Document:

Exhibit 10.84

 

SHIPBUILDING CONTRACT

 

FOR

 

CONSTRUCTION OF ONE 300,000 DWT CRUDE OIL TANKER

 

(HULL NO. H1385)

 

BETWEEN

 

NAVIG8 CRUDE TANKERS INC. or its Nominee

 

as BUYER

 

and

 

SHANGHAI WAIGAOQIAO SHIPBUILDING CO., LTD.

 

as SELLER

 

 

	
Shipbuilding   Contract
    	
Hull No.H1385
    

 

CONTENTS

 

	
ARTICLE
    	
 
    	
PAGE NO.
    
	
 
    	
 
    	
 
    
	
ARTICLE I DESCRIPTION AND CLASS
    	
 
    	
2
    
	
 
    	
 
    	
 
    
	
1. DESCRIPTION:
    	
 
    	
2
    
	
2. CLASS AND RULES
    	
 
    	
2
    
	
3. PRINCIPAL PARTICULARS   AND DIMENSIONS OF THE VESSEL
    	
 
    	
3
    
	
4. GUARANTEED SPEED
    	
 
    	
3
    
	
5. GUARANTEED FUEL   CONSUMPTION
    	
 
    	
3
    
	
6. GUARANTEED DEADWEIGHT
    	
 
    	
4
    
	
7. SUBCONTRACTING:
    	
 
    	
4
    
	
8. REGISTRATION:
    	
 
    	
4
    
	
 
    	
 
    	
 
    
	
ARTICLE II CONTRACT PRICE & TERMS OF   PAYMENT
    	
 
    	
5
    
	
 
    	
 
    	
 
    
	
1. CONTRACT PRICE:
    	
 
    	
5
    
	
2. CURRENCY:
    	
 
    	
5
    
	
3. TERMS OF PAYMENT:
    	
 
    	
5
    
	
4. METHOD OF PAYMENT:
    	
 
    	
6
    
	
5. PREPAYMENT:
    	
 
    	
8
    
	
6. SECURITY FOR PAYMENT   OF INSTALMENTS BEFORE DELIVERY:
    	
 
    	
8
    
	
7. REFUNDS
    	
 
    	
8
    
	
 
    	
 
    	
 
    
	
ARTICLE III ADJUSTMENT OF THE CONTRACT PRICE
    	
 
    	
10
    
	
 
    	
 
    	
 
    
	
1. DELIVERY
    	
 
    	
10
    
	
2. INSUFFICIENT SPEED
    	
 
    	
11
    
	
3. EXCESSIVE FUEL   CONSUMPTION
    	
 
    	
12
    
	
4. DEADWEIGHT
    	
 
    	
13
    
	
5. EFFECT OF RESCISSION   OR CANCELLATION
    	
 
    	
13
    
	
 
    	
 
    	
 
    
	
ARTICLE IV SUPERVISION AND INSPECTION
    	
 
    	
14
    
	
 
    	
 
    	
 
    
	
1. APPOINTMENT OF THE   BUYER’S REPRESENTATIVES
    	
 
    	
14
    
	
2. COMMENTS TO PLANS AND   DRAWINGS
    	
 
    	
14
    
	
3. SUPERVISION AND   INSPECTION BY THE BUYER’S REPRESENTATIVES
    	
 
    	
15
    
	
4. LIABILITY OF THE   SELLER
    	
 
    	
17
    
	
5. SALARIES AND EXPENSES
    	
 
    	
17
    
	
6. REPLACEMENT OF BUYER’S   REPRESENTATIVES
    	
 
    	
17
    
	
 
    	
 
    	
 
    
	
ARTICLE V MODIFICATION,CHANGES AND EXTRAS
    	
 
    	
18
    
	
 
    	
 
    	
 
    
	
1. HOW EFFECTED
    	
 
    	
18
    
	
2. CHANGES IN RULES AND   REGULATIONS, ETC.
    	
 
    	
19
    
	
3. SUBSTITUTION OF   MATERIALS AND/OR EQUIPMENT
    	
 
    	
20
    
	
4. BUYER’S SUPPLIED ITEMS
    	
 
    	
20
    
	
 
    	
 
    	
 
    
	
ARTICLE VI TRIALS
    	
 
    	
22
    

 

Date:  21st March,2014

 

I

 

	
1. NOTICE
    	
22
    
	
2. HOW CONDUCTED
    	
23
    
	
3. TRIAL LOAD DRAFT
    	
23
    
	
4. METHOD OF ACCEPTANCE   OR REJECTION
    	
23
    
	
5. DISPOSITION OF SURPLUS   CONSUMABLE STORES
    	
24
    
	
6. EFFECT OF ACCEPTANCE
    	
25
    
	
 
    	
 
    
	
ARTICLE VII DELIVERY
    	
26
    
	
 
    	
 
    
	
1. TIME AND PLACE
    	
26
    
	
2. WHEN AND HOW EFFECTED
    	
26
    
	
3. DOCUMENTS TO BE   DELIVERED TO THE BUYER
    	
26
    
	
4. TITLE AND RISK
    	
27
    
	
5. REMOVAL OF VESSEL
    	
28
    
	
6. TENDER OF THE VESSEL
    	
28
    
	
 
    	
 
    
	
ARTICLE VIII DELAYS & EXTENSION OF TIME   FOR DELIVERY
    	
29
    
	
 
    	
 
    
	
1. CAUSE OF DELAY
    	
29
    
	
2. NOTICE OF DELAY
    	
30
    
	
3. RIGHT TO CANCEL FOR   EXCESSIVE DELAY
    	
30
    
	
4. DEFINITION OF   PERMISSIBLE DELAY
    	
31
    
	
 
    	
 
    
	
ARTICLE IX WARRANTY OF QUALITY
    	
32
    
	
 
    	
 
    
	
1. GUARANTEE OF MATERIAL   AND WORKMANSHIP
    	
32
    
	
2. NOTICE OF DEFECTS
    	
32
    
	
3. REMEDY OF DEFECTS
    	
32
    
	
4. EXTENT OF THE SELLER’S   LIABILITY
    	
33
    
	
 
    	
 
    
	
ARTICLE X CANCELLATION, REJECTION AND RESCISSION   BY THE BUYER
    	
35
    
	
 
    	
 
    
	
ARTICLE XI BUYER’S DEFAULT
    	
37
    
	
 
    	
 
    
	
1. DEFINITION OF DEFAULT
    	
37
    
	
2. NOTICE OF DEFAULT
    	
37
    
	
3. INTEREST AND CHARGE
    	
37
    
	
4. DEFAULT BEFORE   DELIVERY OF THE VESSEL
    	
38
    
	
5. SALE OF THE VESSEL
    	
39
    
	
 
    	
 
    
	
ARTICLE XII INSURANCE
    	
40
    
	
 
    	
 
    
	
1. EXTENT OF INSURANCE   COVERAGE
    	
40
    
	
2. APPLICATION OF   RECOVERED AMOUNT
    	
40
    
	
3. TERMINATION OF THE   SELLER’S OBLIGATION TO INSURE
    	
41
    
	
 
    	
 
    
	
ARTICLE XIII DISPUTES AND ARBITRATION
    	
42
    
	
 
    	
 
    
	
1. PROCEEDINGS
    	
42
    
	
2. ALTERNATIVE   ARBITRATION BY AGREEMENT
    	
42
    
	
3. NOTICE OF AWARD
    	
43
    
	
4. EXPENSES
    	
43
    
	
5. AWARD OF ARBITRATION
    	
43
    

 

II

 

	
6. ENTRY IN COURT
    	
43
    
	
7. ALTERATION OF DELIVERY   TIME
    	
43
    
	
 
    	
 
    
	
ARTICLE XIV RIGHT OF ASSIGNMENT
    	
44
    
	
 
    	
 
    
	
ARTICLE XV TAXES AND DUTIES
    	
45
    
	
 
    	
 
    
	
1. TAXES
    	
45
    
	
2. DUTIES
    	
45
    
	
 
    	
 
    
	
ARTICLE XVI PATENTS, TRADEMARKS AND COPYRIGHTS
    	
46
    
	
 
    	
 
    
	
ARTICLE XVII NOTICE
    	
47
    
	
 
    	
 
    
	
ARTICLE XVIII EFFECTIVE DATE OF CONTRACT
    	
49
    
	
 
    	
 
    
	
ARTICLE XIX INTERPRETATION
    	
50
    
	
 
    	
 
    
	
1. LAW APPLICABLE
    	
50
    
	
2. DISCREPANCIES
    	
50
    
	
3. DEFINITION
    	
50
    
	
4. ENTIRE AGREEMENT
    	
50
    
	
 
    	
 
    
	
EXHIBIT “A” : IRREVOCABLE LETTER OF GUARANTEE NO.
    	
52
    
	
 
    	
 
    
	
EXHIBIT “B” IRREVOCABLE LETTER OF GUARANTEE
    	
55
    
	
 
    	
 
    
	
FOR THE 2ND, 3RD, AND 4TH INSTALLMENTS
    	
55
    

 

III

 

SHIPBUILDING CONTRACT FOR

CONSTRUCTION OF ONE DIESEL DRIVEN 300,000 DWT CRUDE OIL TANKER

(HULL NO. H1385)

 

This CONTRACT, entered into this 21st day of March 2014 by and between NAVIG8 CRUDE TANKERS INC. or its Nominee, a corporation organized and existing under the Laws of Marshall Islands, having its registered office at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH 96960 (hereinafter called the “BUYER”) on one part; and SHANGHAI WAIGAOQIAO SHIPBUILDING CO., LTD. a corporation organized and existing under the Laws of the People’s Republic of China, having its registered office at 3001 Zhouhai Road, Pudong New District, Shanghai 200137, the People’s Republic of China (hereinafter called the “SELLER”) on the other part.

 

WITNESSETH

 

in consideration of the mutual covenants contained herein, the SELLER agrees to design, build, launch, equip and complete at the SELLER’s own premises or at Shanghai Jiangnan Changxing Heavy Industry Co., Ltd. at Changxing Island, Shanghai (hereinafter called the SELLER’s shipyard) and to sell and deliver to the BUYER after completion and successful trial one (1)  300,000 Metric Tons Deadweight Crude Oil Tanker as more fully described in Article I hereof, to be registered under the flag of Marshall Islands and the BUYER agrees to purchase and take delivery of the aforesaid VESSEL from the SELLER and to pay for the same in accordance with the terms and conditions hereinafter set forth.

 

1

 

ARTICLE I DESCRIPTION AND CLASS

 

1.              DESCRIPTION:

 

The VESSEL is a 300,000 metric tons deadweight crude oil tanker, at scantling draft moulded of 21.3 meters (hereinafter called the “VESSEL”) of the class described below. The VESSEL shall have the SELLER’s Hull No. H1385 and shall be designed, constructed, equipped and completed in accordance with the following “Specifications”:

 

(1)         Specification (Drawing No. 300TK-13202-CS-R1)

(2)         General Arrangement (Drawing No.  300TK-13202-GA-R1)

(3)         Midship Section (Drawing No.  300TK-13202-MS-R1)

(4)         Makers list (Drawing No.  300TK-13202-ML-R1)

(5)         Technical Memorandum on the 300,000 DWT Crude Oil Tanker Specification dated December 17th, 2013

 

attached hereto and signed by each of the parties to this Contract (hereinafter collectively called the “Specifications”), making an integral part hereof.

 

2.              CLASS AND RULES

 

The VESSEL, including its machinery and equipment, shall be designed, equipped and constructed in accordance with the rules and regulations issued and having become effective and compulsorily applicable to the VESSEL up to and on the date of signing this Contract of American Bureau of Shipping (ABS) (hereinafter called the “Classification Society”) and shall be distinguished in the record by the symbol of:

 

+A1 Oil Carrier, (E), CSR, AB-CM, +AMS, +ACCU, TCM, UWILD, SPMA, PMA, ESP, CPS, VEC-L, RW, GP, CPP, POT, CRC, BWT, HIMP, RES, RRDA and shall also comply with the rules and regulations as fully described in the Specifications.

 

The requirements of the authorities as fully described in the Specifications including that of the Classification Society are to include additional rules or circulars thereof issued and become effective as at the date of signing this Contract.

 

The SELLER shall arrange with the Classification Society to assign a representative or representatives (hereinafter called the “Classification Surveyor”) to the SELLER’s Shipyard for supervision of the construction of the VESSEL.

 

All fees and charges incidental to Classification and to comply with the rules, regulations

 

2

 

and requirements of this Contract as described in the Specifications issued up to the date of signing this Contract as well as royalties, if any, payable on account of the construction of the VESSEL shall be for the account of the SELLER, except as otherwise provided and agreed herein. The key plans, materials and workmanship entering into the construction of the VESSEL shall at all times be subject to inspections and tests in accordance with the rules and regulations of the Classification Society.

 

Decisions of the Classification Society as to compliance or noncompliance with Classification rules and regulations shall be final and binding upon the parties hereto.

 

3.              PRINCIPAL PARTICULARS AND DIMENSIONS OF THE VESSEL

 

(a)               Hull:

 

	
Length   overall
    	
abt. 333.00m
    	
 
    
	
Length   between perpendiculars
    	
324.00m
    	
 
    
	
Breadth   moulded
    	
60.00m
    	
 
    
	
Depth   moulded
    	
29.50m
    	
 
    
	
Design   Draft moulded
    	
20.50m
    	
 
    

 

(b)               Propelling Machinery:

 

The VESSEL shall be equipped, in accordance with the Specifications, with one (1) set of MAN 7G80ME-C 9.2 type main engine.

 

4.              GUARANTEED SPEED

 

The SELLER guarantees that the trial speed, after correction, is to be not less than 15.5nautical miles per hour on the trial condition stipulated in the Specification.

 

The trial speed shall be corrected for wind speed and shallow water effect. The correction method of the speed shall be as specified in the Specifications.

 

5.              GUARANTEED FUEL CONSUMPTION

 

The SELLER guarantees that the fuel oil consumption of the Main Engine is not to exceed 158.8+5% grams/brake horse power/hour at normal continuous output at shop trial based on diesel fuel oil having a lower calorific value of 10,200 kilocalories per kilogram.

 

3

 

6.              GUARANTEED DEADWEIGHT

 

The SELLER guarantees that the VESSEL is to have a deadweight of not less than 300,000 metric tons at the scantling draft moulded of 21.3 meters in sea water of 1.025 specific gravity.

 

The term, “Deadweight”, as used in this Contract, shall be as defined in the Specifications.

 

The actual deadweight of the VESSEL expressed in metric tons shall be based on calculations made by the SELLER and checked by the BUYER, and all measurements necessary for such calculations shall be performed in the presence of the BUYER’s REPRESENTATIVE(S) or the party authorized by the BUYER.

 

Should there be any dispute between the SELLER and the BUYER in such calculations and/or measurements, the decision of the Classification Society shall be final.

 

7.              SUBCONTRACTING:

 

The SELLER may, at its sole discretion and responsibility, subcontract any portion of the construction work of the VESSEL to experienced subcontractors, but delivery and final assembly into the VESSEL of any such work subcontracted shall be at the SELLER’s Shipyard. The SELLER shall remain responsible for such subcontracted work.

 

The performance of the works by the Shanghai Jiangnan Changxing Heavy Industry Co., Ltd. or wholly controlled subsidiaries of the SELLER does not constitute subcontracting for the purposes of this clause. Without prejudice to the generality of the foregoing the SELLER shall remain fully liable for the due and complete performance of all the SELLER’s obligations under this Contract notwithstanding the entering into of any such sub-contract as aforesaid. However, the Vessel shall always remain at the SELLER’s shipyard or Shanghai Jiangnan Changxing Heavy Industry Co., Ltd. unless the Buyer and the SELLER agree otherwise.

 

8.              REGISTRATION:

 

The VESSEL shall be registered by the BUYER at its own cost and expenses under the laws of Marshall Islands at the time of delivery and acceptance thereof.

 

4

 

ARTICLE II CONTRACT PRICE & TERMS OF PAYMENT

 

1.              CONTRACT PRICE:

 

The purchase price of the VESSEL is United States Dollars Ninety Eight Million Seven Hundred and Three Thousand Only (US$ 98,703,000.00), net receivable by the SELLER (hereinafter called the “Contract Price”), which is exclusive of the cost for the BUYER’s Supplies as provided in Article V hereof, and shall be subject to upward or downward adjustment, if any, as hereinafter set forth in this Contract.

 

2.              CURRENCY:

 

Any and all payments by the BUYER to the SELLER under this Contract shall be made in United States Dollars.

 

3.              TERMS OF PAYMENT:

 

The Contract Price shall be paid by the BUYER to the SELLER in instalments as follows:

 

(a)         1st Instalment:

 

The sum of United States Dollars Nine Million Eight Hundred and Seventy Thousand Three Hundred Only (US$9,870,300.00), representing ten percent (10%) of the Contract Price, shall become due and payable and be paid by the BUYER within three (3) Singapore and New York business days after its receipt of the Refund Guarantee substantially in the form agreed in Exhibit “A”to this Contract.  SELLER shall send a copy of invoice as demand for the same.

 

(b)         2nd Instalment:

 

The sum of United States Dollars Nine Million Eight Hundred and Seventy Thousand Three Hundred Only (US$9,870,300.00), representing ten percent (10%) of the Contract Price, shall become due and payable and be paid within three (3) Singapore and New York business days after the cutting of the first steel plate of the VESSEL in the SELLER’s workshop, such to be confirmed in writing by the Classification Society, or a date not earlier than sixteen (16) months prior to the Delivery Date, whichever is later. The SELLER shall notify with a telefax or email notice to the BUYER stating that the 1st steel plate has been cut in its workshop and submit a copy of the invoice as demand for payment of this 2nd instalment.

 

5

 

(c)          3rd Instalment:

 

The sum of United States Dollars Nine Million Eight Hundred and Seventy Thousand Three Hundred Only (US$9,870,300.00), representing ten percent (10%) of the Contract Price, shall become due and payable and be paid within three (3) Singapore and New York business days after keel-laying of the first section of the VESSEL. The keel-laying shall be notified by the SELLER with a telefax or email notice to the BUYER stating that the said keel-laying has been carried out, such to be confirmed in writing by the Classification Society, or a date not earlier than eleven (11) months prior to the Delivery Date, whichever is later. The SELLER shall send to the BUYER a telefax or email stating that keel-laying has been carried out and submit a copy of the invoice as demand for payment of this 3rd installment.

 

(d)         4th Instalment:

 

The sum of United States Dollars Nine Million Eight Hundred and Seventy Thousand Three Hundred Only (US$9,870,300.00), representing ten percent (10%) of the Contract Price, shall become due and payable and be paid within three (3) Singapore and New York business days after launching of the VESSEL, such to be confirmed in writing by the Classification Society. The launching of the VESSEL shall be notified by the SELLER with a telefax or email notice to the BUYER stating that the launching of the VESSEL has been carried out. The SELLER shall send to the BUYER a telefax or email stating that launching has taken place and submit a copy of the invoice as demand for payment of this 4th installment.

 

(e)          5th Installment (Payment upon Delivery of the VESSEL):

 

The sum of United States Dollars Nine Million Two Hundred and Twenty One Thousand Eight Hundred Only (US$ 59,221,800.00)), representing sixty percent (60%) of the Contract Price, plus any increase or minus any decrease due to modifications and/or adjustments of the Contract Price in accordance with provisions of the relevant Articles hereof, shall become due and payable and be paid by the BUYER to the SELLER concurrently with delivery of the VESSEL. The SELLER shall send to the BUYER a telefax or e-mail demand for this installment ten (10) days prior to the scheduled date of delivery of the VESSEL.

 

4.              METHOD OF PAYMENT:

 

(a)         1st Instalment:

 

The BUYER shall remit the amount of this installment in accordance with Article II, Paragraph 3 (a) by telegraphic transfer to Industrial And Commercial Bank Of China Limited, Shanghai Municipal Branch, 9 Pudong Avenue,Shanghai, China for credit to

 

6

 

Account No.1001190709148073602 of Industrial And Commercial Bank Of China Limited, Shanghai Municipal Branch (Swift: ICBKCNBJSHI).

 

(b)         2nd Instalment:

 

The BUYER shall remit the amount of this installment in accordance with Article II, Paragraph 3(b) by telegraphic transfer to Industrial And Commercial Bank Of China Limited, Shanghai Municipal Branch, 9 Pudong Avenue,Shanghai, China for credit to Account No.1001190709148073602 of Industrial And Commercial Bank Of China Limited, Shanghai Municipal Branch (Swift: ICBKCNBJSHI), or through other receiving bank to be nominated by the SELLER from time to time and such nomination shall be notified to the BUYER at least 10 days prior to the due date for payment.

 

(c)          3rd Installment:

 

The BUYER shall remit the amount of this installment in accordance with Article II, Paragraph 3(c) by telegraphic transfer to Industrial And Commercial Bank Of China Limited, Shanghai Municipal Branch, 9 Pudong Avenue,Shanghai, China for credit to Account No.1001190709148073602 of Industrial And Commercial Bank Of China Limited, Shanghai Municipal Branch (Swift: ICBKCNBJSHI), or through other receiving bank to be nominated by the SELLER from time to time and such nomination shall be notified to the BUYER at least 10 days prior to the due date for payment.

 

(d)         4th Installment:

 

The BUYER shall remit the amount of this installment in accordance with Article II, Paragraph 3(d) by telegraphic transfer to Industrial And Commercial Bank Of China Limited, Shanghai Municipal Branch, 9 Pudong Avenue,Shanghai, China for credit to Account No.1001190709148073602 of Industrial And Commercial Bank Of China Limited, Shanghai Municipal Branch (Swift: ICBKCNBJSHI), or through other receiving bank to be nominated by the SELLER from time to time and such nomination shall be notified to the BUYER at least 10 days prior to the due date for payment.

 

(e)          5th Installment (Payable upon delivery of the VESSEL):

 

The BUYER shall, at least three (3) Singapore and New York business days prior to the scheduled date of delivery of the VESSEL, make an irrevocable cash deposit in the name of the BUYER with Industrial And Commercial Bank Of China Limited, Shanghai Municipal Branch, 9 Pudong Avenue,Shanghai, China for credit to Account No.1001190709148073602 of Industrial And Commercial Bank Of China Limited, Shanghai Municipal Branch (Swift: ICBKCNBJSHI), for a period of fifteen (15) days and 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

 

7

 

SELLER against presentation by the SELLER to the said Industrial And Commercial Bank Of China Limited, Shanghai Municipal Branch, 9 Pudong Avenue,Shanghai, China for credit to Account No.1001190709148073602 of Industrial And Commercial Bank Of China Limited, Shanghai Municipal Branch (Swift: ICBKCNBJSHI), of a copy of the Protocol of Delivery and Acceptance signed by the BUYER’s authorized representative and the SELLER. Interest, if any, accrued from such deposit, shall be for the benefit of the BUYER.

