EXHIBIT 10.4
FORM OF SHIPBUILDING CONTRACT FOR THE PRODUCTION OF ONE 47,000 DWT CLASS
PRODUCT/CHEMICAL TANKER BY HYUNDAI MIPO DOCKYARD CO. LTD.
SHIPBUILDING CONTRACT
FOR
THE CONSTRUCTION OF
ONE (1) 47,000 DWT CLASS PRODUCT/CHEMICAL TANKER
HULL NO. 0410
BETWEEN
APOLLONAS SHIPPING COMPANY
(AS BUYER)
AND
HYUNDAI MIPO DOCKYARD CO., LTD.
(AS BUILDER)
INDEX
PAGE
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PREAMBLE 3
ARTICLE I : DESCRIPTION AND CLASS 4
II : CONTRACT PRICE 7
III : ADJUSTMENT OF THE CONTRACT PRICE 8
IV : INSPECTION AND APPROVAL 12
V : MODIFICATIONS, CHANGES AND EXTRAS 17
VI : TRIALS AND COMPLETION 20
VII : DELIVERY 24
VIII : DELAYS AND EXTENSIONS OF TIME (FORCE MAJEURE) 27
IX : WARRANTY OF QUALITY 30
X : PAYMENT 34
XI : BUYER'S DEFAULT 39
XII : BUYER'S SUPPLIES 42
XIII : ARBITRATION 44
XIV : SUCCESSORS AND ASSIGNS 46
XV : TAXES AND DUTIES 47
XVI : PATENTS, TRADEMARKS AND COPYRIGHTS 48
XVII : INTERPRETATION AND GOVERNING LAW 49
XVIII: NOTICE 50
XIX : EFFECTIVENESS OF THIS CONTRACT 51
XX : EXCLUSIVENESS 52
EXHIBIT "A" LETTER OF GUARANTEE
EXHIBIT "B" PERFORMANCE GUARANTEE
0410-2
THIS CONTRACT, made on this 16th day of February, 2004 by and between Apollonas
Shipping Company, a corporation incorporated and existing under the laws of the
▇▇▇▇▇▇▇▇ lslands (hereinafter called the "BUYER"), having its registered address
at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, ▇▇▇▇▇▇▇▇
Islands, HM 96960, the party of the first part and HYUNDAI MIPO DOCKYARD CO.,
LTD., a company organized and existing under the laws of the Republic of Korea,
having its principal office at ▇▇▇▇, ▇▇▇▇▇▇-▇▇▇▇, ▇▇▇▇-▇▇, ▇▇▇▇▇, ▇▇▇▇▇
(hereinafter called the "BUILDER"), the party of the second part,
WITNESSETH:
In consideration of the mutual covenants contained herein, the BUILDER agrees to
design, build, launch, equip and complete one (1) 47,000DWT class
Product/Chemical Tanker as described in Article I hereof (hereinafter called the
"VESSEL") at the BUILDER's shipyard in Ulsan, Korea (hereinafter called the
"SHIPYARD") and to deliver and sell the VESSEL to the BUYER, and the BUYER
agrees to accept delivery of and purchase from the BUILDER the VESSEL, according
to the terms and conditions hereinafter set forth :
(End of Preamble)
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ARTICLE I: DESCRIPTION AND CLASS
1. DESCRIPTION
The VESSEL shall have the BUILDER's Hull No. 0410 and shall be constructed,
equipped and completed in accordance with the specifications No.
PC-04001N-01-R1 dated 6th February, 2004 and the general arrangement plan
No. lA000B101(Rl) dated 6th February, 2004 attached thereto (hereinafter
called respectively the "SPECIFICATIONS" and the "PLAN") signed by both
parties, which shall constitute an integral part of this CONTRACT although
not attached hereto.
PLAN and SPECIFICATIONS are intended to explain each other and anything
shown on the PLAN and not stipulated in the SPECIFICATION, or anything
stipulated in the SPECIFICATIONS and not shown on the PLAN, shall be deemed
and considered as if included in both. Should there be any inconsistencies
or contradictions between the SPECIFICATIONS and the PLAN, the
SPECIFICATIONS shall prevail. Should there be any inconsistencies or
contradictions between this CONTRACT and the SPECIFICATIONS, this CONTRACT
shall prevail.
DESIGN RESPONSIBILITIES
The BUILDER shall be fully responsible for the design of the VESSEL, and
shall complete its own verification incorporating any design changes and
modifications as may be mutually agreed by the parties to meet the design
criteria. The consent or agreement from the BUYER to the design changes and
modifications proposed by the BUILDER shall not be unreasonably withheld.
2. BASIC DIMENSIONS AND PRINCIPAL PARTICULARS OF THE VESSEL
(a) The basic dimensions and principal particulars of the VESSEL shall be:
Length, overall abt. 183M
Length, between perpendiculars abt. 174.0M
Breadth, moulded abt. 32.2M
Depth, moulded abt. 18.0M
Designed draught, moulded abt. 11.0M
▇▇▇▇▇▇▇▇▇ draught, moulded abt. 12.5M
Main Engine : HYUNDAI - B&W 7S50MC-C
MCR: 15,820BHP x 127.0RPM
NCR: 10,600BHPx 111.1RPM
Deadweight, guaranteed : 47,500 metric tons at the ▇▇▇▇▇▇▇▇▇ draught
of 12.5 meters on even keel in sea water of
specific gravity of 1.025.
Speed, guaranteed : 14.5 knots at the design draught of 11.0 meters at
the condition of clean bottom and in calm and deep
sea with main engine output of 10,600 BHP with 15%
sea margin.
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Fuel Consumption, guaranteed : 124.9 grams/bhp(metric)-hour + 5% using
marine diesel oil having lower
calorific value of 10,200 Kcal/Kg at
93.5% MCR (optimizing point) of 14,792
bhp (metric) measured at the shop trial
with I.S.O reference conditions
The details of the aforementioned particulars as well as the definitions
and method of measurements and calculations are as indicated in the
SPECIFICATIONS.
(b) The dimensions may be slightly modified by the BUILDER, who also
reserves the right to make changes to the SPECIFICATIONS and the PLAN
if found necessary to suit the local conditions and facilities of the
SHIPYARD, the availability of materials and equipment, the
introduction of improved production methods or otherwise, subject to
the approval of the BUYER which the BUYER shall not withhold
unreasonably.
3. PERMITS AND PLANS
The BUILDER shall at its expense, unless otherwise specifically provided
herein, procure and furnish all items and permissions necessary to perform
its obligations hereunder including, but not limited to (i) plans and
specifications (in addition to the Plans and Specifications described in
this Article I), labor, machinery, parts, materials, supplies and equipment
and (ii) all necessary licenses, surveys, permits or approvals.
4. CLASSIFICATION, RULES AND REGULATIONS
(a) The VESSEL, including its machinery, equipment and outfittings shall
be designed, constructed and classified in accordance with the normal
BUILDER's quality standard. The VESSEL shall be built in strict and
full compliance with the applicable current rules and regulations,
which have been issued and effective in full force as of the date of
signing this CONTRACT, of the DNV (hereinafter called the
"CLASSIFICATION SOCIETY") and the other regulatory bodies free from
all recommendations, reservations or qualifications as described in
the SPECIFICATIONS and classed and registered with the symbol of
+IA1, Tanker for Oil Product ESP, Tanker for Chemicals ESP, Ship Type
3, EO, VCS-2, NAUTICUS (Newbuilding on the basis of fatigue life 25
years), ICE-1A.
(b) The BUILDER shall secure the approval of the CLASSIFICATION SOCIETY of
the PLAN.
(c) The Builder shall arrange with the CLASSIFICATION SOCIETY for the
assignment by the CLASSIFICATION SOCIETY of representative(s) to the
VESSEL during construction and all the machinery, equipment, etc.,
related to Class requirements. All fees and charges in connection with
the complying with the rules and regulations of the classification of
the VESSEL in compliance with the above specified rules, regulations
and requirements of this CONTRACT shall be for the account of the
BUILDER.
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(d) The decision of the CLASSIFICATION SOCIETY as to whether the VESSEL
complies with the regulations of the CLASSIFICATION SOCIETY 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 BUILDER and the BUYER.
5. NATIONALITY OF THE VESSEL
The VESSEL shall be registered by the BUYER at its own cost and expense
under the laws of Panama, at the time of its delivery and acceptance
hereunder.
6 STANDARD OF CONSTRUCTION
The VESSEL shall be properly designed, engineered and constructed with good
workmanship and in accordance with good shipbuilding practice for vessels
of this type for the VESSEL's, intended trade. The principle materials,
equipment, machinery and fittings in connection with the construction of
the VESSEL shall be of the high commercial shipbuilding standard from good
quality new materials unless otherwise specifically agreed upon by and
between the parties hereto.
(End of Article)
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ARTICLE II : CONTRACT PRICE
The contract price of the VESSEL delivered to the BUYER at the SHIPYARD shall be
United States Dollars Thirty Five Million Four Hundred and Thirty Three Thousand
only (US$ 35,433,000-) (hereinafter called the "CONTRACT PRICE") which shall be
paid plus any increases or less any decreases due to adjustment or modification,
if any, as set forth in this CONTRACT. The above CONTRACT PRICE shall include
payment for services in the inspection, test, survey and classification of the
VESSEL which will be rendered by the CLASSIFICATION SOCIETY and shall not
include the cost for application of the new provision related to the
installation of access to cargo tanks and other spaces (SOLAS II-1/ 3-6 and
Resolution MSC.133(76)).
The CONTRACT PRICE also includes all costs and expenses for supplying all
necessary drawings as stipulated in the SPECIFICATIONS except those to be
furnished by the BUYER for the VESSEL in accordance with the SPECIFICATIONS.
The CONTRACT PRICE is a fixed price with no escalation or de-escalation and
subject to change only as expressly provided in this CONTRACT and to the extent
that the BUILDER might, under any applicable law, regulation, order or decree
(including those of Korea) have any such privilege(s) or right(s) to escalate or
change the CONTRACT PRICE (for any reason whatsoever) those privilege(s) or
right(s) are hereby waived by the BUILDER.
(End of Article)
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ARTICLE III: ADJUSTMENT OF THE CONTRACT PRICE
The CONTRACT PRICE of the VESSEL shall be adjusted as hereinafter set forth in
the event of the following contingencies. It is hereby understood by both
parties that any adjustment of the CONTRACT PRICE as provided for in this
Article is by way of liquidated damages and not by way of penalty.
1. DELAYED DELIVERY
(a) No adjustment shall be made and the CONTRACT PRICE shall remain
unchanged for the first thirty (30) days of the delay in delivery of
the VESSEL [ending as of 12 o'clock midnight Korean Standard Time on
the thirtieth (30th) day of delay] beyond the Delivery Date
calculated as provided in Article VII.1. hereof.
(b) If delivery of the VESSEL is delayed more than thirty (30) days beyond
the date upon which the delivery is due from the BUILDER under the
terms of this CONTRACT, then, beginning at midnight of the thirtieth
(30th) day after such due date, the CONTRACT PRICE of the VESSEL shall
be reduced by U.S. Dollars Eight Thousand (US$ 8,000) for each full
day of delay.
However, unless the parties agree otherwise, the total amount of
deduction from the CONTRACT PRICE shall not exceed the amount due to
cover the delay of one hundred and fifty (150) days after thirty (30)
days of the delay in delivery of the VESSEL at the rate of deduction
as specified hereinabove.
(c) But, if the delay in delivery of the VESSEL continues for a period of
more than one hundred and eighty (180) days beyond the DELIVERY DATE
then, in such event, and after such period has expired, the BUYER may,
at its option, cancel this CONTRACT by serving upon the BUILDER a
notice of cancellation by telex, telegram, cable or facsimile to be
confirmed by a registered letter via airmail directed to the BUILDER
at the address given in this CONTRACT. Such cancellation shall be
effective as of the date the notice thereof is received by the
BUILDER. If the BUYER has not served the notice of cancellation after
the aforementioned one hundred and eighty (180) days delay in
delivery, the BUILDER may demand the BUYER to make an election in
accordance with Article VIII.3. hereof.
