EXHIBIT 10.12
The portion of this Exhibit 10.12 marked “******” has been omitted and
confidentially filed with the Securities and Exchange Commission pursuant to
Rule 24b-2 promulgated under the Securities Exchange Act of 1934, as amended.
 

 
 
 
SHIPSALES  CONTRACT

 
 
FOR
 
 
PURE CAR TRUCK CARRIER VESSEL
 
 
(HULL NO. 2253)
 

 
 

 
 

 
 
MADE BY AND BETWEEN
 
 
CLIO MARINE INC.
 
 
AND
 
 
EAST GULF SHIPHOLDING, INC.
 

{N1783113.1.2}
 
 

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CONTENTS
 
 

 
ARTICLE I                            -    DESCRIPTION AND CHARACTERISTICS

ARTICLE II                            -    CONTRACT PRICE AND PAYMENT

ARTICLE III                            -    ADJUSTMENT OF CONTRACT PRICE

ARTICLE IV                            -    SUPERVISION AND INSPECTION

ARTICLE V                            -    MODIFICATIONS, CHANGES AND
SUBSTITUTION

ARTICLE VI                            -    BUYER’S SUPPLIES

ARTICLE VII                            -    TRIALS

ARTICLE VIII                          -    DELIVERY

ARTICLE IX                            -    FORCE MAJEURE

ARTICLE X                            -    WARRANTY OF QUALITY

ARTICLE XI                            -    INSURANCE

ARTICLE XII                            -    BUYER’S DEFAULT

ARTICLE XIII                          -    SELLER’S DEFAULT

ARTICLE XIV                          -    ARBITRATION

ARTICLE XV                           -    ASSIGNMENT OF CONTRACT

ARTICLE XVI                          -    TAXES AND DUTIES

ARTICLE XVII                        -    PATENTS, TRADE MARKS, COPYRIGHTS

ARTICLE XVIII                       -    INTERPRETATION

ARTICLE XIX                         -    NOTICE

ARTICLE XX                           -    EFFECTIVE DATE
 

 
 

 
 

 
 

 
 

 
 
2
 
 

 
 
SHIPSALES CONTRACT
 
 

 
 
This CONTRACT, made and entered into this __ 21st day of  September, 2007, by
and between CLIO MARINE INC., a corporation organized and existing under the
laws of Liberia (hereinafter called the "Seller") and EAST GULF SHIPHOLDING,
INC., a corporation organized and existing under the laws of Marshall Islands
(hereinafter called the "Buyer").
 
 

 
 

 
 
 
 
Witnesseth:
 
 
 
    In consideration of the mutual covenants contained herein, the Seller agrees
to cause MITSUBISHI HEAVY INDUSTRIES, LTD., a corporation organized and existing
under the laws of Japan, (hereinafter called the "Builder"), to construct,
launch, equip and complete one (1) Pure Car Truck Carrier Vessel identified in
Article I.(hereinafter called the "Vessel") hereof at its Nagasaki Shipyard &
Machinery Works (hereinafter referred to as the "Shipyard"), and to sell and
deliver the same to the Buyer at the Shipyard and the Buyer agrees to purchase
from the Seller and to take delivery of the Vessel, upon the terms and
conditions hereinafter set forth. It is agreed and understood that the Seller
may at its discretion construct and deliver the Vessel at Builder's shipyard in
Japan other than the Shipyard mentioned above, provided that the provisions of
this Contract shall not be altered thereby in any other respects.
 
 

 
 
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ARTICLE                         I - DESCRIPTION AND CHARACTERISTICS
 
 
I)        DESCRIPTION
 
 
Subject to the provisions hereof the Vessel shall be of the following
description: Pure Car Truck Carrier Vessel of about 6,400 cars, which shall have
the Builder's Hull Number 2253, shall be documented under the Panamanian flag to
be registered at Republic of Panama at the Buyer's expense, and shall be
constructed, launched, equipped and completed in accordance with the provisions
of this Contract and the Specifications and the accompanying plans to the
Specifications identified by D.No.23-7109A (hereinafter collectively referred to
as the "Specifications" or the "Specifications and Plans") signed by both
parties for identification purpose and attached to this Contract as an integral
part hereof.
 
 

 
 
2)        CHARACTERISTICS AND DIMENSIONS
 
The Vessel shall have the following characteristics and dimensions:
Length, over
all                                                                           less
than 200.00 m
Length, between
perpendiculars                                                              192.00
m
Breadth,
moulded                                                                                         32.26
m
Depth, moulded (to Strength Dk: Garage
Deck)                                      34.52 m
Depth, moulded (to Freeboard Dk:No,7 Car
Deck)                                 14.70 m
Designed draught,
moulded                                                                        8.80
m
Scantling draught,
moulded                                                                        9.70
m

Machinery                                                                Mitsubishi-UE
Type Diesel Engine,Model “7UEC60LSII (P/U)”—1 setMaximum rating (BHP)
14,315kW (19,460PS) x 105.0 min-1Normal rating (BHP)
12,170kw (16,540PS) x 99.5 min-1

Trial speed, guaranteed                                         21.45 knots at
Normal rating (BHP)12,170kw (16,540PS) at 99.5 min-1of main engine on about
20,000 metricton displacement

 

 
 

 
 

 
 
4
 

 
Fuel Consumption, guaranteed                           166.6gr/kW/hr at 12,170kW
(16,540PS) of main engine only onthe basis of fuel oil of 42,700 kJ/kg (10,200
kcal/kg) in lower       calorific value with 3% tolerancemargin at I.S.O.
condition.
 
 
Number of loadable cars guaranteed
5,200 cars of standard car             determined on the “CAR LOADING PLAN”

 
 

 
 
The details of the above particulars as well as the definitions and method of
calculations and measurements are as stated in the Specifications.
 
 

 
 

 
 

 
 
3)        CLASSIFICATION. RULES AND REGULATIONS
 
The Vessel, including its machinery, equipment and outfittings shall be
constructed in accordance with the rules and regulations (the edition and
amendments thereto being current as of the date of execution of this Contract)
and under special survey of Nippon Kaiji Kyokai (hereinafter called
"Classification Society"), and shall be distinguished in the register by the
symbol of NS*(RORO EQ C V), MNS* (MO).
Decisions of the Classification Society as to compliance or non-compliance with
the Classification shall be final and binding upon both parties hereto.
The Vessel shall also comply with the rules and regulations as described in the
Specifications.
All fees and charges incidental to the Classification and with respect to
compliance with the above referred rules and regulations shall be for the
account of the Builder.

 
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{N1783113.1.2}
 
 

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ARTICLE                     II - CONTRACT PRICE AND PAYMENT
 
 
1)  
CONTRACT PRICE

 
 
The purchase price of the Vessel shall be ****** (hereinafter referred to as the
"Contract Price") as the technical services required to be rendered to the Buyer
under the terms of this Contract. The Contract Price shall be net receivable by
the Seller in Tokyo and exclusive of articles to be supplied by the Buyer as
provided in Article VI hereof, and shall be subject to adjustment as hereinafter
provided in this Contract.
 
 
2)  
DEFINITION OF DUE DATE AND CURRENCY

 
 
All payments by the Buyer under this Contract shall be received by the Seller on
the day each payment becomes due in Tokyo. All payments to the Seller under this
Contract shall be made in Japanese Yen.
 