 

If the delivery of the VESSEL is not effected and the SELLER fails to present a copy of the fully signed Protocol of Delivery and Acceptance to said Industrial And Commercial Bank Of China Limited, Shanghai Municipal Branch, 9 Pudong Avenue,Shanghai, China for credit to Account No.1001190709148073602 of Industrial And Commercial Bank Of China Limited, Shanghai Municipal Branch (Swift: ICBKCNBJSHI)on or before the expiry of the aforesaid fifteen (15) days deposit period, the BUYER shall have the right to withdraw the said deposit plus accrued interest upon the expiry of the said fifteen (15) days deposit period. However when the newly scheduled delivery date is notified to the BUYER by the SELLER, the BUYER shall make the cash deposit in accordance with the same terms and conditions as set out above.

 

5.              PREPAYMENT:

 

The BUYER shall have the right to make prepayment of any and all instalments before delivery of the VESSEL, by giving to the SELLER at least thirty (30) days prior written notice, without any price adjustment of the VESSEL for such prepayment.

 

6.              SECURITY FOR PAYMENT OF INSTALMENTS BEFORE DELIVERY:

 

The BUYER shall, within three (3) Business Days after the BUYER’s receipt of the Refund Guarantee, deliver to the SELLER an irrevocable and unconditional Letter of Guarantee in the form annexed hereto as Exhibit “B” (hereinafter called the “Payment Guarantee”) in favour of the SELLER issued by NAVIG8 CRUDE TANKERS INC. (hereinafter called the “Payment Guarantor”) acceptable to the SELLER. This guarantee shall secure the BUYER’s obligation for the payment of the 2nd, 3rd and 4th installments of the Contract Price.

 

7.              REFUNDS

 

All payments made by the BUYER prior to delivery of the VESSEL shall be in the nature of advance to the SELLER, and in the event this Contract is rescinded or canceled by the BUYER, all in accordance with the specific terms of this Contract permitting such rescission or cancellation, the SELLER shall refund to the BUYER in United States Dollars the full

 

8

 

amount of all sums already paid by the BUYER to the SELLER under this Contract, together with interest (at the rate set out in respective provision thereof) from the respective payment date(s) to the date of remittance by telegraphic transfer of such refund to the account specified by the BUYER without deduction, set off or withholding in US dollars from the SELLER’s bank or jurisdiction.

 

As security to the BUYER, the SELLER shall deliver to the BUYER, within Thirty (30) days following the execution of this Contract, a Refund Guarantee to be issued by either Bank of China or Industrial and Commercial Bank of China or The Export-Import Bank of China, at SELLER’s sole direction, (hereinafter called the “Refund Guarantor”) in the form as per Exhibit “A” annexed hereto.

 

However, in the event of any dispute between the SELLER and the BUYER with regard to the SELLER’s obligation to repay the installment or installments paid by the BUYER and to the BUYER’S right to demand payment from the Refund Guarantor, under its guarantee, and such dispute is submitted either by the SELLER or by the BUYER for arbitration in accordance with Article XIII hereof, the Refund Guarantor shall withhold and defer payment until the final arbitration award between the SELLER and the BUYER is published. The Refund Guarantor shall not be obligated to make any payment unless the final arbitration award orders the SELLER to make repayment. If the SELLER fails to honour the award within 45 days, then the Refund Guarantor shall refund to the extent the final arbitration award orders.

 

9

 

ARTICLE III ADJUSTMENT OF THE CONTRACT PRICE

 

The Contract Price of the VESSEL shall be subject to adjustments as hereinafter set forth. It is hereby understood by both parties that any reduction of the Contract Price is by way of liquidated damages and not by way of penalty.

 

1.              DELIVERY

 

(a)         No adjustment shall be made, and the Contract Price shall remain unchanged for the thirty (30) days of delay in delivery of the VESSEL beyond the Delivery Date as defined in Article VII hereof ending as of twelve o’clock midnight (Beijing time) of the thirtieth (30th) day of delay.

 

(b)         If the delivery of the VESSEL is delayed more than thirty (30) days after the date as defined in Article VII hereof, then, in such event, beginning at twelve o’clock midnight (Beijing time) of the thirtieth (30th) day after the date on which delivery is required under this Contract, the Contract Price of the VESSEL shall be reduced by deducting therefrom the sum of United States Dollars Sixteen Thousand Only (US$ 16,000.00) per day.

 

Unless the parties hereto agree otherwise, the total reduction in the Contract Price shall be deducted from the fifth instalment of the Contract Price and in any event (including the event that the BUYER consents to take the VESSEL at the later delivery date after the expiration of Two Hundred and ten (210) days delay of delivery as described in Paragraph 1(c) of this Article or Paragraph3 of Article VIII) shall not be more than One Hundred and Eighty (180) days at the above specified rate of reduction after the thirty (30) days allowance, that is United States Dollars Two Million Eight Hundred and Eighty Thousand Only (U.S.$ 2,880,000.00) being the maximum.

 

(c)          If the delay in the delivery of the VESSEL continues beyond the period of Two Hundred and Ten (210) days (being the total non-permissible delays and Thirty (30) days allowance) after the Delivery Date (as defined in Article VII), then in such event, the BUYER may, at its option, rescind or cancel this Contract in accordance with the provisions of Article X of this Contract. The SELLER may at any time after the expiration of the aforementioned Two Hundred and ten (210) days, if the BUYER has not served notice of cancellation pursuant to Article X, notify the BUYER of the date upon which the SELLER estimates the VESSEL will be ready for delivery and demand in writing that the BUYER make an election, in which case the BUYER shall, within thirty (30) days after such demand is received by the BUYER, either notify the SELLER of its decision to cancel this Contract, or consent to take delivery of the VESSEL at an agreed future date, it being understood and agreed by the parties hereto that, if the VESSEL is not delivered by such future date, the BUYER shall have the same right of cancellation upon the same terms, as hereinabove provided.

 

10

 

In the case the BUYER, within Thirty (30) days after such demand is received by the BUYER, fails to notify the SELLER of its decision to cancel this Contract, or consent to take delivery of the VESSEL at an agreed future date, it shall be deemed that the BUYER has consented to take delivery of the VESSEL at SELLER’s estimated date.

 

(d)         For the purpose of this Article III only, the delivery of the VESSEL shall not be deemed delayed and the Contract Price shall not be reduced when and if the Delivery Date of the VESSEL is extended by reason of causes and provisions of Articles V, VI.1, XI, XII.2, XIII.7 hereof. The Contract Price shall not be adjusted or reduced if the delivery of the VESSEL is delayed by reason of permissible delays as defined in Article VIII hereof.

 

2.              INSUFFICIENT SPEED

 

(a)         The Contract Price of the VESSEL shall not be affected nor changed by reason of the actual speed (as determined by the Trial Run after correction according to the Specifications) being less than three tenths (3/10) of one knot below the guaranteed speed as specified in Paragraph 4 of Article I of this Contract.

 

(b)         However, commencing with and including a deficiency of three tenths (3/10) of one knot in actual speed (as determined by the Trial Run after correction according to the Specifications) below the guaranteed speed as specified in Paragraph 4, Article I of this Contract, the Contract Price shall be reduced as follows:

 

In case of deficiency

 

at or above 0.30 but below 0.40 knot US$ 150,000.00

at or above 0.40 but below 0.50 knot US$ 300,000.00

at or above 0.50 but below 0.60 knot US$ 450,000.00

at or above 0.60 but below 0.70 knot US$ 600,000.00

at or above 0.70 but below 0.80 knot US$ 750,000.00

 

(c)          If the deficiency in actual speed (as determined by the Trial Run after correction according to the Specifications) of the VESSEL upon the Trial Run, is more than 0.80 knot below the guaranteed speed of 15.5 knots, then the BUYER may at its option reject the VESSEL and rescind or cancel this Contract in accordance with provisions of Article X of this Contract, or may accept the VESSEL at a reduction in the Contract Price as above provided, by United States Dollars Seven Hundred and Fifty Thousand only (US$750,000.00) being the maximum.

 

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3.              EXCESSIVE FUEL CONSUMPTION

 

(a)         The Contract Price of the VESSEL shall not be affected nor changed if the actual fuel consumption of the Main Engine, as determined by shop trial in manufacturer’s works, as per the Specifications, is greater than the guaranteed fuel consumption as specified and required under the provisions of this Contract and the Specifications if such actual excess is equal to or less than Five percent (5%) (such threshold being 166.74 grams/brake horse power/hour, being 5% above 158.8 grams/brake horse power/hour).

 

(b)         However, if the actual fuel consumption as determined by shop trial is greater than Five percent (5%) above the guaranteed fuel consumption then, the Contract Price shall be reduced by the sum of United States Dollars One Hundred and Thirty Five Thousand Only (US$135,000.00) for each full one percent (1%) increase in fuel consumption in excess of the above said Five percent (5%) (fractions of one percent to be prorated).

 

(c)          If as determined by shop trial such actual fuel consumption of the Main Engine is more than ten percent (10%) in excess of the guaranteed fuel consumption, i.e. the fuel consumption exceeds 174.68 grams/brake horse power/hour (being 10% above 158.8 grams/brake horse power/hour), the BUYER may, subject to the SELLER’s right to effect alterations of corrections as specified in the following sub-paragraph of Article III 3 (c) hereof at its option, rescind or cancel this Contract, in accordance with the provisions of Article X of this Contract or may accept the VESSEL at a reduction in the Contract Price by United States Dollars Six Hundred and Seventy Five Thousand Only (US$675,000.00) being the maximum.

 

If as determined by shop trial such actual fuel consumption of the Main Engine is more than ten percent (10%) in excess of the guaranteed fuel consumption, i.e. the fuel consumption exceeds 174.68 grams/brake horse power/hour, the SELLER may investigate the cause of the non-conformity and the proper steps may promptly be taken to remedy the same and to make whatever corrections and alterations and / or re-shop trial test or tests as may be necessary to correct such non-conformity without extra cost to the BUYER. Upon completion of such alterations or corrections of such nonconformity, the SELLER shall promptly perform such further shop trials or any other tests, as may be deemed necessary to prove the fuel consumption of the Main Engine’s conformity with the requirement of this Contract and the Specifications and if found to be satisfactory, give the BUYER notice by telefax and/or e-mail of such correction and as appropriate, successful completion accompanied by copies of such results, and the BUYER shall, within six (6) Business Days after receipt of such notice, notify the SELLER by telefax and/or e-mail of its acceptance or reject the re-shop trial together with the reasons therefor. If the BUYER fails to notify the SELLER by telefax and/or e-mail of its acceptance or rejection of the re-shop trial together with the reasons therefor within six (6) Business Days period as provided herein, the BUYER shall be deemed to have accepted the shop trial.

 

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4.              DEADWEIGHT

 

(a)         In the event that there is a deficiency in the actual deadweight of the VESSEL determined as provided in the Specifications, the Contract Price shall not be decreased if such deficiency is Three Thousand and One Hundred (3,100) metric tons or less below the guaranteed deadweight of 300,000 metric tons at assigned designed draft.

 

(b)         However, the Contract Price shall be decreased by the sum of United States Dollars Seven Hundred Only (US$700.00) for each full metric ton of such deficiency being more than Three Thousand and One Hundred (3,100) metric tons.

 

(c)          In the event that there should be a deficiency in the VESSEL’s actual deadweight which exceeds Six thousand and One Hundred (6,100) metric tons below the guaranteed deadweight, the BUYER may, at its option, reject the VESSEL and rescind or cancel this Contract in accordance with the provisions of Article X of this Contract, or may accept the VESSEL with reduction in the Contract Price in the maximum amount of United States Dollars Two Million One Hundred Thousand only (US$2,100,000.00).

 

5.              EFFECT OF RESCISSION OR CANCELLATION

 

It is expressly understood and agreed by the parties hereto that in any case as stated herein, if the BUYER rescinds or cancels this Contract pursuant to any provision under this Article, the BUYER, save for its rights and remedy set out in Article X hereof, shall not be entitled to any liquidated damages or compensation whether described above or otherwise.

 

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ARTICLE IV SUPERVISION AND INSPECTION

 

1.              APPOINTMENT OF THE BUYER’S REPRESENTATIVES

 

The BUYER shall send in good time to and maintain at the SELLER’s Shipyard, at the BUYER’s own cost and expense, one or more representative(s) who shall be duly accredited and authorized in writing by the BUYER (such representative(s) being hereinafter collectively and individually called the “BUYER’S REPRESENTATIVES”) to supervise and survey the construction by the SELLER of the VESSEL, her engines and accessories. The SELLER hereby warrants that, the necessary invitation letter for the BUYER’S REPRESENTATIVES to enter China will be issued in order on demand and without delay provided that the BUYER’S REPRESENTATIVES meets with the rules, regulations and laws of the People’s Republic of China. The BUYER undertakes to give the SELLER adequate notice for the application of invitation letter.

 

2.              COMMENTS TO PLANS AND DRAWINGS

 

The parties hereto shall, within Thirty (30) days after signing of this Contract, mutually agree a list of all the plans and drawings, which are to be sent to the BUYER (hereinafter called “the LIST”) along with a schedule of anticipated dates when these will be dispatched as per SELLER’s estimation, which may be subject to change by the SELLER. Before arrival of the BUYER’S REPRESENTATIVES at the SELLER’s Shipyard, the plans and drawings specified in the LIST shall be sent to the BUYER, and the BUYER shall, within Fourteen (14) working days after receipt thereof (excluding mailing time), return such plans and drawings submitted by the SELLER with comments, if any. Notwithstanding the above, the BUYER shall nevertheless waive its right to comment on the plans and drawings if such plans and drawings have been previously applied to build other vessels with the same specification as that of the VESSEL.

 

When and if the BUYER’S REPRESENTATIVES shall have been sent by the BUYER to the SELLER in accordance with paragraph 1 of this Article, the BUYER’S REPRESENTATIVES shall approve the plans and drawings submitted to him by the SELLER according to the List of plans and drawings agreed upon by both parties unless otherwise agreed upon between the parties hereto. The BUYER’S REPRESENTATIVES shall within three (3) Business Days after receipt hereof, return to the SELLER two (2) copies of such plans and drawings with approval or comments, if any, written thereon.

 

If the comments made by the BUYER or the BUYER’S REPRESENTATIVES are not clearly specified or detailed, the SELLER shall seek the BUYER’s clarification in writing. Should the BUYER or the BUYER’S REPRESENTATIVES not answer such request within reasonable time (minimum being three working days) of the request then the SELLER should

 

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be entitled to place its own reasonable interpretation on the comments of the BUYER in implementing same.

 

In the event that the BUYER or the BUYER’S REPRESENTATIVES shall fail to give comments or return the plans and drawings to the SELLER within the time limit as herein provided, such plans and drawings shall be deemed have been automatically approved or confirmed without any comment.

 

3.              SUPERVISION AND INSPECTION BY THE BUYER’S REPRESENTATIVES

 

The necessary inspection of the VESSEL, its machinery, equipment and outfittings shall be carried out by the Classification Society, and/or inspection team of the SELLER throughout the entire period of construction in order to ensure that the construction of the VESSEL is duly performed in accordance with the Contract and Specifications.

 

The BUYER’S REPRESENTATIVES shall have, at all times until delivery of the VESSEL, the right to attend tests according to the mutually agreed test list and inspect the VESSEL, her engines, accessories and materials at the SELLER’s Shipyard, its subcontractors or any other place where work is done or materials stored in connection with the VESSEL. In the event that the BUYER’S REPRESENTATIVES discovers any construction or material or workmanship which does not or will not conform to the requirements of this Contract and the Specifications, the BUYER’S REPRESENTATIVES shall promptly give the SELLER a notice in writing as to such nonconformity, upon receipt of which the SELLER shall correct such nonconformity if the SELLER agrees with the BUYER. In any circumstances, the SELLER shall be entitled to proceed with the construction of the VESSEL even if there exists discrepancy in the opinion between the BUYER and the SELLER, without however prejudice to the BUYER’s right for submitting the issue for determination by the Classification Society or arbitration in accordance with the provisions hereof.  However the BUYER undertakes and assures the SELLER that the BUYER’S REPRESENTATIVES shall carry out his inspections and supervision in accordance with the agreed inspection procedure, SELLER’s working schedule and usual shipbuilding practice and in a way as to minimize any increase in building costs and delays in the construction of the VESSEL. Once an inspection and/or test has been witnessed and approved by the BUYER’S REPRESENTATIVES, the same inspection and/or test should not have to be repeated, provided it has been carried out in compliance with the requirements of the Classification Society and Specifications.

 

The SELLER agrees to furnish free of charge the BUYER’S REPRESENTATIVES with

 

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office space, and other reasonable facilities including air conditioning, internet connection and public toilets according to SELLER’s practice at the Shipyard. But the fees for the communication like telephone, telefax and internet, etc. shall be borne by the BUYER. At all times, during the construction of the VESSEL until delivery thereof, the BUYER’S REPRESENTATIVES shall be given free and ready access to the VESSEL, her engines and accessories, and to any other place where the work is being done, or the materials are being processed or stored, in connection with the construction of the VESSEL, including the yards, workshops, stores of the SELLER, and the premises of subcontractors of the SELLER, who are doing work, or storing materials in connection with the VESSEL’s construction. The travel expenses for the said access to SELLER’s subcontractors outside of Shanghai shall be at BUYER’s account. The transportation within Shanghai for BUYER’S REPRESENTATIVES to get access to the inspection and/or test shall be provided to the BUYER’S REPRESENTATIVES by the SELLER.

 

The BUYER undertakes to maintain sufficient number of the BUYER’S REPRESENTATIVES at the SELLER’s yard throughout the period of construction of the VESSEL so as to meet the SELLER’s requirements for inspection, survey and/or attendances of tests and/or trials. The BUYER will use best endeavours to ensure that BUYER’S REPRESENTATIVES perform any inspections, surveys and attendances at tests and/or trials in all circumstances, including where such inspections, surveys and test/trial attendances are required during the weekend (Saturday and Sunday) or any public holiday.

 

Should the BUYER’S REPRESENTATIVES fail to conduct any inspection or attend any test (after reasonably advance and written notice by the SELLER of the same, except in the case of re-inspection where oral notice shall be sufficient) due to whatever reason, the SELLER shall be entitled to carry out the construction and/or test without inspection and/or attendance of BUYER’S REPRESENTATIVES and such work so carried out shall be treated as approved by the BUYER’S REPRESENTATIVES.

 

The SELLER is responsible for providing that a safe working environment and proper access is provided to the works and/or areas of inspection.

 

The decision, approval or advice of the BUYER’S REPRESENTATIVES 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 SELLER. However, if the BUYER’S REPRESENTATIVES fail to submit to the SELLER without delay any demand concerning alterations or changes with respect to the building, arrangement or outfit of the VESSEL, her engines or accessories, or any other items or matters in connection herewith, which the BUYER’S REPRESENTATIVES have examined or inspected or attended at the tests thereof under this Contract or the Specifications, the BUYER’S REPRESENTATIVES shall be deemed to have approved the same and shall be precluded from making any demand for alterations, changes or other complaints with respect thereto at a later date.

 

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4.              LIABILITY OF THE SELLER

 

The BUYER’S REPRESENTATIVES engaged by the BUYER under this Contract shall at all times be deemed to be in the employ of the BUYER. The SELLER shall be under no liability whatsoever to the BUYER, or to the BUYER’S REPRESENTATIVES or the BUYER’s employees or agents for personal injuries, including death, during the time when they, or any of them, are on the VESSEL, or within the premises of either the SELLER or its subcontractors, or are otherwise engaged in and about the construction of the VESSEL, unless, however, such personal injuries, including death, were caused by gross negligence of the SELLER, or of any of the SELLER’s employees or agents or subcontractors of the SELLER. Nor shall the SELLER be under any liability whatsoever to the BUYER for damage to, or loss or destruction of property in China of the BUYER or of the BUYER’S REPRESENTATIVES or of the BUYER’s employees or agents, unless such damage, loss or destruction was caused by gross negligence of the SELLER, or of any of the employees, or agents or subcontractors of the SELLER. The BUYER’S REPRESENTATIVES or his assistants or employees shall observe the work’s rules and regulations prevailing at the SELLER’s and its subcontractor’s premises.

 

5.              SALARIES AND EXPENSES

 

All salaries and expenses of the BUYER’S REPRESENTATIVES, or any other employees employed by the BUYER under this Article, shall be for the BUYER’s account.

 

6.              REPLACEMENT OF BUYER’S REPRESENTATIVES

 

The SELLER has the right to request the BUYER in writing to replace any of the BUYER’S REPRESENTATIVES 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 SELLER’s yard, if necessary, and if the BUYER considers that such SELLER’s request is justified and reasonable, the BUYER shall effect the replacement as soon as conveniently arrangeable.

 

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ARTICLE V MODIFICATION,CHANGES AND EXTRAS

 

1.              HOW EFFECTED

 

The Specifications and Plans in accordance with which the VESSEL is constructed, may be modified and/or changed at any time hereafter by written agreement of the parties hereto, provided that such modifications and/or changes or an accumulation thereof will not, in the SELLER’s reasonable judgment, adversely affect the SELLER’s other commitments and provided further that the BUYER shall assent to adjustment of the Contract Price, time of delivery of the VESSEL and other terms of this Contract, if any, as hereinafter provided. Subject to the above, the SELLER hereby agree to exert their best efforts to accommodate such reasonable requests by the BUYER so that the said changes and/or modifications may be made at a reasonable cost and within the shortest period of time which is reasonable and possible. Any such agreement for modifications and/or changes shall include an agreement as to the increase or decrease, if any, in the Contract Price of the VESSEL together with an agreement as to any extension or reduction in the time of delivery, providing to the SELLER additional securities satisfactory to the SELLER (and an increased guarantee from Navig8 Crude Tankers Inc shall be deemed satisfactory security), or any other alterations in this Contract, or the Specifications occasioned by such modifications and/or changes. The aforementioned agreement to modify and/or to change the Specifications may be effected by an exchange of duly authenticated letters, or telefax, or e-mail, manifesting such agreement. The letters, telefaxes and emails exchanged by the parties hereto pursuant to the foregoing shall constitute an amendment of the Specifications under which the VESSEL shall be built, and such letters, emails and telefaxes shall be deemed to be incorporated into this Contract and the Specifications by reference and made a part hereof. Upon consummation of the agreement to modify and/or to change the Specifications, the SELLER shall alter the construction of the VESSEL in accordance therewith, including any additions to, or deductions from, the work to be performed in connection with such construction. If due to whatever reasons, the parties hereto shall fail to agree on the adjustment of the Contract Price or extension of time of delivery or providing additional security to the SELLER or modification of any terms of this Contract which are necessitated by such modifications and/or changes, then the SELLER shall have no obligation to comply with the BUYER’s request for any modification and/or changes.