(d) If the delivery of the VESSEL is made more than thirty (30) days
earlier than the DELIVERY DATE, the CONTRACT PRICE of the VESSEL shall
be increased by adding thereto U.S. Dollars Five Thousand (US$ 5,000)
for each full day, however, such earlier delivery of the VESSEL cannot
be made within the period 31-10-2006 / 31-12-2006.
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(e) 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 extension of the Delivery Date or permissible delays as
provided in Article V, VI, VIII, XI or elsewhere in this CONTRACT, is
delivered beyond the date upon which delivery would then be due under
the terms of this CONTRACT.
2. INSUFFICIENT SPEED
(a) The CONTRACT PRICE of the VESSEL shall not be affected or changed, if
the actual speed, as determined by trial runs more fully described in
Article VI hereof, is less than the speed required under the terms of
this CONTRACT and the SPECIFICATIONS provided such deficiency in
actual speed is not more than three-tenths (3/10) of a knot below the
guaranteed speed.
(b) However, as for the deficiency of more than three-tenths (3/10) of a
knot in actual speed below the speed guaranteed under this CONTRACT,
the CONTRACT PRICE shall be reduced by U.S. Dollars Seventy Thousand
(US$ 70,000) for each full one-tenth (1/10) of a knot in excess of the
said three-tenths (3/10) of a knot of deficiency in speed [fractions
of less than one-tenth (1/10) of a knot shall be regarded as a full
one-tenth (1/10) of a knot]. However, unless the parties agree
otherwise, the total amount of reduction from the CONTRACT PRICE shall
not exceed the amount due to cover the deficiency of one (1) full knot
below the guaranteed speed at the rate of reduction as specified
above.
(c) If the deficiency in actual speed of the VESSEL is more than one (1)
full knot below the speed guaranteed under this CONTRACT, then the
BUYER, at its option, may, subject to the BUILDER's right to effect
alterations or corrections as provided in Article VI.5. hereof, cancel
this CONTRACT or may accept the VESSEL at a reduction in the CONTRACT
PRICE as above provided for one (1) full knot of deficiency only.
(d) If the actual speed of the VESSEL exceeds the speed guaranteed under
this CONTRACT, then the CONTRACT PRICE shall be increased for each
full one-tenth (1/10) of a knot by adding U.S. Dollars Twenty Thousand
(US$ 20,000) [fractions of less than one-tenth (1/10) of a knot shall
be regarded as a full one-tenth (1/10) of a knot].
3. EXCESSIVE FUEL CONSUMPTION
(a) The CONTRACT PRICE shall not be affected or changed by reason of the
fuel consumption of the VESSEL's main engine, as determined by the
engine manufacturer's
0410-9
shop trial as per the SPECIFICATIONS being more than the guaranteed
fuel consumption of the VESSEL's main engine, if such excess is not
more than five per cent (5%) over the guaranteed fuel consumption.
(b) However, as for the excess of more than five percent (5%) in the
actual fuel consumption over the guaranteed fuel consumption of the
VESSEL's main engine, the CONTRACT PRICE shall be reduced by
U.S.Dollars Thirty Thousand (US$ 30,000) for each full one per cent
(1%) increase in fuel consumption in excess of the said five per cent
(5%) increase in fuel consumption [fraction of less than one per cent
(1%) shall be regarded as a full one percent (1%)]. However, unless
the parties agree otherwise, the total amount of reduction from the
CONTRACT PRICE shall not exceed the amount due to cover the excess
of ten percent (10%) over the guaranteed fuel consumption of the
VESSEL's main engine at the rate of reduction as specified above.
(c) If such actual fuel consumption exceeds the guaranteed fuel
consumption of the VESSEL's main engine by more than ten per cent
(10%), the BUYER, at its option, may, cancel this CONTRACT or may
accept the VESSEL at a reduction in the CONTRACT PRICE as above
provided for the ten per cent (10%) increase only.
4. DEADWEIGHT BELOW CONTRACT REQUIREMENTS
(a) The guaranteed deadweight shall be deadweight as defined in Article I
paragraph 2 hereof.
(b) In the event that deficiency of the actual deadweight certified by the
CLASSIFICATION SOCIETY as determined in accordance with the
SPECIFICATION is not more than five hundred (500) metric tons
(disregarding fractions of one (1) metric ton of the guaranteed
deadweight, there shall be no change in CONTRACT PRICE. However,
should there be a deficiency of more than five hundred (500) metric
tons (disregarding fractions of less than one (1) metric ton), the
CONTRACT PRICE shall be reduced by the sum of United States Dollars
Nine Hundred (US$ 900) for every one (1) metric ton deficiency
(disregarding fractions of less than one (1) metric ton).
(c) In the event of such deficiency in the deadweight of the VESSEL being
more than one thousand (1,000) metric tons, the BUYER may at its
option, reject the VESSEL and cancel the Contract or accept the VESSEL
at a reduction in the CONTRACT PRICE to be mutually agreed upon.
0410-10
5. EFFECT OF CANCELLATION
It is expressly understood and agreed by the parties hereto that in any
case, if the BUYER cancels this CONTRACT under this Article, the BUYER
shall not be entitled to any liquidated damages.
6. METHOD OF SETTLEMENT
Every and all adjustment of the CONTRACT PRICE stipulated in this Article
shall be balanced by adjustment of the sixth installment.
(End of Article)
0410-11
ARTICLE IV : INSPECTION AND APPROVAL
1. APPOINTMENT OF BUYER'S REPRESENTATIVE
The BUYER shall timely dispatch to and maintain at the SHIPYARD, at its own
cost, expense and risk, one or more representatives (hereinafter called the
"BUYER'S REPRESENTATIVE"), who shall be duly accredited in writing by the
BUYER to supervise adequately the construction by the BUILDER of the
VESSEL, her equipment and all accessories. Before the commencement of any
item of work under this CONTRACT, the BUILDER shall, whenever reasonably
required, previously exhibit, furnish to, and within the limits of the
BUYER'S REPRESENTATIVE's authority, secure the approval from the BUYER'S
REPRESENTATIVE of any and all plans and drawings prepared in connection
therewith. Upon appointment of the BUYER'S REPRESENTATIVE, the BUYER shall
notify the BUILDER in writing of the name and the scope of the authority
of the BUYER'S REPRESENTATIVE.
2. AUTHORITY OF THE BUYER'S REPRESENTATIVE
Such BUYER'S REPRESENTATIVE shall, at all times during working hours of the
construction until delivery of the VESSEL, have the right to inspect the
VESSEL, her equipment and all accessories, and work progress, or materials
utilized in connection with the construction of the VESSEL, wherever such
work is being done or such materials are stored, for the purpose of
determining that the VESSEL, her equipment and accessories are being
constructed in accordance with the terms of this CONTRACT and/or the
SPECIFICATIONS and the PLAN.
The BUYER'S REPRESENTATIVE shall, within the limits of the authority
conferred upon him by the BUYER, make decisions or give advice to the
BUILDER on behalf of the BUYER promptly on all problems arising out of, or
in connection with, the construction of the VESSEL and generally act in a
reasonable manner with a view to cooperating to the utmost with the BUILDER
in the construction process of the VESSEL.
The decision, approval or advice of the BUYER'S REPRESENTATIVE shall be
deemed to have been given by the BUYER and once given shall not be
withdrawn, revoked or modified except with consent of the BUILDER.
Provided that the BUYER'S REPRESENTATIVE or his assistants shall comply
with the foregoing obligations, no act or omission of the BUYER'S
REPRESENTATIVE or his assistants shall, in any way, diminish the liability
of the BUILDER under Article IX (WARRANTY OF QUALITY). The BUYER'S
REPRESENTATIVE shall notify the
0410-12
BUILDER promptly in writing of his discovery of any construction or
materials, which he believes do not or will not conform to the requirements
of the CONTRACT and the SPECIFICATIONS or the PLAN and likewise advise and
consult with the BUILDER on all matters pertaining to the construction of
the VESSEL, as may be required by the BUILDER, or as he may deem necessary.
However, if the BUYER'S REPRESENTATIVE fails to submit to the BUILDER
without delay any such demand concerning alterations or changes with
respect to the construction, arrangement or outfit of the VESSEL, which the
BUYER'S REPRESENTATIVE has examined, inspected or attended at the test
thereof under this CONTRACT or the SPECIFICATIONS, the BUYER'S
REPRESENTATIVE shall be deemed to have approved the same and shall be
precluded from making any demand for alterations, changes, or complaints
with respect thereto at a later date.
The BUILDER shall comply with any such demand which is not contradictory to
this CONTRACT and the SPECIFICATIONS or the PLAN, provided that any and all
such demands by the BUYER'S REPRESENTATIVE with regard to construction,
arrangement and outfit of the VESSEL shall be submitted in writing to the
authorized representative of the BUILDER. The BUILDER shall notify the
BUYER's REPRESENTATIVE of the names of the persons who are from time to
time authorized by the BUILDER for this purpose.
It is agreed upon between the BUYER and the BUILDER that the modifications,
alterations or changes and other measures necessary to comply with such
demand may be effected at a convenient time and place at the BUILDER's
reasonable discretion in view of the construction schedule of the VESSEL.
In the event that the BUYER'S REPRESENTATIVE shall advise the BUILDER that
he has discovered or believes the construction or materials do not or will
not conform to the requirements of this CONTRACT and the SPECIFICATIONS or
the PLAN, and the BUILDER shall not agree with the views of the BUYER'S
REPRESENTATIVE in such respect, either the BUYER or the BUILDER may seek an
opinion of the CLASSIFICATION SOCIETY. The CLASSIFICATION SOCIETY shall
determine whether or not a nonconformity with the provisions of this
CONTRACT, the SPECIFICATIONS and the PLAN exists. If the CLASSIFICATION
SOCIETY enters a determination in favour of the BUYER, then in such case
the BUILDER shall correct such non conformity to the satisfaction of the
CLASSIFICATION SOCIETY. If the CLASSIFICATION SOCIETY enters a
determination in favour of the BUILDER, then the time for delivery of the
VESSEL shall be extended for the period of delay in construction, if any,
occasioned by the required time for the
0410-13
decision of the CLASSIFICATION SOCIETY.
3. APPROVAL OF DRAWINGS
(a) The BUILDER shall submit to the BUYER four (4) copies of each of the
plans and drawings to be submitted to the Buyer for its approval at
its address as set forth in Article XVIII hereof. The BUYER shall,
within fourteen (14) calendar days including mailing time after
receipt thereof, return to the BUILDER one (1) copy of such plans and
drawings with the approval or comments, if any, of the BUYER. A list
of the plans and drawings to be so submitted to the BUYER shall be
mutually agreed upon between the parties hereto.
(b) When and if the BUYER'S REPRESENTATIVE shall have been sent by the
BUYER to the SHIPYARD in accordance with Paragraph 1 of this Article,
the BUILDER may submit the remainder, if any, of the plans and
drawings in the agreed list, to the BUYER'S REPRESENTATIVE for his
approval, unless otherwise agreed upon between the parties hereto.
The BUYER'S REPRESENTATIVE shall, within seven (7) days after receipt
thereof, return to the BUILDER one (1) copy of such plans and drawing
with his approval of comments written thereon, if any. Approval by the
BUYER'S 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.
