Document:

Exhibit 10.53

 

Execution version

 

DATED 21 March 2014

 

SCORPIO TANKERS INC.

 

and

 

VLCC ACQUISITION I CORPORATION

 

 

AGREEMENT FOR THE SALE AND PURCHASE OF

THE ENTIRE AUTHORIZED AND ISSUED SHARE CAPITAL OF

STI Perth Shipping Company Limited (the “Company”)

 

 

 

INDEX

 

	
1.
    	
INTERPRETATION
    	
1
    
	
 
    	
 
    	
 
    
	
2.
    	
REPRESENTATIONS
    	
5
    
	
 
    	
 
    	
 
    
	
3.
    	
AGREEMENT TO   SELL AND PURCHASE AND RELATED COVENANTS
    	
7
    
	
 
    	
 
    	
 
    
	
4.
    	
CONSIDERATION   AND INTRA-GROUP LOAN REPAYMENT
    	
7
    
	
 
    	
 
    	
 
    
	
5.
    	
COMPLETION
    	
7
    
	
 
    	
 
    	
 
    
	
6.
    	
THE   TRANSFEREE’S REMEDIES
    	
10
    
	
 
    	
 
    	
 
    
	
7.
    	
TERMINATION   EVENTS
    	
10
    
	
 
    	
 
    	
 
    
	
8.
    	
MISCELLANEOUS   PROVISIONS
    	
11
    
	
 
    	
 
    	
 
    
	
9.
    	
NOTICES
    	
13
    
	
 
    	
 
    	
 
    
	
10.
    	
ANTI-BRIBERY   AND COMPLIANCE
    	
14
    
	
 
    	
 
    	
 
    
	
11.
    	
GOVERNING LAW   AND JURISDICTION
    	
16
    

 

 

THIS AGREEMENT is dated the 21 day of March 2014 and is made between (this “Agreement”):-

 

(1)                                 SCORPIO TANKERS INC., incorporated under the under the laws of the Marshall Islands and having its registered office at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands, 96960 (“Transferor”); and

 

(2)                                 VLCC ACQUISITION I CORPORATION, incorporated under the under the laws of the Marshall Islands and having its registered office at Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands, 96960 (“Transferee”),

 

hereafter referred to individually as a “Party” and together as the “Parties”.

 

WHEREAS

 

(A)                               The Company is a Marshall Islands corporation and was incorporated on 22 November 2013.  Further details of the Company are set out in Schedule 2;

 

(B)                               Transferor is the legal and beneficial owner of fifteen hundred (1500) fully paid shares, each of par value United States Dollar One (USD 1.00), issued and registered by the Company which represent its entire authorised and issued share capital (the “Sale Shares”);

 

(C)                               The Company has entered into a shipbuilding contract with Daewoo Shipbuilding & Marine Engineering Co., Ltd (“DSME Builder”) for the construction and purchase of a 300,000 TDW Crude Oil Tanker with DSME Builder’s hull number 5406 dated 13 December 2013.

 

(D)                               In accordance with the terms of the Master Agreement (as defined herein) it was agreed (inter alia) that the Transferee would acquire the entire authorized and issued share capital of the Company and each of (i) STI Glasgow Shipping Company Limited; (ii) STI Edinburgh Shipping Company Limited, (iii) STI Cavaliere Shipping Company Limited, (iv) STI Dundee Shipping Company Limited, (v) STI Newcastle Shipping Company Limited and (vi) STI Esles Shipping Company Limited, as part of an en block transaction (“Aggregate Sale Shares”) pursuant to share purchase agreements in the same form as this Agreement (the “Other SPAs”).

 

(E)                                This Agreement sets out the terms on which the Sale Shares shall be sold by Transferor and purchased by Transferee.

 

NOW THEREFORE IT IS AGREED as follows:-

 

1.                                     INTERPRETATION

 

Definitions

 

1.1                                                 In this Agreement the following terms shall bear the meanings hereinafter set out:-

 

 

	
“Aggregate Sale   Shares”
    	
has the meaning given in recital (D);
    
	
 
    	
 
    
	
“Business Day” 
    	
means a day, other than a Saturday or Sunday,   on which banks are generally open for business in Monaco, the Netherlands,   New York and London;
    
	
 
    	
 
    
	
“Buyer’s   Representative Agreement”
    	
means the agreement to be entered into   between Scorpio Ship Management SAM and the Company in a form agreed between   the Transferor and the Transferee prior to Completion in relation to the   Shipbuilding Contract; 
    
	
 
    	
 
    
	
“Closing Date”
    	
means   the date of Completion; 
    
	
 
    	
 
    
	
“Completion” 
    	
means completion of the sale and purchase of   the Sale Shares in accordance with this Agreement;
    
	
 
    	
 
    
	
“Contracts”
    	
means the contracts listed in paragraph 4 of   the Disclosure Schedule;
    
	
 
    	
 
    
	
“Data Room CD-Rom”
    	
means the two identical CD-Roms containing   copies of the documents listed in the index to the Disclosure Schedule;
    
	
 
    	
 
    
	
“Disclosed”
    	
means disclosed by (i) the information   set out in the Disclosure Schedule; and (ii) the documents contained in   the Data Room CD-Rom;
    
	
 
    	
 
    
	
“Disclosure Schedule”
    	
means the disclosure schedule attached hereto   at Schedule 3;
    
	
 
    	
 
    
	
“Existing Performance Guarantee”
    	
means the guarantee dated 13   December 2013 issued by the Transferor as security for the performance   by the Company of its obligations under the Shipbuilding Contract;
    
	
 
    	
 
    
	
“Insolvency Event”
    	
means that any of the following actions has   occurred in relation to the relevant entity:
    
	
 
    	
 
    
	
 
    	
(a)                               an order has been made or an effective resolution   passed or other proceedings or actions taken (including, without limitation,   the presentation of a petition) with a view to its administration,   bankruptcy, winding-up, liquidation or dissolution; or
    
	
 
    	
 
    
	
 
    	
(b)                               it has had a receiver, administrative receiver,   manager or administrator appointed over all or any substantial part of its   undertaking or assets; or
    

 

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(c)                                any event has occurred or situation arisen in any   jurisdiction that has a substantially similar effect to any of the foregoing;
    
	
 
    	
 
    
	
“Master Agreement”

 
    	
means the agreement dated 18 March 2014   made between (inter alios) the Company; the Transferee; (i) STI Glasgow   Shipping Company Limited; (ii) STI Edinburgh Shipping Company Limited,   (iii) STI Cavaliere Shipping Company Limited, (iv) STI Dundee   Shipping Company Limited, (v) STI Newcastle Shipping Company Limited,   and (vi) STI Esles Shipping Company and the Transferor as amended and restated to date and as it may further   be amended or supplemented;
    