 

The SELLER may make minor changes to the Specifications, if found necessary for introduction of improved production methods or otherwise, provided that the SELLER shall first obtain the BUYER’s written approval which shall not be unreasonably withheld. Any costs associated with such minor changes shall not affect the Contract Price nor the Delivery Date unless mutually agreed.

 

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2.              CHANGES IN RULES AND REGULATIONS, ETC.

 

(1)         If, after the date of signing of this Contract, any requirements as to the rules and regulations as specified in this Contract and the Specifications 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 SELLER and/or the BUYER, upon receipt of the notice thereof, shall transmit such information in full to each other in writing, whereupon within twenty- one (21) days after receipt of the said notice by the BUYER from the SELLER or vice versa, the BUYER shall instruct the SELLER in writing as to the alterations or changes, if any, to be made in the VESSEL which the BUYER, in its sole discretion, shall decide. The SELLER shall promptly comply with such alterations or changes, if any in the construction of the VESSEL, provided that the BUYER shall first agree:

 

(a)         As to any increase or decrease in the Contract Price of the VESSEL that is occasioned by the cost for such compliance; and/or

 

(b)         As to any extension in the time for delivery of the VESSEL that is necessary due to such compliance; and/or

 

(c)          As to any increase or decrease in the guaranteed deadweight and speed of the VESSEL, if such compliance results in increased or reduced deadweight and speed; and/or

 

(d)         As to any other alterations in the terms of this Contract or of Specifications or both, if such compliance makes such alterations of the terms necessary.

 

(e)          If the price is to be increased, then, in addition, as to providing to the SELLER additional securities satisfactory to the SELLER and which shall be satisfied by the provision of an increased guarantee from Navig8 Crude Tankers Inc.

 

Agreement as to such alterations or changes under this Paragraph shall be made in the same manner as provided above for modifications and/or changes of the Specifications and/or Plans.

 

(2)         If, due to whatever reasons, the parties shall fail to agree on the adjustment of the Contract Price or extension of the time for delivery or increase or decrease of the guaranteed speed and deadweight or providing additional security to the SELLER or any alternation of the terms of this Contract, if any, then, the SELLER shall be entitled to proceed with the construction of the VESSEL in accordance with, and the BUYER shall continue to be bound by, the terms of this Contract and Specifications without making any such alterations or changes.

 

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If the alterations or changes are compulsorily required to be made by Class or IMO rules, then, notwithstanding any dispute between the parties relating to the adjustment of the Contract Price or extension of the time for delivery or decrease of the guaranteed speed and deadweight or increase fuel oil consumption or any other respect, the SELLER shall promptly comply with such alterations or changes first. The BUYER shall, in any event, bear the costs and expenses for such alterations or changes (with, in the absence of mutual agreement, the amount thereof and/or any other discrepancy such as but not limited to the extension of Delivery Date, etc. to be determined by arbitration in accordance with Article XIII of this Contract).

 

3.              SUBSTITUTION OF MATERIALS AND/OR EQUIPMENT

 

In the event any of the materials and/or equipment required by the Specifications or otherwise under this Contract for the construction of the VESSEL cannot be procured in time to effect delivery of the VESSEL, the SELLER may, provided the SELLER shall provide adequate evidence and the BUYER so agrees in writing, supply other materials and/or equipment of the equivalent quality, capable of meeting the requirements of the Classification Society and of the rules, regulations, requirements and recommendations with which the construction of the VESSEL must comply.

 

4.              BUYER’S SUPPLIED ITEMS

 

The BUYER shall deliver to the SELLER at its shipyard the items as specified in the Specifications which the BUYER shall supply on BUYER’S account (the “BUYER’s Supplied Items”) by the time designated by the SELLER. SELLER will give reasonable advance notice to BUYER in order to allow BUYER to get these items in the shipyard for the time they are required.

 

Should the BUYER fail to deliver to the SELLER such BUYER’s Supplied Items within the time specified, the delivery of the VESSEL shall automatically be extended for a period of such delay, provided such delay in delivery of the BUYER’s Supplied Items shall affect the delivery of the VESSEL. In such event, the BUYER shall pay to the SELLER all losses and damages sustained by the SELLER due to such delay in the delivery of the BUYER’s Supplied Items and such payment shall be made upon delivery of the VESSEL.

 

Furthermore, if the delay in delivery of the BUYER’s Supplied Items should exceed twenty (20) days, the SELLER shall be entitled to proceed with construction of the VESSEL without installation of such items in or onto the VESSEL, without prejudice to the SELLER’s right hereinabove provided, and the BUYER shall accept the VESSEL so completed.

 

The SELLER shall be responsible for proper storage and handling with reasonable

 

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care of the BUYER’s Supplied Items as specified in the Specifications after delivery to the SELLER and shall procure that at all times the BUYER’s supplies are identified as being the property of the BUYER. The SELLER shall install BUYER’s Supplied Items on board the VESSEL at the SELLER’s expenses. In order to facilitate installation by the SELLER of the BUYER’S Supplied Items in or on the VESSEL, the BUYER shall furnish the SELLER with the necessary specifications, plans, drawings, instruction books, manuals, test reports and certificates required by the rules and regulations of the Specifications. If so requested by the SELLER, the BUYER shall, without any charge to the SELLER, cause the representatives of the manufacturers of the BUYER’s Supplied Items to assist the SELLER in installation thereof in or on the VESSEL and/or to carry out installation thereof by themselves or to make necessary adjustments at the SELLER’s Shipyard.

 

Upon arrival of such shipment of the BUYER’s Supplied Items, both parties shall undertake a joint unpacking inspection. If any damages are found to be not suitable for installation, the SELLER shall be entitled to refuse to accept such BUYER’s Supplied Items.

 

The SELLER shall not be responsible for the quality, performance or efficiency of any equipment supplied by the BUYER and is under no obligation with respect to the guarantee of such equipment against any defects caused by poor quality, performance or efficiency thereof.

 

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ARTICLE VI TRIALS

 

1.              NOTICE

 

(a)         The SELLER shall give NOTICE to the BUYER and BUYER’s Representative in writing at least fifteen (15) days’ notice in advance and seven (7) days definite notice in advance in writing or by telefax or e-mail, of the time and place of the VESSEL’s sea trial as described in the Specifications (hereinafter referred to as “the Trial Run”) and the BUYER and the BUYER’S REPRESENTATIVES shall promptly acknowledge receipt of such notice. The BUYER’S REPRESENTATIVES shall be on board the VESSEL to witness such Trial Run, and to check upon the performance of the VESSEL during the same. Failure to attend the trial run of the VESSEL by the BUYER’S REPRESENTATIVES shall have the effect to extend the date for delivery of the VESSEL by the period of delay caused by such failure to be present. However, if the Trial Run is delayed more than seven (7) days by reason of the failure of the BUYER’s representatives to be present after receipt of due notice as provided above, then in such event the non-attendance shall be deemed to be a waiver by the BUYER of its right to have its representative on board the VESSEL at the trial run, and the SELLER may conduct such Trial Run without the BUYER’S REPRESENTATIVES being present, and in such case the BUYER shall be obliged to accept the VESSEL on the basis of a certificate jointly signed by the SELLER and the Classification Society certifying that the VESSEL, after Trial Run subject to minor alterations and corrections as provided in this Article, if any, is found to conform to the Contract and Specifications. The SELLER hereby warrants that the necessary invitation letter for the BUYER’S REPRESENTATIVES to enter China will be issued in order on demand and without delay otherwise the Trial Run shall be postponed until after the BUYER’S REPRESENTATIVES have arrived at the SELLER’s Shipyard and any delays as a result thereof shall not count as a permissible delay under Article VIII thereof. However, should the nationalities and other personal particulars of the BUYER’S REPRESENTATIVES be not acceptable to the SELLER in accordance with its best understanding of the relevant rules, regulations and/or Laws of the People’s Republic of China then prevailing, then the BUYER shall, on the SELLER’s telefax or e-mail demand, effect replacement of all or any of them immediately. Otherwise the Delivery Date as stipulated in Article VII hereof shall be extended by the delays so caused by the BUYER.

 

(b)         In the event of unfavorable weather on the date specified for the Trial Run, the same shall take place on the first available day thereafter that the weather conditions permit. The parties hereto recognize that the weather conditions in Chinese 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 of the VESSEL, the weather should suddenly become unfavorable, as would have precluded the continuance of the Trial Run, the Trial Run of the VESSEL shall be discontinued and

 

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postponed until the first favorable day next following, unless the BUYER shall assent by telefax or e-mail and confirm in writing of its acceptance of the VESSEL on the basis of the Trial Run made prior to such sudden change in weather conditions. In the event that the Trial Run is postponed because of unfavorable weather conditions, such delay shall be regarded as a permissible delay, as specified in Article VIII hereof. For the purposes of this paragraph 1(b), unfavorable weather conditions shall be taken as (i) Beaufort Scale Force 6 and above or (ii) when the MSA (Maritime Safety Administration) does not permit the sea trial to proceed.

 

2.              HOW CONDUCTED

 

(a)         All expenses in connection with Trial Run of the VESSEL are to be for the account of the SELLER, who, during the Trial Run and when subjecting the VESSEL to Trial Run, is to provide, at its own expense, the necessary crew to comply with conditions of safe navigation. The Trial Run shall be conducted in the manner prescribed in the Specifications.

 

The course of Trial Run shall be determined by the SELLER and shall be conducted within the trial basin equipped with speed measuring facilities.

 

(b)         The SELLER shall provide the VESSEL with the required quantities of water and fuel oil with exception of lubrication oil, greases and hydraulic oil which shall be supplied by the BUYER for the conduct of the Trial Run or Trial Runs as prescribed in the Specifications. The fuel oil supplied by the SELLER, and lubricating oil, greases and hydraulic oil supplied by the BUYER shall be in accordance with the applicable engine specifications, and the cost of the quantities of water, fuel oil, lubricating oil, hydraulic oil and greases consumed during the Trial Run or Trial Runs shall be for the account of the SELLER.

 

3.              TRIAL LOAD DRAFT

 

In addition to the supplies provided by the BUYER in accordance with sub-paragraph (b) of the preceding Paragraph 2 hereof, the SELLER shall provide the VESSEL with the required quantity of fresh water and other stores necessary for the conduct of the Trial Run. The necessary ballast (fresh and sea 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 for the SELLER’s account.

 

4.              METHOD OF ACCEPTANCE OR REJECTION

 

(a)         Upon notification of the SELLER of the completion of the Trial Run of the VESSEL, the

 

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BUYER or the BUYER’S REPRESENTATIVES shall within six (6) days thereafter, notify the SELLER by telefax or e-mail of its acceptance of the VESSEL or of its rejection of the VESSEL together with the reasons therefor.

 

(b)         However, should the result of the Trial Run indicate that the VESSEL or any part thereof including its equipment does not conform to the requirements of this Contract and Specifications, then the SELLER shall investigate with the BUYER’S REPRESENTATIVES the cause of failure and the proper steps shall be taken to remedy the same and shall make whatever corrections and alterations and/or re-Trial Run or Runs as may be necessary without extra cost to the BUYER, and upon notification by the SELLER of completion of such alterations or corrections and/or re-trial or re-trials, the BUYER shall, within six (6) days thereafter, notify the SELLER by telefax or e-mail of its acceptance of its VESSEL or of the rejection of the VESSEL together with the reason therefor on the basis of the alterations and corrections and/or re-trial or re-trials by the SELLER.

 

(c)          In the event that the BUYER fails to notify the SELLER by telefax or e-mail of its acceptance or rejection of the VESSEL together with the reason therefor within six (6) Business Days period as provided for in the above sub- paragraphs (a) and (b), the BUYER shall be deemed to have accepted the VESSEL.

 

(d)         Any dispute arising among the parties hereto as to the result of any Trial Run or further tests or trials, as the case may be, of the VESSEL shall be solved by reference to arbitration as provided in Article XIII hereof.

 

(e)          Nothing herein shall preclude the BUYER from accepting the VESSEL with its qualifications and/or remarks following the Trial Run and/or further tests or trials as aforesaid.

 

5.              DISPOSITION OF SURPLUS CONSUMABLE STORES

 

Should any amount of fuel oil, fresh water, or other unbroached consumable stores furnished by the SELLER for the Trial Run or Trial Runs remain on board the VESSEL at the time of acceptance thereof by the BUYER, the BUYER agrees to buy the same from the SELLER at the actual invoiced price, and payment by the BUYER shall be effected as provided in Article II 3 (e) and 4 (e) of this Contract.

 

The BUYER shall supply lubricating oil, greases and hydraulic oil for the purpose of Trial Runs at its own expenses and the SELLER will reimburse for the amount of lubricating oil and hydraulic oil actually consumed for the said Trial Run or Trial Runs at the original price incurred by the BUYER and payment by the SELLER shall be effected as provided in Article II 3(e) and 4(e) of this Contract.

 

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6.              EFFECT OF ACCEPTANCE

 

The BUYER’s acceptance of the VESSEL by written or telefax, or e-mail notification sent to the SELLER, in accordance with the provisions set out above, 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 by the SELLER of the VESSEL, as hereinafter provided, if the SELLER complies with all other procedural requirements for delivery as hereinafter set forth.

 

The BUYER shall not be entitled to reject the VESSEL (at the time of delivery) by reason of any minor or insubstantial non-conformity, or deficiencies of minor importance, which do not in any way affect the safety or the operation of the VESSEL, its crew, passengers or cargo, provided that:

 

i)                 The SELLER shall for its own account remedy the deficiency and fulfill the requirements as soon as possible.

 

ii)              A list of such defect and non-conformities will be prepared by the parties immediately prior to the delivery of the VESSEL.

 

iii)           The SELLER shall pay BUYER upon delivery, the direct actual cost of rectification of minor deficiencies which in all events not exceeding the costs of a leading Chinese shipyard performing similar rectification of such deficiencies, if the rectification of such deficiencies affects the delivery schedule of the vessel. For the avoidance of doubt, the SELLER shall not be liable to the BUYER for the consequential and indirect costs (i.e. loss of time & loss of profit etc.).

 

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ARTICLE VII DELIVERY

 

1.              TIME AND PLACE

 

The VESSEL shall be delivered safely afloat by the SELLER to the BUYER at the SELLER’s Shipyard or at Shanghai Jiangnan Changxing Heavy Industry Co., Ltd., in accordance with the Specifications and with all Classification and Statutory Certificates and after completion of Trial Run (or, as the case may be, re-Trial or re-Trials) and acceptance by the BUYER in accordance with the provisions of Article VI hereof on or before March 31st, 2016 provided that, in the event of delays in the construction of the VESSEL or any performance required under this Contract due to causes which under the terms of the Contract permit extension or postponement of the time for delivery, the aforementioned time for delivery of the VESSEL shall be extended accordingly.

 

The aforementioned date or such later date to which delivery is extended pursuant to the terms of this Contract is hereinafter called the “Delivery Date”.

 

2.              WHEN AND HOW EFFECTED

 

Provided that the BUYER and the SELLER shall each have fulfilled all of their respective obligations as stipulated in this Contract, delivery of the VESSEL shall be effected forthwith by the concurrent delivery by each of the parties hereto, one to the other, of the 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 quadruplicate and executed by each of the parties hereto.

 

3.              DOCUMENTS TO BE DELIVERED TO THE BUYER

 

Upon acceptance of the VESSEL by the BUYER, the SELLER shall deliver to the BUYER the following documents (subject to the provision contained in Article VII hereof) which shall accompany the aforementioned Protocol of Delivery and Acceptance:

 

(a)         PROTOCOL OF TRIALS of the VESSEL made by the SELLER pursuant to the Specifications.

 

(b)         PROTOCOL OF INVENTORY of the equipment of the VESSEL including spare part and the like, all as specified in the Specifications, made by the SELLER.

 

(c)          PROTOCOL OF STORES OF CONSUMABLE NATURE made by the SELLER referred to under Paragraph 5 of Article VI hereof.

 

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(d)         FINISHED DRAWINGS AND PLANS pertaining to the VESSEL as stipulated in the Specifications, made by the SELLER.

 

(e)          PROTOCOL OF DEADWEIGHT AND INCLINING EXPERIMENT, made by the SELLER

 

(f)           ALL CERTIFICATES required to be furnished upon delivery of the VESSEL pursuant to the Specifications.

 

Certificates shall be issued by relevant Authorities or Classification Society. The VESSEL shall comply with the above rules and regulations which are in force at the time of signing this Contract. All the certificates shall be delivered in one (1) original to the VESSEL and two (2) copies to the BUYER.

 

If the full term certificate or certificates are unable to be issued at the time of delivery by the Classification Society or any third party other than the SELLER, then the provisional certificate or certificates as issued by The Classification Society or the third party other than the SELLER with the full term certificates to be furnished by the SELLER after delivery of the VESSEL and in any event before the expiry of the provisional certificates shall be acceptable to the BUYER.

 

(g)          DECLARATION OF WARRANTY issued by the SELLER that the VESSEL is delivered to the BUYER free and clear of any liens, charges, claims, mortgages, or other encumbrances upon the BUYER’s title thereto, and in particular, that the VESSEL is absolutely free of all burdens in the nature of imposts, taxes or charges imposed by the province or country of the port of delivery, as well as of all liabilities of the SELLER to its sub-contractors, employees and crews and/or all liabilities arising from the operation of the VESSEL in Trial Run or Trial Runs, or otherwise, prior to delivery.

 

(h)         COMMERCIAL INVOICE made by the SELLER.

 

(i)             BILL OF SALE made by the SELLER.

 

(j)            BUILDER’S Certificate made by the SELLER.

 

4.              TITLE AND RISK

 

Title to and risk of the VESSEL and her equipment (but excluding the BUYER’s supplies)  shall pass to the BUYER only upon delivery and acceptance thereof. As stated above, it being expressly understood that, until such delivery and acceptance is effected, title to the VESSEL, and her equipment, shall remain at all times with the SELLER and are at the entire risk of the SELLER.

 

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5.              REMOVAL OF VESSEL

 

The BUYER shall take possession of the VESSEL immediately upon delivery and acceptance thereof, and shall remove the VESSEL from the premises of the SELLER within seven (7) days after delivery and acceptance thereof is effected. If the BUYER shall not remove the VESSEL from the premises of the SELLER within the aforesaid seven (7) days, then, in such event, without prejudice to the SELLER’s right to require the BUYER to remove the VESSEL immediately at any time thereafter, the BUYER shall pay to the SELLER the reasonable mooring charge of the VESSEL.

 

6.              TENDER OF THE VESSEL

 

If the BUYER fails to take delivery of the VESSEL after completion thereof according to this Contract and the Specifications without justified reason, the SELLER shall have the right to tender the VESSEL for delivery after compliance with all procedural requirements as above provided.

 

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ARTICLE VIII DELAYS & EXTENSION OF TIME FOR DELIVERY

 

1.              CAUSE OF DELAY

 

If, at any time before actual delivery, either the construction of the VESSEL, or any performance required hereunder as a prerequisite of delivery of the VESSEL, is delayed due to war, blockade, revolution, insurrection, mobilization, civil commotions, riots, strikes, sabotage, lockouts, local temperature higher than Thirty Five (35) degree centigrade (but each day above 35 degree shall be counted as one half day each), Acts of God or the public enemy, terrorism, plague or other epidemics, quarantines, prolonged failure or restriction of electric current from an outside source, freight embargoes, if any, earthquakes, tidal waves, typhoons, hurricanes, storms or other causes beyond the control of the SELLER or of its sub-contractors or its key equipment suppliers (i.e. being the suppliers of the main engine, propeller and gearbox etc), as the case may be, or by force majeure of any description, whether of the nature indicated by the forgoing or not, or by destruction of the premises of the SELLER or works of the SELLER or its sub-contractors or its key equipment suppliers (i.e. being the suppliers of the main engine, propeller and gearbox etc) or of the VESSEL or any part thereof, by fire, flood, or other causes beyond the control of the SELLER or its sub-contractors or its key equipment suppliers (i.e. main engine, propeller, gearbox etc) as the case may be, or due to the bankruptcy of the equipment and/or material supplier or suppliers (i.e. main engine, propeller, gearbox etc), or due to the delay caused by acts of God causing significant shortage in the supply of parts essential to the construction of the VESSEL, then, in the event of delay due to the happening of any of the aforementioned contingencies, the SELLER shall not be liable for such delay and the time for delivery of the VESSEL under this Contract shall be extended without any reduction in the Contract Price for a period of time which shall not exceed the total accumulated time of all such delays, subject nevertheless to the BUYER’s right of cancellation under Paragraph 3 of this Article and subject however to all relevant provisions of this Contract which authorize and permit extension of the time of delivery of the VESSEL, provided however that:

 

(i)             the delay in respect of which the SELLER is claiming relief under this Article VIII.1 was not caused or contributed to by any intended act of the SELLER;

 

(ii)          the delay event impacts upon the Vessel’s construction schedule and completion; and

 

(iii)       the SELLER has taken reasonable steps to mitigate its effect upon the construction of the Vessel,

 

For the avoidance of doubt, where two delay events as described in this paragraph 1 occur simultaneously or overlap with each other, such delays caused by such events shall not be double-counted.

 

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2.              NOTICE OF DELAY

 

Within twenty (20) days from the date of the SELLER becomes aware of the commencement of any delay on account of which the SELLER claims that it is entitled under this Contract to an extension of the time for delivery of the VESSEL, the SELLER shall advise the BUYER by telefax or e-mail, of the date such delay commenced, and the reasons therefor and, if possible, its estimated duration of the probable delay in the delivery of the VESSEL, and shall supply the BUYER with evidence to support the delay claimed.