(d) In the event that the BUYER or the BUYER'S REPRESENTATIVE shall fail
to return the plans and drawings to the BUILDER within the time limit
as hereinabove provided, such plans and drawings shall be deemed to
have been automatically approved without any comment. In the event the
plans and drawings submitted by the BUILDER to the BUYER or the
BUYER'S REPRESENTATIVE in accordance with this Article do not meet
with the BUYER's or the BUYER'S REPRESENTATIVE's approval, the matter
may be submitted by either party hereto for determination pursuant to
Article XIII hereof. If the BUYER's comments on the plans and drawings
that are returned to the BUILDER by the BUYER within the said time
limit are not clearly specified or detailed, the BUILDER shall be
entitled to place its own interpretation on such comments in
implementing them.
4. SALARIES AND EXPENSES
All salaries and expenses of the BUYER'S REPRESENTATIVE or any other person
or persons employed by the BUYER hereunder shall be for the BUYER's
account.
0410-14
5. RESPONSIBILITY OF THE BUILDER
(a) The BUILDER shall provide the BUYER'S REPRESENTATIVE and his
assistants free of charge with suitably furnished office space at, or
in the immediate vicinity of, the SHIPYARD together with access to
telephone and facsimile facilities as may be necessary to enable the
BUYER'S REPRESENTATIVE and his assistants to carry out their work
under this CONTRACT. However, the BUYER shall pay for the telephone or
facsimile facilities used by the BUYER'S REPRESENTATIVE or his
assistants.
The BUILDER, its employees, agents and subcontractors, during its
working hours until delivery of the VESSEL, shall arrange for them to
have free and ready access to the VESSEL, her equipment and
accessories, and to any other place (except the areas controlled for
the purpose of national security) where work is being done, or
materials are being processed or stored in connection with the
construction of the VESSEL including the premises or subcontractors.
The BUYER'S REPRESENTATIVE or his assistants or employees shall
observe the work's rules and regulations prevailing at the BUILDER's
and its sub-contractor's premises. The BUILDER shall promptly provide
to the BUYER'S REPRESENTATIVE and/or his assistants and shall ensure
that its sub-contractors shall promptly provide all such information
as he or they may reasonably request in connection with the
construction of the VESSEL and her engines, equipment and machinery.
(b) The BUYER'S REPRESENTATIVE and his assistants shall at all times
remain the employees of the BUYER. The BUILDER shall not be liable to
the BUYER or the BUYER'S REPRESENTATIVE or to his assistants or to the
BUYER's employees or agents for personal injuries, including death,
during the time they, or any of them, are on the VESSEL, or within the
premises of either the BUILDER or its sub-contractors, or are
otherwise engaged in and about the construction of the VESSEL, unless,
however, such personal injuries, including death, are caused by the
gross negligence of the BUILDER, its sub-contractors, or its or their
employees or agents. The BUILDER shall not be liable to the BUYER for
damages to, or destruction of property of the BUYER or of the BUYER'S
REPRESENTATIVE or his assistants of the BUYER's employees or agents,
unless such damages, loss or destruction is caused by the gross
negligence of the BUILDER, its sub-contractors, or its or their
employees or agents.
0410-15
6. RESPONSIBILITY OF THE BUYER
The BUYER shall undertake and assure that the BUYER'S REPRESENTATIVE shall
carry out his duties hereunder in accordance with the normal shipbuilding
practice and in such a way so as to avoid any unnecessary and unreasonable
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 the
BUYER's REPRESENTATIVE who is deemed unsuitable and unsatisfactory for the
proper progress of the VESSEL's construction together with reasons. The
BUYER shall investigate the situation by sending its representative to the
BUILDER's yard, 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. REPORT OF PROGRESS
The BUYER is entitled to require the BUILDER to report the progress of the
construction of the VESSEL on monthly basis.
(End of Article)
0410-16
ARTICLE V : MODIFICATION, CHANGES AND EXTRAS
1. HOW EFFECTED
Minor modifications or changes to the SPECIFICATIONS and the PLAN under
which the VESSEL is to be constructed may be made at any time hereafter by
written agreement of the parties hereto. Any modification or change
requested by the BUYER which does not affect the frame-work of the
SPECIFICATIONS shall be agreed to by the BUILDER if the BUYER agrees to
adjustment of the CONTRACT PRICE, deadweight and/or cubic capacity, speed
requirements, the Delivery Date and other terms and conditions of this
CONTRACT reasonably required as a result of such modifications or change.
The BUILDER has the right to continue construction of the VESSEL on the
basis of the SPECIFICATIONS and the PLAN until the BUYER has agreed to
such adjustments. The BUILDER shall be entitled to refuse to make any
alteration, change or modification of the SPECIFICATIONS and/or the PLAN
requested by the BUYER, if the BUYER does not agree to the aforesaid
adjustments within seven (7) days of the BUILDER's notification of the same
to the BUYER, or, if, in the BUILDER's reasonable judgement, the compliance
with such request of the BUYER would cause an unreasonable disruption of
the normal working schedule of the SHIPYARD.
The BUILDER, however, agrees to exert its best efforts to accommodate such
reasonable request by the BUYER so that the said change and modification
shall be made at a reasonable cost and within the shortest period of time
reasonably possible. The aforementioned agreement to modify and change the
SPECIFICATIONS and the PLAN may be effected by exchange of letters or
telexes or cables or facsimiles manifesting the agreement.
The letters, telexes, cable and facsimiles exchanged by the parties
pursuant to the foregoing shall constitute an amendment to this CONTRACT
and the SPECIFICATIONS or the PLAN under which the VESSEL shall be built.
Upon consummation of such an agreement to modify and change the
SPECIFICATIONS or the PLAN, the BUILDER shall alter the construction of the
VESSEL in accordance therewith including any addition to, or deduction
from, the work to be performed in connection with such construction.
2. SUBSTITUTION OF MATERIAL
If any materials, machinery or equipment required for the construction of
the VESSEL by the SPECIFICATIONS and the PLAN or otherwise under this
CONTRACT can not be procured in time to meet the BUILDER's construction
schedule for the VESSEL, and subject that the BUILDER acting prudently, had
ordered all required items on time, the BUILDER may supply, subject to the
BUYER's prior approval, other materials, machinery or equipment of
0410-17
equal quality and effect capable of meeting the requirements of the
CLASSIFICATION SOCIETY and the rules, regulations and requirements with
which the construction of the VESSEL must comply, and such substitution of
materials shall be at no extra cost to the BUYER and shall not delay the
delivery of the VESSEL. If there is any gain, same will be to the benefit
of the BUYER. In any event, the BUILDER shall exercise due diligence to
procure all materials in a timely manner. The BUYER's approval shall have
no effect whatsoever on the BUILDER's undertakings in respect of the
Contract. The BUYER may research the availability of alternative materials
and propose the use of same to the BUILDER who shall reasonably evaluate
such proposals for use in construction.
3. CHANGES IN RULES AND REGULATIONS
If the specified rules and regulations with which the construction of the
VESSEL is required to comply are altered or changed by the CLASSIFICATION
SOCIETY or bodies authorized to make such alterations or changes, either
the BUYER or the BUILDER, upon receipt of due notice thereof, shall
forthwith give notice thereof to the other party in writing. Thereupon,
within twenty one (21) days after giving the notice to the BUILDER or
receiving the notice from the BUILDER, the BUYER shall advise the BUILDER
as to the alterations and changes, if any, to be made on the VESSEL which
the BUYER, in its sole discretion, shall decide. The BUILDER shall not be
obliged to comply with such alterations and/or changes if the BUYER fails
to notify the BUILDER of its decision within the time limit stated above.
The BUILDER shall comply promptly with the said request of the BUYER,
provided that the BUILDER and the BUYER shall first agree to:
(a) any increase or decrease in the CONTRACT PRICE of the VESSEL that is
necessary due to by such compliance;
(b) any extension or advancement in the Delivery Date of the VESSEL that
is necessary due to by such compliance;
(c) any increase or decrease in the deadweight and/or cubic capacity of
the VESSEL, if such compliance results in any increase or reduction in
the deadweight and/or cubic capacity;
(d) adjustment of the speed requirements if such compliance results in any
increase or reduction in the speed; and
(e) any other alterations in the terms of this CONTRACT or of the
SPECIFICATIONS or the PLANS or both, if such compliance makes such
alterations of the terms necessary.
0410-18
Any delay in the construction of the VESSEL caused by the BUYER's delay in
making a decision or agreement as above shall constitute a permissible
delay under this CONTRACT. Such agreement by the BUYER shall be effected in
the same manner as provided above for modification and change of the
SPECIFICATIONS and the PLAN.
The BUILDER shall assist to the best of its efforts to minimize the
consequence hereof to the BUYER.
(End of Article)
0410-19
ARTICLE VI : TRIALS AND COMPLETION
1. NOTICE
The BUILDER shall notify the BUYER in writing or by cable, telex or
facsimile at least thirty (30) days in advance of the time and place of the
trial run of the VESSEL. Such notice shall specify the place from which the
VESSEL will commence her trial run and approximate date upon which the
trial run is expected to take place. Such date shall be further confirmed
by the BUILDER five (5) days in advance of the trial run by telex, cable or
facsimile.
The BUYER'S REPRESENTATIVE, who is to witness the performance of the VESSEL
during such trial run, shall be present at such place on the date specified
in such notice. Should the BUYER'S REPRESENTATIVE fail to be present after
the BUILDER's due notice to the BUYER as provided above, the BUILDER shall
be entitled to conduct such trial run with the presence of the
representative(s) of the CLASSIFICATION SOCIETY only without the BUYER'S
REPRESENTATIVE being present. In such case, the BUYER shall be obliged to
accept the VESSEL on the basis of a certificate jointly issued by the
BUILDER and the representative of the CLASSIFICATION SOCIETY that the
VESSEL, after the trial run, subject to minor alterations and corrections,
if necessary, has been found to conform with the SPECIFICATIONS and this
CONTRACT and is satisfactory in all respects, provided the BUILDER first
makes such corrections and alterations promptly.
2. WEATHER CONDITION
In the event of unfavourable weather on the date specified for the trial
run, the trial run shall take place on the first available day that weather
conditions permit. The parties hereto recognize that the weather conditions
in Korean waters, in which the trial run is to take place, are such that
great changes in weather may arise momentarily and without warning and
therefore, it is agreed that if, during the trial run, the weather should
become so unfavourable that the trial run can not be continued, then the
trial run shall be discontinued and postponed until the first favourable
day next following, unless the BUYER shall assent to the acceptance of the
VESSEL by notification in writing on the basis of such trial run so far
made prior to such change in weather conditions. Any delay of the trial run
caused by such unfavourable weather conditions shall also operate to extend
the Delivery Date of the VESSEL for the period of delay occasioned by such
unfavourable weather conditions.
3. HOW CONDUCTED
All expenses in connection with the trials of the VESSEL are to be for the
account of the BUILDER, which, during the trials, is to provide at its own
expense the necessary crew to comply with conditions of safe navigation.
The trials shall be conducted in the manner prescribed in this CONTRACT and
the SPECIFICATIONS, and shall prove fulfillment of the performance
requirements for the trials as set forth in the SPECIFICATIONS.
0410-20
The BUILDER shall be entitled to conduct preliminary sea trials, during
which the propulsion plant and/or its appurtenance shall be adjusted
according to the BUILDER's judgement. The BUILDER shall have the right to
repeat any trial whatsoever as it deems necessary.
4. CONSUMABLE STORES
The BUILDER shall load the VESSEL with the required quantity of fuel oil,
lubricating oil and greases, fresh water, and other stores necessary to
conduct the trials as set forth in the SPECIFICATIONS. The necessary
ballast (fuel oil, fresh water and such other ballast as may be required)
to bring the VESSEL to the trial load draft, as specified in the
SPECIFICATIONS, shall be supplied and paid for by the BUILDER whilst
lubricating oil and greases shall be supplied and paid for by the BUYER
within the time advised by the BUILDER for the conduct of sea trials as
well as for use before the delivery of the VESSEL to the BUYER. The fuel
oil as well as lubricating oil and greases shall be in accordance with the
engine specifications and the BUYER shall decide and advise the BUILDER of
the supplier's name for lubricating oil and greases before the keel laying
of the VESSEL, provided that the supplier shall be acceptable to the
BUILDER and/or the makers of all the machinery.
