SHIPBUILDING CONTRACT FOR CONSTRUCTION OF ONE MULTI-PURPOSE VESSEL (HULL NO. NYHS200720) BETWEEN ARGYLE MARITIME CORP. AS BUYER AND CHINA COMMUNICATIONS CONSTRUCTION COMPANY LTD AND NANTONG YAHUA SHIPBUILDING CO., LTD. COLLECTIVELY AS SELLER CONTENTS
Exhibit
10.2
Pursuant
to 17 CFR 240.24b-2, confidential information (indicated by [***]) has been
omitted and has been filed separately with the Securities and Exchange
Commission pursuant to a Confidential Treatment Application filed with the
Commission.
FOR
CONSTRUCTION
OF ONE
MULTI-PURPOSE
VESSEL
(HULL
NO.
NYHS200720)
BETWEEN
ARGYLE
MARITIME CORP.
AS
BUYER
AND
CHINA
COMMUNICATIONS CONSTRUCTION COMPANY LTD
AND
NANTONG
YAHUA SHIPBUILDING CO., LTD.
COLLECTIVELY
AS SELLER
CONTENTS
Page
No.
1.1 DESCRIPTION
2. ARTICLE
II - CONTRACT PRICE & TERMS OF PAYMENT
2.1 CONTRACT
PRICE
3. ARTICLE
III - ADJUSTMENT OF THE CONTRACT PRICE
3.1 DELIVERY
DATE
4. ARTICLE
IV - SUPERVISION AND INSPECTION
4.1 APPOINTMENT
OF THE BUYER'S SUPERVISOR
5. ARTICLE
V - MODIFICATION, CHANGES AND EXTRAS
5.1 HOW
EFFECTED
6. ARTICLE
VI - TRIALS
6.1 NOTICE
7. ARTICLE
VII - DELIVERY
7.1 TIME
AND PLACE
8. ARTICLE
VIII - DELAYS & EXTENSION OF TIME FOR DELIVERY
8.1 CAUSE
OF DELAY
HYPERLINK
\l "_Toc159829350"
9. ARTICLE
IX - WARRANTY OF QUALITY
9.1 GUARANTEE
OF MATERIAL AND WORKMANSHIP
10. ARTICLE
X - INSOLVENCY OF SELLER: RESCISSION BY THE BUYER
11.1 DEFINITION
OF DEFAULT
12. ARTICLE
XII - INSURANCE
12.1 EXTENT
OF INSURANCE COVERAGE
13. ARTICLE
XIII - DISPUTES AND ARBITRATION
13.1 PROCEEDINGS
14. ARTICLE
XIV - RIGHT OF ASSIGNMENT
15.1 TAXES
16. ARTICLE
XVI - PATENTS, TRADEMARKS AND COPYRIGHTS
19.1 LAW
APPLICABLE
Exhibit
"A": IRREVOCABLE
REFUND LETTER OF GUARANTEE FOR THE 1st
INSTALMENT
Exhibit
“B” IRREVOCABLE
REFUND LETTER OF GUARANTEE FOR THE 2nd,
3rd
and
4th
INSTALMENTS
Exhibit
"C": IRREVOCABLE
PAYMENT LETTER OF GUARANTEE
Exhibit
"D": FORM
OF
STAGE CERTIFICATE
FOR
CONSTRUCTION
OF ONE
MULTI-PURPOSE
VESSEL
(HULL
NO.NYHS200720)
This
CONTRACT, entered into this day
of
February 2007 by and between
ARGYLE MARITIME CORP.,
a
corporation organized and existing under the laws of the Xxxxxxxx Islands,
having its registered office at Trust Company Complex, Ajeltake Road, Ajeltake
Island, Majuro, Xxxxxxxx Islands MH96960 (hereinafter called the "BUYER")
on one
part; and
CHINA COMMUNICATIONS CONSTRUCTION COMPANY LTD,
a
corporation organized and existing under the laws of the People's Republic
of
China, having its registered office at Xx.X00, Xx Xxxx Xxx Xxx Xxxxxx, Xxxxxxx
000000, the People's Republic of China (hereinafter called "CCCC"),and
NANTONG
YAHUA SHIPBUILDING CO., LTD.,
a
corporation organized and existing under the laws of the People's Republic
of
China, having its registered office at 1# Hongzha Road, Jiuweigang, Nantong
Jiangsu P.C. 226361, the People's Republic of China (hereinafter called the
"BUILDER")
on the
other part, CCCC and the BUILDER being hereinafter collectively called the
"SELLER".
WITNESSETH
IN
CONSIDERATION OF the mutual covenants contained herein, the SELLER agrees to
design, build, launch, equip and complete at the BUILDER's Shipyard at 1#
Hongzha Road, Jiuweigang, Nantong Jiangsu P.C. 226361, the People's Republic
of
China (the “SHIPYARD”)
and to
sell and deliver to the BUYER after completion and successful trial one (1)
multi-purpose vessel as more fully described in Article I hereof, to be
registered under the flag of Panama and
the
BUYER agrees to purchase and take delivery of the aforesaid vessel from the
SELLER and to pay for the same in accordance with the terms and conditions
hereinafter set forth.
| 1. |
ARTICLE
I - DESCRIPTION AND CLASS
|
| 1.1 |
DESCRIPTION
|
The
vessel (hereinafter called the "VESSEL")
is a
multi-purpose vessel, with a xxxxxxxxx draft (moulded) of 10.90 meters and
with
the dimensions stated in Article I paragraph 3, of the class described below.
The VESSEL shall have the BUILDER's Hull No.NYHS200720 and shall be designed,
constructed, equipped and completed in accordance with the following
Specifications:
(1) Specification
for XXX Xxxxxxxxxxxxx Xxxxx-Xxxxxxx Xxxxxx(Xxxxxxx Xx.XX0000-00-00XX Rev. 1
December 24, 2006) (the “Technical
Specification”)
(2) General
Arrangement (Drawing No.SC4461-010-03 Rev. 1)
(3) Midship
Section (Drawing No. SC4461-011-01 Rev. 1)
(4) Makers
List for Equipment (Drawing No. SC4461-010-MX Rev.2)
each
initialled by each of the parties to this Contract on 24 December 2006
(hereinafter collectively called the "Specifications"),
and
forming an integral part hereof.
| 1.2 |
CLASS
AND RULES: GENERAL QUALITY
STANDARDS
|
The
VESSEL, including its machinery and equipment, shall be designed and constructed
in accordance with the rules, regulations and requirements of Lloyd’s Register
of Shipping (hereinafter called the "Classification Society")
so as
to achieve on delivery the following Class notation:-
LR
+100A1, STRENGTHENED FOR HEAVY CARGOES, CONTAINER CARGOES ON TWEEN DECK AND
ON
UPPER DECK AND ALL HATCH COVERS, +LMC, SCM, *IWS, UMS
The
VESSEL shall also comply with the rules, regulations and requirements of the
other regulatory bodies and authorities as fully described in the
Specifications.
The
requirements of such regulatory bodies and authorities as fully described in
the
Specifications, including those of the Classification Society, are to include
any rules, regulations and requirements announced but not in effect as at the
date of this Contract provided they are scheduled to come into effect as
compulsorily applicable for the VESSEL prior to the Delivery Date specified
in
Article 7 hereof.
The
VESSEL’s Classification status and certificates are to be clean and free of
conditions and/or recommendations of Class, without any references in the
memoranda, other than as permitted in the Specifications.
The
SELLER shall arrange with the Classification Society to assign a representative
or representatives (hereinafter called the "Classification Surveyor")
to the
BUILDER's Shipyard for supervision of the construction of the
VESSEL.
All
fees
and charges incidental to the Classification Society and to comply with the
rules, regulations and requirements defined in this Contract as well as
royalties, if any, payable on account of the construction of the VESSEL shall
be
for the account of the SELLER, except as otherwise provided and agreed herein.
The key plans, materials and workmanship entering into the construction of
the
VESSEL shall at all times be subject to inspections and tests in accordance
with
the rules and regulations of the Classification Society.
Decisions
of the Classification Society as to compliance or non-compliance of the VESSEL
with the Classification rules and regulations shall be final and binding upon
the parties hereto.
To
the
extent (i) not specified by the Classification Society or other regulatory
authorities and (ii) not otherwise expressly stated in this Contract or the
Specifications, all of the works envisaged by this Contract shall be undertaken
by the SELLER in a good, sound and workmanlike manner in accordance with the
first-class Chinese shipbuilding and marine engineering standards and practice
for vessels of the present type, including without limitation such standards
and
practice in relation to quality assurance. The VESSEL shall be delivered safely
afloat at the Shipyard following successful completion of trials and fully
ready
to serve its intended purpose.
| 1.3 |
PRINCIPAL
PARTICULARS AND DIMENSIONS OF THE
VESSEL
|
|
(a)
|
Hull:
|
Length
overallNot
to
exceed [***] m
Length
between perpendiculars [***]
m
Breadth
moulded [***]
m
Breadth,
extreme at any point
Not to
exceed [***] m
Depth
moulded [***]
m
Xxxxxxxxx
draft moulded [***]
m
Design
draft moulded [***]
m
The
above
principal particulars can be changed by mutual agreement between the parties
according to the final design.
The
Parties hereby expressly agree that (i) it shall be a condition precedent to
her
delivery and acceptance by the BUYER that the VESSEL shall not exceed the
dimensions for length overall and extreme breadth stated in paragraph (a) of
this Article and that (ii) the BUYER be entitled in such circumstances to reject
the VESSEL pursuant to Article 6.3 without prejudice to any of its rights under
this Agreement.
|
(b)
|
Propelling
Machinery:
|
The
VESSEL shall be equipped, in accordance with the Specifications, with [***].
| (c) |
Lines
Plan:
|
It
is
understood and agreed that the lines plan of the VESSEL’s hull will be developed
following the date of this Agreement. Such development shall be undertaken
by
the BUYER at its own cost, including model tests and calculations. The model
will be made available to the SELLER for final model tests of the propeller
design. The final model test with design propeller to be SELLER’s
cost.
| 1.4 |
GUARANTEED
SPEED
|
The
SELLER guarantees that the trial speed at the trial draft after any correction
undertaken in accordance with paragraph 3.5 of the Technical Specification
is to
be not less than the speed as determined by model basin testing in a Chinese
ship model test facility, at a draft/trim condition corresponding to ballast
loading condition, at a main engine output of Maximum Continuous Rating (MCR)
9,480 kW as stipulated in the Specifications, (hereinafter called the
"GUARANTEED SPEED").
| 1.5 |
GUARANTEED
FUEL CONSUMPTION
|
The
SELLER guarantees that the fuel oil consumption of the Main Engine as determined
by the shop test is not to exceed the consumption as stipulated in Paragraph
3.6
of Part I of the Specifications (hereinafter called the "GUARANTEED FUEL CONSUMPTION").
| 1.6 |
GUARANTEED
DEADWEIGHT
|
The
SELLER guarantees that the VESSEL is to have a deadweight of not less than
30,000 metric tons at the design draft moulded of 10.00 meters in sea water
of
1.025 specific gravity as defined in the Specifications (hereinafter called
the
"Guaranteed
Deadweight").
The
actual deadweight of the VESSEL expressed in metric tons shall be based on
calculations made by the SELLER and checked by the BUYER, and all measurements
necessary for such calculations shall be performed in the presence of the
Supervisor or the party authorized by the BUYER.
Should
there be any dispute between the SELLER and the BUYER in such calculations
and/or measurements, the decision of the Classification Society shall be
final.
| 1.7 |
SUBCONTRACTING
|
The
SELLER may, at its sole discretion and responsibility, subcontract any portion
of the construction work of the VESSEL not exceeding in value United States
Dollars five hundred thousand (US$500,000.00), but delivery and final assembly
into the VESSEL of any such work subcontracted shall be at the BUILDER's
Shipyard. Save in respect of the VESSEL’s block fabrication which may be carried
out at the BUILDER’s Nikka facility at Nantong’s industrial area for marine
equipment, the SELLER shall not otherwise be entitled to subcontract any portion
of the contract work exceeding in value United States Dollars five hundred
thousand (US$500,000.00) without the written consent of the BUYER, the same
not
to be unreasonably withheld. The SELLER shall remain fully responsible for
such
subcontracted work under this Contract as if it had undertaken the same.
| 1.8 |
MAKERS’
LIST
|
In
respect of each of the items of materials and equipment to be supplied by the
subcontractors and suppliers specifically defined in the Makers’ List, the
SELLER shall be obliged to select one of the subcontractors and suppliers
therein listed as pre-qualified in respect of such item of materials and
equipment to supply the same.
The
SELLER shall notify the BUYER of its selection of each “Major Supplier” (as
defined below) and the relevant equipment or system to be provided by the same
within one hundred and twenty (120) days of the Effective Date of this Contract
(as such term is hereinafter defined). In addition, the SELLER shall notify
the
BUYER of its selection of all the remaining subcontractors and suppliers as
set
out in the Makers’ List once such selection has been made. However,
should the BUYER wish the SELLER to contract with another subcontractor or
supplier (other than those subcontractors or suppliers notified to the BUYER
in
accordance with the aforementioned provisions of this Article), the BUYER shall
advise the SELLER of its preference within five (5) New York business days
of
receipt of such notification from the SELLER. In the event that the BUYER's
preference involves an increase or decrease in the costs of such item of
materials and equipment from the costs applicable to the SELLER’s selection, the
SELLER shall within five (5) New York business days of being so notified by
the
BUYER, quote the amount of such cost change to the BUYER who shall have the
option to notify the SELLER within five (5) New York business days thereafter
that it insists on its preference, and in such case the amount of the cost
change shall be added to or subtracted from, as the case may be, the Contract
Price.
If the
BUYER does not make such election within such five (5) New York business day
period, the BUYER shall be deemed to have accepted the amount of the cost
increase or decrease, as the case may be, so advised by the SELLER.
Machinery
and equipment defined in the Makers’ List may be built in the People’s Republic
of China according to license agreement of Maker, provided that the machinery
and equipment is fully guaranteed by the licensor and that the function and
design is equivalent to the licensor’s product. The technical specification of
all equipment/materials shall comply with the requirements set forth in the
Specifications of the VESSEL. If the SELLER or Maker proposes alternative
equipment specifications, this shall be specifically called to the attention
of
the BUYER by the SELLER in writing, including a complete technical specification
of the alternate equipment to be submitted to the BUYER for approval. Failure
by
the SELLER to call BUYER’s attention to proposed alternative equipment
specifications shall nullify BUYER’s acceptance of the equipment/Maker and shall
not relieve the SELLER from meeting the equipment requirements given in the
Specifications.
