SHIPBUILDING CONTRACT
FOR THE CONSTRUCTION OF A
308,500 DWT
CRUDE OIL DOUBLE HULL TANK VESSEL
(Hull No. 1228)
between
SAMSUNG CORPORATION
and
SAMSUNG HEAVY INDUSTRIES CO., LTD.
COLLECTIVELY AS "BUILDER"
and
GOLDEN STATE PETRO (IOM I-A) PLC
AS "BUYER"
CONTRACT
PREAMBLE
CONTRACT, made this 24th day of December 1996, by and between
SAMSUNG CORPORATION, a corporation incorporated and existing under the laws of
the Republic of Korea, having its registered office at 000, 0-xx, Xxxxxxxx-xx,
Xxxxx-xx, Xxxxx, Xxxxxxxx of Korea, and SAMSUNG HEAVY INDUSTRIES CO., LTD., a
corporation incorporated and existing under the laws of the Republic of Korea,
having its registered office at 000-00, Xxxxxx-Xxxx, Xxxxxxx-Xx, Xxxxx, Xxxxx,
(hereinafter collectively called the "Builder"), on one part, and GOLDEN STATE
PETRO (IOM I-A) PLC, having an office and its principal place of business at
00-00 Xxxxx Xxxxxx, Xxxxxxx, Xxxx of Man, (hereinafter collectively called the
"Buyer"), on the other part.
WITNESSETH
The Buyer and the Builder, each in consideration of the mutual
undertakings, promises, and commitments set forth herein, agree, subject to the
stated terms and conditions, as follows:
ARTICLE I
VESSEL'S DESIGN AND DELIVERY
1. THE VESSEL
(a) The Builder shall, at its Koje Shipyard, located at Koje,
Korea (hereinafter called the "Shipyard"), construct, launch,
equip, supply, and in all respects complete so as to be ready
for immediate operation, and deliver to the Buyer a single
screw, double hull, oil tank vessel (hereinafter called the
"Vessel"), to be designated as Hull No. 1228, together with
all machinery, materials, parts, supplies, equipment,
appurtenances, and all other items necessary to and for the
said construction, completion, delivery, and operation of the
Vessel.
(b) The Vessel shall be built and completed in accordance with:
(i) GENERAL ARRANGEMENT PLAN DWG. No: TK9616.GA04 dated
October 17, 1996 as may be updated by subsequent
changes to documents (ii) through (v) below;
(ii) MIDSHIP SECTION PLAN DWG No: TK9616.MS03 dated
October 1, 1996 (hereinafter called the "Plan");
(iii) FULL SPECIFICATIONS REF No.: TK9616.FS05 dated
November 5, 1996 (herein called the
"Specifications"), which Plan and Specifications have
been executed, and shall be deemed to be incorporated
herein and shall constitute an integral part of this
Contract; and
(iv) MEMORANDUM OF DISCUSSION: REF No. TK9616MOMVI dated
November 6, 1996 ("MOD I") and MEMORANDUM OF
DISCUSSION REF No.: TK9616.MOMVII when delivered
("MOD II"), to the extent there are discrepancies
between MOD I, MOD II and documents listed in (i),
(ii) or (iii) above, MOD I and MOD II shall prevail.
(c) Should there be any discrepancy between this Contract and the
Plan or the Specifications, the provisions in this Contract
shall prevail. Should there be any discrepancy between the
Specifications and Plan, the Specifications shall prevail.
When there is no specific description in the Specifications
(including Samsung Shipbuilding Quality Standards - "SSQS")
and Plan, a standard of workmanship and practices equivalent
to the Builder's shipbuilding standards as practicable,
generally applicable to the construction of similar size and
types of vessels, shall be applicable to the construction of
the Vessel, which standard shall include the incorporation of
any modification in design or construction which was
implemented to address a defect in any other Builder's VLCC
vessels.
(d) The Builder, at its expense, shall, unless otherwise
specifically provided herein, procure and furnish all items
and permissions necessary to perform its obligations hereunder
including, but not limited to, (i) plans and specifications
(in addition to the Plan and Specifications), labor,
machinery, materials, parts, supplies, equipment,
appurtenances, and (ii) licenses, permits, inspections,
surveys and approvals.
(e) The Builder retains all rights with respect to the
Specifications, plans and working drawings, technical
descriptions, calculations, test results, and other data,
information, and documents concerning the design and
construction of the Vessel and the Buyer undertakes therefore
not to disclose the same or divulge any information contained
therein to any third parties, without prior written consent of
the Builder, which shall not be unreasonably withheld, except
where it is necessary for usual operation, repair, and
maintenance of the Vessel or to any charterer of the Vessel
from the Buyer. In addition, the Buyer shall cause any
charterer of the Vessel to deliver to the Builder a
confidentiality agreement with respect to the Specifications.
(f) Any modifications to drawings set forth above which may be
required by the Classification Society shall be accomplished
by the Builder without any cost to the Buyer; provided, this
provision shall only apply to modifications which are based
upon the standards of the American Bureau of Shipping (the
"Classification
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Society") in effect on the date of this Contract; PROVIDED
FURTHER, any other modifications required by the
Classification Society shall be handled in accordance with
Article III(c).
ARTICLE II
DIMENSIONS, DEADWEIGHT, SPEED, FUEL CONSUMPTION
(a)The basic dimensions of the Vessel shall be:
Length overall about 333.00 meters
Length between
perpendiculars about 318.00 meters
Breadth, molded about 58.00 meters
Depth, molded to upper deck at
side about 31.25 meters
Designed loaded draft, molded about 21.40 meters
Xxxxxxxxx draft, molded about 22.50 meters
Cargo tank capacity including
the slop tanks (100% full) about 350,000 cubic meters
(b) The deadweight capacity (hereinafter called "DWT") of the
Vessel, including cargo, bunkers, stores, provisions, fresh
drinking, and distilled water, crew with their effects and
minimum spare parts required by the Classification Society and
based upon the Plan and Specifications, shall be three hundred
eight thousand five hundred (308,500) metric tons in salt
water (of 1.025 specific gravity) on the xxxxxxxxx draft,
molded, of about 22.50 meters.
The deadweight of the Vessel of 308,500 metric tons, plus or
minus any deadweight change due to Alterations, shall
constitute, and hereinafter shall be referred to as, the
"Contract DWT". Should the final deadweight on delivery, be
less than the Contract DWT, a payment for such deficiency
shall be allowed, as specified in Article VII (b).
(c) The main propulsion unit for the Vessel will consist of one
Samsung-B&W 7S80MC engine, to be manufactured by a Korean
licensee identified in the Maker's List, and as stipulated in
the Specifications, having a maximum continuous power rating
of 34,650 BHPm at about 79.0 r.p.m.
(d) The Vessel is guaranteed to obtain an average speed of 16.0
knots, measured during sea trials and as defined in the
Specifications.
(e) The fuel consumption of the main propulsion unit, as
determined by the shop trials, shall be 122.3 grams per BHPm
per hour for fuel having a lower calorific
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value of 10,200 Kcal/kg for main propulsion at 31,190 BHPm and
based on Specifications.
ARTICLE III
CLASS AND REGULATIONS
(a) The Vessel, including its machinery, equipment, and
outfittings, shall be classed with the Classification Society
and shall be built to Class +A1, (E), Oil Carrier, +AMS,
+ACCU, and SH. The Vessel shall also comply with the laws,
rules, regulations, recommendations, and requirements as
stated in the Specifications. The Builder shall, at its
expense, request the Classification Society to assign an
on-site surveyor (hereinafter referred to as the "Surveyor")
to oversee complete construction of the Vessel at the Shipyard
and other locations as required.
(b) The Builder, at its expense, shall obtain certificates as
provided in the Specifications and deliver such to the Buyer
in triplicate (one (1) original and two (2) copies). If formal
certificate(s) cannot be obtained upon the Vessel's delivery,
the Builder may furnish provisional one(s) in substitution for
the formal certificate(s). The Buyer shall pay the charges for
official inspection and certifications required by any
Government of Registry specified in Specifications, and the
registration of the Vessel shall be the responsibility of the
Buyer.
(c) In the event that there should be any amendments or additions,
following the date of this Contract, to the laws, rules, or
regulations of any Government or regulatory body, or the
Classification Society, which require any revision(s) of or to
the Plan and Specifications or to this Contract, the Buyer
shall authorize any such revision(s) to the Vessel that are
necessary to comply with such amendments or additions unless
the Buyer shall obtain from such Government or regulatory body
a written waiver of compliance therewith. In the event that
Alterations (as defined in Article XIV (a)) are required, they
shall be handled in accordance with the provisions of Article
XIV.
ARTICLE IV
DELIVERY
(a) The Vessel shall be delivered to the Buyer (hereinafter called
the "Delivery") fully complete, supplied (including
lubricating oil and fresh water in the system but excluding
ship's stores such as food, utensils, miscellaneous
consumable, etc.) and ready for immediate operation, after
having passed the tests and met the standards set forth in the
Specifications and Articles II, III, and XVI hereof on or
before February 1, 1999 (hereinafter called the "Delivery
Date"). Notwithstanding the foregoing, in the event defects of
a nature which would affect
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Vessel's seaworthiness or seriously impair the operation of
Vessel are discovered after Vessel has passed the tests and
met standards set forth in the Specifications and prior to
delivery of Vessel, except defects of Buyer Supplies (as
defined in Article XI), Buyer shall have the right to require
Builder to make the necessary correction(s) at Builder's
expense prior to delivery.