Any fuel oil, fresh water or other consumable stores furnished and paid for
by the BUILDER for trial runs remaining on board the VESSEL, at the time of
acceptance of the VESSEL by the BUYER, shall be bought by the BUYER from
the BUILDER at the BUILDER's purchase price, as evidenced by vouchers, for
such supply in Korea and payment by the BUYER thereof shall be made at the
time of delivery of the VESSEL. The BUILDER shall pay the BUYER at the time
of delivery of the VESSEL for the consumed quantity of lubricating oil and
greases which were furnished and paid for by the BUYER at the BUYER's
purchase price thereof. The consumed quantity of lubricating oils and
greases shall be calculated on the basis of the difference between the
remaining amount, including the same remaining in the main engine, other
machinery and their pipes, ▇▇▇▇▇ tube and the like, and the supplied
amount.
5. ACCEPTANCE OR REJECTION
(a) If, during any sea trial, any breakdown occurs entailing interruption
or irregular performance which can be repaired on board, the trial
shall be continued after such repairs have been made. Any important
spare parts for the VESSEL's operation used in connection with such
repairs are to be replaced with new parts at the BUILDER's cost prior
to delivery.
(b) However, if, during or after the trial run, it becomes apparent that
the VESSEL or any part of her equipment requires alterations or
corrections which but for this provision would or might entitle the
BUYER to cancel this CONTRACT, the BUILDER shall notify the BUYER
promptly in writing or by cable, telex or facsimile to such effect and
shall simultaneously advise the BUYER of the estimated additional time
required for the necessary alterations or corrections to be made. The
BUILDER shall take proper steps to
0410-21
remedy the same and carry out further re-trial runs as may be
necessary without extra cost to the BUYER so as to insure full
conformity with the requirements of this CONTRACT and the
SPECIFICATIONS.
The BUYER shall, within three (3) days of receipt from the BUILDER of
notice of completion of such alterations or corrections and after such
further trials or tests as necessary, notify the BUILDER in writing or
by cable, telex or facsimile confirmed in writing of its acceptance,
qualified acceptance or rejection of the VESSEL, all in accordance
with the SPECIFICATIONS, the PLAN and this CONTRACT, and shall not be
entitled to reject the VESSEL on such grounds until such time.
(c) Save as above provided, the BUYER shall, within three (3) days after
completion of the trial run, notify the BUILDER in writing or by
cable, telex or facsimile confirmed in writing of its acceptance of
the VESSEL or of the details in respect of which the VESSEL does not
conform to the SPECIFICATIONS or this CONTRACT.
If the BUILDER is in agreement with the BUYER's determinations as to
non-conformity, the BUILDER shall make such alterations or changes as
may be necessary to correct such non-conformity and shall prove the
fulfillment of this CONTRACT and the SPECIFICATIONS by such tests or
trials as may be necessary.
Upon completion of correction of such non-conformity, if the
CLASSIFICATION SOCIETY request a second trial run to prove that such
non-conformity has been corrected, the BUILDER shall give the BUYER
three (3) days' notice of the second trial. The BUYER shall, within
three (3) days after completion of such tests and/or trials, notify
the BUILDER in writing or by cable, telex or facsimile confirmed in
writing of its acceptance or rejection of the VESSEL.
(d) Any dispute between the BUILDER and the BUYER as to the conformity or
non-conformity of the VESSEL to the requirements of this Contract
and/or the Specifications shall be submitted for final decision by the
CLASSIFICATION SOCIETY.
(e) However, the BUYER shall not be entitled to reject the VESSEL by
reason of any minor or insubstantial items judged from the point of
view of standard shipbuilding and shipping practice as not being in
conformity with the SPECIFICATIONS, but, in that case, the BUILDER
shall not be released from the obligation to correct and/or remedy
such minor or insubstantial items as soon as practicable after the
delivery of the VESSEL.
6. EFFECT OF ACCEPTANCE
The BUYER's written, telexed, cabled or facsimiled notification of
acceptance delivered to the BUILDER as above provided, shall be final and
binding insofar as conformity of the VESSEL
0410-22
with 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 conditions of delivery, as herein set forth and
provided that, in the case of qualified acceptance, any matters which were
mentioned in the notice of the qualified acceptance by the BUYER as
requiring correction have been corrected satisfactorily.
If the BUYER fails to notify the BUILDER of its acceptance or rejection of
the VESSEL as hereinabove provided, the BUYER shall be deemed to have
accepted the VESSEL. Nothing contained in this Article shall preclude the
BUILDER from exercising any and all rights which the BUILDER has under this
CONTRACT if the BUILDER disagrees with the BUYER's rejection of the VESSEL
or any reasons given for such rejections, including arbitration provided in
Article XIII hereof.
If, at the time of delivery of the VESSEL, there are deficiencies on the
VESSEL, such deficiencies should be resolved in such way that if the
deficiencies are of minor importance and do not affect the safety or the
operation of the VESSEL, its crew, passengers or cargo, the BUILDER shall
be nevertheless entitled to tender the VESSEL for delivery and the BUYER
shall be nevertheless obliged to take delivery of the VESSEL, provided
that:
(i) the BUILDER shall for its own account remedy the deficiency and
fulfill the requirements as soon as possible, to the satisfaction of
the BUYER or
(ii) if elimination of such deficiencies will affect timely delivery of the
VESSEL, then the BUILDER shall indemnify the BUYER for any direct cost
reimbursement in association with remedying these minor
non-conformities elsewhere from Korea as a consequence thereof.
The estimated costs will be deducted from the final payment or the BUILDER
shall provide a bank guarantee to cover such costs.
(End of Article)
0410-23
ARTICLE VII: DELIVERY
1. TIME AND PLACE
The VESSEL shall be delivered by the BUILDER to the BUYER at the SHIPYARD,
safely afloat on 31st January, 2007 (hereinafter called the "DELIVERY
DATE") after completion of satisfactory trials and acceptance by the BUYER
in accordance with the terms of Article VI, except that, in the event of
delays in delivery of the VESSEL by the BUILDER due to causes which under
the terms of this CONTRACT permit extensions of the time for delivery of
the VESSEL, the aforementioned DELIVERY DATE shall be extended accordingly.
The BUILDER shall give an approximate notice to the BUYER of the expected
date of delivery, on or before thirty (30) calendar days and twenty (20)
calendar days prior to scheduled delivery date. A preliminary notice shall
be given to the BUYER at least two (2) months prior to the scheduled
delivery date.
2. WHEN AND HOW EFFECTED
Provided that each the BUILDER and BUYER shall have fulfilled all of their
obligations provided for in this CONTRACT, delivery of the VESSEL shall be
forthwith effected upon acceptance thereof by the BUYER, as hereinabove
provided, by the concurrent delivery by each of the parties hereto to the
other of a PROTOCOL OF DELIVERY AND ACCEPTANCE acknowledging delivery of
the VESSEL by the BUILDER and acceptance thereof by the BUYER, which shall
be prepared in duplicate and signed by each of the parties hereto.
3. DOCUMENTS TO BE DELIVERED TO THE BUYER
Upon delivery and acceptance of the VESSEL, the BUILDER shall deliver to
the BUYER the following documents, which shall accompany the aforementioned
PROTOCOL OF DELIVERY AND ACCEPTANCE:
(a) PROTOCOL OF TRIALS of the VESSEL made pursuant to this CONTRACT and
the SPECIFICATIONS,
(b) PROTOCOL OF INVENTORY of the equipment of the VESSEL, including share
parts, all as specified in the SPECIFICATIONS,
0410-24
(c) PROTOCOL OF STORES OF CONSUMABLE NATURE, such as all fuel oil and
fresh water remaining in tanks if its cost is charged to the BUYER
under Article VI.4. hereof,
(d) FINISHED DRAWINGS AND PLANS, MANUALS AND INSTRUCTION BOOKS pertaining
to the VESSEL as stipulated in the SPECIFICATIONS, which shall be
furnished to the BUYER at no additional cost,
(e) ALL CERTIFICATES required to be furnished upon delivery of the VESSEL
pursuant to this CONTRACT, the SPECIFICATIONS and the customary
shipbuilding practice, including
(i) Classification Certificate
(ii) Safety Construction Certificate
(iii) Safety Equipment Certificate
(iv) Safety Radiotelegraphy Certificate
(v) International Loadline Certificate
(vi) International Tonnage Certificate
(vii) BUILDER's Certificate
(viii) De-ratting Exemption Certificate
(ix) IOPP Certificate
However, it is agreed by the parties that if 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
formal certificates as promptly as possible after such formal
certificates have been issued and in any event before the expiry of
the provisional certificates.
(f) DECLARATION OF WARRANTY of the BUILDER that on the date of delivery
the VESSEL is delivered to the BUYER free and clear of any liens,
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
prefecture or country of the port of delivery, as well as of all
liabilities of the BUILDER to its sub-contractors and employees and of
all liabilities arising from the operation of the VESSEL in trial
runs, or otherwise, prior to delivery except as otherwise provided
under this Contract.
0410-25
(g) COMMERCIAL INVOICE with main particulars of the VESSEL, made by the
BUILDER,
(h) ▇▇▇▇ OF SALE made by the BUILDER, duly notarially attested and
apostilled.
(i) BUILDER's CERTIFICATE, duly notarially attested and apostilled.
4. TENDER OF THE VESSEL
If the BUYER fails to take delivery of the VESSEL after completion thereof
according to this CONTRACT and the SPECIFICATIONS, the BUILDER shall have
the right to tender delivery of the VESSEL after compliance with all
procedural requirements as provided above.
5. TITLE AND RISK
Title and risk shall pass to the BUYER upon delivery of the VESSEL being
effected as stated above and the BUILDER shall be free of all
responsibility or liability whatsoever related with this CONTRACT except
for the warranty of quality contained in Article IX and the obligation to
correct and/or remedy, as provided in Article VI. 5 (d), if any, it being
expressly understood that, until such delivery is effected, the VESSEL and
equipment thereof are at the entire risk of the BUILDER including but not
confined to, risks of war, insurrection and seizure by Governments or
Authorities, whether Korean or foreign, and whether at war or at peace. The
title to the BUYER's supplies as provided in Article XII shall remain with
the BUYER and the BUILDER's responsibility for such BUYER's supplies shall
be as described in Article XII.2.
6. REMOVAL OF THE VESSEL
The BUYER shall take possession of the VESSEL immediately upon delivery
thereof and shall remove the VESSEL from the SHIPYARD within three (3) days
after delivery thereof is effected. Port dues and other charges levied by
the Korean Government Authorities after delivery of the VESSEL and any
other costs related to the removal of the VESSEL shall be borne by the
BUYER, unless prevented from doing so by any circumstances beyond BUYER's
reasonable control, then, in such event, the BUYER shall pay to the BUILDER
the reasonable moving and mooring charges of the VESSEL.
