SHIPBUILDING CONTRACT OF ONE (1) 176,000 DWT BULK CARRIER (HULL NO. H1074) PRELIMINARY NAME: TBN 1 BETWEEN EPTAPROHI SHIPPING CORPORATION. AS BUYER AND JIANGSU RONGSHENG HEAVY INDUSTRIES GROUP CO., LTD. AS BUILDER
EXHIBIT
10.31
OF
ONE
(1)
176,000 DWT
BULK
CARRIER
(HULL
NO.
H1074)
PRELIMINARY
NAME: TBN 1
BETWEEN
EPTAPROHI
SHIPPING CORPORATION.
AS
BUYER
AND
JIANGSU
RONGSHENG HEAVY INDUSTRIES GROUP CO., LTD.
AS
BUILDER
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INDEX
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PAGE
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PREAMBLE
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5
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ARTICLE
I - DESCRIPTION AND CLASS
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5 | ||
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1.
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Description:
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5
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2.
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Class
and Rules:
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6
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3.
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Principal
Particulars of the VESSEL:
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7
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4.
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Subcontracting
Construction outside Builder’s Premise:
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8
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5.
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Registration:
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8
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ARTICLE
II - CONTRACT PRICE AND TERMS OF PAYMENT
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10
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1.
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Contract
Price:
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10
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2.
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Adjustment
of Contract Price:
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10
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3.
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Currency:
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10
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4.
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Terms
of Payment:
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10
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5.
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Method
of Payment:
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12
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6.
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Prepayment.
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13
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7.
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Refunds:
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13
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8.
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Security
for Payment of Instalments before Delivery:
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14
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ARTICLE
III - ADJUSTMENT OF CONTRACT PRICE
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15
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1.
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Delivery:
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15
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2.
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Speed:
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16
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3.
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Fuel
Consumption:
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17
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4.
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Deadweight:
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17
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5.
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Effect
of Rescission:
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18
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6.
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Method
of Settlement:
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18
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ARTICLE
IV - APPROVAL OF PLANS AND DRAWINGS AND INSPECTION DURING
CONSTRUCTION
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19
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1.
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Approval
of Plans and Drawings:
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19
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2.
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Appointment
of the BUYER’s REPRESENTATIVE:
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20
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3.
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Inspection
by REPRESENTATIVE:
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20
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4.
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Facilities:
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21
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5.
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Liability
of the BUILDER:
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22
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6.
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Responsibility
of the BUYER:
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22
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7.
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Salaries
and Expenses:
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23
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ARTICLE
V - MODIFICATION
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24
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1.
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Modification
of Specifications:
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24
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2.
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Change
in Class, etc.:
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24
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3.
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Substitution
of Materials:
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25
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ARTICLE
VI - TRIALS AND ACCEPTANCE
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26
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1.
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Notice:
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26
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2.
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Weather
Condition:
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26
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3.
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How
Conducted:
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27
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4.
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Method
of Acceptance or Rejection:
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27
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5.
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Effect
of Acceptance:
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28
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2
of 63
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6.
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Disposition
of Surplus Consumable Stores:
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28
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ARTICLE
VII - DELIVERY
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29
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1.
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Time
and Place:
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29
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2.
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Notice:
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29
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3.
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When
and How Effected:
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29
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4.
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Documents
to be Delivered to the BUYER:
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29
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5.
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Tender
of the VESSEL:
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31
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6.
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Title
and Risk:
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31
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7.
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Removal
of the VESSEL:
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31
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ARTICLE
VIII - DELAYS AND EXTENSION OF TIME FOR DELIVERY (FORCE
MAJEURE)
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32
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1.
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Causes
of Delay:
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32
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2.
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Notice
of Delays:
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32
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3.
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Definition
of Permissible Delays:
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33
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4.
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Definition
of Non-Permissible Delays:
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33
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5.
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Right
to Rescind for Excessive Delay:
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33
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ARTICLE
IX - WARRANTY OF QUALITY
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34
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1.
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Guarantee
of Material, Workmanship:
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34
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2.
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Notice
of Defects:
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34
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3.
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Remedy
of Defects:
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34
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4.
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Extent
of BUILDER’s Liability:.
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37
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ARTICLE
X - RESCISSION OF THE CONTRACT
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39
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1.
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Notice:
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39
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2.
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Refund
by the BUILDER:
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39
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3.
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Discharge
of Obligations:
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39
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4.
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Refundment
Guarantee:
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40
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ARTICLE
XI - BUYER’S DEFAULT
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41
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1.
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Definition
of Default:
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41
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2.
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Interest
and Charge:
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41
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3.
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Effect
of Default:
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42
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4.
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Sale
of the VESSEL:
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42
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ARTICLE
XII - INSURANCE
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44
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1.
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Extent
of Insurance Coverage:
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44
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2.
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Application
of Recovered Amount:
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44
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3.
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Termination
of the BUILDER’s obligation to insure:
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45
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4.
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Insurance
Confirmation:
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45
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ARTICLE
XIII - DISPUTES AND ARBITRATION
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46
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1.
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Proceedings:
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46
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2.
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Notice
of Award:
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47
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3.
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Expenses:
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47
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4.
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Entry
in Court:
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47
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5.
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Alteration
of Delivery Time:
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47
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ARTICLE
XIV - RIGHTS OF ASSIGNMENT
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48
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1.
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Assignment:
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48
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2.
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Assignment
of Guarantee Claims:
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48
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ARTICLE
XV - TAXES AND DUTIES
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49
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3
of 63
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Taxes
and Duties in the People’s Republic of China:
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49
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ARTICLE
XVI - PATENTS, TRADEMARKS, COPYRIGHTS, ETC.
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50
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1.
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Patents,
Trademarks and Copyrights:
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50
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2.
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General
Plans, Specifications and Working Drawings:
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50
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ARTICLE
XVII - BUYER’s SUPPLIES
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51
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1.
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Responsibility
of the BUYER:
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51
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2.
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Responsibility
of the BUILDER:
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52
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3.
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Joint
Responsibility of the Parties hereto:
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52
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ARTICLE
XVIII - NOTICE AND CORRESPONDENCE
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53
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1.
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Address:
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53
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2.
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Language:
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53
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ARTICLE
XIX - EFFECTIVE DATE OF CONTRACT
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54
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ARTICLE
XX - INTERPRETATION
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55
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1.
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Laws
Applicable:
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55
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2.
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Discrepancies:
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55
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3.
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Entire
Agreement:
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55
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ARTICLE
XXI - CONFIDENTIALITY
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56
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EXHIBIT
A
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58
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EXHIBIT
B
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60
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EXHIBIT
C
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63
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END
OF
CONTRACT
4
of 63
FOR
ONE
(1) 176,000-DWT
BULK
CARRIER
THIS
CONTRACT, made on this 6th day of December 2006 by and between JIANGSU RONGSHENG
HEAVY INDUSTRIES GROUP CO., LTD., a corporation organized and existing under
the
laws of the People’s Republic of China, having its business office at ▇▇. ▇▇▇,
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ , ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, the People’s Republic of China (hereinafter
called the “BUILDER”), the party of the first part, and EPTAPROHI SHIPPING
CORPORATION, a corporation organized and existing under the laws of Liberia,
having its principal office at ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ (hereinafter
called the “BUYER”), the party of the second part, them also being referred to
individually as the “Party” or collectively as the “Parties”
hereinafter.
WITNESSETH:
IN
CONSIDERATION OF the mutual covenants contained herein, the BUILDER agrees
to
build, launch, equip and complete at the BUILDER’s SHIPYARD, Rugao Jiangsu
Province P.R.China(hereinafter called the “SHIPYARD”) and to sell and deliver to
the BUYER after completion and successful trial one (1) 176,000 DWT Bulk
Carrier
(hereinafter called the “VESSEL”) as more fully described in Article I hereof
and the relevant Exhibits hereto, to be registered under the flag of Malta
and
the BUYER agrees to purchase and take delivery of the aforesaid Vessel from
the
BUILDER at the SHIPYARD and to pay for the same in accordance with the terms
and
conditions hereinafter set forth.
ARTICLE
I - DESCRIPTION AND CLASS
| 1. |
Description:
|
The
VESSEL shall be a 176,000 DWT Bulk Carrier, at ▇▇▇▇▇▇▇▇▇ draft moulded of
18.25
meters of the class described below. The VESSEL shall have the BUILDER’s Hull
No. H1074 and shall be constructed, equipped and completed in accordance
with
the following Specifications and Plans of the date hereof signed by the Parties
hereto (hereinafter collectively called the “Specifications”), which are hereby
incorporated into this Contract and made an integral part hereof.
|
(1)
|
Specification
for 176,000 DWT Bulk Carrier (Drawing No. SC4481-010-02SM(0000101B))
(For
avoidance of any doubt, this VESSEL technically does not comply
with IMO
Performance Standard for Protective Coatings for dedicated seawater
ballast tanks.)
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(2)
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General
Arrangement (Drawing No. 0000001)
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(3)
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Midship
Section (Drawing No. 0000002)
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5
of 63
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(4)
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Makers
List for Equipment (Drawing No.
SC4481-010-05MX)
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(5)
|
Memo
(Ref. No.:
SC4481-010-02SM(0000101B)-M1)
|
The
details of such Specifications (1) thru (4) as set forth above shall be duly
signed by each of the Parties to this Contract.
| 2. |
Class
and Rules:
|
The
VESSEL, including its machinery and equipment, shall be designed and constructed
in accordance with the rules and regulations of Det Norske Veritas (DNV)
or
Lloyd’s Register (LR)(hereinafter called the “Classification Society”) issued
and having become effective up to and on the date of signing this Contract.
The
vessel is to be classed and registered according to the following notations
or
the equivalent LR notation:
+1A1,
Bulk carrier ESP, BC-A, Holds 2,4,6 and 8 may be empty, CSR, GRAB(25), ES(S),
bis, BWM-E(s), E0, TMON, OPP-F.
Upon
delivery, the Vessel shall also comply with the rules, regulations and
requirements of other regulatory bodies as specifically described in the
Specifications, all the foregoing rules, regulations and requirements and
amendments thereto including those of the Classification Society and other
regulatory bodies (as specified in the Specifications) applicable to the
Vessel
shall be those which entered into force on or before the date of signing
of this
Contract. Decisions of the Classification Society as to compliance or
non-compliance with their rules and regulations shall be final and binding
upon
the Parties hereto. Any amendments, variations or modifications to any of
the
above standards, rules or regulations in force and compulsively applicable
to
the vessel issued and having become effective up to and on the date of signing
this Contract shall be complied with in addition to the above standards,
rules
and regulations.
The
Contract Price as set forth in Article III entitled Contract Price is based
on
the version and amendments of the rules and regulations which are in force
up to
and on the date of signing this Contract as fully described in the
Specifications. It is stated hereto that the Contract Price as set forth
in
Article III does not include any cost involved by the upcoming new IMO
performance standard for protective coatings for dedicated seawater ballast
tanks in all types of ships, i.e. amendments for SOLAS regulations 11-1/3-2
and
XII/6.3.
The
BUILDER shall arrange with the Classification Society to assign a representative
or representatives (hereinafter called the “Classification Surveyor”) to the
BUILDER’s SHIPYARD for supervision of the construction of the
VESSEL.
All
fees
and charges incidental to the Classification Society and to comply with the
compulsory rules, regulations and requirements of this Contract as described
6
of 63
in
the
Specifications issued, in effect and applicable up to the date of signing
this
Contract as well as royalties, if any, payable on account of the construction
of
the VESSEL shall be for the account of the BUILDER, except as otherwise provided
and agreed herein.
Any
change in VESSEL resulting from changes in the rules and regulations other
than
set forth above shall be mutually agreed between the Parties whether in respect
of the Contract Price, delivery date, deadweight adjustments and others,
in
accordance with Article V - Modification, Changes and Extras, however, with
the
exception of any cost incurred as a result from changes in such rules and
regulations compulsory to the construction of the VESSEL coming into force
after
January 31st, 2010 but before the Newly Planned Delivery Date in case of
delay
of the Delivery Date as defined in Article VII hereof, unless
such
delay is a Permissible Delay as defined in Paragraph 4 in Article VIII
hereinafter.
Decision
of the Classification Society as to the compliance or noncompliance with
the
classification rules and regulations including those statutory rules and
regulations which the Classification Society is authorized to act on behalf
of
the relevant authorities shall be final and binding upon the Parties
hereto.
| 3. |
Principal
Particulars of the
VESSEL:
|
|
(a)
|
Hull:
|
|
Length
overall
|
abt.
|
291.80
m
|
|
|
Length
between perpendiculars
|
282.20
m
|
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|
Breadth
moulded
|
45.00
m
|
||
|
Depth
moulded
|
24.75
m
|
||
|
Designed
draught moulded
|
16.50
m
|
||
|
▇▇▇▇▇▇▇▇▇
draught moulded
|
18.25
m
|
||
|
Deadweight
at ▇▇▇▇▇▇▇▇▇ draft (summer
load line) in sea water of 1.025
specific gravity
|
176,000
mt
|
|
(b)
|
Propelling
Machinery and Guaranteed Speed:
|
The
VESSEL shall be equipped, in accordance with the Specifications, with one
(1)
set of MAN B&W 6S70MC ▇▇▇▇ VI type Main Engine manufactured in Korea under
license in line with the Makers List for Equipment. The BUILDER guarantees
that
the trial speed, after correction, is to be not less than 15.1 knots at design
draft (16.50m) at continuous output of main engine of 14,331KW at 86.2 rpm
(85%
MCR) with 15% sea margin on clean hull in deep sea water and under Beaufort
wind
force 4 (hereinafter called the “Guaranteed Speed”). The trial speed shall be
corrected for the actual wind speeds and directions and shallow water effect
at
the time of the speed test runs. The correction method of the speed shall
be as
specified in the Specifications.
7
of 63
|
(c)
|
Guaranteed
Deadweight:
|
The
BUILDER guarantees that the VESSEL is to have a deadweight of not less than
176,000 metric tons at ▇▇▇▇▇▇▇▇▇ draft even keel of 18.25 meters in sea water
of
1.025 specific gravity.
The
term,
“Deadweight”, as used in this Contract, shall be as defined in the
Specifications.