 
3)  
TERMS OF PAYMENT

 
 
The Buyer shall pay the Contract Price to the Seller in accordance with the
following terms and conditions:
 
 
(a) First Installment
 
 
****** percent (******%) of the Contract Price, amounting to ****** shall be
paid to the Seller upon ******.
 
 
(b) Second Installment
 
 
****** percent (******%) of the Contract Price, amounting to ****** shall be
paid to the Seller upon ******.
 
 

 
 
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(c) Third Installment
 
 
****** percent (******%) of the Contract Price, amounting to ****** shall be
paid to the Seller upon ******.
 
 
(d) Fourth Installment
 
 
The sum of ****** percent (******%) of the Contract Price, amounting to ******,
plus ****** or minus ****** and/or ******, if any, plus the price of ******,
shall be paid to the Seller upon ******.
 
 

 
 
4)        METHOD OF PAYMENT
 
 
( a) 1st Installment:
 
 
Within two (2) Business Days (Business Day means a day, other than Saturday,
Sunday and national holiday, on which the Builder, Seller and the Buyer are
working and on which leading banks in Japan and New York are open for business
of foreign exchange, remittance and lending of money) after signing of this
Contract, the Buyer shall pay the amount of this Installment by telegraphic
transfer to a bank in Tokyo, Japan nominated by the Seller (hereinafter called
the "BANK") for the account of the Seller.
 
 
(b) 2nd Installment:
 
 
Within two (2) Business Days after receipt by the Buyer of either fax or e-mail
from the Seller confirming the keel-laying of the Vessel, the Buyer shall pay
the amount of this Installment by telegraphic transfer to the BANK for the
account of the Seller.
 
 

 
 
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{N1783113.1.2}
 
 

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(c) 3rd Installment:
 
 
Within two (2) Business Days after receipt by the Buyer of either fax or e-mail
from the Seller confirming the completion of the launching of the Vessel, the
Buyer shall pay the amount of this Installment by telegraphic transfer to the
BANK for the account of the Seller.
 
 
(d) 4th Installment:
 
 
The Buyer shall, at least three (3) Business Days prior to the scheduled
delivery date of the Vessel subject of any changes to the delivery date in
accordance with this Contract, make a cash deposit with the BANK, covering the
amount of this Installment (as adjusted in accordance with the provisions of
this Contract), with an irrevocable instruction that the said amount shall be
released to the Seller's favour and account against presentation to the BANK by
facsimile of a duly signed copy of the PROTOCOL OF DELIVERY AND ACCEPTANCE of
the Vessel as set forth in Paragraph 3 of Article VII hereof. Any cost and
expense related to such remittance and deposit shall be bourne by the Buyer.
 
 
No payment under this Contract shall be delayed or withheld by the Buyer on
account of any dispute or disagreement of whatever nature arising between the
parties hereto.
 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 
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{N1783113.1.2}
 
 

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ARTICLE                     III - ADJUSTMENT OF CONTRACT PRICE
 
 
The Contract Price shall be subject to adjustment as hereinafter set forth:
 
 
1)  
DELAYED DELIVERY

 
 
No adjustment shall be made, and the Contract Price shall remain unchanged, for
the first thirty (30) days of delay in delivery of the Vessel beyond the date on
which delivery is required under the terms of this Contract.
 
 
If the delivery of the Vessel is delayed more than thirty (30) days beyond the
said delivery date, the Contract Price shall be reduced by deducting therefrom
the sum of ******, as liquidated damages, for each day of such delay beyond the
above said thirtieth (30th) day.
 
 
However, unless the parties agree otherwise, the total reduction in the Contract
Price shall not exceed the amount due to cover the delay of one hundred and
twenty (120) days after the above thirtieth (30th) day as computed at the rate
of reduction specified in the above.
 
 
But, if the delay in delivery of the Vessel continues for a period of more than
one hundred twenty (120) days from the thirtieth (30th) day after the date on
which delivery is required under the terms of this Contract, the Buyer may, at
its option, rescind this Contract by serving upon the Seller a written notice of
rescission of this Contract.
 
 
Such rescission shall be effective as of the date the notice thereof is received
by the Seller, and the Seller, after receipt of such notice, shall refund to the
Buyer all installments paid by the Buyer, together with interest at two point
five percent (2.5%) over the long-term prime rate in Japan per annum from the
date of each payment. Such refund by the Seller to the Buyer of all installments
paid by the Buyer on account of the Vessel shall forthwith discharge all
obligations, duties and liabilities of each of the parties hereto to the other
under this Contract.
 
 
In case the Buyer has not served notice of rescission, the Seller shall
immediately after the expiration of such period of delay in delivery, propose a
future delivery date and demand
 
 

 
 
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{N1783113.1.2}
 
 

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that the Buyer shall make an election. The Buyer shall, within fourteen (14)
days after such demand is received by the Buyer, notify the Seller by facsimile
confirmed in writing of its intention to rescind the Contract or of its consent
to accept the Vessel at an agreed future date, it being understood by the
parties that if the Vessel is not delivered by such future date, the Buyer shall
have the same right of rescission upon the same terms as hereinbefore provided.
If the Buyer fails to notify the Seller of its intention to rescind the Contract
as above specified, within the aforementioned fourteen (14) days, the Buyer
shall be deemed to have consented to the delivery of the Vessel at the later
date proposed by the Seller.
 
 
For the purpose of this Paragraph, 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 by reason of permissible delays as herein provided, is not
delivered by the date upon which delivery is required under the terms of this
Contract.
 
 
2)  
INSUFFICIENT SPEED

 
 
The Contract Price of the Vessel shall not be affected or changed if the speed
of the Vessel on trials, as determined in accordance with the Specifications, is
less than the guaranteed speed of the Vessel, provided such deficiency is not
more than one-fifth (1/5) of one (I) knot below the guaranteed speed.
 
 
In the event, however, that the deficiency in the speed exceeds one-fifth (1/5)
of one (I) knot below the guaranteed speed, the Contract Price shall be reduced,
as liquidated damages, by ****** for such deficiency of each 0.1 knots (any
fractions to be pro-rated but disregarding fractions of one­-hundredth (11100)
of one (I) knot).
 
 
If the deficiency of the Vessel's speed on trials exceeds one (1) full knot
below the guaranteed speed, the Buyer at its option may accept the Vessel at a
reduction in the Contract Price as above specified for an insufficient speed of
one (1) full knot, that is at a total reduction of ******, or, subject to the
provisions of Paragraph 4) of Article VII, may reject the Vessel and rescind
this
 
 

 
 

 
 
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{N1783113.1.2}
 
 

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Contract, in which case the provisions in Paragraph 1) of this Article regarding
the Buyer's rescission of the Contract shall be applied.
 
 
3)         EXCESSIVE FUEL CONSUMPTION
 
 
The Contract Price of the Vessel shall not be affected or changed if the fuel
consumption of the main engine at the normal output during the shop trial, as
determined in accordance with the Specifications, does not exceed three (3)
percent above one hundred and sixty six point six grams per kilo watt per hour
(166.6gr/kW/hr) at 42,700kW of main engine only on the basis of fuel oil of
42,700 kJ/kg in lower calorific value at 1.S.0. condition.
 
 
In the event, however, that the fuel consumption exceeds three (3) percent, on
the above specified conditions, the Contract Price shall be reduced, as
liquidated damages by the sum of ****** for each full one (1) percent in excess
of the above said three (3) percent.
 