	
 
    	
 
    
	
“New Performance   Guarantee”
    	
means the back-to-back performance guarantee   in the agreed form to be issued by the Transferee at Completion; 
    
	
 
    	
 
    
	
“Other SPAs”
    	
has the meaning given in recital (D);
    
	
 
    	
 
    
	
“Purchase Price”
    	
has the meaning attributed to it under Clause   4.1;
    
	
 
    	
 
    
	
“Refund Guarantee”
    	
means the refund guarantee dated 17   December 2013 issued by Korea Eximbank in favour of the Company;
    
	
 
    	
 
    
	
“Resale   Price”
    	
means   USD 105,000,000 (one hundred and five million US dollars);
    
	
 
    	
 
    
	
“Security   Interest”
    	
means   any mortgage, hypothecation, charge (whether fixed or floating), pledge,   lien, option, restriction, assignment, right of first refusal, right of   pre-emption, right of set-off, third-party right or interest, other   encumbrance or security interest of any kind, or another type of preferential   arrangement (including a title transfer or retention arrangement) having   similar effect;
    
	
 
    	
 
    
	
“Shipbuilding   Contract”
    	
the   agreement dated 13 December 2013 made between the Company and DSME Builder   for the construction and purchase of a 300,000 TDW Crude Oil Tanker with Hull   number 5406, including the technical specifications (as amended and   supplemented from time to time, including any side letters and addenda) and   the Refund Guarantee;
    
	
 
    	
 
    
	
“Shipbuilding   Contract Price”
    	
means   USD 94,050,000 (ninety four million and fifty thousand US dollars);
    
	
 
    	
 
    
	
“Tax”
    	
means   (a)  all forms of taxation (other than for the avoidance of doubt,   deferred taxation) and duties and levies, including, without limitation,   corporate taxes,
    

 

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income   taxes, registration, stamp duty and transfer taxes, value added taxes, social   security contributions and employment taxes; and (b) all monetary   penalties and interest relating to any matter in clause (a) above;
    
	
 
    	
 
    
	
“Transaction   Documents”
    	
means   each of this Agreement, the New Performance Guarantee and any other documents   executed pursuant to this Agreement;
    
	
 
    	
 
    
	
“Transferee’s Group”
    	
means   each of the Transferee and any subsidiary undertaking, or parent undertaking   of the Transferee , or any subsidiary undertaking of such parent undertaking   of the Transferee from time to time (including, with effect from Completion,   the Company);
    
	
 
    	
 
    
	
“Transferor’s Account”
    	
means   the following account of the Transferor:
    
	
 
    	
 
    
	
 
    	
Name of Bank:
    	
ABN AMRO Bank
    
	
Address of Bank:
    	
ROTTERDAM, THE NETHERLANDS
    
	
I.B.A.N.:
    	
NL03ABNA0242248403
    
	
BIC/Swift Code:
    	
ABNANL2A
    
	
Beneficiary:
    	
Scorpio Tankers Inc.
    
	
Account Number:                
    	
24 22 48 403
    
	
 
    	
Intermediary   bank:
    	
Deutsche   Bank Trust Company America NY NY 10004
    
	
 
    	
Swift code:
    	
BKTRUS33XXX
    
	
“Transferor’s Group”
    	
means   each of the Transferor and any subsidiary undertaking of the Transferor from   time to time;
    
	
 
    	
 
    
	
“USD”
    	
means United States Dollars; and
    
	
 
    	
 
    
	
“Vessel”
    	
means the 300,000 TDW Crude Oil Tanker under   Hull number 5406.
    

 

Further capitalised terms used in this Agreement are defined hereafter.

 

Interpretation

 

1.2                                In this Agreement:-

 

1.2.1                                                 unless the context otherwise requires, words in the singular include the plural and vice versa;

 

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1.2.2                                                 references to a document in the “agreed form” is a reference to a document in a form approved and for the purposes of identification initialled by or on behalf of each party;

 

1.2.3                                                 “liability” includes every kind of debt or liability (present or future, certain or contingent), whether incurred as principal or surety or otherwise;

 

1.2.4                                                 a “subsidiary undertaking” or “parent undertaking” is to be construed in accordance with section 1162 (and Schedule 7) of the Companies Act 2006.  A subsidiary and a subsidiary undertaking shall include any person the shares or ownership interests in which are subject to security and where the legal title to the shares or ownership interests so secured are registered in the name of the secured party or its nominee pursuant to such security;

 

1.2.5                                                 references to any document include the same as amended, supplemented or restated from time to time; and

 

1.2.6                                                 Clause headings are for convenience of reference only and are not to be taken into account in the interpretation of this Agreement.

 

2.                                     REPRESENTATIONS

 

Transferor’s Representations and Warranties

 

2.1                               The Transferor hereby represents and warrants to Transferee as at the date of this Agreement (the “Warranties” and each a “Warranty”):-

 

2.1.1                                                 in the terms set out in Schedule 1 hereto;

 

2.1.2                                                 that Transferor is duly incorporated and is validly existing under the laws of its place of incorporation and has the requisite corporate power to execute this Agreement and perform its obligations hereunder; and

 

2.1.3                                                 that all necessary corporate and other action and governmental or other official consents and authorities necessary for it to enter into and perform its obligations hereunder have been taken; that the execution, delivery and performance by it of the provisions of this Agreement do not, and will not as of the Closing Date, contravene (i) any law or regulation existing at the date hereof applicable to it (ii) any contractual restriction binding upon it or (iii) its constitutional documents.

 

2.2                               The Warranties are deemed to be repeated on the Closing Date, by reference to the facts then existing.  Any reference made to the date of this Agreement (whether express or implied) in relation to any Warranty shall be construed, in 

 

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connection with the repetition of the Warranties, as a reference to the Closing Date.

 

2.3                               The Warranties (other than the Warranties at paragraphs 1, 2 and 3) are given subject to the information Disclosed.

 

2.4                               The Transferee acknowledges that:

 

(a)         it has conducted its own legal due diligence in relation to the Company and the Contracts based on the information contained in the Disclosure Schedule and the Data Room CD-Rom; and

 

(b)         it does not rely on, and it has not been induced to enter into this Agreement by, any representation or warranty, whether express or implied, of any nature whatsoever concerning the Sale Shares or the Company other than the Warranties set out in this Agreement.

 

2.5                               The Transferor acknowledges that the Transferee is entering into this Agreement in reliance on each Warranty, which has also been given as a representation and with the intention of inducing the Transferee to enter into this Agreement.

 

2.6                               If, at any time before Completion, the Transferor becomes aware of any matter which could cause a claim under this Agreement to arise or any matter which at Completion could constitute a breach of Warranty it shall forthwith disclose the same in full in writing to the Transferee in such detail as is available to the Transferor at the relevant time and, if requested by the Transferee, shall use its reasonable endeavours to remedy the notified occurrence.