For
the
purposes of this Article 1.8, “Major Supplier” means each subcontractor or
supplier identified as such in the Makers’ List.
| 1.9 |
REGISTRATION
|
The
VESSEL shall be registered by the BUYER at its own cost and expenses under
the
laws of registered nationality at the time of delivery and acceptance thereof.
| 1.10 |
DESIGN
OBLIGATIONS
|
It
is
expressly agreed and understood that the SELLER shall be solely responsible
for
all aspects of the design of the VESSEL, whether or not such design has been
approved by the BUYER and/or the Classification Society, and whether or not
such
design derives from drawings, plans calculations or other data supplied by
the
BUYER and/or any modification requests from the BUYER.
The
BUYER
shall be entitled to unrestricted use of the design documents of the VESSEL
as
listed in the Contract Specifications PART I - GENERAL, SECTION 9 PLANS, ETC.,
for any purpose.
| 1.11 |
SPARE
PARTS
|
The
SELLER shall furnish on board the VESSEL at the time of delivery of the VESSEL,
the spare parts and maintenance tools of the type, and in at least the specified
quantities, recommended by the makers of the machinery and equipment to which
they relate and/or required by the Classification Society or other regulatory
authorities. In the event that the quantity of spare parts and tools
specifically referred to in the Technical Specification are greater than the
specified quantities recommended by the makers and/or required by the
Classification Society, the Seller shall furnish the quantity of spare parts
and
tools referred to in the Technical Specification. The cost of the spare parts
and maintenance tools is included in the Contract Price.
The
SELLER shall be responsible at its own cost for receiving, indoor storage,
handling, bringing on board and storage on the VESSEL of all such spare parts
and maintenance tools under instruction and supervision of the Supervisor.
The
spare parts and maintenance tools furnished by the SELLER shall be properly
protected against physical decay, corrosion and mechanical damage and shall
be
properly listed so that replacements may be readily ordered.
During
the guarantee period as more specifically described in Article 9.1, the SELLER
may, with the prior written approval of the BUYER, use such of the spare parts
furnished to the VESSEL as the SELLER may require in order to remedy any defects
against which the VESSEL is guaranteed under Article 9. However, any such spare
parts so used by the SELLER during this period, shall at the SELLER’s sole cost
and expense be promptly replaced on board the VESSEL or be paid at BUYER’s
purchase cost for the same, including any freight costs.
| 2. |
ARTICLE
II - CONTRACT PRICE & TERMS OF
PAYMENT
|
| 2.1 |
CONTRACT
PRICE
|
The
purchase price of the VESSEL is United States Dollars thirty-five million four
hundred and twenty thousand (US$ 35,420,000) only, net receivable by the SELLER
(hereinafter called the "Contract Price"),
which
is exclusive of the cost for the BUYER's supplies as provided in Article V
hereof, and shall be subject to upward or downward adjustment, if any, as
hereinafter set forth in this Contract.
| 2.2 |
CURRENCY
|
Any
and
all payments by the BUYER to the SELLER and vice-versa under this Contract
shall
be made in United States Dollars.
| 2.3 |
TERMS
OF PAYMENT
|
The
Contract Price shall be paid by the BUYER to the SELLER in instalments for
each
unit as follows:
(a)
1st
Instalment:
The
sum
of United States Dollars seven million (US$ 7,000,000) only, shall become due
and payable and be paid by the BUYER within five (5) New York business days
of
the later of:
1)
the date
on which the BUYER shall have received (A) the Refund Guarantee in respect
of
the 1st
instalment to be issued by one of (i) Bank
of
Communications (Beijing Branch) or (ii) Industrial and Commercial Bank of
China
(Beijing Branch) in the SELLER’s option (hereafter the ”SELLER’s
Bank”) together with (B) documentary evidence from the SELLER’s Bank that this
has been duly registered with the State Administration for Foreign Exchange
(“SAFE”) as provided in Paragraph 7 of this Article; and
2) the
date
on which the BUYER shall have delivered to SELLER an original of the Letter
of
Guarantee issued by The Royal Bank of Scotland or other international bank
acceptable to the SELLER in accordance with Article II, Paragraph 6 hereof.
(b)
2nd
Instalment:
The
sum
of United States Dollars seven million (US$ 7,000,000) only, shall become due
and payable and be paid within five (5) New York business days of the later
of
| (i) |
the
date specified in Clause 3 of the Overall Agreement between the BUYER’s
parent company, TBS International Limited, and the SELLER concluded
on the
same date as this Contract (the “Overall Agreement”); and
|
(ii) the
date
of receipt by the BUYER of the Refund Guarantee to be issued by the SELLER’s
Bank in respect of the 2nd,
3rd
and
4th
instalments, together with documentary evidence from the SELLER’s Bank that this
has been duly registered with SAFE as provided in Paragraph 7 of this Article.
(c)
3rd
Instalment:
The
sum
of United States Dollars seven million (US$ 7,000,000),
shall
become due and payable and be paid within five (5) New York business days of
the
receipt by the BUYER of a telefax notice from the SELLER attaching a Stage
Certificate in the form of the draft attached as Exhibit “D”, countersigned by
the Classification Surveyor, certifying that the VESSEL’s keel has been laid
within the meaning of this Article 2.3.
“Keel
laying”
shall
for the purposes of this Article be deemed to have taken place when the first
pre-fabricated hull block has been completed, surveyed, accepted by the
Classification Society and located in its final position in the building dock
or
slipway at the Shipyard.
(d)
4th
Instalment:
The
sum
of United States Dollars seven million (US$ 7,000,000) only, shall become due
and payable and be paid within five (5) New York business days of the receipt
by
the BUYER of a telefax notice from the SELLER attaching a Stage Certificate
in
the form of the draft attached as Exhibit “D”, countersigned by the
Classification Surveyor, certifying that the VESSEL has been successfully
launched.
(e)
5th
Instalment (Payment upon Delivery of the VESSEL):
The
sum
of United States Dollars seven million four hundred and twenty thousand (US$
7,420,000) only,
plus
any
increase or minus any decrease due to modifications and/or adjustments of the
Contract Price in accordance with the provisions of the relevant articles
hereof, shall become due and payable and be paid by the BUYER to the SELLER
concurrently with the delivery of the VESSEL.
(f)
The
SELLER shall notify the BUYER in writing fourteen (14) New York business days
in
advance of the expected due date of payment of the Second, Third, Fourth and
Fifth Instalments of the Contract Price referred to in Article 2.3.
| 2.4 |
METHOD
OF PAYMENT
|
(a)
1st
Instalment:
The
BUYER
shall remit the amount of this instalment in accordance with Article II,
Paragraph 3(a) by telegraphic transfer to the account of the SELLER’s bank (the
account number to be nominated by the SELLER).
(b)
2nd
Instalment:
The
BUYER
shall remit the amount of this instalment in accordance with Article II,
Paragraph 3(b) by telegraphic transfer to the account of the SELLER’s bank (the
account number to be nominated by the SELLER) or
through other receiving bank to be nominated by the SELLER from time to time
and
such nomination shall be notified to the BUYER at least ten (10) New York
business days prior to the due date for the payment.
(c)
3rd
Instalment:
The
BUYER
shall remit the amount of this instalment in accordance with the Article II,
Paragraph 3(c) by telegraphic transfer to the account of the SELLER’s bank (the
account number to be nominated by the SELLER) or
through other receiving bank to be nominated by the SELLER from time to time
and
such nomination shall be notified to the BUYER at least ten (10) New York
business days prior to the due date for the payment.
(d)
4th
Instalment:
The
BUYER
shall remit the amount of this instalment in accordance with Article II,
Paragraph 3(d) by telegraphic transfer to the account of the SELLER’s bank (the
account number to be nominated by the SELLER) or
through other receiving bank to be nominated by the SELLER from time to time
and
such nomination shall be notified to the BUYER at least ten (10) New York
business days prior to the due date for payment.
(e)
5th
Instalment (Payable upon Delivery of the VESSEL):
The
BUYER
shall, at least three (3) New York business days prior to the scheduled date
of
delivery of the VESSEL notified by the SELLER, make a cash deposit in the name
of the BUYER with the SELLER’s Bank for a period of thirty (30) days and
covering the amount of this instalment (as adjusted in accordance with the
provisions of this Contract), with instruction that the said amount shall be
released to the SELLER against presentation by the SELLER to the said bank,
of a
duplicate of the Protocol of Delivery and Acceptance signed by the BUYER's
authorized representative and the SELLER. Such deposit shall be on terms that
if
the duly executed Protocol of Delivery and Acceptance of the VESSEL has not
been
submitted to the SELLER’s bank within Twenty (20) New York business Days, the
deposit shall be returned to the BUYER together with any interest accrued
thereon.
| 2.5 |
PREPAYMENT
|
The
BUYER
shall have the right to make prepayment of any and all instalments before
delivery of the VESSEL, by giving to the SELLER at least thirty (30) days prior
written notice, without any price adjustment of the VESSEL for such
prepayment.
| 2.6 |
SECURITY
FOR PAYMENT OF INSTALMENTS BEFORE
DELIVERY
|
The
BUYER
shall, on or before 31st
March
2007, deliver to the SELLER an irrevocable and unconditional Letter of Guarantee
in a form annexed hereto as Exhibit "C" in favour of the SELLER issued by the
Royal Bank of Scotland or other first class international bank acceptable to
the
SELLER. This guarantee shall secure the Buyer's obligation for the payment
of
2nd,
3rd
and 4th
instalments of the Contract Price.
| 2.7 |
REFUNDS
|
All
payments made by the BUYER prior to the delivery of the VESSEL shall be in
the
nature of advance to the SELLER, and in the event this Contract is rescinded
by
the BUYER, all in accordance with the specific terms of this Contract permitting
such rescission, the SELLER shall refund to the BUYER in United States Dollars
the full amount of all sums already paid by the BUYER to the SELLER under this
Contract, together with interest (at the rate set out in respective provision
thereof) from the respective payment date(s) to the date of remittance by
telegraphic transfer of such refund to the account specified by the BUYER.
If
the SELLER is required to refund to the BUYER the instalments paid by the BUYER
to the SELLER as provided in this Article, the SELLER shall return to the BUYER
all of the BUYER's supplies as stipulated in Article V which were not
incorporated in the VESSEL and pay to the BUYER an amount equal to the cost
to
the BUYER of those supplies that were incorporated into the VESSEL. As security
to the BUYER and as a condition precedent to the payment of the 1st
pre-delivery instalment payable by the BUYER after the date of this Contract
in
accordance with Paragraphs 3 and 4 of this Article, the SELLER shall (i) deliver
to the BUYER a Refund Guarantee for the 1st
instalment to be issued by the SELLER’s Bank in the form annexed hereto as
Exhibit "A” and (ii) procure that the SELLER’s Bank shall provide to the BUYER
satisfactory evidence of registration of the relevant Refund Guarantee with
SAFE, the BUYER having no obligation to pay the 1st
pre-delivery instalment until such evidence has been received by the BUYER.
Further, as security to the BUYER and as a condition precedent to the payment
of
the 2nd
pre-delivery instalment payable by the BUYER in accordance with Paragraphs
3 and
4 of this Article, the SELLER shall (i) deliver to the BUYER a Refund Guarantee
for the 2nd,
3rd
and
4th
instalments to be issued by the SELLER’s Bank in the form annexed hereto as
Exhibit "B” and (ii) procure that the SELLER’s Bank shall provide to the BUYER
satisfactory evidence of registration of the relevant Refund Guarantee with
SAFE, the BUYER having no obligation to pay the 2nd
pre-delivery instalment until such evidence has been received by the
BUYER.
| 3. |
ARTICLE
III - ADJUSTMENT OF THE CONTRACT
PRICE
|
The
Contract Price of the VESSEL shall be subject to adjustments as hereinafter
set
forth. It is hereby understood by both parties that any reduction of the
Contract Price under this Article is by way of liquidated damages and not by
way
of penalty.
| 3.1 |
DELIVERY
DATE
|
(a)
No
adjustment shall be made, and the Contract Price shall remain unchanged for
the
first sixty (60) days of delay in delivery of the VESSEL beyond the Delivery
Date as defined in Article VII hereof ending at twelve o'clock midnight New
York
time on the sixtieth (60th)
day of
delay.
(b)
If
the delivery of the VESSEL is delayed more than sixty (60) days after the date
as defined in Article VII hereof, then, in such event, beginning at twelve
o'clock midnight New York time on the sixtieth (60th)
day
after the date on which delivery is required under this Contract, the Contract
Price of the VESSEL shall be reduced by deducting there from the sum of United
States Dollars two thousand five hundred (US$ 2,500) per day. Unless the parties
hereto agree otherwise, the total reduction in the Contract Price shall be
deducted from the Fifth Instalment of the Contract Price and in any event
(including the event that the BUYER consents to take the VESSEL at the later
delivery date after the expiration of two hundred and thirty (230) days delay
of
delivery as described in Paragraph 1(c) of this Article) shall not be more
than
one hundred seventy (170) days at the above specified rate of reduction after
the sixty (60)days allowance, that is United States Dollars four hundred
twenty-five thousand only (US$ 425,000) being the maximum.
If
the
delay in the delivery of the VESSEL continues for a period of Two hundred and
thirty (230) days (being the total of non-permissible delays) after the Delivery
Date as defined in Article VII, then in such event, the BUYER may, at its
option, rescind this Contract in accordance with the provisions of Article
X of
this Contract. The SELLER may at any time after the expiration of the
aforementioned two hundred and thirty (230) days, if the BUYER has not served
notice of rescission pursuant to Article X of this Contract, notify the BUYER
of
the date upon which the SELLER estimates the VESSEL will be ready for delivery
and demand in writing that the BUYER makes an election, in which case the BUYER
shall, within thirty (30) days after such demand is received by the BUYER,
either notify the SELLER of its decision to rescind this Contract, or consent
to
take delivery of the VESSEL at an agreed future date, it being understood and
agreed by the parties hereto that, if the VESSEL is not delivered by such future
date, the BUYER shall have the same right of rescission upon the same terms,
as
hereinabove provided.
(d)
For
the purpose of this Article, the delivery of the VESSEL shall not be deemed
delayed and the Contract Price shall not be reduced when and if the Delivery
Date of the VESSEL is extended by reason of causes and provisions of Articles
V,
XI, XII and XIII hereof. The Contract Price shall not be adjusted or reduced
if
the delivery of the VESSEL is delayed by reason of permissible delays as defined
in Article VIII hereof.
| 3.2 |
SPEED
|
(a)
The
Contract Price of the VESSEL shall not be affected nor changed by reason of
the
actual speed (as determined by the Trial Run after correction according to
the
Specifications) being less than five tenths (5/10) of one knot below the
Guaranteed Speed.