 
If the fuel consumption as above stated exceeds by seven (7) percent or more in
excess of the above said three (3) percent, the Buyer at its option may accept
the Vessel at a reduction in the Contract Price as above specified for a fuel
consumption in excess of seven(7) percent above said three (3) percent, that is,
at a total reduction of ******, or, subject to the provisions of Paragraph 4) of
Article VII, may reject the Vessel and rescind this Contract, in which case the
provisions in Paragraph 1) of this Article regarding the Buyer's rescission of
the Contract shall be applied.
 
 
4)  
CAR CAPACITY

 
 
If the car capacity of the Vessel, as determined in accordance with the
Specifications, is below the guaranteed car capacity of the Vessel, the Contract
Price of the Vessel shall be reduced by ****** as liquidated damages for the
deficiency of each car unit.
 
 
If the deficiency in the car capacity exceeds one hundred (100) units below the
guaranteed car capacity, the Buyer at its option may accept the Vessel at a
reduction in the Contract Price
 
 

 
 
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{N1783113.1.2}
 
 

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of ******, or subject to the provisions of Paragraph 4) of Article VIT, may
reject the Vessel and rescind this Contract, in which case the provisions in
Paragraph I) of this Article regarding the Buyer's rescission of the Contract
shall be applied.
 
 

 
 

 
 

 
 
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{N1783113.1.2}
 
 

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ARTICLE
 
 
IV - SUPERVISION AND INSPECTIO
 

 
1) SUPERVISION BY SELLER:
 
 
Scope of Works : The Seller shall carry out the supervision on the construction
of the Vessel by the Builder, including, without limitation, (i) approval of the
plans and drawings, (ii) inspections on the Vessel, its machinery, equipment and
outfitting, (iii) attendance of trials and tests and (iv) making comments as to
conformity with the Specifications.
 
 
Seller's Appointment: The Seller appoints ****** or similar quality entities as
supervising company.
 
 
Seller's Technical Decision: Any decision regarding the approval of plans and
drawings, supervision of construction and acceptance of the Vessel under the
Shipbuilding Contract between the Seller and the Builder dated 25th July, 2007
shall be made by the Seller in its absolute discretion and that such decision
shall not require any prior consultation with or approval of the Buyer or its
representatives. During the construction of the Vessel, the Seller shall give to
the Buyer, upon their request, an technical information which they are holding,
and shall make best endeavors to obtain information and documents which the
Buyer might need. The Seller shall undertake that the supervision of
construction of the Vessel shall be carried out as if the Vessel was for their
internal account and management.
 
 
2) NO SUPERVISION BY BUYER:
 
 
The Buyer shall not have the right of supervision but shall have the right to
send its representatives in the capacity of observers pursuant to Clause 3)
hereof.
 
 
3) BUYER'S OBSERVANCE:
 
 
 
Buyer's Observance: The Buyer may send one (1) observer to the Shipyard
periodically as follows to review progress of construction of the Vessel at the
Buyer's risk and expenses without

 
 
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{N1783113.1.2}
 
 

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interfering with the construction of the Vessel.:
 
 
              (a)At the time of keel-laying of the Vessel.
 
 
              (b)At the time of launching of the Vessel.
 
 
 
(c)
 
At the time of significant test/trials for main engine during shipbuilding
period of the Vessel

 
 
 
(d)
At the time of significant test/trials for diesel generator sets during
shipbuilding period of the Vessel.

 
 
 
(e)
 
Maximum duration per one observation mentioned above shall be four (4) calendar
days.

 
 
 
(f)
 
At any time during the entire duration of Sea Trials in which case the Buyer's
observer as well as three (3) Buyer's crew including Master and/or Chief
Engineer and/or (I) Technical Manager to be joined by the Buyer's observer. Such
Buyer's crew shall be permitted to be in attendance on the Vessel at the sea
trial of the Vessel at Buyer's risk and expenses and for familiarization purpose
only.

 
 
 
(g)
The Buyer' Observer shall not attend and not be stationed at the Shipyard and/or
any other Builder's shipyard without the attendance of the Seller's supervisor.

 
 
 
(h)
At any other time requested by Buyer but maximum three (3) times and subject to
Seller's approval and acceptance.

 
 
Seller's Liability: The Seller shall be under no liabilities in respect of any
loss, damage or injury suffered by such representatives, and the Buyer shall
indemnify the Seller against any loss, damage or liability sustained or incurred
by the Seller howsoever caused as a consequence of or arising out of or in
connection with the attendance of such representatives on board the Vessel
during its acceptance trials.
 
 
Restriction on Observance: The representatives referred to in this Clause shall
not interfere with or obstruct in any way the Seller's supervision on board the
Vessel during its acceptance sea trials and/or sea trials schedule of the
Builder.
 
 
Buyer's Comment: The Buyer's comment(s), if any, during sea trials of the Vessel
shall not be unreasonably withheld by the Seller and the Seller shall take
action if necessary, provided that such comment( s) shall not affect the price,
cost of the Vessel and the sea trials schedule of the Builder.
 
 
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{N1783113.1.2}
 
 

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ARTICLE V - MODIFICATIONS, CHANGES AND SUBSTITUTION
 
 
1) VOLUNTARY MODIFICATIONS BY MUTUAL AGREEMENT
 
 
The Specifications may be modified and/or changed by written agreement of the
parties hereto, provided that such modifications and/or changes or an
accumulation thereof will not, in the Seller's judgment, adversely affect
Builder's planning or program in relation to the Seller's other commitments, and
provided, further, that the Buyer shall first agree, before such modifications
and/or changes are carried out, to alterations in the Purchase Price, the
Delivery Date and other terms and conditions of this Contract and Specifications
occasioned by or resulting from such modifications and/or changes. Such
agreement may be effected by exchange of letters signed by the authorized
representatives of the parties hereto or by email or facsimile confirmed by such
letters manifesting agreements of the parties hereto which shall constitute
amendments to this Contract and/or the Specifications.
 
 
2)  
COMPULSORY MODIFICATION

 
 
 
(I) Change in Class: In the event that, after the date of this Contract, any
requirements as to class, or as to rules and regulations to which the
construction of the Vessel is required to conform are altered or changed by the
Classification Society or the other regulatory bodies authorized to make such
alterations or changes, the following provisions shall apply:

 
 
 
(a) If such alterations or changes are compulsory for the Vessel, either of the
parties hereto, upon receipt of such information from the Classification Society
or such other regulatory bodies, shall promptly transmit the same to the other
in writing, and the Seller shall thereupon cause the Builder to incorporate such
alterations or changes into the construction of the Vessel, provided that the
Buyer shall first agree to adjustments required by the Seller in the Purchase
Price, the Delivery Date and other terms and conditions of this Contract and the
Specifications occasioned by or resulting from such alterations or change.

 
 
(b) If such alterations or changes are not compulsory for the Vessel, but the
Buyer
 
 
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{N1783113.1.2}
 
 

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desires to incorporate such alterations or changes into the construction of the
Vessel, then, the Buyer shall notify the Seller of such intentions. The Seller
may accept such alterations or changes if they will not, in the judgment of the
Seller, adversely affect the Builder's planning or program in relation to the
Seller's other commitments, and provided, further, that the Buyer shall first
agree to adjustments required by the Seller in the Purchase Price, the Delivery
Date and other terms and conditions of this Contract and the Specifications
occasioned by or resulting from such alterations or changes.
 
 
 
(2) Change in Class: Agreement as to such alterations or changes under (1) above
shall be made in the same manner as provided in Sub-Clause VI) hereof for
modifications or changes to the Specifications.