 

Likewise within twenty (20) days after such delay ends, the SELLER shall advise the BUYER in writing or by telefax or e-mail, of the date such delay ended, and also shall specify the maximum period of the time by which the SELLER claims the date for delivery of the VESSEL should be extended by reason of such delay. Failure of the BUYER to acknowledge the SELLER’s notification of any claim for extension of the Delivery Date 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.

 

Failure of the SELLER to give notice of any relevant delay event in excess of fifteen (15) days in accordance with this paragraph 2 shall be deemed a waiver of the SELLER’s right to postpone the DELIVERY DATE under this Article VIII in respect of such relevant delay event.

 

3.              RIGHT TO CANCEL FOR EXCESSIVE DELAY

 

If (a) the total accumulated time of all delays on account of the causes specified in Paragraph 1 of this Article aggregate to two hundred and twenty-five (225) days or more, or (b) if the total accumulated time of all delays on account of the causes specified in Paragraph 1 of the Article and non-permissible delays as described in Paragraph 1 of Article III aggregate to two hundred and fifty-five (255) days or more, in any circumstances, excluding delays due to arbitration as provided for in Article XIII.7 hereof or due to default in performance by the BUYER, or due to delays in delivery of the BUYER’s Supplied Items, and excluding delays due to causes which, under Article V, VI.1, XI and XII.2(b) hereof, permit extension or postponement of the time for delivery of the VESSEL , then in such event, the BUYER may in accordance with the provisions set out herein rescind or cancel this Contract by serving upon the SELLER telefaxed or e-mailed notice of cancellation which shall be confirmed in writing and the provisions of Article X of this Contract shall apply. The SELLER may, at any time, after the accumulated time of the aforementioned delays justifying cancellation by the BUYER as above provided for, demand in writing that the BUYER shall make an election, in which case the BUYER shall, within thirty (30) days after such demand is received by the BUYER either notify the SELLER of its intention to cancel, or consent to an extension of the time for delivery to an agreed future date, it being understood and agreed by the parties hereto that, if any further delay occurs on account of causes justifying cancellation as specified in

 

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this Contract, the BUYER shall have the same right of cancellation upon the same terms as hereinabove provided but in respect of the new agreed delivery date.

 

4.              DEFINITION OF PERMISSIBLE DELAY

 

Delays on account of such causes as provided for in Paragraph 1 of this Article excluding any other extensions of a nature which under the terms of this Contract permit postponement of the Delivery Date, shall be understood to be (and are herein referred to as) permissible delays, and are to be distinguished from non-permissible delays on account of which the Contract Price of the VESSEL is subject to adjustment as provided for in Article III hereof. Notwithstanding any other stipulations of this Contract, the Parties hereby agree that a default in performance of BUYER or any breach of this Contract by BUYER or reasons attributable to the BUYER or the events described under Article V, VI.1, XI and XII.2(b) of this Contract shall entitle the SELLER to extend the Delivery Date. Such extension of the Delivery Date shall be regarded as mutually agreed change of Delivery Date and shall be distinguished from Permissible Delay and non-permissible delays.

 

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ARTICLE IX WARRANTY OF QUALITY

 

1.              GUARANTEE OF MATERIAL AND WORKMANSHIP

 

The SELLER, for a period of twelve (12) months following delivery to the BUYER of the VESSEL, guarantees the VESSEL, her hull and machinery, her engine, and all parts and equipment thereof that are manufactured, furnished, supplied, or installed by the SELLER and/or its sub-contractors under this Contract including material, equipment (however excluding any parts for the VESSEL which have been supplied by the BUYER) against all defects which are due to defective materials, and/or poor workmanship.

 

Provided no additional cost occurs to the SELLER, the SELLER agrees that upon the expiry of this guarantee and upon request of the BUYER, it shall assign (to the extent to which it may validly do so) to the BUYER, all rights, title and interest that the SELLER may have in and to all guarantees or warranties given by the supplier (excluding the supplier of BUYER’s supplied item) of any of the appurtenances and materials used in the construction and/or operation of the VESSEL. The SELLER agrees to render to the BUYER reasonable assistance in making any claim or taking any action against any such supplier, which claim or action shall be made and/or taken at the BUYER’s sole expense. The BUYER shall meet all reasonable expenses incurred by the SELLER in rendering any assistance requested by the BUYER pursuant to this paragraph.

 

2.              NOTICE OF DEFECTS

 

The BUYER shall notify the SELLER in writing, or by telefax or e-mail, as promptly as possible, after discovery of any defect or deviations for which a claim is made under this guarantee. The BUYER’s written notice shall describe the nature of the defect and the extent of the damage caused thereby. The SELLER 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. Telefaxed or e-mailed advice with brief details explaining the nature of such defect and extent of damage within thirty (30) days after such expiry date and that a claim is forthcoming will be sufficient compliance with the requirements as to time.

 

3.              REMEDY OF DEFECTS

 

The SELLER shall remedy at its expense any defects, against which the VESSEL or any part of the equipment thereof is guaranteed under this Article by making all necessary repairs and/or replacement. Such repairs and/or replacement will be made by the SELLER. All parts

 

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and/or materials so repaired shall be guaranteed for a further period of six (6) months, but the total warranty period shall not exceed eighteen (18) months after delivery and acceptance of the VESSEL by the BUYER. In any case, the VESSEL shall be taken, at the BUYER’S cost and responsibility, to place elected, ready in all respects for such repairs or replacement.

 

However, if it is impractical to make the repair by the SELLER, and if forwarding by the SELLER of replacement parts, and materials cannot be accomplished without impairing or delaying the operation or working of the VESSEL, then, in any such event, the BUYER shall, cause the necessary repairs or replacements to be made elsewhere at the discretion of the BUYER provided that the BUYER shall first and in all events, will, as soon as possible, give the SELLER notice in writing, or by telefax or e-mail of the time and place such repairs will be made and, if the VESSEL is not thereby delayed, or her operation or working is not thereby delayed, or her operation or working is not thereby impaired, the SELLER shall have the right to verify by its own representative(s) or that of Classification Society the nature and extent of the defects complained of. The SELLER shall, in such cases, promptly advise the BUYER, by telefax or e-mail, after such examination has been completed, of its acceptance or rejection of the defects as ones that are subject to the guarantee herein provided.

 

In any circumstances as set out below, the SELLER shall immediately pay to the BUYER in United States Dollars by telegraphic transfer the actual cost for such repairs or replacements including forwarding charges, or, at the average cost for making similar repairs or replacements including forwarding charges as quoted by a leading shipyard each in China, South Korea and Singapore whichever is lower:

 

(a)         Upon the SELLER’s acceptance of the defects as justifying remedy under this Article, or

 

(b)         If the SELLER neither accepts nor rejects the defects as above provided, nor request arbitration within thirty (30) days after its receipt of the BUYER’s notice of defects.

 

Any dispute shall be referred to arbitration in accordance with the provisions of Article XIII hereof.

 

4.              EXTENT OF THE SELLER’S LIABILITY

 

The SELLER shall have no obligation and/or liabilities with respect to defects discovered after the expiration of the period of guarantee as specified in Paragraph 1 of this Article.

 

The SELLER shall be liable to the BUYER for defects and damages caused by any of the defects specified in Paragraph 1 of this Article provided that such liability of the SELLER shall be limited to damage occasioned within the guarantee period specified in Paragraph 1 above. The SELLER shall not be obligated to repair, or to be liable for, damages to the VESSEL, or to any part of the equipment thereof, due to ordinary wear and tear or caused by the defects other than those specified in Paragraph 1 above, nor shall there be any SELLER’s

 

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liability hereunder for defects in the VESSEL, or any part of the equipment thereof, caused by fire or accidents at sea or elsewhere, or mismanagement, accidents, negligence, or willful neglect, on the part of the BUYER, its employees or agents including the VESSEL’s officers, crew and passengers, or any persons on or doing work on the VESSEL other than the SELLER, its employees, agents or sub-contractors. Likewise, the SELLER shall not be liable for defects in the VESSEL, or the equipment or any part thereof, due to repairs or replacement which were made by those other than the SELLER and/or their sub-contractors or which have not been carried out in accordance with the procedures set out in this Article.

 

Upon delivery of the VESSEL to the BUYER, in accordance with the terms of the Contract, the SELLER shall thereby and thereupon be released of all responsibility and liability whatsoever and howsoever arising under or by virtue of this Contract (save in respect of those obligations to the BUYER expressly provided for in this Article IX) including without limitation, any responsibility or liability for defective workmanship, materials or equipment, design or in respect of any other defects whatsoever and any loss or damage resulting from any act, omission or default of the SELLER. The SELLER shall, in no circumstances, be liable for any consequential loss or special loss, or expenses arising from any cause whatsoever including, without limitation, loss of time, loss of profit or earnings or demurrage directly from any commitments of the BUYER in connection with the VESSEL.

 

The Guarantee provided in this Article and the obligations and the liabilities of the SELLER hereunder are exclusive and in lieu of and the BUYER hereby waives all other remedies, warranties, guarantees or liabilities, express or implied, arising by Law or otherwise (including without limitation any obligations of the SELLER with respect to fitness, merchantability and consequential damages) or whether or not occasioned by the SELLER’s negligence. This Guarantee shall not be extended, altered or varied except by a written instrument signed by the duly authorized representatives of the SELLER, and the BUYER.

 

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ARTICLE X CANCELLATION, REJECTION AND RESCISSION BY THE BUYER

 

1.              All payments made by the BUYER prior to the delivery of the VESSEL shall be in the nature of advance to the SELLER. In the event the BUYER shall exercise its right of cancellation and/or rescission of this Contract under and pursuant to any of the provisions of this Contract specifically permitting the BUYER to do so, then the BUYER shall notify the SELLER in writing or by telefax or e-mail, and such cancellation and/or rescission shall be effective as of the date the notice thereof is received by the SELLER.

 

For the avoidance of doubt, the events and/or occurrences which entitle the BUYER to rescind and cancel the Contract shall be limited to those occurrences or events specified in this Contract which specifically permits the BUYER to do so. No other event or circumstance shall give rise to any right to the BUYER for rescission or cancellation of the Contract whether under this Contract or under any applicable laws.

 

2.              Thereupon the SELLER shall refund in United States dollars immediately to the BUYER the full amount of all sums paid by the BUYER to the SELLER on account of the VESSEL, unless the SELLER disputes the BUYER’s cancellation and/or rescission by instituting arbitration in accordance with Article XIII. If the BUYER’s cancellation or rescission of this Contract is disputed by the SELLER by instituting arbitration as aforesaid, then no refund shall be made by the SELLER, and the BUYER shall not be entitled to demand repayment from the Refund Guarantor under its guarantee, until the arbitration award between the BUYER and the SELLER, which shall be in favour of the BUYER, declaring the BUYER’s cancellation and/or rescission justified, is made and delivered to the SELLER by the arbitration tribunal. In the event that the SELLER is obligated to make refundment, the SELLER shall pay the BUYER interest in United States Dollars at the rate of six percent (6%) per annum, if the cancellation or rescission of the Contract is exercised by the BUYER in accordance with the provision of Article III 1(c), 2(c), 3(c) or 4(c) hereof, on the amount required herein to be refunded to the BUYER computed from the respective dates when such sums were received by Industrial And Commercial Bank Of China Limited, Shanghai Municipal Branch or any such other bank account as nominated by the SELLER pursuant to Article II 4(a), 4(b), 4(c) or 4(d) from the BUYER to the date of remittance by telegraphic transfer of such refund to the BUYER by the SELLER, provided, however, that if the said rescission by the BUYER is made by reason of Paragraph 1 of Article VIII or Paragraph 2 (b) of Article XII, then in such event the SELLER shall not be required to pay any interest.

 

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.

 

If the SELLER is obligated by the terms of the Contract to refund to the BUYER the instalments paid by the BUYER to the SELLER as provided in this Paragraph, the BUYER’s supplied items shall be at BUYER’s disposal.

 

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3.                                      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.

 

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ARTICLE XI BUYER’S DEFAULT

 

1.              DEFINITION OF DEFAULT

 

The BUYER shall be deemed in default of its obligation under the Contract if any of the following events occurs:

 

(a)         The BUYER fails to pay the First or Second or Third or Fourth installment to the SELLER when any such installment becomes due and payable under the provisions of Article II hereof and provided the BUYER shall have received the SELLER’s demand for payment in accordance with Article II hereof; or

 

(b)         The BUYER fails to deliver to the SELLER an irrevocable and unconditional Letter of Guarantee under the provisions of Article II hereof; or

 

(c)          The BUYER fails to pay the fifth installment to the SELLER in accordance with Paragraph 3(e) and 4(e) of Article II hereof provided the BUYER shall have received the SELLER’s demand for payment in accordance with Article II hereof; or

 

(d)         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 VII hereof.

 

2.              NOTICE OF DEFAULT

 

If the BUYER is in default of payment or in performance of its obligations as provided hereinabove, the SELLER shall notify the BUYER to that effect by telefax or e-mail after the date of occurrence of the default as per Paragraph 1 of this Article and the BUYER shall forthwith acknowledge by telefax or E-mail to the SELLER that such notification has been received. In case the BUYER does not give the aforesaid telefax or E-mail acknowledgment to the SELLER within three (3) calendar days it shall be deemed that such notification has been duly received by the BUYER.

 

3.              INTEREST AND CHARGE

 

(a)         If the BUYER is in default of payment as to any installment as provided in Paragraph 1 (a) and/or 1 (c) of this Article, the BUYER shall pay interest on such installment at the rate of six percent (6%) per annum until the date of the payment of the full amount, including all aforesaid interest. In case the BUYER shall fail to take delivery of the VESSEL when required to as provided in Paragraph 1 (d) of this Article, the BUYER shall be deemed in default of payment of the fifth installment and shall pay interest thereon at the same rate as aforesaid from and including the day on which the

 

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VESSEL is tendered for delivery by the SELLER, as provided in Article VII hereof.

 

(b)         In any event of default by the BUYER under 1 (a) or 1 (b) or 1 (c) or 1 (d) above, the BUYER shall also pay all costs, charges and expenses incurred by the SELLER in consequence of such default.

 

4.              DEFAULT BEFORE DELIVERY OF THE VESSEL

 

(a)         If any default by the BUYER occurs as defined in Paragraph 1 (a) or 1 (b) or 1 (c) or 1 (d) of this Article, the Delivery Date shall be automatically postponed for a period of continuance of such default by the BUYER. In any event of default by the BUYER, the BUYER shall also pay all charges and expenses incurred by the SELLER in consequence of such default.

 

(b)         If any such default as defined in Paragraph 1 (a) or 1 (b) or 1 (c) or 1 (d) of this Article committed by the BUYER continues for a period of fifteen (15) days, then, the SELLER shall have all following rights and remedies:

 

(i)             The SELLER may, at its option, cancel or rescind this Contract, provided the SELLER has notified the BUYER of such default pursuant to Paragraph 2 of this Article, by giving notice of such effect to the BUYER by telefax or e-mail. Upon receipt by the BUYER of such telefax or e-mail notice of cancellation or rescission, all of the BUYER’s Supplies shall forthwith become the sole property of the SELLER, and the VESSEL and all its equipment and machinery shall be at the sole disposal of the SELLER for sale or otherwise; and

 

(ii)          In the event of such cancellation or rescission of this Contract, the SELLER shall be entitled to retain any instalment or instalments of the Contract Price paid by the BUYER to the SELLER on account of this Contract; and

 

(iii)       (Applicable to any BUYER’s default defined in 1(a) of this Article) The SELLER shall, without prejudice to the SELLER’s right to recover from the BUYER the 5th instalment, interest, costs and/or expenses by applying the proceeds to be obtained by sale of the VESSEL in accordance with the provisions set out in this Contract, have the right to declare all unpaid 1st, 2nd, 3rd and 4th instalments to be forthwith due and payable, and upon such declaration, the SELLER shall have the right to immediately demand the payment of the aggregate amount of all unpaid 1st, 2nd, 3rd, and 4th instalments from the Payment Guarantor in accordance with the terms and conditions of the Payment Guarantee issued by the Payment Guarantor.

 

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5.              SALE OF THE VESSEL

 

(a)         In the event of cancellation or rescission of this Contract as above provided, 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 occasioned to the BUYER thereby.

 

In the case of sale of the VESSEL, the SELLER shall give telefax, or E-mail, or written notice to the BUYER.

 

(b)         In the event of the sale of the VESSEL in its completed state, the proceeds of sale received by the SELLER shall be applied firstly to payment of all expenses attending such sale and otherwise incurred by the SELLER as a result of the BUYER’s default, and then to payment of all unpaid installments and/or unpaid balance of the Contract Price and interest on such installment at the interest rate as specified in the relevant provisions set out above from the respective due dates thereof to the date of application.

 

(c)          In the event of the sale of the VESSEL in its incomplete state, the proceeds of sale received by the SELLER shall be applied firstly to all expenses attending such sale and otherwise incurred by the SELLER as a result of the BUYER’s default, and then to payment of all costs of construction of the VESSEL (such costs of construction, as herein mentioned, shall include but are not limited to all costs of labour and/or prices paid or to be paid by the SELLER for the equipment and/or technical design and/or materials purchased or to be purchased, installed and/or to be installed on the VESSEL) and/or any fees, charges, expenses and/or royalties incurred and/or to be incurred for the VESSEL less the installments so retained by the SELLER, and compensation to the SELLER for a reasonable sum of loss of profit due to the cancellation or rescission of this Contract.

 

(d)         In either of the above events of sale, if the proceed of sale exceeds the total of the amounts to which such proceeds are to be applied as aforesaid, the SELLER shall promptly pay the excesses to the BUYER without interest, provided, however that the amount of each payment to the BUYER shall in no event exceed the total amount of installments already paid by the BUYER and the cost of the BUYER’s Supplied Items, if any.

 

(e)          If the proceed of sale are insufficient to pay such total amounts payable as aforesaid, the BUYER shall promptly pay the deficiency to the SELLER upon request.

 

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ARTICLE XII INSURANCE

 

1.              EXTENT OF INSURANCE COVERAGE

 

From the time of keel-laying of the first section of the VESSEL until the same is completed, delivered to and accepted by the BUYER, the SELLER shall, at its own cost and expense, keep the VESSEL and all machinery, materials, equipment, appurtenances and outfit, delivered to the SELLER for the VESSEL or built into, or installed in or upon the VESSEL, including the BUYER’s Supplied Items, fully insured with first class Chinese insurance companies for SELLER’s RISK.

 

The amount of such insurance coverage shall, up to the date of delivery of the VESSEL, be in an amount at least equal to, but not limited to, the aggregate of the payments made by the BUYER to the SELLER including the value of maximum amount of US$ 200,000.00 of the BUYER’s Supplied Items. The policy referred to hereinabove shall be taken out in the name of the SELLER and all losses under such policy shall be payable to the SELLER.

 

2.              APPLICATION OF RECOVERED AMOUNT

 

(a) Partial Loss:

 

In the event the VESSEL shall be damaged by any insured cause whatsoever prior to acceptance and delivery thereof by the BUYER and in the further event that such damage shall not constitute an actual or a constructive total loss of the VESSEL, the SELLER shall apply the amount recovered under the insurance policy referred to in Paragraph 1 of this Article to the repair of such damage satisfactory to the Classification Society and other institutions or authorities as described in the Specifications without additional expenses to the BUYER, and the BUYER shall accept the VESSEL under this Contract if completed in accordance with this Contract and Specifications and not make any claim for any consequential loss or depreciation.

 

(b) Total Loss:

 

However, in the event that the VESSEL is determined to be an actual or constructive total loss, the SELLER shall either:

 

(i)             By the mutual agreement between the parties hereto, proceed in accordance with terms of this Contract, in which case the amount recovered under said insurance policy shall be applied to the reconstruction and/or repair of the VESSEL’s damage and/or reinstallation of BUYER’s Supplied Items, provided the parties hereto shall have first agreed in writing as to such reasonable extension of the Delivery Date

 

40

 

and adjustment of other terms of this Contract including the Contract Price as may be necessary for the completion of such reconstruction; or

 

(ii)          If due to whatever reasons the parties fail to agree on the above, then the SELLER shall refund immediately to the BUYER the amount of all installments paid to the SELLER under this Contract without interest, whereupon this Contract shall be deemed to be canceled and all rights, duties, liabilities and obligations of each of the parties to the other shall terminate forthwith.

 

Within thirty (30) days after receiving telefax or e-mail notice of any damage to the VESSEL constituting an actual or a constructive total loss, the BUYER shall notify the SELLER in writing or by telefax or e-mail of its agreement or disagreement under this sub-paragraph. In the event the BUYER fails to so notify the SELLER, then such failure shall be construed as a disagreement on the part of the BUYER. This Contract shall be deemed as rescinded and canceled and Paragraph 2 (b) (ii) of this Article shall apply.

 

3.              TERMINATION OF THE SELLER’S OBLIGATION TO INSURE

 

The SELLER’s obligation to insure the VESSEL hereunder shall cease and terminate forthwith upon delivery thereof to and acceptance by the BUYER.

 

41

 

ARTICLE XIII DISPUTES AND ARBITRATION

 

1.              PROCEEDINGS

 

In the event of any dispute between the parties hereto as to any matter arising out of or relating to this Contract or any stipulation herein or with respect thereto which cannot be settled by the parties themselves, such dispute shall be resolved by arbitration in London England in accordance with the Laws of England. Any arbitration of disputes under this Contract shall be conducted in accordance with the London Maritime Arbitrators’ Association Terms. Either party may demand arbitration of any such disputes by giving written notice to the other party. Any demand for arbitration by either party hereto shall state the name of the arbitrator appointed by such party and shall also state specifically the question or questions as to which such party is demanding arbitration. Within twenty (20) days after receipt of notice of such demand for arbitration, the other party shall in turn appoint a second arbitrator. The two arbitrators thus appointed shall thereupon select a third arbitrator, and the three arbitrators so named shall constitute the board of arbitration (hereinafter called the “Arbitration Board”) for the settlement of such dispute.

 

In the event however, that said other party should fail to appoint a second arbitrator as aforesaid within twenty (20) days following receipt of notice of demand of arbitration, it is agreed that such party shall thereby be deemed to have accepted and appointed as its own arbitrator the one already appointed by the party demanding arbitration, and the arbitration shall proceed forthwith before this sole arbitrator, who alone, in such event, shall constitute the Arbitration Board. And in the further event that the two arbitrators appointed respectively by the parties hereto as aforesaid should be unable to reach agreement on the appointment of the third arbitrator within twenty (20) days from the date on which the second arbitrator is appointed, either party of the said two arbitrators may apply to the President for the time being of the London Maritime Arbitrators Association to appoint the third arbitrator. The award of the arbitration, made by the sole arbitrator or by the majority of the three arbitrators as the case may be, shall be final, conclusive and binding upon the parties hereto.