(b)
However, commencing with and including a deficiency of five tenths (5/10) of
one
knot in actual speed (as determined by the Trial Run after correction according
to the Specifications) below the Guaranteed Speed as specified in Paragraph
4,
Article I of this Contract, the Contract Price shall be reduced as follows:
In
case
of deficiency:
at
or
above 0.50 but below 0.60 knot US$ 5,000
at
or
above 0.60 but below 0.70 knot US$ 10,000
at
or
above 0.70 but below 0.80 knot US$ 15,000
at
or
above 0.80 but below 0.90 knot US$ 20,000
at
or
above 0.90 but below 1.00 knot US$ 25,000
at
or
above 1.00 knot US$ 30,000
(c)
If
the deficiency in actual speed (as determined by the Trial Run after correction
according to the Specifications) of the VESSEL upon the Trial Run, is 1.00
knot
or more than 1.00 knot below the Guaranteed Speed, then the BUYER may at its
option reject the VESSEL and rescind this Contract in accordance with provisions
of Article X of this Contract, or may accept the VESSEL at a reduction in the
Contract Price as above provided in the maximum amount of United States Dollars
thirty thousand only (US$ 30,000).
| 3.3 |
EXCESSIVE
FUEL CONSUMPTION
|
If
the
actual fuel consumption of the Main Engine as determined by shop test in
manufacturer’s works, as per the Specifications, is greater than the Guaranteed
Fuel Consumption, as specified and required under the provisions of this
Contract and the Specifications, the BUYER may reject the Main Engine. The
SELLER may then, at its option, either (i) rectify the deficiency in the Main
Engine in order so that it complies with the requirements of the Contract and
the Specifications or (ii) replace it with a Main Engine that does so comply.
| 3.4 |
DEADWEIGHT
|
(a)
In
the event that there is a deficiency in the actual deadweight of the VESSEL
determined as provided in the Specifications, the Contract Price shall not
be
decreased if such deficiency is six hundred (600) metric tons or less below
the
Guaranteed Deadweight of thirty thousand (30,000) metric tons at assigned design
draft.
(b)
However, the Contract Price shall be decreased by the sum of United States
Dollars 600 (US$ 600) for each full metric ton of such deficiency being more
than six hundred (600) metric tons.
(c)
In
the event that there should be a deficiency in the VESSEL's actual deadweight
which exceeds one thousand (1000) metric tons below the Guaranteed Deadweight,
the BUYER may, at its option, reject the VESSEL and rescind this Contract in
accordance with the provisions of Article X of this Contract, or may accept
the
VESSEL at a reduction in the Contract Price in the maximum amount of United
States Dollars two hundred and forty thousand (US$ 240,000).
| 3.5 |
EFFECT
OF RESCISSION
|
It
is
expressly understood and agreed by the parties hereto that in any case as stated
herein, if the BUYER rescinds this Contract pursuant to any provision under
this
Article, the BUYER, save its rights and remedy set out in Article X hereof,
shall not be entitled to any liquidated damage or compensation whether described
above or otherwise.
| 4. |
ARTICLE
IV - SUPERVISION AND
INSPECTION
|
| 4.1 |
APPOINTMENT
OF THE BUYER'S SUPERVISOR
|
The
BUYER
shall send in good time to and maintain at the BUILDER's Shipyard, at the
BUYER's own cost and expense, one or more representative(s) who shall be duly
accredited in writing by the BUYER (such representative(s) being hereinafter
collectively and individually called the "Supervisor")
to
supervise and survey the construction by the SELLER of the VESSEL, her engines
and accessories. The SELLER hereby warrants that, the necessary visa for the
Supervisor to enter China will be issued in order on demand and without delay
provided that the Supervisor meets with the rules, regulations and laws of
the
People's Republic of China. The BUYER undertakes to give the SELLER adequate
notice for the application of visa.
| 4.2 |
APPROVAL
OF PLANS AND DRAWINGS
|
The
parties hereto shall, within thirty (30) days after the Effective Date of this
Contract, mutually agree a list of all the plans and drawings, which are to
be
sent to the BUYER for approval (herein below called the "LIST").
The
plans and drawings specified in the LIST shall be sent to the BUYER, and the
BUYER shall, within fourteen (14) days after receipt thereof (excluding mailing
time), return such plans and drawings submitted by the SELLER with approval
or
remarks, if any.
The
SELLER shall take due note of the BUYER's remarks and amendments (if any) on
plans and drawings submitted pursuant to this Article and, if such remarks
or
amendments are not of such a nature or extent as to constitute modifications
of
the Specifications within the meaning of Article V hereof, then the SELLER
shall
commence or continue construction of the VESSEL in accordance with the corrected
or amended plans and drawings.
Unless
notification is given to the SELLER by the BUYER of approval or disapproval
of
any plans and drawings within the above designated period of time for each
case,
the said plans and drawings shall be deemed to have been automatically approved.
But the SELLER shall
notify the BUYER by telefax within five (5) days of the elapse of the above
designated period of time.
The
plans
and drawings approved by the BUYER shall be final, and any alteration thereof
as
confirmed in writing by the BUYER shall be regarded as modification specified
in
Article V of this Contract.
| 4.3 |
SUPERVISION
AND INSPECTION BY THE SUPERVISOR
|
The
necessary inspection of the VESSEL, its machinery, equipment and outfitting
shall be carried out by the Classification Society, and/or inspection team
of
the SELLER throughout the entire period of construction in order to ensure
that
the construction of the VESSEL is duly performed in accordance with the Contract
and Specifications.
The
Supervisor shall have, at all times until delivery of the VESSEL, the right
to
attend tests according to the mutually agreed test list and inspect the VESSEL,
her engines, accessories and materials at the BUILDER's Shipyard, its
subcontractors or any other place where work is done or materials stored in
connection with the VESSEL. In the event that the Supervisor discovers any
construction or material or workmanship which does not or will not conform
to
the requirements of this Contract and the Specifications, the Supervisor shall
promptly give the SELLER a notice in writing as to such nonconformity, upon
receipt of which the SELLER shall correct such nonconformity if the SELLER
agrees with the BUYER. However the BUYER undertakes and assures the SELLER
that
the Supervisor shall carry out his inspections in accordance with the agreed
inspection procedure and schedule set out in Part I, Section 11 of the Technical
Specification and usual international shipbuilding practice and in a way as
to
minimize any increase in building costs and delays in the construction of the
VESSEL.
The
inspection and approval by the BUYER or by the BUYER's representative and/or
the
Classification Society shall not alter the SELLER's obligation under this
Contract and shall not relieve the SELLER from the liability under Article
IX of
this Contract nor preclude the BUYER from claiming adjustment of the Contract
Price according to Article III of this Contract unless otherwise mutually
agreed. The SELLER agrees to furnish free of charge the Supervisor with private
office space, with lighting, heat and air conditioning; equipped with six (6)
desks, chairs, filing cabinets, personal lockers, and meeting table and chairs;
access to toilet facilities maintained by the SELLER; parking spaces and other
reasonable facilities including separate IDD telephone (1 lines), separate
IDD
telefax (1 line) and internet broadband access, according to usual international
shipbuilding practice at, or in the immediate vicinity of the BUILDER's
Shipyard. At all times, during the construction of the VESSEL until delivery
thereof, the Supervisor shall with the assistance of the SELLER be given free
and ready access to the VESSEL, her engines and accessories, and to any other
place where the work is being done, or the materials are being processed or
stored, in connection with the construction of the VESSEL, including the yards,
workshops, stores of the BUILDER, and the premises of subcontractors of the
SELLER, who are doing work, or storing materials in connection with the VESSEL's
construction. The travel expenses for the said access to the SELLER's
subcontractors shall be for the BUYER's account.
The
SELLER shall provide the Supervisor with detailed design plans, production
drawings, schedules and other documents and information for the VESSEL, to
enable the Supervisor to carry out inspections.
| 4.4 |
LIABILITY
OF THE SELLER
|
The
Supervisor engaged by the BUYER under this Contract shall at all times be deemed
to be in the employment of the BUYER. The SELLER shall be under no liability
whatsoever to the BUYER, or to the Supervisor or the BUYER's employees or agents
for personal injuries, including death, during the time when they, or any of
them, are on the VESSEL, or within the premises of either the SELLER or its
subcontractors, or are otherwise engaged in and about the construction of the
VESSEL, unless, however, such personal injuries, including death, were caused
by
gross negligence of the SELLER, or of any of the SELLER's employees or agents
or
subcontractors of the SELLER. Nor shall the SELLER be under any liability
whatsoever to the BUYER for damage to, or loss or destruction of property in
China of the BUYER or of the Supervisor, or of the BUYER's employees or agents,
unless such damage, loss or destruction was caused by gross negligence of the
SELLER, or of any of the employees, or agents or subcontractors of the
SELLER.
| 4.5 |
SALARIES
AND EXPENSES
|
All
salaries and expenses of the Supervisor, or any other employees employed by
the
BUYER under this Article, shall be for the BUYER's account. The BUYER shall
also
be responsible for the costs of all international telephone and telefax
communications.
| 4.6 |
REPORT
OF PROGRESS
|
The
BUYER
is entitled to require the SELLER to report the condition of progress as to
the
construction of the VESSEL whenever the BUYER requires during the construction
of the VESSEL.
| 4.7 |
REPLACEMENT
OF SUPERVISOR
|
The
SELLER has the right to request the BUYER in writing to replace any of the
Supervisor who is deemed unsuitable and unsatisfactory for the proper progress
of the VESSEL's construction together with reasons. The BUYER shall investigate
the situation by sending its representative to the BUILDER's Shipyard, if
necessary, and if the BUYER considers that such SELLER's request is justified,
the BUYER shall effect the replacement as soon as conveniently
arrangeable.
| 5. |
ARTICLE
V - MODIFICATION, CHANGES AND
EXTRAS
|
| 5.1 |
HOW
EFFECTED
|
The
Specifications and plans in accordance with which the VESSEL is constructed,
may
be modified and/or changed at any time hereafter by written agreement of the
parties hereto, provided that such modifications and/or changes or an
accumulation thereof will not, in the SELLER's reasonable judgment, adversely
affect the SELLER's other commitments and provided further that the BUYER shall
assent to adjustment of the Contract Price, time of delivery of the VESSEL
and
other terms of this Contract, if any, as hereinafter provided. Subject to the
above, the SELLER hereby agrees to exert its best efforts to accommodate such
reasonable requests by the BUYER so that the said changes and/or modifications
may be made at a reasonable cost and within the shortest period of time which
is
reasonable and possible. Any such agreement for modifications and/or changes
shall include an agreement as to the increase or decrease, if any, in the
Contract Price of the VESSEL together with an agreement as to any extension
or
reduction in the time of delivery, or any other alterations in this Contract,
or
the Specifications occasioned by such modifications and/or changes. The
Supervisor shall be entitled to negotiate such agreement with the SELLER on
behalf of the BUYER to the extent of its authority as notified by the BUYER
to
the SELLER from time to time in writing. The aforementioned agreement to modify
and/or to change the Specifications may be effected by an exchange of duly
authenticated letters or telefax, manifesting such agreement. The letters and
telefaxes exchanged by the parties hereto pursuant to the foregoing shall
constitute an amendment of the Specifications under which the VESSEL shall
be
built, and such letters and telefaxes shall be deemed to be incorporated into
this Contract and the Specifications by reference and made a part hereof. Upon
consummation of the agreement to modify and/or to change the Specifications,
the
SELLER shall alter the construction of the VESSEL in accordance therewith,
including any additions to, or deductions from, the work to be performed in
connection with such construction. If due to whatever reasons, the parties
hereto shall fail to agree on the adjustment of the Contract Price or extension
of time of delivery or modification of any terms of this Contract which are
necessitated by such modifications and/or changes, then the SELLER shall be
entitled to refuse to make any such modifications or changes requested by the
BUYER, if the BUYER does not agree to the aforementioned adjustment within
a
reasonable period of the BUYER'S notification of the same to the
BUYER.
| 5.2 |
CHANGES
IN RULES AND REGULATIONS, ETC.
|
(1)
If,
after the date of this Contract, any requirements as to the rules and
regulations as specified in this Contract and the Specifications to which the
construction of the VESSEL is required to conform, are altered or changed by
the
Classification Society or the other regulatory bodies authorized to make such
alterations or changes, the SELLER and/or the BUYER, upon receipt of the notice
thereof, shall transmit such information in full to each other in writing,
whereupon within ten (10) New York business days after receipt of the said
notice by the BUYER from the SELLER or vice versa, the BUYER shall instruct
the
SELLER in writing as to the alterations or changes, if any, to be made in the
VESSEL which the BUYER, in its sole discretion, shall decide. The SELLER shall
promptly comply with such alterations or changes, if any in the construction
of
the VESSEL, provided that the BUYER shall first agree:
|
(a)
|
As
to any reasonable increase or decrease in the Contract Price of the
VESSEL
that is occasioned by the cost for such compliance;
and/or
|
|
(b)
|
As
to any reasonable extension in the time for delivery of the VESSEL
that is
necessary due to such compliance;
and/or
|
|
(c)
|
As
to any reasonable decrease in the Guaranteed Deadweight and the Guaranteed
Speed of the VESSEL, if such compliance results in reduced deadweight
and
speed; and/or
|
|
(d)
|
As
to any other alterations in the terms of this Contract or of the
Specifications or both, if such compliance makes such alterations
of the
terms necessary.
|
Agreement
as to such alterations or changes under this paragraph shall be made in the
same
manner as provided above for modifications and/or changes of the Specifications
and/or plans.
All
improvements recommended by the original manufacturers and designers before
the
delivery of the VESSEL in the design of the main engine or parts of the VESSEL
shall be notified by the SELLER to the BUYER.
(2)
If,
due to whatever reasons, the parties shall fail to agree on the adjustment
of
the Contract Price or extension of the time for delivery or decrease of the
Guaranteed Speed and Guaranteed Deadweight or any alternation of the terms
of
this Contract, if any, then the SELLER shall be entitled to proceed with the
construction of the VESSEL in accordance with, and the BUYER shall continue
to
be bound by, the terms of this Contract and the Specifications without making
any such alterations or changes.
| 5.3 |
SUBSTITUTION
OF MATERIALS AND/OR EQUIPMENT
|
In
the
event that any of the materials and/or equipment required by the Specifications
or otherwise under this Contract for the construction of the VESSEL cannot
be
procured in time to effect delivery of the VESSEL, the SELLER may, provided
the
SELLER shall provide adequate evidence and the BUYER so agrees in writing,
supply other materials and/or equipment of equivalent quality, capable of
meeting the requirements of the Classification Society and of the rules,
regulations, requirements and recommendations with which the construction of
the
VESSEL must comply.
| 5.4 |
BUYER'S
SUPPLIED ITEMS
|
The
BUYER
shall on its own account deliver to the SELLER at BUILDER'S shipyard the BUYER'S
supplied items as specified in the Specifications in accordance with the time
schedule to be furnished by the SELLER to meet the building schedule of the
VESSEL.