 
 
3)  
SUBSTITUTION OF MATERIALS

 
 
In the event that any of the materials required in the construction of the
Vessel under this Contract and the Specifications and Plans cannot be procured
in time to effect delivery, or are in short supply to maintain the Delivery Date
of the Vessel, the Seller may, provided that the Seller shall so notify the
Buyer, cause the Builder to supply other available materials which are capable
of meeting the requirements of class and of the rules and regulations with which
the construction of the Vessel must comply. Any agreement as to the substitution
of materials may be effected in the manner provided in Sub-Clause VI) of this
Article, and shall likewise, include reasonable alterations in the Contract
Price and other terms and conditions of this Contract, if any, occasioned by or
resulting from the substitution.
 
 

 
 

 
 

 
 

 
 

 
 
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{N1783113.1.2}
 
 

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ARTICLE                             VI - BUYER'S SUPPLIES
 
 
1)  
RESPONSIBILITY OF THE BUYER

 
 
The Buyer shall, at its cost and expense, supply all articles to be supplied by
the Buyer, as specifically listed in the Specifications (hereinafter referred to
as the "Buyer's Supplies"), to the Seller at the Shipyard in perfect condition
ready for installation and by the date designated by the Seller and/or 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 Seller with the necessary plans, instruction books,
test reports and certificates required by rules or regulations, and if so
requested by the Seller and/or the Builder, shall cause the representative(s) of
the manufacturers of these articles to assist the Builder in installation and/or
make necessary adjustment thereof at the Shipyard, for the Buyer's account.
 
 
The Buyer shall be liable for any expenses incurred by the Seller and/or the
Builder for repair of the Buyer's Supplies due to defective material or poor
workmanship or performance or due to damage under transportation.
 
 
Should the Buyer fail to deliver to the Seller any item of the Buyer's Supplies
including the necessary plans, instruction books, test reports and certificates
mentioned above by the time designated by the Seller and/or the Builder, the
delivery of the Vessel shall automatically be extended for a period of such
delay, provided such delay in delivery shall affect delivery of the Vessel. In
such event the Buyer shall pay to the Seller all losses and damages (except for
the consequential loss or damage) sustained by the Seller and/or the Builder due
to such delay in delivery of the Buyer's Supplies, and such payment shall be
made upon delivery of the Vessel. In case that the delay in delivery of such
Buyer's Supplies should exceed thirty (30) days beyond the date specified for
delivery thereof, the Seller shall be entitled to cause the Builder to proceed
with construction of the Vessel without installation of such item(s) in or onto
the Vessel, without prejudice to the Seller's right hereinabove provided, and
the Buyer shall accept the Vessel so completed.
 
 

 
 
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{N1783113.1.2}
 
 

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2)  
RESPONSIBILITY OF THE BUILDER

 
 
The Buyer and the Seller hereby confirm that the Builder shall be responsible
for storing and handling of the Buyer's Supplies after delivery to the Shipyard,
and shall install them on board the Vessel at the Builder's expense; it being
agreed, however, the Seller and the Builder are not responsible for quality,
performance and/or efficiency of any equipment of the Buyer's Supplies and is
under no obligation with respect to guarantee of such equipment against any
defects caused by poor quality, performance and/or efficiency of the Buyer's
Supplies themselves.
 
 
This provision does not apply to, and the Seller and the Builder shall not be
responsible for, the items such as ship stores which the Seller and the Builder
are not required to install on board the Vessel under the Specifications.
 
 

 
 

 
 

 
 

 
 

 
 
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{N1783113.1.2}
 
 

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ARTICLE VII - TRIALS
 
 
I)  
NOTICE

 
 
The Seller shall notify the Buyer, at least fourteen (14) days in advance, of
the time and place of the trial of the Vessel, and the Buyer shall promptly
acknowledge receipt of such notice. Buyer's observance of the sea trials of the
Vessel shall be carried out pursuant to Article N. 3) hereof. Failure in
attendance of the observer at the trial run of the Vessel for any reason
whatsoever after due notice to the Buyer as above provided shall be deemed to be
a waiver by the Buyer of its right to have the Buyer's observer on board the
Vessel at the trial run.
 
 
2)             WEATHER CONDITIONS
 
 
The trial shall be carried out under the weather condition which is deemed
favorable enough by the judgment of the Seller. In the event of unfavorable
weather on the date specified for the trial, same shall take place on the first
available day thereafter that the weather conditions permit. The parties hereto
recognize that the weather conditions in Japanese waters in which the trial runs
are 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,
such change in the weather should occur as precludes the continuance of the
trial, the trial run shall be discontinued and postponed until the first day
next following which is deemed favorable enough by the judgment of the Seller;
unless the Buyer shall assent to acceptance of the Vessel on the basis of trials
made prior to such change in weather conditions. Any delay of the trial run
caused by such unfavorable weather conditions shall operate to extend the date
for delivery of the Vessel by the period of delay involved, and such delay shall
be deemed as permissible delay in the delivery of the Vessel.
 
 
3)        HOW CONDUCTED
 
 

 
 

 
 
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{N1783113.1.2}
 
 

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All expenses in connection with the trial of the Vessel are to be for the
account of the Seller, and the Seller shall cause the Builder to provide at its
own expense the necessary materials and the necessary crew to comply with
conditions of safe navigation. The trial shall be conducted in the manner
prescribed in the Specifications, and shall prove fulfillment of the performance
requirements for the trials as set forth in the Specifications. All trials of
the Vessel shall be conducted on the trial course determined by the Seller.
 
 
4)  
METHOD OF ACCEPTANCE OR REJECTION

 
 
Upon completion of the trial run, the Builder shall give the Seller a notice by
email or facsimile confirmed in writing of completion of the trial run, as and
if the Builder considers that the results of the trial run indicate conformity
of the Vessel to this Contract and the Specifications. The Seller shall, within
three (3) Business Days after receipt of such notice from the Builder, notify
the Builder by email or facsimile confirmed in writing of its acceptance or
rejection of the Vessel. Such acceptance of the Vessel shall be made provided
that the Vessel is deemed to satisfy the requirements of this Contract and the
Specifications. The Buyer shall be deemed to have accepted the Seller's such
decision.
 
 
However, should the result of the trial run indicate that the Vessel or any part
or equipment thereof does not conform to the requirements of this Contract
and/or the Specifications, and if the Builder is in agreement to non-conformity
as specified in the Seller's notice of rejection to the Builder, then the Seller
shall cause the Builder to correct such non-conformity and perform such further
test as may be deemed necessary until the Builder are able to prove satisfaction
of the same with requirements of this Contract and/or the Specifications.
 
 
The Buyer shall follow the decision of the Seller, and shall give notice of
acceptance to the Seller as long as the Seller make a decision of acceptance of
the Vessel, except in the case that the Buyer proves to the Seller's
satisfaction that the Vessel is not materially and substantially in conformity
with the Specifications with evidences, in which case the Seller shall review
the opinion and evidences submitted by the Buyer and discuss in good faith.
Except where the Seller reasonably judges that the Buyer's opinion of
substantial non-
 
 
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{N1783113.1.2}
 
 

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conformity is obviously wrong or abuse of the right, then a matter shall first
referred to judgment of the Classification Society, but if the Classification
Society fails to make a judgment or cannot do so, the matter shall be referred
to an arbitration.
 