 

2.7                               The Transferor shall not make any claim for an indemnity or a contribution or otherwise against the Company in connection with any liability which the Transferor has or may have in respect of a Warranty or under Clause 2.6 provided always that the Transferor’s liability did not arise as a result of a voluntary action of the Company after the Closing Date.

 

2.8                              Each Warranty is to be construed separately and independently and is not limited or restricted by a provision of or interference from any other terms of this Agreement.

 

Transferee’s Representations and Warranties

 

2.9                              The Transferee hereby represents and warrants to Transferor as at the date of this Agreement: (the “Transferee’s Warranties”):

 

2.9.1                             that Transferee is duly incorporated and is validly existing under the laws of its place of incorporation and has the requisite corporate power to execute this Agreement and perform its obligations hereunder;

 

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2.9.2                             that all necessary corporate and other action and governmental or other official consents and authorities necessary for it to enter into and perform its obligations hereunder have been taken; and

 

2.9.3                             that the execution, delivery and performance by it of the provisions of this Agreement do not, and will not as of the Closing Date, contravene (i) any law or regulation existing at the date hereof applicable to it (ii) any contractual restriction binding upon it or (iii) its constitutional documents.

 

The Transferee’s Warranties shall be deemed to be repeated as at the Closing Date, by reference to the facts then existing.

 

3.                                     AGREEMENT TO SELL AND PURCHASE AND RELATED COVENANTS

 

3.1                               Subject to the terms of this Agreement and for the consideration set out in Clause 4.1 below, Transferor hereby agrees to sell to Transferee the Sale Shares on the Closing Date together with the benefit of all rights and profits attaching thereto on the Closing Date free from any Security Interest, and Transferee agrees to purchase such Sale Shares.

 

3.2                               The Transferee shall not be obliged to complete the purchase of any of the Sale Shares unless the sale of the Aggregate Sale Shares is completed simultaneously.

 

4.                                     CONSIDERATION

 

4.1                               The consideration payable by the Transferee for the Sale Shares to be purchased by Transferee hereunder shall be:

 

(a)         an amount equal to the difference between the Resale Price and the Shipbuilding Contract Price (being USD 10,950,000 (ten million, nine hundred and fifty thousand US dollars));

 

(b)         an amount equal to the first instalment paid by the Company to the DSME Builder pursuant to the Shipbuilding Contract (being the amount of USD 14,107,500 (fourteen million, one hundred and seven thousand, five hundred US dollars)),

 

(together, the “Purchase Price”).

 

4.2                               The total amount of the Purchase Price is USD 25,057,500 (twenty five million and fifty seven thousand, five hundred US dollars).

 

5.                                     COMPLETION

 

5.1                               Completion shall be effected by the Transferor satisfying its obligations under Clause 5.2.1 and by the Transferee satisfying its obligations under Clause 5.2.2

 

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and shall take place on Monday 24 March 2014 (or such later date as may be agreed by the Parties) at the offices of the Transferor in Monaco.

 

5.2          At Completion:-

 

5.2.1                             Transferor shall deliver, or procure the delivery, to Transferee of the following:-

 

5.2.1.1                                       duly executed instruments of transfer of the Sale Shares, duly completed by Transferor and stamped in favour of Transferee together with the Share Certificates for the Sale Shares in the name of the Seller;

 

5.2.1.2                                       duly signed letters of resignation of the directors and officers of the Company in the agreed form dated as of the Closing Date and addressed to the Company and the Transferee, such resignations to include an acknowledgement that such director or officer does not have a claim against the Company for breach of contract, compensation for loss of office, redundancy or unfair dismissal or any other account whatsoever and that no agreement or arrangement is outstanding between the Company and such director or officer under which the Company has or could have any obligation to any such director or officer;

 

5.2.1.3                                       a certificate of goodstanding in respect of the Company dated no more than 2 Business Days prior to the Closing Date issued by the Marshall Islands Registry;

 

5.2.1.4                                       a certified true extract from the minutes of a duly held meeting of the directors of the Transferor evidencing the authorisation of the execution by the Transferor of this Agreement and the other documents which it is to execute pursuant to this Agreement;

 

5.2.1.5                                       each register, minute book and other book required by law to be kept by the Company made up to but not including the Closing Date and each certificate of incorporation and certificate(s) of incorporation on change of name for the Company;

 

5.2.1.6                                       all books, records, tax records, journals, ledgers, accounts, agreements and other documents (including, in the case of those kept or maintained on computer or otherwise electronically, such printouts, disks, tapes and other copies as the 

 

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Transferee may require acting reasonably) of the Company which are in the Company’s possession together with such information and things as the Transferee will need to access any of the foregoing;

 

5.2.1.7                                       the originals of the Shipbuilding Contract;

 

5.2.1.8                                       a deed of confirmation from the Transferor (for itself and as agent for each member of the Transferor’s Group) to the Company in the agreed form confirming that the Company has no indebtedness or liability to the Transferor or any member of the Transferor’s Group;

 

5.2.1.9                                       the Buyer’s Representative Agreement duly executed by, or on behalf of, Scorpio Ship Management SAM and the Company;

 

5.2.1.10                                the Data Room CD-Rom; and

 

5.2.1.11                                such other documents (if any) as may be required to give the Transferee legal and beneficial ownership of the Sale Shares as contemplated herein and to enable the Transferee to become the registered holders thereof.

 

5.2.2                                                 At Completion, the Transferee shall:-

 

5.2.2.1                                       pay the Purchase Price to the Transferor by wire transfer for value on the Closing Date to the Transferor’s Account;

 

5.2.2.2                                       deliver to the Transferor a certified true copy of the minutes of a duly held meeting of the directors of the Transferee authorising the execution by the Transferee of this Agreement and the other documents which it is to execute pursuant to this Agreement; and

 

5.2.2.3                                       deliver to the Transferor the New Performance Guarantee duly executed by the Transferee.

 

5.3                                                 On the Closing Date the Transferor hereby agrees to do and execute at its cost all such further acts, documents and things as the Transferee may reasonably request so that the legal and beneficial ownership of the Sale Shares vest in the Transferee as contemplated by this Agreement.

 

5.4                                                 The Transferor undertakes to the Transferee that it shall not (and that it shall procure that the Company shall not) do or allow to be done anything which would constitute a breach of Warranty if the Warranties were deemed to be 

 

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repeated on each day between the date of this Agreement and the Closing Date.

 

5.5                                                 The Transferor shall, promptly following receipt, forward to the Transferee all correspondence, notices and invoices received by the Transferor which relate to the Company or the Shipbuilding Contract.