Should
the BUYER fail to deliver to the SELLER such items within the time specified,
the delivery of the VESSEL shall be extended for a period of such delay,
provided such delay in delivery of the BUYER's supplied items shall affect
the
delivery of the VESSEL.
If
the
delay in delivery of the BUYER's supplied items should exceed thirty (30) days,
the SELLER shall be entitled to proceed with the construction of the VESSEL
without installation of such items in or onto the VESSEL, without prejudice
to
the SELLER's right hereinabove provided, and the BUYER shall accept the VESSEL
so completed.
The
SELLER shall be responsible for storing and handling of the BUYER's supplies
as
specified in the Specifications after delivery to the SELLER and shall install
them on board the VESSEL at the SELLER's expenses.
Upon
arrival of such shipment of the BUYER's supplied items, both parties shall
undertake a joint unpacking inspection. If any damages are found to be not
suitable for installation, the SELLER shall be entitled to refuse to accept
such
BUYER's supplied items.
| 6. |
ARTICLE
VI - TRIALS
|
| 6.1 |
NOTICE
|
The
BUYER
and the Supervisor shall receive from the SELLER at least thirty (30) day
approximate notice in advance and seven (7) day definite notice in advance
in
writing or by telefax confirmed in writing, of the time and place of the
VESSEL's sea trial as described in the Specifications (hereinafter called the
"Trial Run")
and
the BUYER and the Supervisor shall promptly acknowledge receipt of such notice.
The BUYER's representatives and/or the Supervisor shall be on board the VESSEL
to witness such Trial Run, and to check upon the performance of the VESSEL
during the same. The failure of the BUYER's representatives to be present at
the
Trial Run of the VESSEL, after due notice to the BUYER and the Supervisor as
provided above, shall have the effect to extend the date for delivery of the
VESSEL by the period of delay caused by such failure to be present. However,
if
the Trial Run is delayed more than seven (7) days by reason of the failure
of
the BUYER's representatives to be present after receipt of due notice as
provided above, then in such event, the BUYER shall be deemed to have waived
its
right to have its representatives on board the VESSEL during the Trial Run,
and
the SELLER may conduct such Trial Run with the presence of the representative
of
the Classification Society only without the BUYER's representatives being
present, and in such case the BUYER shall be obliged to accept the VESSEL on
the
basis of a certificate jointly signed by the BUILDER and the Classification
Society certifying that the VESSEL, after the Trial Run subject to minor
alterations and corrections if any, to be completed prior to the day of delivery
to the BUYER as provided in this Article, if any, is found to conform to this
Contract and the Specifications and is satisfactory in all respects. The SELLER
hereby warrants that the necessary visa for the BUYER's representatives to
enter
China will be issued in order on demand and without delay otherwise the Trial
Run shall be postponed until after the BUYER's representatives have arrived
at
the BUILDER's Shipyard and any delays as a result thereof shall not count as
a
permissible delay under Article VIII thereof. However, should the nationalities
and other personal particulars of the BUYER's representatives be not acceptable
to the visa issuing authorities in accordance with its best understanding of
the
relevant rules, regulations and/or laws of the People's Republic of China then
prevailing, then the BUYER shall, on the SELLER's telefax demand, effect
replacement of all or any of them immediately. Otherwise the Delivery Date
as
stipulated in Article VII hereof shall be extended by the delays so caused
by
the BUYER.
In
the
event of unfavorable weather on the date specified for the Trial Run, the same
shall take place on the first available day thereafter that the weather
conditions permit. The parties hereto recognize that the weather conditions
in
Chinese waters in which the Trial Run is to take place are such that great
changes in weather may arise momentarily and without warning and, therefore,
it
is agreed that if during the Trial Run of the VESSEL, the weather should
suddenly become unfavorable, as would have precluded the continuance of the
Trial Run, the Trial Run of the VESSEL shall be discontinued and postponed
until
the first favorable day next following, unless the BUYER shall assent by telefax
and confirm in writing of its acceptance of the VESSEL on the basis of the
Trial
Run made prior to such sudden change in weather conditions. In the event that
the Trial Run is postponed because of unfavorable weather conditions, such
delay
shall be regarded as a permissible delay, as specified in Article VIII
hereof.
| 6.2 |
HOW
CONDUCTED
|
(a)
All
expenses in connection with the Trial Run of the VESSEL are to be for the
account of the SELLER, who, during the Trial Run and when subjecting the VESSEL
to the Trial Run, is to provide, at its own expense, the necessary crew to
comply with conditions of safe navigation. The Trial Run shall be conducted
in
the manner prescribed in the Specifications and shall prove the fulfilment
of
the performance required for the Trial Run as set forth in the Specifications.
The
course of Trial Run shall be determined by the SELLER and shall be conducted
within the trial basin equipped with speed measuring facilities.
(b)
The
SELLER according to the Specifications shall provide the VESSEL with the
required quantities of water, fuel oil and greases, fresh water and stores
with
exception of lubrication oil and hydraulic oil which shall be supplied by the
BUYER for the conduct of the Trial Run or Trial Runs as prescribed in the
Specifications. The fuel oil and greases supplied by the SELLER, and lubricating
oil and hydraulic oil supplied by the BUYER shall be in accordance with the
applicable engine specifications, and the cost of the quantities of such items
supplied by the SELLER and consumed during the Trial Run or Trial Runs shall
be
for the account of the SELLER.
| 6.3 |
METHOD
OF ACCEPTANCE OR REJECTION
|
(a)
Upon
notification by the SELLER of the completion of the Trial Run of the VESSEL
and
submission to the BUYER of the detailed written results thereof, the BUYER
or
the BUYER's Supervisor shall within six (6) New York business days thereafter,
notify the SELLER by telefax confirmed in writing of its acceptance of the
VESSEL if the BUYER agrees that the VESSEL conforms with the requirements of
this Contract and the Specifications.
(b)
However, should the VESSEL or any part thereof including its equipment not
conform to the requirements of this Contract and the Specifications, and the
BUYER shall give notice of rejection to the SELLER for such reason, then the
SELLER shall investigate with the Supervisor the cause of failure and proper
steps shall be taken to remedy the same and shall make whatever corrections
and
alterations and/or re-Trial Run or Runs as may be necessary without extra cost
to the BUYER, and upon notification by the SELLER of completion of such
alterations or corrections and/or re-Trial or re-Trials and submission to the
BUYER of the detailed written results thereof the BUYER shall, within six (6)
New York business days thereafter, again notify the SELLER by telefax confirmed
in writing of its acceptance of the VESSEL or of the rejection of the VESSEL
together with the reason therefor. This process shall be repeated until the
earlier of the BUYER’s acceptance of the VESSEL or the rescission of this
Contract in accordance with its terms.
(c)
In
the event that the BUYER fails to notify the SELLER by telefax confirmed in
writing of its acceptance or rejection of the VESSEL together with the reason
therefor within six (6) New York business days period as provided for in the
above sub-paragraphs (a) and (b), the BUYER shall be deemed to have accepted
the
VESSEL.
(d)
Any
dispute arising among the parties hereto as to the result of any of the Trial
Run or further tests or trials, as the case may be, of the VESSEL shall be
solved by reference to arbitration as provided in Article XIII
hereof.
(e)
It is
agreed that the BUYER shall not be entitled to reject the VESSEL by reason
of
any minor or insubstantial defects or deficiencies judged from the point of
view
of international shipbuilding standards as not being in conformity with the
Specifications but in such case the SELLER shall be obliged to remedy such
defects or deficiencies if any before effecting delivery of the VESSEL to the
BUYER under this Contract.
| 6.4 |
DISPOSITION
OF SURPLUS CONSUMABLE STORES
|
Should
any amount of fuel oil, fresh water, or other on board consumable stores
furnished by the SELLER for the Trial Run or Trial Runs remain on board the
VESSEL at the time of acceptance thereof by the BUYER, the BUYER agrees to
buy
the same from the SELLER at the SELLER'S actual purchasing price thereof, and
payment by the BUYER shall be effected as provided in Article II 3 (e) and
4 (e)
of this Contract.
The
BUYER
shall supply lubricating oil and hydraulic oil for the purpose of the Trial
Runs
at its own expense and the SELLER will reimburse the amount of lubricating
oil
and hydraulic oil actually consumed for the Trial Run or Trial Runs at the
BUYER'S actual price at delivery port incurred by the BUYER and payment by
the
SELLER shall be effected as provided in Article II 3(e) and 4(e) of this
Contract. At the time of delivery of the VESSEL in measuring the consumed
quantity of lube oils and hydraulic oil, the oils remaining in the main engine
(except for the sump tank), other machinery and their pipes, xxxxx tube and
the
like shall be excluded and be considered as consumed.
| 6.5 |
EFFECT
OF ACCEPTANCE
|
The
BUYER's acceptance of the VESSEL by written and telefax notification sent to
the
SELLER, in accordance with the provisions set out above, shall be final and
binding so far as conformity of the VESSEL to this Contract and the
Specifications is concerned, and shall preclude the BUYER from refusing formal
delivery by the SELLER of the VESSEL, as hereinafter provided, if the SELLER
complies with all other procedural requirements for delivery as hereinafter
set
forth.
| 7. |
ARTICLE
VII - DELIVERY
|
| 7.1 |
TIME
AND PLACE
|
The
VESSEL shall be delivered safely afloat by the SELLER to the BUYER at the
BUILDER's Shipyard, in accordance with the Specifications and with all the
Classification and Statutory Certificates and after completion of the Trial
Run
(or, as the case may be, re-Trial or re-Trials) and acceptance by the BUYER
in
accordance with the provisions of Article VI hereof on the “Hull
NYHS200720 Delivery Date”
defined
in the Overall Agreement. Provided however, that, in the event of delays in
the
construction of the VESSEL or any performance required under this Contract
due
to causes which under the terms of the Contract permit extension of the time
for
delivery, the aforementioned time for delivery of the VESSEL shall be extended
accordingly.
The
Hull
NYHS200720 Delivery Date or such later date to which delivery of the VESSEL
is
extended pursuant to the terms of this Contract is hereinafter called the
"Delivery
Date".
| 7.2 |
WHEN
AND HOW EFFECTED
|
Provided
that the BUYER and the SELLER shall each have fulfilled all of their respective
obligations as stipulated in this Contract, the delivery of the VESSEL shall
be
effected forthwith by the concurrent delivery by each of the parties hereto,
one
to the other, of the Protocol of Delivery and Acceptance, acknowledging delivery
of the VESSEL by the SELLER and acceptance thereof by the BUYER, which Protocol
shall be prepared in quadruplicate and executed by each of the parties
hereto.
| 7.3 |
DOCUMENTS
TO BE DELIVERED TO THE BUYER
|
The
acceptance of the VESSEL by the BUYER shall be conditional upon receipt by
the
BUYER from the SELLER of authenticated documents, certificates as required
in
this Contract and also in the Specifications including but not limited to the
following (subject to the provision contained in Article V-2 hereof) which
shall
accompany the aforementioned Protocol of Delivery and Acceptance:
(a)
PROTOCOL OF TRIALS of the VESSEL made by the SELLER pursuant to the
Specifications.
(b)
PROTOCOL OF INVENTORY of the equipment of the VESSEL including spare parts
and
the like, all as specified in the Specifications made by the SELLER and
confirmed by the Supervisor. The equipment of the VESSEL must follow
international standard ISO and CB, GB, and first class Chinese shipbuilding
practice.
(c)
PROTOCOL OF STORES OF CONSUMABLE NATURE made by the SELLER and confirmed by
the
Supervisor referred to under Paragraph 4 of Article VI hereof.
(d)
FINISHED DRAWINGS AND PLANS pertaining to the VESSEL as stipulated in the
Specifications (If it is SELLER’s Obligation).
(e)
PROTOCOL OF DEADWEIGHT AND INCLINING EXPERIMENT, made by the SELLER,
TRIM
AND
STABILITY BOOKLET and LOADING MANUAL, and GRAIN LOADING STABILITY MANUAL, all
approved by the Classification Society on behalf of the Flag State
Administration.
(f)
ALL
CERTIFICATES required to be furnished upon delivery of the VESSEL pursuant
to
this Contract and the Specifications. Certificates shall be issued by relevant
Authorities or Classification Society. The VESSEL shall comply with the above
rules and regulations which are in force at the time of delivery of the VESSEL.
All the certificates shall be delivered in one (1) original to the VESSEL and
two (2) copies to the BUYER.
If
any
permanent certificate or certificates are unable to be issued at the time of
delivery of the VESSEL by the Classification Society or any third party other
than the SELLER, then the provisional certificate or certificates issued by
the
Classification Society or such third party shall be furnished by the SELLER
and
acceptable to the BUYER provided that permanent certificates shall be furnished
by the SELLER to the BUYER in any event before the expiry of such provisional
certificates.
(g)
DECLARATION OF WARRANTY issued by the SELLER that the VESSEL is delivered to
the
BUYER free and clear of any liens, charges, claims, mortgages, or other
encumbrances upon the BUYER's title thereto, and in particular, that the VESSEL
is absolutely free of all burdens in the nature of imposts, taxes or charges
imposed by the province or country of the port of delivery, as well as of all
liabilities of the SELLER to its sub-contractors, employees and crews and/or
all
liabilities arising from the operation of the VESSEL in Trial Run or Trial
Runs,
or otherwise, prior to the delivery of the VESSEL.
(h)
COMMERCIAL INVOICE made by the SELLER.
(i)
XXXX
OF SALE made by the SELLER.
(j)
BUILDER's certificate.
| 7.4 |
TITLE
AND RISK
|
Title
to
and risk of the VESSEL shall pass to the BUYER only upon the delivery thereof.