(b) The Builder shall use its best efforts and all due diligence
and dispatch, including, but not limited to, the ordering,
expediting and inspection of all machinery, parts and
materials, to complete and deliver the Vessel on or prior to
the Delivery Date. The Builder shall assist the Buyer to
bunker and store the Vessel (beyond the conditions set forth
in Article IV (a) above) at the Buyer's expense to be ready
for departure. Delivery shall be made at the Shipyard at a
wharfside where there shall be sufficient water for the Vessel
always to be afloat and from which it can safely depart, or at
such other safe place as may be mutually agreed. Upon
Delivery, the Vessel shall be free and clear of all liens,
encumbrances, taxes and claims of any nature.
(c) The Builder shall notify the Buyer in writing, providing
documentation for any delay relating to the construction or
delivery of the Vessel or any performance required hereunder
within ten (10) days after the beginning of any period of
delay.
(d) If Delivery of the Vessel is or will be delayed for any reason
whatsoever, other than due to delays caused by the Buyer, or
by Alterations (as defined in Article XIV), for a period of
more than one hundred eighty (180) days beyond the Delivery
Date, the Buyer shall have the following options, exercisable
not later than either (i) ten (10) days after the expiration
of such one hundred eighty (180) day period or (ii) twenty
(20) days after the Buyer has been notified by the Builder and
the parties have mutually agreed that one hundred eighty (180)
days delay is likely to take place, whichever first occurs:
(i) to extend the Delivery Date with the Buyer's right to
liquidated damages, as provided in Article VII (a),
or
(ii) to cancel this Contract in which event the Buyer
shall be entitled to a refund in accordance with
Article VI (h).
(e) In case the Vessel, during the period of building, sustains
any damage which is repaired in accordance with the Plan and
Specifications and to the satisfaction of the Representative
(as hereinafter defined in Article XV), the Classification
Society, and the concerned authorities, if any, the Buyer
shall have no right, except as specifically granted under the
terms of this Contract, to refuse to take Delivery.
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(f) Should the Vessel be completed for Delivery before the
Delivery Date and the Builder has so informed the Buyer at
least 10 weeks in advance, the Buyer shall take Delivery but
not earlier than 8 weeks prior to the Delivery Date provided
that all the terms and conditions of this Contract have been
fulfilled.
(g) Upon Delivery, the Builder shall furnish the Buyer with a
Commercial Invoice, Builder's Certificate, Protocol of Sea
Trials of Vessel, Protocols of Inventory, Protocols of
Consumable Nature and Declaration of Warranty of Freedom from
Liens and Claims, including any claim by the Guarantor by
reason of its Letter of Guarantee under Article X (as such
terms are defined in such Article), and such other
certificates and documents as the Buyer may request evidencing
transfer to the Buyer of a free and clear title in and to the
Vessel.
(h) The Buyer shall remove the Vessel from the Builder's premises
within five (5) business days after Delivery of the Vessel.
(i) Upon satisfactory completion of the trials as specified in
Article XVI, and fulfillment of the terms and conditions of
this Contract, Buyer and Builder shall execute a Protocol of
Delivery and Acceptance (hereinafter referred to as
"Acceptance"). Upon execution of said Protocol of Delivery and
Acceptance, title and risk of the Vessel shall pass to the
Buyer, as stated above, it being expressly understood that
until such Delivery is effected, title to the Vessel and its
equipment (except for the Buyer's Supplies subject to the
provisions of Article XI), are in the Builder and at its risk.
ARTICLE V
DISCHARGE OF LIENS
The Builder shall, before Delivery, discharge all claims,
liens, or right in rem of any kind against the Vessel, including any claims for
taxes or by the Guarantor made by reason of its Letter of Guaranty under Article
X hereof, and shall indemnify and save the Buyer harmless with respect thereto.
Upon Delivery, the Builder shall furnish the Buyer with a warranty (as defined
in Article IV (g)), that the Vessel is free and clear of all liens,
encumbrances, taxes, and claims of any nature.
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ARTICLE VI
PRICE, PAYMENT, TERMS, REFUND, BANK GUARANTEE
PRICE, CURRENCY AND PAYMENTS
(a) Contract Price:
The net purchase price of the Vessel is US$80,881,200
(hereinafter called the "Contract Price") to be paid by the
Buyer to the Builder for the construction and completion of
the Vessel and Delivery (exclusive of Buyer's Supplies as
provided in Article XI). The Contract Price shall be fixed,
with no escalation and subject to change only as expressly
provided elsewhere in this Contract, and to the extent that
the Builder might, under any applicable law, regulation, or
decree (including those of Korea), have any such right(s) to
escalate or change the Contract Price, such right(s) are
hereby waived. The Contract Price includes all costs and
expenses incurred by the Builder performing engineering
calculations for designing and supplying all necessary
drawings for the Vessel, in accordance with the
Specifications.
(b) Currency:
All payments by the Buyer to the Builder under this Contract
shall be made in United States Dollars ("US$").
(c) Progress Payment:
The Contract Price shall be due and payable by the Buyer to
the Builder in installments as indicated on Schedule 1
attached hereto.
(d) Method of Payment:
(i) First Installment
Within one (1) banking day after receipt of a facsimile copy
of the export license for the Vessel issued by the Builder's
Bank (as hereinafter defined) on behalf of the Government of
Korea as required under Article XIX(a) hereof, the Buyer shall
remit by telegraphic transfer the first installment in the
amount set forth in Schedule 1 to the account of BANKERS TRUST
COMPANY, New York for account of Hanil Bank, Account No.
00-000-000 for credit of Samsung Heavy Industries Co., Ltd. or
to such other Bank which the Builder may designate in favor of
Samsung Heavy Industries Co., Ltd. (hereinafter called the
"Builder's Bank") under advise by authenticated cable or telex
to the Builder's Bank.
(ii) Each Subsequent Installment
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The Buyer shall remit by telegraphic transfer each installment
to the Builder's Bank or to such other Bank which the Builder
may designate in favor of Samsung Heavy Industries Co., Ltd.
payable pursuant to Schedule 1 attached to this Contract.
Upon receipt of a facsimile or telex notice from the Builder
not less than six (6) banking days in New York prior to the
scheduled Delivery Date, notifying the Buyer of such date, the
Buyer shall deposit the amount payable upon Delivery of the
Vessel by telegraphic transfer to account of the Builder's
Bank at least one (1) banking day in Korea prior to the
scheduled Delivery of the Vessel, with irrevocable
instructions to be confirmed by the Builder's Bank that the
said deposit shall be payable to the Builder against
presentation by the Builder of a duplicate original copy of
the Protocol of Delivery and Acceptance of the Vessel signed
by the Builder and the Buyer and that, in the event that the
actual delivery and acceptance of the Vessel shall not take
place within seven (7) days following such scheduled Delivery,
the said deposit shall be returned to the Buyer's bank.
To the extent a note (in the form of Appendix C hereto) (the
"Note") is delivered with respect to any installment payment
as provided in Schedule 1 hereto, the Builder shall indemnify
the Buyer against any loss, damage, claim, liability and any
payment obligations incurred by the Buyer solely as a result
of Builder's failure to return the Note when required by this
Contract or the Note. Buyer shall only be required to make a
payment on the Note, upon presentation of the original of such
Note to the Buyer and Acceptance of the Vessel. If the Vessel
is rejected for any reason and this Contract is terminated the
Note shall be marked "cancelled" and returned to the Buyer.
The final installment shall be adjusted as set forth below:
- any adjustments or payments due from the Buyer to the
Builder at the time of Delivery in accordance with
the terms of this Contract, including payment for any
additional work, for which extra payments have been
agreed under Article XIV(b).
- any adjustments, saving, credits, or payments due
from the Builder to the Buyer at the time of the
Vessel's Delivery pursuant to the provisions of this
Contract,
- any adjustment resulting from settlement of the costs
of any fuel oil, lubricating oils and greases (except
in the Vessel's systems) or unbroached consumable
stores (furnished by Builder for trials), and
remaining on board the Vessel after acceptance of the
Vessel by Buyer, at the cost thereof to either the
Builder or Buyer as may be applicable.
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Not later than ten (10) business days prior to the scheduled
date for Delivery, the parties hereto shall execute and
deliver an agreement setting forth the ascertained adjustments
of the Contract Price, if any, and not later than three (3)
banking days prior to the scheduled date for acceptance of
delivery of the Vessel a supplemental agreement setting forth
any further adjustment of the Contract Price. It is the
intention of the parties to settle all amounts prior to
Delivery and Acceptance.
It is understood, however, that any outstanding adjustments
and settlements by either party to the other, not determined
prior to Delivery, shall be payable when determined as soon as
possible after Delivery; in no event shall Delivery of the
Vessel be delayed pending final determination of any such
adjustments and settlements. Any disputes as to adjustments
shall be settled in accordance with Article XXIV.
(iii) Default Interest and Others
In the event of default in the payment of any installments in
the above Paragraphs (i) and (ii) above, the Buyer shall pay
default interest, charges and expenses in accordance with
Paragraph (b) of Article VIII hereof.
Simultaneously with such payments, the Buyer shall cause the
Buyer's Bank to advise the Builder's Bank of the details of
such payments by authenticated bank cable or telex.
No payment under this Contract shall be delayed, suspended or
withheld by the Buyer on account of any dispute or
disagreement between the parties hereto. Any claim which the
Buyer may have against the Builder hereunder shall be settled
and liquidated separately from any payment by the Buyer to the
Builder hereunder.
Except as otherwise specifically provided for in this Article
VI, all payments to the Builder due under this Contract shall
be paid in United States Dollars by telegraphic transfer to
the bank identified in Article VI (d)(i) above.