 

6.                                     THE TRANSFEREE’S REMEDIES

 

6.1                                                 Without restricting the rights of the Transferee in any way or the ability of the Transferee to claim damages on any basis, in the event that any of the Warranties is breached the Transferor shall pay to the Transferee, or at the option of the Transferee, to the Company (on demand) an amount equal to the amount necessary to put the Company into the position which would have existed if the Warranties had not been breached and had been true and not misleading.

 

6.2                                                 The Transferor’s total liability in respect of all claims in respect of breach of the Warranties pursuant to this Clause 6 is limited to an amount equal to 100% of the Purchase Price.

 

7.                                     TERMINATION EVENTS

 

Definition

 

7.1                                                 Each of the events set out below occurring prior to or on Completion shall be a Termination Event within the meaning of this Agreement:-

 

7.2                                                 the sale of any of the Aggregate Sale Shares cannot be completed on the Closing Date simultaneously with the sale of the Sale Shares hereunder as a result of the failure of any Party to comply with its obligations under Clause 5 or any other Clause of this Agreement or any of its obligations pursuant to one or more of the Other SPAs; or

 

7.3                                                 any representation or warranty contained herein which is made by any Party proves to be incorrect in any material respect when made, unless otherwise waived by the other Party;

 

7.4                                                 either Party fails to comply with any material obligation contained in this Agreement or the Master Agreement.

 

Consequences of a Termination Event

 

7.5                                                 Following the occurrence with respect to a Party of a Termination Event (the “Defaulting Party”) which is continuing, the non-defaulting Party may by notice to the Defaulting Party terminate this Agreement, in which event (and without prejudice to any accrued rights of the Parties hereunder in the event of breach of the terms hereof), this Agreement shall immediately cease to be valid and binding.

 

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8.                                     MISCELLANEOUS PROVISIONS

 

Entire Agreement

 

8.1                                                 This Agreement together with the Master Agreement and the Other SPAs constitutes the entire understanding between the Parties in relation to the subject matter hereof and replaces and extinguishes all prior agreements, undertakings, arrangements or understandings made by the Parties with respect to such subject matter.

 

Assignment

 

8.2                                                 Neither of the Parties shall be entitled to assign the benefit of any rights under this Agreement provided that the benefit of any rights under this Agreement (including the Warranties) shall be freely assignable by the Transferee in the following circumstances:

 

(a)                                  to any member of the Transferee’s Group, save that if the assignee ceases to be a member of the Transferee’s Group, the Transferee will first ensure that the assignee reassigns the benefit that has been assigned to it under this Clause to the Transferee (or another member of the Transferee’s Group); and/or

 

(b)                                  by way of security for the benefit of any person who provides bank or other facilities to any member of the Transferee’s Group in connection with the transactions effected under this Agreement, and any such security or encumbrance may be enforced or released.

 

No Waiver

 

8.3                                                 No waiver of any provision of this Agreement shall be effective unless in writing signed by the waiving party and no waiver of any breach or default hereunder shall constitute a waiver of any other subsequent breach or default, whether of the same or different nature.

 

Invalidity or unenforceability of a term

 

8.4                                                 If any of the provisions of this Agreement or the application thereof are invalid or unenforceable in any respect, the validity and enforceability of the remaining provisions thereof shall in no way be affected, prejudiced or disturbed thereby. As used in this subsection, the term “provision” shall mean any part of any paragraph, sentence or clause contained in this Agreement.

 

Counterparts

 

8.5                                                 This Agreement may be executed in any number of counterparts and all of such counterparts taken together shall be deemed to constitute one and the same instrument.

 

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Binding effect

 

8.6                                                 This Agreement shall be binding upon the Parties hereto and their respective successors and assigns.

 

Contracts (Rights of Third Parties) Act 1999

 

8.7                                                 No provision of this Agreement shall be enforceable under the Contracts (Rights of Third Parties) Act 1999 by any person who is not a party to this Agreement.

 

Confidentiality

 

8.8                                                 The Agreement and the transactions contemplated herein shall be treated as strictly private and confidential, unless: (i) the Parties both agree to disclose the same, or (ii) the existence or any of its terms are required to be disclosed by law or reported to any regulator or regulated exchange, provided always that the Parties shall be at liberty to disclose it to their legal advisors and financial institutions.

 

Further Assurances

 

8.9                                                 From and after the date of this Agreement, upon the request of either of the Parties, each Party shall execute and deliver such instrument, documents and other writings as may be reasonably necessary or desirable to confirm and carry out and to effectuate fully the intent and purposes of this Agreement and the transactions contemplated thereby.

 

Variations and Amendments

 

8.10                                          No variation or amendment of this Agreement shall be effective unless in writing and signed by or on behalf of a duly authorized representative of each Party.

 

Survival

 

8.11                                          This Agreement (other than the Warranties which shall survive as set out in this Clause) shall in so far as they remain to be performed or are capable of subsisting remain in full force and effect after Completion.  The Warranties shall survive Completion until the earlier of: (i) the actual date of delivery of the Vessel under the Shipbuilding Contract; or (ii) termination of the Shipbuilding Contract by the Company (the “Warranty Date”) provided that this clause shall not affect any claim made by the Transferee in respect of a breach of Warranty prior to the Warranty Date.

 

Fees and Expenses

 

8.12                                          Each Party shall bear its own costs in connection with the preparation and execution of this Agreement.

 

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Tax Matters

 

8.13                                          Subject to the Warranties and the Buyer’s remedies in respect thereof, each Party shall be responsible, individually, for its own Tax which it may be or become in the future liable to pay in terms of law (and any other costs attached thereto such as interest, penalties, additional tax or similar costs) which is connected, directly or indirectly with this Agreement and which may arise in relation to any transfer of shares contemplated by this Agreement.

 

Trademarks and Intellectual Property

 

8.14                                          The Parties agree that any intellectual property and ancillary rights acquired or developed by the Parties, including trade names, trademarks and web domain names, shall remain the exclusive property of the respective Party.

 

8.15                                          The Transferee undertakes that it shall as soon as reasonably practicable following the earlier of:

 

8.15.1                                          the novation of the Shipbuilding Contract from the Company to another member of the Transferee’s Group; and

 

8.15.2                                          the delivery of the Vessel under Shipbuilding Contract,

 

procure that the name of the Company shall be changed so as to remove the name “STI” and shall promptly thereafter provide evidence of such change of name to the Seller.

 

8.16                                          Nothing in this Agreement shall have the effect of limiting or restricting any liability of the Transferor in respect of a claim arising as a result of any fraud, wilful default, or wilful concealment by the Transferor or any of its directors or employees.