As stated above, it is expressly understood that, until such delivery is
effected, the title to the VESSEL, and her equipment, shall remain at all times
with the SELLER and are at the entire risk of the SELLER.
| 7.5 |
REMOVAL
OF VESSEL
|
The
BUYER
shall take possession of the VESSEL immediately upon delivery and acceptance
thereof, and shall remove the VESSEL from the premises of the BUILDER within
seven (7) New York business days after delivery and acceptance thereof is
effected. If the BUYER shall not remove the VESSEL from the premises of the
BUILDER within the aforesaid seven (7) New York business days, then, in such
event, without prejudice to the SELLER's right to require the BUYER to remove
the VESSEL immediately at any time thereafter, the BUYER shall pay to the SELLER
the reasonable mooring charge of the VESSEL.
| 7.6 |
TENDER
OF THE VESSEL
|
If
the
BUYER fails to take delivery of the VESSEL after completion thereof according
to
this Contract and the Specifications without justified reason, the SELLER shall
have the right to tender the VESSEL for delivery after compliance with all
procedural requirements as above provided.
| 8. |
ARTICLE
VIII - DELAYS & EXTENSION OF TIME FOR
DELIVERY
|
| 8.1 |
CAUSE
OF DELAY
|
If,
at
any time before actual delivery, either the construction of the VESSEL, or
any
performance required hereunder as a prerequisite of delivery of the VESSEL,
is
delayed due to war, blockade, revolution, insurrection, mobilization, civil
commotions, riots, national strikes affecting a significant proportion of the
Chinese shipbuilding industry, sabotage, lockouts, Acts of God, plague or other
epidemics, quarantines, prolonged failure or restriction of electric current
from an outside source, freight embargoes, if any, earthquakes, tidal waves,
typhoons, hurricanes, storms or such other causes beyond the control of the
BUILDER or of its sub-contractors, as the case may be, which causes will
considerably affect the BUILDER’S production, or by destruction of the BUILDER
or works of the BUILDER or its sub-contractors, or of the VESSEL or any part
thereof, by fire, flood, or other proven causes beyond the control of the SELLER
or its sub-contractors as the case may be, then, in the event of delay due
to
the happening of any of the aforementioned contingencies, the SELLER shall
not
be liable for such delay and the time for delivery of the VESSEL under this
Contract shall be extended without any reduction in the Contract Price for
a
period of time which shall not exceed the total accumulated time of all such
delays, subject nevertheless to the BUYER's right of rescission under Paragraph
4 of this Article and subject however to all relevant provisions of this
Contract which authorize and permit extension of the time of delivery of the
VESSEL.
| 8.2 |
NOTICE
OF DELAY
|
Within
seven (7) New York business days from the date of commencement of any delay
on
account of which the SELLER claims that it is entitled under this Contract
to an
extension of the time for delivery of the VESSEL, the SELLER shall advise the
BUYER by telefax confirmed in writing, of the date such delay commenced, and
the
reasons therefor. Likewise within seven (7) New York business days after such
delay ends, the SELLER shall advise the BUYER in writing or by telefax confirmed
in writing, of the date such delay ended, and also shall specify the maximum
period of the time by which the date for delivery of the VESSEL is extended
by
reason of such delay. Failure of the BUYER to acknowledge the SELLER's
notification of any claim for extension of the Delivery Date within thirty
(30)
days after receipt by the BUYER of such notification, shall be deemed to be
a
waiver by the BUYER of its right to object to such extension. Failure of the
SELLER to give the BUYER notice of delay as provided in this Article except
for
the case of entire power failure or cut-off of the communication facilities
shall preclude the SELLER from claiming extension of the Delivery Date by reason
of such failure.
| 8.3 |
DEFINITION
OF PERMISSIBLE DELAY
|
Delays
on
account of such causes as provided for in Paragraph 1 of this Article, but
excluding any other extensions of a nature which under the terms of this
Contract permit postponement of the Delivery Date, shall be understood to be
(and are herein referred to as) permissible delays, and are to be distinguished
from non-permissible delays on account of which the Contract Price of the VESSEL
is subject to adjustment as provided for in Article III hereof.
| 8.4 |
RIGHT
TO RESCIND FOR EXCESSIVE DELAY
|
If
the
total accumulated time of (i) all permissible delays aggregate to two hundred
and ten (210) days or more or (ii) all permissible delays and non-permissible
delays aggregate to three hundred (300) days or more, the BUYER may in
accordance with the provisions set out herein rescind this Contract by serving
upon the SELLER telefaxed notice of rescissions which shall be confirmed in
writing, in which event the provisions of Article X of this Contract shall
apply. Provided, however, that in calculating any periods of non-permissible
delay for the purposes of this Article 8.4, there shall be excluded delays
(i)
due to arbitration as provided for in Article XIII hereof (ii) due to default
in
performance by the BUYER (iii) due to delays in delivery of the BUYER's supplied
items and (iv) due to causes which, under Article V and XI hereof, permit
extension or postponement of the time for delivery of the VESSEL.
The
SELLER may, at any time, after the BUYER’s right to rescind as aforesaid has
arisen, demand in writing that the BUYER shall make an election, in which case
the BUYER shall, within thirty (30) days after such demand is received by the
BUYER either notify the SELLER of its intention to rescind, or consent to an
extension of the time for delivery to an agreed future date, it being understood
and agreed by the parties hereto that, if any further delay occurs on account
of
causes justifying rescission as specified in this Contract, the BUYER shall
have
the same right of rescission upon the same terms as hereinabove
provided.
| 9. |
ARTICLE
IX - WARRANTY OF QUALITY
|
| 9.1 |
GUARANTEE
OF MATERIAL AND WORKMANSHIP
|
The
SELLER, for a period of twelve (12) months following delivery to the BUYER
of
the VESSEL, guarantees the VESSEL, her hull and machinery and all parts and
equipment thereof that are manufactured or furnished or supplied by the SELLER
and/or its sub-contractors under this Contract including material, equipment
(however excluding any parts for the VESSEL which have been supplied by or
on
behalf of the BUYER) against all defects which are due to defective materials,
or equipment, errors, miscalculation and/or poor workmanship.
| 9.2 |
NOTICE
OF DEFECTS
|
The
BUYER
shall notify the SELLER in writing, or by telefax confirmed in writing, as
promptly as possible, after discovery of any defect or deviations for which
a
claim is made under this guarantee. The BUYER's written notice shall describe
the nature of the defect and the extent of the damage caused thereby. The SELLER
shall have no obligation under this guarantee for any defects discovered prior
to the expiry date of the guarantee, unless notice of such defects, is received
by the SELLER not later than thirty (30) days after such expiry date. Telefaxed
advice with brief details explaining the nature of such defect and extent of
damage within thirty (30) days after such expiry date and that a claim is
forthcoming will be sufficient compliance with the requirements as to time.
If
the SELLER becomes aware of defective materials or design or construction within
the nature of serial defect in respect of the VESSEL or any other vessel built
by the SELLER, the SELLER shall immediately notify the BUYER in writing and
by
fax or by telefax.
| 9.3 |
REMEDY
OF DEFECTS
|
The
SELLER shall remedy at its expense any defects, against which the VESSEL or
any
part of the equipment thereof is guaranteed under this Article by making all
necessary repairs and/or replacement. Such repairs and/or replacement will
be
made by the SELLER.
However,
if it is impractical to make the repair by the SELLER, and if forwarding by
the
SELLER of replacement parts, and materials can not be accomplished without
impairing or delaying the operation or working of the VESSEL, then, in any
such
event, the BUYER shall cause the necessary repairs or replacements to be made
elsewhere at the discretion of the BUYER provided that the BUYER shall first
and
in all events, will, as soon as possible, give the SELLER notice in writing,
or
by telefax confirmed in writing of the time and place such repairs will be
made
and, if the VESSEL is not thereby delayed, or her operation or working is not
thereby delayed, or her operation or working is not thereby impaired, the SELLER
shall have the right to verify by its own representative(s) or that of
Classification Society the nature and extent of the defects complained of.
The
SELLER shall, in such cases, promptly advise the BUYER, by telefax, after such
examination has been completed, of its acceptance or rejection of the defects
as
ones that are subject to the guarantee herein provided. In all minor cases,
the
Guarantee Engineer, as hereinafter provided for, will act for and on behalf
of
the SELLER.
In
any
circumstances as set out below, the SELLER shall immediately pay to the BUYER
in
United States Dollars by telegraphic transfer the actual cost for such repairs
or replacements including forwarding charges, or at the average cost for making
similar repairs or replacements including forwarding charges as quoted by a
leading shipyard each in China, Japan, South Korea and Singapore, whichever
is
lower:
(a)
Upon
the SELLER's acceptance of the defects as justifying remedy under this Article,
or
(b)
If
the SELLER neither accepts nor rejects the defects as above provided, nor
requests arbitration within thirty (30) days after its receipt of the BUYER's
notice of defects.
Any
dispute shall be referred to arbitration in accordance with the provisions
of
Article XIII hereof.
| 9.4 |
EXTENT
OF THE SELLER'S LIABILITY
|
The
SELLER shall have no obligation and/or liabilities with respect to defects
discovered after the expiration of the period of guarantee specified
above.
The
SELLER shall be liable to the BUYER for defects and damages caused by any of
the
defects specified in Paragraph 1 of this Article provided that such liability
of
the SELLER shall be limited to damage occasioned within the guarantee period
specified in Paragraph 1 above. The SELLER shall not be obligated to repair,
or
to be liable for, damages to the VESSEL, or to any part of the equipment
thereof, due to ordinary wear and tear or caused by the defects other than
those
specified in Paragraph 1 above, nor shall there be any SELLER's liability
hereunder for defects in the VESSEL, or any part of the equipment thereof,
caused by fire or accidents at sea or elsewhere, or mismanagement, accidents,
negligence, or wilful neglect, on the part of the BUYER, its employees or agents
including the VESSEL's officers, crew and passengers, or any persons on or
doing
work on the VESSEL other than the SELLER, its employees, agents or
sub-contractors. Likewise, the SELLER shall not be liable for defects in the
VESSEL, or the equipment or any part thereof, due to repairs or replacement
which were made by those other than the SELLER and/or their sub-contractors
without prior consent of the SELLER.
Upon
delivery and acceptance of the VESSEL in accordance with the terms of this
Contract, the SELLER shall thereby and thereupon be released of all
responsibility and liability whatsoever and howsoever arising under or by virtue
of this Contract (save in respect of those obligations to the BUYER expressly
provided for in this Article IX). Neither CCCC nor the BUILDER shall, in any
circumstances, be liable for any consequential loss or special loss, or expenses
arising from any cause whatsoever including, without limitation, loss of time,
loss of profit or earnings or demurrage directly from any commitments of the
BUYER in connection with the VESSEL.
The
Guarantee provided in this Article and the obligations and the liabilities
of
the SELLER hereunder are exclusive and in lieu of law and the BUYER hereby
waives all other remedies, warranties, guarantees or liabilities, express or
implied, arising by law or otherwise on the part of the SELLER. This Guarantee
shall not be extended, altered or varied except by a written instrument signed
by the duly authorized representatives of the SELLER and the BUYER.
| 9.5 |
GUARANTEE
ENGINEER
|
The
SELLER shall at the request of the BUYER nominate for BUYER’s acceptance and,
when judged satisfactory, appoint one or two Guarantee Engineer(s) (the
“Guarantee
Engineer”)
to
serve the VESSEL as the SELLER's representative(s) for a period of six (6)
months from the delivery of the VESSEL with BUYER'S option up to twelve months
(12). The BUYER, and its employees, shall give such Guarantee Engineer(s) full
co-operation in carrying out his/their duties as the representative(s) of the
SELLER on board the VESSEL. The BUYER shall accord the Guarantee Engineer(s)
the
treatment comparable to the VESSEL's Chief Engineer, and shall provide him
with
accommodation and subsistence at no cost to the SELLER and/or the Guarantee
Engineer(s).
The
BUYER
shall pay to the Guarantee Engineer(s) the sum of United States Dollars Two
Thousand Five Hundred only (US$2,500) per month to cover his/their miscellaneous
expenses including wages and also the BUYER shall pay the expense of
repatriation to Shanghai, the People's Republic of China by air upon termination
of his/their service, the expense of his/their communications with the SELLER
when made in performance of his/their duties as the Guarantee Engineer(s) and
the expenses, if any, of his/their medical and hospital care. The BUYER, its
successor(s) and/or assign(s), shall be liable to and indemnify the SELLER
and/or the Guarantee Engineer(s) for personal injuries, including death and
damages to, or loss or destruction of property of the Guarantee Engineer(s),
if
such death, injuries, damages, loss and/or destruction were caused by gross
negligence or wilful misconduct of the BUYER, its successor(s) and/or assign(s)
or its employees and/or agents.
Pertaining
to the detailed particulars of this paragraph, an agreement will be made
according to this effect between the parties hereto upon delivery of the VESSEL.
| 10. |
ARTICLE
X - INSOLVENCY OF SELLER: RESCISSION BY THE
BUYER
|
10.1 Insolvency
of Seller or Seller’s Bank
In
addition to its rights of rescission as elsewhere set out in this Contract,
the
BUYER shall be entitled to rescind this Contract should any of the following
events occur:
| (a) |
The
filing of a petition or the making of an order or the passing of
an
effective resolution for the winding up of either CCCC or 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 of the undertaking or property of either CCCC or the BUILDER,
or
the insolvency of or a suspension of payments by either CCCC or the
BUILDER, or the cessation of the carrying on of business by either
CCCC or
the BUILDER, or the making by either CCCC or the BUILDER of any special
arrangement or composition with their creditors; or any like or similar
circumstance occurring under the laws of the People’s Republic of China;
|
| (b) |
The
occurrence of any of the events set out in sub-paragraph (a) above
with
respect to the SELLER’s Bank, and the failure by the SELLER within
twenty-one (21) days thereof to substitute the SELLER’s Bank, both as
regards refund guarantees previously issued and those yet to be issued,
with an alternative guarantor reasonably acceptable to the BUYER.
|
10.2 Rescission
By The Buyer
(a)
All
payments made by the BUYER prior to the delivery of the VESSEL shall be in
the
nature of advance to the SELLER. In the event the BUYER shall exercise its
right
of rescission of this Contract under and pursuant to any of the provisions
of
this Contract specifically permitting the BUYER to do so, then the BUYER shall
notify the SELLER in writing or by telefax confirmed in writing, and such
rescission shall be effective as of the date the notice thereof is received
by
the SELLER.