(e) Notice of Payment on or before Delivery:
With the exception of the first installment, the Builder shall
give the Buyer seven (7) business days prior notice by telex
of the anticipated due date and amount of each installment
payable on or before delivery of the Vessel.
(f) Expenses:
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Expenses and bank charges for remitting payments and any
expenses and fees connected with such payment shall be for
account of the Buyer.
(g) Prepayment
Prepayment of any installment due on or before Delivery shall
be subject to mutual agreement between the parties hereto.
(h) Refund:
All payments made by the Buyer hereunder in United States
Dollars and prior to Delivery and Buyer's acceptance of the
Vessel shall be in the nature of installments to the Builder.
In the event that the Vessel is rejected by the Buyer, or this
Contract is canceled by the Buyer, all in accordance with the
terms of this Contract, or if the Builder should default in
Delivery of the Vessel or is guilty of breach of this Contract
justifying a recision thereof by the Buyer then, and in any
such event, the Builder shall refund to the Buyer an amount
equal to the sum of (i) the amount set forth on Schedule 2
hereto calculated as of the first day of the calendar month in
which the date of rejection occurs and (ii) an amount equal to
the product of (x) the difference between (1) the amount set
forth on Schedule 2 hereto calculated as of the first day of
the calendar month immediately succeeding the month in which
the date of rejection occurs and (2) the amount set forth on
Schedule 1 hereto as of the first day of the month in which
the date of rejection occurs and (y) a fraction the numerator
of which is the numeric day of the month of the date of
rejection and the denominator of which is 30. If the amount as
calculated above is not paid on the date of rejection there
shall be added to such amount interest at the rate of nine
percent (9.0%) per annum from and including the date of
rejection to but not including the date such amount is paid.
Such refunds by the Builder to the Buyer shall forthwith
discharge all obligations, duties, and liabilities of each of
the parties hereto to the other under this Contract. Any and
all refunds made to the Buyer under this Article VI (h) shall
be made in United States Dollars. Throughout this Contract,
whenever interest is due on any amounts to be paid or refunded
by either party, said interest shall be calculated as simple
interest, based on the actual number of days divided by 360.
All refunds made by the Builder to the Buyer under this
contract shall be paid in United States Dollars by telegraphic
transfer to the Buyer's account or its assignee's account as
set forth in a written notice to the Builder from such party.
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ARTICLE VII
ADJUSTMENTS TO CONTRACT PRICE
(a) Delayed Delivery Price Adjustment:
(i) If the Delivery is not made on the Delivery Date, the
Builder shall pay the Buyer, as liquidated damages
(not as penalty), the amount of $24,200 for each
calendar day of delay and the Contract Price shall be
reduced by the amount of such liquidated damages.
If delivery of the Vessel is delayed for a period of
more than one hundred eighty (180) days beyond the
Delivery Date, the Buyer may reject the Vessel or,
alternatively, the Buyer may accept the Vessel with a
longer delay in Delivery at an agreed upon reduction
in the Contract Price. Such reduction in the Contract
Price shall be agreed within thirty (30) days
following the Builder's receipt of the Buyer's notice
that it elects to accept the Vessel (with longer
delay in Delivery), but in no event shall the
Contract Price reduction be less than the maximum
price adjustment set forth above and calculated in
accordance with Schedule 2. If agreement is not
reached in such thirty (30) day period, the Buyer
shall be deemed to have rejected the Vessel.
(ii) If the Vessel is delivered earlier than the Delivery
Date, the Buyer shall pay to the Builder, a premium,
which shall be US$24,200 for each calendar day prior
to the Delivery Date; provided however no delivery
shall be made earlier than 8 weeks prior to the
Delivery Date as provided in Article IV (f).
(iii) In the event that the Buyer elects to reject the
Vessel as allowed under this Article VII (a), the
Builder shall immediately repay to the Buyer the
amounts set forth in Article VI (h), whereupon this
Contract shall terminate and such payment shall
forthwith discharge all obligations, duties and
liabilities of each party hereto to the other under
this Contract.
(b) Deadweight Deficiency Price Adjustment:
(i) No payment shall be made by the Builder to the Buyer
for a deficiency in deadweight (measured to the
nearest metric ton) of up to and including two
thousand five hundred (2,500) metric tons less than
the Contract DWT as specified in Article II (b), and
as may be adjusted under the provisions of Article
XIV (b). If the final deadweight is deficient by more
than the aforesaid two thousand five hundred (2,500)
metric tons, the Builder shall pay the Buyer, as
liquidated damages (not as a penalty), seven hundred
($700) per metric ton of deadweight deficiency,
exceeding
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the aforesaid two thousand five hundred (2,500)
metric tons up to and including the deadweight
deficiency. If such deadweight deficiency should
amount to more than six thousand (6,000) metric tons
and the Builder is unable to rectify such deficiency
to below the aforesaid six thousand (6,000) metric
tons, the Buyer may reject the Vessel or,
alternatively, the Buyer may accept the Vessel with
the excessive deadweight deficiency with an agreed
upon reduction of the Contract Price. The Buyer shall
make such elections within seven (7) days following
receipt of a notice from the Builder stating that the
Builder is unable to rectify the deficiency. The
Buyer and Builder shall agree upon the reduction of
the Contract Price within thirty (30) days following
the Buyer's election, which reduction shall be in an
amount not less than the maximum price adjustment set
forth above. If agreement is not reached in such
thirty (30) day period, the Buyer shall be deemed to
have rejected the Vessel.
(ii) No payment shall be made for any increases in the
Contract DWT.
(iii) In the event that the Buyer elects to reject the
Vessel as allowed under this Article VII (b), the
Builder shall immediately repay to the Buyer the
amounts set forth in Article VI (h), all sums
theretofore paid by the Buyer on account of the
Contract Price, whereupon this Contract shall
terminate and such payment shall forthwith discharge
all obligations, duties and liabilities of each party
hereto to the other under this Contract.
(c) Speed Deficiency Price Adjustment:
(i) No payment shall be made by the Builder to the Buyer
for a deficiency in speed (measured to the nearest
one-tenth (0.10) of one knot) of up to and including
three tenths (0.30) of one knot less than the speed
of sixteen (16.0) knots guaranteed in Article II (d).
If the speed deficiency is more than three tenths
(0.30) of one knot, the Builder shall pay the Buyer,
as liquidated damages (not as penalty) in accordance
with the following schedule for speed deficiencies up
to and including one (1.00) knot less than the
guaranteed speed.
Speed Deficiency
below 16.00 knots Liquidated Damage
----------------- -----------------
0.01 to 0.30 knots $0
0.31 to 0.40 knots $400,000
0.41 to 0.50 knots $600,000
0.51 to 1.00 knots $900,000/each 0.10 knot
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If the speed deficiency is greater than one (1.0)
knot, and the Builder is unable to rectify such
deficiency up to at least the aforesaid one (1.0)
knot, the Buyer may reject the Vessel or,
alternatively, the Buyer may accept the Vessel with
its insufficient speed with an agreed upon reduction
of the Contract Price. The Buyer shall make such
elections within seven (7) days following receipt of
a notice from the Builder stating that the Builder is
unable to rectify the deficiency. The Buyer and
Builder shall agree upon the reduction of the
Contract Price within thirty (30) days following the
Buyer's election, which reduction shall be in an
amount not less than the maximum price adjustment set
forth above. If agreement is not reached in such
thirty (30) day period, the Buyer shall be deemed to
have rejected the Vessel.
(ii) No payment shall be made for any increase in the
speed of the Vessel.
(iii) In the event that the Buyer elects to reject the
Vessel as allowed under this Article VII (c), the
Builder shall immediately repay to the Buyer, the
amounts set forth in Article VI (h), whereupon this
Contract shall terminate and such payment shall
forthwith discharge all obligations, duties and
liabilities of each party hereto to the other under
this Contract.
(d) Excessive Fuel Consumption Price Adjustment:
(i) No payment shall be made by the Builder to the Buyer
if the fuel consumption (measured to the nearest
tenth of one percent) of the main propulsion unit
exceeds that provided for in Article II (e) by Three
percent (3.0%) or less. If the fuel consumption of
the main propulsion unit exceeds that provided for in
Article II (e) by more than Three percent (3.0%) the
Builder shall pay the Buyer, as liquidated damages
(not as penalty), one hundred fifty thousand
($150,000) for every one percent (1.0%) and pro rata
for less than a full one percent (1.0%) by which the
fuel consumption exceeds the aforesaid three percent
(3.0%). If the fuel consumption exceeds that provided
in Article II (e) by more than Ten percent (10.0%)
and the Builder is unable to rectify such deficiency
to at least said Ten percent (10.0%), the Buyer may
reject the Vessel or, alternatively, the Buyer may
accept the Vessel with the aforesaid deficiencies
with an agreed upon reduction of the Contract Price.
The Buyer shall make such elections within seven (7)
days following receipt of a notice from the Builder
stating that the Builder is unable to rectify the
deficiency. The Buyer and Builder shall agree upon
the reduction of the Contract Price within thirty
(30) days following the Buyer's election, which
reduction shall be in an amount not less than the
maximum price adjustment set forth above. If
agreement is not reached in such thirty (30)
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day period, the Buyer shall be deemed to have
rejected the main propulsion unit.
(ii) No payment shall be made for any improvements in fuel
consumption less than that defined in Article II (e)
herein.
(iii) In the event that the Buyer elects to reject the
Vessel as allowed under this Article VII (d), the
Builder shall immediately repay to the Buyer, the
amounts set forth in Article VI (h), whereupon this
Contract shall terminate and such payment shall
forthwith discharge all obligations, duties and
liabilities of each party hereto to the other under
this Contract.