 

2.              ALTERNATIVE ARBITRATION BY AGREEMENT

 

Notwithstanding the preceding provisions of this Article, it is recognized that in the event of any dispute or difference of opinion arising in regard to the construction of the VESSEL, her machinery and equipment, or concerning the quality of materials or workmanship thereof or thereon, such dispute may be referred to the Classification Society upon mutual agreement of the parties hereto. In such case, the opinion of the Classification Society shall be final and binding on the parties hereto.

 

42

 

3.              NOTICE OF AWARD

 

Notice of any award shall immediately be given in writing or by telefax or e-mail to the SELLER and the BUYER.

 

4.              EXPENSES

 

The Arbitration Board shall determine which party shall bear the expenses of the arbitration or the proportion of such expenses which each party shall bear.

 

5.              AWARD OF ARBITRATION

 

Award of arbitration, shall be final and binding upon the parties concerned.

 

6.              ENTRY IN COURT

 

Judgment on any award may be entered in any court of competent jurisdiction.

 

7.              ALTERATION OF DELIVERY DATE

 

In the event of reference to arbitration of any dispute arising out of matters occurring prior to delivery of the VESSEL, the SELLER shall not be entitled to extend the Delivery Date as defined in Article VII hereof and the BUYER shall not be entitled to postpone its acceptance of the VESSEL on the Delivery Date or on such newly planned time of delivery of the VESSEL as declared by the SELLER. However, if the construction of the VESSEL is affected by any arbitration, the SELLER shall then be permitted to extend the Delivery Date as defined in Article VII and the decision or the award shall include a finding as to what extent the SELLER shall be permitted to extend the Delivery Date.

 

43

 

ARTICLE XIV RIGHT OF ASSIGNMENT

 

1.                                      ASSIGNMENT AND TRANSFER BY THE BUYER

 

The SELLER agrees that prior to delivery of the VESSEL, the Contract may, with the prior written approval/consent of the SELLER, which the SELLER shall not unreasonably withhold, be assigned or transferred to BUYER’s bank for financing purpose or to a 100% subsidiary of the BUYER.

 

For the avoidance of doubt, the BUYER’s rights to transfer or assign under this Paragraph 1 shall apply equally to any transferee or assignee of the BUYER’s rights and obligations under this Contract as defined in the above paragraph, but always subject to SELLER’s prior consent, which the SELLER shall not unreasonably withhold.

 

2.                                      ASSIGNMENT BY THE SELLER

 

SELLER shall have the right to assign this Contract to SELLER’s bank for financing purpose at any time after the effective date hereof, provided that prior written agreement is obtained from the BUYER, which the BUYER shall not unreasonably withhold.

 

44

 

ARTICLE XV TAXES AND DUTIES

 

1.              TAXES

 

The SELLER shall bear and pay all taxes, duties, stamps, dues levies and fees of whatsoever nature incurred or imposed in China in connection with the execution and/or performance of this Contract by the SELLER. Any taxes and/or duties imposed upon those items or services procured by the SELLER in the People’s Republic of China or elsewhere for the construction of the VESSEL shall be borne by the SELLER.

 

The BUYER shall be responsible for the personal income tax for any person it employs, including BUYER’S REPRESENTATIVES or other BUYER’s staff, agent and representatives who work at SELLER’s shipyard and premise.

 

2.              DUTIES

 

The BUYER shall bear and pay all taxes, duties, stamps and fees incurred outside China in connection with execution and/or performance of this Contract by the BUYER, except for taxes, duties, stamps, dues, levies and fees imposed upon those items which are to be procured by the SELLER for the construction of the VESSEL in accordance with the terms of this Contract and the Specifications..

 

Any tax or duty other than those described hereinabove, if any, shall be borne by the BUYER.

 

45

 

ARTICLE XVI PATENTS, TRADEMARKS AND COPYRIGHTS

 

The machinery and equipment of the VESSEL may bear the patent number, trademarks or trade names of the manufacturers. The SELLER shall defend and hold harmless the BUYER from patent liability or claims of patent infringement of any nature or kind, including costs and expenses for, or on account of any patented or patentable invention made or used in the performance of this Contract and also including cost and expense of litigation, if any.

 

Nothing contained herein shall be construed as transferring any patent or trademark rights or copyright in equipment covered by this Contract, and all such rights are hereby expressly reserved to the true and lawful owners thereof. Notwithstanding any provisions contained herein to the contrary, the SELLER’s obligation under this Article should not be terminated by the passage of any specified period of time.

 

The SELLER’s indemnity hereunder does not extend to equipment or parts supplied by the BUYER to the SELLER if any.

 

The SELLER retains all rights with respect to the Specification, and plans and working drawings, technical descriptions, calculations, test results and other data, information and documents concerning the design and construction of the VESSEL and the BUYER undertakes therefore not to disclose the same or divulge any information contained therein to any third parties, without the prior written consent of the SELLER, excepting where it is necessary for usual operation, repair and maintenance, sale or charter of the VESSEL or registration, classification insurance or sale of the VESSEL.

 

46

 

ARTICLE XVII NOTICE

 

Any and all notices and communications in connection with this Contract shall be addressed as follows:

 

To the BUYER :

 

NAVIG8 CRUDE TANKERS INC.

 

Address :                                              c/o Navig8 Asia Pte Ltd

3 Temasek Avenue

#25-01 Centennial Tower

Singapore 039190

 

Telefax No. :                         +44 207 467 5867

E-mail :                                                     legal@navig8group.com

 

To the SELLER : Shanghai Waigaoqiao Shipbuilding Co., Ltd.

 

Address : 3001 Zhouhai Road, Pudong New District, Shanghai 200137,

the People’s Republic of China

 

Telex No. : (021) 58480446

 

E-mail : swsbiz@chinasws.com

 

47

 

Any change of address shall be communicated in writing by registered mail or by e-mail by the party making such change to the other party and in the event of failure to give such notice of change, communications addressed to the party at their last known address shall be deemed sufficient.

 

Any and all notices, requests, demands, instructions, advice and communications in connection with this Contract shall be deemed to be given at, and shall become effective from, the time when the same is delivered to the address of the party to be served, provided, however, that registered airmail shall be deemed to be delivered ten (10) days after the date of dispatch, express courier service shall be deemed to be delivered five (5) days after the date of dispatch, and telefax or e-mail acknowledged by the answerbacks shall be deemed to be delivered upon dispatch. E-mail transmissions shall be deemed as delivered upon the subject email has been removed to the “Sent” box on the sending computer.

 

Any and all notices, communications, Specifications and drawings in connection with this Contract shall be written in the English language and each party hereto shall have no obligation to translate them into any other language.

 

48

 

ARTICLE XVIII EFFECTIVE DATE OF CONTRACT

 

This Contract shall become effective upon signing of this Contract

 

Upon signing of this Contract, both parties hereto shall do as follows:

 

(1)         Receipt by the BUYER of a Refund Guarantee in the form annexed hereto as Exhibit A issued by Refund Guarantor in accordance with Article II Paragraph 7 hereof.

 

(2)         Receipt by the SELLER of the first instalment in accordance with Paragraph 3(a) and 4(a) of Article II of this Contract; and

 

(3)         Receipt by the SELLER of a Letter of Guarantee in the form annexed hereto as Exhibit B issued by the Refund Guarantor in accordance with Article II Paragraph 6 hereof.]

 

49

 

ARTICLE XIX INTERPRETATION

 

1.              LAW APPLICABLE

 

The parties hereto agree that the validity and interpretation of this Contract and of each Article and part hereof be governed by and interpreted in accordance with the laws of England.

 

2.              DISCREPANCIES

 

All general language or requirements embodied in the Specifications are intended to amplify, explain and implement the requirements of this Contract. However, in the event that any language or requirements so embodied in the Specifications permit an interpretation inconsistent with any provision of this Contract, then in each and every such event the applicable provisions of this Contract shall govern. The Specifications and plans are also intended to explain each other, and anything shown on the plans and not stipulated in the Specifications or stipulated in the Specifications and not shown on the plans, shall be deemed and considered as if embodied in both. In the event of conflict between the Specifications and plans, the Specifications shall govern.

 

However, with regard to such inconsistency or contradiction between this Contract and the Specifications as may later occur by any change or changes in the Specifications agreed upon by and among the parties hereto after execution of this Contract, then such change or changes shall govern.

 

3.              DEFINITION

 

“Banking Day(s)” are days on which banks are open in Singapore, New York, U.S.A.

 

“Business Day(s)” are days on which banks are open in Singapore and P. R. China.

 

In absence of stipulation of “banking day(s)” or “Business Day(s)”, the “day” or “days” shall be taken as “calendar day” or “calendar days”.

 

4.              ENTIRE AGREEMENT

 

This Contract sets forth the entire understanding of the Parties with respect to the subject matter discussed herein.  It supersedes all prior discussions, negotiations and agreements, (including but not limited to the Letter of Intent / Option Agreement) whether oral or written, expressed or implied.

 

In WITNESS WHEREOF, the parties hereto have caused this Contract to be duly executed on

 

50

 

the day and year first above written.

 

 

	
THE BUYER :
    	
 
    
	
 
    	
 
    
	
NAVIG8 CRUDE TANKERS INC.
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
By :
    	
/s/ Rasmus Bach Nielsen
    	
 
    
	
 
    	
 
    
	
Name : Rasmus Bach Nielsen
    	
 
    
	
 
    	
 
    
	
Title :   Attorney-in-Fact
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
THE SELLER:
    	
 
    
	
 
    	
 
    
	
Shanghai Waigaoqiao Shipbuilding Co., Ltd.
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
By :
    	
/s/ Huang Yicheng
    	
 
    
	
 
    	
 
    
	
Name : Huang Yicheng
    	
 
    
	
 
    	
 
    
	
Title :   Attorney-in-Fact
    	
 
    

 

51

 

Exhibit “A”: IRREVOCABLE LETTER OF GUARANTEE NO.

 

To:                               

 

Date:

Dear Sirs,

Irrevocable Letter of Guarantee No.

 

At the request of Shanghai Waigaoqiao Shipbuilding Company Limited and in consideration of your agreeing to pay Shanghai Waigaoqiao Shipbuilding Company Limited (hereinafter called “the SELLER”) the instalments before delivery of the VESSEL under the Contract concluded by and amongst you, and the SELLER dated 21st March,2014for the construction of one (1) 300,000 Metric Tons Deadweight Crude Oil Tanker to be designated as Hull No. H1385 (hereinafter called “the Contract”), we, the undersigned, do hereby guarantee irrevocably, as primary obligor, repayment to you by the SELLER of an amount up to but not exceeding a total amount of United States Dollars Thirty Nine Million Four Hundred and Eighty One Thousand Two Hundred Only (US$ 39,481,200.00) (plus the interest described below) representing the first instalment of the Contract Price of the VESSEL, United States Dollars Nine Million Nine Million Eight Hundred and Seventy Thousand Three Hundred Only (US$9,870,300.00), the second instalment of the Contract Price of the VESSEL, United States Dollars Nine Million Eight Hundred and Seventy Thousand Three Hundred Only (US$9,870,300.00), the third instalment of the Contract Price of the VESSEL, United States Dollars Nine Million Eight Hundred and Seventy Thousand Three Hundred Only (US$9,870,300.00) and the fourth instalment of the Contract Price of the VESSEL, United States Dollars Nine Million Nine Million Eight Hundred and Seventy Thousand Three Hundred Only (US$9,870,300.00), as you may have paid to the SELLER under the Contract prior to the delivery of the VESSEL, if and when the same or any part thereof becomes repayable to you from the SELLER in accordance with the terms (Article X or Article XII 2(b)) of the Contract. Should the SELLER fail to make such repayment, we shall pay you the amount the SELLER ought to pay with an interest at the rate of six percent (6%) per annum if the cancellation of the Contract is exercised by you in accordance with the provisions of Article III 1(c), 2(c), 3(c) or 4(c) of the Contract or at the rate of zero percent (0%) per annum if cancellation of the Contract is exercised by you by reason of paragraph 1 of Article VIII or paragraph 2(b) of Article XII, in both cases calculated from the date the installments were received by the SELLER to the date of remittance of such refund within thirty (30) Business Days after our receipt of the relevant written demand from you for repayment. Any written demand to us shall be accepted by us as conclusive evidence that the amount claimed is due under this guarantee, provided that such demand: (1) is signed by authorized representative of you and accompanied by a power of attorney granted by you providing the relevant authorized representative with authority to make the demand; (2) states that the principal amount and interest thereon if any demanded by you has been demanded by you from the SELLER and was not paid by the SELLER within forty-five (45) days after that demand upon the SELLER; and (3) is accompanied by a copy of your said demand upon the SELLER.

 

52

 

It is hereby understood that payment of any interest provided herein is by way of liquidated damages due to cancellation of the CONTRACT.

 

However, in the event of any dispute between you and the SELLER in relation to:

 

(1) whether the SELLER shall be liable to repay the instalment or instalments paid by you and

 

(2) consequently whether you shall have the right to demand payment from us,

 

and such dispute is submitted either by the SELLER or by you for arbitration in accordance with Article XIII of the Contract, we shall be entitled to withhold and defer payment until the arbitration award is published. We shall not be obligated to make any payment to you unless the arbitration award orders the SELLER to make repayment. If the SELLER fails to honour the award within 45 days of the final award being issued then we shall refund to you against your further written demand accompanied with a certified copy of the arbitration award which orders the SELLER to make repayment, to the extent the arbitration award orders but not exceeding the aggregate amount of this guarantee plus the interest described above.

 

The undersigned hereby certifies, represents and warrants that all acts, conditions and things required to be done and performed and to have occurred prior to the creation and issuance of this guarantee, and to ensure that this guarantee constitutes valid and legally binding obligations 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 said repayment shall be made by us in United States Dollars. This Letter of Guarantee shall become effective from the time of the actual receipt of the first instalment by the SELLER from you and the amounts effective under this Letter of Guarantee shall correspond to the total payment actually received by the SELLER from time to time under the Contract prior to the delivery of the VESSEL. However, the available amount under this Letter of Guarantee shall in no event exceed above mentioned amount actually received by the SELLER, together with interest calculated, as described above at six percent (6%) or, zero percent (0%) per annum, as the case may be for the period commencing with the date of receipt by the SELLER of the respective instalment to the date of repayments thereof.

 

This Letter of Guarantee shall remain in force until the VESSEL has been delivered to and accepted by you or refund has been made by the SELLER or ourselves, or until February 9th, 2017, whichever occurs earlier, after which you are to return it to us by airmail for cancellation. Upon its expiration, this guarantee shall become null and void, any action of maintaining the original of this guarantee and its amendment(s) shall give no right to you for lodging any more claim hereunder.

 

However in the event that a dispute in respect of a refund is being referred to arbitration in accordance with Article XIII of the Contract, then this Letter of Guarantee shall continue to

 

53

 

remain in force until 60 days after such arbitration proceedings are concluded and a final arbitration award has been issued.

 

Any claim under this guarantee must be received by us before its expiration.

 

It is agreed that this Letter of Guarantee may, with our prior written approval and such approval shall not be unreasonably withheld, be assigned by you (excluding, in respect of a first class international bank, the right of demanding payment which shall in all respect remain with yourself) to a first class international bank that is financing the whole or part of your purchase of the VESSEL or one of your 100% subsidiaries or affiliates.

 

This Letter of Guarantee shall be construed, interpreted and governed by the Laws of England and any dispute arising out of or in connection with this Letter of Guarantee shall be submitted to the exclusive jurisdiction of the courts of England.

 

For the Refund Guarantor

 

54

 

Exhibit “B” IRREVOCABLE LETTER OF GUARANTEE

FOR THE 2ND, 3RD, AND 4TH INSTALLMENTS

 

Date:                     

 

	
To:
    	
Shanghai   Waigaoqiao Shipbuilding Co., Ltd.,
    
	
 
    	
3001   Zhouhai Road, Pudong New District,
    
	
 
    	
Shanghai   200137, the People’s Republic of China
    

 

Dear Sirs,

 

(1)                     In consideration of your entering into a shipbuilding contract dated 21st March,2014   (“the Shipbuilding Contract”) with NAVIG8 CRUDE TANKERS INC. or its Nominee as the buyer (“the BUYER”) for the construction of one (1) 300,000 Metric Tons Deadweight Crude Oil Tanker known as Shanghai Waigaoqiao Shipbuilding Co., Ltd.’s Hull No. H1385 (“the VESSEL”), we, NAVIG8 CRUDE TANKERS INC., hereby IRREVOCABLY, ABSOLUTELY and UNCONDITIONALLY guarantee, as the primary obligor and not merely as the surety, the due and punctual payment by the BUYER of each and all of the 2nd, 3rd, and 4th installments of the Contract Price amounting to a total sum of United States Dollars Twenty Nine Million Six Hundred and Ten Thousand Nine Hundred only (US$ 29,610,900.00) as specified in (2) below.

 

(2)                     The instalments guaranteed hereunder, pursuant to the terms of the Shipbuilding Contract, comprise the 2nd installment in the amount of U.S. Dollars Nine Million Eight Hundred and Seventy Thousand Three Hundred Only (US$9,870,300.00)payable by the BUYER within three (3) Singapore and New York business days after cutting of the first steel plate in your SELLER’s workshop, the third installment in the amount of U.S. Dollars Nine Million Eight Hundred and Seventy Thousand Three Hundred Only (US$9,870,300.00) payable by the BUYER within three (3) Singapore and New York business days after keel-laying of the first section of the VESSEL, and the 4th installment in the amount U.S. Dollars Nine Million Eight Hundred and Seventy Thousand Three Hundred Only (US$9,870,300.00) payable by the BUYER within three (3) Singapore and New York business days after launching of the VESSEL.

 

(3)                     We also IRREVOCABLY, ABSOLUTELY and UNCONDITIONALLY guarantee, as primary obligor and not merely as surety, the due and punctual payment by the BUYER of interest on each Instalment guaranteed hereunder at the rate of six percent (6%) per annum from and including the first day after the date of instalment in default until the date of full payment by us of such amount guaranteed hereunder.

 

55

 

(4)                     In the event that the BUYER fails to punctually pay any Instalment guaranteed hereunder or the BUYER fails to pay any interest thereon, and any such default continues for a period of fifteen (15) days, then, upon receipt by us of your first written demand, we shall immediately pay to you or your assignee all unpaid 2nd, 3rd and 4th instalments, together with the interest as specified in paragraph (3) hereof, without requesting you to take any or further action, procedure or step against the BUYER or with respect to any other security which you may hold.

 

(5)                     We hereby agree that at your option this Guarantee and the undertaking hereunder shall be assignable to and if so assigned shall inure to the benefit of any 3rd party designated by you or Industrial And Commercial Bank Of China Limited, Shanghai Municipal Branch , as your assignee as if any such third party or Industrial And Commercial Bank Of China Limited, Shanghai Municipal Branch were originally named herein.

 

(6)                     Any payment by us under this Guarantee shall be made in the Unites States Dollars by telegraphic transfer to Industrial And Commercial Bank Of China Limited, Shanghai Municipal Branch, 9 Pudong Avenue,Shanghai, China for credit to Account No.1001190709148073602 of Industrial And Commercial Bank Of China Limited, Shanghai Municipal Branch (Swift: ICBKCNBJSHI), as receiving bank nominated by you for credit to the account of you with Industrial And Commercial Bank Of China Limited, Shanghai Municipal Branch, 9 Pudong Avenue,Shanghai, China for credit to Account No.1001190709148073602 of Industrial And Commercial Bank Of China Limited, Shanghai Municipal Branch (Swift: ICBKCNBJSHI) or through other receiving bank to be nominated by you from time to time, in favour of you or your assignee.

 

(7)                     Our obligations under this guarantee shall not be affected or prejudiced by any dispute between you as the SELLER and the BUYER under the Shipbuilding Contract or by the SELLER’s delay in the construction and/or delivery of the VESSEL due to whatever causes or by any variation or extension of their terms thereof or by any security or other indemnity now or hereafter held by you in respect thereof, or by any time or indulgence granted by you or any other person in connection therewith, or by any invalidity or unenforceability of the terms thereof, or by any act, omission, fact or circumstances whatsoever, which could or might, but for the foregoing, diminish in any way our obligations under this Guarantee.

 

(8)                     Any claim or demand shall be in writing signed by one of your officers and may be served on us either by hand or by post and if sent by post to                                                                                    (or such other address as we may

 

56

 

notify to you in writing), or by email (email:                         ) via Industrial And Commercial Bank Of China Limited , with confirmation in writing.

 

(9)                     This Letter of Guarantee shall come into full force and effect upon delivery to you of this Guarantee and shall continue in force and effect until the VESSEL is delivered to and accepted by the BUYER and the BUYER shall have performed all its obligations for taking delivery thereof or until the full payment of all 2nd, 3rd, and 4th Instalments together with the aforesaid interests by the BUYER or us, whichever first occurs.

 

(10)              The maximum amount, however, that we are obliged to pay to you under this Guarantee shall not exceed the aggregate amount of U.S. Dollars Twenty Nine Million Nine Hundred and Seven Thousand and Nine only (US$29,907,009.00) being an amount equal to the sum of:-

 

(a)           All the 2nd, 3rd and 4th instalments guaranteed hereunder in the total amount of United States Dollars Twenty Nine Million Six Hundred and Ten Thousand Nine Hundred only (US$ 29,610,900.00); and

 

(b)           Interest at the rate of six percent (6%) per annum on the Instalment for a period of sixty (60) days in the amount of United States Dollars Two Hundred Ninety Six Thousand and One Hundred and Nine only (US$ 296,109.00).

 

(11)                All payments by us under this Guarantee shall be made without any set-off or counterclaim and without deduction or withholding for or on account of any taxes, duties, or charges whatsoever unless we are compelled by law to deduct or withhold the same. In the latter event we shall make the minimum deduction or withholding permitted and will pay such additional amounts as may be necessary in order that the net amount received by you after such deductions or withholdings shall equal the amount which would have been received had no such deduction or withholding been required to be made.

 

(12)                    This Letter of Guarantee shall be construed in accordance with and governed by the Laws of England. We hereby submit to the non-exclusive jurisdiction of the English courts for the purposes of any legal action or proceedings in connection herewith in England.