The
actual deadweight of the VESSEL expressed in metric tons shall be based on
calculations made by the BUILDER and checked by the BUYER and the Classification
Society, and all measurements necessary for such calculations shall be performed
in the presence of the BUYER’s REPRESENTATIVE(s) or the party authorized by the
BUYER and the Classification Society.
Should
there be any dispute between the BUILDER and the BUYER in such calculations
and/or measurements, the decision of the Classification Society shall be
final
and binding on the Parties hereto.
|
(d)
|
Guaranteed
Fuel Oil Consumption:
|
The
BUILDER guarantees that the fuel oil consumption of the Main Engine is not
to
exceed 169 grams/(kilowatt
x
hour) at
MCR at
shop trial based on diesel fuel oil having a lower calorific value of 10,200
kilocalories per kilogram at ISO standard condition (hereinafter called the
“Guaranteed Fuel Consumption”). The fuel oil consumption shall be calculated
accordingly based on the conversion formula issued by B&W; all as per
Specifications which in case of doubt shall prevail.
| 4. |
Subcontracting
Construction outside Builder’s
Premise:
|
The
BUILDER
may, at its sole responsibility, subcontract any part of the vessel to
experienced subcontractors within China and may, at the BUILDER’s sole
discretion, construct and assemble the blocks in such premise provided that
the
BUILDER shall remain fully responsible for such subcontracted work or
construction in other premise, provided the substantial part of the vessel
shall
be constructed and completed in the BUILDER’s SHIPYARD.
| 5. |
Registration:
|
The
VESSEL shall be
registered by the BUYER at its own cost and expenses under the laws of Malta
at
the time of delivery and acceptance of the VESSEL hereunder.
8
of 63
If
any
certificate is not applicable by Maltese authorities, the BUYER shall assist
the
BUILDER to obtain exemption of the said certificates in order to register
the
VESSEL under the flag of Malta.
(End
of
Article)
9
of 63
ARTICLE
II - CONTRACT PRICE AND TERMS OF PAYMENT
| 1. |
Contract
Price:
|
The
purchase price of the VESSEL is United States Dollars Eighty One Million
only
(US$81,000,000.-) net receivable by the BUILDER (hereinafter called the
“Contract Price”), which is exclusive of the BUYER’s Supplies as provided in
Article XVII hereof, and shall be subject to upward or downward adjustment,
if
any, as hereinafter set forth in this Contract.
The
Contract Price also includes all costs and expenses for supplying all necessary
drawings, certificates and ship’s model as stipulated in the Specifications,
except those to be furnished by the BUYER in accordance with the
Specifications.
| 2. |
Adjustment
of Contract Price:
|
Adjustment
of the Contract Price, if any, in accordance with provisions of this Contract
shall be made by way of addition to or subtraction from the instalment due
and
payable upon delivery of the VESSEL, or if this instalment or others will
not
suffice, from the respective instalment prior thereto, in the manner as
hereinafter provided.
| 3. |
Currency:
|
Any
and
all payments by the BUYER to the BUILDER under this Contract shall be made
in
United States Dollars. All lifting charge, if any, incurred in respect of
the
payments made at other banks than the BUILDER’s nominated bank in the People’s
Republic of China specified in Paragraph 5 of this Article shall be for the
BUYER’s account.
| 4. |
Terms
of Payment:
|
The
Contract Price including any adjustment thereof shall be paid by the BUYER
to
the BUILDER in five (5) instalments as follows:
| (a) |
1st
Instalment:
|
The
sum
of United States Dollars Sixteen Million Two Hundred Thousand Only
(US$16,200,000.00) representing twenty percent (20%) of the Contract Price
shall
be paid by the BUYER within five (5) banking days after the BUYER’s receipt of
the original Refund Guarantee for 1st instalments in the form set out in
Exhibit
A
|
(b)
|
2nd
Instalment
|
10
of 63
The
sum
of United States Dollars Sixteen Million Sixteen Million Two Hundred Thousand
Only (US$16,200,000.00) representing twenty percent (20%) of the Contract
Price
shall be paid by the BUYER within five (5) banking days after receipt by
the
BUYER of a Stage Certificate signed by the BUILDER, the BUYER’s REPRESENTATIVE
and the Classification Society Surveyor in the form set out in Exhibit C
hereto
certifying that steel-cutting of the VESSEL has taken place but always provided
that the 2nd
Instalment shall not be payable earlier than fifteen (15) months prior to
the
Delivery Date and Buyer’s receipt of the original Refund Guarantee covering the
refund of the second instalment’ in the form of hereto attached as Exhibit A
whichever is later.
|
(c)
|
3rd
Instalment:
|
The
sum
of United States Dollars Sixteen Million Sixteen Million Two Hundred Thousand
Only (US$16,200,000.00) representing twenty percent (20%) of the Contract
Price
shall be paid within five (5) banking days after receipt by the BUYER of
a Stage
Certificate signed by the BUILDER, the BUYER’s REPRESENTATIVE and the
Classification Society Surveyor in the form set out in Exhibit C hereto
certifying that laying of the first block of the keel of the VESSEL has taken
place always provided that this instalment shall not become due and payable
earlier than tweleve (12) months before the Delivery Date and and Buyer’s
receipt of the original Refund Guarantee covering the refund of the third
instalment’ in the form of hereto attached as Exhibit A whichever is
later.
|
(d)
|
4th
Instalment:
|
The
sum
of United States Dollars Sixteen Million Two Hundred Thousand Only
(US$16,200,000.00) representing twenty percent (20%) of the Contract Price
shall
be paid within five (5) banking days after receipt by the BUYER of a Stage
Certificate signed by the BUILDER, the BUYER’s REPRESENTATIVE and the
Classification Society Surveyor in the form set out in Exhibit C hereto
certifying that launching of the VESSEL has taken place and Buyer’s receipt of
the original Refund Guarantee covering the refund of the 4th
instalment’ in the form of hereto attached as Exhibit A whichever is
later.
|
(e)
|
5th
Instalment:
|
The
sum
of United States Dollars Sixteen Million Sixteen Million Two Hundred Thousand
Only (US$16,200,000.00) representing twenty percent (20%) of the Contract
Price
plus any increase or minus any decrease due to modification and/or adjustment
of
the Contract Price hereunder in accordance with the provisions of the relevant
Articles hereof shall be paid upon delivery of the VESSEL. In accordance
with
the Contract and
11
of 63
Specifications
and acceptance by the BUYER and delivery by the BUILDER to the BUYER of the
documents set out in Article VII
The
parties hereto shall use their best endeavours to agree on all adjustments
of
the Contract Price, if any, not later than three (3) banking days prior to
the
scheduled delivery date of the VESSEL.
The
date
on which any of the above instalments falls to be paid under this Contract
shall
be referred to as the “Due
Date”
in
this
Contract.
| 5. |
Method
of Payment:
|
|
(a)
|
1st
Instalment:
|
On
or
before the Due Date for payment of the 1st
intallment, the BUYER shall remit the amount of this instalment by telegraphic
transfer to the BANK nominated by the BUILDER at least five (5) banking days
prior to the Due Date with U.S. Dollar Saving account (hereinafter called
the
“BANK”)
for
the account of the BUILDER quoting the reference “Hull H1074
|
(b)
|
2nd
Instalment:
|
The
BUILDER shall by written notice by facsimile notify the BUYER at least seven
(7)
banking days prior to the scheduled steel-cutting date.
On
or
before the Due Date for payment of the 2nd
Instalment, the BUYER shall remit the amount of this instalment by telegraphic
transfer to the BANK for the account of the BUILDER quoting the reference
“Hull
H1074”.
|
(c)
|
3rd
Instalment:
|
The
BUILDER shall by written notice by facsimile notify the BUYER at least seven
(7)
banking days prior to the scheduled keel-laying date.
On
or
before the Due Date for payment of the 3rd
Instalment, the BUYER shall remit the amount of this instalment by telegraphic
transfer to the BANK for the account of the BUILDER quoting the reference
“Hull
H1074”.
|
(d)
|
4th
Instalment:
|
The
BUILDER shall by written notice by facsimile notify the BUYER at least seven
(7)
banking days prior to the scheduled launching date.
On
or
before the Due Date for payment of the 4th
Instalment, the BUYER shall remit the amount of this instalment by telegraphic
transfer to the
12
of 63
BANK
for
the account of the BUILDER quoting the reference “Hull H1074”.
|
(e)
|
5th
Instalment:
|
The
BUILDER shall by provide a detailed written notice to the BUYER by facsimile
setting out any adjustment, of the Contract Price in accordance with the
Contract not later than fourteen (14) banking days prior to the scheduled
Delivery Date.
The
BUILDER shall by written notice by facsimile notify the BUYER seven (7) banking
days prior to the scheduled delivery date.
The
BUYER
shall, at least three (3) banking days prior to the scheduled delivery date
of
the VESSEL, remit by bank transfer the amount of the 5th
Instalment as adjusted to the BANK, to be held for the account of the BUYER
to
be released to the BUILDER against presentation by the BUILDER to the BANK
of a
copy of the Protocol of Delivery and Acceptance of the VESSEL executed by
the
BUILDER and the BUYER as set forth in Paragraph 3 of Article VII hereof together
with an invoice for the amount due for the 5th
Instalment.
For
the
purpose of this Contract, “banking
day”
means
any day excluding Saturday, Sunday and public holidays in New York, Beijing,
Hong Kong, Piraeus and London.
| 6. |
Prepayment:
|
Prepayment
of any instalment due on or before delivery of the VESSEL shall be subject
to
mutual agreement between the Parties hereto.
| 7. |
Refunds:
|
All
payments made by the BUYER prior to the delivery of the VESSEL shall be in
the
nature of advance to the BUILDER, and in the event this Contract is rescinded
and/or cancelled by the BUYER, all in accordance with the specific terms
of this
Contract or the law permitting such cancellation, the BUILDER shall refund
to
the BUYER in United States Dollars the full amount of all sums already paid
by
the BUYER to the BUILDER under this Contract, together with interest at the
rate
of eight per cent (8%) per annum from the respective payment date(s) to the
date
of remittance by telegraphic transfer of such refund to the account specified
by
the BUYER. If the BUILDER is required to refund to the BUYER the instalments
paid by the BUYER to the BUILDER as provided in this Article, the BUILDER
shall
return to the BUYER all of the BUYER’s supplies as stipulated in Article V which
were not incorporated in the VESSEL and pay to the BUYER an amount equal
to the
cost to the BUYER of those supplies that were incorporated to the
VESSEL.
13
of 63
As
security to the BUYER for the payment of the 1st,
2nd,
3rd
and
4th
instalments paid prior to the delivery of the VESSEL, the BUILDER shall,
within
five (5) banking days prior to each installment, respectively provide the
BUYER’s bank with an individual Refund Guarantee for each of the 1st,
2nd,
3rd
and
4th
instalments to be issued by a reputable Chinese and/or international bank
and/or
international insurance company at the BUILDERS’s option acceptable to Buyers
and Buyers bank (the “Refund Guarantor”), in the form and substance of Exhibit A
with reasonable amendments, if any. All four Refund Guarantees must be
registered with SAFE,
| 8. |
Security
for Payment of Instalments before
Delivery:
|
The
BUYER
shall, concurrently with the payment of 1st
instalment of the Contract Price, deliver to the BUILDER an irrevocable and
unconditional letter of guarantee (“Payment Guarantee”) issued by a bank to be
nominated by BUYER (“Payment Guarantor”). Such Payment Guarantee issued by the
Payment Guarantor in a form annexed hereto as Exhibit B, in favour of the
BUILDER, shall guarantee the BUYER’s obligation for the payment of the
2nd
instalment of the Contract Price. All cost, fees and duties for such Payment
Guarantee shall be borne by BUILDER. Such Payment Guarantee shall be acceptable
to BUILDER and BUILDER’s bank.
(End
of
Article)
14
of 63
ARTICLE
III - ADJUSTMENT OF CONTRACT PRICE
The
Contract Price shall be subject to adjustment, as hereinafter set forth,
in the
event of the following contingencies (it being understood by both Parties
that
any reduction of the Contract Price is by way of liquidated damages only,
and
not by way of penalty):
| 1. |
Delivery:
|
|
(a)
|
No
adjustment shall be made and the Contract Price shall remain unchanged
for
the first thirty (30) days of delay in delivery of the VESSEL beyond
the
Delivery Date as defined in Article VII hereof (ending as of twelve
o’clock midnight China Standard Time of the thirtieth (30th) day
of
delay).
|
|
(b)
|
If
the delivery of the VESSEL is delayed more than thirty (30) days
after the
Delivery Date, then, in such event, beginning at twelve o’clock midnight
of the thirtieth (30th) day after the Delivery Date, the Contract
Price
shall be reduced by deducting therefrom the sum of United States
Dollar
fifteen thousand only (US$15,000.-) per day from the thirtieth
(30th) day
till the date of actual delivery as set forth in Article VII
hereof.
|
Unless
the Parties hereto agree otherwise, the total reduction in the Contract Price
shall be deducted from the Contract Price payable.
|
(c)
|
But
if the delay in delivery of the VESSEL should continue for a period
of one
hundred eighty (180) days from the thirty-first (31st) day after
the
Delivery Date, then, in such event, and after such period has expired,
the
BUYER may at its option rescind or cancel this Contract in accordance
with
the provisions of Article X hereof. The BUILDER may, at any time
after the
expiration of the aforementioned one hundred eighty (180) days
of delay in
delivery, if the BUYER has not served notice of rescission as provided
in
Article X hereof, demand in writing that the BUYER shall make an
election,
in which case the BUYER shall, within fifteen (15) days after such
demand
is received by the BUYER, notify the BUILDER of its intention either
to
rescind/cancel this Contract or to consent to the acceptance of
the VESSEL
at agreed reduction price and at agreed future date (the “Newly Planned
Delivery Date”); it being understood by the parties hereto that, if the
VESSEL is not delivered by such Newly Planned Delivery Date, the
BUYER
shall have the same right of rescission or cancellation upon the
same
terms and conditions as hereinabove
provided.
|
|
(d)
|
For
the purpose of this Article, the delivery of the VESSEL shall be
deemed to
be delayed when and if the VESSEL, after taking into full account
all
postponements of the Delivery Date by reason of Permissible Delays
as
defined in Article VIII, is not delivered by the date upon which
delivery
is required under the terms of this
Contract.