(End of Article)
0410-26
ARTICLE VIII : DELAYS AND EXTENSIONS OF TIME (FORCE MAJEURE)
1. CAUSES OF DELAY
If, at any time after signing this CONTRACT, either the construction or
delivery of the VESSEL or any performance required hereunder as a
prerequisite to the delivery thereof is delayed by any of the following
events; namely war, acts of state or government, blockade, revolution,
insurrections, mobilization, civil commotion, riots, strikes, sabotage,
lockouts, Acts of God or the public enemy, plague or other epidemics,
quarantines, shortage or prolonged failure of electric current, freight
embargoes, or defects in major forgings or castings, or delays or defects
in the BUYER's supplies as stipulated in Article XII, if any, or shortage
of materials, machinery or equipment or inability to obtain delivery or
delays in delivery of materials, machinery or equipment, provided that at
the time of ordering the same could reasonably be expected by the BUILDER
to be delivered in time or defects in materials, machinery or equipment
which could not have been detected by the BUILDER using reasonable care or
earthquakes, tidal waves, typhoons, hurricanes, prolonged or unusually
severe weather conditions or destruction of the premises or works of the
BUILDER or its sub-contractors, or of the VESSEL, or any part thereof, by
fire, landslides, flood, lightning, explosion, or delays in the BUILDER's
other commitments resulting from any such causes as described in this
Article which in turn delay the construction of the VESSEL or the BUILDER'S
performance under the CONTRACT, or delays caused by the CLASSIFICATION
SOCIETY or the BUYER's faulty action or omission, or other causes beyond
the control of the BUILDER, or its sub-contractors, as the case may be, or
for any other causes which, under the terms of this CONTRACT, authorise and
permit extension of the time for delivery of the VESSEL, then, in the event
of delays due to the happening of any of the aforementioned contingencies,
then, and in any such case PROVIDED THAT:
(a) such delay or event has not been caused by any negligence or
intentional act of the BUILDER or its sub-contractors; and
(b) the BUILDER shall use all reasonable efforts to prevent or minimise
any delay in the construction of the VESSEL resulting from such events
(including, but without limitation, the obtaining of items from
alternative sources and the introduction of overtime) the Delivery
Date of the VESSEL under this CONTRACT shall be extended for a period
of time equal to the delay in the Delivery Date so caused but which
shall not exceed the total accumulated time of all such delays.
Should several causes of force majeure occur during the same period of
time, the resulting delay shall not be the sum of delays resulting from
each individual case.
0410-27
2. NOTICE OF DELAYS
Within five (5) days after commencement of any delay on account of which
the BUILDER claims that it is entitled under this CONTRACT to an extension
of the DELIVERY DATE of the VESSEL, excluding delays due to arbitration,
the BUILDER shall advise the BUYER in writing or by telex, cable or
facsimile of the date such delay commenced, the reasons thereof and, if
possible, its estimated duration of the probable delay in the delivery of
the VESSEL, and shall supply the BUYER if reasonably available with
evidence to justify the delay claimed. Within one (1) week after such delay
ends, the BUILDER shall likewise advise the BUYER in writing or by telex,
cable or facsimile of the date that such delay ended, the steps taken by
the BUILDER to mitigate such delay and shall specify the maximum period of
time by which an extension to the DELIVERY DATE is claimed. Failure of
BUILDER to give said advices to the BUYER shall bar the BUILDER from later
claiming that the said delays were caused by reason of any one or more of
the events referred to in this Article and also, shall specify the period
of time by which the BUILDER claims the DELIVERY DATE should be extended by
reason of such delay. Failure of the BUYER to object to the BUILDER's
notification of any claim for extension of the date for delivery of the
VESSEL within ten (10) days after receipt by the BUYER of such notification
shall be deemed to be a waiver by the BUYER of its right to object to such
extension.
3. RIGHT TO CANCEL FOR EXCESSIVE DELAY
If the total accumulated time of all permissible and non-permissible
delays, excluding delays due to (i) arbitration under Article XIII, (ii)
the BUYER's defaults under Article XI, (iii) modifications and changes
under Article V or (iv) delays or defects in the BUYER's supplies as
stipulated in Article XII, aggregates three hundred (300) days or more,
then, the BUYER may, at any time thereafter, cancel this CONTRACT by giving
a written notice of cancellation to the BUILDER. Such cancellation shall be
effective as of the date the notice thereof is received by the BUILDER.
If the BUYER has not served the notice of cancellation as provided in the
above or Article III. 1. hereof, the BUILDER may, at any time after
expiration of the accumulated time of the delay in delivery, either three
hundred (300) days in case of the delay in this Paragraph or one hundred
and eighty (180) days in case of the delay in Article III. 1, notify the
BUYER of the future date upon which the BUILDER estimates the VESSEL will
be ready for delivery and demand in writing or by telex, cable or facsimile
that the BUYER make an election either to cancel this CONTRACT or to
consent to the delivery of the VESSEL at such future date, in which case
the BUYER shall, within seven (7) days after receipt of such demand make
and
0410-28
notify the BUILDER of such election. If the BUYER elects to consent to the
delivery of the VESSEL at such future date (or other future date as the
parties may agree):
(a) Such future date shall become the contractual delivery date for the
purposes of this CONTRACT and shall be subject to extension by reason
of permissible delays as herein provided, and
(b) If the VESSEL is not delivered by such revised contractual delivery
date (as extended by reason of permissible delays), the BUYER shall
have the same right of cancellation upon the same terms as provided in
the above and Article III. 1.
If the BUYER shall not make an election within seven (7) days as provided
hereinabove, the BUYER shall be deemed to have accepted such extension of
the DELIVERY DATE to the future delivery date indicated by the BUILDER.
4. DEFINITION OF PERMISSIBLE DELAYS
Delays on account of the foregoing causes shall be understood to be
permissible delays, and are to be distinguished from non-permissible
unauthorized delays on account of which the CONTRACT PRICE of the VESSEL is
subject to adjustment as provided in Article III hereof.
(End of Article)
0410-29
ARTICLE IX : WARRANTY OF QUALITY
1. GUARANTEE OF MATERIAL AND WORKMANSHIP
The BUILDER, for the period of twelve (12) months from the date of delivery
of the VESSEL to the BUYER, guarantees the VESSEL, her hull and machinery,
and all parts and equipment thereof that are manufactured or furnished or
supplied by the BUILDER or its subcontractors under this CONTRACT against
all defects which are due to inadequate or faulty design, defective
materials, construction miscalculation and/or poor workmanship on the part
of the BUILDER or its subcontractors.
The BUILDER will be responsible for all machinery or parts of machinery and
all constructions which are supplied by sub-contractors and will guarantee
the above mentioned for a period of twelve (12) months on the basis as laid
down in this Paragraph.
If the warranties given by the suppliers and/or subcontractors have a
validity in excess of twelve (12) months period as set forth in this
CONTRACT, then, such warranties shall be assigned to the BUYER.
2. NOTICE OF DEFECTS
The BUYER or its duly authorized representative will notify the BUILDER in
writing or by telex, cable or facsimile promptly after discovery of any
defect for which a claim is to be made under this guarantee.
The BUYER's written notice shall include full particulars as to the nature
of the defect and the extent of the damage caused thereby, but excluding
consequential damage as hereinafter provided. The BUILDER will be under no
obligation with respect to this guarantee in respect of any claim for
defects discovered prior to the expiry date of the guarantee, unless notice
of such defects is received by the BUILDER before the expiry date. However,
cable or telex or facsimile advice received by the BUILDER within three (3)
days after such expiry date that a claim is forthcoming will be sufficient
compliance with the requirement as to time, provided that such cable or
telex or facsimile advice shall include at least a brief description of the
defect including the identity of the equipment, extent of damage, name and
number of any replacement part and description of any remedial work
required, and that full particulars are given to the BUILDER not later than
fifteen (15) days after the expiry date.
0410-30
3. REMEDY OF DEFECTS
(a) The BUILDER shall remedy, at its expense, any defects, against which
the VESSEL is guaranteed under this Article, by making all necessary
and reasonably practicable repairs or replacements at the SHIPYARD or
elsewhere as provided for in (b) herein below.
In such case, the VESSEL shall be taken at the BUYER's cost and
responsibility to the place selected, ready in all respects for such
repairs or replacements and in any event, the BUILDER shall not be
responsible for towage, dockage, wharfage, port charges and anything
else incurred for the BUYER's getting and keeping the VESSEL ready for
such repairing or replacing.
(b) However, if it is impractical (which shall include, but not be limited
to, an emergency) to bring the VESSEL to the SHIPYARD, the BUYER may
cause the necessary repairs or replacements to be made elsewhere which
is deemed by the BUYER with the consent of the BUILDER which shall not
be unreasonably withheld, to be suitable for the purpose, provided
that, in such event, the BUILDER may forward or supply replacement
parts or materials to the VESSEL under the terms described in (c)
hereinbelow, unless forwarding or supplying thereof to the VESSEL
would impair or delay the operation or working schedule of the VESSEL.
In the event that the BUYER proposes to cause the necessary repairs or
replacements to be made to the VESSEL at any shipyard or works other
than the SHIPYARD, the BUYER shall first (but in all events as soon as
reasonably possible) give the BUILDER notice in writing or by telex,
cable or facsimile of the time and place such repairs will be made,
and if the VESSEL is not thereby delayed, or her operation or working
schedule is not thereby impaired, the BUILDER shall have the right to
verify by its own representative(s) the nature and extent of the
defects complained of. The BUILDER shall, in such case, promptly
advise the BUYER by telex, cable or facsimile, after such examination
has been completed, of its acceptance or rejection of the defects as
ones that are covered by the guarantee herein provided. Upon the
BUILDER's acceptance of the defects as justifying remedy under this
Article, or upon award of the arbitration so determining, the BUILDER
shall compensate the BUYER an amount equal to the cost of making the
same repairs or replacements at the SHIPYARD
The guarantee period for parts of the VESSEL's hull, her machinery
and/or her equipment repaired or replaced by the BUILDER shall be
extended for a further period of six (6) months always provided that
this six (6) months guarantee does not expire before the original
twelve (12) months guarantee. The guarantee for parts required or
replaced shall not in any way extend beyond eighteen (18) months from
the delivery date of the VESSEL.
0410-31
(c) In the event that it is necessary for the BUILDER to forward a
replacement for a defective part under this guarantee, replacement
parts shall be shipped to the BUYER under the terms of F.O.B. port of
the country where they are to be purchased.
(d) The BUILDER reserves the option to retrieve, at the BUILDER's cost,
any of the replaced equipment/parts in case defects are remedied in
accordance with the provisions in this Article.
(e) Any dispute under this Article shall be referred to arbitration in
accordance with the provisions of Article XIII hereof.
4. EXTENT OF THE BUILDER'S LIABILITY
(a) After delivery of the VESSEL the responsibility of the BUILDER in
respect of and/or in connection with the VESSEL and/or this CONTRACT
shall be limited to the extent expressly provided in this Article.
Except as expressly provided in this Article, in no circumstances and
on no ground whatsoever shall the BUILDER have any responsibility or
liability whatsoever or howsoever arising in respect of or in
connection with the VESSEL or this CONTRACT after the delivery of the
VESSEL. Further, but without in any way limiting the generality of
this Article, the BUILDER shall have no liability or responsibility
whatsoever or howsoever arising for or in connection with any
pecuniary loss or expense, any liability to any third party or any
fine, compensation, penalty or other payment or sanction incurred by
or imposed upon the BUYER or any other party whatsoever in relation to
or in connection with this CONTRACT or the VESSEL.
(b) The BUILDER shall be under no obligation with respect to defects
discovered after the expiration of the period of guarantee specified
above, nor in any event shall the BUILDER be liable for any worsening
of defects after the expiry date of the guarantee.
(c) The BUILDER shall under no circumstances be liable for defects in the
VESSEL or any part of equipment thereof caused by perils of the sea,
rivers or navigation, or normal wear and tear, or fire or accidents at
sea or elsewhere or by mismanagement, accident, negligence, willful
neglect, alteration or addition on the part of the BUYER, its
employees or agents on or doing work on the VESSEL, including the
VESSEL's officers, crew and passengers. Likewise, the BUILDER shall
not be liable for defects in the VESSEL or any part of equipment
thereof that are due to repairs which
0410-32
were made by other than the BUILDER at the discretion of the BUYER as
hereinabove provided.