 

(13)                    When this Letter of Guarantee shall have expired as aforesaid, you will return the same to us without any request or demand from us.

 

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IN WITNESS WHEREOF, we have caused this Letter of Guarantee to be executed and delivered by our duly authorized representative the day and year above written.

 

Very Truly Yours

 

By: NAVIG8 CRUDE TANKERS INC.

 

58Exhibit 10.85

 

SHIPBUILDING CONTRACT

 

FOR

 

THE CONSTRUCTION OF

 

300,000 DWT CLASS CRUDE OIL CARRIER

 

HULL NO. 2794

 

BETWEEN

 

NAVIG8 CRUDE TANKERS INC

 

(AS BUYER)

 

AND

 

HYUNDAI  HEAVY INDUSTRIES CO., LTD.

 

(AS BUILDER)

 

 

I  N  D  E  X

 

	
 
    	
 
    	
 
    	
PAGE
    
	
 
    	
 
    	
 
    	
 
    
	
PREAMBLE
    	
 
    	
 
    	
3
    
	
 
    	
 
    	
 
    	
 
    
	
ARTICLE
    	
I
    	
: DESCRIPTION AND CLASS
    	
4
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
II
    	
: CONTRACT PRICE
    	
8
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
III
    	
: ADJUSTMENT OF THE CONTRACT PRICE
    	
9
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
IV
    	
: INSPECTION AND APPROVAL
    	
12
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
V
    	
: MODIFICATIONS, CHANGES AND EXTRAS
    	
18
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
VI
    	
: TRIALS AND COMPLETION
    	
21
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
VII
    	
: DELIVERY
    	
25
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
VIII
    	
:DELAYS AND EXTENSIONS OF TIME (FORCE MAJEURE)
    	
29
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
IX
    	
: WARRANTY OF QUALITY
    	
32
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
X
    	
: PAYMENT
    	
35
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
XI
    	
: BUYER’S DEFAULT
    	
41
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
XII
    	
: BUYER’S SUPPLIES
    	
45
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
XIII
    	
: ARBITRATION
    	
48
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
XIV
    	
: SUCCESSORS AND ASSIGNS
    	
50
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
XV
    	
: TAXES AND DUTIES
    	
51
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
XVI
    	
: PATENTS, TRADEMARKS AND COPYRIGHTS
    	
52
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
XVII
    	
: COMPLIANCE   AND ANTI-BRIBERY
    	
53
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
XVIII
    	
: INTERPRETATION AND GOVERNING LAW
    	
54
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
XIX
    	
: NOTICE
    	
55
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
XX
    	
: EFFECTIVENESS OF THIS CONTRACT
    	
56
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
XXI
    	
: EXCLUSIVENESS
    	
57
    
	
 
    	
 
    	
 
    	
 
    
	
EXHIBIT “A”  LETTER   OF GUARANTEE
    	
59
    

 

2

 

THIS CONTRACT, made on this 24th day of March, 2014 by and between NAVIG8 CRUDE TANKERS INC, a corporation incorporated and existing under the laws of Marshall Islands, having its registered office at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH 96960 (hereinafter called the “BUYER”), the party of the first part and HYUNDAI  HEAVY INDUSTRIES CO., LTD. a company organized and existing under the laws of the Republic of Korea, having its principal office 1,000 Bangeojinshunhwan-doro, Dong-Gu, Ulsan, Korea, Korea (hereinafter called the “BUILDER”), the party of the second part,

 

W I T N E S S E T H :

 

In consideration of the mutual covenants contained herein, the BUILDER agrees to design, build, launch, equip and complete one (1) 300,000 DWT Class Crude Oil Carrier as described in Article I hereof (hereinafter called the “VESSEL”) at the BUILDER’s shipyard in Korea (hereinafter called the “SHIPYARD”) in accordance with the BUILDER’s shipbuilding practice for Crude Oil Carrier, as the BUILDER has been performing for its other clients and in accordance with HSQM (Hyundai  Shipbuilding Quality Manual) 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)

 

3

 

ARTICLE I: DESCRIPTION AND CLASS

 

1.     DESCRIPTION

 

The VESSEL shall have the BUILDER’s Hull No. 2794 and shall be designed, constructed, equipped and completed in accordance with the specifications (No. CONV300-FS-P1, dated 10th December 2013) and the general arrangement plan (No. 1G7000201, dated 10th December 2013) 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.

 

The SPECIFICATIONS and the PLAN are intended to explain each other and anything shown on the PLAN and not stipulated in the SPECIFICATIONS 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.

 

2.     BASIC DIMENSIONS AND PRINCIPAL PARTICULARS OF THE VESSEL

 

(a)   The basic dimensions and principal particulars of the VESSEL shall be:

 

	
Length, overall
    	
abt.
    	
333 m
    
	
Length, between   perpendiculars
    	
abt.
    	
322 m
    
	
Breadth, moulded
    	
abt.
    	
60 m
    
	
Depth, moulded
    	
abt.
    	
29.4 m
    
	
Design draught,   moulded
    	
abt.
    	
20.5 m
    
	
Scantling draught,   moulded
    	
abt.
    	
21.6 m
    

 

	
Main Engine
    	
:
    	
HYUNDAI -   B&W 7G80ME-C9.2
    
	
 
    	
 
    	
Nominal   Rating: 32,970 kW x 72 RPM
    
	
 
    	
 
    	
MCR: 24,400   kW x 66 RPM
    
	
 
    	
 
    	
NCR: 17,080   kW x 58.6 RPM
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Main engine   to be part load optimized
    
	
 
    	
 
    	
 
    
	
Deadweight,   guaranteed 
    	
:
    	
299,969   metric tons at the Scantling draught of 21.6 meters on even keel in sea water   of specific gravity of 1.025.
    

 

4

 

	
Speed,   guaranteed
    	
:
    	
14.8 knots   at the design draught of 20.5 meters at the condition of clean bottom and in   calm and deep sea with main engine output of 17,080 kW with 15% sea margin.
    
	
 
    	
 
    	
 
    
	
Fuel   Consumption, guaranteed 
    	
:
    	
161.7   grams/kW-hour using marine diesel oil having lower calorific value of 42,700   kj/kg at MCR 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 written approval of the BUYER which the BUYER shall not withhold unreasonably, and all subject to the other relevant provisions of this CONTRACT.

 

3.     CLASSIFICATION, RULES AND REGULATIONS

 

(a)         The VESSEL, including its machinery, equipment and outfitting shall be designed, equipped and constructed in accordance with the BUILDER’s HSQM (Hyundai  Shipbuilding Quality Manual) and shipbuilding practices.

 

The VESSEL shall be built in compliance with the rules (editions and amendments thereto being in force at the date of signing this CONTRACT) of Korean Register of Shipping (hereinafter called the “CLASSIFICATION SOCIETY”), classed and registered with the symbol of +KRS1-Oil Tanker (Double Hull) ‘ESP’, (FBC), (CSR), Crude, VEC-2, IGS, COW, IWS, IBWM, LI, +KRM1-UMA, STCM, PSPC, IAFS, IOPP, ISPP, IGPP, IAPP, IIHM, IEE, EQ-SPM, ERS, CHA.

 

The VESSEL shall be built in compliance with the standards provided in the SPECIFICATIONS and with the Rules and Regulations as mentioned in the SPECIFICATIONS which are in force at the date of signing the SPECIFICATIONS (for reference, the published LR’s “Future IMO Legislation, Aug 2013” to be used).

 

EEDI verification to be performed by the BUILDER during sea trials and confirmed by the CLASSIFICATION SOCIETY.

 

5

 

 

(b)         The BUILDER shall arrange with the CLASSIFICATION SOCIETY for the assignment by the CLASSIFICATION SOCIETY of representative(s) to the VESSEL during each stage of construction. All fees and charges incidental to classification of the VESSEL as well as in compliance with the above specified rules, regulations and requirements of this CONTRACT shall be for the account of the BUILDER.

 

All major plans, materials and workmanship used in the construction of the VESSEL shall be subject to inspection and test by the CLASSIFICATION SOCIETY in accordance with the rules and regulations of the CLASSIFICATION SOCIETY.

 

(c)          The decision of the CLASSIFICATION SOCIETY as to whether the VESSEL complies with the regulations of the CLASSIFICATION SOCIETY shall be final and binding upon the BUILDER and the BUYER, provided that in the case of dispute the decision shall be endorsed by Head Office of the CLASSIFICATION SOCIETY.

 

4.     SUBCONTRACTING

 

The BUILDER is authorised to sub-contract part of the work to third party sub-contractors who will carry out works in accordance with the quality standards and shipbuilding practices outlined above at Article I. 3. (a) of this CONTRACT, provided that the work is done in Korea and the BUILDER shall have first given notice in writing to the BUYER.

 

Without prejudice to the generality of the foregoing, the BUILDER shall remain fully liable for the due and complete performance of all the BUILDER’s obligation under this CONTRACT notwithstanding the entering into of any such sub-contract as aforesaid. However, the VESSEL shall always remain at the SHIPYARD unless the BUYER and the BUILDER agree otherwise.

 

No sub-contract shall bind or purport to bind the BUYER, and each sub-contract shall be the responsibility of the BUILDER and not contain any retention rights, liens or other such rights that may interfere at anytime with the transfer of unencumbered ownership and title of the VESSEL by the BUILDER to the BUYER.

 

All sub-contractors howsoever employed or engaged are hereby declared and agreed to be sub-contractors employed or engaged by the BUILDER and the BUILDER agrees that it is and shall remain fully responsible for and liable in respect of any sub-contractors and/or their acts or omissions and, without prejudice to the generality of the foregoing, the BUILDER shall ensure control over supervision and scheduling of the all work done by any subcontractor.

 

The BUILDER hereby agrees that if any of its employees, servants or agents or those of the

 

6

 

sub-contractors appointed pursuant to this CONTRACT shall, in the reasonable opinion of the BUYER, not be carrying out properly their duties and responsibilities under or pursuant to the terms of this CONTRACT, the BUYER shall be entitled (by giving written notice to the BUILDER) to draw the same to the attention of the BUILDER and, if the BUYER considers it necessary, to request the BUILDER to replace such person(s) if the same are its own employees, servants or agents, or to use its best endeavours to replace such person(s) if the same are the employees, servants or agents of a sub-contractor. The BUILDER shall investigate any such request, and, if found justified, take appropriate action. Any such replacement shall be within such a time scale so as to ensure that the BUILDER continues to carry out all of its duties and obligations under or pursuant to this CONTRACT.

 

The BUYER’s inspection and final assembly of any subcontracted work shall be at the BUILDER’s SHIPYARD. The BUILDER will arrange for the BUYER to execute pre-production inspection of sub-contractors premises by providing reasonable advanced notice to inspect the facility. The BUYER retains the right to inspect vetting records by BUILDER’s Quality Control Department confirming compliance with the BUILDER’s quality standards.

 

The BUYER’s rights hereunder shall not in any way be reduced in respect of such sub-contracted work and the BUYER shall not bear any additional costs in respect of such sub-contracted work.

 

5.     NATIONALITY OF THE VESSEL

 

The VESSEL shall be registered by the BUYER at its own cost and expense under the laws of Marshall Islands with its home port at the time of its delivery and acceptance hereunder.

 

(End of Article)

 

7

 

ARTICLE II: CONTRACT PRICE

 

The contract price of the VESSEL delivered to the BUYER at the SHIPYARD shall be United States Dollars One Hundred One Million Three Hundred Ten Thousand Two Hundred Ninety Four (US$ 101,310,294.-) (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. Subject to the above, the CONTRACT PRICE is fixed and is not subject to any fluctuations in or on account of wages, costs of equipment or materials or currencies or otherwise. 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 of the BUYER’s supplies as stipulated in Article XII.

 

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. All other costs and expenses of the BUILDER as provided in the CONTRACT or the SPECIFICATIONS or otherwise incurred by the BUILDER are for the account of the BUILDER unless expressly specified as being for the account of the BUYER in the CONTRACT or otherwise in writing.

 

The BUILDER shall, however undertake to install in the VESSEL all of such BUYER’s supplies in accordance with the SPECIFICATIONS without extra cost to the BUYER, but the BUYER shall pay all charges and expenses, including, but not limited to, the customs clearance fee, for transporting such BUYER’s supplied articles to the SHIPYARD.

 

(End of Article)

 

8

 

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 Twenty Three Thousand (US$  23,000) 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 Eighty (180) 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 two hundred and ten (210) days beyond the date upon which the delivery is due from the BUILDER under the terms of this CONTRACT 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 e-mail 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 two hundred and ten (210) days delay in delivery, the BUILDER may demand the BUYER to make an election in accordance with Article VIII.3 hereof.

 

(d)         For the purpose of this Article, the delivery of the VESSEL shall be deemed to be delayed when and if the VESSEL, after taking into full account extension of the Delivery Date or permissible delays as provided in ArticlesV.1 and V.3, VI.2, VIII, XI.1, XII.1 and XIII.7, is delivered beyond or before the date upon which delivery would then be due under the terms of this CONTRACT.

 

9

 

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 guaranteed speed as defined in Article I paragraph 2 hereof, 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 guaranteed speed, the CONTRACT PRICE shall be reduced by U.S. Dollars Eighty Thousand (US$ 80,000) 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 guaranteed speed, 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.

 

3.              EXCESSIVE FUEL CONSUMPTION

 

(a)         The CONTRACT PRICE of the VESSEL 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 shop trial as per the SPECIFICATIONS being more than the guaranteed fuel consumption of the VESSEL’s main engine as defined in Article I paragraph 2 hereof, if such excess is not more than five per cent (5%) over the guaranteed fuel consumption.

 

BUYER’s Representatives will be provided fourteen (14) days notice of engine trials in order to be present during aforementioned trials.

 

(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 Eighty Thousand (US$ 80,000) 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

 

10

 

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 percent (10%), the BUYER, at its option, may, subject to the BUILDER’s right to effect alterations or corrections as specified in Article VI. 5. hereof, cancel this CONTRACT or may accept the VESSEL at a reduction in the CONTRACT PRICE as above provided for the ten percent (10%) increase only.

 

4.              DEADWEIGHT BELOW CONTRACT REQUIREMENTS

 

(a)         The CONTRACT PRICE of the VESSEL shall not be affected or changed, if the actual deadweight determined as provided in this CONTRACT and the SPECIFICATIONS, is below the guaranteed deadweight as defined in Article I paragraph 2 hereof by one point five percent (1.5%) of the guaranteed deadweight or less.

 

(b)         However, should the deficiency in the actual deadweight of the VESSEL be more than one point five percent (1.5%) of the guaranteed deadweight (disregarding fractions of less than one (1) metric ton), the CONTRACT PRICE shall be reduced by the sum of U.S. Dollars Seven Hundred (US$ 700) for each one (1) metric deficiency (disregarding fractions of less than one (1) metric ton) in excess of the said one point five percent (1.5%) of deficiency.

 

(c)          In the event of such deficiency in the deadweight of the VESSEL being more than three percent (3%) of the guaranteed deadweight, the BUYER, at its option, may, subject to the BUILDER’s right to effect alterations or corrections as specified in Article VI. 5. hereof, cancel this CONTRACT or accept the VESSEL at a reduction in the CONTRACT PRICE as above provided for three percent (3%) only.

 

5.              EFFECT OF CANCELLATION

 

(a)         The liquidated damages payable according to the provisions of each Paragraph under this ARTICLE are cumulative and not exclusive.

 

(b)         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, save for its rights and remedies set out in Article X.5 hereof, shall not be entitled to any liquidated damages.

 

(End of Article)

 

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.

 

The BUYER shall have the right to replace or substitute any of its representatives upon prior notice to the BUILDER. One individual BUYER’S REPRESENTATIVE shall be nominated by the BUYER in writing from time to time as having authority to bind the BUYER on certain matters as provided in this Article and that nominated BUYER’S REPRESENTATIVE shall alone be so authorized in respect of such matters and no other BUYER’S REPRESENTATIVE shall be authorized to so bind the BUYER in respect of such matters.

 

However, in any case, the BUYER shall not appoint any employees of the BUILDER or the persons who had been employed by the BUILDER within one (1) year before the BUYER’s appointment of such ex-employee of the BUILDER as the BUYER’S REPRESENTATIVE or his assistants or employees of the BUYER without the BUILDER’s prior written consent.

 

2.              AUTHORITY OF THE BUYER’S REPRESENTATIVE

 

According to the BUYER’s written authorization, 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 in 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 BUILDER will endeavor to arrange for the inspection by the BUYER’S REPRESENTATIVE during working hours of the BUILDER. However, such inspection may be arranged beyond the BUILDER’s normal working hours, including weekend and/or holiday if this is considered necessary by the BUILDER in order to meet the BUILDER’s construction

 

12

 

schedule, on the condition that the BUILDER will inform the BUYER’S REPRESENTATIVE at least Two (2) working days in advance of such inspection.

 

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 within reasonable time 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 BUILDER within reasonable time 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, within one (1) working day after any inspections or tests, or in the case of major inspection or test items, within two (2) working days, 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. Such major inspection or test items shall be decided and agreed by the parties to this CONTRACT at the time of the BUYER’s approval of an inspection and test plan submitted by the BUILDER upon the BUYER’S REPRESENTATIVE’s work commencement or opening up of his office at the SHIPYARD, whichever is the earlier.

 

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

 

13

 

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, with the agreement of the other party, seek an opinion of the CLASSIFICATION SOCIETY or failing such agreement, request an arbitration in accordance with the provisions of Article XIII hereof. The CLASSIFICATION SOCIETY or the arbitration tribunal, as the case may be, shall determine whether or not a nonconformity with the provisions of this CONTRACT, the SPECIFICATIONS and the PLAN exists. If the CLASSIFICATION SOCIETY or the arbitration tribunal, as the case may be, enters a determination in favour of the BUYER, then in such case the BUILDER shall make the necessary alterations or changes, or if such alterations or changes cannot be made in time to meet the construction schedule for the VESSEL, the BUILDER may make a proposal for a fair and reasonable adjustment of the CONTRACT PRICE in lieu of such alterations and changes, such proposal to be subject to the mutual agreement of the BUILDER and BUYER. If the CLASSIFICATION SOCIETY or the arbitration tribunal, as the case may be, 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 such proceedings, and the BUYER shall compensate the BUILDER for the proven loss and damages incurred by the BUILDER as a result of the dispute herein referred to.

 

3.              APPROVAL OF DRAWINGS

 

All plans and drawings and instruction books to be in English.

 

(a)         The BUILDER shall submit to the BUYER three (3) 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 twenty one (21) 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 

 

14

 

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 or 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.

 

(c)          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 seek clarification from the BUYER prior to implementing them which clarification must be provided in writing by the BUYER within five (5) days of such request from the BUILDER. If the BUYER shall fail to provide the BUILDER with such clarification within the said time limit, then 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.

 

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, internet connection, printer/copier and facsimile facilities, air conditioning, toilets, and computer outlet 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 high speed internet connection and facsimile facilities used by the BUYER’S REPRESENTATIVE or his assistants.

 

The BUILDER shall provide full assistance and advice how to obtain the necessary visas,

 

15

 

working permits and/or other document that may be necessary for the BUYER’S REPRESENTATIVE to enter and remain and work in Korea without delay provided that the BUYER’S REPRESENTATIVE meets the requirements and laws of Korea.

 

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 of sub-contractors.

 

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.

 

The BUILDER is responsible for ensuring at all times that a safe working environment and proper access is provided to the works and/or areas of inspection. Failure to provide proper, safe access at either the BUILDER or any appointed sub contractor may result in declining an inspection provided that justifiable grounds are presented to the BUILDER. Such time and impact to schedule are for the BUILDER’s account / responsibility.

 

(b)             The BUYER’S REPRESENTATIVE and his assistants shall at all times remain the employees of the BUYER, and not of the BUILDER. 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 or willful misconduct 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 or the BUYER’s employees or agents, unless such damages, loss or destruction is caused by the gross negligence or willful misconduct of the BUILDER, its sub-contractors, or its or their employees or agents.

 

6.              RESPONSIBILITY OF THE BUYER

 

The BUYER shall undertake and assure that the BUYER’S REPRESENTATIVE shall carry

 

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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 to replace the BUYER’S REPRESENTATIVE who is deemed unsuitable and unsatisfactory for the proper progress of the VESSEL’s construction.

 

The BUYER shall investigate the situation by sending its representative (s) to the SHIPYARD, if necessary, and if the BUYER considers that such BUILDER’s request is justified, the BUYER shall effect such replacement as soon as conveniently arrangeable.

 

The BUILDER’s employees, agents, subcontractors and so forth shall at all times remain under the BUILDER’s responsibility. The BUYER shall not be liable to the BUILDER, or the BUILDER’s employees, agents, subcontractors and so forth 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 his subcontractors, 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 BUYER, its employees including the BUYER’S REPRESENTATIVE and his assistants or agents. The BUYER shall not be liable to the BUILDER, or the BUILDER’s employees, agents, subcontractors and so forth for damages to, or loss or destruction of property of the BUILDER, or the BUILDER’s employees, agent, subcontractors and so forth unless such damages, loss or destruction were caused by the gross negligence of the BUYER, or its employees or agents.

 

(End of Article)

 

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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 or the PLAN and also does not adversely affect the BUILDER’s planning or program in relation to the BUILDER’s other commitments which have been entered into at that time shall be agreed to by the BUILDER if the BUYER agrees to adjustment of the CONTRACT PRICE(if any), 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 and BUILDER has agreed to the necessary adjustments to the Contract Price of the VESSEL, the time of delivery and any other alterations in this CONTRACT, or the SPECIFICATIONS. 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 and BUILDER do not agree to the aforesaid adjustments within seven (7) days of the BUILDER’s notification of its proposal for 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, e-mail or facsimiles manifesting the agreement.

 

The letters, e-mail 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.

 

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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 cannot be procured in time to meet the BUILDER’s construction schedule for the VESSEL, or are in short supply provided that they have been timely ordered, or are unreasonably high in price compared with the prevailing international market price on the date of signing this CONTRACT provided that they have been timely ordered, the BUILDER may supply, subject to the BUYER’s prior approval in writing, other materials, machinery or equipment of 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.

 

Furthermore, it is expressly agreed that should the BUILDER have to use any steel plate made in China they will only use steel plate produced by major Chinese steel mills used by Hyundai Heavy Industries Group. No Brazilian steel will be used for any of the structural parts of the VESSEL without the BUYER’s prior approval in its absolute discretion. All steel for the structural parts of the VESSEL to be provided in accordance with the CLASSIFICATION SOCIETY’s standards and approvals.