|
15
of 63
|
(f)
|
In
the event that the BUILDER is unable to deliver the Vessel on the
Newly
Planned Delivery Date as declared, the VESSEL can, nevertheless,
be
delivered by the BUILDER at a date after such declared Newly Planned
Date.
|
In
such
circumstances, and for the purpose of determining the liquidated damages
and/or
penalties to the BUYER (according to the provisions of Paragraph 1(b) of
this
Article) and the BUYER’s right to cancel or rescind this Contract (according to
the provisions of Paragraph 1(c) of this Article), the Newly Planned Delivery
Date declared by the BUILDER shall not be in any way treated or taken as
having
substituted the original Delivery Date as defined in Article VII. The BUYER’s
aforesaid right for liquidated damages and/or penalties and/or to cancel
or
rescind this Contract shall be accrued, operated or exercised only to the
extent
as described in Paragraph 1(a), 1(b) and/or 1(c) of Article III. In whatever
circumstances, the Delivery Date as defined in Article VII (not the Newly
Planned Delivery Date as declared by the BUILDER) shall be used to regulate,
as
so described in Paragraph 1 (a), 1(b) and/or 1(c) of Article III, the BUYER’s
right for liquidated damages and/or penalties and to rescind this Contract
and
the BUILDER’s liability to pay the aforesaid liquidated damages and/or penalties
resulting from the delay in delivery of the VESSEL.
| 2. |
Speed:
|
|
(a)
|
The
Contract Price shall not be affected or changed by reason of the
actual
speed, as determined by trial run, being less than three-tenths
(3/10) of
one (1) knot below the Guaranteed Speed of the VESSEL specified
and
required under Paragraph 3(b) of Article I of this Contract (hereinafter
called the Guaranteed Speed”).
|
|
(b)
|
However,
commencing with and including such deficiency of three-tenths (3/10)
of
one (1) knot in actual speed below the Guaranteed Speed of the
VESSEL, the
Contract Price shall be reduced as follows (but disregarding fractions
of
one-tenth (1/10) of a knot):
|
|
For
Three-tenths (3/10) of a knot
|
-
|
a
total sum of US$100,000.-
|
|
For
Four-tenths (4/10) of a knot
|
-
|
a
total sum of US$150,000.-
|
|
For
Five-tenths (5/10) of a knot
|
-
|
a
total sum of US$260,000.-
|
|
For
Six-tenths (6/10) of a knot
|
-
|
a
total sum of US$400,000.-
|
|
For
Seven-tenths (7/10) of a knot
|
-
|
a
total sum of US$550,000.-
|
|
For
Eight-tenths (8/10) of a knot
|
-
|
a
total sum of US$700,000.-
|
|
(c)
|
If
the deficiency in actual speed of the VESSEL upon trial run is
more than
nine-tenths (9/10) of a knot below the Guaranteed Speed of the
VESSEL,
then the BUYER may, at its option, reject the VESSEL and rescind
this
Contract in accordance with the provisions of Article X
|
16
of 63
hereof,
or may accept the VESSEL at a reduction in the Contract Price as above provided,
that is, at a total reduction of United States Dollars seven hundred thousand
only (U.S.$700,000.-).
| 3. |
Fuel
Consumption:
|
|
(a)
|
The
Contract Price shall not be affected or changed by reason of the
fuel
consumption of the Main Engine, as determined by shop trial as
per the
Specifications, being more than the Guaranteed Fuel Consumption
of the
Main Engine of 169 grams/(Akilowatt
x hour) at
MCR specified and required under Paragraph 3(d) of Article I of
this
Contract, if such excess is not more than five percent (5%) over
the
Guaranteed Fuel Consumption.
|
|
(b)
|
However,
commencing with and including an excess of five percent (5%) in
the actual
fuel consumption over the Guaranteed Fuel Consumption of the Main
Engine,
the Contract Price shall be reduced by the sum of United States
Dollars
(US$100,000.-) for each full one percent (1%) increase in fuel
consumption
above said five percent (5%) (fractions of one percent (1%) to
be
prorated), up to a maximum of eight percent (8%) over the Guaranteed
Fuel
Consumption of the Main Engine.
|
|
(c)
|
If
such actual fuel consumption exceeds eight percent (8%) of the
Guaranteed
Fuel Consumption of the Main Engine, the BUYER may, at its option,
reject
the VESSEL and rescind this Contract in accordance with the provisions
of
Article X hereof, or may accept the VESSEL at a reduction in the
Contract
Price as above specified for eight percent (8%) only, that is,
at a total
reduction of United States Dollars three hundred thousand
(US$300,000.-).
|
| 4. |
Deadweight:
|
|
(a)
|
The
Contract Price shall not be affected or changed by reason of the
actual
deadweight tonnage determined as provided for in the Specifications
being
below the deadweight tonnage specified and required under Paragraph
3(c)
of Article I of this Contract (hereinafter called the “Guaranteed
Deadweight”), if such deficiency in the actual deadweight tonnage is not
more than one thousand (1,000) metric
tons.
|
|
(b)
|
In
the event that the actual deadweight of the VESSEL as determined
in
accordance with the Specifications is less than the guaranteed
deadweight
of the VESSEL, the Contract Price shall be reduced by the sum of
United
States Dollars one thousand (US$1,000.-) for each full metric ton
of such
deficiency being more than one thousand (1,000) metric tons, up
to a
maximum reduction of United States Dollars one million five hundred
(U.S.$1,500,000.-) but disregarding fractions of one (1) metric
ton.
|
|
(c)
|
In
the event of such deficiency in the actual deadweight of the VESSEL
|
17
of 63
being
two
thousand five hundred (2,500) metric tons or more, then the BUYER may, at
its
option, reject the VESSEL and rescind this Contract in accordance with the
provisions of Article X hereof, or may accept the VESSEL at a reduction in
the
Contract Price as above provided for metric tons only, that is, at a total
reduction of United States Dollars one million five hundred
(US$1,500,000.-).
| 5. |
Effect
of Rescission:
|
It
is
expressly understood and agreed by the Parties hereto that in any case, if
the
BUYER rescinds this Contract under this Article, the BUYER, subject to the
provisions of Article X hereof, shall not be entitled to any liquidated damages,
other than the refund of the instalments already paid and payment of interest
accrued thereon as provided in Article X hereof.
| 6. |
Method
of Settlement:
|
Every
and
all adjustment of the Contract Price provided in this Article shall be balanced
at the payment due upon delivery of the VESSEL.
(End
of
Article)
18
of 63
ARTICLE
IV - APPROVAL OF PLANS AND DRAWINGS
AND
INSPECTION DURING CONSTRUCTION
| 1. |
Approval
of Plans and Drawings:
|
|
(a)
|
The
BUILDER shall submit to the BUYER four (4) copies each of the plans
and
drawings to be submitted thereto for its approval at its address
as set
forth in Article XVIII hereof.
|
The
BUYER
shall, within three (3) weeks after the date of receipt before keel-laying
of
the VESSEL, and/or within two (2) weeks after the date of receipt after
keel-laying of the VESSEL, return by courier service to the BUILDER two (2)
copies of such plans and drawings including one (1) copy to be transferred
to
the REPRESENTATIVE (as defined hereinafter) with the BUYER’s approval or
qualified approval with comments written thereon, if any. The BUILDER shall
give
reply regarding BUYER’s comments within two (2) weeks from the date of receipt.
If the BUILDER fails to reply, the BUYER’s approval comments shall be deemed
accepted by the BUILDER.
In
case
the said plans and drawings shall not be returned to the BUILDER from the
BUYER
within the time limit as hereinabove provided, the BUILDER shall give the
BUYER
notice by telefax and the BUYER shall acknowledge and inform the BUILDER
of the
status of approval and if such plans and drawings are not returned to the
BUILDER within further five (5) days after the BUILDER’s telefax, such plans and
drawings shall be deemed to have been automatically approved without comments
unless otherwise agreed.
|
(b)
|
When
and if the REPRESENTATIVE (as defined hereinafter) shall have been
sent by
the BUYER to the SHIPYARD in accordance with Paragraph 2 of this
Article,
the BUILDER may, however at the BUYER’s express written consent only,
submit the remainder, if any, of the plans and drawings in the
agreed
list, to the REPRESENTATIVE for his approval. The REPRESENTATIVE
shall,
within two (2) weeks after receipt thereof, return to the BUILDER
one (1)
copy of such plans and drawings with his approval or qualified
approval
with comments written thereon, if
any.
|
Approval
by the REPRESENTATIVE of the plans and drawings duly submitted to him shall
be
deemed to be the approval by the BUYER for all purposes of this
Contract.
In
the
event that the BUYER or the REPRESENTATIVE shall fail to return the plans
and
drawings to the BUILDER within the time limit as hereinabove specified, such
plans and drawings shall be deemed to have been automatically approved without
any comment.
19
of 63
The
approval of plans and drawings by the BUILDER shall not alter or diminish
the
responsibility of the BUILDER to design and construct the VESSEL in accordance
with the Contract, the Specifications and Plans.
|
(e)
|
All
documents, drawings, calculations, instruction manuals, etc. which
are
submitted to the BUYER, shall be in English
only.
|
| 2. |
Appointment
of the BUYER’s
REPRESENTATIVE:
|
The
BUYER
may timely send to and maintain at the SHIPYARD a REPRESENTATIVE who shall
be
duly authorized in writing by the BUYER (herein called the “REPRESENTATIVE”) to
act on behalf of the BUYER in connection with modifications of the
Specifications, approval of the plans and drawings, attendance to the tests
and
inspections relating to the VESSEL, its machinery, equipment and outfitting,
and
any other matters for which he is specifically authorized by the
BUYER.
The
BUYER
may also send to and maintain at the SHIPYARD up to seven (7) assistants
to the
REPRESENTATIVE. The BUYER may also send to and maintain at the Main Engine
Manufacturer’s factory, at the BUYER’s own cost and expense, two (2) assistants
for the period from 3 months prior to the bed assembling up to completion
of
shop test.
| 3. |
Inspection
by
REPRESENTATIVE:
|
The
necessary inspection of the VESSEL, its machinery, equipment and outfitting
shall be carried out by the Classification Society, other regulatory bodies
and/or an inspection team of the BUILDER throughout the entire period of
construction, in order to ensure that the construction of the VESSEL is duly
performed in accordance with this Contract and the Specifications and the
plans.
The
REPRESENTATIVE and his assistants shall at all times during working hours
during
the construction until delivery and acceptance of the VESSEL, have the right
to
inspect the VESSEL, and all work in progress, materials utilized and quality
of
work in connection with the construction thereof wherever such work is being
done within the SHIPYARD’s premises or such materials and equipment are stored,
and the premise of subcontractors of the BUILDER who are doing work or storing
materials in connection with the VESSEL’s construction, for the purpose of
determining the VESSEL is being constructed in accordance with the terms
of this
CONTRACT and the Specifications and Plans. The REPRESENTATIVE and his assistants
shall have the unrestricted right to visit the VESSEL and all work in
progress.
The
REPRESENTATIVE and his assistants shall also have the right to visit, with
the
BUILDER’s attendance or introduction as necessary, all property utilized in
connection with the construction of the VESSEL, wherever and whenever such
property is stored. The REPRESENTATIVE and his assistants may, with the
20
of 63
BUILDER’s
permission, visit all property of the BUILDER wherever any work for the VESSEL
is to be done. Such permission shall not be unreasonably withheld by the
BUILDER.
The
BUILDER shall give a notice to the REPRESENTATIVE and his assistant(s) at
least
twenty-four (24) hours advance for tests and inspections within the SHIPYARD
stating particulars of any tests and inspections which may be attended by
the
REPRESENTATIVE and his assistants provided that in exceptional circumstances
the
manner in which such notice is given may be modified by mutual agreement.
Also
BUILDER shall give a notice to the REPRESENTATIVE and his assistants of the
date
and place of such tests and inspections including three (3) days prior notice
of
auxiliary engines test and seven (7) days prior notice of Main Engine tests.
For
tests and inspections outside the SHIPYARD, sufficient advance notice to
allow
for the REPRESENTATIVE and his assistants to arrange transportation shall
be
given. This advance notice should not be less than three (3) days for tests
and
inspections that require air travel for attendance. Any inspection schedule
must
be reasonable at all times in order to allow the REPRESENTATIVE and his
assistants to carry out their duties properly and inspections must be evenly
spread over a reasonable time. The inspection thus exercised on behalf of
BUYER
shall not alter or diminish the responsibility of BUILDER to construct VESSEL
in
accordance with the Contract, the Specifications and Plans. Once a test has
been
witnessed and approved by the BUYER’s REPRESENTATIVE, the same test should not
have to be repeated, provided it has been carried out in compliance with
the
requirements of the Classification Society and Specifications.
In
the
event that the BUYER’s REPRESENTATIVES discovers any construction or material or
workmanship which does not conform to the requirements of this Contract and/or
the Specifications, the BUYER’s REPRESENTATIVES shall promptly give the BUILDER
a notice in writing as to such non-conformity. Upon receipt of such notice
from
the BUYER’s REPRESENTATIVES, the BUILDER shall correct such non-conformity or,
if it does not, shall respond in writing within seven (7) working days of
receipt of the notice stating the reasons why it does not agree. If there
is any
difference of opinion between the parties as to the conformity of the VESSEL
with the Contract and the Specifications the parties shall try to settle
the
dispute by negotiation. Should the dispute not be settled by negotiation
it may,
if mutually agreed upon, be referred to the Classification Society or a mutually
agreed expert whose opinion shall be final and binding upon the parties hereto,
failing which the dispute shall be referred to arbitration pursuant to Article
XIII hereof.
| 4. |
Facilities:
|
The
BUILDER shall at no cost to the BUYER furnish suitably lighted and
air-conditioned office space within the SHIPYARD or in the immediate vicinity
of
the BUILDER’s SHIPYARD, for a team of up to eight (8) persons including the
REPRESENTATIVE and his assistant(s), with office furniture, meeting table,
21
of 63
filling
cabinets and public toilet and shower space and other reasonable facilities.