(e) Schedule of Payments due to Price Adjustments:
All payments due to price adjustments, if any, pursuant to
this Article VII shall be made on the Delivery Date.
(f) Effect of Rescission:
It is expressly understood and agreed by the parties that, in
any case, if the Buyer rejects the Vessel under the provisions
of this Article VII, the Buyer shall not be entitled to any
liquidated damages set forth in this Article VII.
ARTICLE VIII
DEFAULT IN PAYMENT
(a) The Buyer shall be deemed to be in default in the event that
it should fail to make any payment with respect to the
Contract Price, when due and payable as provided in Article
VI.
(b) If the Buyer is in default as provided herein, then, and in
such event, the Buyer shall, commencing with and including the
day next following the payment date, pay interest on the
payment which has not been paid to the Builder from the date
when it should have been paid at the rate of nine percent
(9.0%) per annum from and including such day until paid. In
addition, the Delivery Date shall be extended by one day for
each day the Buyer remains in default hereunder.
(c) Subject to the provisions of Article VIII (b), if any such
default shall prevail for more than fifteen (15) business
days, the Builder shall have the option of canceling this
Contract, by giving fifteen (15) business days written notice
of said cancellation to the Buyer and retaining, as security
for the payment of its legal damages, any and all funds then
paid to it by the Buyer and the Builder shall have a right to
sell the Vessel at the best price available at a public or
private auction,
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advertised internationally, including an invitation to the
Buyer to participate, but otherwise on such terms and
conditions as the Builder may determine, and any resulting
losses to the Builder shall be an element of legal damages. If
the proceeds of the sale are insufficient to compensate losses
to the Builder due to the Buyer's default, the Buyer shall
promptly pay the deficiency to the Builder on demand. If the
Vessel is sold for more than the Contract Price, the Buyer
shall receive any such excess the Builder receives, after
reasonable and customary service fees have been deducted.
ARTICLE IX
BUILDER'S PAYMENT AND REPAYMENT AND INTEREST THEREON
(a) Any payments or repayments required to be made by the Builder
to the Buyer under this Contract shall be made as provided for
in Article VI (h). The Buyer shall receive the gross amount of
the principal and interest due. Any applicable withholding tax
payments shall be paid by the Builder.
(b) If the Builder is required to make payment to the Buyer of any
moneys as liquidated damages, under this Contract the Builder
shall pay such amounts to the Buyer at Delivery of the Vessel.
However, should this payment be delayed, there shall be added
to each such payment interest at the rate of nine percent
(9.0%) per annum from the date the said payment becomes due
until paid.
ARTICLE X
BANK GUARANTEE
The Builder shall, at its cost, furnish the Buyer with a Letter of
Guarantee given by a first class Korean bank acceptable to the Buyer
(hereinafter referred to as "Guarantor"), substantially in the form of
Appendix A attached hereto. The Letter of Guarantee shall guarantee
payment to the Buyer in United States Dollars, at such place as the
Buyer or its assignee may designate, of all sums payable or repayable
by the Builder to the Buyer under this Contract with interest thereon
as provided in Article VI (h), upon receipt by said Guarantor from the
Buyer of a written claim that it is entitled to such payment or
repayment and that the Builder has failed to make same.
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ARTICLE XI
TERMS DURING DESIGN, CONSTRUCTION, AND GUARANTEE PERIODS
BUYER'S SUPPLIES
The Contract Price for the Vessel is exclusive of the costs of
equipment specified in the Specifications as the "Buyer's Supplies"
(and hereinafter so referred to), which shall be supplied and delivered
by the Buyer to the Builder, at the Shipyard and at the Buyer's cost
and expense. The Builder shall undertake to install the agreed Buyer's
Supplies without extra cost to the Buyer, provided that they are
delivered by the Buyer to the Builder in sufficient time to permit
installation without delaying construction of the Vessel. Delivery of
the Buyer's Supplies shall be in accordance with a reasonable time
schedule, designated by the Builder and made available to the Buyer
prior to the start of any construction activity for the Vessel. Should
any or all of the Buyer's Supplies arrive late and should the Builder
agree to install those Buyer's Supplies so delayed, any change in
construction time directly resulting from such late arrival shall
accordingly extend the Delivery Date. Furthermore, if the delay in
delivery of the Buyer's Supplies should exceed thirty (30) days, the
Builder shall be entitled to proceed with the construction of the
Vessel, either without installation of such Buyer's Supplies in or onto
the Vessel, or using equipment supplied by the Builder, without
prejudice to the Builder's right to extend the Delivery Date and to
compensation for losses and damages as hereinabove provided and the
Buyer shall accept the Vessel so completed. All the Buyer's Supplies
shall be subject to the Builder's reasonable right of rejection in the
event the same are found to be unsuitable or not in proper condition
for installation. The Builder shall not be responsible for the quality
or capacity of the Buyer's Supplies and shall not be liable for any
defect in the Buyer's Supplies; however, the Builder shall receive and
upon receipt safely store and insure, against loss or damage, all the
said Buyer's Supplies. Any technical assistance, information and/or
royalties required for the installation of the Buyer's Supplies shall
be the responsibility of the Buyer. Both parties clearly understand
that the provisions of this Article XI shall not apply to machinery or
equipment other than those specified in the Specifications as the
Buyer's Supplies.
ARTICLE XII
INSURANCE
(a) From the time of launching until delivery of the Vessel, the Builder
shall, at its own cost and expense, insure the Vessel and all machinery
and equipment, appurtenances and outfits, including the Buyer's
Supplies after arrival at the shipyard whether or not built into or
installed in or upon the Vessel, against all risks under the "Institute
Clauses for Builder's Risk", with a first class Korean insurance
company or underwriters acceptable to the Buyer. The amount of such
insurance coverage shall, up to the date of Delivery of the Vessel, not
be less than the aggregate amount of all payments paid by the Buyer
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to the Builder, plus the value of agreed Alterations at the time of
launching and of the Buyer's Supplies in the custody of the Shipyard.
(b) In the event that the Vessel shall be damaged from any insured cause at
any time before Delivery of the Vessel, and in the further event that
such damage shall not constitute an actual or constructive total loss
of the Vessel, the amount received in respect of the insurance shall be
applied by the Builder in repair of such damage, satisfactory to the
Classification Society, and the Buyer shall accept the Vessel under
this Contract if completed in accordance with this Contract, the
Specifications, and Plan, subject, however, to any applicable extension
of delivery time under Article IV (c) hereof.
Should the Vessel from any cause become an actual or constructive total
loss, the Builder shall either:
(i) proceed in accordance with the terms of this Contract, in
which case the amount received in respect of the insurance
shall be applied to the construction and repair of damage to
the Vessel, provided the parties hereto shall have first
agreed thereto in writing and to such reasonable extension of
delivery time as may be necessary for the completion of such
reconstruction and repair; or
(ii) refund promptly to the Buyer, in accordance with Article VI
(h), the full amount of all sums paid by the Buyer to the
Builder in advance of delivery of the Vessel, and deliver to
the Buyer all Buyer's Supplies (or the insurance proceeds paid
with respect thereto), in which case this Contract shall be
deemed to be automatically terminated and all right, duties,
liabilities and obligations of each of the parties to the
other shall forthwith cease and terminate.
(c) The Builder shall be under no obligation to insure the Vessel hereunder
after Delivery of the Vessel.
ARTICLE XIII
BUILDER'S GUARANTEE
(a) If, within twelve (12) months, or such longer period as might
be specified with respect to certain equipment or machinery in
the Specifications, and eighteen (18) months for main engine
(hereinafter called the "Guarantee Period") after the Delivery
and Acceptance of the Vessel, any defect in the Vessel (except
the Buyer's Supplies), its design, machinery, equipment, or
other appurtenances, due to defective materials or
workmanship, or failure to construct in conformity with the
Plan and Specifications (all hereinafter referred to as
"Guarantee Defects"), shall be discovered (other than defects
solely due to normal wear and tear, negligence or improper
acts of the operator or crew of said Vessel or overloading,
improper loading, stowage, and accident), the Builder shall,
as quickly as possible after receipt of the Buyer's written
notice thereof, correct,
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replace, or repair such defect at its own expense at its
Shipyard; provided that if, in the Buyer's opinion, the Vessel
cannot conveniently be brought to the Shipyard, and if no
other agreement can be reached between the parties, the
Builder shall pay to the Buyer the lesser of
(i) the cost to the Buyer of such repairs, or
(ii) such sum as the Builder would have charged a repair
customer for like repairs and/or replacements had
such work been done at the Shipyard.
Replacement parts or materials to be furnished to Buyer by
Builder for making of repairs under the Guarantee which are
performed other than at Shipyard or in such other facility of
Builder shall be transported to the place of repair at
Builder's expense.
In principle, such transportation shall be by the most
expeditious public surface transportation. If required to keep
Vessel in operation, Builder shall arrange for and bear the
cost of transporting necessary parts or materials by air
transportation.
Builder shall in every case use its best efforts to expedite
the furnishing to Buyer of replacement parts or materials
required under the Guarantee.
Repairs under this Article are guaranteed for the balance of
the period set out in paragraph (a) of this Article however
major repairs shall be guaranteed for the longer of (x) the
balance of the period set out in paragraph (a) of this Article
or (y) two (2) months from the date of completion of such
major repairs, but in no event longer than fourteen months
(14) after the Delivery Date. For purposes of this paragraph,
"major repairs" shall be any repair costing more than ten
thousand United States Dollars (US$10,000).