(d) The liability of the BUILDER provided for in this Article shall be
limited to defects directly caused by defective materials,
construction miscalculation design and/or poor workmanship as above
provided. The BUILDER shall not be obliged to repair, not be liable
for, damage to the VESSEL or any part of the equipment thereof, which
after delivery of the VESSEL, is caused other than by the defects of
the nature specified above. The guarantees contained as hereinabove in
this Article replace and exclude any other liability, guarantee,
warranty and/or condition imposed or implied by statute, common law,
custom or otherwise on the part of the BUILDER by reason of the
construction and sale of the VESSEL for and to the BUYER.
5. GUARANTEE ENGINEER
The BUILDER may at the request of the BUYER appoint a guarantee engineer to
serve on the VESSEL as its representative for a period of three (3) months
from the date the VESSEL is delivered. However, if the BUYER shall deem it
necessary to keep the guarantee engineer on the VESSEL for a longer period,
then he shall remain on board the VESSEL after the said three (3) months,
but no longer than twelve (12) months from the delivery of the VESSEL.
The BUYER and its employees shall give such guarantee engineer full
cooperation in carrying out his duties as the representative of the BUILDER
on board the VESSEL.
The BUYER shall accord the guarantee engineer treatment comparable to the
VESSEL's chief engineer and shall provide board and lodging at no cost to
the BUILDER or the guarantee engineer. While the guarantee engineer is on
board the VESSEL, the BUYER shall pay to the BUILDER a sum of U.S. Dollars
Five Thousand (US$ 5,000) per month, the expenses of his repatriation to
Ulsan, Korea by air upon termination of his service, the expenses of his
communication with the BUILDER incurred in performing his duties and
expenses, if any, of his medical and hospital care in the VESSEL's
hospital. The BUILDER and the BUYER shall, prior to delivery of the VESSEL,
execute a separate agreement regarding the guarantee engineer.
(End of Article)
0410-33
ARTICLE X : PAYMENT
1. CURRENCY
All payments under this CONTRACT shall be made in United States Dollars.
2. TERMS OF PAYMENT
The payments of the CONTRACT PRICE shall be made in installments as
follows.
(a) First Instalment
U.S. Dollars One Million Seven Hundred Four Thousand Three Hundred
Seventy Five only (US$ 1,704,375-) shall be paid within seven (7)
business days after the date hereof and after receipt of the original
Letter of Refund Guarantee or authenticated bank cable in accordance
with this Article.
Under this CONTRACT, in counting the business days, only Saturdays and
Sundays are excepted. When a due date falls on a day when banks are
not open for business in Piraeus, London, New York or Seoul such due
date shall fall due upon the first business day next following.
(b) Second Instalment
U.S. Dollars One Million Seven Hundred Four Thousand Three Hundred
Seventy Five only (US$ 1,704,375-) shall be paid within six (6) months
after signing of this CONTRACT.
(c) Third Instalment
U.S. Dollars One Million Seven Hundred Four Thousand Three Hundred
Seventy Five only (US$ 1,704,375-) shall be paid within five (5)
business days of receipt by the BUYER of a telexed, cabled or
facsimiled notice from the BUILDER with written confirmation of the
CLASSIFICATION SOCIETY confirming that steel cutting has been started,
but not earlier than eleven (11) months prior to the DELIVERY DATE.
(d) Fourth Instalment
U.S. Dollars Three Million Four Hundred Eight Thousand Seven Hundred
Fifty only (US$ 3,408,750-) shall be paid within five (5) business
days of receipt by the BUYER of a telexed, cabled or facsimiled notice
from the BUILDER with written confirmation
0410-34
of the CLASSIFICATION SOCIETY confirming that the first keel block has
been laid, but not earlier than seven (7) months prior to the DELIVERY
DATE.
(e) Fifth Istalment
U.S. Dollars One Million Seven Hundred Four Thousand Three Hundred
Seventy Five only (US$ 1,704,375-) shall be paid within five (5)
business days of receipt by the BUYER of a telexed, cabled or
facsimiled notice from the BUILDER with written confirmation of the
CLASSIFICATION SOCIETY confirming that the VESSEL has been launched,
but not earlier than four (4) months prior to the DELIVERY DATE.
(f) Sixth Instalment
U.S. Dollars Twenty Five Million Two Hundred Six Thousand Seven
Hundred Fifty only (US$ 25,206,750-) plus or minus any increase or
decrease due to modifications and/or adjustment, if any, arising prior
to delivery of the VESSEL of the CONTRACT PRICE under Articles III and
V of this CONTRACT shall be paid by the BUYER to the BUILDER
concurrently with the delivery of the VESSEL as evidenced by the
execution of the BUILDER and the BUYER of the Protocol of Delivery and
Acceptance.
It is understood and agreed upon by the BUILDER and the BUYER that all
payments under the provisions of this Article shall not be delayed or
withheld by the BUYER due to any dispute or disagreement of whatsoever
nature arising between the BUILDER and the BUYER. Should there be any
dispute in this connection, the matter shall be dealt with in accordance
with the provisions of arbitration in Article XIII hereof.
3. DEMAND FOR PAYMENT
At least fourteen (14) days prior to the date of each event provided in
Paragraph 2 of this Article on which any payment shall fall due hereunder,
with the exception of the payment of the first instalment, the BUILDER
shall notify the BUYER by telex, cable or facsimile of the date such
payment shall become due.
The BUYER shall immediately acknowledge receipt of such notification by
telex, cable or facsimile to the BUILDER, and make payment as set forth in
this Article. If the BUILDER fails to receive the BUYER's said
acknowledgement within three (3) days after
0410-35
sending the aforementioned notification, the BUILDER shall promptly telex,
cable or facsimile to the BUYER a second notification of similar import.
The BUYER shall immediately acknowledge by telex, cable or facsimile
receipt of the foregoing second notification regardless of whether or not
the first notification was acknowledged as aforesaid.
4. METHOD OF PAYMENT
(a) All the pre-delivery payments and the payment due on delivery in
settlement of the CONTRACT PRICE as provided for in Paragraph 2 of
this Article shall be made in U.S. Dollars on or before the DUE DATE
thereof by telegraphic transfer as follows;
(i) The payment of the first, second, third, fourth and fifth
instalments shall be made to the account of Hyundai Mipo
Dockyard Co., Ltd. (hereinafter called the "HMD") with the
Export-Import Bank of Korea, Head Office, Seoul, Korea
(hereinafter called "KEXIM"), Account No. ▇▇-▇▇▇-▇▇▇ at the
Deutsche Bank Trust Company Americas, New York N.Y. 10015, USA
(hereinafter called the "DBTC, N.Y.") in favour of HMD under
advice by telefax or telex, including swift, to KEXIM, Korea by
the remitting Bank.
(ii) The BUYER or its financing bank shall make an irrevocable cash
deposit in the name of the BUYER or its financing bank at KEXIM,
for a period of thirty (30) days covering the amount of the sixth
installment, with irrevocable instructions that the said
instalment is payable to the HMD against presentation by the
BUILDER to the KEXIM of a faxed copy of the original PROTOCOL OF
DELIVERY AND ACCEPTANCE of the VESSEL signed by the BUILDER and
the BUYER's authorized representative. If the delivery of the
VESSEL is not effected on or before the expiry of the aforesaid
thirty (30) days deposit period, the BUYER shall have the right
to withdraw the said deposit plus accrued interest upon the
expiry date. However, when the new scheduled delivery date is
notified to the BUYER by the BUILDER, the BUYER shall make the
cash deposit in accordance with the same terms and conditions as
set out above.
(b) Simultaneously with each of such payments, the BUYER shall advise the
BUILDER of the details of the payments by telex, cable or facsimile
and at the same time, the BUYER shall cause the BUYER's remitting Bank
to advise the Bank of the details of such payments by authenticated
bank cable or telex.
0410-36
5. REFUND BY THE BUILDER
The payments made by the BUYER to the BUILDER prior to delivery of the
VESSEL shall constitute advances to the BUILDER. If the VESSEL is rejected
by the BUYER in accordance with the terms of this CONTRACT or, except in
the case of rescission or cancellation of this CONTRACT by the BUILDER
under the provisions of Article XI hereof, if the BUYER terminates, cancels
or rescinds this CONTRACT pursuant to any of the provisions of this
CONTRACT specifically permitting the BUYER to do so, the BUILDER shall,
within twenty (20) days of receipt of BUYER's notice, refund to the BUYER,
in U.S. Dollars, the full amount of total sums paid by the BUYER to the
BUILDER in advance of delivery together with interest thereon as herein
provided.
The transfer and other bank charges of such refund shall be for the
BUILDER's account. The interest rate of the refund, as above provided,
shall be six per cent (6%) per annum from the date following the date of
receipt by the BUILDER of the pre-delivery instalment(s) to the date of
remittance by telegraphic transfer of such refund.
It is hereby understood by both parties that payment of any interest
provided herein is by way of liquidated damages due to cancellation of this
CONTRACT and not by way of compensation for use of money.
If, the BUILDER is required to refund to the BUYER the instalments paid by
the BUYER to the BUILDER as provided in this Paragraph, the BUILDER shall
return to the BUYER all of the BUYER's supplies as stipulated in Article
XII which were not incorporated into the VESSEL and pay to the BUYER an
amount equal to the cost to the BUYER of those supplies incorporated into
the VESSEL.
6. TOTAL LOSS
If there is a total loss or a constructive total loss of the VESSEL prior
to delivery thereof, the BUILDER shall proceed according to the mutual
agreement of the parties hereto either:
(a) to build another vessel in place of the VESSEL so lost and deliver it
under this CONTRACT to the BUYER, provided that the parties hereto
shall have agreed in writing to a reasonable price and time for the
construction of such vessel in place of the lost VESSEL; or
(b) to refund to the BUYER the full amount of the total sums paid by the
BUYER to the
0410-37
BUILDER under the provisions of Paragraph 2 of this Article together
with interest thereon at the rate of six per cent (6%) per annum from
the date following the date of receipt by the BUILDER of such
pre-delivery instalment(s) to the date of payment by the BUILDER to
the BUYER of the refund.
If the parties hereto fail to reach such agreement within two (2) months
after the VESSEL is determined to be a total loss or constructive total
loss, the provisions of (b) hereinabove shall be applied.
7. DISCHARGE OF OBLIGATIONS
Such refund as provided in the foregoing Paragraphs 5 and 6 by the BUILDER
to the BUYER shall forthwith discharge all the obligations, duties and
liabilities of each of the parties hereto to the other (other than any
obligations of the BUYER in respect of facilities afforded to the BUYER'S
REPRESENTATIVE) under this CONTRACT. Any and all refunds or payments due to
the BUYER under this CONTRACT shall be made by telegraphic transfer to the
account specified by the BUYER.
8. REFUND GUARANTEE
The BUILDER shall furnish the BUYER at least seven (7) business days prior
to the payment of the first instalment with an assignable, irrevocable and
unconditional letter of guarantee issued by the KEXIM for the refund of the
pre-delivery instalments plus interest as aforesaid to the BUYER under or
pursuant to Paragraph 5 above in the form and tenor as annexed hereto as
Exhibit "A".
All expenses in issuing and maintaining the letter of guarantee described
in this Paragraph shall be borne by the BUILDER.