Separate telephone line and facsimile receiver suitable for international
calls,
broadband internet connection shall be provided in the REPRESENTATIVE’s office.
Charges for telecommunications services shall be paid by the BUYER as billed
by
the telecommunications authorities.
All
transportation in the Greater Nantong Area, shall be provided to the
REPRESENTATIVE by the BUILDER. The travel expenses for the said access to
the
BUILDER’s subcontractors outside of the Greater Nantong Area in the People’s
Republic of China shall be at BUYER’s account.
The
REPRESENTATIVE shall be on duty during the working time of the BUILDER, which
is
or is deemed to be Monday thru Saturday, 7:00 am to 5:00 pm.
During
last month of the period of construction of VESSEL, office space, washing
facilities in SHIPYARD shall be provided for VESSEL’s senior officers and
crew.
The
BUILDER shall assist the BUYER in arranging necessary visa(s) for the
REPRESENTATIVE and his assistant(s) to enter China.
| 5. |
Liability
of the BUILDER:
|
The
REPRESENTATIVE and his assistant(s) shall at all times be deemed to be employees
of the BUYER and not of the BUILDER. The BUILDER shall be under no liability
whatsoever to the BUYER, the REPRESENTATIVE or his assistant(s) for personal
injuries, including death, suffered during the time when he or they are on
the
VESSEL, or within the premises of either the BUILDER or its subcontractors,
or
are otherwise engaged in and about the construction of the VESSEL, unless,
however, such personal injuries including death were caused by a negligence
of
the BUILDER, or of any of its employees or agents or
subcontractors.
The
BUILDER shall be under no liability whatsoever to the BUYER, the REPRESENTATIVE
or his assistant(s) for damage to, or loss or destruction of property in
the
People’s Republic of China of the BUYER or of the REPRESENTATIVE or his
assistant(s), unless such damage, loss or destruction were caused by negligence
of the BUILDER, or of any of its employees or agents or
subcontractors.
| 6. |
Responsibility
of the BUYER:
|
The
BUYER
shall undertake and assure that the REPRESENTATIVE and his assistant(s) shall
carry out his duties hereunder in accordance with the normal shipbuilding
practice of the BUILDER and in such a way as to avoid any
22
of 63
unnecessary
increase in building cost, delay in the construction of the VESSEL, and/or
any
disturbance in the construction schedule of the BUILDER.
The
BUILDER has the right to request the BUYER in writing to replace any
REPRESENTATIVE who is reasonably deemed unsuitable and unsatisfactory for
the
proper progress of the VESSEL’s construction together with reasons. The BUYER
may investigate the situation by sending its representative to the BUILDER’S
SHIPYARD, if necessary, and if the BUYER considers that such BUILDER’s request
is justified, the BUYER shall effect the replacement as soon as conveniently
arrangable.
| 7. |
Salaries
and Expenses:
|
All
salaries and expenses of the REPRESENTATIVE, his assistant(s) or any other
employees employed by the BUYER under this Article shall be for the BUYER’s
account except for those mentioned under the Paragraph 4 in this
Article.
(End
of
Article)
23
of 63
ARTICLE
V - MODIFICATION
| 1. |
Modification
of Specifications:
|
The
Specifications and plans in accordance with which the VESSEL shall be
constructed, may be modified and/or changed at any time hereafter by written
agreement of the Parties hereto, provided that such modifications and/or
changes
or an accumulation thereof will not, in the BUILDER’s reasonable judgement,
materially affect the BUILDER’s other commitments and provided further that the
BUYER shall assent to adjustment of the Contract Price, date of delivery
of the
VESSEL and other terms of this Contract, if any, as provided herein. Subject
to
the above, the BUILDER hereby agrees to accommodate such reasonable requests
by
the BUYER so that the said changes and/or modifications may be made at
reasonable and justified cost, and within the shortest period of time reasonably
possible.
Any
such
agreement in writing for modifications and/or changes shall include an agreement
as to the increase or decrease, if any, in the Contract Price of the VESSEL
together with an agreement as to any extension or reduction in the time of
delivery, or any other alterations in this Contract, or the Specifications
occasioned by such modifications and/or changes. The aforementioned agreement
to
modify and/or to change the Specifications may be effected by an exchange
of
duly authenticated letters or telefaxes, manifesting such agreement. The
letters
and telefaxes exchanged by the Parties hereto pursuant to the foregoing shall
constitute an amendment of the Specifications under which the VESSEL shall
be
built, and such letters and telefaxes shall be deemed to be incorporated
into
this Contract and the Specifications by reference and made a part hereof.
Upon
consummation of the agreement to modify and/or to change the Specifications,
the
BUILDER shall alter the construction of the VESSEL in accordance therewith,
including any additions to, or deductions from, the work to be performed
in
connection with such construction.
If,
for
whatever reasons, the Parties hereto shall fail, within a reasonable period,
to
agree on the adjustment of the Contract Price or extension of time of delivery
or modification of any terms of this Contract which are necessitated by such
modifications and/or changes, then the BUILDER shall be entitled to refuse to
make any such modifications or changes requested by the BUYER by a notification
of the same in writing to the BUYER.
The
BUILDER may make changes to the Specifications, if found necessary for
introduction of improved production methods or otherwise, provided that the
BUILDER shall first obtain the BUYER’s approval.
| 2. |
Change
in Class, etc.:
|
24
of 63
In
the
event that, after the date of signing this Contract, any requirements as
to the
rules and regulations as specified in this Contract to which the construction
of
the VESSEL is required to conform, are altered or changed, as per Paragraph
2 of
Article I, by the Classification Society or the other regulatory bodies
authorized to make such alterations or changes, the BUILDER shall transmit
such
information in full to the BUYER in writing, whereupon within twenty one
(21)
days after receipt of the said notice by the BUYER shall, in its sole discretion
decide and instruct the BUILDER in writing as to the alterations or changes,
if
any, to be made in the VESSEL. The BUILDER shall promptly comply with such
alterations or changes in the construction of the VESSEL, only provided that
the
Parties shall have first agreed:
|
(i)
|
As
to any reasonable increase or decrease in the Contract Price of
the VESSEL
that is occasioned by the cost for such compliance according to
and in
compliance with Paragraph 1 of this Article V;
and/or
|
|
(ii)
|
As
to any extension in the time for delivery of the VESSEL that is
necessary
due to such compliance; and/or
|
|
(iii)
|
As
to any decrease in the Guaranteed Deadweight and the Guaranteed
Speed of
the VESSEL, if such compliance results in reduced deadweight, cargo
capacity and speed; and/or
|
|
(iv)
|
As
to any other alterations in the terms of this Contract, if such
compliance
makes such alterations of the terms
necessary.
|
Agreements
as to such alterations or changes under this Paragraph shall be made in the
same
manner as provided in Paragraph 1 of this Article for modifications or changes
to the Specifications.
| 3. |
Substitution
of Materials:
|
In
the
event that any of the materials required by the Specifications or otherwise
under this Contract for the construction of the VESSEL cannot be procured
in
time or are in short supply to maintain the Delivery Date of the VESSEL,
the
BUILDER may, provided that the BUYER shall so agree in writing, which shall
not
be unreasonably withheld, supply other materials and/or equipment of and
with
equivalent quality and capable of meeting the requirements of the Classification
Society and of the rules, regulations and requirements with which the
construction of the VESSEL must comply. Any agreement as to such substitution
of
materials shall be effected in the manner provided in Paragraph 1 of this
Article.
(End
of
Article)
25
of 63
ARTICLE
VI — TRIALS AND ACCEPTANCE
| 1. |
Notice:
|
The
BUYER
and the REPRESENTATIVE shall be entitled to receive from the BUILDER at least
thirty (30) days’ notice in advance, followed by seven (7) days’ definitive
notice in advance, in writing or by telefax (confirmed in writing), of the
scheduled time and place of the VESSEL’s sea trial as described in the
Specifications (hereinafter called the “Trial Run”) and the BUYER and the
REPRESENTATIVE shall promptly acknowledge receipt of such notice. If the
time
and/or place of the trial run of the VESSEL has to be altered, a three (3)
days
definite notice shall be sent to the BUYER by telefax.
The
BUYER
shall have a representative and/or its REPRESENTATIVE and/or his assistant(s)
on
board the VESSEL to witness such Trial Run. Failure in attendance of the
representative and/or its REPRESENTATIVE and/or his assistant(s) of the BUYER
at
the Trial Run of the VESSEL for any reason whatsoever after due notice to
the
BUYER as above provided, shall be deemed to be a waiver by the BUYER of its
right to have its representative and/or its REPRESENTATIVE and/or his
assistant(s) on board the VESSEL at the Trial Run, and the BUILDER and the
class
surveyor may conduct the Trial Run without the representative and/or its
REPRESENTATIVE and/or his assistant(s) of the BUYER being present, and in
such
case the BUYER shall be obliged to accept the VESSEL on the basis of a
certificate of the BUILDER with an approval from the Classification Society
certifying that the VESSEL, upon Trial Run, is found to conform to this Contract
and the Specifications.
| 2. |
Weather
Condition:
|
The
Trial
Run shall be carried out under the weather condition which is deemed favourable
enough by the reasonable judgment of the BUILDER and the BUYER.
In
the
event of unfavourable weather on the date specified for the Trial Run, the
same
shall take place on the first available day thereafter that the weather
condition permits. It is agreed that, if during the trial run of the VESSEL,
the
weather should suddenly become so unfavourable that orderly conduct of the
trial
run can no longer be continued, the trial run shall be discontinued and
postponed until the first favourable day next following, unless the BUYER
shall
assent in writing to acceptance of the VESSEL on the basis of the trial run
already made before such discontinuance has occurred.
Any
delay
of trial run caused by such unfavourable weather condition shall operate
to
postpone the Delivery Date by the period of delay involved and such delay
shall
be deemed as a Permissible Delay in the delivery of the VESSEL.
26
of 63
| 3. |
How
Conducted:
|
All
expenses in connection with the Trial Run are to be for the account of the
BUILDER and the BUILDER shall provide at its own expense the necessary crew
to
comply with conditions of safe navigation. The Trial Run shall be conducted
in
the manner prescribed in the Specifications, and shall prove fulfilment of
the
performance requirements for the trial run as set forth in the
Specifications.
Notwithstanding
the foregoing, lubricating and hydraulic oils and greases necessary for the
period of construction and the trial run of the VESSEL shall be supplied
by the
BUYER at the SHIPYARD prior to the time required and fuel oils, water, fresh
water and stores for the conduct of the Trial Run or Trial Runs shall be
supplied by the BUILDER for its account. The lubricating and hydraulic oils
and
greases supplied by the BUYER shall be in accordance with the Specifications
and
instruction of the BUILDER. The fuel oil supplied by the BUILDER, and
lubricating oil and hydraulic oil supplied by the BUYER shall be in accordance
with the applicable engine specifications. The BUYER shall communicate to
the
BUILDER the intended oil suppliers for the VESSEL and the BUILDER shall comply
with above requirements.
| 4. |
Method
of Acceptance or Rejection:
|
|
(a)
|
Upon
completion of the trial run, the BUILDER shall give the BUYER a
notice of
completion of the trial run together with written reports recording
off
all the trials, as and if the BUILDER considers that the results
of the
trial run indicate conformity of the VESSEL to this Contract and
the
Specifications. The BUYER shall, within five (5) banking days after
receipt of such notice from the BUILDER notify the BUILDER by telefax
of
its acceptance or of its rejection of the Trial Run results, together
with
the reasons therefor.
|
|
(b)
|
However,
should the result of the Trial Run indicate that the VESSEL or
any part
thereof including its equipment does not conform to the requirements
of
this Contract, the BUILDER shall investigate together with the
REPRESENTATIVE the cause of such non-conformance and determine
the proper
steps to be taken to remedy the same and make whatever corrections
and
alterations and/or re-Trial Run or Trial Runs as may be necessary
without
extra cost to the BUYER, and upon notification by the BUILDER of
the
completion of such alterations or corrections and/or re-Trial or
re-Trials
the BUYER shall, within five (5) business days, notify the BUILDER
by
telefax (confirmed in writing) of its acceptance of the VESSEL
or of the
rejection of the Trial Run results, together with the reason therefore,
taking into account the alterations and corrections and/or retrial
or
retrials by the BUILDER.
|
|
(c)
|
In
the event that the BUYER fails to notify the BUILDER by facsimile
of the
acceptance, or the rejection of the trial run together with the
reason
|
27
of 63
therefor
within the period as provided in the above Sub-paragraph (a) or (b), the
BUYER
shall be deemed to have accepted the VESSEL.
|
(d)
|
Any
dispute arising between the parties hereto as to whether the VESSEL
and
its equipment and machinery comply with this Contract and/or
Specifications, or as to the result of any trial run of the VESSEL,
or
relating to the BUYER’s rejection to take delivery of the VESSEL, shall be
resolved in accordance with Article
XIII.
|
|
(e)
|
Nothing
herein shall preclude the BUYER from accepting the VESSEL with
its
qualifications and/or remarks following the Trial Run and/or further
tests
or trials as aforesaid and the BUILDER shall be obliged to comply
with
and/or remove such qualifications and/or remarks (if such qualifications
and/or remarks are reasonably acceptable to the BUILDER) at the
time
before effecting delivery of the VESSEL to the BUYER under this
Contract.
|
| 5. |
Effect
of Acceptance:
|
Subject
to the provisions of this Contract, BUYER’s acceptance of the VESSEL as above
provided shall be final and binding so far as conformity of the VESSEL to
this
Contract and the Specifications is concerned, and shall preclude the BUYER
from
refusing formal delivery of the VESSEL as hereinafter provided, if the BUILDER
complies with all other procedural requirements for delivery as provided
in
Article VII hereof.
| 6. |
Disposition
of Surplus Consumable
Stores:
|
Following
conclusion of the Trial Runs and acceptance of the VESSEL by the BUYER, the
BUYER shall reimburse the BUILDER at original net purchase price as evidenced
by
invoices for fuel oils on board in storage tanks and delivered to the BUYER
with
the VESSEL.
The
BUILDER shall absorb the cost of lubricating and hydraulic oil and greases
consumed during Trial Runs excluding lubricating oils and greases remaining
in
the main engine, other machinery and their pipes, ▇▇▇▇▇ tube and the like,
at
BUYER’s net purchase prices as evidenced by invoices.