If such defect can be repaired or replaced by the Vessel's
crew, the Buyer will give prior notice to the Builder of such
defect, and upon the Builder's written acceptance that the
Buyer may remedy such defect, and the Builder will reimburse
the Buyer for the incremental costs of the crew's labor so
incurred or the costs of such labor at the Builder's Shipyard,
whichever is the lesser, excluding normal maintenance.
Guarantee Defects that affect the safety of the Vessel or crew
and/or constitute an emergency, shall be repaired either by
the crew or Buyer selected contractor in a reasonable manner
under the circumstances without Builder's prior approval and
the Builder shall be notified as soon as possible after the
repairs are undertaken and such repair work will be subject to
mutual agreement between the parties; provided any such repair
work shall not adversely affect any provisions of this Article
XIII as to any other Guarantee Defect. In any case, the
Builder shall also reimburse the Buyer for the actual
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cost, in the currency incurred, of any temporary repairs
necessary to enable the Vessel to present itself for the
aforesaid permanent repairs. As to such defects as are
repaired or replaced by the Builder, the guarantee hereunder
shall be subject to an agreement between the Builder and Buyer
which addresses defects so repaired or replaced. The Builder's
only liability for defects in the Vessel, its machinery,
equipment or other appurtenances, as aforesaid, shall be as
hereinabove provided and the Builder shall be under no
obligation for defects in workmanship or contractor supplied
materials in any part of the Vessel which have been replaced
or in any way repaired by any contractors, unless such
contractors have been appointed or approved by the Builder. In
no event shall the Builder be liable for any consequential
damages or for any loss of hire or time in operation or repair
of the Vessel. The parties hereto agree that there are no
warranties intended or given, which extend beyond those
specified in this Contract, and that the provisions of this
Article XIII exclude and negate any warranty, express or
implied (including any implied warranty of merchantability or
fitness for particular purpose), or other or further
responsibility or liability imposed by law, statute, or
otherwise with respect to the Vessel.
(b) For the detection of any underwater Guarantee Defects, which
cannot be detected while the Vessel is afloat, Buyer at its
expense, may drydock the Vessel within the Guarantee Period.
Buyer shall pay, as its expense, the haul day and lay days
required to accomplish the Vessel's normal drydocking
maintenance. However, if any underwater Guarantee Defects are
discovered, and the correction of which requires additional
drydocking time, the Builder, in addition to the cost of
correcting Guarantee Defects shall also pay the drydocking
charge for the additional days spent in the drydock, if any.
Alternatively, the Buyer may choose to conduct an underwater
survey in lieu of drydocking within the Guarantee Period to
determine if any defects exist as to any area of the Vessel
which is below the waterline for such Vessel. If any
underwater Guarantee Defects are found, the Builder shall pay
to correct the defects at Vessel's first drydocking. In
addition to remedying the Guarantee Defects, the Builder shall
pay the drydocking charge for each additional day beyond those
needed for routine maintenance.
The Buyer shall notify the Builder of the time and place of
any drydocking or underwater survey for the purpose of
discovery of underwater Guarantee Defects so that the Builder
may attend at its own expense, if it so desires.
Notwithstanding the foregoing, if at any time during Guarantee
Period it becomes necessary to drydock the Vessel for
correction of any Guarantee Defects, the cost of the entire
drydocking as well as the cost of remedying Guarantee Defects
shall be at the expense of the Builder; provided that if any
work is carried out for the
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Buyer during such drydocking, the Buyer shall pay the
drydocking charge for the additional days spent in the
drydock, if any.
(c) The Buyer shall notify the Builder in writing, or by telex or
facsimile, of any defects for which claim is made under this
guarantee as promptly as possible after the discovery thereof.
The Buyer's written notice shall describe in detail the nature
and ascertainable cause and extent of the defects. The Builder
shall in any event have no obligation in respect of any
defects, unless notice of such defects is received by the
Builder not later than ten (10) days after the expiry of the
Guarantee Period.
(d) Upon Buyer's request the Builder shall assign a "Guarantee
Engineer" to the Vessel, who shall be fully conversant with
the construction and maintenance of the machinery, for a
period of three (3) months following Delivery. At the option
of the Buyer, the Buyer may request the services of the
Guarantee Engineer for an additional period of up to six (6)
months beyond the initial three (3) months. While said
Guarantee Engineer shall remain the employee of the Builder,
he shall sign the Vessel's Articles, be accorded the status of
Chief Engineer and shall receive from the Buyer free lodging,
board, medical care, and communication services equal to one
of the Vessel's officers, and if required, free passage to
Korea. The Buyer shall pay to the Builder for the services of
the Guarantee Engineer the sum of Five Thousand United States
Dollars ($5,000) per month as compensation for the services of
the Guarantee Engineer. The detailed terms and conditions on
assignment of the Guarantee Engineer shall be the subject of a
separate agreement to be executed on or before the date of
Delivery.
ARTICLE XIV
ALTERATIONS and APPROVALS
(a) The Builder shall not depart from the requirements of the Plan
and Specifications unless such departure is approved in
writing by the Buyer but, the Buyer may, subject to the
remaining terms and conditions of this Article, correct any
errors or omissions in and/or make deletions from, or
additions to, the Plan and Specifications (such corrections,
deletions, modifications, changes, and additions hereinafter
also called the "Alterations").
(b) The Alterations requested in writing by the Buyer, or required
under the provisions of Articles III (c), shall be carried out
by the Builder, provided, however, that any Alterations are
reasonable in regard to the design of the Vessel and the Buyer
shall have first agreed in writing to an adjustment of the
Contract Price, the date of Delivery, alteration in the
Contract DWT, if any, and other terms of this Contract or the
Specifications as may then be necessary. If any such
- 20 -
agreement by the Buyer results in an inconsistency or
contradiction between this Contract and the Specifications,
such agreement shall then prevail over the terms of this
Contract and the Specifications to the extent of any such
inconsistency or contradiction. All payments or credits, if
any, resulting from Alterations as may be agreed to as set
forth herein, shall be included in the invoice for the payment
due the Builder at Delivery, as set forth in Article VI (d).
(c) All of the Builder's drawings and equipment specifications as
specified in the Specifications shall be submitted to the
Buyer or its designated agent, at the address set forth in
Article XXVI, or as may be designated by the Buyer as the
address of its agent, for approval before work associated with
these drawings and equipment specifications is commenced.
Unless notification, in accordance with Article XXVI, is given
to the Builder by the Buyer or its agent of approval or
disapproval of such drawings and equipment specifications
within twenty (20) calendar days of receipt thereof by the
Buyer, said drawings and equipment specifications shall be
deemed to have been approved. It is understood that the Buyer
may reserve comments upon or remarks with respect to the
drawings and specifications at the time of their approval, and
details concerning construction and/or outfittings may be
discussed and agreed upon between the Builder and the
Representative, as defined herein, since such prompt approval
is essential to timely Delivery.
(d) In the event that any of the materials required by the
Specifications and Plan, or otherwise under this Contract, for
the construction of the Vessel cannot be procured in time to
effect Delivery, or are in short supply, the Builder may,
provided the Buyer so agrees in writing, supply other
materials capable of meeting the requirements of the
Classification Society and the Rules, Regulations,
Requirements and Recommendations with which the construction
of the Vessel must comply at no additional cost to Buyer.
ARTICLE XV
INSPECTION
(a) The Buyer may assign, at its own cost and expense, one or more
representatives (herein called individually or collectively
the "Representative") to be stationed at the Shipyard, one of
whom will be designated as the Buyer's Construction
Supervisor. The Buyer will prepare a job description for the
Construction Supervisor which, among other things, will
clearly describe his responsibilities and levels of authority
while he is stationed at the Shipyard. A copy of this job
description, together with the scheduled arrival date of the
Construction Supervisor at the Shipyard, will be provided to
the Builder within six (6) months of Contract signing. In
order to permit inspection of the work, the Buyer, or its
Representative, shall have free access, during working hours
or outside working
- 21 -
hours with twenty-four (24) hours advance notice, to the
Shipyard and to all of the Builder's drawing offices and
workshops where the Vessel or its parts are being designed or
manufactured. The Builder shall take immediate remedial action
as to any valid and reasonable criticism of or exception made
as to the material or workmanship by the Buyer or its
Representative. Valid and reasonable criticism or exceptions
shall refer to non-conformity with this Contract, Plans,
Specifications, good shipbuilding practice, or unsafe working
Conditions for the Buyer or its Representative. If the Builder
so requests or the Buyer so desires, the Buyer or its
Representative shall specify such criticism or exception in
writing. The Representative shall make every effort to carry
out inspections as scheduled by the Builder, providing the
procedures specified in the Builder's "Quality System Guide"
("QSG"), included in the Specifications, are followed. The
Representative and Builder shall utilize the previously
mentioned "QSG" to record inspection results and resolve the
Buyer's comments, if any.
(b) Facilities, including but not limited to office space, two (2)
telephone lines, one (1) facsimile telephone line, file
cabinets, desks, chairs, additional office space for Vessel's
crew during latter part of Vessel's construction with local
area network (LAN) line to the main office, office cleaning
services, clean boiler suit service and other normal services,
sanitation facilities, labor and material necessary for the
safe and convenient conduct, in the Shipyard, of such
inspection(s) shall be furnished by the Builder to the
Representative at no expense to the Buyer. The Builder shall
also provide apartments furnished to Western standards in
Builder's practice for the Buyer's construction manager and
five (5) inspectors. If Buyer requests Builder to provide the
Buyer with special furniture and facilities beyond Builder's
practice, any additional costs therefrom, if any, shall be
borne by Buyer. The Builder shall also arrange for the Buyer,
or its Representative, to have free access to the drawing
offices and workshops of subcontractors and suppliers engaged
by the Builder. The Builder shall not be liable for personal
injuries to or death of said Representative (or other agents
or employees of the Buyer) or for damage to, or loss or
destruction of their property, unless such injury, death,
damage, loss, or destruction is the result of the negligence
of the Builder, its subcontractors or its (their) employees or
agents. All salaries and personal expenses of said
Representative, or others employed by the Buyer, shall be for
the Buyer's account. International and long distance
telephone/facsimile charges, postage, cable/telex charges and
other miscellaneous expenses incurred by the Representative
shall be for the Buyer's account.