9. PERFORMANCE GUARANTEE
Within seven (7) business days upon receipt of the Refund Guarantee as
provided in para (8) hereinabove, the BUYER shall provide the BUILDER with
an irrevocable and unconditional Letter of Guarantee issued by a Guarantor
acceptable to the BUILDER for the due and faithful performance by the BUYER
of all its liabilities and responsibilities under the CONTRACT including,
but not limited to, the payment of the CONTRACT PRICE and taking delivery
of the VESSEL in the substantially similar form and tenor as annexed hereto
as Exhibit "B"
(End of Article)
0410-38
ARTICLE XI : BUYER'S DEFAULT
1. DEFINITION OF DEFAULT
The BUYER shall be deemed to be in default under this CONTRACT in the
following cases:
(a) If the first, second, third, fourth or fifth instalment is not paid
to the BUILDER within respective DUE DATE of such instalments; or
(b) If the sixth instalment is not deposited in accordance with Article
X.4.(a)(ii) hereof or if the said sixth instalment deposit is not
released to the BUILDER against presentation by the BUILDER of a copy
of the original PROTOCOL OF DELIVERY AND ACCEPTANCE; 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; or
(d) If a petition is filed or an order is made or an effective resolution
is passed for the winding up or dissolution of the BUYER or a Receiver
is appointed of the undertaking or property of the BUYER or any
similar process or proceeding is initiated under the laws of any
relevant jurisdiction, or the BUYER generally suspends payment or
ceases to carry on its business or makes any special arrangement or
composition with its creditors.
In case the BUYER is in default of any of its obligations under this
CONTRACT, the BUILDER is entitled to and shall have the following rights,
powers and remedies in addition to such other rights, powers and remedies
as the BUILDER may have elsewhere in this CONTRACT and/or at law, at equity
or otherwise.
2. EFFECT OF THE BUYER'S DEFAULT ON OR BEFORE THE DELIVERY OF THE VESSEL
If the BUYER shall be in default as provided in Paragraph 1 above of its
obligations under this CONTRACT, then;
(a) The DELIVERY DATE of the VESSEL shall be extended automatically for
the actual period of such default and the BUILDER shall not be obliged
to pay any liquidated damages for the delay in delivery of the VESSEL
caused thereby.
0410-39
(b) The BUYER shall pay to the BUILDER interest at the rate of six per
cent (6%) per annum in respect of the instalment(s) in default from
the respective DUE DATE-to the date of actual receipt by the BUILDER
of the full amount of such instalment(s).
(c) If the BUYER is in default in payment of any of the instalment(s) due
and payable prior to or simultaneously with the delivery of the
VESSEL, the BUILDER shall, in writing or by telex, cable or facsimile,
notify the BUYER to that effect, and the BUYER shall, upon receipt of
such notification, forthwith acknowledge in writing or by telex, cable
or facsimile to the BUILDER that such notification has been received.
(d) If any of the BUYER's default continues for a period of fourteen (14)
days after the BUILDER's notification to the BUYER of such default,
the BUILDER may, at its option, rescind this CONTRACT by serving upon
the BUYER a written notice or a telex, cable or facsimile notice of
rescission confirmed in writing.
(e) In the event of such cancellation by the BUILDER of this CONTRACT due
to the BUYER's default as provided for in paragraph 1 above, the
BUILDER shall be entitled to retain and apply the instalments already
paid by the BUYER to the recovery of the BUILDER's loss and damage due
to the BUYER's default and the cancellation of this CONTRACT and at
the same time the BUILDER shall have the full right and power either
to complete or not to complete the VESSEL which is the sole property
of the BUILDER as it deems fit, and to sell the VESSEL at a public or
private sale on such terms and conditions as the BUILDER thinks fit
without being answerable for any loss or damage.
The proceeds received by the BUILDER from the sale shall be applied in
addition to the instalment(s) retained by the BUILDER as mentioned
hereinabove as follows:-
First, in payment of all reasonable costs and expenses of the
sale of the VESSEL, including interest thereon at six per cent
(6%) per annum from the respective date of payment of such costs
and expenses aforesaid to the date of sale on account of the
BUYER's default.
Second, if the VESSEL has been completed, in or towards
satisfaction of the unpaid balance of the CONTRACT PRICE, to
which shall be added the cost of all additional work and extras
agreed by the BUYER including interest thereon at six per cent
(6%) per annum from the respective DUE DATE of the instalment in
default to the date of sale, or if the VESSEL has not been
completed, in or towards satisfaction of the unpaid amount of the
cost incurred by the BUILDER prior to the date of sale on account
of
0410-40
construction of the VESSEL, including work, labour and materials
plus interest thereon at six per cent (6%) per annum from the
respective DUE DATE of the instalment in default to the date of
sale.
Third, the balance of the proceeds, if any, shall belong to the
BUYER, and shall forthwith be paid over to the BUYER by the
BUILDER.
In the event of the proceeds from the sale together with instalment(s)
retained by the BUILDER being insufficient to pay the BUILDER, the BUYER
shall be liable for the deficiency and shall pay the same to the BUILDER
upon its demand.
3. BUILDER'S DEFAULT
The BUILDER shall be deemed to be in default under this Contract, if a
petition is filed or an order is made or an effective resolution is passed
for the winding up or dissolution of the BUILDER or a Receiver is appointed
of the undertaking or property of the BUILDER or any similar process or
proceeding is initiated under the laws of any relevant jurisdiction, or the
BUILDER generally suspends payment or ceases to carry on its business or
makes any special arrangement or composition with its creditors.
In the event of such BUILDER's default as aforesaid, the BUYER may, at its
option, thereafter at any time be entitled (but not bound) to rescind this
Contract, but this clause shall not limit any other rights or remedy the
BUYER may have in this Contract and/or at law, at equity or otherwise.
(End of Article)
0410-41
ARTICLE XII : BUYER'S SUPPLIES
1. RESPONSIBILITY OF THE BUYER
The BUYER shall, at its cost and expense, supply all the BUYER's supplies,
if any, (hereinafter called the "BUYER'S SUPPLIES"), to the BUILDER at the
SHIPYARD in a condition ready for installation and in accordance with the
time schedule to be furnished by the BUILDER to meet the building schedule
of the VESSEL.
In order to facilitate the installation of the BUYER'S SUPPLIES by the
BUILDER, the BUYER shall furnish the BUILDER with the necessary plans,
instruction books, test report and all test certificates required by the
BUILDER and shall cause the representative(s) of the makers of the BUYER'S
SUPPLIES to give the BUILDER any advice, instructions or assistance which
the BUILDER may reasonably require in the installation or adjustment
thereof at the SHIPYARD, all without cost or expense to the BUILDER.
The BUYER shall be liable for any reasonable expense incurred by the
BUILDER for repair of the BUYER'S SUPPLIES due to defective design or
materials, poor workmanship or performance or due to damage in transit and
the DELIVERY DATE of the VESSEL shall be extended for the period of such
repair if such repair shall affect the delivery of the VESSEL.
Commissioning into good order of the BUYER'S SUPPLIES during and after
installation on board shall be made at the BUYER's expense by the
representative of respective maker of the person designated by the BUYER in
accordance with the BUILDER's building schedule.
Should the BUYER fail to deliver to the BUILDER the BUYER'S SUPPLIES and
the necessary document or advice for such supplies within the time
specified by the BUILDER, the DELIVERY DATE of the VESSEL shall
automatically be extended for the period of such delay if such delay in
delivery shall affect the delivery of the VESSEL. In such event, the BUYER
shall pay to the BUILDER all direct losses and damages (not including
consequential damages, indirect damages or loss of profit) sustained by the
BUILDER due to such delay in the delivery of the BUYER'S SUPPLIES and such
payment shall be made upon delivery of the VESSEL, provided, however, that
the BUILDER shall have:
(a) furnished the BUYER with the time schedule referred to above, two (2)
months prior to installation of the BUYER'S SUPPLIES and
(b) given the BUYER written notice of any delay in delivery of the BUYER'S
SUPPLIES and the necessary document or advice for such supplies as
soon as the delay occurs which might give rise to a claim by the
BUILDER under this Paragraph.
0410-42
Furthermore, if the delay in delivery of the BUYER'S SUPPLIES and the
necessary document or advice for such supplies should exceed ten (10) days
from the date specified by the BUILDER, the BUILDER shall be entitled to
proceed with construction of the VESSEL without installation of such items
(regardless of their nature or importance to the BUYER or the VESSEL) in or
on the VESSEL without prejudice to the BUILDER's right hereinabove
provided, and the BUYER shall accept the VESSEL so completed.
2. RESPONSIBILITY OF THE BUILDER
The BUILDER shall be responsible for storing, safekeeping and handling the
BUYER'S SUPPLIES, if any, which the BUILDER is required to install on board
the VESSEL after delivery of such supplies to the SHIPYARD, and shall
install such supplies on board the VESSEL at the BUYER's expense.
The BUILDER shall not be responsible for the quality, performance or
efficiency of any equipment included in the BUYER'S SUPPLIES and is under
no obligation with respect to the guarantee of such equipment against any
defects caused by poor quality, performance or efficiency of the BUYER'S
SUPPLIES. If any of the BUYER'S SUPPLIES is lost or damaged while in the
custody of the BUILDER, the BUILDER shall, if the loss or damage is due to
willful conduct, default or negligence on its part, be responsible for such
loss or damage.
(End of Article)
0410-43
ARTICLE XIII : ARBITRATION
1. APPOINTMENT OF THE ARBITRATOR
If any dispute or difference shall arise between the parties hereto
concerning any matter or thing herein contained, or the operation or
construction thereof, or any matter or thing in any way connected with this
CONTRACT or the rights, duties or liabilities of either party under or in
connection with this CONTRACT, then, in every such case, the dispute or
difference shall be referred to arbitration in London by a sole arbitrator.
The arbitrator shall be appointed by agreement within fourteen (14) days of
first notification of either party to the other of intention to arbitrate
such dispute or difference, or in default of such agreement, upon the
application of either of the parties, by the President for the time being
of the London Maritime Arbitrators Association who shall in making any such
appointment have due regard to the requirement for an expeditious
resolution of the dispute and in particular the availability of any
arbitrator so appointed for an early hearing date.
2. LAWS APPLICABLE
Any arbitration arising hereunder shall be governed by and conducted in
accordance with the Arbitration ▇▇▇ ▇▇▇▇ of England or any statutory
modification or re-enactments thereof for the time being in force. The
award of the arbitrator shall be final and binding upon parties hereto.
3. PROCEEDINGS
In the event of any dispute or difference arising or occurring prior to
delivery to, or acceptance by, the BUYER of the VESSEL being referred to
arbitration, the parties hereby acknowledge that time is of the essence in
obtaining an award from the arbitrator on such dispute or difference and
the parties hereby agree that the arbitration shall be conducted according
to the following timetable:
(a) The claimant in the arbitration to serve points of claim within twenty
one (21) days of the appointment of the arbitrator.
(b) The respondent in the arbitration to serve points of defense and
points of counterclaim, if any, within twenty one (21) days
thereafter.
(c) The claimant to serve points of reply and defense to counterclaim, if
any, within ten (10)
0410-44
days thereafter and the hearing of the arbitration to commence within
twelve (12) weeks of the appointment of the arbitrator.
4. ALTERATION OF DELIVERY OF THE VESSEL
In the event of the arbitration of any dispute or difference 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 way altered thereby.
(End of Article)
0410-45
ARTICLE XIV : SUCCESSORS AND ASSIGNS
The BUILDER agrees that, prior to delivery of the VESSEL, this CONTRACT may,
with the prior written approval of the BUILDER, which the BUILDER shall not
unreasonably withhold, be assigned to and the title thereof may be taken by
another company. In the event of any assignment pursuant to the terms of this
CONTRACT, the assignee, its successors and assigns shall succeed to all the
rights and obligations of the BUYER under this CONTRACT. However, the BUYER
shall remain responsible for performance by the assignee, its successors and
assigns of all the BUYER's obligations, liabilities and responsibilities under
this CONTRACT. It is understood that any expenses or charges incurred due to the
transfer of this CONTRACT shall be for the account of the BUYER.
It is expressly agreed that the BUYER may freely assign the CONTRACT at any time
to a bank or other financial institution for purpose of securing the BUYER'S
financing without a consent of the BUILDER.