(b)
Thereupon the SELLER shall refund in United States Dollars immediately to the
BUYER the full amount of all sums paid by the BUYER to the SELLER on account
of
the VESSEL, unless the SELLER disputes the BUYER's rescission by instituting
arbitration in accordance with Article XIII. If the BUYER's rescission of this
Contract is disputed by the SELLER by instituting arbitration as aforesaid,
then
no refund shall be made by the SELLER, and the BUYER shall not be entitled
to
demand repayment from the SELLER’s Bank, until the arbitration award between the
BUYER and the SELLER or, in case of appeal or appeals by the SELLER on the
arbitration award or any court orders, by the final court order, which shall
be
in favour of the BUYER, declaring the BUYER's rescission justified, is made
and
delivered to the SELLER by the arbitration tribunal or final competent London
Court having jurisdiction on the dispute. In the event the SELLER is obligated
to make refundment, the SELLER shall pay the BUYER interest in United States
Dollars at the rate of five percent (5%) if the rescission of this Contract
is
exercised by the BUYER in accordance with the provision of Paragraph 4 of
Article VIII or/by the events described in Article III 1(c), 2(c), 3(c) or
4(c)
hereof computed from the respective dates when such sums were received by the
SELLER’s Bank pursuant to Article II 4(b), 4(c) or 4(d) from the BUYER to the
date of remittance by telegraphic transfer of such refund to the BUYER by the
SELLER, however in the event of total loss as described in Article XII of this
Contract, then, no interest will be paid on the amount required herein to be
refunded to the BUYER.
(c)
Upon
such refund by the SELLER to the BUYER, all obligations, duties and liabilities
of each of the parties hereto to the other under this Contract shall be
forthwith completely discharged.
| 11. |
ARTICLE
XI - BUYER'S DEFAULT
|
| 11.1 |
DEFINITION
OF DEFAULT
|
The
BUYER
shall be deemed in default of its obligation under the Contract if any of the
following events occurs:
(a)
The
BUYER fails to pay the Second or Third or Fourth Instalment to the SELLER when
any such instalment becomes due and payable under the provisions of Article
II
hereof and provided that the BUYER shall have received the SELLER's demand
for
payment in accordance with Article II hereof; or
(b)
The
BUYER fails to pay the Fifth Instalment to the SELLER in accordance with
Paragraph 3(e) and 4(e) of Article II hereof provided that the BUYER shall
have
received the SELLER's demand
for
payment in accordance with Article II hereof; or
(c)
The
BUYER fails to take delivery of the VESSEL, when the VESSEL is duly tendered
for
delivery by the SELLER under the provisions of Article VII hereof.
| 11.2 |
NOTICE
OF DEFAULT
|
If
the
BUYER is in default of payment or in performance of its obligations as provided
hereinabove, the SELLER shall notify the BUYER to that effect by telefax after
the date of occurrence of the default as per Paragraph 1 of this Article and
the
BUYER shall forthwith acknowledge by telefax to the SELLER that such
notification has been received. In case the BUYER does not give the aforesaid
telefax acknowledgment to the SELLER within three (3) New York business days
it
shall be deemed that such notification has been duly received by the
BUYER.
| 11.3 |
INTEREST
AND CHARGE
|
(a)
If
the BUYER is in default of payment as to any instalment as provided in Paragraph
1 (a) and/or 1 (b) of this Article, the BUYER shall pay interest on such
instalment at the rate of five percent (5%) per annum until the date of the
payment of the full amount, including all aforesaid interest. In case the BUYER
shall fail to take delivery of the VESSEL when required to as provided in
Paragraph 1 (c) of this Article, the BUYER shall be deemed in default of payment
of the 5th Instalment and shall pay interest thereon at the same rate as
aforesaid from and including the day on which the VESSEL is tendered for
delivery by the SELLER, as provided in Article VII Paragraph 6
hereof.
(b)
In
any event of default by the BUYER under 1 (a) or 1 (b) or 1 (c) above, the
BUYER
shall also pay all reasonable costs, charges and expenses incurred by the SELLER
in consequence of such default.
| 11.4 |
DEFAULT
BEFORE DELIVERY OF THE VESSEL
|
(a)
If
any default by the BUYER occurs as defined in Paragraph 1 (a) or 1 (b) or 1
(c)
of this Article, the Delivery Date shall, at the SELLER's option, be postponed
for a period of continuance of such default by the BUYER.
(b)
If
any such default as defined in Paragraph 1 (a) or 1 (b) or 1 (c) of this Article
committed by the BUYER continues for a period of fifteen (15) New York business
days starting from the date the BUYER receives the SELLER’s notice of default
referred to in Article XI paragraph 2, then, the SELLER shall have all of the
following rights and remedies:
(i)
The
SELLER may, at its option, rescind this Contract, provided that the SELLER
has
notified the BUYER of such default pursuant to Paragraph 2 of this Article,
by
giving notice of such effect to the BUYER by telefax confirmed in writing.
Upon
receipt by the BUYER of such telefax notice of rescission, all of the BUYER's
Supplies shall forthwith become the sole property of the SELLER, and the VESSEL
and all its equipment and machinery shall be at the sole disposal of the SELLER
for sale or otherwise; and
(ii)
In
the event of such rescission of this Contract, the SELLER shall be entitled
to
retain any instalment or instalments of the Contract Price paid by the BUYER
to
the SELLER on account of this Contract.
| 11.5 |
SALE
OF THE VESSEL
|
(a)
In
the event of rescission of this Contract as above provided, the SELLER shall
have full right and power either to complete or not to complete the VESSEL
as it
deems fit, and to sell the VESSEL at a public or private sale on such terms
and
conditions as the SELLER thinks fit without being answerable for any loss or
damage occasioned to the BUYER thereby.
In
the
case of sale of the VESSEL, the SELLER shall give telefax or written notice
to
the BUYER.
(b)
In
the event of the sale of the VESSEL in its completed state, the proceeds of
sale
received by the SELLER shall be applied firstly to payment of all expenses
attending such sale and otherwise incurred by the SELLER as a result of the
BUYER's default, and then to payment of all unpaid instalments and/or unpaid
balance of the Contract Price and interest on such instalment at the interest
rate as specified in the relevant provisions set out above from the respective
due dates thereof to the date of application.
(c)
In
the event of the sale of the VESSEL in its incomplete state, the proceeds of
sale received by the SELLER shall be applied firstly to all expenses attending
such sale and otherwise incurred by the SELLER as a result of the BUYER's
default, and then to payment of all costs of construction of the VESSEL (such
costs of construction, as herein mentioned, shall include but are not limited
to
all costs of labour and/or prices paid or to be paid by the SELLER for the
equipment and/or technical design and/or materials purchased or to be purchased,
installed and/or to be installed on the VESSEL) and/or any fees, charges,
expenses and/or royalties incurred and/or to be incurred for the VESSEL less
the
instalments so retained by the SELLER, and compensation to the SELLER for a
reasonable sum of loss or profit due to the rescission of this
Contract.
(d)
In
either of the above events of sale, if the proceeds of sale exceed the total
of
the amounts to which such proceeds are to be applied as aforesaid, the SELLER
shall promptly pay the excesses to the BUYER without interest, provided, however
that the amount of each payment to the BUYER shall in no event exceed the total
amount of instalments already paid by the BUYER and the cost of the BUYER's
supplies, if any.
(e)
If
the proceeds of sale are insufficient to pay such total amounts payable as
aforesaid, the BUYER shall promptly pay the deficiency to the SELLER upon
request.
| 12. |
ARTICLE
XII - INSURANCE
|
| 12.1 |
EXTENT
OF INSURANCE COVERAGE
|
From
the
time of keel-laying of the first section of the VESSEL until the VESSEL is
completed, delivered to and accepted by the BUYER, the SELLER shall, at its
own
cost and expense, keep the VESSEL and all machinery, materials, equipment,
appurtenances and outfit, delivered to the SELLER for the VESSEL or built into,
or installed in or upon the VESSEL, including the BUYER's Supplies, fully
insured with the first class Chinese insurance companies on insurance terms
no
narrower than the Institute of London Underwriters’ Builders' Risks Clauses.
The
amount of such insurance coverage shall, up to the date of delivery of the
VESSEL, be in an amount at least equal to, but not limited to, the aggregate
of
the payments made by the BUYER to the SELLER including the value of the BUYER's
Supplies. The policy referred to hereinabove shall be taken out in the name
of
the SELLER and all losses under such policy shall be payable to the SELLER.
The
SELLER shall send the BUYER a copy of the insurance policy and/or confirmation
of the insurance coverage for the VESSEL as soon as possible after the
Keel-Laying of the VESSEL has been carried out.
| 12.2 |
APPLICATION
OF RECOVERED AMOUNT
|
(a)
Partial Loss:
In
the
event the VESSEL shall be damaged by any insured cause whatsoever prior to
acceptance and delivery thereof by the BUYER and in the further event that
such
damage shall not constitute an actual or a constructive total loss of the
VESSEL, the SELLER shall apply the amount recovered under the insurance policy
referred to in Paragraph 1 of this Article to the repair of such damage
satisfactory to the Classification Society and other institutions or authorities
as described in the Specifications without additional expenses to the BUYER,
and
the BUYER shall accept the VESSEL under this Contract if completed in accordance
with this Contract and the Specifications.
(b)
Total
Loss:
However,
in the event that the VESSEL is determined to be an actual or constructive
total
loss, the SELLER shall either:
(i)
By
mutual agreement between the parties hereto, proceed in accordance with the
terms of this Contract, in which case the amount recovered under said insurance
policy shall be applied to the reconstruction and/or repair of the VESSEL's
damages and/or reinstallation of BUYER's supplies without additional expenses
to
the BUYER, provided the parties hereto shall have first agreed in writing as
to
such reasonable extension of the Delivery Date and adjustment of other terms
of
this Contract including the Contract Price as may be necessary for the
completion of such reconstruction; or
(ii)
If
due to whatever reasons the parties fail to agree on the above, then refund
immediately to the BUYER the amount of all instalments paid to the SELLER under
this Contract without interest together with recovered amount for BUYER's
supplies onboard, whereupon this Contract shall be deemed to be cancelled and
all rights, duties, liabilities and obligations of each of the parties to the
other shall terminate forthwith.
Within
thirty (30) days after receiving telefax notice of any damage to the VESSEL
constituting an actual or a constructive total loss, the BUYER shall notify
the
SELLER in writing or by telefax of its agreement or disagreement under this
sub-paragraph. In the event the BUYER fails to so notify the SELLER, then such
failure shall be construed as a disagreement on the part of the BUYER, this
Contract shall be deemed as rescinded and cancelled, the BUYER shall receive
the
refund as hereinabove provided and the provisions hereof shall
apply.
| 12.3 |
TERMINATION
OF THE SELLER'S OBLIGATION TO
INSURE
|
The
SELLER's obligation to insure the VESSEL hereunder shall cease and terminate
forthwith upon delivery thereof to, and acceptance by, the BUYER.
| 13. |
ARTICLE
XIII - DISPUTES AND
ARBITRATION
|
| 13.1 |
PROCEEDINGS
|
In
the
event of any dispute between the parties hereto as to any matter arising out
of
or relating to this Contract or any stipulation herein or with respect thereto
which cannot be settled by the parties themselves, such dispute shall be
resolved by arbitration in London, England in accordance with the laws of
England. Either party may demand arbitration of any such disputes by giving
written notice to the other party. Any demand for arbitration by either party
hereto shall state the name of the arbitrator appointed by such party and shall
also state specifically the question or questions as to which such party is
demanding arbitration. Within twenty (20) days after receipt of notice of such
demand for arbitration, the other party shall in turn appoint a second
arbitrator. The two arbitrators thus appointed shall thereupon select a third
arbitrator, and the three arbitrators so named shall constitute the board of
arbitration (hereinafter called the "Arbitration
Board")
for
the settlement of such dispute.
In
the
event however, that said other party should fail to appoint a second arbitrator
as aforesaid within twenty (20) days following receipt of notice of demand
of
arbitration, it is agreed that such party shall thereby be deemed to have
accepted and appointed as its own arbitrator the one already appointed by the
party demanding arbitration, and the arbitration shall proceed forthwith before
this sole arbitrator, who alone, in such event, shall constitute the Arbitration
Board. And in the further event that the two arbitrators appointed respectively
by the parties hereto as aforesaid should be unable to reach agreement on the
appointment of the third arbitrator within twenty (20) days from the date on
which the second arbitrator is appointed, either party of the said two
arbitrators may apply to any court in England or other official organization
in
England having jurisdiction in such matter to appoint the third arbitrator.
The
award of the arbitration, made by the sole arbitrator or by the majority of
the
three arbitrators as the case may be, unless appealed by either parties, shall
be final, conclusive and binding upon the parties hereto.
| 13.2 |
ALTERNATIVE
ARBITRATION BY AGREEMENT
|
Notwithstanding
the preceding provisions of this Article, it is recognized that in the event
of
any dispute or difference of opinion arising in regard to technical matters
on
the construction of the VESSEL, her machinery and equipment, or concerning
the
quality of materials or workmanship thereof or thereon, such dispute may be
referred to the Classification Society upon mutual agreement of the parties
hereto. In such case, the opinion of the Classification Society shall be final
and binding on the parties hereto.
| 13.3 |
NOTICE
OF AWARD
|
Notice
of
any award shall immediately be given in writing or by telefax confirmed in
writing to the SELLER and the BUYER.
| 13.4 |
EXPENSES
|
The
arbitrator(s) shall determine which party shall bear the expenses of the
arbitration or the proportion of such expenses which each party shall
bear.
| 13.5 |
AWARD
OF ARBITRATION
|
Award
of
arbitration, unless appealed by either parties, shall be final and binding
upon
the parties concerned.
| 13.6 |
ENTRY
IN COURT
|
Judgment
on any award may be entered in any court of competent jurisdiction.
| 13.7 |
ALTERATION
OF DELIVERY DATE
|
In
the
event that any dispute or difference is referred either to arbitration or to
an
expert, the arbitration tribunal or expert, as the case may be, shall, where
the
dispute requires, include a finding as to whether or not the Delivery Date
of
the VESSEL should, as a result of such dispute, be in any way altered thereby.
| 14. |
ARTICLE
XIV - RIGHT OF ASSIGNMENT
|
14.1 The
BUYER
shall be entitled to assign any and all of its rights under this Contract for
the purposes of obtaining finance, to which assignment(s) the BUILDER hereby
consents.