(c) Prior to scheduled arrival date of the Representative at the
Shipyard, the Builder shall give the Buyer seven (7) day's
notice of any scheduled inspections. If the Buyer elects not
to personally attend any such inspections, approval by the
Surveyor of inspections and tests of materials, machinery and
equipment shall be deemed to be approval by the Buyer, but
only to the extent that said Surveyor normally performs such
inspections and tests; otherwise, the Builder's approval,
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taking into account all Specification requirements, shall be
deemed to be approval by the Buyer.
ARTICLE XVI
TRIALS
(a) When construction, fitting out and testing of Vessel have been
substantially completed, Builder shall carry out in strict
compliance with the Specifications all sea trials, tests and
commissioning of the various machinery and equipment which are
detailed in the Specifications so as to demonstrate that such
machinery and equipment are in accordance with the
requirements of the Specifications, and shall further
demonstrate that Vessel and all systems function properly.
The Builder shall notify the Buyer at least fifteen (15) days
prior to the date that the Vessel shall be ready for its
trials and the Buyer shall promptly acknowledge receipt of
such notice, and said trials shall be carried out (on the date
set forth in said notice, in the open sea and at the Builder's
sole risk and expense, but in the presence of the Surveyor and
the Representative), in order to ascertain whether said Vessel
complies with this Contract. The Builder shall provide five
(5) berths on board the Vessel for the Buyer's representatives
during sea trials. The said trials shall be carried out
regardless of whether the Representative should attend or not
on the date set forth in said notice. The Builder shall be
responsible for all acts or omissions (whether negligent or
not) of its employees or representatives, including its
officers, crew and pilots, or any compulsory pilots or
inspectors required for the trials. The said trials shall be
conducted in accordance with the Specifications. Unless the
said trials reveal deficiency(ies) and/or failures and
therefore valid complaints as to the fulfillment of this
Contract, the Vessel shall be delivered as provided for in
Article IV. Failure of the Buyer and/or its Representative to
attend the said trials of the Vessel, after due notice to the
Buyer as provided herein, shall be deemed to be a waiver by
the Buyer of its right to have the Buyer and/or its
Representative on board the Vessel at the trials. In such
case, the Buyer shall accept the Vessel on the basis of the
Builder's statement that the Vessel, upon completion of the
trials is found to conform to this Contract and the
Specifications.
(b) The Buyer or its Representative shall have access to all data
being taken and all calculations during the said trials and if
the Buyer or its Representatives should detect any
deficiencies and/or failures during the said trials, the Buyer
or its Representative shall give to the Builder (as soon as
possible but in any event prior to completion of the trials
and subsequently confirmed in writing within seventy-two (72)
hours after completion of the trials) notice that such
deficiencies and/or failures exists with a short description
of said deficiencies and/or failures.
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Rectification of any such deficiencies and/or failures shall
be made in accordance with the terms of this Article XVI.
(c) If any said deficiencies and/or failures are detected during
the said trials, the Builder shall rectify same and then by a
fresh trials of like duration, or necessary trials/tests of
the specific parts rectified, establish, that said
deficiencies and/or failures have been rectified in accordance
with the Plans, Specifications and this Contract.
(d) For the said trials, the Builder, at its expense, shall load
the Vessel by ballasting to the loaded and ballast drafts as
defined in the Specifications. Any delay in a Vessel's
Delivery arising as a result of said trials shall be the sole
responsibility of the Builder.
(e) In the event of unfavorable weather as agreed between the
Builder and Buyer, on the date specified for the said trials,
they shall take place on the first available day thereafter
that the weather conditions permit. It is agreed that if
during the trials of the Vessel the weather should suddenly
become unfavorable, as would have precluded the commencement
of the trials had the change in weather occurred before the
trials had started, then, and in such event, the trials of the
Vessel shall be discontinued and postponed until the first
favorable day next following, unless the Buyer shall assent in
writing to Acceptance of the Vessel on the basis of the trials
made prior to such sudden change in weather conditions.
(f) Fuel oil, lubricating oils, and greases required for the
trials or any other trials shall be purchased and supplied by
the Buyer, unless the parties shall otherwise agree. The
Builder shall pay the Buyer the cost of the fuel oil,
lubricating oils and greases consumed by the Builder up to the
date of Delivery at the Buyer's original purchase prices.
ARTICLE XVII
RESPONSIBILITIES OF THE BUILDER
BUILDER'S STATUS
In the performance of the work covered by this Contract, the Builder
shall act as an independent contractor, maintaining complete control
over the Builder's employees. The Builder may, at its sole
responsibility, subcontract any portion of the construction work of the
Vessel, but the Builder shall, in any event, be responsible for all
subcontractors, agents and representatives, and their collective
employees. Any work to be done outside the Builder's shipyard shall be
disclosed to the Buyer in advance. It is agreed that all major
structural building components of the Vessel shall be done in the
Builder's
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shipyard or by subcontractors located in Korea within the vicinity of
Koje Island and the City of Pusan who are under direct supervision by
Builder.
ARTICLE XVIII
TAXES AND DUTIES
The Builder shall be responsible for and pay, without recourse to the
Buyer, any and all taxes, assessments, duties or other similar levies
or charges, imposed by the Korean authorities, whether national,
municipal or local, with respect to the period up to and including
Delivery (even though assessed, determined or imposed thereafter), on
or in respect of (i) this Contract or any act or transaction hereunder,
(ii) the Vessel or any part thereof, or (iii) any imports of material
or equipment, and including without limitation, any tax imposed with
respect to the sale or Delivery to the Buyer or the Vessel's export
from Korea. Should the Buyer, at any time before or after Delivery, be
assessed or required to pay any such taxes, assessments, duties or
other similar levies or charges imposed by the Korean authorities, the
Builder shall reimburse the Buyer therefore. The Builder's liabilities
with regard to taxes shall be limited to the foregoing.
Taxes, assessments, duties or other charges imposed by any Governmental
authority on the Buyer's Supplies, supplied or exported to Korea by the
Buyer or its Representative shall be the responsibility of the Buyer.
The Buyer shall bear and pay all taxes, duties, stamps, and fees
incurred outside of Korea in connection with the Buyer's execution
and/or performance of this Contract, except for taxes, duties and other
fees imposed upon those items to be procured by the Builder for
construction of the Vessel.
ARTICLE XIX
GOVERNMENTAL PERMITS, LICENSES, LAWS, AND PATENTS
GOVERNMENTAL APPROVALS AND LICENSES
(a) The Builder shall obtain necessary Korean Government approvals
and licenses, if any, required for the Builder's performance
under this Contract, including, without limitation, the Korean
Government Export License authorizing the transfer and
Delivery to the Buyer for export or removal from the
jurisdiction of Korea and for registration by the Buyer under
the flag of Liberia. The Builder shall assist the Buyer in
obtaining any licenses, permits, or other authorizations, or
waivers, necessary for the Representative to enter and/or
reside in Korea to perform his functions as set forth herein
or attend the Trials.
(b) The Builder shall proceed as soon as possible to obtain from
the Korean Government the aforementioned licenses and permits
for the Vessel to be
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constructed, delivered and be exported from Korea, as provided
herein and shall notify the Buyer as to the issuance thereof
by facsimile or cable, subsequently confirmed in writing
accompanied by copies of the said licenses and permits. In the
event that the said licenses and permits for the Vessel shall
not have been granted by the Korean authorities within thirty
(30) days following the date of this Contract, unless
otherwise mutually agreed to by the Builder and the Buyer, the
Builder shall be required to refund within twenty (20) days
thereafter, to the Buyer the amounts set forth in Article VI
(h) and this Contract shall thereupon automatically become
null and void and each of the parties hereto shall be
forthwith and completely discharged from all of its
obligations to the other.
(c) Notwithstanding the foregoing provisions of this Article XIX,
in case the Vessel, during construction or prior to Delivery,
should be requisitioned or seized by the Korean Government,
the Builder shall forthwith pay to the Buyer the amounts set
forth in Article VI (h) hereof, and such refund shall
forthwith release both parties from all obligations under this
Contract.
ARTICLE XX
LAWS AND PERMITS
The Builder shall exercise due diligence to ensure that the Builder,
its employees and representatives, shall at all times comply with all
applicable Korean laws, ordinances, statutes, rules, and regulations,
including those relating to wages, hours and working conditions and
insurance. The Builder, at its expense, shall procure all priorities,
permits, licenses, inspections, approvals and certificates required in
connection with the construction and completion of the Vessel and
Delivery in its Koje Shipyard. If required to permit performance of the
work, the Builder shall furnish any bond, security or deposits so
required. If violations are identified, the Buyer shall have no remedy,
unless such violation materially affects the Builder's performance of
this Contract or seriously threatens the health or safety of Buyer's
representative.
ARTICLE XXI
PATENTS, TRADEMARKS, AND TRADE NAMES
Except for the aforesaid Buyer's Supplies, all royalties and licensing
and engineering fees required for incorporating patented features or
proprietary articles into the Vessel shall be paid by the Builder. The
Builder shall indemnify and save the Buyer harmless from all claims,
damages and costs, including costs of defense, in Korea or elsewhere,
resulting from any alleged patent, trademark or trade name infringement
based upon the design, construction or use of the Vessel or any part
thereof furnished by the Builder, its suppliers or subcontractors. The
Buyer shall notify the Builder of any such claim of
- 26 -
which the Buyer has notice and the Builder shall assume the
responsibility and defense thereof at the Builder's expense.