 

Inconsistences

 

8.17                                          In the event of any inconsistency between the terms of this Agreement and the Master Agreement the Parties agrees that as between themselves the provisions of this Agreement shall prevail.

 

9.                                    NOTICES

 

Addresses for Notices

 

9.1                                Every notice or demand under this Agreement shall be in writing but may be given or made by letter or telefax.  The same shall be sent to the following addresses and/or telefax numbers

 

Notices to Transferee

 

VLCC Acquisition I Corporation c/o

 

General Maritime Corporation

 

13

 

299 Park Avenue

 

Second Floor

 

New York

 

New York 10171

 

USA

 

For the attention of:  CFO Leonidas J. Vrondissis

 

Email: lvrondissis@generalmaritimecorp.com

 

cc

 

Kramer Levin

 

For the attention of:  Terrence L. Shen

 

Email: tshen@KRAMERLEVIN.com

 

Watson, Farley & Williams LLP

 

For the attention of:  Jonathan Kellett

 

Email: Jkellett@wfw.com

 

Notices to Transferor

 

Scorpio Tankers at:

 

Le Millenium”, 9 Boulevard Charles III, 98000 Monaco

 

Attention: Mr. Luca Forgione/ Legal Department

 

Telephone No.: +377 97 98 57 00, Facsimile No.:+377 97 77 83 46

 

Email: legal@scorpiogroup.net

 

or to such other address and/or telefax number as shall be from time to time advised in writing by any party to the other.  Any notice sent by telefax shall be confirmed by prepaid first class (airmail if from abroad) letter posted as soon as practicable thereafter but the failure of the addressee to receive such letter shall not prejudice the validity or effect of such telefax notice.

 

10.                              ANTI-BRIBERY AND COMPLIANCE

 

The Transferor represents and warrants to the Transferee and the Transferee represents and warrants to the Transferor with effect from the date hereof and the Closing Date that, to the best of its knowledge, neither it nor any of its directors, officers, agents, employees, representatives or any other similar person acting for or on behalf of the foregoing in connection with the transactions contemplated in this Agreement, has offered, paid, promised to pay, or authorized the payment of any money, or offered, given a promise to give, or authorized the giving of anything of value, to any 

 

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government official, political party or official thereof or to any candidate for political office (or to any person where it or any of its directors, officers, agents, employees, representatives of any other similar person knew or was aware of a high probability that all or a portion of such money or thing of value would be offered, given or promised, directly or indirectly, to any government official, political party, party official or candidate for political office) for the purpose of:

 

(1)                                 influencing any act or decision of such government official, political party, party official or candidate in his or her official capacity; or

 

(2)                                 inducing such government official, political party, party official or candidate to do or omit to do any act in violation of the lawful duty of such government official, political party, party official or candidate; or

 

(3)                                 securing any improper advantage; or

 

(4)                                 inducing such government official, political party, party official or candidate to use his or her influence with any governmental authority to affect or influence any act or decision of such governmental authority, in order to assist it in obtaining or retaining business, the transactions contemplated by this Agreement.

 

The Transferor represents and warrants to the Transferee and the Transferee represents and warrants to the Transferor with effect of the date hereof and the Closing Date that:

 

(1)                                 it has not engaged in any activity, practice or conduct which would constitute a breach of any applicable law or convention relating to the prevention of bribery and corruption including, but not limited to: (A) the UK Bribery Act 2010 (the “Bribery Act”); (B) the United States Foreign Corrupt Practices Act of 1977 (as amended); and (C) the Convention on Combating Bribery of Foreign Public Officials in International Business Transactions, signed in Paris on December 17, 1997, which entered into force on February 15, 1999, and the Convention’s Commentaries;

 

(2)                                 it has maintained in place adequate procedures designed to prevent it or any of their respective directors, officers, employees, agents or other persons acting on the behalf of any of the foregoing, from undertaking any conduct that would give rise to an offence under the Bribery Act (as each such term is defined in the Bribery Act); and

 

(3)                                 it has not violated in any material respect any applicable law or regulation in connection with this Agreement, or in connection with the carrying on of its business (including, without limitation, the US Foreign Account Tax Compliance Act and the US Foreign Corrupt Practices Act).

 

15

 

11.                              GOVERNING LAW AND JURISDICTION

 

Governing law

 

11.1                                                   This Agreement (including a dispute relating to its existence, validity or termination) and any non-contractual obligation or other matter arising out of or in connection with it shall be governed by, and construed in accordance with, English law.

 

Jurisdiction

 

11.2                                                   Any dispute arising out of or in connection with this Agreement shall be referred to arbitration in London in accordance with the Arbitration Act 1996 or any statutory modification or re-enactment thereof save to the extent necessary to give effect to the provisions of this Clause. The arbitration shall be conducted in accordance with the London Maritime Arbitrators Association Terms current at the time when the arbitration proceedings are commenced.

 

16

 

SCHEDULE 1

 

TRANSFERORS’ REPRESENTATIONS AND WARRANTIES

 

Specific Representations and Warranties:

 

The Transferor makes the following specific representations and warranties set out below to Transferee:-

 

1                                                    The Company and the Sale Shares

 

(a)                                            Incorporation and existence

 

The Company is duly formed and validly existing under the laws of the Republic of the Marshall Islands and the information set out in Schedule 2 is true, accurate and not misleading in any respect.

 

(b)                                            Title to the Sale Shares

 

The Sale Shares constitute 100% of the issued and outstanding share capital of the Company, the Transferor is the sole legal and beneficial owner of the Sale Shares, and no claim has been made by any person to be entitled to any of them.  The Company is authorised to issue 1500 registered shares with a par value of USD1.00 per share, all of which shares have been validly issued, are fully paid and non-assessable.  There is no Security Interest, option, conversion right, right to acquire, or other adverse interest, right, equity, claim or potential claim of any description on or over or affecting any of the Sale Shares nor are there any agreements, arrangements or commitments to give or create any such Security Interest, right or claim, and no claim has been made by any person to be entitled to any.

 

(c)                                             No arrangements relating to share capital

 

The Company has not created or issued any shares or equity interests (other than the Sale Shares) or loan capital or other securities at any time). There is no agreement, arrangement, obligation or commitment (including an option or right of pre-emption or conversion) requiring or granting any person the right to require the creation, allotment, issue, transfer, redemption or repayment of, or creating or requiring the creation of any Security Interest over, or requiring the grant to a person of the right (conditional or not) to require the allotment, issue, transfer, redemption or repayment of, any shares, equity or loan capital the Company (or any unissued shares, equity capital, loan capital or other securities of the Company) now or at any time in the future, and the Company has not agreed to do or enter into any of the foregoing and no person has made any claim to be entitled to any of the foregoing.

 

(d)                                            Dividends

 

Since incorporation, the Company has not made or declared any dividends or other distributions whatsoever.