(End
of
Article)
28
of 63
ARTICLE
VII - DELIVERY
| 1. |
Time
and Place:
|
Following
completion of the Trial Run (or, as the case may be, any re-Trial Run or
re-Trial Runs), the VESSEL shall be delivered safely afloat by the BUILDER
to
the BUYER at the SHIPYARD in accordance with the Specifications and with
all
Classification Society notation and statutory certificates specified in
Paragraph 2 of Article I on or before 31st
January
2010 but in any case not during the period between 15TH
November, 2009 and 5th
January,
2010, except that in the event of delays in the construction of the VESSEL
or
any performance required under this Contract due to causes which under the
terms
of this Contract permit postponement of the date for delivery, the
aforementioned date for delivery of the VESSEL shall be postponed
accordingly.
The
aforementioned date, or such later date to which the requirement of delivery
is
postponed pursuant to such terms, is herein called the “Delivery
Date”.
| 2. |
Notice:
|
The
BUILDER shall give an approximate notice to the BUYER of the expected date
of
delivery on or before thirty (30) calendar days prior to the scheduled delivery
date. A preliminary notice shall be given to the BUYER at least two (2) months
prior to the scheduled delivery date. The BUILDER shall be entitled to deliver
the VESSEL prior to the Delivery Date with thirty (30) days written notice
to
BUYER.
| 3. |
When
and How Effected:
|
Provided
that the BUILDER and the BUYER shall have fulfilled all of its obligations
stipulated under this Contract, delivery of the VESSEL shall be effected
forthwith by the concurrent delivery by each of the Parties hereto to the
other
of the PROTOCOL OF DELIVERY AND ACCEPTANCE, acknowledging delivery of the
VESSEL
by the BUILDER and acceptance thereof by the BUYER, which protocol shall
be
prepared in duplicate and executed by each of the Parties hereto.
| 4. |
Documents
to be Delivered to the
BUYER:
|
Acceptance
of the VESSEL by the BUYER shall be conditioned upon the BUILDER’s delivery and
receipt thereof by the BUYER of the following documents, subject to Paragraph
2
Article V hereof, to the BUYER, which shall accompany the PROTOCOL OF DELIVERY
AND ACCEPTANCE:
|
(a)
|
PROTOCOL
OF TRIALS OF THE VESSEL made pursuant to the
|
29
of 63
Specifications.
|
(b)
|
PROTOCOL
OF INVENTORY of the equipment of the VESSEL, including spare parts
and the
like, all as specified in the
Specifications.
|
|
(c)
|
PROTOCOL
OF STORES OF CONSUMABLE NATURE referred to under Paragraph 6 of
Article VI
hereof, including the original purchase price
thereof.
|
|
(d)
|
ALL
CERTIFICATES including three (3) originals of the BUILDER’s CERTIFICATE
(duly attested by notary public if necessary) required to be furnished
upon delivery of the VESSEL pursuant to this Contract and the
Specifications. All other certificates, except for BUILDER’s CERTIFICATE,
shall be delivered in one (1) original to the VESSEL and two (2)
copies to
the BUYER. It is agreed that if, through no fault on the part of
the
BUILDER, the classification certificate and/or other certificates
are not
available at the time of delivery of the VESSEL, provisional certificates
shall be accepted by the BUYER, provided that the BUILDER shall
furnish
the BUYER with the formal certificates within three (3) months
after
delivery of the VESSEL however in any event before the expiry of
such
provisional certificates, unless otherwise mutually
agreed.
|
|
(e)
|
DECLARATION
OF WARRANTY of the BUILDER that the VESSEL is delivered to the
BUYER free
and clear of any liens, charges, claims, mortgages, or other encumbrances
upon the BUYER’s title thereto, and in particular, that the VESSEL is
absolutely free of all burdens in the nature of imposts, taxes
or charges
imposed by the Chinese governmental authorities, as well as of
all
liabilities of the BUILDER to its subcontractors, employees and
crew,
and/or of all liabilities arising from the operation of the VESSEL
in
Trial Runs, or otherwise, prior to
delivery.
|
|
(f)
|
FINISHED
DRAWINGS AND PLANS pertaining to the VESSEL as stipulated in the
Specifications.
|
|
(g)
|
COMMERCIAL
INVOICE in triplicate, with main particulars of the
VESSEL.
|
|
(h)
|
▇▇▇▇
OF SALE in three (3) originals, duly notarized and legally
attested.
|
|
(i)
|
PROTOCOL
OF DEADWEIGHT DETERMINATION and inclining
experiments.
|
|
(j)
|
NON-REGISTRATION-CERTIFICATE,
as a copy, issued by the competent local authority, stating that
the
VESSEL is not registered at the time of Delivery; the original
instrument
shall be delivered within thirty (30) business days after delivery
of such
copy; and
|
|
(k)
|
Any
other reasonable document required by flag authority for the
|
30
of 63
registration
of the VESSEL;
The
BUILDER shall provide to the BUYER, at least fourteen (14) days prior to
the
Delivery Date, the drafts of the above-mentioned documents.
| 5. |
Tender
of the VESSEL:
|
If
the
BUYER fails to take delivery of the VESSEL after completion thereof according
to
this Contract and the Specifications without any justifiable reason, the
BUILDER
shall have the right to tender delivery of the VESSEL after compliance with
all
procedural requirements as above provided.
| 6. |
Title
and Risk:
|
Title
to
and risk of loss of the VESSEL shall pass to the BUYER from the BUILDER only
upon delivery and acceptance thereof having been completed as stated above;
it
being expressly understood that, until such delivery is effected, title to
and
risk of loss of the VESSEL and her machinery and equipment shall be entirely
in
the BUILDER.
The
BUILDER may mortgage this VESSEL for financing purpose provided that, upon
delivery, the BUILDER shall provide the BUYER with a declaration of warranty
in
accordance with Paragraph 4 (e) of this Article and present to the BUYER
original documents, if requested, at the SHIPYARD, and provide copies thereof,
verifying that any such mortgage, lien and/or other encumbrance has been
done
away with and is cleared, and the VESSEL is free and clear of such.
| 7. |
Removal
of the VESSEL:
|
The
BUYER
shall take possession of the VESSEL immediately upon delivery and acceptance
thereof, and shall remove the VESSEL from the mooring quay of the SHIPYARD
as
soon as possible within three (3) business days after delivery and acceptance
thereof is effected. If the BUYER shall not remove the VESSEL from the mooring
quay of the SHIPYARD within the aforesaid three (3) business days, then,
in such
event, the BUYER shall pay to the BUILDER the reasonable mooring charges
of the
VESSEL.
(End
of
Article)
31
of 63
ARTICLE
VIII - DELAYS AND EXTENSION OF TIME FOR DELIVERY
(FORCE
MAJEURE)
| 1. |
Causes
of Delay:
|
If,
at
any time before actual delivery, either the construction of the VESSEL, or
any
performance required hereunder as a prerequisite of delivery of the VESSEL,
is
delayed as a result of Acts of God (including fire, flood, tidal waves,
earthquake, typhoons, drought or other natural catastrophe), war, invasion,
act
of foreign or public enemies, hostilities (whether war is declared or not),
civil war, rebellion, revolution, insurrection, terrorist activities, blockage,
freight embargo, labour dispute, strike, lockout, local outside air temperature
higher than 40 degree centigrade, or disaster similar in nature beyond the
control of the BUILDER (hereinafter “Force Majeure”) or by destruction of the
BUILDER or works of the BUILDER, or of the VESSEL or any part thereof, by
Force
Majeure or due to the delay caused by Force Majeure in the supply of parts
essential to the construction of the vessel, then, in the event of delay
due to
the happening of any of the aforementioned contingencies, the BUILDER shall
not
be liable for such delay and the time for delivery of the VESSEL under this
Contract shall be extended without any reduction in the Contract Price for
a
period of time which shall not exceed the total duration of all such delays,
subject nevertheless to the BUYER’s right of cancellation under Paragraph 3 of
this Article VIII, notwithstanding and accounting for all relevant provisions
of
this Contract which may additionally constitute extension of the time of
delivery of the VESSEL. Any Party asserting Force Majeure as an excuse shall
have the onus to show that reasonable steps were taken under the circumstances
to prevent and/or minimize delay or damages caused by foreseeable events,
that
all non-excused obligations were substantially fulfilled, and that the other
Party was timely notified of the likelihood or actual occurrence which would
justify such an assertion, so that other prudent precautions could be
contemplated.
| 2. |
Notice
of Delays:
|
Within
five (5) working days from the date of occurrence of any cause of delay,
on
account of which the BUILDER claims that it is entitled under this Contract
to a
postponement of the Delivery Date, the BUILDER shall notify the BUYER in
writing
or by facsimile together with supporting evidence of the date such cause
of
delay occurred. Likewise, within five (5) working days after the date of
ending
of such cause of delay, the BUILDER shall notify the BUYER in writing or
by
facsimile of the date such cause of delay ended. The BUILDER shall also notify
the BUYER of the period, by which the Delivery Date is postponed by reason
of
such cause of delay, with all reasonable despatch after it has been
determined.
Failure
of the BUYER to acknowledge receipt of the BUILDER’s written notification of any
claim for extension of the Delivery Date after receipt by the
32
of 63
BUYER
of
such notification shall be deemed to be a waiver by the BUYER of its right
to
object to such extension.
| 3. |
Definition
of Permissible Delays:
|
Delays
on
account of such causes as specified in Paragraph 1 of this Article and other
delays of a nature which under the terms of this Contract expressly permits
postponement of the Delivery Date shall be understood to be Permissible
Delays.
| 4. |
Definition
of Non-Permissible
Delays:
|
All
other
delays, exclusive, however, of delays which the Arbitrators (as referred
to the
Article XIII hereof) determine to be permissible and result in an extension
of
the delivery date and of delays caused by any default in performance by the
BUYER the nature of which under the terms of this Contract permits extension
of
the time of delivery, shall be deemed to be Non-Permissible Delays on account
of
which the Contract Price is subject to adjustment as provided in Article
III
hereof.
| 5. |
Right
to Rescind for Excessive
Delay:
|
If
the
total accumulated time of all delays on account of causes specified in Paragraph
1
of
Article III and Paragraph 1 of this Article VIII, amounts to two hundred
(200)
days or more, then, in such event, the BUYER may rescind this Contract in
accordance with the provisions of Article X hereof. The BUILDER may, at any
time
after the total accumulated time of the aforementioned delays justifying
rescission by the BUYER, demand in writing that the BUYER shall make an
election, in which case the BUYER shall, within thirty (30) days after such
demand is received by the BUYER, either notify the BUILDER of its intention
to
rescind this Contract, or consent to a postponement of the Delivery Date
to a
specific future date; it being understood and agreed by the Parties hereto
that,
if any further delay occurs on account of causes justifying rescission as
specified in this Article, the BUYER shall have the same right of rescission
upon the same terms as hereinabove provided as if the said revised future
date
for delivery, New Delivery Date, was the Delivery Date as defined in Article
VII.
If
the
BUYER fails to notify the BUILDER of its rescission of this Contract as
specified above within such thirty (30) days period, the Buyer shall be deemed
to have consented to the delivery of the VESSEL at the future date for delivery
proposed by the BUILDER.
(End
of
Article)
33
of 63
ARTICLE
IX - WARRANTY OF QUALITY
| 1. |
Guarantee
of Material,
Workmanship:
|
The
BUILDER, for a period of twelve (12) months from the date of delivery of
the
VESSEL to the BUYER, shall guarantee the VESSEL, its hull and machinery and
all
parts and equipment thereof including machinery appurtenances that are
manufactured or furnished or supplied by the BUILDER and/or its subcontractors
under this Contract against all defects which are due to defective material,
and/or poor workmanship of the BUILDER and/or its subcontractors (the “Guarantee
Period”) provided that such defects have not been caused by perils of the sea,
rivers or navigation, or by normal wear and tear, fire, accident, mismanagement,
negligence or willful neglect, or by alteration or addition by the
BUYER.
The
provisions set forth under this Article as to the Guarantee of the BUILDER
shall
not apply to any articles supplied by the BUYER except as to improper
installation thereof made by the BUILDER.
The
propeller shall be well designed. Detailed cavitation calculation shall be
submitted to the BUYER for reference. If any phenomenon of cavitation and
erosion occurred, the BUILDER has the responsibility to remedy it.
Any
additional warranty and/or guarantee period in excess of twelve (12) months
offered by any manufacturer and/or BUILDER’s subcontractors shall be
automatically passed on to the BUYER and all such rights and claims under
any
applicable warranty and guarantee are herewith transferred or deemed to be
transferred to the BUYER upon delivery of the VESSEL.
| 2. |
Notice
of Defects:
|
The
BUYER
shall notify the BUILDER in writing or by facsimile as promptly as possible
after discovery of the any defects or deviations for which claims is to be
made
under this Guarantee. The BUYER’s written notice shall describe the nature of
the defect and the extent of the damage caused thereby. The BUILDER shall
be
under no obligation with respect to this Guarantee to any claim for defects
discovered after the expiry date of the Guarantee, unless notice of such
defect
is given by the BUYER to the BUILDER not later than thirty (30) days after
such
expiry date. Telefaxed advices within thirty (30) days after expiry date
that a
claim is forthcoming will be sufficient compliance with the requirement as
to
time. If the BUILDER becomes aware of defective materials or a serious defect
in
the design or construction of the VESSEL or any other vessel built by the
BUILDER, that endangers the safe operation of the VESSEL, the BUILDER shall
use
its best efforts to immediately notify the BUYER by telefax.
| 3. |
Remedy
of Defects:
|
34
of 63
|
(a)
|
The
BUILDER shall remedy, at its expense, any defect against which
the VESSEL
or any part of equipment thereof is guaranteed under this Article
IX by
repairing or replacing the defective parts in the BUILDER’s SHIPYARD. Such
repairs or replacing defective parts will be made by the BUILDER
free of
charge.
|
|
(b)
|
Such
repairs or replacement will be made at the BUILDER’s SHIPYARD unless the
VESSEL cannot be conveniently brought
there.
|
However,
if it is inconvenient to bring the VESSEL to the BUILDER’s SHIPYARD and if it is
likewise not feasible for the BUILDER to forward replacements for the defective
parts so as to avoid impairment and delay to the VESSEL’s operation or working,
then, in such event, the BUYER shall cause the necessary repairs or replacements
to be made elsewhere at the discretion of the BUYER, provided,
however, that the BUYER shall give the BUILDER notice in writing or facsimile
confirmed in writing of the time and place such repairs will be made, if
the
VESSEL is not thereby delayed or her operation or working is not thereby
impaired, the BUILDER shall have the right to verify by its own representative
the nature and extent of the defects complained of. The BUILDER, in such
cases,
shall promptly advise the BUYER by facsimile, after such verification has
been
completed, of its acceptance or rejection of the defect as one that is subject
to the Guarantee herein provided. In all minor cases, the Guarantee Engineer,
if
applicable, will act for and on behalf of the BUILDER.