 
5)  
EFFECT OF ACCEPTANCE

 
 
Acceptance of the Vessel as above provided shall be final and binding so far as
conformity of the Vessel to this Contract and the Specifications is concerned
and shall preclude the Buyer from refusing formal delivery of the Vessel as
hereinafter provided, if the Seller complies with all other procedural
requirements for delivery as provided for in Article VlII hereof. The Seller
will exercise good faith in determining acceptance or rejection of the Vessel.
 
 
6)  
DISPOSITION OF SURPLUS CONSUMABLE STORES

 
 
Should any fuel oil, fresh water (except fresh water used as ballast) and other
consumable stores, furnished by the Seller for trial runs remain on board the
Vessel after acceptance of the Vessel by the Buyer, the Buyer agrees to buy the
same from the Seller at the price the Seller paid to the local supplier through
the Builder evidenced by voucher, and payment shall be effected at the time of
delivery of the Vessel.
 
 
Lubricating oils and greases necessary for the operation of the Vessel shall be
supplied by the Buyer prior to the trial runs, and the Seller shall pay upon
delivery of the Vessel the cost of the quantities of lubricating oils and
greases consumed during the trial runs at original purchase price by the Buyer
evidenced by voucher.
 
 

 
 

 
 

 
 
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{N1783113.1.2}
 
 

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ARTICLE VIII  - DELIVERY
 
 
1)  
TIME AND PLACE

 
 
The Vessel shall be delivered by the Seller to the Buyer at the Shipyard, not
earlier than ******, but not later than ******, subject, however, to the
provisions relating to permissible delays, and extension of the time of delivery
of the Vessel under this Contract.
 
 
It is understood and agreed by both parties hereto that the Seller shall use due
diligence to cause the Builder to construct, complete and deliver the Vessel at
the earliest possible time and the Buyer shall promptly accept the Vessel if and
when the Seller shall tender earlier delivery of the Vessel, provided that the
Seller shall have performed all its obligations under this Contract.
 
 
2)  
WHEN AND HOW EFFECTED

 
 
Provided that the Buyer shall concurrently pay to the Seller all sums due and
payable upon delivery of the Vessel, the delivery of the Vessel shall be
forthwith effected upon acceptance thereof by the Buyer, as herein 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 Seller
and acceptance thereof by the Buyer, which PROTOCOL shall be prepared in
duplicate and executed by each of the parties hereto.
 
 
3)  
DOCUMENTS TO BE DELIVERED TO THE BUYER

 
 
Acceptance of the Vessel by the Buyer shall be conditioned upon receipt by the
Buyer of the following duly authenticated documents to be provided by the Seller
and/or the Builder, which shall accompany the aforementioned PROTOCOL OF
DELIVERY AND ACCEPTANCE:
 
 
(a) COMMERCIAL INVOICE.
 
 
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{N1783113.1.2}
 
 

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(b)
DECLARATION OF WARRANTY of the Seller that the Vessel is delivered to the Buyer
free and clear of any and all liens, claims or other encumbrances upon the
Vessel and Buyer's title thereof, and in particular, that the Vessel is
absolutely free of all burdens in the nature of imposts, taxes or charges
imposed by the city, state or country of the port of delivery, as well as of all
liabilities arising from the construction or operation of the Vessel in trial
runs or otherwise, prior to delivery and acceptance.

 
 
(c)            PROTOCOL OF TRIALS of the VESSEL made pursuant to the
Specifications.
 
 
 
(d)
PROTOCOL OF INVENTORY of the equipment of the VESSEL, including spare parts and
the like, all as specified in the specifications.

 
 
 
(e)
PROTOCOL OF STORES OF CONSUMABLE NATURE referred to under paragraph 6) of
Article VII hereof, including the original purchase price thereof. (f) FINISHED
DRAWINGS AND PLANS and instruction books pertaining to the Vessel as stipulated
in the Specifications.

 
 
 
(f)
FINISHED DRAWINGS AND PLANS and instruction books pertaining to the Vessel as
stipulated in the Specifications.

 
 
(g)            BILL OF SALE (being Notarized & Legalized or Apostilled)
 
 
 
(h)
BUILDER'S CERTIFICATE (being Notarized & Legalized or Apostilled) and all other
CERTIFICATE(S) required to be furnished upon delivery of the Vessel pursuant to
the Specifications.

 
 
4)  
TITLE AND RISK

 
 
Title to and risk of the Vessel shall pass to the Buyer upon acceptance thereof
by the Buyer as stated above; it being expressly understood that, until such
acceptance is effected, the Vessel and its equipment are at the title and risk
of the Seller.
 
 
5)  
REMOVAL OF THE VESSEL

 
 
The Buyer shall take possession of the Vessel immediately upon acceptance
thereof, and if so requested by the Seller, shall remove the Vessel from the
Shipyard within three (3) days after acceptance of the Vessel.
 
 

 
 
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{N1783113.1.2}
 
 

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ARTICLE
 
 
IX - FORCE MAJEURE
 

 
1)  
CAUSES OF DELAY

 
 
If, at any time before the actual delivery, either the construction of the
Vessel or any performance required as a prerequisite of delivery of the Vessel
is delayed due to Acts of God; acts of princes or rulers; requirements of
government authorities; war or other hostilities or preparations therefor;
blockade; revolution, insurrections, mobilization, civil war, civil commotion or
riots; vandalism; sabotages, strikes, lockouts or other labor disturbances;
labor shortage, plague or other epidemics; quarantine; flood, typhoons,
hurricanes, storms or other weather conditions not included in normal planning;
earthquakes; tidal waves; landslides; fires, explosions, collisions or
strandings; embargoes; delays or failure in transportation; shortage of
materials, machinery or equipment; import restrictions; 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 Seller
and/or the Builder to be delivered in time; prolonged failure, shortage or
restriction of electric current, oil or gas; defects in materials, machinery or
equipment which could not have been detected by the Seller and/or the Builder
using reasonable care; casting or forging rejects or the like not due to
negligence; delays caused by the Classification Society or other bodies whose
documents are required; destruction of or damage to the Shipyard or works of the
Builder, its subcontractors or suppliers, or of or to the Vessel or any part
thereof, by any causes herein described; delays in the Builder's other
commitments resulting from any causes herein described which in turn delay the
construction of the Vessel or the Seller's and/or the Builder's performance
under this Contract; other causes or accidents beyond control of the Seller
and/or the Builder, its subcontractors or suppliers of the nature whether or not
indicated by the foregoing words; all the foregoing provided that these events
could not be foreseen at the day of signing this Contract; then and in any such
case, the delivery date shall be postponed for a period of time which shall not
exceed the total accumulated time of all such delays.
 
 
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{N1783113.1.2}
 
 

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2)  
NOTICE OF DELAY

 
 
Within twelve (12) days after the date of occurrence of any cause of delay, on
account of which the Seller claims that it is entitled under this Contract to a
postponement of the delivery date, the Seller shall notify the Buyer in writing
or by email or facsimile confirmed in writing of the date such cause of delay
occurred. Likewise, within twelve (12) days after the date of ending of such
cause of delay, the Seller shall notify the Buyer in writing or by facsimile
confirmed in writing of the date such cause of delay ended. The Seller shall
also notify the Buyer of the period by which the delivery date is postponed by
reason of such cause of delay, with all reasonable dispatch after it has been
determined. Failure of the Buyer to object to the Seller's claim for
postponement of the delivery date within five (5) days after receipt by the
Buyer of such notice of claim shall be deemed to be a waiver by the Buyer of its
right to object to such postponement of the delivery date.
 