 

17

 

(e)               No Subsidiaries

 

The Company is not the holder or beneficial owner of any shares or other security in any body corporate wherever incorporated.

 

(f)               Business

 

The Company has not conducted any business or other activity other than:

 

(i)                entry into and performance of its obligations under the Shipbuilding Contract;

 

(ii)               opening, operating and closing the bank accounts described in paragraph 5(d) of the Disclosure Schedule; and

 

(iii)              holding the insurances described in paragraph 7 of the Disclosure Schedule (the “Insurances”).

 

2                 The Transferor

 

(a)               Capacity of Transferor

 

As regards the Transferor:

 

(i)                this Agreement and the Transaction Documents to which it is a party constitute (or will constitute when executed) its legal, valid and binding obligations enforceable against it in accordance with their terms;

 

(ii)               it has the power and authority to absolutely and unconditionally sell and transfer the full legal and beneficial ownership in the Sale Shares registered in its name to the Transferee on the terms set out in this Agreement;

 

(iii)              no action, suit, proceeding, litigation or dispute against it or any Transferor Group Companies is presently taking place or pending or, to its knowledge, threatened that would or might reasonably be expected to inhibit its ability to perform its obligations under this Agreement and the Transaction Documents to which it is a party or that could materially and adversely affect the Sale Shares; and

 

(iv)              no Insolvency Event has occurred in relation to it and no events or circumstances have arisen that entitle or could entitle any person to take any action, appoint any person, commence proceedings or obtain any order instigating an Insolvency Event.

 

3                 Insolvency

 

(a)               No Insolvency event

 

No Insolvency Event has occurred in relation to the Company and no events or circumstances have arisen that entitle or could entitle any person to take any 

 

18

 

action, appoint any person, commence proceedings or obtain any order instigating an Insolvency Event.

 

4                                                    Agreements

 

(a)                                            Disclosure of Contracts

 

The Company is not, and has never been, a party to, liable under or subject to any agreement, arrangement, obligation or commitment other than the Contracts.  Complete and accurate copies of the Contracts (including all amendments and supplemental agreements relating thereto) have been provided to the Transferee and are set out in the index to the Disclosure Schedule.

 

(b)                                            Enforceability of and compliance with Contracts

 

In relation to each Contract:

 

(i)                                                the Transferor has no reason to believe that the Company will be unable to complete and fulfil each Contract by the due date and in accordance with its terms;

 

(ii)                                             the Company is in the possession of each Contract;

 

(iii)                                          there are no written or oral agreements that derogate from the obligations of any person other than the Company or increase the obligations of the Company under any Contract;

 

(iv)                                         each Contract has been validly executed, is valid and subsisting and has not been terminated;

 

(v)                                            no Contract is subject to a Security Interest granted or created by the Company other than under the terms of the Contract;

 

(vi)                                         there is no and has not been, at any time, any breach of, or any default in the performance of, the terms of any Contract by any person other than the Company nor, so far as the Transferor is aware, are there any circumstances likely to give rise to such breach or default. The Company has not granted any time or indulgence, or waived any right, in relation to any Contract;

 

(vii)                                      the Company has fulfilled all of its obligations and performed and observed all warranties, undertakings, conditions, covenants and agreements on its part to be fulfilled, performed and observed under each Contract;

 

(viii)                                   no notice of any intention to terminate any Contract has been given by the Company or received by the Company in respect of any Contract;

 

(ix)                                         the Company has paid all Taxes, duties, and other charges payable in respect of each Contract so far as such Taxes, duties, and other charges fall upon the Company and have become due and payable;

 

19

 

(x)                                            all necessary licences, approvals and consents required by the Company prior to the entry into of each of the Contracts and for their continuation were duly obtained and are subsisting and, to the Transferor’s knowledge, no circumstances have arisen that may lead to withdrawal or failure to renew, if applicable, of any such licence, approval or consent; and

 

(xi)                                         there are no disputes or outstanding claims pending or, to the Transferor’s knowledge, threatened against the Company under any Contract and, to the Transferor’s knowledge, no person is entitled to make, or has threatened to make, a claim against the Company in respect of any representation, breach of condition or warranty or other express or implied term relating to any of the Contracts and no matter exists that would or might enable a person other than the Company to make such a claim in any action for breach of any Contract or otherwise give any person other than the Company the right to withhold or delay the performance of any of its obligations thereunder.

 

(c)                                             No powers of attorney

 

There are in force no powers of attorney given by the Company nor any other authority (express, implied or ostensible) given by the Company to or in favour of any person (as agent or otherwise) to enter into any agreement, contract or commitment or to do anything on their behalf.

 

(d)                                            Offers and tenders

 

No offer or tender or similar arrangement given or made by the Company is capable of giving rise to an agreement solely by the unilateral act of any person other than the Company.

 

(e)                                             Joint Ventures etc

 

The Company is not, and has not agreed to, act or carry on business in partnership with any other person and are or have agreed to act or become a member of any joint venture, consortium, corporate or unincorporated body, association or undertaking.

 

(f)                                              Competition/Anti-trust

 

The Company is not a party to any practice, arrangement or agreement that infringes or is likely to require registration or notification under any relevant anti-trust or competition law.

 

(g)                                             Performance Guarantees

 

No call or payment has been made on or by the Performance Guarantor pursuant to any Performance Guarantee.  True, complete and accurate copies of the Performance Guarantees are set out in the Disclosure Schedule.

 

20

 

(h)                                            Price Payable

 

The price payable by the Company to the DSME Builder pursuant to the Shipbuilding Contract as at Completion is USD 94,050,000 (ninety four million and fifty thousand US dollars) (which amount includes USD 1,200,000 (one million, two hundred thousand US dollars) of extras, but excludes buyer’s supplies as defined in the Shipbuilding Contract).

 

5                                                    Financial Arrangements

 

(a)                                            Indebtedness

 

The Company does not have outstanding nor has it incurred or agreed to incur any Indebtedness.

 

(b)                                            Loans

 

The Company has not made any loans to any person.

 

(c)                                             No guarantee or Security Sale Shares

 

No guarantee or Security Interest has been given or entered into by the Company or any third party in respect of Indebtedness or other obligations of the Company and no guarantee or Security Interest has been given or entered into by the Company in respect of any other person.

 

(d)                                            Bank accounts

 

Details of all bank accounts of the Company and the balances of the Company’s bank accounts as at Completion are set out in paragraph 5(d) of the Disclosure Schedule.

 

6                                                    Assets and Liabilities

 

(a)                                            No other assets and liabilities

 

The Company has no assets other than its paid up share capital and its right pursuant to the Contracts. The Company has no liabilities other than pursuant to the Contracts and its on-going obligation to pay the annual corporate fees to the Marshall Islands registry. No corporate fees are due and payable by the Company to the Marshall Islands Registry as at the Closing Date.