Then
and
in any of the circumstances set out below, the BUILDER shall immediately
pay to
the BUYER in United States Dollars by telegraphic transfer either (i) the
actual
cost for such repairs or replacements including forwarding charges, or (ii)
at
the average cost of making similar repairs or replacements including forwarding
charges as quoted by a leading SHIPYARD in each of Japan, South Korea,
Singapore, Malta, and China, whichever (i) or (ii) is lower:
|
(aa)
|
upon
the BUILDER’s acceptance of the defects as justifying remedy under this
Article, which shall not be unreasonably withheld;
or
|
|
(bb)
|
if
the BUILDER neither accepts nor rejects the defects, nor requests
arbitration within fifteen (15) days after its receipt of the BUYER’s
notice of defects; or
|
|
(cc)
|
upon
determination in an arbitration process in accordance with Article
XIII
that the defect(s) in question fall within the provisions of this
Article
IX.
|
|
(c)
|
In
the event it is necessary to forward the replacement for the defective
|
35
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parts
under the BUILDER’s Guarantee, the BUILDER shall forward the same at Cost
Insurance and Freight by sea. However, if such replacement(s) is/are
indispensably essential to and urgently required for the seaworthiness of
the
VESSEL, the BUILDER shall forward the same at Cost Insurance and Freight
by
airfreight. Seafreight and/or airfreight thereby incurred are for account
of the
BUILDER.
All
disputes in this connection, including any disputes arising on the question
of
cost or upon the rejection by the BUILDER, upon impartial verification of
the
defects as aforesaid and all other disputes connected with or arising upon
the
discovery by the BUYER of the defects which cannot be amicably settled between
the BUYER and the BUILDER shall be referred to the Classification Society.
However, if the decision of the Classification Society is not acceptable
to
either or both parties, such disputes shall be then referred to arbitration
as
provided in ARTICLE XIII of this Contract.
|
(d)
|
If
all the defects for which the BUILDER is responsible under this
Article
are discovered and notified before the expiration of the guarantee
period,
then these defects shall be agreed in writing between the Parties
hereto
as being guarantee items by the end of guarantee period and shall
be
repaired or replaced in the manner provided hereinabove in principle
within four (4) months after such expiration of the guarantee period
or at
a later date to be mutually agreed
upon.
|
If
the
said defects are not repaired or replaced within the said four (4) months
period, or on or before said later date to be mutually agreed upon, due to
inconvenience at the BUILDER, the BUYER has the right to cause the repairs
or
replacements to be made at the discretion of the BUYER and the BUILDER shall
pay
to the BUYER for such repairs or replacements a sum in United States Dollars
equal to the average of the reasonable cost of making the same repairs or
replacements including forwarding charges as quoted by a leading SHIPYARD
in
each of Japan, South Korea, Singapore, Malta, and China.
At
the
expiration of the twelve (12) months from delivery of the VESSEL, all
liabilities on the part of the BUILDER shall duly cease, except for those
defects, repairs or replacements of which cannot be carried out on or before
twelve (12) months after delivery of the VESSEL. The BUILDER’s liabilities on
such defects shall be extended up to and cease upon completion of their repairs
and replacements.
|
(e)
|
The
VESSEL shall, at the sole discretion of the BUYER, drydock for
guarantee
termination survey in China on or before the expiry date of the
12-months
guarantee period. However, the BUILDER hereby agrees that should
the
VESSEL not be able to return to China within the stipulated time
allowed
for the 12-months drydocking, then, either the BUILDER
|
36
of 63
shall
agree to the VESSEL’s drydocking arranged by the BUYER which is made available
near to the VESSEL’s actual position, or the BUILDER shall extend the time to
enable the VESSEL to return to China to complete the said drydocking for
guarantee termination survey, provided that such extension of the time shall
not
be more than three (3) months after said 12-months Guarantee
Period.
If
defect(s) be found on rudder, propeller, bottom, other underwater part(s)
or
tail-end shaft and such defect(s) including but not limited to coatings is/are
to be remedied by the BUILDER under the BUILDER’s guarantee as provided in this
Article, the BUILDER shall pay the expenses of said drydocking while the
VESSEL
is in drydock to the extent as far as the BUILDER’s guarantee work is concerned.
In all other cases the expenses of the said drydocking shall be borne by
the
BUYER.
|
(f)
|
In
any case, the VESSEL shall be taken at the BUYER’s cost and responsibility
to the place elected, ready in all respects for such repairs or
replacements.
|
| 4. |
Extent
of BUILDER’s
Liability:
|
The
BUILDER shall be under no obligation with respect to defects discovered after
the expiration of the Guaranteed Period specified above. The BUILDER shall
be
liable to the BUYER for the defects specified in Paragraph 1 of this ARTICLE
provided that such liability of the BUILDER shall be limited to damage
occasioned within the Guarantee Period specified in Paragraph 1 above. The
BUILDER shall however be under no obligation for any remote and/or consequential
damages occasioned by any defect or for any loss of time in operating or
repairing the VESSEL, or both, caused by any defect.
The
BUILDER shall not be obliged to repair, or be liable for, damages to the
VESSEL,
or any part or equipment thereof, which after acceptance of the VESSEL by
the
BUYER are caused by other than the defects of the nature specified in Paragraph
1 above, nor shall there be any BUILDER’s liability hereunder for defects in the
VESSEL, or any part or equipment thereof, caused by fire or accidents at
sea or
elsewhere subsequent to acceptance of the VESSEL by the BUYER, or mismanagement,
accident, negligence, or willful neglect on the part of the BUYER, its employees
or agents, or of any persons other than employees, agents or subcontractors
of
the BUILDER, on or doing work on, the VESSEL, including the VESSEL’s officers,
crew and passengers, other than the BUILDER, its employees, agents or
subcontractors.
Likewise,
the BUILDER shall not be liable for defects in the VESSEL, or any part or
equipment thereof, that are due to repairs, which were made by others than
the
BUILDER and/or its subcontractors or with prior consent of the BUILDER at
the
direction of the BUYER, as hereinabove, except in the event of default by
the
BUILDER of its obligations under Paragraph 3 of this Article. Should the
37
of 63
facsimile
advice of defects in guarantee period be noticed by the BUYER to the BUILDER,
notwithstanding the nature of such defects being in compliance with the
Specifications described in Paragraph 1 of the Article as guarantee item
or not,
the BUILDER shall take active measures to assist the BUYER to remedy the
defects
in the quickest way.
The
guarantee contained as hereinabove in this Article (the “Guarantee”) replaces
and excludes any other liability, guarantee, warranty and/or condition imposed
or implied by the law, customary, statutory or otherwise, applying to the
construction and sale of the VESSEL by the BUILDER for and to the
BUYER.
(End
of
Article)
38
of 63
ARTICLE
X - RESCISSION OF THE CONTRACT
| 1. |
Notice:
|
The
payments made by the BUYER prior to the delivery of the VESSEL shall be in
the
nature of advances to the BUILDER. In the event that the BUYER shall exercise
its right of rescission and/or cancellation of this Contract under and pursuant
to any of the provisions of this Contract specifically permitting the BUYER
to
do so, then the BUYER shall notify the BUILDER in writing or by facsimile
and
such rescission and/or cancellation shall be effective as of the date notice
thereof is received by the BUILDER.
The
declaration of default and the notice to cancel and/or rescind this Contract
may
be set forth in the same document.
| 2. |
Refund
by the BUILDER:
|
Thereupon
the BUILDER shall refund to the BUYER the full amount of all sums paid by
the
BUYER to the BUILDER on account of the VESSEL within seven (7) days together
with an amount equal to the original purchase prices of the BUYER’s supplied
material as evidenced by the invoice issued by the each supplier of the same
including lubricating oil, grease and fuel oil, if any, which are purchased
by
the BUYER to the VESSEL, except those items which are able to return to the
BUYER, unless the BUILDER proceeds to the arbitration under the provisions
of
Article XIII hereof.
In
such
event, the BUILDER shall pay the BUYER interest at the rate of eight percent
(8%) per annum on the amount required herein to be refunded to the BUYER,
computed from the respective dates on which such sums were paid by the BUYER
to
the BUILDER to the date of remittance by telegraphic transfer of such refund
with interest to the BUYER by the BUILDER, provided, however, that if the
said
rescission by the BUYER is made under the provisions of Paragraph 1 of Article
VIII hereof, then in such event the BUILDER shall pay to the BUYER the interest
at the rate of four percent (4%) per annum. The bank charges to such refund
relating to the BUILDER’s Bank to be on account of the BUILDER.
| 3. |
Discharge
of Obligations:
|
Upon
such
refund by the BUILDER to the BUYER, all obligations, duties and liabilities
of
each of the parties hereto to the other under this Contract shall be forthwith
completely discharged, and the BUYER shall have no right to claim any further
damages whatsoever in respect of any breach or alleged breach of this
Contract.
39
of 63
| 4. |
Refundment
Guarantee:
|
After
signing this Contract and in accordance with Paragraph 7 of Article II, the
BUILDER shall furnish the BUYER, for the first, second, third and fourth
instalments, before the Builder’s receipt of the respective instalment, with a
Refund Guarantee from a reputable bank in China or an international insurance
company acceptable to the BUYER and the BUYER’s bank for the advance money, in
favour of the BUYER, guaranteeing the BUILDER’s refundment to the BUYER, in the
form Exhibit A attached hereto.
Such
Refund Guarantee shall cover the advance money as above referred to plus
interest thereon as described in this Article and shall remain in full force
and
effect from the date of receipt by the BUILDER of the said advance money
from
the BUYER until (i) receipt by the BUYER of the sum of the advance money
aggregated hereby together with interest thereon or (ii) upon acceptance
by the
BUYER of the delivery of the VESSEL at the BUILDER’s SHIPYARD in accordance with
the terms of this Contract, whichever comes earlier and in any such case,
the
Refundment Guarantee shall be returned to the BUILDER.
(End
of
Article)
40
of 63
ARTICLE
XI - BUYER’S DEFAULT
| 1. |
Definition
of Default:
|
The
BUYER
shall be deemed to be in default of performance of its obligations under
this
Contract in the following cases:
|
(a)
|
If
the BUYER fails to pay any of the first, second, third and fourth
instalments to the BUILDER after such instalment becomes due and
payable
under the provision of Article II hereof;
or
|
|
(b)
|
If
the BUYER fails to pay the fifth Instalment to the BUILDER concurrently
with the delivery of the VESSEL by the BUILDER to the BUYER as
provided in
Article II hereof; or
|
|
(c)
|
If
the BUYER fails to take delivery of the VESSEL, when the VESSEL
is duly
tendered for delivery by the BUILDER under the provisions of Article
VII
hereof.
|
If
the
BUYER is in default of payment or in the performance of its obligations
hereunder, the BUILDER shall notify the BUYER to that effect by telefax after
the date of occurrence of the default under this Article XI. The BUYER shall
forthwith acknowledge receipt thereof by telefax, within five (5) banking
days,
failing which it shall be deemed to have received such notification by the
BUYER.
| 2. |
Interest
and Charge:
|
If
the
BUYER is in default of payment as to any instalment as provided in Paragraph
1
(a) and (b) of this Article, the BUYER shall pay interest on such instalments
at
the rate of eight percent (8%) per annum from the due date thereof to the
date
of payment to the BUILDER of the full amount including interest; in case
the
BUYER shall fail to take delivery of the VESSEL as provided in Paragraph
1 (c)
of this Article, the BUYER shall be deemed to be in default of payment of
the
fifth instalment and shall pay interest thereon at the same rate as aforesaid
from and including the day on which the VESSEL is tendered for delivery by
the
BUILDER.
In
any
event of default by the BUYER, the BUYER shall also pay all direct proven
charges and expenses incurred by the BUILDER which are caused by such default,
however, no indirect and/or consequential damages.
The
payment of interest shall be made simultaneously with the payment of the
principal by telegraphic transfer in the manner as provided for in Paragraph
5,
Article II of this Contract.