 
3)  
DEFINITION OF PERMISSIBLE DELAY

 
 
Delays on account of such causes as specified in Paragraph I) of this Article
and any other delays of a nature which under the terms of this Contract permits
postponement of the delivery date shall be understood to be permissible delays
and are to be distinguished from unauthorized delays on account of which the
Contract Price is subject to adjustment as provided for in Article III hereof.
 
 
4)  
RIGHT TO RESCIND FOR EXCESSIVE DELAY

 
 
If the total accumulated time of all delays on account of the causes specified
in Paragraph 1) of this Article, excluding delays of a nature which under the
terms of this Contract permit postponement of the delivery date, amounts to one
hundred and fifty (150) days or more, then in such event, the Buyer may rescind
this Contract by serving upon the Seller a written notice of cancellation. Such
cancellation shall be effective as of the date the first arriving notice thereof
is received by the Seller, and the Seller, after receipt of such notice, shall
refund to the Buyer the full amount of all sums paid to the Seller on account of
 
 
25
 

{N1783113.1.2}
 
 

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the Vessel. Such refund shall forthwith discharge all obligations, duties and
liabilities of each of the parties hereto to the other under this Contract. The
Seller may, at any time, after the aggregate of the aforementioned delays shall
exceed one hundred and fifty (150) days, as aforesaid, demand in writing that
the Buyer shall make an election, in which case the Buyer shall, within ten (10)
days after such demand is received, either notify the Seller of its intention to
rescind, or agree to an extension of the time for delivery to a future date
specified by the Seller.
 
 
It being understood and agreed by the parties that if further delay occurs on
account of the causes specified in this Article beyond such extended delivery
date, the Buyer immediately shall again have the same right of rescission.
 
 

 
 

 
 
 
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{N1783113.1.2}
 
 

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ARTICLE                        X - WARRANTY OF QUALITY
 
 
1)         GUARANTEE OF MATERIALS AND WORKMANSHIP
 
 
The Seller shall cause the Builder, for the period of twelve (12) months from
the date of delivery of the Vessel, to guarantee the Vessel, her hull, her
engines, her machineries, outfittings and accessories and all parts and
equipments, excluding Buyer's Supplies stipulated in Article VI hereof, against
all defects which are due to defective material and/or poor workmanship of the
Builder and/or its subcontractors and are neither the result of incompetence,
mismanagement, negligence, accident or willful neglect of the Buyer, its
employees or agents or of any persons other than employees or agents of the
Seller and/or the Builder, nor the effect of perils of the seas or river or
normal wear and tear. The Seller and/or the Builder shall have no obligation
under this guarantee for any defects discovered prior to the expiry date of the
guarantee unless notice of such defects is received by the Seller not later than
thirty (30) days after such expiry date.
 
 
However, in case that the Buyer is unable to enter the Vessel in the dry-dock
within the guarantee period as provided above, the Builder's guarantee for the
underwater part of the Vessel which cannot be discovered unless the Vessel is
dry-docked, may be extended until the time of the first dry-docking after the
delivery of the Vessel, subject to the mutual agreement of the parties hereto.
 
 
2)  
NOTICE OF DEFECTS:

 
 
The Buyer shall notify the Seller in writing, or by email or facsimile confirmed
in writing,
 
 
of any defects for which claim is made under this guarantee as promptly as
possible after discovery thereof. The Buyer's written notice shall describe the
nature and extent of the defects.
 
 
3)        EXTENT OF THE SELLER'S AND THE BUILDER'S LIABILITY
 
 

 
 

 
 
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{N1783113.1.2}
 
 

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The Seller and/or the Builder shall be under no obligation with respect to
defects discovered after the expiration of the period of guarantee specified
above. The Seller and/or the Builder shall not be responsible for any
consequential damages occasioned by any defects or for any loss of time in
operating or repairing the Vessel, or both, caused by any defects. Nor shall
there be any liability of the Seller and/or the Builder hereunder for defects in
the Vessel or any part or equipment thereof, caused by fire or accident at sea
or elsewhere or by mismanagement, accidents, negligence or willful neglect on
the part of the Buyer, its employees or agents, or of any persons other than
employees or agents of the Seller and/or the Builder. Likewise, the Seller
and/or the Builder shall not be liable for defects in the Vessel, or any part or
equipment thereof, that are due to repairs which were made by other than the
Builder at the direction of the Buyer, as hereinafter provided.
 
 
The provisions of this Article X exclude and negate any other or further
responsibility or liability imposed on the Seller and/or the Builder by statute
or otherwise.
 
 
4)  
REMEDY OF DEFECTS

 
 
The Seller shall cause the Builder to remedy any defects against which the
Vessel, or any part or equipment thereof is guaranteed under this Article, by
repairing or replacing the defective parts at the Builder's shipyard, unless the
Vessel can not be conveniently brought to such shipyard for such repairs.
 
 
In case the Vessel can not be conveniently brought to the shipyard of the
Builder, the Buyer may cause necessary repairs or replacements to be made
elsewhere at the direction of the Buyer. In such case the Buyer shall first give
the Seller the notice thereof, and the Seller shall have the right to verify by
its own or the Builder's representative the nature and extent of the defects
complained of, and shall, after such verification, promptly advise the Buyer of
its acceptance or rejection of the defects as one/those that is/are subject to
the guarantee herein provided. Any dispute shall be referred to arbitration in
accordance with the provisions of Article XIII hereof. If the Seller accepts the
defects as one/those justifying remedy under this Article, the Seller shall pay
to the Buyer, unless otherwise agreed upon between the parties hereto, actual
cost incurred for such repairs and replacements.
 
 

 
 
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{N1783113.1.2}
 
 

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Upon reasonable requests from the Buyer, duly endorsed by the Builder's engineer
if he is then on board, the Seller shall cause the Builder to forward to the
Vessel necessary parts and/or equipment, by sea freight at Seller's expense, to
replace those which have been found defective in accordance with provisions
hereof. If the Buyer should reasonably require same to be forwarded by air
freight, the Seller shall do so at Seller's expense, provided that, such parts
and/or equipment are essential to and urgently required for the seaworthiness of
the Vessel.
 
 
The guarantee contained in this Article shall not be assigned to any party in
any case including but not limited to the case that the Vessel is sold by the
Buyer to the third party, unless prior consent of the Seller is given in
writing.
 
 

 
 
 

 
 
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{N1783113.1.2}
 
 

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ARTICLE
 
 
XI - INSURANCE
 

 
1)  
EXTENT OF INSURANCE COVERAGE

 
 
The Seller shall cause the Builder, at the Builder's own cost and expense, to
insure the Vessel and all machinery, equipment, appurtenances and outfits,
including the Buyer's Supplies, built into or installed in or upon the Vessel,
with first class insurance company or underwriters in Japan. The amount of such
insurance coverage shall not be less than the aggregate amount of all
installments paid by the Buyer to the Seller, plus the value of the Buyer's
Supplies in the custody of the Shipyard.
 
 
2)  
APPLICATION OF RECOVERED AMOUNTS

 
 
In the event that the Vessel shall be damaged from any insured cause at any time
before delivery of the Vessel, and in the further event that such damage shall
not constitute an actual or a constructive total loss of the Vessel, the amount
received in respect of the insurance shall be applied by the Builder in repair
of such damage, satisfactory to the Classification requirements, and the Buyer
shall accept the Vessel under this Contract if completed in accordance with this
Contract and the Specifications, subject, however, to the extension of delivery
time under Article VIII hereof.
 