 

(b)                                            No property

 

The Company does not own, occupy or use any real property.

 

(c)                                             No intellectual property

 

The Company does not own or use any Intellectual Property.

 

21

 

7                                                    Insurance

 

(a)                                            No amounts are due or payable by the Company in respect of the Insurances and the Company has not made any claim under the Insurances.

 

(b)                                            The Company does not maintain any policies of insurance other than the Insurances and the Insurances will be terminated on the Closing Date without liability to the Company.

 

8                                                    Litigation and other Disputes

 

(a)                                            No proceedings

 

The Company is not engaged in or a party to any dispute, litigation, arbitration, prosecution or other legal proceedings or in any proceedings or hearings before any statutory or governmental body, department, board or agency, nor are any of the foregoing pending or threatened by the Company and the Company has not received any notice that any of the foregoing is pending or threatened against the Company.

 

(b)                                            No orders or judgements

 

There is no order, decree or judgement of any court, tribunal or any governmental agency of any country outstanding against the Company or any person for whose acts the Company may be vicariously liable, and, to the Transferor’s knowledge, there are no circumstances likely to give rise to vicarious liability of the Company.

 

(c)                                             No unlawful acts

 

The Company has not committed, or been prosecuted for, any breach of a statutory or regulatory duty or any tortious or other criminal or unlawful or unauthorised act that could reasonably be expected to lead, or has led, to a claim for damages or an injunction or other order of a court or tribunal of competent jurisdiction being made against it, and there are no circumstances likely to give rise to such a breach or act.

 

9                                                    Compliance with Legal Requirements

 

(a)                                            Compliance by the Company

 

The Company has complied and is continuing to comply in all material respects with all relevant legislation and regulations applicable to it and/or its business and/or its assets.

 

(b)                                            Returns

 

All returns, particulars, resolutions and other documents required to be filed with or delivered to the relevant authorities in the Republic of the Marshall Islands by the Company have been properly prepared and so filed or delivered.

 

22

 

(c)                                             Governing Documents

 

The governing documents of, and all resolutions passed by, the Company and all other legal requirements concerning the Company have been complied with. Copies of the governing documents of the Company have been provided to the Transferee, which are complete and accurate in all respects, have attached thereto or incorporated therein copies of all resolutions and other documents required by law to be so attached or incorporated, and fully set out the rights and restrictions attaching to the Sale Shares.

 

(d)                                            Books and records

 

The statutory books (including all registers and minute books whether electronic or otherwise), books of account and other statutory records the Company have been properly and accurately written up or maintained in accordance with Marshall Islands law and are up to date and comprise complete and accurate records of all information required to record therein. The Company has not received any notice or allegation that any of the statutory books, books of accounts or other records of whatsoever kind of the Company are inaccurate or incomplete or should be rectified.

 

10                                             Employment

 

The Company does not and has never had any employees or operated any pension scheme.

 

11                                             Taxation

 

No Tax returns are, or have ever been required to be, filed by or with respect to the Company. The Company does not have and will not have any Tax liability in respect of any time at or prior to Completion.

 

12                                             Miscellaneous

 

(a)                                            No broker’s fees

 

No one is entitled to receive from the Company any finder’s fee, brokerage, or other commission in connection with the purchase of the Sale Shares.

 

(b)                                            All information disclosed

 

All information relating to the Company that the Transferor knows or should reasonably know and that is material to be known by the Transferee in the context of the sale of the Sale Shares has been disclosed to the Transferee and there are no other facts or matters undisclosed to the Transferee that could reasonably be expected to have an adverse effect on the Company or the Sale Shares.

 

23

 

(c)                                             Accurate information provided

 

All information given by the Transferor and/or the professional advisers of the Transferor to the Transferee, any of the directors or professional advisers of the Transferee (including information contained in the Disclosure Schedule and the Data Room CD-Rom) in the course of negotiations leading to this Agreement was when given and remains and will at Completion be true and accurate in all respects and there is no matter or fact which has not been disclosed which renders any such information untrue or misleading in any respect.

 

24

 

SCHEDULE 2

 

INFORMATION ABOUT THE COMPANY

 

	
1
    	
 
    	
Registered number
    	
 
    	
65269
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
2
    	
 
    	
Date of   incorporation
    	
 
    	
22   November 2013
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
3
    	
 
    	
Place of   incorporation
    	
 
    	
Republic of the   Marshall Islands
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
4
    	
 
    	
Address of   registered office
    	
 
    	
Trust Company Complex,   Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands, 96960
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
5
    	
 
    	
Type of company
    	
 
    	
Marshall Islands   Corporation
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
6
    	
 
    	
Shareholder
    	
 
    	
Scorpio Tankers   Inc.
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
7
    	
 
    	
Total authorised   and issued share capital
    	
 
    	
1500 fully paid   registered shares
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
8
    	
 
    	
Directors
    	
 
    	
Brian Lee  Sergio Gianfranchi
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
9
    	
 
    	
Secretary
    	
 
    	
Brian Lee
    

 

25

 

SCHEDULE 3

 

DISCLOSURE SCHEDULE

 

The headings and paragraph numbers below correspond to those headings and paragraph numbers in Schedule 2 (Transferor’s Representations and Warranties):

 

4.                                      Agreements

 

The Company is a party to the following:

 

(a)                                 the Shipbuilding Contract (please see document 5.1.1 and 5.1.3 of the attached index); and

 

(b)                                 the Account Agency Agreement referred to at document 10.1.1 of the attached index.  The Account Agency Agreement has been terminated without liability to the Company.

 

Copies of each Contract are included in the Data Room CD-Rom.

 

5.                                      Financial Arrangements

 

(a)                                 The Transferor advanced an interest-free loan to the Company in the amount of USD 14,107,500 (fourteen million, one hundred and seven thousand, five hundred US dollars) to fund instalments paid by the Company under the Shipbuilding Contract, which has been capitalised on or prior to the date of this Agreement.

 

(d)                                 The Company held a bank account at ABN AMRO N.V., account number 618696253 (the “Bank Account”).  This account has been closed without liability to the Company.

 

7.                                      Insurance

 

The Company has insurance with respect to the Vessel with Standard Club Europe Limited (please see document 5.1.5 of the attached index). The Insurances will be terminated on the Closing Date without liability to the Company.

 

8.                                      Refund Guarantee

 

The Refund Guarantee was issued by authenticated SWIFT message to the Bank Account. No originals of the Refund Guarantee are held by the Transferor. Copies of the Refund Guarantee are included in the Data Room CD-Rom (please see document 5.1.3 of the attached index).