41
of 63
| 3. |
Effect
of Default:
|
|
(a)
|
If
any default by the BUYER occurs as provided hereinbefore, the Delivery
Date shall be automatically postponed for a period of continuance
of such
default by the BUYER.
|
|
(b)
|
If
any such default by the BUYER continues for a period of twenty-five
(25)
business days, the BUILDER may, at its option, rescind this Contract
by
giving notice of such effect to the BUYER by facsimile confirmed
in
writing. Upon receipt by the BUYER of such notice of rescission,
this
Contract shall forthwith become null and void, and any lien, interest
or
property right that the BUYER may have in and to the VESSEL or
to any part
or equipment thereof and to any material or part acquired for construction
of the VESSEL but not yet utilized for such purpose, shall forthwith
cease, and the VESSEL and all parts and equipment thereof shall
become the
sole property of the BUILDER.
|
In
the
event of such rescission of this Contract, the BUILDER shall be entitled
to
retain any instalment or instalments theretofore paid by the BUYER to the
BUILDER on account of this Contract.
| 4. |
Sale
of the VESSEL:
|
|
(a)
|
In
the event of rescission of this Contract as above provided, the
BUILDER
shall have full right and power either to complete or not to complete
the
VESSEL as it deems fit, and to sell the VESSEL at a public sale
on such
terms and conditions as the BUILDER thinks fit without being answerable
for any loss or damage.
|
In
the
case of sale of the VESSEL, the BUILDER shall give telefax or written notice
to
the BUYER.
|
(b)
|
In
the event of the sale of the VESSEL in its completed state, the
proceeds
of the sale received by the BUILDER shall be applied firstly to
payment of
all expenses attending such sale and otherwise incurred by the
BUILDER as
a result of the BUYER’s default, and then to payment of all unpaid
instalments of the Contract Price and interest on such instalments
at the
rate of eight percent (8%) per annum from the respective due dates
thereof
to the date of application.
|
|
(c)
|
In
the event of sale of the VESSEL in its incomplete state, the proceeds
of
sale received by the BUILDER shall be applied firstly to all expenses
attending such sale and otherwise incurred by the BUILDER as a
result of
the BUYER’s default, and then to payment of all costs of construction of
the VESSEL less the instalments so retained by the
BUILDER.
|
|
(d)
|
In
either of the above events of sale, if the proceeds of sale exceeds
the
|
42
of 63
total
amount to which such proceeds are to be applied as aforesaid, the BUILDER
shall
promptly pay the excess to the BUYER without interest, provided however,
that
the amount of such payment to the BUYER shall in no event exceed the total
amount of instalments already paid by the BUYER and the cost of the BUYER’s
Supplies, if any.
|
(e)
|
If
the proceeds of sale are insufficient to pay such total amounts
payable as
aforesaid, the BUYER shall promptly pay the deficiency to the BUILDER
upon
request.
|
(End
of
Article)
43
of 63
ARTICLE
XII - INSURANCE
| 1. |
Extent
of Insurance Coverage:
|
From
the
time of keel-laying of the VESSEL until the same is completed, delivered
to and
accepted by the BUYER, the BUILDER shall at its own cost and expense, keep
the
VESSEL and all machinery, materials, equipment, appurtenances and outfit,
delivered to the SHIPYARD for the VESSEL or built into, or installed in or
upon
the VESSEL, including the BUYER’s Supplies, fully insured for BUILDER’s risk
with established Chinese prime insurance companies under coverage corresponding
to “Institute of London Underwriters Clause for Builder’s Risks”.
The
amount of such insurance coverage shall, up to the date of delivery of the
VESSEL, be in an amount at least equal to, but not limited to, the aggregate
of
the payment made by the BUYER to the BUILDER and including the value of the
BUYER’s Supplies.
The
policy referred to hereinabove shall be taken out in the name of the BUILDER
and
all proceeds under such policy shall be payable to the BUILDER.
One
photocopy of each of the BUILDER’s risk insurance shall be delivered to the
BUYER.
Notwithstanding
anything to the contrary in this Contract, if the BUILDER has made valid
tender
of delivery of the VESSEL, the cost of any insurance placed on the VESSEL
from
the time of valid tender, as defined in Paragraph 5 of Article VII, until
the
time of actual delivery shall be for the account of the BUYER.
| 2. |
Application
of Recovered Amount:
|
|
(a)
|
Partial
Loss:
|
In
the
event the VESSEL shall be damaged by any insured cause whatsoever prior to
acceptance thereof by the BUYER and in the further event that such damage
shall
not constitute an actual or a constructive total loss of the VESSEL, the
BUILDER
shall apply the amount recovered under the insurance policy referred to in
Paragraph 1 of this Article to the repair of such damage satisfactory to
the
Classification Society and also to the satisfaction of the REPRESENTATIVE
without additional expense to the BUYER, and the BUYER shall accept the VESSEL
under this Contract if completed in accordance with this Contract and the
Specifications.
44
of 63
|
(b)
|
Total
Loss:
|
However,
in the event that the VESSEL is determined to be an actual or constructive
total
loss, the BUILDER shall by the mutual agreement between the Parties hereto
either:
|
(i)
|
Proceed
in accordance with the terms of this Contract, in which case the
amount
recovered under said insurance policy shall be applied to the
reconstruction of the VESSEL’s damage, provided the parties hereto shall
have first agreed in writing as to such reasonable postponement
of the
Delivery Date and adjustment of other terms of this Contract including
the
Contract Price as may be necessary for the completion of such
reconstruction; or
|
|
(ii)
|
Refund
immediately to the BUYER the amount of all instalments paid to
the BUILDER
under this Contract with the interest at the rate of eight percent
(8%)
per annum, whereupon this Contract shall be deemed to be rescinded
and all
rights, duties, liabilities and obligations of each of the parties
to the
other shall terminate forthwith.
|
If
the
Parties hereto fail to reach such agreement within two (2) months after the
VESSEL is determined to be an actual or constructive total loss, the provisions
of Subparagraph (b) (ii) as above shall be applied.
| 3. |
Termination
of the BUILDER’s obligation to
insure:
|
The
BUILDER’s obligation to insure the VESSEL hereunder shall cease and terminate
forthwith upon delivery and acceptance thereof by the BUYER.
| 4. |
Insurance
Confirmation:
|
The
BUILDER shall on demand provide the BUYER with a duplicate or a certified
copy
of such insurances and/or entries and shall punctually pay all premiums,
calls
or other sums payable and on demand shall produce to the BUYER evidence of
payment of the last premium and/or call or supplementary call due. The BUILDER
will do nothing and ensure nothing is done whereby any such insurances or
entries may be or become void or voidable and will in all respect act in
conformity with the terms of such insurances or entries.
In
the
case that the BUILDER’s insurances under this Article do not cover the original
purchase prices of the BUYER’s supplies, the BUILDER shall forthwith pay such
sums to the BUYER provided such supplies have been installed
onboard.
(End
of
Article)
45
of 63
ARTICLE
XIII - DISPUTES AND ARBITRATION
| 1. |
Proceedings:
|
|
(a)
|
Decision
by the Classification Society:
|
If
any
dispute arises between the Parties hereto in regard to the design and/or
construction of the VESSEL, its machinery and equipment, and/or in respect
of
the materials and/or workmanship thereof and/or thereon, and/or in respect
of
interpretations of this Contract or the Specifications and Plans, the Parties
may, by mutual agreement, refer the dispute to the Classification Society
or to
such other expert as may be mutually agreed between the Parties
hereto.
|
(b)
|
Proceedings
of Arbitration:
|
In
the
event that the Parties hereto do not agree to settle a dispute according
to
Paragraph 1 of this Article and/or in the event of any other dispute of any
kind
whatsoever between the Parties and relating to this Contract or its rescission
or any stipulation herein, such dispute shall be submitted to arbitration
in
London subject to the rules of the London Maritime Arbitrators Association.
Each
Party shall appoint an arbitrator and the two arbitrators so appointed shall
appoint a third arbitrator (together to “Arbitration Board”).
If
the
two arbitrators are unable to agree upon a third arbitrator within twenty
(20)
days after appointment of the second arbitrator, either of the said two
arbitrators may apply to the President for the time being of the London Maritime
Arbitrators Association to appoint the third arbitrator.
Such
arbitration shall be in accordance with and subject to the provisions of
the
English Arbitration Act 1996 or any statutory modification or re-enactment
thereof for the time being in force.
Either
Party may demand arbitration of any such dispute by giving notice to the
other
Party. Any demand for arbitration by either of the Parties hereto shall state
the name of the arbitrator appointed by such Party shall also state specifically
the question or questions as to which such Party is demanding arbitration.
Within fourteen (14) days after receipt of notice of such demand for
arbitration, the other Party shall in turn appoint a second arbitrator and
give
notice in writing of such appointment to the Party demanding arbitration.
If a
Party fails to appoint an arbitrator as aforementioned within fourteen (14)
days
following receipt of notice of demand for arbitration by the other Party,
the
Party failing to appoint an arbitrator shall be deemed to have accepted and
appointed, as its own arbitrator, the arbitrator appointed by the Party
demanding arbitration shall
46
of 63
proceed
before this sole arbitrator who alone in such event shall constitute the
Arbitration Board. The award of the Arbitration Board shall be final, conclusive
and binding upon the Parties hereto.
| 2. |
Notice
of Award:
|
Notice
of
any arbitration award shall immediately be given in writing or by telefax
(confirmed in writing) to the BUILDER and the BUYER.
| 3. |
Expenses:
|
The
arbitrator(s) shall determine how the expenses of the arbitration or the
proportion of such expenses shall be allocated between the parties.
| 4. |
Entry
in Court:
|
Enforcement
on any award by the Arbitration Board or the arbitrator, as the case may
be, may
be entered in a court of competent jurisdiction. Any right of appeal available
under English law or any other jurisdiction is hereby expressly excluded
by the
Parties hereto.
| 5. |
Alteration
of Delivery
Time:
|
In
the
event of the arbitration of any dispute or differences, that affects the
construction of the VESSEL, arising or occurring prior to delivery to, or
acceptance by the BUYER of the VESSEL, the award by the arbitrator shall
include
a finding as to whether or not the contractual delivery date of the VESSEL
should, as a result of such dispute, be in any altered thereby.
(End
of
Article)
47
of 63
ARTICLE
XIV - RIGHTS OF ASSIGNMENT
| 1. |
Assignment:
|
Neither
of the Parties hereto shall assign this Contract to a third party unless
prior
consent of the other Party is given in writing; such consent not to be
unreasonably withheld.
| 2. |
Assignment
of Guarantee Claims:
|
If
the
BUYER sells or transfers the VESSEL to a third party after the delivery,
it
shall have a right to assign the benefits of Article IX - Guarantee to such
third party.
(End
of
Article)
48
of 63
ARTICLE
XV - TAXES AND DUTIES
Taxes
and Duties in the People’s Republic of China:
The
BUILDER shall bear and pay all taxes and duties imposed in the People’s Republic
of China in connection with execution and/or performance of this Contract,
excluding any taxes and duties imposed in the People’s Republic of China upon
the BUYER’s Supplies described in the Specifications.
(End
of
Article)
49
of 63
ARTICLE
XVI - PATENTS, TRADEMARKS, COPYRIGHTS, ETC.
| 1. |
Patents,
Trademarks and
Copyrights:
|
Machinery
and equipment of the VESSEL may bear the patent number, trademarks or trade
names of the manufacturers.
The
BUILDER shall defend and save harmless the BUYER from patent liability or
claims
of patent infringement of any nature or kind, including costs and expenses
for,
or on account of any patented or patentable invention made or used in the
performance of this Contract and also including costs and expenses of
litigation, if any.
Nothing
contained herein shall be construed as transferring any patent or trademark
rights or copyright in equipment covered by this Contract, and all such rights
are hereby expressly reserved to the true and lawful owners
thereof.
The
BUILDER’s warranty herein does not extend to the BUYER’s Supplies.
| 2. |
General
Plans, Specifications and Working
Drawings:
|
The
BUILDER retains all rights with respect to the Specifications, and plans
and
working drawings, technical descriptions, calculations, test results and
other
data, information and documents concerning the design and construction of
the
VESSEL and the BUYER undertakes therefore not to disclose the same or divulge
any information contained therein to any third parties, without the prior
written consent of the BUILDER, excepting where it is necessary for usual
operation, repair and maintenance of the VESSEL or for enforcing its rights
under this Contract.
(End
of
Article)
50
of 63
ARTICLE
XVII - BUYER’s SUPPLIES
| 1. |
Responsibility
of the BUYER:
|
|
(a)
|
The
BUYER shall, at its own risk, cost and expense, supply and deliver
to the
SHIPYARD all of the items to be furnished by the BUYER as specified
in the
Specifications (herein called throughout this Contract the “BUYER’s
Supplies”) at the warehouse or other storage of the SHIPYARD in the proper
condition ready for installation in or on the VESSEL, in accordance
with
the time schedule designated by the
BUILDER.
|
|
(b)
|
In
order to facilitate installation by the BUILDER of the BUYER’s Supplies in
or on the VESSEL, the BUYER shall furnish the BUILDER with necessary
specifications, plans, drawings, instruction books, manuals, test
reports
and certificates required by the rules and regulations. The BUYER,
if so
requested by the BUILDER in writing, shall, without any charge
to the
BUILDER, cause the representatives of the manufacturers of the
BUYER’s
Supplies to assist the BUILDER in installation thereof in or on
the VESSEL
and/or to carry out installation thereof by themselves or to make
necessary adjustments thereof at the
SHIPYARD.
|
|
(c)
|
Any
and all of the BUYER’s Supplies shall be subject to the BUILDER’s
reasonable right of rejection, as and if they are found to be unsuitable
or in improper condition for installation. However, if so requested
by the
BUYER, the BUILDER shall repair or adjust the BUYER’s Supplies without
prejudice to the BUILDER’s other rights hereunder and without being
responsible for any consequences therefrom. In such case, the BUYER
shall
reimburse the BUILDER for all costs and expenses incurred by the
BUILDER
in such repair or adjustment and the Delivery Date shall be postponed
for
a period of time necessary for such repair or replacement, if the
BUILDER
requests.
|
|
(d)
|
Should
the BUYER fail to deliver any of the BUYER’s Supplies within the time
designated by the BUILDER, the Delivery Date shall be automatically
extended for a period of such delay in delivery, provided that
such delay
in delivery shall affect delivery of the VESSEL. In such event,
the BUYER
shall be responsible and pay to the BUILDER for all losses and
damages
incurred by the BUILDER by reason of such delay in delivery of
the BUYER’s
Supplies and such payment shall be made upon delivery of the
VESSEL.
|
If
delay
in delivery of any of the BUYER’s Supplies exceeds thirty (30) days, then, the
BUILDER shall be entitled to proceed with construction of the VESSEL without
installation thereof in or on the VESSEL, without
51
of 63
prejudice
to the BUILDER’s other rights as hereinabove provided, and the BUYER shall
accept and take delivery of the VESSEL so constructed.
| 2. |
Responsibility
of the BUILDER:
|
The
BUILDER shall be responsible for storing and handling with reasonable care
of
the BUYER’s Supplies after delivery thereof at the SHIPYARD, and shall at its
own cost and expense, install them in or on the VESSEL, unless otherwise
provided herein or agreed by the parties hereto, provided, always, that the
BUILDER shall not be responsible for quality, efficiency and/or performance
of
any of the BUYER’s Supplies.
| 3. |
Joint
Responsibility of the Parties
hereto:
|
Upon
arrival of such shipment of the BUYER’s Supplies, both Parties shall undertake a
joint unpacking inspection. If any damages are discovered that render any
such
item(s) unsuitable for installation, the BUILDER shall be entitled to refuse
to
accept such BUYER’s supplied items.
