/or commissioning obligations to Purchaser and make other arrangements for the sale of the Commissioned Yacht, it being understood and agreed that Purchaser shall be liable for all costs associated with the resale of the Commissioned Yacht, including discounts, commissions, dockage, and upkeep, and other associated expenses resulting from Purchaser’s breach. Additionally, upon an Event of Default, ACY shall be entitled to retain any payments or deposits made by Purchaser as liquidated damages, toward satisfaction of claims and entitlements for damages for Purchaser’s breach.

11. Miscellaneous.
a) Accuracy of Information. Information on the Commissioned Yacht is believed to be good and correct, and ACY offers such information in good faith, but does not guarantee the accuracy of such information.

b) Force Majeure. Neither Party shall be liable to the other for any delay or failure to perform any of the agreements or other obligations in this Agreement (except for the payment of money) due to causes beyond its reasonable control, including without limitation, acts of God, acts of terrorism, piracy, pandemics and pandemic-like situations, quarantine restrictions, strikes, lockouts, riots, acts of war, fire, communication line failures, computer viruses, power failures, accidents, tropical storms, hurricanes, earthquakes, or other natural disasters.

c) Uncertainty of Delivery and Supply. Purchaser, recognizing the uncertainty of absolute deliveries and supply chains, hereby acknowledges that no claims for damages arising from the failure to deliver the Commissioned Yacht on the requested delivery date shall be made when such failure is due to reasons beyond the control of ACY. Notwithstanding anything to the contrary in this Agreement, upon the determination by ACY that delivery of the Commissioned Yacht or any individual parts, components, or services will not occur within a reasonable amount of time due to reasons beyond the control of ACY, ACY shall have the option to terminate this Agreement, or remove parts, components, or services from the Commissioning Services Agreement, in which case ACY shall refund the corresponding payments for these items made by Purchaser pursuant to this Agreement and such refund shall be the sole and exclusive remedy of Purchaser in connection with this Agreement.

d) Notices. All notices required under this Agreement must be in writing and may be made by personal delivery or overnight courier and shall be effective upon delivery with proof of delivery retained.

e) Costs and Expenses. The Parties agree that if a court determines that a Party has failed to fulfill its legal obligations under this Agreement, that breaching Party shall pay all costs and expenses, including reasonable attorney’s fees incurred by the other non-breaching Party in enforcing the prevailing Party’s rights under this Agreement.

f) Jurisdiction, Venue, and Jury. This Agreement, and the rights and obligations of the Parties hereunder, shall be governed by and construed in accordance with the laws of the Commonwealth of Virginia applicable to contracts made and to be performed therein, excluding its conflicts of law provisions. Any action under this Agreement shall be brought in a court of competent jurisdiction in Fairfax County, Virginia, and the Parties hereby: (i) agree that jurisdiction and venue are proper in Fairfax County, Virginia; (ii) consent to personal jurisdiction in Fairfax County, Virginia; and (iii) waive any right to transfer this case to any other court or forum without consent of the other Party. THE PARTIES HAVING BEEN ADVISED TO CONSULT LEGAL COUNSEL WITH RESPECT TO THIS AGREEMENT, HEREBY EACH WAIVE ANY AND ALL RIGHTS THEY MIGHT HAVE TO HAVE ANY DISPUTE HEREUNDER ADJUDICATED BY A JURY.

g) Entire Agreement; Amendments; Enforceability. This Agreement and the Purchase Agreement (i) supersede any and all prior oral or written agreements between the Parties pertaining to the subject matter contained herein and therein, (ii) represent the entire agreement of the Parties with respect to the subject matter hereof and thereof and that there are no other duties, obligations, liabilities, or warranties, implied or otherwise, except as specifically set forth herein and therein, and (iii) may be modified, amended, discharged, or waived in part or in whole only by an agreement in writing signed by the Party to be bound. There are no other duties, obligations, liabilities, or warranties, implied or otherwise, except as set forth herein and therein. If any provision of this Agreement is found to be unenforceable or invalid, the remainder of such provision shall be enforced to the maximum extent permitted by law.

h) No Waivers. ACY’s failure to insist on compliance or enforcement of any provision of this Agreement shall not affect its validity or enforceability nor constitute a waiver of future enforcement of that provision or of any other provision of this Agreement.

i) Assignment. This Agreement shall be binding upon and enforceable by and against the Parties, as well as against each of their successors, legal representatives, heirs, and assigns. Purchaser may assign this Agreement to any member(s) of Purchaser’s immediate family; otherwise, Purchaser may not assign this Agreement without ACY’s prior written consent, and any assignment without such consent shall be null, void, and invalid. ACY may freely assign this Agreement in its sole discretion. If a Party does assign this agreement, such Party shall notify the other Party in writing within sixty (60) days from the assignment.

j) Counterparts. The Parties may sign this Agreement in any number of identical counterparts, each of which will be deemed an original (including signatures evidenced via facsimile or electronic mail) with the same effect as if the signatures were upon the same instrument.

k) Price Escalation. The contract price for the Commissioning and/or Commissioning Services has been calculated based on the current prices for the component materials and labor. However, the market for the materials and labor needed to accomplish the Commissioning and/or Commissioning Services have been volatile and sudden price/cost increases may occur. ACY agrees to use its best efforts to obtain the lowest possible prices from available suppliers and labor but should there be an increase in the prices of the materials that are purchased after execution of the contract for Commissioning or an increase in the cost of labor for the Commissioning, Purchaser agrees to pay these cost increases to ACY. Any claim by ACY for payment of a cost increase, as provided above, shall require written notice delivered to the Purchaser stating the increased cost of material or labor and the material(s) in question.

In connection with the Commissioning Services and installation of any after-market options on the Commissioned Yacht by ACY, as set forth in the Purchase Agreement and any Change Orders thereto, as defined herein and in the Purchase Agreement, Purchaser agrees to the above terms and conditions.