The BUILDER shall have the right to assign this CONTRACT at any time after the
effective date hereof, provided that prior written agreement is obtained from
the BUYER
(End of Article)
0410-46
ARTICLE XV : TAXES AND DUTIES
1. TAXES:
Unless otherwise expressly provided for in this CONTRACT, all costs and
taxes including stamp duties, if any, incurred in or levied by any country
except Korea in connection with this CONTRACT shall be borne by the BUYER
and corresponding costs and taxes in Korea, before delivery of the VESSEL,
if any, shall be borne by the BUILDER.
2. DUTIES:
The BUILDER shall hold the BUYER harmless from any payment of duty imposed
in Korea upon materials or supplies which, under the terms of this
CONTRACT, or amendments thereto, may be supplied by the BUYER from abroad
for the construction of the VESSEL.
The BUILDER shall likewise hold the BUYER harmless from any payment of duty
imposed in Korea in connection with materials or supplies for operation of
the VESSEL, including running stores, provisions and supplies necessary to
stock the VESSEL for its operation. This indemnity does not, however,
extend to any items purchased by the BUYER for use in connection with the
VESSEL which are not absolutely required for the construction or operation
of the VESSEL.
(End of Article)
0410-47
ARTICLE XVI : PATENTS, TRADEMARKS AND COPYRIGHTS
1. PATENTS, TRADEMARKS AND COPYRIGHTS
Machinery and equipment of the VESSEL, whether made or furnished by the
BUILDER under this CONTRACT, may bear the patent numbers, trademarks, or
trade names of the manufacturers. The BUILDER shall defend and save
harmless the BUYER from all liabilities or claims for or on account of the
use of any patents, copyrights or design of any nature or kind, or for the
infringement thereof including any unpatented invention made or used in the
performance of this CONTRACT and also for any costs and expenses of
litigation, if any in connection therewith. No such liability or
responsibility shall be with the BUILDER with regard to components and/or
equipment and/or design supplied by the BUYER.
Nothing contained herein shall be construed as transferring any patent or
trademark rights or copyrights in equipment covered by this CONTRACT, and
all such rights are hereby expressly reserved to the true and lawful owners
thereof.
2. RIGHTS TO THE SPECIFICATIONS, PLANS, ETC.
The BUILDER retains all rights with respect to the SPECIFICATIONS, 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.
(End of Article)
0410-48
ARTICLE XVII : INTERPRETATION AND GOVERNING LAW
This CONTRACT has been prepared in English and shall be executed in duplicate
and in such number of additional copies as may be required by either party
respectively. The parties hereto agree that the validity and interpretation of
this CONTRACT and of each Article and part thereof shall be governed by the laws
of England.
(End of Article)
0410-49
ARTICLE XVIII : NOTICE
Any and all notices, requests, demands, instructions, advices and communications
in connection with this CONTRACT shall be written in English, sent by registered
air mail, cable, telex or facsimile and shall be deemed to be given when first
received whether by registered mail, cable, telex or facsimile. They shall be
addressed as follows, unless and until otherwise advised:
To the BUILDER : HYUNDAI MIPO DOCKYARD CO., LTD.
1381, Bangeo-Dong, Dong-Ku, ▇▇▇▇▇ ▇▇▇-▇▇▇, ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇: ▇▇. ▇. ▇. ▇▇▇▇ / Contract Administration Dep't.
Tel: ▇▇ ▇▇ ▇▇▇ ▇▇▇▇
Facsimile: 82 52 250 3060
To the BUYER : APOLLONAS SHIPPING COMPANY
C/O BARCLAY SHIPPING LTD.
▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇, ▇▇▇▇▇▇
Attention : ▇▇. ▇. ▇▇▇▇▇▇▇▇▇
Tel ▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇
Facsimile: 30 210 428 5679
The said notices shall become effective upon receipt of the letter, cable, telex
or facsimile communication by the receiver thereof. Where a notice by telex,
cable or facsimile is concerned which is required to be confirmed by letter,
then, unless the CONTRACT or the relevant Article thereof otherwise requires,
the notice shall become effective upon receipt of the telex, cable or facsimile.
(End of Article)
0410-50
ARTICLE XIX : EFFECTIVENESS OF THIS CONTRACT
This CONTRACT shall become effective upon signing by the parties hereto.
(End of Article)
0410-51
ARTICLE XX : EXCLUSIVENESS
This CONTRACT shall constitute the only and entire agreement between the parties
hereto, and unless otherwise expressly provided for in this CONTRACT, all other
agreements, oral or written, made and entered into between the parties prior to
the execution of this CONTRACT shall be null and void.
(End of Article)
0410-52
IN WITNESS WHEREOF, the parties hereto have caused this CONTRACT to be duly
executed in duplicate on the date and year first above written.
BUYER BUILDER
For and on behalf of For and on behalf of
APOLLONAS SHIPPING COMPANY HYUNDAI MIPO DOCKYARD CO., LTD.
By /s/ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ By /s/ S. Joh
---------------------------------- -------------------------------------
Name: ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ Name: S. Joh
Title: Attorney-in-Fact Title: Attorney-in-Fact
WITNESS: Illegible WITNESS: Illegible
/s/ Illegible /s/ Illegible
------------------------------------- ----------------------------------------
0410-53
EXHIBIT "A"
LETTER OF GUARANTEE
Letter of Guarantee NO.: ______________
Date: _______________, 2004
Gentlemen:
We hereby open our irrevocable letter of guarantee number _________________
in favour of (hereinafter called the "BUYER") for account of Hyundai Mipo
Dockyard Co., Ltd., Ulsan, Korea (hereinafter called the "BUILDER") as follows
in connection with the shipbuilding contract dated ________________, 2004
(hereinafter called "CONTRACT") made by and between the BUYER and the BUILDER
for the construction of _________________________ having the BUILDER's Hull No.
_______________ (hereinafter called the "VESSEL").
If, in connection with the terms of the CONTRACT, the BUYER shall become
entitled to a refund of the advance payments made to the BUILDER prior to the
delivery of the VESSEL, we hereby irrevocably guarantee as prime obligator and
not merely as a surety the repayment of the same to the BUYER within thirty (30)
days after demand not exceeding US$ (Say U.S. Dollars __________________________
___________________ only) together with interest thereon at the rate of
__________ per cent (__%) per annum from the date following the date of receipt
by the BUILDER to the date of remittance by telegraphic transfer of such refund.
The amount of this guarantee will be automatically increased upon the
BUILDER's receipt of the respective instalment, each time by the amount of
instalment plus interest thereon as provided in the CONTRACT, but in any
eventuality the amount of this guarantee shall not exceed the total sum of US$
___________________________ (Say U.S. Dollars ________________ only) plus
interest thereon at the rate of ____________ per cent (__%) per annum from the
date following the date of the BUILDER's receipt of each instalment to the date
of remittance by telegraphic transfer of the refund.
This letter of guarantee is available (subject to the third paragraph
hereof) against the BUYER's simple receipt and signed statement certifying that
the BUYER's demand for refund has been made in conformity with Article X of the
CONTRACT and the BUILDER has failed to make the refund.
In case any refund is made to the BUYER by the BUILDER or by us under this
Letter of Guarantee, our liability hereunder shall be automatically reduced by
the amount such refund.
0410-54
It is hereby understood that payment of any interest provided herein is by
way of liquidated damages due to cancellation of the CONTRACT and not by way of
compensation for use of money.
Notwithstanding the provisions hereinabove, in the event that within thirty
(30) days from the date of your claim to the BUILDER referred to above, we
receive notification from you or the BUILDER accompanied by written confirmation
to the effect that your claim to cancel the CONTRACT or your claim for
refundment thereunder has been disputed and referred to arbitration in
accordance with the provisions of the CONTRACT, we shall under this guarantee,
refund to you the sum adjudged to be due to you by the BUILDER pursuant to the
award made under such arbitration immediately upon receipt from you of a demand
for the sums so adjudged and a copy of the award.
This letter of guarantee shall become null and void upon receipt by the
BUYER of the sum guaranteed hereby or upon acceptance by the BUYER of the
delivery of the VESSEL in accordance with the terms of the CONTRACT and, in
either case, this letter of guarantee shall be returned to us.
This letter of guarantee is assignable and valid from the date of this
letter of guarantee until such time as the VESSEL is delivered by the BUILDER to
the BUYER in accordance with the provisions of the CONTRACT.
All payments by us under this Letter of 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 any such
deduction or withholding shall equal the amount which would have been received
had no such deduction or withholding been required to be made.
We hereby confirm that we are permitted by the law of the Republic of Korea
to issue guarantee with this wording and especially to designate English law and
London as place of jurisdiction. We hereby confirm that we have obtained all
necessary approvals and authorizations to issue this Letter of Guarantee and
that we are authorized to effect payment thereunder in foreign currency in case
of utilization.
This guarantee shall be governed by and construed in accordance with the
laws of England and the undersigned hereby submits to the non-exclusive
jurisdiction of the courts of England and appoints __________________________ to
receive service of proceedings in such courts on its behalf.
0410-55
Very truly yours,
for and on behalf of
By
-------------------------------------
Name:
----------------------------------
Title:
---------------------------------
0410-56
EXHIBIT "B"
Hyundai Mipo Dockyard Co., Ltd.
1381, Bangeo-Dong, Dong-Ku,
Ulsan, 682-712 Date: _________________,2004
Korea
PERFORMANCE GUARANTEE
Gentlemen,
In consideration of your executing a shipbuilding contract (hereinafter
called the "CONTRACT") dated ________________________, 2004 with
_______________________________ (hereinafter called the "BUYER") providing for
the construction of ________________________________________ having the
BUILDER's Hull No. _____________ (hereinafter called the "VESSEL"), and
providing, among other things, for payment of the contract price amounting to
United States Dollars _________________ only (US$___________________) for the
VESSEL, prior to, upon and after the delivery of the VESSEL, the undersigned, as
a primary obligor and not as a surety merely, hereby unconditionally and
irrevocably guarantees to you, your successors and assigns, the due and faithful
performance by the BUYER of all its liabilities and responsibilities under the
CONTRACT and any supplements, amendments, changes or modifications hereinafter
made thereto including but not limited to, due and prompt payment of the
contract price (whether on account of principal, interest or otherwise) by the
BUYER to you, your successors and assigns under the CONTRACT, notwithstanding
any obligation of the BUYER being or becoming unenforceable by defect in or want
of its powers, (hereby expressly waiving notice of any such supplement,
amendment, change or modification as may be agreed to by the BUYER) and confirms
that this guarantee shall be fully applicable to the CONTRACT whether so
supplemented, amended, changed or modified and if it shall be assigned by the
BUYER in accordance with the terms of the CONTRACT. This guarantee will expire
on delivery of the VESSEL to the BUYER.
The undersigned hereby certifies, represents and warrants that all acts,
conditions and things required to be done and performed and to have occurred
precedent to the creation and issuance of this guarantee, and to constitute the
guarantee the valid and legally binding obligation of the undersigned
enforceable in accordance with its terms have been done and performed and have
occurred in due and strict compliance with applicable laws.
The payment by the undersigned under this guarantee shall be made forthwith
upon receipt by us of written demand from you including a statement that the
BUYER is in default of payment of the amounts (including, but not limited to,
the instalment(s) payable prior to or upon delivery of the VESSEL) that were
due under the CONTRACT, without requesting you
0410-57
to take any or further procedure or step against the BUYER. In the event that
any withholding or deduction is imposed by any law, the undersigned will pay
such additional amount as may be necessary in order that the actual amount
received after deduction or withholding shall equal to the amount that would
have been received if such deduction or withholding were not required.
This guarantee shall be governed by and interpreted in accordance with the
laws of England and the undersigned hereby submits to the non-exclusive
jurisdiction of the Courts of England and appoints ____________________________
to receive service of proceedings in such courts on its behalf.
Very truly yours,
For and on behalf of
By
-------------------------------------
Name:
----------------------------------
Title:
---------------------------------
0410-58