 

3.              CHANGES IN RULES AND REGULATIONS

 

If any requirements as to CLASSIFICATION SOCIETY or as to the specified rules and regulations with which the construction of the VESSEL is required to comply in Article I. 3. (a) are altered or changed by the CLASSIFICATION SOCIETY or other regulatory 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 ten (10) working 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 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 occasioned by such compliance;

 

(b)         any extension or advancement in the Delivery Date of the VESSEL that is occasioned by such compliance;

 

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(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 guaranteed speed 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 PLAN or both, if such compliance makes such alterations of the terms necessary.

 

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.

 

(End of Article)

 

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ARTICLE VI: TRIALS AND COMPLETION

 

GENERAL

 

The BUILDER shall carry out and run the tests and trials on the VESSEL in the manner and to the extent as described in the SPECIFICATIONS (and the trials schedule) and otherwise as may be required by the CLASSIFICATION SOCIETY.

 

1.              NOTICE

 

When the VESSEL is substantially complete and in a safe and fit state to proceed to sea, with all appropriate safety and lifesaving equipment onboard for the expected number of persons to be present, the BUILDER shall notify the BUYER in writing or by e-mail or facsimile at least fourteen (14) days in advance of the time and place of the trial run of the VESSEL. Such notice shall specify the Korean port 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 e-mail or facsimile.

 

The BUYER’S REPRESENTATIVE(s), who is/are 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(s) 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(s) being present. In such case, the BUYER shall be obliged to accept the VESSEL on the basis of a certificate issued by the BUILDER that the VESSEL, after the trial run, subject to 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 cannot 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 

 

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period of delay occasioned by such unfavourable weather conditions. For the purposes of this paragraph 2, unfavourable weather conditions shall be taken as Beaufort Scale Force 6 and above.

 

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.

 

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 prior to the steel cutting 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 for such supply in Korea (with supporting invoices and documents provided) 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 (with supporting invoices and documents provided).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, stern tube and the like, and the supplied amount.

 

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5.              ACCEPTANCE OR REJECTION

 

(a)         Upon completion of sea trial, the BUILDER shall give the BUYER a notice in writing or by e-mail or telefax of the result of the sea trial, as and if the BUILDER considers that the result of sea trial indicates conformity of the VESSEL to this CONTRACT and the SPECIFICATIONS and PLAN.

 

(b)         The BUYER shall within four (4) working days after receipt of such notice notify the BUILDER in writing or by e-mail or telefax of its acceptance or rejection of the VESSEL, provided that in case of rejecting the VESSEL, the BUYER shall set out in its notice of rejection a detailed, clear explanation of all and any aspects of the VESSEL which it considers do not comply with this CONTRACT, the SPECIFICAITONS and/or the PLAN.

 

(c)          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 the CONTRACT and SPECIFICATIONS by such tests or trials as may be necessary. If the BUILDER is not in agreement with the BUYER’s determination as to non-conformity, each party shall be entitled to refer the disagreement for determination as per Article XIII.

 

(d)         The BUYER shall not be entitled to reject the VESSEL by reason of any minor or insubstantial items which do not in any way affect the safety or the operation of the Vessel judged from the point of view of the BUILDER’s shipbuilding practice for Crude Oil Carrier, as the BUILDER has been performing for its other clients and HSQM (Hyundai Shipbuilding Quality Manual) 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 for its own account such minor or insubstantial items as soon as practicable after the delivery of the VESSEL. If inconvenient for the VESSEL to have such items corrected and/or remedied at the SHIPYARD, the BUILDER shall arrange to have such corrections or remedies carried out elsewhere, and may, if practicable, do such work while the VESSEL is sailing. The BUYER may in its absolute discretion accept a payment in lieu of such items being corrected and/or remedied. Any payment in lieu shall be agreed in writing between the BUILDER and the BUYER.

 

(e)          If during any sea trial any breakdowns occur entailing interruption or irregular performance which can be repaired on board, the sea trial shall be continued after such repairs and be valid in all respects. However, if during the sea trial it becomes apparent that the VESSEL or any part of her equipment requires alterations or correction, the BUILDER shall notify the BUYER promptly in writing or by e-mail or telefax to such effect and shall simultaneously advise the BUYER of the estimated additional time 

 

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required for the necessary alterations or corrections to be made. The BUYER shall, within five (5) 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 e-mail or telefax of its acceptance or rejection of the VESSEL, all in accordance with the SPECIFICATIONS, PLAN and the CONTRACT, and shall not be entitled to reject the VESSEL on such grounds until such time.

 

(End of Article)

 

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ARTICLE VII: DELIVERY

 

1.              TIME AND PLACE

 

The VESSEL shall be delivered by the BUILDER to the BUYER at the SHIPYARD, safely afloat at a quay on or before September 9, 2016 (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 provide the BUYER in writing by e-mail or telefax thirty (30) days approximate notice of readiness and fourteen (14), seven (7) and three (3) days definite notice of readiness for delivery of the VESSEL.

 

2.              WHEN AND HOW EFFECTED

 

Provided that the BUYER shall concurrently with delivery of the VESSEL release to the BUILDER the fifth instalment as set forth in Article X.2.hereofand shall have fulfilled all of its obligations provided for in this CONTRACT (as it may have been amended from time to time) prior to the delivery of the VESSEL, 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 PROTOCOL shall be prepared induplicate 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 spare parts, all as specified in the SPECIFICATIONS,

 

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(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 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 (duly notarized and legalized)

(viii)                        Ship Sanitation Control Exemption Certificate

(ix)                              Classification Certificate for anchor, chains and mooring ropes, machinery and equipment

(x)                                 Certificate for life-boats and life saving equipments

(xi)                              Certificates for navigation lights and special signal lights

(xii)                           International Oil Pollution Prevention Certificate

(xiii)                        Compass adjustment Certificate

(xiv)                       Suez Canal Tonnage Certificate

(xv)                          Deadweight Certificate

(xvi)                       Certificate for Provision Crane, Hose Handling Crane and Engine Room Crane

(xvii)                    International Air Pollution Prevention Certificate

(xviii)                 Coating Technical File

(xix)                       International Sewage Pollution Certificate

(xx)                          Class approved Loading Manual

(xxi)                       Certified Cargo oil tanks calibration

(xxii)                    Ballast Management Certificate

(xxiii)                 Emergency Towing System

(xxiv)                Engine Technical File (NOx)

(xxv)                   Load Test certificates for all designated lifting lugs / points installed (more than 3.0 ton S.W.L) (issued by the BUILDER)

 

The above list of Certificates and Documents is indicative and may possibly not include all the Required Certificates and Documents for the VESSEL as she is specified in her CLASSIFICATION notation to conduct unrestricted trade. However it is agreed that all

 

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the required CLASSIFICATION SOCIETY and Statutory Certificates and Documents should be furnished by the BUILDER to the BUYER.

 

All certificates or relevant documents which are to be duly notarized and legalized shall be agreed between the parties prior to delivery. All certificates to be delivered in one (1) original and two (2) copies to the BUYER.

 

If any Certificate, Drawing, Plan, Diagram or other documents referred to in this Article, through no fault on the part of BUILDER, cannot be provided upon delivery and if the absence thereof does not impede the navigation or management of the VESSEL and/or constitute a breach of the statutory requirements of the flag state, of the VESSEL or the requirements of the CLASSIFICATION SOCIETY, a provisional/interim certificate shall be acceptable by the BUYER provided the formal Certificate, Drawing, Plan, Diagram or other document be delivered as soon as practicable after delivery of the VESSEL.

 

(f)           DECLARATION OF WARRANTY of the BUILDER that 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.

 

(g)          COMMERCIAL INVOICE made by the BUILDER.

 

(h)         BILL OF SALE made by the BUILDER.

 

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 to and risk of the VESSEL and her equipment (but excluding the BUYER’s supplies) shall pass to the BUYER upon Delivery and Acceptance 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 is expressly understood between the parties hereto that, until such Delivery and Acceptance is effected, the

 

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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 and Acceptance thereof and shall remove the VESSEL from the SHIPYARD within three (3) working days after Delivery and Acceptance thereof is effected.

 

From the delivery of the VESSEL until the actual removal thereof from the SHIPYARD, the BUYER shall be responsible for the safety and preservation of the VESSEL in all respects, including without limitation, keeping the VESSEL insured at his own cost, and furthermore, the BUYER shall indemnify and hold the BUILDER free and harmless against any liability or claims including without limitation, the claims of his insurers arising out of any accident whatsoever , unless caused by the gross negligence or willful misconduct of the BUILDER, his employee or agent.

 

Port dues and other charges levied by the Korean Government Authorities after Delivery and Acceptance of the VESSEL and any other costs related to the removal of the VESSEL shall be borne by the BUYER.

 

(End of Article)

 

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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, 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 directly delay the construction of the VESSEL or the BUILDER’s performance under the CONTRACT (the BUILDER treating this CONTRACT not less favorably than other commitments), 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, then in the event of delays due to the happening of any of the aforementioned contingencies, the DELIVERY DATE of the VESSEL under this CONTRACT shall be extended for a period of time which shall not exceed the total accumulated time of all such delays provided however that:

 

(i)             the delay in respect of which the BUILDER is claiming relief was beyond its reasonable control or that of its employees, suppliers and subcontractors and was not caused or contributed to by any error, neglect, act or omission of the BUILDER or of its agents, employees or subcontractors, nor by any breach of this CONTRACT;

 

(ii)          the delay impacts upon the Vessel’s construction schedule and completion;

 

(iii)       the BUILDER has shown due diligence in choice of sub-contractor; and

 

(iv)      the BUILDER has taken all reasonable steps to mitigate its effect upon the construction of the VESSEL,

 

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For the avoidance of doubt, where two delay events as described in this paragraph 1(a) occur simultaneously or overlap with each other, such delays caused by such events shall not be double-counted.

 

2.              NOTICE OF DELAYS

 

Within seven (7) 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 e-mail 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 seven (7) days after such cause of delay ends, the BUILDER shall likewise advise the BUYER in writing or by e-mail or facsimile of the date that such cause of delay ended, 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 seven (7) 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 of the DELIVERY DATE.

 

Failure of the BUILDER to give notice of any relevant delay event in accordance with this paragraph 2 shall be deemed a waiver of the BUILDER’s right to postpone the DELIVERY DATE under this Article VIII in respect of such relevant delay event.

 

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.7, (ii) the BUYER’s defaults under Article XI.1 and XI.2., (iii) modifications and changes under Article V.1 and V.3 or (iv) delays or defects in the BUYER’s supplies as stipulated in Article XII.1, aggregates two hundred and sixty (260) days or more (inclusive of the thirty (30) days grace period as per Article III.1.(a)), 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 and the BUILDER, upon receipt of such notice, and upon the BUYER’s demand, shall refund in accordance with the provisions of Article X.5 hereof all payments made to the BUILDER by the BUYER.

 

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 two hundred and sixty (260) days in case of the delays referred to in this Paragraph 3 or two hundred and ten (210) days in case of the delay in Article III.1, notify

 

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the BUYER of the future date upon which the BUILDER estimates the VESSEL will be ready for delivery and demand in writing or by e-mail 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) business days after receipt of such demand, make and 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) business 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 specified in Paragraph 1 above 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)

 

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ARTICLE IX: WARRANTY OF QUALITY

 

1.              GUARANTEEOF MATERIAL AND WORKMANSHIP

 

Subject to the provisions hereinafter set forth, the BUILDER undertakes to remedy, free of charge to the BUYER, any defective design, construction, material and/or workmanshipand/or negligent or other improper acts or omissions (hereinafter called the “DEFECT(S)”) on the part of the BUILDER and/or its sub-contractors, provided that the defect is discovered within a period of twelve (12) months after the date of delivery of the VESSEL and a notice thereof is duly given to the BUILDER as hereinafter provided.

 

For the purpose of this Article the VESSEL shall include her hull, machinery and equipment, painting and coatings thereof but shall exclude any parts for the VESSEL which have been supplied by or on behalf of the BUYER under Article XII.

 

The BUILDER agrees that upon the expiry of this guarantee it shall assign (to the extent to which it may validly do so and such supplier guarantee extends beyond twelve (12) months after the date of delivery of the VESSEL) to the BUYER, all rights, title and interest that the BUILDER may have in and to all guarantees or warranties given by the supplier of any of the appurtenances and materials used in the construction and/or operation of the VESSEL, unless such assignment is against Korean law.

 

2.              NOTICE OF DEFECTS

 

The BUYER shall notify the BUILDER in writing or by e-mail or facsimile, of any DEFECTS for which claim is made under this guarantee as promptly as possible after discovery thereof. The BUYER’s written notice shall include full particulars to describe the nature and extent of the DEFECTS. The BUILDER shall have no obligation for any DEFECTS discovered prior to the expiry date of the said twelve (12) months period, unless notice of such DEFECTS is received by the BUILDER no later than seven (7) business days after such expiry date.

 

3.              REMEDY OF DEFECTS

 

(a)         The BUILDER shall remedy, at its expense, any DEFECT against which the VESSEL or any part of the machinery or equipment thereof is guaranteed under this Article IX, by making all necessary repairs or replacements at the SHIPYARD or elsewhere as provided for in (b) hereinbelow.

 

(b)         However, if it is impractical to bring the VESSEL to the SHIPYARD, the BUYER may cause the necessary repairs or replacements to be made elsewhere which is deemed 

 

32

 

suitable for the purpose, provided that, in such event, the BUILDER may forward or supply replacement parts or materials to the VESSEL, 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 other shipyard or works than the SHIPYARD, the BUYER shall first, but in all events as soon as possible, give the BUILDER notice in writing or by e-mail 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 in writing or by e-mail 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 IX, or upon the award of the arbitration tribunal so determining, or if the BUILDER neither accepts nor rejects the defects nor requests arbitration within sixty (60) days after its receipt of the BUYER’s notice of defects, the BUILDER shall pay to the BUYER for such repairs or replacements a sum equal to the actual direct cost of the repairs or replacements, as evidenced in United States Dollars by the final invoices of the relevant shipyard/repairer or supplier, however, the amount of the BUILDER’s payment to the BUYER for such repairs or replacements shall not exceed the average cost quoted by two reputable repair yards in Singapore.

 

(c)          In any case, the VESSEL shall be taken at the BUYER’s costs and responsibility to the place elected, 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 or any other cost or expenses whatsoever incurred by the BUYER in getting and keeping the VESSEL ready for such repairs or replacements.

 

(d)         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 C.I.F. port designated by the BUYER.

 

(e)          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 IX.

 

(f)           Any dispute under this Article IX shall be referred to arbitration in accordance with the provisions of Article XIII hereof.

 

(g)          In case any amount, which the BUILDER should pay to the BUYER for a single claim in accordance with this Article, is over US$100,000, then the BUILDER shall immediately

 

33

 

pay to the BUYER such amount.

 

4.              EXTENT OF BUILDER’S RESPONSIBILITY

 

(a)         After delivery of the VESSEL the BUILDER shall have no responsibility for any other DEFECTS whatsoever in the VESSEL than the DEFECTS specified in paragraph 1 of this Article IX and Article VI. 5(d). The BUILDER shall have no liability whatsoever in any circumstances whatsoever to the BUYER or to any third party for anything except the cost of repairing the DEFECT itself. The BUILDER shall not in any circumstances be responsible or liable for any consequential or special losses, damages or expenses including, but not limited to, loss of time, loss of profit or earning or demurrage directly or indirectly occasioned to the BUYER or any third party by reason of the DEFECTS specified in paragraph 1 of this Article or due to repairs or other works done to the VESSEL to remedy such DEFECTS or any other consequential or special losses, damages or expenses related to any liability, cost or expense whatsoever or howsoever arising in connection with any damage to the VESSEL or to any cargo or to any other property owned by the BUYER or any third party caused as a result of the DEFECT and after delivery the BUYER shall hold the BUILDER harmless and indemnify the BUILDER against any such claim from the BUYER or any third party whatsoever in respect of any such matters and in respect of any other claims relating to the VESSEL for which the BUILDER does not expressly give an warranty to the BUYER under this Article.

 

(b)         The BUILDER shall not be responsible for any DEFECTS in any part of the VESSEL which may subsequent to delivery of the VESSEL have been replaced or in any way repaired by any persons other than the BUILDER and/or its nominated sub-contractors, or for any DEFECTS which have been caused or aggravated by omission or improper use and maintenance of the VESSEL on the part of the BUYER, its servants or agents or by ordinary wear and tear or by any other circumstances beyond the control of the BUILDER.

 

(c)          The guarantee contained as hereinabove in this Article replaces and excludes any other liability, guarantee, warranty and/or condition whether expressly set out in this CONTRACT or imposed or implied by the law, customary, statutory or otherwise, by reason of the construction and sale of the VESSEL by the BUILDER for and to the BUYER.

 

Any major parts or materials (including painting or coating) replaced during the Guarantee Period under Paragraph 1 of this Article shall be guaranteed for a further twelve (12) months, but not more than eighteen (18) months from delivery of the VESSEL.

 

(End of Article)

 

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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 as follows.

 

(a)         First Instalment 

 

Twenty percent (20%) of the CONTRACT PRICE amounting to U.S.Dollars Twenty Million Two Hundred Sixty Two Thousand Fifty Eight (US$ 20,262,058) shall be paid within three (3) business days after the BUYER’s receipt of the Letter of Guarantee via SWIFT, duly issued in accordance with Paragraph 8 of 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 any of New York, London, Singapore or Seoul, such due date shall fall due upon the first business day next following.

 

(b)         Second Instalment

 

Ten per cent (10%) of the CONTRACT PRICE amounting to U.S.Dollars Ten Million One Hundred Thirty One Thousand Thirty (US$ 10,131,030) shall be paid on the date falling six (6) months from the date of signing this CONTRACT.

 

(c)          Third Instalment

 

Ten per cent (10%) of the CONTRACT PRICE amounting to U.S.Dollars Ten Million One Hundred Thirty One Thousand Thirty (US$ 10,131,030) shall be paid within three (3) business days of receipt by the BUYER of a facsimiled or emailed advice from the BUILDER that first steel cutting of the VESSEL has been commenced and confirmed in writing by the CLASSIFICATION SOCIETY. Such steel cutting to take place not more than twelve (12) months prior to the DELIVERY DATE.

 

(d)         Fourth Instalment

 

Ten per cent (10%) of the CONTRACT PRICE amounting to U.S.Dollars Ten Million One Hundred Thirty One Thousand Thirty (US$ 10,131,030) shall be paid within 

 

35

 

three (3) business days of receipt by the BUYER of a facsimiled or emailed advice from the BUILDER that the first block of the keel has been laid and confirmed in writing by the CLASSIFICATION SOCIETY. Such keel laying to take place not more than eight (8) months prior to the DELIVERY DATE.

 

(e)       Fifth Instalment

 

Fifty per cent (50%) of the CONTRACT PRICE amounting to U.S.Dollars Fifty Million Six Hundred Fifty Five Thousand One Hundred Forty Six (US$ 50,655,146) 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 to the BUILDER concurrently with the delivery and acceptance of the VESSEL, as evidenced by the execution by the parties of the Protocol of Delivery and Acceptance referred to in Article VII of the CONTRACT. The BUILDER shall send to the BUYER a commercial invoice as demand for payment of this instalment.

 

(The date stipulated for payment of each of the five instalments mentioned above is hereinafter in this Article and in Article XI referred to as the “DUE DATE” of that instalment).

 

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 X 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 e-mail or facsimile of the date such payment shall become due.

 

The BUYER shall immediately acknowledge receipt of such notification by e-mail 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 sending the aforementioned notification, the BUILDER shall promptly e-mail or facsimile to the BUYER a second notification of similar import. The BUYER shall immediately acknowledge by e-mail or facsimile receipt of the foregoing second notification regardless of whether or not the first notification was acknowledged as aforesaid.

 

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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, and fourth instalments shall be made to the account of Industrial Bank of Korea, Head Office, Seoul, Korea (hereinafter called “IBK”), Account No. 001-1-544566 at JP Morgan Chase Bank, 1 Chase Manhattan Plaza 10th FL, New York, NY 10081, USA (hereinafter called “JPMCB, N.Y.”) in favour of Hyundai Heavy Industries Co., Ltd. (hereinafter called the “HHI”) under advice by telefax or telex, including swift, to IBK by the remitting Bank. If the BUILDER should wish to nominate an alternative bank, the designation, the account number, identity of account holder and name of such account bank shall be notified by the BUILDER to the BUYER at least five (5) business days prior to the DUE DATE.

 

(ii)          Upon the cost adjustment to the CONTRACT PRICE in accordance with the provisions of the CONTRACT, the fifth) instalment as provided for in Paragraph 2.(e) of this Article shall be deposited at the account of IBK, Account No. 001-1-544566 at JPMCB, N.Y., or any other bank, Seoul, Korea as designated by the BUILDER, by the BUYER in favour of HHI at least three (3) business days prior to the scheduled delivery date of the VESSEL notified by the BUILDER, with instructions valid for a period of twelve (12) business days that the said instalment is payable to the HHI against presentation by the BUILDER to IBK, or any other bank, Seoul, Korea as the case may be, of a copy of the original PROTOCOL OF DELIVERY AND ACCEPTANCE of the VESSEL signed by the BUILDER and the BUYER, together with an invoice for the amount due under this instalment.

 

(iii)       If the BUILDER fails to present a copy of the PROTOCOL OF DELIVERY AND ACCEPTANCE to the Bank within the said period of twelve (12) business days or unless the validity of the instruction is further extended by the BUYER based on mutual agreement in writing reached with the BUILDER within the said twelve (12) business days validity period, the BUILDER’s bank shall remit the said amount of the fifth instalment to the BUYER’s bank account immediately upon expiry of the initial twelve (12) business days validity period of the instruction. Interest, if any, accrued by such deposit shall be for BUYER’s account.

 

In the event of the fifth instalment having been so returned by the Bank to the BUYER, the BUYER shall remit the fifth instalment again to the Bank as laid down

 

37

 

in this paragraph upon receipt of a further notice from the Builder for readiness of the Vessel for delivery.

 

(b)         Simultaneously with each of such payments, the BUYER shall advise the BUILDER of the details of the payments by e-mail or facsimile and at the same time, the BUYER shall cause the BUYER’s remitting Bank to advise IBK, or any other bank, Seoul, Korea as the case may be, of the details of such payments by authenticated SWIFT, bank cable or telex.