 
Should the Vessel from any cause become an actual or constructive total loss,
the Seller shall either:
 
 
 
( a)
cause the Builder to proceed in accordance with the terms of this Contract, in
which case the amount received in respect of the insurance shall be applied to
the reconstruction and repair of the damage of the Vessel, provided the parties
hereto shall have first agreed thereto in writing and to such reasonable
extension of delivery time as may be necessary for the completion of such
reconstruction and repair, delays due to such extension being deemed to be
permissible delays; or

 
 

 
 

 
 
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{N1783113.1.2}
 
 

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(b)
Refund promptly to the Buyer the full amount of all sums paid by the Buyer to
the Seller as installments in advance of delivery of the Vessel and deliver to
the Buyer all Buyer's Supplies (or the insurance proceeds paid with respect
thereto), in which case this Contract shall be deemed to be automatically
terminated and all rights, duties, liabilities and obligations of each of the
parties to the other shall forthwith cease and terminate.

 
 
3)  TERMINATION OF SELLER'S AND/OR BUILDER'S OBLIGATION TO INSURE
 
 
The Seller and/or the Builder shall be under no obligation to insure the Vessel
hereunder after delivery of the Vessel to the Buyer.
 
 

 
 

 
 
 
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{N1783113.1.2}
 
 

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ARTICLE                      XII - BUYER'S DEFAULT
 
 
1)  
DEFINITION OF DEFAULT

 
 
The Buyer shall be deemed to be in default of performance of its obligations
under this Contract in the following cases:
 
 
(a)
If the Buyer fails to pay the 1st Installment to the Seller within three (3)
Business Days after the day and year first above written under the provisions of
Article II hereof; or

 
 
(b)
If the Buyer fails to pay the 2nd and 3rd Installments to the Seller within
three (3) Business Days after such Installment becomes due and payable under the
provisions of Article II hereof; or

 
 
(c)
If the Buyer fails to pay the 4th Installment to the Seller concurrently with
the delivery of the Vessel by the Seller to the Buyer as provided in Article II
hereof; or (d) If the Buyer fails to take delivery of the Vessel, when the
Vessel is duly tendered for delivery by the Seller under the provisions of
Article VIII hereof; or

 
 
( e)
If the Buyer cancels or terminates or purports to cancel or terminate or issues
a notice of cancellation or termination in respect of this Contract (save and
except as the result of the proper exercise of its rights under this Contract);
or

 
 
(f)
If any court order or other order having a legally binding effect on the Buyer
is requesting the Buyer to cease purchase of the Vessel; or

 
 
(g)
If, after the date of this Contract, a petition is filed or an order is made or
and effective resolution is passed for the winding up of the Buyer; or

 
 
(h)
If the Buyer ceases to carry on its business or declares its intention to cease
to carry on its business or generally is subjected to any applicable insolvency
procedure; or (i) If a receiver, trustee, liquidator or sequestrator of, or for,
the Buyer or any substantial part of their property is appointed.

 
 
(i)
If a receiver, trustee, liquidator or sequestrator of, or for, the Buyer or any
substantial part of their property is appointed.

 
 
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{N1783113.1.2}
 
 

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2)  
INTEREST CHARGE

 
 
If the Buyer is in default of payment as to any installment mentioned above, the
Buyer shall, commencing with and including the due date, pay interest on such
unpaid installment at the rate of two point five percent (2.5%) over the
Long-term prime rate in Japan per annum until such installment including
interest thereon is fully paid.
 
 
It is expressly understood that the rate of interest specified in this Contract
shall be the net rate to be received by the party entitled thereto.
 
 
3)  
RESCISSION BY SELLER

 
 
If such default continues for a period of ten (10) days thereafter, the Seller
may, at its option, rescind this Contract by giving notice to the Buyer by email
or facsimile confirmed in writing. Upon receipt of such notice of rescission by
the Buyer, this Contract shall forthwith be rescinded and cancelled, and any
lien, interest or property right that the Buyer may have in and to the Vessel or
to any part or equipment thereof and to any material or part acquired for
construction of the Vessel but not yet utilized for such purpose, shall
forthwith cease, and the Vessel and all parts and equipment thereof shall become
the sole property of the Seller, and any installment or installments theretofore
paid by the Buyer to the Seller on account of this Contract shall be retained by
the Seller, however, the retainment of installments shall not preclude the
Seller from claiming proven loss or damages (except for the consequential loss
or damages), if any, which are suffered by the Seller consequent on rescission
of this Contract.
 
 
4)  
SALE OF VESSEL

 
 
In the event of rescission of this Contract as provided above, the Seller shall
have full right and power either to complete or not to complete the Vessel as it
deems fit, and to sell the Vessel at a public or private sale on such terms and
conditions as the Seller thinks fit without being answerable for any loss or
damage.
 
 
When the sale of the Vessel is made, the proceeds shall be received by the
Seller and shall be applied by the Seller as follows:
 
 
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{N1783113.1.2}
 
 

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(a) In case of sale of the Vessel in incomplete state:
 
 
Firstly to payment of (1) all costs and expenses attending the sale and
otherwise incurred by the Seller and the Builder as a result of the Buyer's
default and then to (2) compensation to the Seller and the Builder for all costs
and expenses relating to the construction of the Vessel and interest thereon at
the rate of two point five percent (2.5%) over the Long-term prime rate in Japan
per annum and for reasonable loss of profit consequent on the rescission of this
Contract.
 
 
If the proceeds of sale plus the installment or installments paid by the Buyer
is sufficient to pay all of the above (1) and (2), the balance shall be paid to
the Buyer, however, if the proceeds of sale is deficient to pay the same, such
deficiency shall forthwith be paid by the Buyer upon demand of the Seller.
 
 
(b) In case of sale of the Vessel after completion:
 
 
Firstly to payment of (1) all costs and expenses attending the sale and
otherwise incurred by the Seller and/or the Builder as a result of the Buyer's
default and then to (2) all unpaid installments of the Contract Price and
interest of such installments at the rate of two point five percent (2.5%) over
the Long-term prime rate in Japan per annum from the respective due dates
thereof to the date of application.
 
 
If there is any balance left of the proceeds of sale after full payment of all
above (1) and (2), the balance shall be paid to the Buyer, however, if the
proceeds of sale are deficient to pay all of the above (I) and (2), such
deficiency shall forthwith be paid by the Buyer upon demand of the Seller.
 
 

 
 

 
 
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{N1783113.1.2}
 
 

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3)  
 

 
 
4)  
 

 
 
ARTICLE XIII - SELLER'S DEFAULT
 
 
I)  
DEFINITION OF DEFAULT

 
 
The Seller shall be deemed to be in default of performance of its obligations
under this Contract in the following cases:
 
 
(a)
If the Seller cancels or terminates or purports to cancel or terminate or issues
a notice of cancellation or termination in respect of this Contract (save and
except as the result of the proper exercise of its rights under this Contract);
or

 
 
(b)
If any court order or other order having a legally binding effect on the Seller
is requesting the Seller to cease sale of the Vessel; or

 
 
( c)
If, after the date of this Contract, a petition is filed or an order is made or
and effective resolution is passed for the winding up of the Seller; or

 
 
(d)
If the Seller ceases to carry on its business or declares its intention to cease
to carry on its business or generally is subjected to any applicable insolvency
procedure; or ( e) If a receiver, trustee, liquidator or sequestrator of, or
for, the Seller or any substantial part of their property is appointed.