(End
of
Article)
52
of 63
ARTICLE
XVIII - NOTICE AND CORRESPONDENCE
| 1. |
Address:G53
|
Any
and
all notices and communications in connection with this Contract shall be
addressed as follows:
|
To
the BUYER:
|
EPTAPROHI
SHIPPING CORPORATION.
|
|
C/O:
SAFETY
MANAGEMENT OVERSEAS S.A.
|
|
|
▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
|
|
|
▇▇▇
▇▇ ▇▇▇▇▇
|
|
|
▇▇▇▇▇▇,
▇▇▇▇▇▇
|
|
|
Telefax
No.:
|
▇▇▇-▇▇▇-▇▇▇
6900
|
|
To
the BUILDER:
|
Jiangsu
Rongsheng Heavy
|
|
Industries
Group Co., Ltd.
|
|
|
▇▇.
▇▇▇, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇,
|
|
|
▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇
|
|
|
The
People’s Republic of China
|
|
|
Telefax
No. :
|
▇▇▇-▇▇-▇▇▇▇▇▇▇▇
|
Any
change of address shall be communicated in writing by registered mail or
by
telefax by the Party making such change to the other party and in the event
of
failure to give such notice of change, communications addressed to the party
at
their last known address shall be deemed sufficient. Day-to-day communication
by
e-mail is permitted.
Any
and
all notices, requests, demands, instructions, advice and communications in
connection with this Contract shall be deemed to be given at, and shall become
effective from, the time when the same is delivered to the address of the
party
to be served, provided, however, that registered airmail shall be deemed
to be
delivered ten (10) days after the date of dispatch, express courier service
shall be deemed to be delivered five (5) days after the date of dispatch,
and
the SWIFT transmission for Refund Guarantee shall be deemed to be delivered
to
the Buyer and/or the Buyer’s bank on the same day of dispatch from BUILDER’s
bank.
| 2. |
Language:
|
Any
and
all notices and communications in connection with this Contract shall be
written
in English Language.
(End
of
Article)
53
of 63
ARTICLE
XIX - EFFECTIVE DATE OF CONTRACT
This
Contract and the Annexes shall become effective as from the date of execution
and signing hereof by the BUYER and the BUILDER.
(End
of
Article)
54
of 63
ARTICLE
XX - INTERPRETATION
| 1. |
Laws
Applicable:
|
The
Parties hereto agree that the validity and interpretation of this Contract
and
of each Article and part hereof shall be governed by the laws of
England.
| 2. |
Discrepancies:
|
All
general language or requirements embodied in the Specifications are intended
to
amplify, explain and implement the requirements of this Contract. However,
in
the event that any language or requirements so embodied permit an interpretation
inconsistent with any provisions of this Contract, then in each and every
such
event, the applicable provisions of this Contract shall prevail and govern.
The
Specifications and plan are also intended to explain each other, and anything
shown on the plan and not stipulated in the Specifications or stipulated
in the
Specifications and not shown on the plan shall be deemed and considered as
if
embodied in both. In the event of conflict between the Specifications and
plan,
the Specifications shall prevail and govern.
| 3. |
Entire
Agreement:
|
This
Contract contains the entire agreement and understanding between the Parties
hereto and supersedes all prior negotiations, representations, undertakings
and
agreements on any subject matter of this Contract.
(End
of
Article)
55
of 63
ARTICLE
XXI - CONFIDENTIALITY
Without
prejudice to Paragraph 2 of Article XVI, this Contract, especially the Contract
Price, is confidential between the Parties and its terms and conditions may
not
be divulged except as necessary in the performance of the Contract to the
third
parties in a business relationship such as financial sources, government
agencies, vendors, and in connection with any arbitration of this Contract
or to
otherwise pursue its rights under this Contract.
(End
of
Article)
56
of 63
IN
WITNESS WHEREOF, the Parties hereto have caused this Contract to be executed
the
day and year first above written
|
BUYER:
|
BUILDER:
|
|
|
EPTAPROHI
SHIPPING
|
Jiangsu
Rongsheng
|
|
|
CORPORATION
|
Heavy
Industries Group Co., Ltd.
|
|
|
/s/
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
|
/s/
▇▇▇▇ ▇▇▇▇▇
|
|
|
Attorney-in-Fact:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
|
Attorney-in-Fact:
▇▇▇▇ ▇▇▇▇▇
|
57
of 63
EXHIBIT
A
Form
of Individual Refundment Guarantee for the 1st
(2nd, 3rd, 4th)
Instalment
REFUND
GUARANTEE
|
BANK
REF NO: [...]
|
|
|
ISSUING
DATE: [...]
|
TO:
EPTAPROHI SHIPPING CORPORATION.
In
consideration of your entering into a Shipbuilding Contract dated December
6th,
2006 (hereinafter called the “Contract”) with JIANGSU RONGSHENG HEAVY INDUSTRIES
GROUP CO., LTD., a corporation organized and existing under the laws of the
People’s Republic of China, with offices at, ▇▇. ▇▇▇, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇,
the People’s Republic of China (hereinafter called the “Builder”) for the
construction of one (1) 176,000-DWT Type Motor Bulk Carrier to be known as
the
Builder’s HULL NO. H1074 (hereinafter called the “Vessel”) and in consideration
of your payment for the account of the Builder the sum of United States Dollars
Sixteen Million Two Hundred Thousand only (US$16,200,000.00) being the first
instalment of the Contract Price of the Vessel in accordance with the contract,
we the bank [...], having our registered office at [...], China (hereinafter
called the “Bank”), the undersigned, hereby absolutely and irrevocably guarantee
that we will pay to you upon first written demand from you, an amount up
to
United States Dollars Sixteen Million Two Hundred Thousand only
(US$16,200,000.00) without deduction of any nature of the said instalment
paid
by you to the Builder, together with interest thereon as provided in the
said
Contract, if and when said instalment becomes refundable from the Builder
under
and by virtue of the said Contract.
This
Letter of Guarantee shall be subject to the following terms:
|
1.
|
This
Letter of Guarantee shall come into force when you have effected
the
payment of this instalment as per the
Contract.
|
|
2.
|
The
maximum amount that the Bank, the undersigned, in any eventuality
may be
obliged to pay to your shall be the sum of United States Dollars
Sixteen
Million Two Hundred Thousand only (US$16,200,000.00) together with
interest calculated at the rate stipulated in said Contract for
the terms
from the date of the payment of the said instalment to the date
of
remittance of such refund.
|
|
3.
|
This
Letter of Guarantee shall become null and void upon receipt by
your
company of the amount guaranteed hereby together with interest
thereon or
upon the acceptance by your company of the delivery of the Vessel
|
58
of 63
constructed
in accordance with terms of the said Contract as evidenced by the Protocol
of
Delivery and Acceptance of the VESSEL duly signed by the BUILDER and you
and in
this case this Letter of Guarantee shall be returned to us.
|
4.
|
This
Letter of Guarantee shall benefit and ensure to the assignee and
successor
of this Contract.
|
|
5.
|
All
documents specified and presented under this Guarantee, including the demand
for
payment, will be examined by us with reasonable care to ascertain whether
or not
they appear on their face to conform to the terms of the Guarantee. Where
such
documents do not appear so to conform or appear on their face to be inconsistent
with one another, they shall be refused.
|
Yours
faithfully,
|
||
|
For
|
||
[The
final form of the Refund Guarantee will be as per agreement between
BUYER,
BUILDER,
BUYER’s BANK and REFUND GUARANTOR]
59
of 63
EXHIBIT
B
(Draft
only, subject to BUILDER’s and BUYER’s bank approval)
FORM
OF
IRREVOCABLE LETTER OF GUARANTEE
FOR
THE
2nd INSTALMENT
(___________________)
Bank
Date:
(___________________)
JIANGSU
RONGSHENG HEAVY
INDUSTRIES
GROUP CO., LTD.
▇▇.
▇▇▇,
▇▇▇▇ ▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇▇
▇▇▇▇▇▇
The
People’s Republic of China
Dear
Sirs,
|
(1)
|
In
consideration of your entering into a Ship Sale Contract
dated______________ (“the Shipbuilding Contract”) with SAFETY MANAGEMENT
OVERSEAS S.A. as the buyer (“the BUYER”) for the construction of one (1)
176,000 Metric Tons Deadweight Bulk Carrier bearing Hull No. H1074
(the
“VESSEL”), we, ______________, hereby IRREVOCABLY, ABSOLUTELY and
UNCONDITIONALLY guarantee, as the primary obligor and not merely
as the
surety, the due and punctual payment by the BUYER of the 2nd installment
of the Contract Price amounting to a sum of United States Dollars
Sixteen
Million Two Hundred Thousand (US$16,200,000.00) as specified in
(2)
below.
|
|
(2)
|
The
Installments guaranteed hereunder, pursuant to the terms of the
Shipbuilding Contract, comprise the 2nd installment in the amount
of
United States Dollars Sixteen Million Two Hundred Thousand
(US$16,200,000.00) payable by the BUYER within five (5) New York
banking
days after cutting of the first steel plate in your BUILDER’s
workshop.
|
|
(3)
|
We
also IRREVOCABLY, ABSOLUTELY and UNCONDITIONALLY guarantee, as
primary
obligor and not merely as surety, the due and punctual payment
by the
BUYER of interest on each installment guaranteed hereunder at the
rate of
four per cent (4%) per annum from and including the first day after
the
date of installment in default until the date of full payment by
us of
such amount guaranteed hereunder.
|
|
(4)
|
In
the event that the BUYER fails to punctually pay any Installment
guaranteed hereunder or the BUYER fails to pay any interest thereon,
and
any such default
|
60
of 63
continues
for a period of fifteen (15) days, then, upon receipt by us of your first
written demand, we shall immediately pay to you or your assignee all unpaid
2nd,
3rd and 4th installments, together with the interest as specified in paragraph
(3) hereof, without requesting you to take any or further action, procedure
or
step against the BUYER or with respect to any other security which you may
hold.
|
(5)
|
We
hereby agree that at your option this Guarantee and the undertaking
hereunder shall be assignable to and if so assigned shall inure
to the
benefit of any 3rd party designated by you or ______________, the
People’s
Republic of China as your assignee as if any such third party or
______________, the People’s Republic of China were originally named
herein.
|
| (6) |
Any
payment by us under this Guarantee shall be made in the Unites
States
Dollars by telegraphic transfer to [ (bank)]
as receiving bank nominated
by you, for credit to the account of you with [ (bank)] or through
other
receiving bank to be nominated by you from time to time, in favour
of you
or your assignee.
|
|
(7)
|
Our
obligations under this guarantee shall not be affected or prejudiced
by
any dispute between you as the BUILDER and the BUYER under the
Shipbuilding Contract or by the BUILDER’s delay in the construction and/or
delivery of the VESSEL due to whatever causes or by any variation
or
extension of their terms thereof or by any security or other indemnity
now
or hereafter held by you in respect thereof, or by any time or
indulgence
granted by you or any other person in connection therewith, or
by any
invalidity or unenforceability of the terms thereof, or by any
act,
omission, fact or circumstances whatsoever, which could or might,
but for
the foregoing, diminish in any way our obligations under this
Guarantee.
|
|
(8)
|
Any
claim or demand shall be in writing signed by one of your officers
and may
be served on us either by hand or by post and if sent by post
to_________________________(or such other address as we may notify
to you
in writing), or by tested telex (telex NO:______________)
via_____________, with confirmation in
writing.
|
|
(9)
|
This
Letter of Guarantee shall come into full force and effect upon
delivery to
you of this Guarantee and shall continue in force and effect until
the
VESSEL is delivered to and accepted by the BUYER and the BUYER
shall have
performed all its obligations for taking delivery thereof or until
the
full payment of 2nd installment together with the aforesaid interests
by
the BUYER or us, whichever first
occurs.
|
|
(10)
|
The
maximum amount, however, that we are obliged to pay to you under
this
Guarantee shall not exceed the aggregate amount of U.S. Dollars
_________
being an amount equal to the sum
of:-
|
|
(a)
|
All
the 2nd installment guaranteed hereunder in the total amount of
United
|
61
of 63
States
Dollars Sixteen Million Two Hundred Thousand (US$16,200,000.00);
and
|
(b)
|
Interest
at the rate of four percent (4%) per annum on the installments
for a
period of sixty (60) days in the amount of United States Dollars
Sixteen
Million Two Hundred Thousand
(US$16,200,000.00)
|
|
(11)
|
All
payments by us under this Guarantee shall be made without any set-off
or
counterclaim and without deduction or withholding for or on account
of any
taxes, duties, or charges whatsoever unless we are compelled by
law to
deduct or withhold the same. In the latter event we shall make
the minimum
deduction or withholding permitted and will pay such additional
amounts as
may be necessary in order that the net amount received by you after
such
deductions or withholdings shall equal the amount which would have
been
received had no such deduction or withholding been required to
be
made.
|
|
(12)
|
|
(13)
|
This
Letter of Guarantee shall have expired as aforesaid, you will return
the
same to us without any request or demand from
us.
|
|
(14)
|
IN
WITNESS WHEREOF, we have caused this Letter of Guarantee to be
executed
and delivered by our duly authorized representative the day and
year above
written.
|
|
Very
Truly Yours
|
||
|
By:
|
||
[The
final form of the Payment Guarantee will be as per agreement between
BUYER,
BUILDER,
BUYER’s BANK and REFUND GUARANTOR]
62
of 63
EXHIBIT
C
STAGE
CERTIFICATE
Hull
No. (“the
VESSEL”)
under
a Shipbuilding Contract dated
the day
of 2007
(“the CONTRACT”)
made
between [•] (“the BUYER”)
and
[•] (“the BUILDER”).
We
hereby
certify in connection with the CONTRACT of the VESSEL that [steel cutting
has
commenced] [the first block of keel has been laid] [launching has taken
place].
|
For
and on behalf of the BUILDER
|
For
and on behalf of the BUYER
|
|
(Authorised
Representative)
|
|
|
Dated:
|
Dated:
|
|
For
and on behalf of the
|
|
|
CLASSIFICATION
SOCIETY
|
|
|
Dated:
|
63
of 63