ARTICLE XXII
CONTRACTUAL RESPONSIBILITIES AND PROCEDURES
ASSIGNMENT OR SUBSTITUTION
(a) The Builder shall not assign this Contract without the consent
of the Buyer.
(b) The Buyer intends to register the Vessel under Liberian flag
but may elect an alternate registry within a reasonable time
prior to Delivery (subject to mutual agreement on necessary
Alterations as provided for in Article XIV (b).
(c) It is understood that the Buyer may designate any other
company as the person to receive Delivery of the Vessel by
assigning its rights and obligations under this Contract with
a resulting change of the Vessel's intended registry, if any,
provided that any said assignee shall demonstrate to the
satisfaction of the Builder that it is financially able to
meet the Buyer's obligations hereunder and is otherwise
acceptable to the Builder, which acceptance shall not be
unreasonably withheld.
(d) In the event of an assignment of the Buyer's rights and
obligations hereunder with respect to the Vessel said assignee
or the substitute party shall have all the rights and assume
all the obligations of the Buyer hereunder with respect to
said Vessel and the responsibility of the Buyer hereunder,
with respect to such Vessel, shall terminate.
(e) Any and all costs incurred for the registration of the Vessel
shall be for the account of the Buyer or its assignee
regardless of whether such expenses should be incurred and
payable in Korea or not. Application and certificates for
statutory inspections for the registration of the Vessel shall
be arranged by the Buyer at Buyer's expense.
ARTICLE XXIII
CONTRACT AND AMENDMENTS
(a) This Contract and the Plan and Specifications have been
prepared in the English language, which shall control. The
Contract has been signed in duplicate, one counterpart being
retained by the Builder and one by the Buyer. The Plan and
Specifications have been signed in duplicate, one counterpart
being retained by the Builder and one counterpart by the
Buyer.
- 27 -
(b) No representative of either party shall have authority to
make, and neither party shall be bound by, nor liable for, any
statement, representation, promise or agreement not set forth
herein. No changes, amendments or modifications shall be valid
unless reduced to writing and signed by the parties.
(c) The validity, enforcement and interpretation of this Contract
shall be governed by the Laws of the State of New York, one of
the United States of America.
ARTICLE XXIV
ARBITRATION
(a) If any dispute arises between the parties hereto with regard
to the application or interpretation of rules for construction
and classification of vessels promulgated by the
Classification Society (or other matters deemed appropriate by
the parties), the parties may by mutual agreement refer the
dispute to the Classification Society, or to such other expert
as may be mutually agreed between two parties hereto, and
whose decision shall be final, conclusive and binding upon the
parties hereto.
(b) Should any dispute of any nature arise in respect of this
Contract, its performance or interpretation which is not
decided in accordance with Article XXIV (a) above, such
dispute shall be settled by arbitration in New York City in
accordance with the rules of the Society of Maritime
Arbitrations, Inc. and otherwise in accordance with the
provisions of the Laws of the State of New York. The party who
desires arbitration of any such dispute shall give written
notice to the other party. The notice shall state the name and
address of the arbitrator whom it appoints and describe the
specific nature of the particular dispute. Such notice shall
be sent by registered air mail and shall be addressed in the
manner set forth in Article XXVI, and the other party shall,
within thirty (30) days following the receipt of said notice,
give written notice to the party requesting the arbitration as
to the name and address of the arbitrator whom it appoints,
which notice shall be sent by registered air mail and shall be
addressed in the manner set forth in Article XXVI, provided
that if the other party should fail to so appoint its
arbitrator, the arbitrator appointed by the party desiring the
arbitration may proceed with the arbitration hearing and issue
an award. Otherwise the two arbitrators so chosen shall select
a third arbitrator. The applicable law of the State of New
York on all matters at issue shall apply. A judgement based
upon the decision of the majority of the arbitrators or the
sole arbitrator, as the case may be, may be entered in the
appropriate court of any country having jurisdiction of either
party. The arbitrators shall also decide which party, or the
extent to which each party, shall pay costs of arbitration.
Unless and to the extent otherwise determined by the
arbitrator(s), reference to arbitration shall not relieve the
Builder of its obligation diligently to proceed with the
construction,
- 28 -
completion and delivery of the Vessel, but the majority of the
arbitrators or the sole arbitrator, as the case may be, shall
decide the extent to which the Delivery Date shall be extended
by virtue of the dispute having been referred to arbitration.
No director, employee or agent of either party shall give or
receive any commission, fee, rebate, gift or entertainment of
significant cost or value in connection with this Contract. An
independent public accounting firm mutually acceptable to
Builder and Buyer may, at either party's request and expense,
audit any and all records of both parties for the sole purpose
of determining whether there has been compliance with this
Article. Any such audit shall be conducted at any reasonable
time or times during the term of this Contract and during a
period of two years after its termination. No information
obtained during such audit shall be disclosed unless it
relates to such conflict of interest.
ARTICLE XXV
INDEMNITY
Each of Builder and Buyer shall indemnify and save Indemnitees harmless
from and against any and all loss, damage, injury, liability, and
claims thereof for injury to, or death of any person, including an
employee of Builder or Buyer, one of the Indemnitees or a third party
or for loss of or damage to property belonging to Builder or Buyer, an
Indemnitee or a third party arising out of or in connection with the
Indemnitee's performance or non-performance of its duties under this
Shipbuilding Contract until Delivery except to the extent such loss,
damage, injury, liability or claim is attributable to the negligence or
willful misconduct of any of the Indemnitees.
Indemnitees means Chevron Corporation which has been nominated by Buyer
for supervision of the Vessel on behalf of Buyer, any company under
Chevron Corporation's control and the directors, officers, employees
and agents of any of the foregoing companies.
ARTICLE XXVI
NOTICES
All notices hereunder shall be made in writing and delivered personally
or by registered mail, postage prepaid, or by cable, telex, or
facsimile to the Builder and to the Buyer at the following respective
addresses, unless changed by notice duly given in accordance with this
Article XXVI:
- 29 -
To the Builder, at:
Samsung Heavy Industries Co., Ltd.
Xxxxxxx Xxxxx, 000-00, Xxxxxx-Xxxx,
Xxxxxxx-xx, Xxxxx, Xxxxx 135-280
Telefax: 00-0-0000-0000
Telephone: 00-0-0000-0000 6530
Or preferably to its Koje Shipyard -
Samsung Heavy Industries Co., Ltd.
Koje Shipyard
000, Xxxxxxxxx-xx, Xxxxxxx-xx,
Xxxx Xxxx, Xxxxxxxx, Xxxxx, 656-800
Telex: SSCYARD K52213
Telefax: 82-558-32-2160 (Design Department)
00-000-000-0000 (Customer Coordination Department)
To the Buyer, at:
Golden State Petroleum Transport Corporation
00-00 Xxxxx Xxxxxx
Xxxxxxx, Xxxx xx Xxx
Telefax: 000-000-000-000-000
Telephone: 000-000-000-000-000
Attention: Xxxxxx Xxxx
copy to:
Golden State Petroleum Transportation Corporation
c/o Cambridge Petroleum Transport Corporation
00 Xxxx 00xx Xxxxxx
Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
Telefax: 000-000-0000
Telephone: 000-000-0000
Attention: Xxxx XxXxxxxx
- 30 -
ARTICLE XXVII
EFFECTIVE DATE
This Contract shall, following execution by all parties, become
effective upon the Builder furnishing to the Buyer, per Article XIX
(b), a notice of issuance of the Export License required under Article
XIX (a) (herein called the "Effective Date").
- 31 -
IN WITNESS WHEREOF, the parties hereto executed this Contract as of the
date first set forth above.
For the Builder: SAMSUNG CORPORATION
---------------
Witness:
/s/ Xxxxx X. Xxx By: /s/ X. X. Xxx
-------------------- ---------------------
SAMSUNG HEAVY INDUSTRIES CO., LTD.
Witness:
/s/ Xxxxx X. Xxx By: /s/ X. X. Xxx
-------------------- ---------------------
For the Buyer: GOLDEN STATE PETRO (IOM-I-A) PLC
Witness:
/s/ Xxxxxx Xxxxxxxxx By: /s/ Xxxx XxXxxxxx
-------------------- ---------------------
- 32 -
Schedule 1
NET
INSTALLMENT PAYMENT TO
INSTALLMENT PAYMENT DATE AMOUNT BUILDER(D)
1 December 26, 1996 $ 36,396,540 $35,304,644
2 June 1, 1998 8,088,120 7,845,477
3 Sept 1, 1998 8,088,120 7,845,477
4 Dec 1, 1998 1,786,420 1,732,826
5 (FINAL) Feb 1, 1999(A) 26,522,000(B)(C) 25,726,340
(A) The final installment is to be paid on the Delivery Date for the Vessel
which is currently anticipated to be February 1, 1999. Notwithstanding
the date set forth above the final installment shall be payable on the
date of Acceptance of the Vessel as provided in the Contract.
(B) The final installment shall be payable as provided below.
1. On December 24, 1996 the Buyer shall execute and deliver one
(1) promissory note in the amount of US$4,044,060 and bearing
a maturity date of February 1, 1999, which Note shall be in
the form as attached as Appendix C hereto. Any transferee of
such Note shall deliver a Letter of Undertaking in the form of
Appendix D hereto.