14.2 Subject
to paragraph 1 of this Article, the BUYER may assign this Contract to a third
party only and always subject to a prior written consent of the SELLER which
consent shall not be unreasonably withheld by the SELLER, provided that all
of
the SELLER’S rights under this contract are protected by the terms of such
assignment.
| 15. |
ARTICLE
XV - TAXES AND DUTIES
|
| 15.1 |
TAXES
|
All
costs
for taxes including stamp duties and import licence fees, if any, incurred
in
connection with this Contract in the People's Republic of China shall be borne
by the SELLER. Any taxes and/or duties imposed upon those items or services
procured by the SELLER in the People's Republic of China or elsewhere for the
construction of the VESSEL, including export licence fees, shall be borne by
the
SELLER.
| 15.2 |
DUTIES
|
The
SELLER shall indemnify the BUYER for, and hold it harmless against, any duties,
including import and export licence fees, imposed in the People's Republic
of
China upon materials and equipment which under the terms of this Contract and/or
the Specifications will, or may be, supplied by the BUYER from the abroad for
installation in the VESSEL as well as any duties imposed in the People's
Republic of China upon running stores, provisions and supplies furnished by
the
BUYER from abroad to be stocked on board the VESSEL and also from the payment
of
export duties, if any, to be imposed upon the VESSEL as a whole or upon any
of
its parts or equipment.
| 16. |
ARTICLE
XVI - PATENTS, TRADEMARKS AND
COPYRIGHTS
|
The
machinery and equipment of the VESSEL may bear the patent number, trademarks
or
trade names of the manufacturers. The SELLER shall defend and save harmless
the
BUYER from patent liability or claims of patent infringement of any nature
or
kind, including costs and expenses for, or on account of any patented or
patentable invention made or used in the performance of this Contract and also
including cost and expense of litigation, if any.
Nothing
contained herein shall be construed as transferring any patent or trademark
rights or copyright in equipment covered by this Contract, and all such rights
are hereby expressly reserved to the true and lawful owners thereof.
Notwithstanding any provisions contained herein to the contrary, the SELLER's
obligation under this Article should not be terminated by the passage of any
specified period of time.
The
SELLER's indemnity hereunder does not extend to equipment or parts supplied
by
the BUYER to the SELLER if any.
| 17. |
ARTICLE
XVII - NOTICES
|
Any
and
all notices and communications in connection with this Contract shall be
addressed as follows:
To
the
BUYER
Suite
306
Commerce
Building
Xxx
Xxxxxxxx Xxxx
Xxxxxxxx
XX00
Xxxxxxx
Telefax
No. :000-000-0000
with
copy to:
TBS
Shipping Services Inc.
000
Xxxxxx Xxxxxx Xxxx
Xxxxxxx,
Xxx Xxxx 00000
XXX
Attention:
Xxxxxx X. Xxxxx
Telefax
No. : 000-000-0000
To
CCCC
CHINA
COMMUNICATIONS CONSTRUCTION COMPANY LTD.
x/x.
XXXX
XXXXXXXX EQUIPMENT ENGINEERING CO., LTD
00
Xxxxx,
0000 Xx Xxxx Xxx Xxxx, Xxxxxxxx 000000 Xxxxx
Telefax
No. : +8621
5089 0068
with
copy to the BUILDER:
NANTONG
YAHUA SHIPBUILDING CO., LTD.
1#
Hongzha Road, Jiuweigang, Nantong Jiangsu P.C. 000000, Xxxxx
Telefax
No. : +86513
8556 0018
Any
notices and communications sent by CCCC or the BUILDER alone to the BUYER shall
be deemed as having being sent by both CCCC and the BUILDER.
Any
change of address shall be communicated in writing by registered mail by the
party making such change to the other party and in the event of failure to
give
such notice of changes, communications addressed to the party at their last
known address shall be deemed sufficient.
Any
and
all notices, requests, demands, instructions, advice and communications in
connection with this Contract shall be deemed to be given at, and shall become
effective from, the time when the same is delivered to the address of the party
to be served, provided, however, that registered airmail shall be deemed to
be
delivered ten (10) days after the date of dispatch, express courier service
shall be deemed to be delivered five (5) days after the date of dispatch, and
telefax acknowledged by the answerbacks shall be deemed to be delivered upon
dispatch. Any and all notices, communications, Specifications and drawings
in
connection with this Contract shall be written in the English language and
each
party hereto shall have no obligation to translate them into any other language.
| 18. |
ARTICLE
XVIII - EFFECTIVE DATE OF
CONTRACT
|
This
Contract shall not become effective and shall have no effect whatsoever, with
no
party being liable to the other for any loss or damage, unless and until all
the
following conditions are completely fulfilled and satisfied, latest by
31st
March
2007:
(1) Due
execution of this Contract by each of the BUYER, CCCC and the BUILDER comprising
of (i) the signing of this Contract by duly authorised representatives of each
party and (ii) the stamping of this Contract through the placement of each
party’s corporate chop;
(2) Receipt
by the BUYER of (i) the Refund Guarantee for the First Instalment issued by
the
SELLER’s Bank and (ii) documentary evidence from the SELLER’s Bank that this has
been duly registered with SAFE; and
(3) Receipt
by the SELLER of (a) the First Instalment in accordance with Paragraph 3(a)
and
4(a) of Article II of this Contract and (b) an original of the Letter of
Guarantee issued by The Royal Bank of Scotland or other international bank
acceptable to the Seller in accordance with Article II Paragraph 6(a)
hereof.
For
the
purpose of this Contract, the “Effective Date” means the date on which this
Contract becomes effective in accordance with the provisions of this Article
XVIII.
| 19. |
ARTICLE
XIX - INTERPRETATION
|
| 19.1 |
LAW
APPLICABLE
|
The
parties hereto agree that the validity and interpretation of this Contract
and
of each Article and part hereof be governed by and interpreted in accordance
with the laws of England.
| 19.2 |
DISCREPANCIES
|
All
general language or requirements embodied in the Specifications are intended
to
amplify, explain and implement the requirements of this Contract. However,
in
the event that any language or requirements so embodied in the Specifications
permit an interpretation inconsistent with any provision of this Contract,
then
in each and every such event the applicable provisions of this Contract shall
govern. The Technical Specification and plans (which comprise the
Specifications) are also intended to explain each other, and anything shown
on
the plans and not stipulated in the Technical Specification or stipulated in
the
Technical Specification and not shown on the plans, shall be deemed and
considered as if embodied in both. In the event of conflict between the
Technical Specification and plans, the Technical Specification shall
govern.
However,
with regard to such inconsistency or contradiction between this Contract and
the
Specifications as may later occur by any change or changes in the Specifications
agreed upon by and among the parties hereto after execution of this Contract,
then such change or changes shall govern.
| 19.3 |
DEFINITION
|
In
absence of stipulation of “New York business day(s)", all references to "day" or
"days" shall be taken as "calendar day" or "calendar days".
In
WITNESS WHEREOF, the parties hereto have caused this Contract to be duly
executed on the day and year first above written.
THE
BUYER: ARGYLE MARITIME CORP.
By
:
_/s/
Xxxxxx Levin________________________
Name
:
Xxxxxx Xxxxx
Title
:
Director
- New Shipbuilding Projects
Witness
:
CCCC
: CHINA COMMUNICATIONS CONSTRUCTION COMPANY LTD.
By
:
____________/s/_______________________
Name
:
Title
:
Witness
:
CCCC SHANGHAI EQUIPMENT ENGINEERING CO., LTD
THE
BUILDER: NANTONG YAHUA SHIPBUILDING CO., LTD.
By
:
_________/s/________________________
Name
:
Title
:
Witness
:
Exhibit
"A" :
REFUND
LETTER OF GUARANTEE
FOR
THE 1st
INSTALMENT (DRAFT)
To:
ARGYLE
MARITIME CORP.
Trust
Company Complex
Ajeltake
Road
Ajeltake
Island
Majuro
Xxxxxxxx
Islands MH96960
Date:
Dear
Sirs,
Irrevocable
Letter of Guarantee No.
1.
At the
request of CHINA COMMUNICATION CONSTRUCTION COMPANY LTD and NANTONG YAHUA
SHIPBUILDING CO., LTD. (hereinafter collectively called the "SELLER")
and in
consideration of your entering in to the shipbuilding contract concluded by
and
amongst you and the SELLER dated February 2007 for the construction of one
(1)
multi-purpose vessel (the “VESSEL”)
to be
designated as Hull No. NYHS200720 (hereinafter called the "Contract"),
we,
the undersigned, do hereby irrevocably guarantee repayment to you by the SELLER
of a total amount of United States Dollars seven million(US$
7,000,000),representing the 1st
instalment of the Contract Price of the VESSEL (the “Instalment”),
that
you are to pay to the SELLER under the Contract prior to the delivery of the
VESSEL, if and when the same or any part thereof becomes repayable to you from
the SELLER in accordance with the terms of the Contract. Should the SELLER
fail
to make such repayment, we shall pay you the amount the SELLER ought to pay
together with interest at the rate of zero percent (0%) per annum if the
rescission of the Contract is exercised by you for the total loss in accordance
with the Article XII and X of the Contract or together with an interest at
the
rate of five percent (5%) per annum if the rescission of the Contract is
exercised by you for delay in accordance with the provisions of Article VIII
of
the Contract or by the events described in Article III 1(c), 2(c), 3(c) or
4(c)
of the Contract within thirty (30) business days after our receipt of a simple
written demand from you for repayment confirming that the SELLER has refused
and/or has failed to refund the BUYER in breach of the relevant Article of
the
Contract.
2.
However, in the event of any dispute between you and the SELLER as to whether
the SELLER is liable to repay the Instalment paid by you and such dispute is
submitted either by the SELLER or by you for arbitration in accordance with
Article XIII of the Contract, we shall be entitled to withhold and defer payment
until the arbitration award is granted. We shall not be obligated to make any
payment to you unless the arbitration award orders the SELLER to make repayment
and any right of appeal available to the SELLER under English law is waived
or
is not exercised by the SELLER in accordance with English law. Provided further
that in the event an application is successfully made for leave to appeal,
our
liability to make payment hereunder shall be conditional upon the final
determination in your favour of the matters in respect of which leave to appeal
has been granted. Our obligation to make payment hereunder of the principal
amount guaranteed and interest thereon shall arise immediately upon our
receiving of a certified copy of such relevant award and shall be to the extent
the arbitration award (or any court judgment) orders but not exceeding the
aggregate amount of this guarantee plus the interest as described
above.
3.
The
said repayment shall be made by us in United States Dollars. All payments by
us
under this Letter of Guarantee shall be made without any set-off or counterclaim
and without deduction or withholding for or on account of any taxes, duties,
or
charges whatsoever unless we are compelled by law to deduct or withhold the
same. In the latter event we shall make the minimum deduction or withholding
permitted and will pay such additional amounts as may be necessary in order
that
the net amount received by you after such deductions or withholdings shall
equal
the amount which would have been received had no such deduction or withholding
been required to be made.
4.
This
Letter of Guarantee shall become effective from the time of the actual receipt
by the SELLER of the payment of the Instalment of the Contract Price from you
or
on your behalf or from your parent company as your guarantor or pursuant to
any
Payment Guarantee issued by your bank. However, our liability under this Letter
of Guarantee shall be limited to the above mentioned amount actually paid to
the
SELLER, together with interest calculated, as described above at five percent
(5%) or, zero percent (0%) per annum, as the case may be for the period
commencing with the date of receipt by the SELLER of the said Instalment to
the
date of repayment thereof.
5.
This
Letter of Guarantee shall remain in force until (i) the VESSEL has been
delivered to and accepted by you or (ii) refund has been made by the SELLER
or
ourselves or (iii) 31st
August
2009, whichever
occurs earlier. However, in the event that by 31st
August
2009 (i) the Vessel has not been delivered to and accepted by you or (ii) refund
has not been made by the SELLER or ourselves then, the validity of this Letter
of Guarantee shall be automatically extended until 28th
February
2011. Notwithstanding the foregoing, if arbitration or appeal proceedings exist
between you and the SELLER for such matter as described above, then the validity
of this Letter of Guarantee shall be automatically extended until the date
falling on the sixtieth (60th) calendar day after the final arbitration award
or
final court order is granted.
6.
Our
liability hereunder shall not be affected by any alteration to, or variation
of,
the terms of the Contract you may hereafter agree with the SELLER. We hereby
agree that this Letter of Guarantee shall be construed as a continuing and
unconditional guarantee of payment and without regard to the validity or
unenforceability of any other agreement or instrument (including the Contract)
and without regard to defence, set-off or counterclaim, or any other
circumstance whatsoever which might constitute an equitable or legal discharge
of our obligation hereunder. No action or failure to act on your part shall
relieve us of any of our obligation hereunder.
7.
We
hereby confirm that you may assign this Letter of Guarantee to your financiers
by way of security. No other assignment of your rights under this Letter of
Guarantee shall be permissible without our prior written consent, such consent
not to be unreasonably withheld. In any event, the right for making a demand
under this Letter of Guarantee shall exclusively remain with you.
8.
This
Letter of Guarantee is governed by the laws of England and is subject to the
exclusive jurisdiction of the English Courts. For the purpose of any proceedings
hereunder, we irrevocably appoint the following as our agent for service of
process: [ ].
For
The
_______ Bank
(Stamp
& Signature)
Name
:
Title
:
Exhibit
"B" :
REFUND
LETTER OF GUARANTEE
FOR
THE 2nd,
3rd
AND 4th
INSTALMENTS (DRAFT)
To:
ARGYLE
MARITIME CORP.
Trust
Company Complex
Ajeltake
Road
Ajeltake
Island
Majuro
Xxxxxxxx
Islands MH96960
Date:
Dear
Sirs,
Irrevocable
Letter of Guarantee No.
1.
At the
request of CHINA COMMUNICATION CONSTRUCTION COMPANY LTD and NANTONG YAHUA
SHIPBUILDING CO., LTD. (hereinafter collectively called the "SELLER")
and in
consideration of your entering into the shipbuilding contract concluded by
and
amongst you, and the SELLER dated February 2007 for the construction of one
(1)
multi-purpose vessel (the “VESSEL”)
to be
designated as Hull No. NYHS200720 (hereinafter called the "Contract"),
we,
the undersigned, do hereby irrevocably guarantee repayment to you by the SELLER
of a total amount of United States Dollars twenty one million (US$
21,000,000),representing United States Dollars seven million (US$ 7,000,000)
for
the 2ndinstalment
of the Contract Price of the VESSEL, United States Dollars seven million (US$
7,000,000) for the 3rd
instalment of the Contract Price of the VESSEL and United States Dollars seven
million (US$ 7,000,000) for the 4th
instalment of the Contract Price of the VESSEL (the “Instalments”
and
each, an “Instalment”),
that
you are to pay to the SELLER under the Contract prior to the delivery of the
VESSEL, if and when the same or any part thereof becomes repayable to you from
the SELLER in accordance with the terms of the Contract. Should the SELLER
fail
to make such repayment, we shall pay you the amount the SELLER ought to pay
together with interest at the rate of zero percent (0%) per annum if the
rescission of the Contract is exercised by you for the total loss in accordance
with the Article XII and X of the Contract or together with an interest at
the
rate of five percent (5%) per annum if the rescission of the Contract is
exercised by you for delay in accordance with the provisions of Article VIII
of
the Contract or by the events described in Article III 1(c), 2(c), 3(c) or
4(c)
of the Contract within thirty (30) business days after our receipt of a simple
written demand from you for repayment confirming that the SELLER has refused
and/or has failed to refund the BUYER in breach of the relevant Article of
the
Contract.