 

5.              REFUND BY THE BUILDER

 

(a)         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.1 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 forthwith 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 without deduction, set-off or withholding in US dollars.

 

(b)         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, provided, however, that if the cancellation of this CONTRACT by the BUYER is based upon delays due to Force Majeure or other causes beyond the control of the BUILDER as provided for in Article VIII.1 hereof, then in such event, the interest rate of refund shall be reduced to Four per cent (4%) per annum for the periods affected by such delays.

 

(c)          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.

 

(d)         If, the BUILDER is required to refund to the BUYER the instalments paid by the BUYER to the BUILDER as provided in this Paragraph 5, 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.

 

38

 

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 cost 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 BUILDER under the provisions of Paragraph 2 of this Article together with interest thereon at the rate of Four per cent (4%) 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.

 

(c)          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, within thirty (30) days following the execution of this CONTRACT, furnish the BUYER (and prior to the payment of the first instalment) with an assignable letter of guarantee issued by IBK via SWIFT for the assurance of and as security for the refund of the pre-delivery instalments under or pursuant to Paragraph 5 and/or Paragraph 6 above plus interest accrued thereon in accordance with this CONTRACT in the form and substance 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.

 

39

 

If the BUILDER fails to provide the Refund Guarantee within thirty (30) days after the date of this CONTRACT, the BUYER shall be entitled to terminate this Contract with immediate effect by written notice to the BUILDER.

 

(End of Article)

 

40

 

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 or fourth instalment is not paid to the BUILDER within the respective DUE DATE of such instalments; or

 

(b)         If the fifth instalment is not deposited in accordance with Article X.4.(a)(ii) hereof or if the said fifth 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 an order or an effective resolution shall be passed for winding up of the BUYER (except for the purpose of reorganization, merger or amalgamation); or

 

In case the BUYER is in default as set out in Paragraph 1 above, 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 of its obligations under this CONTRACT as provided in Paragraph 1 above, 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.

 

(b)         The BUYER shall pay to the BUILDER interest at the rate of Six percent (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 

 

41

 

e-mail or facsimile, notify the BUYER to that effect, and the BUYER shall, upon receipt of such notification, forthwith acknowledge in writing or by 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 e-mail 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 proven loss and damage including reasonable estimated profit (in relation to this CONTRACT) 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 and damage. However the BUILDER shall exercise normal commercial diligence to secure the market price obtainable for a sale in such circumstances; and

 

(f)           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 construction of the VESSEL, including work, labour, materials and reasonably estimated profit which the BUILDER would have been entitled to receive if the VESSEL had been completed and delivered 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

 

42

 

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.              DEFINITION OF BUILDER’S DEFAULT

 

The BUILDER shall be deemed to be in default of its obligations under this CONTRACT in the event of:

 

(i)             The filing of a petition or the making of an order or the passing of an effective resolution for the winding up of the BUILDER (other than for the purpose of reconstruction or amalgamation which has been previously approved in writing by the BUYER), or the appointment of a receiver, administrator, compulsory manager, trustee, liquidator or other similar officer has been made against the BUILDER or any of its assets under the laws of any jurisdiction or the appointment of a receiver of the undertaking or property of the BUILDER, or the insolvency of or a suspension of payments by the BUILDER, or the cessation of the carrying on of business by the BUILDER at any of its shipyards, or the making by the BUILDER of any special arrangement or composition with the creditors of the BUILDER; or any like or similar circumstance occurring under the laws of the Republic of Korea; or

 

(ii)          The occurrence of any of the events set out in (i) with respect to the bank issuing the Letter of Guarantee referred to in Article X.5, and the failure by the BUILDER within sixty (60) days thereof to replace such bank with an alternative guarantor reasonably acceptable to the BUYER and its bank; or

 

(iii)       Where the BUILDER:

 

(a)         remains in default of performance of any obligation or provision of the CONTRACT fourteen (14) days after receiving written notice from the BUYER that the BUILDER is in default; or

 

(b)         fails, neglects, refuses or is unable during the course of the construction of the VESSEL to provide materials, equipment, services or labour to perform the construction in accordance with the SPECIFICATIONS, the PLAN, and this CONTRACT prior to the date on which the BUYER shall be entitled to cancel this CONTRACT for delay.

 

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4.              EFFECT OF BUILDER’S DEFAULT

 

If any such default as referred to in Paragraph3 above occurs, then the BUYER may terminate this CONTRACT by promptly notifying the BUILDER in writing but not later than two (2) weeks from the date of the BUILDER’s default takes place or after the period to remedy it has expired. Such cancellation is to be effective as of the date when such notice of cancellation is received by the BUILDER and the provisions of Article X. 5 shall apply in respect of such termination. In any event the BUYER shall be entitled to pursue such claims and remedies as it may elect subject to the applicable law.

 

(End of Article)

 

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ARTICLE XII: BUYER’S SUPPLIES

 

1.              RESPONSIBILITY OF THE BUYER

 

(a)         The BUYER shall, at its cost and expense, supply all the BUYER’s supplies mentioned in the SPECIFICATIONS, if any, (hereinafter called the “BUYER’S SUPPLIES”), to the BUILDER at the SHIPYARD in perfect 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.

 

Such schedule to be advised by the BUILDER within six (6) months after this CONTRACT becomes effective according to Article XX.

 

(b)         In order to facilitate the installation of the BUYER’S SUPPLIES by the BUILDER in or on the VESSEL, the BUYER shall furnish the BUILDER with the necessary plans, instruction books, test report and all test certificates reasonably 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.

 

(c)          The BUYER shall be liable for any 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.

 

(d)         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 or the person designated by the BUYER in accordance with the BUILDER’s building schedule.

 

(e)          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 losses and damages 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 :

 

45

 

(i)             furnished the BUYER with the time schedule referred to above, two (2) months prior to installation of the BUYER’S SUPPLIES and

 

(ii)          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.

 

Furthermore, if the delay in delivery of the BUYER’S SUPPLIES and the necessary document or advice for such supplies should exceed ten (10) working 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 which has appropriate proof against weather, dust and theft and, which the BUILDER is required to install on board the VESSEL under the SPECFICATIONS after delivery of such supplies to the SHIPYARD and shall procure that at all times the BUYER’S SUPPLIES are clearly marked as being the property of the BUYER. The BUILDER shall install such supplies on board the VESSEL at the BUILDER’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 are lost or damaged while in the custody of the BUILDER, the BUILDER shall, if the loss or damage is due breach of its obligations under this Paragraph 2, default, negligence or omission on its part, be responsible for such loss or damage.

 

Upon delivery of the BUYER’S SUPPLIES at the SHIPYARD, the BUILDER and the BUYER shall carry out a joint unpacking inspection of the BUYER’S SUPPLIES so that the condition at the time of delivery can be confirmed.

 

3.              RETURN OF THE BUYER’S SUPPLIES

 

If pursuant to the provisions of this CONTRACT the BUILDER is required to refund to the BUYER the instalments paid by the BUYER to the BUILDER, the BUILDER shall either (i)

 

46

 

return to the BUYER all of the BUYER’S SUPPLIES not incorporated into the VESSEL and pay to the BUYER an amount equal to the actual cost of those supplies incorporated into the VESSEL, or (ii) pay to the BUYER an amount equal to the actual cost of all supplies provided to the BUILDER and paid for by the BUYER irrespectively of whether or not the same have been incorporated into the VESSEL by mutual agreement.

 

(End of Article)

 

47

 

ARTICLE XIII: ARBITRATION

 

1.              DECISION BY THE CLASSIFICATION SOCIETY

 

If any dispute arises between the parties hereto in regard to the design and/or construction of the VESSEL, its machinery and equipment, and/or in respect of the materials and/or workmanship thereof and/or thereon, and/or in respect of interpretations of the SPECIFICATIONS, the parties may by mutual agreement refer the dispute to the CLASSIFICATION SOCIETY or to such other expert as may be mutually agreed between the parties hereto, and whose decision shall be final, conclusive and binding upon the parties hereto.

 

2.              LAWS APPLICABLE

 

Any arbitration arising hereunder shall be governed by and conducted in accordance with the London Maritime Arbitrators’ Association Terms or any statutory modification or re-enactments thereof for the time being in force. The award of the arbitrator shall be final, conclusive and binding upon parties hereto.

 

3.              PROCEEDINGS OF ARBITRATION

 

In the event that the parties hereto do not agree to settle a dispute according to Paragraph 1 of this Article and/or in the event of any other dispute of any kind whatsoever between the parties and relating to this CONTRACT or its rescission or any stipulation herein, such dispute shall be submitted to arbitration in London. The parties shall try to agree a single arbitrator to conduct the arbitration.

 

If the parties cannot agree upon the appointment of the single arbitrator within two (2) weeks after one of the parties has given notice to the other party notifying that the other party refer the dispute to arbitration, the dispute shall be settled by three arbitrators, each party appointing one arbitrator, the third being appointed by the two arbitrators so appointed. In the further event that the two arbitrators appointed respectively by the parties hereto as aforesaid should be unable to reach agreement on the appointment of the third arbitrator within twenty (20) days from the date on which the second arbitrator is appointed, either party of the said two arbitrators may apply to the President for the time being of the London Maritime Arbitrators Association to appoint the third arbitrator. If either of the appointed arbitrators refuses or is incapable of acting, the party who appointed him shall appoint a new arbitrator in his place.

 

If one party fails to appoint an arbitrator - either originally or by way of substitution - for two (2) weeks after the other party having appointed its arbitrator, has served the defaulting party notice of default for failure to make the appointment, the President of the London Maritime 

 

48

 

Arbitrators Association shall, after application from the party having appointed its arbitrator, also appoint an arbitrator on behalf of the party in default. The award of the arbitration made by the sole arbitrator or by the majority of the three arbitrators as the case may be shall be final, conclusive and binding upon the parties hereto.

 

4.              NOTICE OF AWARD

 

The award shall immediately be given to the BUYER and the BUILDER by telefax or e-mail.

 

5.              EXPENSES

 

The Arbitrator or the Arbitration Board shall determine which party shall bear the expenses of the arbitration or the portion of such expenses which each party shall bear.

 

6.              ENTRY IN COURT

 

In case of failure by either party to respect the award of the arbitration, the judgement may be entered in any proper court having jurisdiction thereof.

 

7.              ALTERATION OF DELIVERY DATE

 

In the event of reference to arbitration of any dispute arising out of matters occurring prior to delivery of the VESSEL, the award may include any postponement of the DELIVERY DATE which the Arbitrator or the Arbitration Board may deem appropriate. To the maximum extent possible and provided the arbitration proceedings or the subject matter of the dispute do not affect the construction of the VESSEL, work under this CONTRACT shall continue during the arbitration of any dispute.

 

(End of Article)

 

49

 

ARTICLE XIV: SUCCESSORS AND ASSIGNS

 

1.              TRANSFER OR ASSIGNMENT BY THE BUYER

 

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 or delay, be transferred by novation to or assigned to another company and the title thereof may be taken by another company. In the event of any transfer or assignment pursuant to the terms of this CONTRACT, the transferee or assignee, its successors and assigns shall succeed to all the rights and obligations of the BUYER under this CONTRACT including but not limited to post-construction warranties of quality and the benefit of the Refund Guarantee. 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 or assignment of this CONTRACT by the BUYER shall be for the account of the BUYER.

 

The BUILDER shall have the right to transfer or assign this CONTRACT at any time after the effective date hereof, provided that prior written agreement is obtained from the BUYER.

 

2.              TRANSFER BY THE BUILDER

 

The BUILDER shall not have the right to assign or transfer this CONTRACT at any time after the Effective Date (as defined in ARTICLE XIX) hereof, unless prior written approval is obtained from the BUYER.

 

(End of Article)

 

50

 

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 and also from the payment of export duties incurred by the BUILDER in Korea, if any, to be imposed upon the VESSEL as a whole or upon any of its parts or equipment. 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.

 

3.              KOREAN BUNKER SALES TAX

 

The price of the delivery bunkers remaining on board the VESSEL on the DELIVERY DATE which is to be paid by the BUYER to the BUILDER shall be net of any sales tax payable to the Korean Government.

 

(End of Article)

 

51

 

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 hold 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 AND 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 marketing, operation, repair and maintenance of the VESSEL or registration, classification, insurance or sale of the VESSEL.

 

In case the BUYER requests the prior written consent of the BUILDER as set out in the above paragraph, the BUYER shall provide the BUILDER with a written undertaking from the recipient stating that (1) he acknowledges and shall observe the foregoing terms concerning the BUILDER’s right to confidential information and (2) any confidential information furnished in tangible form shall not be duplicated by recipient except for the purpose of the job specifically assigned to him. (3) Upon the completion of his job requiring reference to the confidential information, recipient shall return to the BUYER at his option or otherwise destroy all the confidential information received in written or tangible form including copies or reproductions or other media containing such confidential information. (4) Any documents or other media developed by the recipient containing confidential information shall be destroyed by the recipient.

 

(End of Article)

 

52

 

ARTICLE XVII : COMPLIANCE AND ANTI-BRIBERY

 

1.              REPRESENTATIONS OF THE PARTIES

 

During the Term of this CONTRACT and for the duration of any services provided hereunder, each party certifies and represents as follows:

 

(a)         It will comply with the laws of any jurisdiction applicable to such party as it relates to this CONTRACT, including but not limited to any applicable anti-corruption and anti-bribery laws, also including, without limitation, the United States Foreign Corrupt Practices Act (“US FCPA”), the UK Bribery Act 2010 (“UK Bribery Act”) and the anti-bribery or anti-corruption laws of South Korea as such laws may be amended from time to time.

 

(b)         In connection with this CONTRACT, it has not and will not make any payments or gifts or provide other advantages, or any offers or promises of payments or gifts or other advantages of any kind, directly or indirectly, to:

 

a.              any person or entity with the intention of obtaining or retaining a business advantage for itself or the other party to this CONTRACT;

 

b.              any official or member of any government or any agency or instrumentality thereof; any official or member of any public international organisation or any agency or instrumentality thereof; any or official of a political party or any candidate for political office (herein ‘public official’); or any person while knowing or reasonably suspecting that all or a portion of such money or thing of value will be offered, given or promised, directly or indirectly, to any public official, in violation of the UK Bribery Act, the US FCPA or the laws of South Korea.

 

(c)          In connection with this CONTRACT, it has not and will not request, agree to accept or accept from any person or entity any payments or gifts or other advantages, or any offers or promises of payments or gifts or other advantages of any kind, directly or indirectly, as a reward or inducement to perform its obligations under this CONTRACT in any way improperly.

 

2.              INDEMNIFICATION

 

Each party agrees that it will fully indemnify, defend and hold harmless the other party from any claims, liabilities, damages, expenses, penalties, judgments and losses (including reasonable attorneys’ fees) assessed or resulting by reason of a breach of the representations and undertakings contained in this Article XVII to the extent permitted by law.

 

(End of Article)

 

53

 

ARTICLE XVIII: 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)

 

54

 

ARTICLE XIX: 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 or facsimile or by hand or email and shall be deemed to be given when first received whether by registered mail or facsimile, by hand or email. They shall be addressed as follows, unless and until otherwise advised:

 

	
To the BUILDER
    	
:
    	
HYUNDAI HEAVY INDUSTRIES CO., LTD.
    
	
 
    	
 
    	
625   Seohae-ro, Gunsan, Jeonbuk, Korea
    
	
 
    	
 
    	
 
    
	
Attention:
    	
 
    	
Mr. I.   Y. Kim / Contract   Management Dep’t.
    
	
 
    	
 
    	
Tel : +82 63   447 6801
    
	
 
    	
 
    	
Facsimile: + 82 63 447 6899
    
	
 
    	
 
    	
E-mail: gcmd@hhi.co.kr
    
	
 
    	
 
    	
 
    
	
To the BUYER
    	
:
    	
NAVIG8 CRUDE   TANKERS INC
    
	
 
    	
 
    	
c/o Navig8   Asia Pte Ltd
    
	
 
    	
 
    	
3 Temasek   Avenue, #25-01 Centennial Tower, Singapore 039190
    
	
 
    	
 
    	
 
    
	
Attention:
    	
 
    	
Mr. Daniel   Chu
    
	
 
    	
 
    	
Facsimile:   +44 207 467 5867
    
	
 
    	
 
    	
Tel: +44 207   467 5888
    
	
 
    	
 
    	
E-mail:   legal@navig8group.com
    

 

The said notices shall become effective upon receipt of the letter, e-mail or facsimile communication by the receiver thereof. Where a notice by e-mail 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 e-mail or facsimile.

 

(End of Article)

 

55

 

ARTICLE XX: EFFECTIVENESS OF THIS CONTRACT

 

This CONTRACT shall become effective upon signing by the parties hereto.

 

(End of Article)

 

56

 

ARTICLE XXI: 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 and shall be superseded by this CONTRACT.

 

(End of Article)

 

57

 

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
    
	
NAVIG8 CRUDE TANKERS INC
    	
 
    	
HYUNDAI HEAVY INDUSTRIES   CO., LTD.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
By
    	
/s/ Gary   Brockelsby
    	
 
    	
By
    	
/s/ T.Y. Cho
    
	
Name: Gary   Brockelsby
    	
 
    	
Name: T.Y. Cho
    
	
Title:   Attorney-in-Fact
    	
 
    	
Title:   Attorney-in-Fact
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
WITNESS
    	
 
    	
WITNESS
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
By
    	
/s/ Daniel   Chu
    	
 
    	
By
    	
/s/ S.D. Yoon
    
	
Name: Daniel   Chu
    	
 
    	
Name: S.D. Yoon
    
	
Title:   General Counsel
    	
 
    	
Title:   Deputy General Manager
    

 

58

 

EXHIBIT “A”

 

DEED OF GUARANTEE

 

Date :[                 ], 2014

 

Gentlemen:

 

We hereby open our irrevocable letter of guarantee number [  ] (this “Guarantee”) in favour of NAVIG8 CRUDE TANKERS INC, a corporation organized and existing under the laws of Marshall Islands and having its principal office at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH 96960(hereinafter called the “BUYER”) for account of HYUNDAI HEAVY INDUSTRIES CO., LTD., Ulsan, Korea (hereinafter called the “BUILDER”) as follows in connection with the shipbuilding contract dated [   ], 2014 (hereinafter called “CONTRACT”) made by and between the BUYER and the BUILDER for the construction of 300,000 DWT Class Crude Oil Carrier 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 payment made to the BUILDER prior to the delivery of the VESSEL, we hereby irrevocably, unconditionally and absolutely guarantee, as primary obligor and not merely as surety, to you, your successors and assignees, 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 six per cent (6%) 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, not more than three (3) times, each time by the amount of such 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 six per cent (6%) 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. However, in the event of cancellation of the CONTRACT being based on delays due to Force Majeure as provided under Article VIII of the CONTRACT, the interest rate of refund shall be reduced to four per cent (4%) per annum as provided in Article X.5of the CONTRACT for the periods affected by such delays.

 

The payment by us under this Guarantee shall be made(subject to the third paragraph hereof) against the BUYER’s first written demand 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 within thirty (30) days after the BUYER’s demand. Refund shall be made to the BUYER by telegraphic transfer in United States Dollars. All payments under this Guarantee shall be made without any set-off or counterclaim and without any 

 

59

 

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 which case we shall make the minimum deduction or withholding permitted and will pay to you such additional amounts as may be necessary in order that the net amount received by you after such deduction or withholding shall be equal to the amount which would have been received had no such deduction or withholding been made.

 

In case any refund is made to the BUYER by the BUILDER or by us under this Guarantee, our liability hereunder shall be automatically reduced by the amount of such refund.

 

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, or, if applicable, pursuant to a final court judgment issued in relation thereto, immediately upon receipt from you of a demand for the sums so adjudged and a copy of the award or court judgment, as the case may be.

 

The validity of this Guarantee and our liability under or in connection therewith shall not be discharged, impaired, reduced or in any way affected by any extension of time or other amendment, variation, modification or supplement whatsoever of or to the CONTRACT nor by the giving of any time or any concession granted by you to the BUILDER or any indulgence, waiver or consent on your part in respect of time or any other terms of the CONTRACT, nor by any delay or failure by you in enforcing your rights under or in connection with the CONTRACT, nor by the liquidation, insolvency, bankruptcy, reorganization, amalgamation, reconstruction or analogous proceedings or other financial failure of the BUILDER or any other person, nor by the illegality, invalidity or unenforceability or any defect in the CONTRACT or any provisions thereof, or any repudiation, termination or rescission thereof or any other matter or circumstance which would (but for the provisions of this paragraph) discharge, impair, affect or reduce our liability under or in connection with this Guarantee.

 

This Guarantee shall become null and void upon receipt by the BUYER of the sum guaranteed hereby together with interest thereon 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 Guarantee shall be returned to us.

 

This Guarantee is valid and effective from the date of this Guarantee until such time as the VESSEL is delivered by the BUILDER to the BUYER in accordance with the provisions of the CONTRACT. However in the event that a dispute in respect of a refund is being resolved by 

 

60

 

arbitration in accordance with Article XIII of the CONTRACT, then this Guarantee shall continue to remain in force until 30 business days after such arbitration proceedings are concluded and a final arbitration award has been issued.

 

We agree that you may assign without our prior written consent the benefit of this Guarantee to any lawful assignee of the benefit of the CONTRACT.

 

This Guarantee and any non-contractual obligations arising out of or in connection with it shall be governed by, interpreted and construed in accordance with the laws of England. The undersigned hereby submits to the exclusive jurisdiction of the courts of England for the settlement of any disputes which may arise out of or in connection with this Guarantee and any non-contractual obligations arising out of or in connection with it. We hereby irrevocably appoint [   ] to act as our agent to receive and accept on our behalf any process or other document relating to any proceedings in the English courts which are connected with this Guarantee.

 

Very truly yours,

 

This Guarantee has been executed and delivered as a Deed on the day and year written above.

 

Signed as a Deed on behalf of [   ],a company incorporated in [   ]

	
by:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
and
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
being   persons who, in accordance with the laws of that territory, are acting under   the authority of the company
    	
 
    
	
 
    	
 
    	
 
    
	
In the presence of:
    	
 
    	
 
    
	
Witness’s   signature:
    	
 
    	
 
    
	
Name (print):
    	
 
    	
 
    
	
Occupation:
    	
 
    	
 
    
	
Address:
    	
 
    	
 
    

 

61

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