 
 
2) RESCISSION BY BUYER
 
 
The payments made by the Buyer prior to the delivery of the Vessel shall be in
the nature of advances to the Seller. If such default continues for a period of
ten (10) days thereafter. the Buyer may, at its option, rescind this Contract by
giving notice to the Seller by email or facsimile confirmed in writing. Upon
receipt of such notice of rescission by the Seller, this Contract shall
forthwith be rescinded and cancelled.
 
 

 
 

 
 

 
 

 
 
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{N1783113.1.2}
 
 

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3). REFUND BY SELLER:
 
 
Thereupon the Seller shall promptly refund to the Buyer the full amount of all
sums paid by the Buyer to the Seller on account of the Vessel, unless the Seller
proceeds to the arbitration under the provisions of Article XIV hereof.
 
 
In such event, the Seller shall pay to the Buyers interest at the rate of two
point five percent (2.5%) per annum on the amount required to be refunded to the
Buyer, computed from the respective dates on which such sums were paid by the
Buyer to the Seller to the date of remittance by the Seller.
 
 
4). DISCHARGE OF OBLIGATIONS:
 
 
Upon such refund by the Seller to the Buyer, all obligations, duties and
liabilities of each of the parties hereto to the other under this Contract shall
be forthwith completely discharged.
 
 
ARTICLE XIV - ARBITRATION
 
 
1)           TECHNICAL DISPUTES
 
 
Any dispute or any difference of opinion between the parties hereto relating to
conformity of the construction of the Vessel or material used to the
Classification requirements or relating to any other technical matters shall be
referred to the Classification Society for settlement by and between the parties
and the Classification Society.
 
 
In the event that the settlement cannot be reached by the three parties
above-mentioned, then such matter shall be referred to arbitration as
hereinafter provided.
 
 

 
 

 
 
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{N1783113.1.2}
 
 

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2)  
ARBITRATION

 
 
Except for the case in which the dispute is settled under Paragraph I) hereof,
any dispute arising under or by virtue of this Contract or any difference of
opinion between the parties hereto concerning their rights and obligations under
this Contract, shall be referred to arbitration in Tokyo in accordance with the
prevailing rules and regulations of Japan Shipping Exchange, Inc.
 
 
3)  
ALTERATION OF DELIVERY TIME

 
 
In the event of arbitration of any dispute arising or occurring prior to
delivery of the Vessel, an award of the arbitrators shall include a finding as
to whether or not the delivery date of the Vessel is in any way altered thereby.
 
 

 
 

 
 
37
 

{N1783113.1.2}
 
 

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ARTICLE                               XV-
 
 
ASSIGNMENT OF CONTRACT
 

 

 
 
Neither party may assign this Contract in whole or in part to any other
individual or company unless the prior consent of the other party is given in
written agreement.
 
 
In case of assignment by the Buyer, such assignment shall further be subject to
approval of the Japanese Government, and the Buyer shall remain liable under
this Contract.
 
 
This Contract shall inure to the benefit of and shall be binding upon the lawful
successors or the legitimate assigns of either or both parties.
 
 

 
 
 
 

 
 
38
 

{N1783113.1.2}
 
 

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ARTICLE                      XVI - TAXES AND DUTIES
 
 
1)  
TAXES

 
 
All taxes and charges of any kind incurred in connection with this Contract in
Japan except stamp duty in Japan which shall be shared by both parties, shall be
borne by the Seller, and those incurred in countries other than Japan shall be
borne by the Buyer.
 
 
2)  
DUTIES

 
 
The Seller shall hold the Buyer harmless from any payment of a duty imposed in
Japan upon materials or supplies which the Seller may acquire at its cost and by
its own discretion from abroad for construction of the Vessel. However, the
import duties, if any, on any materials or apparatus which, under the terms of
this Contract and/or Specifications, may be supplied by the Buyer from abroad
for construction of the Vessel, and or any other materials, stores, provisions
or any other goods which the Buyer or its employees may take in from abroad
shall be borne by the Buyer.
 
 

 

 
 

 
 
39
 

{N1783113.1.2}
 
 

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ARTICLE                             XVII - PATENTS, TRADE MARKS, COPYRIGHTS
 
 
1)  
PATENTS, TRADEMARKS AND COPYRIGHTS

 
 
Machinery and equipment of the Vessel may bear the patent numbers, trade marks
or trade names of the manufacturers, Nothing contained herein shall be construed
as transferring any patent or trade mark rights or copyrights in equipment
covered by this Contract, and all such rights are hereby expressly reserved to
the true and lawful owners thereof.
 
 
The Seller shall cause the Builder to defend the Buyer and hold it harmless from
patent liability or claim of patent infringement of any nature or kind,
including costs and expenses for, or on account of, any patented or unpatented
invention made or used in the performance of the Contract and also including
costs and expenses of litigation, if any, provided, however, that the Buyer
shall defend the Seller and hold it harmless in respect of infringement of any
patent rights on account of parts or equipment for the Vessel supplied by the
Buyer.
 
 
2)  
GENERAL PLANS, SPECIFICATIONS AND WORKING DRAWINGS

 
 
The Buyer hereby agrees with the Seller that the Builder retains all rights with
respect to the Specifications, plans, 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.
 
 

 
 
 
40
 

{N1783113.1.2}
 
 

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ARTICLE
 
 
XVIII- INTERPRETATION
 

 
In the event of a conflict or inconsistency between the terms of this Contract
and any of the terms of the Specifications attached hereto, the Specifications
shall prevail in all technical respects and the Contract shall prevail in all
other respects. Should there be any inconsistency or contradiction between the
Plans and the Specifications, the Specifications shall govern.
 
 
This Contract shall be construed, take effect and be enforceable in accordance
with and under the laws and regulations prevailing in Japan.
 
 

 
 
 
 

 
 
41
 

{N1783113.1.2}
 
 

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ARTICLE                         XIX - NOTICE
 
 
All notices and communications in connection with this Contract, except as
otherwise specifically provided, shall be addressed as follows:
 
 
To the Buyer:
 
 
Facsimile:
 
 
To the Seller:                                       c/o Mitsui & Co., LTD.
 
 
2-1, Otemach 1-chome
 
 
Chiyoda-ku, Tokyo 100-0004
 
 
Japan
 
 

 
 
Facsimile:                                81-3-3285-9838
 
 

 
 
To the Builder:                                MITSUBISHI HEAVY INDUSTRIES, LTD.
 
 
16-5, Konan 2-chome
 
 
Minato-ku, Tokyo 108-8215
 
 
Japan
 
 

 
 
 Facsimile:                                          81-3-6716-5822
 
 

 
 

 
 

 
 

 
 
42
 
 

 
 

 
 
ARTICLE                      XX - EFFECTIVE DATE
 
 
This Contract shall become effective upon execution thereof by the Buyer and the
Seller.
 
 

 
 
 

 
 

 
 

 
 
43
 

{N1783113.1.2}
 
 

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IN WITNESS WHEREOF, the parties hereto have caused this Contract to be duly
executed.
 
 
For the
Buyer:                                                                           For
the Seller:
 
 

 
 

 
 

 
 
By:                                                                By:
 
 
Title:                                                                           Title:
 
 

 
 
 
 

 
 

 
 
44
 

{N1783121.3}
 
 

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