2.
However, in the event of any dispute between you and the SELLER as to whether
the SELLER is liable to repay an Instalment or Instalments paid by you and
such
dispute is submitted either by the SELLER or by you for arbitration in
accordance with Article XIII of the Contract, we shall be entitled to withhold
and defer payment until the arbitration award is granted. We shall not be
obligated to make any payment to you unless the arbitration award orders the
SELLER to make repayment and any right of appeal available to the SELLER under
English law is waived or is not exercised by the SELLER in accordance with
English law. Provided further that in the event an application is successfully
made for leave to appeal, our liability to make payment hereunder shall be
conditional upon the final determination in your favour of the matters in
respect of which leave to appeal has been granted. Our obligation to make
payment hereunder of the principal amount guaranteed and interest thereon shall
arise immediately upon our receiving of a certified copy of such relevant award
and shall be to the extent the arbitration award (or any court judgment) orders
but not exceeding the aggregate amount of this guarantee plus the interest
as
described above.
3.
The
said repayment shall be made by us in United States Dollars. All payments by
us
under this Letter of Guarantee shall be made without any set-off or counterclaim
and without deduction or withholding for or on account of any taxes, duties,
or
charges whatsoever unless we are compelled by law to deduct or withhold the
same. In the latter event we shall make the minimum deduction or withholding
permitted and will pay such additional amounts as may be necessary in order
that
the net amount received by you after such deductions or withholdings shall
equal
the amount which would have been received had no such deduction or withholding
been required to be made.
4.
This
Letter of Guarantee shall become effective from the time of the actual receipt
by the SELLER of the payment of the 2nd
Instalment of the Contract Price from you or on your behalf or from your parent
company as your guarantor or pursuant to any Payment Guarantee issued by your
bank. However, our liability under this Letter of Guarantee shall be limited
to
the above mentioned amount actually paid to the SELLER, together with interest
calculated, as described above at five percent (5%) or, zero percent (0%) per
annum, as the case may be for the period commencing with the date of receipt
by
the SELLER of the respective Instalment to the date of repayment thereof.
5.
This
Letter of Guarantee shall remain in force until (i) the VESSEL has been
delivered to and accepted by you or (ii) refund has been made by the SELLER
or
ourselves or (iii) 31st
August
2009, whichever
occurs earlier. However, in the event that by 31st
August
2009 (i) the Vessel has not been delivered to and accepted by you or (ii) refund
has not been made by the SELLER or ourselves then, the validity of this Letter
of Guarantee shall be automatically extended until 28th
February
2011. Notwithstanding the foregoing, if arbitration or appeal proceedings exist
between you and the SELLER for such matter as described above, then the validity
of this Letter of Guarantee shall be automatically extended until the date
falling on the sixtieth (60th) calendar day after the final arbitration award
or
final court order is granted.
6.
Our
liability hereunder shall not be affected by any alteration to, or variation
of,
the terms of the Contract you may hereafter agree with the SELLER. We hereby
agree that this Letter of Guarantee shall be construed as a continuing and
unconditional guarantee of payment and without regard to the validity or
unenforceability of any other agreement or instrument (including the Contract)
and without regard to defence, set-off or counterclaim, or any other
circumstance whatsoever which might constitute an equitable or legal discharge
of our obligation hereunder. No action or failure to act on your part shall
relieve us of any of our obligation hereunder.
7.
We
hereby confirm that you may assign this Letter of Guarantee to your financiers
by way of security. No other assignment of your rights under this Letter of
Guarantee shall be permissible without our prior written consent, such consent
not to be unreasonably withheld. In any event, the right for making a demand
under this Letter of Guarantee shall exclusively remain with you.
8.
This
Letter of Guarantee is governed by the laws of England and is subject to the
exclusive jurisdiction of the English Courts. For the purpose of any proceedings
hereunder, we irrevocably appoint the following as our agent for service of
process: [ ].
For
The
_______ Bank
(Stamp
& Signature)
Name
:
Title
:
Exhibit
"C"
IRREVOCABLE
PAYMENT LETTER OF GUARANTEE
FOR
THE 2nd
, 3rd
and 4th
INSTALMENTS (DRAFT)
From:
The
Royal Bank of Scotland
To: China
Communications Construction Company Ltd. (“CCCC”);
Date:
Dear
Sirs,
1.
In
consideration of your entering into a Shipbuilding Con-tract dated February
2007
(the “Shipbuilding
Contract”)
with
Nantong Yahua Shipbuilding Co., Ltd. of 1# Hongzha Road, Jiuweigang, Nantong,
Jiangsu P.C. 226361 (the “BUILDER”)
and
Argyle Maritime Corp. of Trust Company Complex, Ajeltake Road, Ajeltake Island,
Majuro, Xxxxxxxx Islands MH96960 as the buyer (the “BUYER”)
for
the construction of one (1) multi-purpose vessel known as the Builder’s Hull
No.NYHS200720(the “VESSEL"),
we,
The
Royal Bank of Scotland
of [ ],
hereby IRREVOCABLY, ABSOLUTELY and UNCONDITIONALLY guaran-tee, as the primary
obligor and not merely as the surety, the due and punctual payment by the BUYER,
as and when the same shall fall due, of each and all of the 2nd, 3rd
and
4th
instalments
(the “Instalments”
and
each, an “Instalment”)
of the
Contract Price amounting to a total sum of United States Dollars twenty one
million (US$ 21,000,000) as specified in (2) below, being part of a total
Contract Price of United States Dollars thirty five million four hundred and
twenty thousand (US$ 35,420,000). Terms used herein shall bear the same meaning
as in the Shipbuilding Contract, a copy of which has been provided to us.
2.
The
Instalments guaranteed hereunder, pursuant to the terms of the Shipbuilding
Contract, comprise:-
| (a) |
the
2nd Instalment in the amount of U.S. Dollars seven million only (US$
7,000,000) payable by the BUYER within five (5) New York business
days of
the receipt by the BUYER of (i) the Refund Guarantee issued by the
SELLER’s Bank in respect of the 2nd,
3rd
and 4th
Instalments together with documentary evidence that this has been
duly
registered with the State Administration for Foreign Exchange (“SAFE”) and
(ii) a telefax notice attaching the Stage Certificate issued by you
and
the BUILDER in the form of the draft attached as Appendix A to the
Overall
Agreement, countersigned by the Classification Surveyor, certifying
that
the steel cutting of the first plate of the VESSEL in the BUILDER’s
Shipyard has commenced,
|
| (b) |
the
3rd Instalment in the amount of U.S. Dollars seven million only (US$
7,000,000) payable by the BUYER within five (5) New York business
days of
the receipt by the BUYER of a telefax notice attaching the Stage
Certificate issued by you and the BUILDER in the form of the draft
attached as Exhibit D to the Shipbuilding Contract, countersigned
by the
Classification Society, certifying that the VESSEL’s keel has been laid
within the meaning of Article 2.3 of the Shipbuilding Contract;
and
|
| (c) |
the
4th Instalment in the amount of U.S. Dollars seven million only (USD
7,000,000) payable by the BUYER within five (5) New York business
days of
the receipt by the BUYER of a telefax notice attaching the Stage
Certificate issued by you and the BUILDER in the form of the draft
attached as Exhibit D to the Shipbuilding Contract, countersigned
by the
Classification Surveyor, certifying that the VESSEL has been successfully
launched.
|
PROVIDED
HOWEVER that it is expressly understood and agreed that our maximum liability
under this Letter of Guarantee shall at all times be limited to the aggregate
of:
(a)
the
lesser of (i) United States Dollars fourteen million (USD 14 million) and (ii)
the difference between the Contract Price and an amount corresponding to the
aggregate of each Instalment payment made from time to time by the BUYER to
the
SELLER under the Shipbuilding Contract; and
(b)
interest thereon as specified in paragraph 3 below.
For
the
avoidance of doubt, our liability under this Letter of Guarantee shall be
limited to United States Dollars fourteen million (USD 14 million) plus interest
thereon as specified in paragraph 3 below until such time as the BUYER pays
the
3rd
instalment of the Contract Price of the VESSEL, which shall reduce our liability
under this Letter of Guarantee to United States Dollars seven million (USD
7
million) plus interest. Our liability shall remain at United States Dollars
seven million (USD 7 million) plus interest until the payment by the BUYER
of
the 4th
instalment of the Contract Price, whereupon we shall have no further liability
to you under this Letter of Guarantee whatsoever.
3.
We
also IRREVOCABLY, ABSOLUTELY and UNCONDITIONALLY guarantee, as primary obligor
and not merely as surety, the due and punctual payment by the BUYER of interest
on each In-stalment guaranteed hereunder at the rate of five percent (5%) per
annum from and including the first day after the date this Instalment fell
due
under the Shipbuilding Contract until the date of full payment by us of such
amount guaranteed hereunder.
4.
In the
event that the BUYER fails to punctually pay any Instalment guaranteed hereunder
or the BUYER fails to pay any interest thereon, and such default continues
for a
period of fifteen (15) calendar days from the date of notice thereof from
yourselves to the BUYER, then, upon receipt by us of your first written demand,
we shall pay to you or your Assignee duly notified in your demand, within
fifteen (15) calendar days all unpaid 2nd,
3rd
and
4th
Instalments, together with the interest as specified in paragraph (3) hereof,
without requesting you to take any or further action, procedure or step against
the BUYER or with respect to any other security which you may hold, provided
that:
(a)
Your
demand is accompanied by an original of the relevant Stage Certificate(s)
referred to in paragraph 2 above, issued in compliance with the Stage
Certificate formalities stated in the Overall Agreement or Shipbuilding
Contract, as the case may be; and
(b)
Your
demand is made not earlier than 20 days after receipt by us of a valid Refund
Guarantee duly registered with SAFE in respect of each Instalment claimed under
your demand, issued in compliance with the requirements of the Shipbuilding
Contract.
5.
Any
payment by us under this Letter of Guarantee shall be made in United States
Dollars by telegraphic transfer to , as receiving bank nominated by you for
credit to the account of you with [Bank
of
Communications (Beijing Branch)][Industrial and Commercial Bank of China
(Beijing Branch)], the People's Republic of China or through such other
receiving bank to be nominated in writing by you from time to time, in favour
of
you or your Assignee.
6.
Our
obligations under this Letter of Guarantee shall not be affected or prejudiced
by any dispute between you as the SELLER and the BUYER under the Shipbuilding
Contract or by the BUILDER's delay in the construction and/or delivery of the
VESSEL due to whatever causes or by any variation or extension of their terms
thereof or by any security or other indemnity now or hereafter held by you
in
respect thereof, or by any time or indulgence granted by you or any other person
in connection therewith, or by any invalidity or unenforceability of the terms
thereof.
7.
Any
claim or demand shall be in writing signed by one of your officers and may
be
served on us for the attention of the Letter of Guarantee Department either
by
authenticated SWIFT message via [Bank
of
Communications (Beijing Branch)][Industrial and Commercial Bank of China
(Beijing Branch)], or by hand, or by post and if sent by post to [ ] (or such
other address as we may notify to you in writing).
8.
This
Letter of Guarantee shall come into full force and effect upon delivery to
you
of this Letter of Guarantee and shall continue in force and effect until the
earliest of the following:
(a)
the
date on which the VESSEL is delivered to and accepted by the BUYER; or
(b)
the
date on which full payment of the 2nd, 3rd
and
4th
Instalments together with the aforesaid interest shall have been made to you
by
the BUYER or ourselves, whichever first occurs; or
(c)
the
date on which the Shipbuilding Contract has been rescinded in compliance with
its terms; or
| (d) |
28th
February 2009.
|
However,
in the event that by 28th
February
2009 (i) the Vessel has not been successfully launched or (ii) the full payment
of the 2nd,
3rd
and
4th
Instalments together with interest has not been made to you by the BUYER or
ourselves or (iii) the Shipbuilding Contract has not been rescinded in
compliance with its terms, then the validity of this Letter of Guarantee shall
be automatically extended until 28th
February
2010.
9.
All
payments by us under this Letter of Guarantee shall be made without any set-off
or counterclaim and without deduction or withholding for or on account of any
taxes, duties, or charges whatsoever unless we are compelled by law to deduct
or
withhold the same. In the latter event we shall make the minimum deduction
or
withholding permitted and will pay such additional amounts as may be necessary
in order that the net amount received by you after such deductions or
withholdings shall equal the amount which would have been received had no such
deduction or withholding been required to be made.
10.
We
hereby confirm that you may assign this Letter of Guarantee to your financiers
by way of security. No other assignment of your rights under this Letter of
Guarantee shall be permissible without our prior written consent, such consent
not to be unreasonably withheld. In any event, the right for making a demand
under this Letter of Guarantee shall exclusively remain with you. The
term
“Assignee”
where
used in this Letter of Guarantee shall be construed by reference to this
paragraph 11.
11.
This
Letter of Guarantee shall be construed in accordance with and governed by the
laws of England. We hereby submit to the exclusive jurisdiction of the English
courts for the purposes of any legal action or proceedings in connection with
this Letter of Guarantee.
12.
As
soon as this Letter of Guarantee expires as aforesaid, you shall return the
same
to us without any request or demand from us.
IN
WITNESS WHEREOF, we have caused this Letter of Guarantee to be executed and
delivered by our duly authorized representative the day and year above
written.
Very
Truly Yours,
For
The
Royal Bank of Scotland
By:
_________________________
(Signature
& Stamp)
Name
:
Title
:
EXHIBIT
“D” - FORM OF STAGE CERTIFICATE
[insert
date]
ARGYLE
MARITIME CORP.
c/o
TBS
SHIPPING SERVICES INC.
000
Xxxxxx Xxxxxx Xxxx
Xxxxxxx
Xxx
Xxxx
00000
XXX
For
the
attention of Xxxxxx X. Xxxxx
Fax
no:
000-000-0000
Gentlemen:
Hull
No. NYHS200720 under a Shipbuilding Contract dated
February
2007, made between yourselves and ourselves
We
hereby
certify in connection with the building of the above VESSEL:-
[that
the
VESSEL’s keel has been laid in accordance with the meaning of Article 2.3 of the
Contract]
[that
the
VESSEL has been successfully launched].
For
and
on behalf of
China
Communications Construction Company Ltd. and Nantong Yahua Shipbuilding Co.,
Ltd.
as
the
SELLER
................................
Dated
[
]
For
and
on behalf of
Lloyd’s
Register
As
Classification Society
................................
Dated
[
]