 

9.                                      Additional disclosures are attached to this Schedule.

 

26

 

IN WITNESS WHEREOF the parties have caused this Agreement to be duly executed by their duly authorised officers or other representatives the day and year first above written.

 

 

	
SIGNED
    	
)
    	
 
    
	
for and on behalf of
    	
)
    	
 
    
	
VLCC ACQUISITION I CORPORATION
    	
)
    	
 
    
	
By Leonard J. Vrondissis
    	
)
    	
 
    
	
Duly authorised signatory
    	
)
    	
 
    
	
in the presence of: 
    	
)
    	
/s/   Leonard J. Vrondissis
    
	
Jorge Yengle
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
SIGNED
    	
)
    	
 
    
	
for and on behalf of
    	
)
    	
 
    
	
SCORPIO TANKERS INC.
    	
)
    	
 
    
	
By Luca Forgione
    	
)
    	
 
    
	
Duly authorised signatory
    	
)
    	
 
    
	
in the presence of:
    	
)
    	
/s/   Luca Forgione
    
	
Micha WithoftExhibit 10.75

 

SHIPBUILDING CONTRACT

 

FOR

 

THE CONSTRUCTION OF

 

300,000 DWT CLASS CRUDE OIL CARRIER

 

HULL NO. S768

 

BETWEEN

 

NAVIG8 CRUDE TANKERS INC

 

(AS BUYER)

 

AND

 

HYUNDAI SAMHO 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 12th day of December, 2013 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 SAMHO HEAVY INDUSTRIES CO., LTD. a company organized and existing under the laws of the Republic of Korea, having its principal office 93, Daebul-Ro, Samho-Eup, Yeongam-Gun, Jeollanam-Do, 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 HSQS (Hyundai Samho Shipbuilding Quality Standard) 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. S768 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 HSQS (Hyundai Samho Shipbuilding Quality Standard) 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.

 

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(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 sub-contractors appointed pursuant to this CONTRACT shall, in the reasonable opinion of the 

 

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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)

 

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ARTICLE II: CONTRACT PRICE

 

The contract price of the VESSEL delivered to the BUYER at the SHIPYARD shall be United States Dollars Ninety Five Million Three Hundred Thousand (US$ 95,300,000.-) (hereinafter called the “CONTRACT PRICE”) which shall be paid plus any increases or less any decreases due to adjustment or modification, if any, as set forth in this CONTRACT. 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)

 

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ARTICLE III: ADJUSTMENT OF THE CONTRACT PRICE

 

The CONTRACT PRICE of the VESSEL shall be adjusted as hereinafter set forth in the event of the following contingencies. It is hereby understood by both parties that any adjustment of the CONTRACT PRICE as provided for in this Article is by way of liquidated damages and not by way of penalty.

 

1.              DELAYED DELIVERY

 

(a)         No adjustment shall be made and the CONTRACT PRICE shall remain unchanged for the first thirty (30) days of the delay in delivery of the VESSEL [ending as of 12 o’clock midnight Korean Standard Time on the thirtieth (30th) day of delay] beyond the Delivery Date calculated as provided in Article VII.1. hereof.

 

(b)         If delivery of the VESSEL is delayed more than thirty (30) days beyond the date upon which the delivery is due from the BUILDER under the terms of this CONTRACT, then, beginning at midnight of the thirtieth (30th) day after such due date, the CONTRACT PRICE of the VESSEL shall be reduced by U.S. Dollars 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.

 

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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

 

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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 XXXX 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)

 

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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

 

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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)

 

17

 

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;

 

19

 

(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

 

21

 

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.

 

22

 

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 HSQS (Hyundai Samho Shipbuilding Quality Standard) 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

 

23

 

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 March 15, 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,

 

25

 

(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

 

26

 

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

 

27

 

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,

 

29

 

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

 

30

 

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

 

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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 Nineteen Million Sixty Thousand (US$ 19,060,000) 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, but in any event not earlier than 20th, December 2013.

 

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 Nine Million Five Hundred Thirty Thousand (US$9,530,000) 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 Nine Million Five Hundred Thirty Thousand (US$9,530,000) 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 Nine Million Five Hundred Thirty Thousand (US$9,530,000) shall be paid within three (3) business

 

35

 

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 Forty Seven Million Six Hundred Fifty Thousand (US$47,650,000) 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 Nong Hyup Bank of Korea, Head Office, Seoul, Korea (hereinafter called “NH Bank”), Account No. 001-1-544582 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 Samho Heavy Industries Co., Ltd. (hereinafter called the “HSHI”) under advice by telefax or telex, including swift, to NH BANK 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 NH BANK, Account No. 001-1-544582 at JPMCB, N.Y., or any other bank, Seoul, Korea as designated by the BUILDER, by the BUYER in favour of HSHI 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 HSHI against presentation by the BUILDER to NH BANK, 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 in this paragraph upon receipt of a further notice from the Builder for readiness of 

 

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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 NH BANK, 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.

 

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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 NH BANK 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.

 

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 

 

39

 

effect by written notice to the BUILDER.

 

(End of Article)

 

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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.

 

43

 

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)

 

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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)

 

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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 SAMHO HEAVY INDUSTRIES CO., LTD.
    
	
 
    	
 
    	
 
    	
93, Daebul-Ro,   Samho-Eup, Yeongam-Gun, Jeollanam-Do, Korea
    
	
 
    	
 
    	
 
    	
 
    
	
Attention:
    	
 
    	
 
    	
Mr. S. W. Chun / Contract Management Dep’t.
    
	
 
    	
 
    	
 
    	
Tel : +82 61 460 2649
    
	
 
    	
 
    	
 
    	
Facsimile: + 82 61 460 3707
    
	
 
    	
 
    	
 
    	
E-mail: swc@hshi.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 SAMHO
    
	
 
    	
HEAVY INDUSTRIES CO., LTD.
    
	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
By
    	
/s/ Daniel Chu
    	
 
    	
By
    	
/s/ Sam H. Ka
    
	
Name: Daniel Chu
    	
Name: Sam H. Ka
    
	
Title: Attorney-in-Fact
    	
Title: Attorney-in-Fact
    
	
 
    	
 
    
	
 
    	
 
    
	
WITNESS
    	
WITNESS
    
	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
By
    	
/s/ Siduarth Nair
    	
 
    	
By
    	
/s/ Y.D. Park
    
	
Name: Siduarth Nair
    	
Name: Y.D. Park
    
	
Title:
    	
Title: SVP
    

 

58

 

EXHIBIT “A”

 

DEED OF GUARANTEE

 

Date :[          ], 2013

 

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 SAMHO HEAVY INDUSTRIES CO., LTD., Samho, Korea (hereinafter called the “BUILDER”) as follows in connection with the shipbuilding contract dated [   ], 2013 (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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