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During Raffles construction/ COnditions for delivery

With Raffles shipbuilding contract conditions for acceptance / delay subject to independent review by the Chairman, (and / or legal and technical advisors approved / appointed by them as required) before construction starts, the legal acceptance (not physical acceptance) of Raffles at the completion of its construction is based upon it that it must:

• Be certified as classed by Lloyd’s Register and confirmed by Lloyd’s as being in compliance with international regulations for a commercial passenger ship with the class (and notations) to be obtained a condition of “performance” of the shipbuilding contract.
• Be accepted by the Isle of Man Government into their ship registry which may involve additional to Lloyd’s, and International requirements.
• Be accepted by first class hull and machinery (H&M) and protection and indemnity club (P&I) underwriters to be insured (subject to deductibles), without which Raffles cannot be legally operated.
• Be certified to the owners / The Bank satisfaction, free of all debt and liens by Alexanders, and / or Ernst & Young.

With the above all signalling the vessels legal completion in accordance with the terms of the shipbuilding contract / specification. Thus allowing its subsequent technical or physical acceptance and then handover or delivery to owners to take place.

The physical acceptance which follows legal acceptance may in addition to Lloyd's / IoM surveys be subject to a final inspection by a UK qualified chartered quantity surveyor (QS) appointed by the owners / the Chairman or Ernst & Young to confirm that all non statutory / technical conditions and non essential material supply such as carpets, stereo systems, TV’s etc., as per the shipbuilding contract / specifications and / or individual apartment contracts have been met

It is Raffles Limited that contracts directly with AMS based on one time licensing of FVH design / engineering for the physical construction of Raffles under a standard shipbuilding contract modified from the Association of West European Shipbuilders standard document.

Stage payments due from the individual owners are made only to Raffles Limited company account and payments due under the shipbuilding contract are not authorised for release by the bank / Ernst & Young, and / or escrow agents to AMS until a certificate of progress is provided by Lloyd’s or equal and against a pre-agreed milestone / happening or a physical stage of construction being reached, which are set out as condition(s) precedent in the shipbuilding contract.

Ernst & Young examine Raffles / AMS project accounts on a monthly basis all through the construction period, providing monthly reports to Alexanders, the Chairman, The Bank(s). Ernst & Young will also audit the company accounts for the IoM Government reporting purposes at least twice during construction even though technically the company is not trading.

During construction of Raffles, the ship and AMS as the builders, and the owners are fully insured with this arranged by Marsh with leading underwriters who are acceptable to the Chairman / bank / Ernst & Young, located in London, Munich, Paris, Singapore and Zurich for:

• Shipbuilding risks, including third party.
• Sovereign risks (including third supplier country).
• Professional indemnity.
• Workman’s compensation.
• Cargo (destined for Raffles as appropriate).
• Business disruption (as appropriate / available).

With these insurances to the satisfaction of the Chairman and with Marsh also advising the Chairman, The Bank and owners on all insurance matters, including later in obtaining suitable post construction H&M, P&I Club insurance for Raffles operation.

The full Isle of Man company by-laws are initially proposed by the legal advisors and decided / modified by all 122 owners advised by the Chairman as early as possible during Raffles 2 years construction period however they only come into force at legal handover by the builders / AMS when the ownership of Raffles is 100% by the 122 owners.

During Raffles actual construction the IoM company operates under simplified by-laws that reflect that its only activity is the ongoing acquisition of Raffles.

As early as possible during construction all 122 owners should decide in a ballot, held by Alexanders and / or Ernst & Young, to accept or not the builder’s offer of a special 5 year guarantee on Raffles the ship, and to accept the condition for this, that the builders / FVH to protect their interests will also manage the vessels operation for the same period.