2. Cash payment of US$22,477,940 shall be made by the Buyer
simultaneously with the Acceptance of the Vessel by
telegraphic transfer to the account set forth in Article
VI(d)(i) of the Contract.
(C) In the event Acceptance of the Vessel shall occur on any date other
than the maturity date of the Note for whatever reason and this
Contract shall not have been rescinded, terminated or cancelled prior
to such date, the Buyer shall execute and deliver to the Builder, upon
request of the Builder in exchange for the Note, a replacement note
(the "Replacement Note") identical to the Note except that such
Replacement Note shall bear a new maturity date designated by the
Builder. The Builder shall return the Note when it receives the
Replacement Note. Any payment made by the Buyer to the holder of the
Note shall be deemed payment to the Builder under this Contract with
respect to the installment amount to which such Note relates and the
Buyer shall be discharged from any and all obligations with respect to
such installment amount.
N.B. Simultaneously with each of such payments, the Buyer shall cause
the Buyer's Bank of advise the Builder's Bank of the details of such
payments by authenticated bank cable or telex.
(D) Net payment reflects the obligation of the Builder to pay 3.0% of the
Contract Price to Cambridge Petroleum Transport Corporation pursuant to
a Letter Agreement dated as of December 24, 1996.
For the Builder: SAMSUNG CORPORATION
---------------
Witness:
____________________________ By:______________
SAMSUNG HEAVY INDUSTRIES CO., LTD.
Witness:
____________________________ By:______________
For the Buyer: GOLDEN STATE PETRO (IOM I-A) PLC
Witness:
____________________________ By:______________
SCHEDULE 2
REFUND AMOUNT
Net
Date Amount
---- ------
1-1-97 38,532,319
2-1-97 38,675,864
3-1-97 38,939,083
4-1-97 39,200,551
5-1-97 39,460,258
6-1-97 39,718,192
7-1-97 39,974,345
8-1-97 40,253,705
9-1-97 40,530,182
10-1-97 40,804,985
11-1-97 41,078,104
12-1-97 41,349,530
1-1-98 41,619,252
2-1-98 41,912,261
3-1-98 42,198,413
4-1-98 42,482,948
5-1-98 42,765,855
6-1-98 50,892,603
7-1-98 51,217,993
8-1-98 51,566,994
9-1-98 59,754,942
10-1-98 60,141,890
11-1-98 60,527,808
12-1-98 62,645,518
1-1-99 63,039,467
2-1-99 63,457,427
3-1-99 63,912,580
4-1-99 64,367,282
5-1-99 64,821,531
6-1-99 65,275,324
7-1-99 65,728,661
8-1-99 66,181,539
APPENDIX A
IRREVOCABLE INSTALLMENT PAYMENT
LETTER OF GUARANTEE
[STATIONERY OF GUARANTOR BANK]
December 24, 1996
Golden State Petro (IOM I-A) PLC
c/o Cambridge Petroleum Transport Corporation
00 Xxxx 00xx Xxxxxx
Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs:
On behalf of The Korea Development Bank ("We" or the "Bank"), Seoul, Republic of
Korea, we hereby open our Irrevocable Installment Payment Letter of Guarantee
No. __________________________ (hereinafter called the "Guarantee") in favor of
Golden State Petro (IOM I-A) PLC and its assignee (hereinafter called the
"Buyer") for account of Samsung Heavy Industries Co., Ltd. and Samsung
Corporation (hereinafter collectively called the "Builder") in connection with
payments to be made by the Buyer to the Builder pursuant to the Shipbuilding
Contract dated the 24th day of December, 1996, as amended, supplemented or
otherwise modified from time to time (hereinafter called the "Contract") made by
and between the Buyer and the Builder for the construction of one (1) single
screw diesel drive Crude Oil Double Hull Tank Vessel having Builder's Hull No.
1228 (hereinafter called the "Vessel") which is available as follows:
We hereby irrevocably guarantee the payment (and not merely the collectability
of the same) to the Buyer immediately upon demand in an amount not to exceed the
principal amount of sixty six million, one hundred eighty one thousand, five
hundred thirty nine United States Dollars (US $66,181,539) together with simple
interest thereon calculated at the rate of nine percent (9.0%) per annum on the
basis of a 360 day year from and including the date of receipt of demand to but
not including the date of remittance by telegraphic transfer of such refund.
Subject to Buyer making installment payments in accordance with paragraph (d) of
Article VI of the Contract, the amount of this Guarantee will be automatically
increased during the term of this Guarantee and shall be equal to the sum of:
(i) the amount set forth on Schedule 1 hereto calculated as of the first day of
the calendar month in which the date of rejection occurs; and (ii) an amount
equal to the product of (X) the difference between (1) the amount set forth of
Schedule 1 hereto calculated as of the first day of the calendar month
immediately succeeding the month in which the date of rejection occurs and (2)
the amount set forth on Schedule 1 hereto as of the first day of the month in
which the date of rejection of the vessel under the Contract occurs and (y) a
fraction the numerator of which is numeric day of the month of the date of such
rejection and the denominator of which is 30 (collectively, the "Refund
Amount").
Payment under this Guarantee is available at the counters of ______________ Bank
against presentation of the Buyer's signed statement issued in the form attached
hereto as Exhibit A ("Notice of Demand"). If the Notice of Demand is received by
the Bank by 12:00 noon local time on a business day, the Bank shall pay the
Refund Amount in immediately available funds on the same business day. If the
Notice of Demand is received by the Bank after 12:00 noon local time on a
business day, the Bank shall pay the Refund Amount in immediately available
funds on the next succeeding business day.
This Guarantee is available for one payment only, whether for the full amount
hereof or any part thereof, as may be demanded by the Buyer. In the event that
the Buyer's demand is for a lesser amount than the amount of this Guarantee, the
interest payable will be calculated on the amount of the Buyer's demand and not
on the amount of this Guarantee.
Payment shall be made to the Buyer in United States Dollars in accordance with
the payment instruction given to us by the Buyer at the time of a claim under
this Guarantee. Payment effected as directed by the Buyer shall discharge our
obligation to the extent of such payment.
We agree that this Guarantee shall be a continuing guarantee and (i) shall not
be impaired or discharged by the granting of time or any other indulgence to the
Builder, or any other forbearance (whether as to payment, time, performance, or
otherwise) which might, but for this provision, have any such effect; (ii) shall
not be conditioned or contingent upon the Buyer's pursuit of any remedy that it
has against the Builder; and (iii) shall be unconditional irrespective of any
other circumstance that might otherwise constitute a legal or equitable
discharge of a surety or guarantor under applicable law, and we hereby waive any
and all rights (whether by counterclaim, set off or otherwise) and defenses at
law or in equity that may be available to us by reason of such circumstance.
This Guarantee shall expire and become null and void on the earlier of (i) the
receipt by the Buyer of the sum guaranteed hereby; (ii) the receipt by The Korea
Development Bank of a copy of the Protocol of Acceptance and Delivery of the
Vessel, purportedly signed by the Buyer and the Builder and issued in the form
attached hereto as Appendix B; and (iii) 5:00 p.m. New York time on the 1st day
of October, 1999, in any such case this Guarantee shall be returned to us;
provided, the Bank further agrees that its obligations hereunder shall continue
to be effective or reinstated, as the case may be, if at any time any payment,
or any part thereof, made by the Builder is rescinded or must otherwise be
restored by the Buyer upon the bankruptcy or reorganization of the Buyer.
-2-
Notwithstanding the provisions hereinabove, in case we receive notification from
the Buyer or the Builder confirmed by an arbitrator stating that the Buyer's
claim to cancel the Contract or the Buyer's claim for refundment thereunder has
been disputed and referred to arbitration in accordance with the provisions of
the Contract, the period of validity of this Guarantee shall be extended until
thirty (30) days after the final award shall be rendered in the arbitration and
a copy thereof acknowledged by the arbitrators. In such case, this Guarantee
shall not be available unless and until such acknowledged copy of the final
award in the Arbitration justifying the Buyer's claim is presented to us.
This Guarantee and the rights and interests hereunder may be assigned by the
Buyer in whole without charge with written notice to the Bank but only if this
Guarantee and the Contract are simultaneously assigned to the same assignee. The
Bank may not assign this Guarantee and the Bank's rights or interests hereunder
without the prior written consent of the Buyer and its assignee.
This Guarantee is governed by and enforced and construed in accordance with the
laws of the State of New York, United States of America, applicable to contracts
entered into and to be performed entirely within such state.
For: The Korea Development Bank
By: _____________________________ By: ______________________________
Name: Name:
Title: Title:
-3-
SCHEDULE 1
REFUND AMOUNT
Net
Date Amount
---- ------
1-1-97 38,532,319
2-1-97 38,675,864
3-1-97 38,939,083
4-1-97 39,200,551
5-1-97 39,460,258
6-1-97 39,718,192
7-1-97 39,974,345
8-1-97 40,253,705
9-1-97 40,530,182
10-1-97 40,804,985
11-1-97 41,078,104
12-1-97 41,349,530
1-1-98 41,619,252
2-1-98 41,912,261
3-1-98 42,198,413
4-1-98 42,482,948
5-1-98 42,765,855
6-1-98 50,892,603
7-1-98 51,217,993
8-1-98 51,566,994
9-1-98 59,754,942
10-1-98 60,141,890
11-1-98 60,527,808
12-1-98 62,645,518
1-1-99 63,039,467
2-1-99 63,457,427
3-1-99 63,912,580
4-1-99 64,367,282
5-1-99 64,821,531
6-1-99 65,275,324
7-1-99 65,728,661
8-1-99 66,181,539
Exhibit A
___________________Bank
___________________
___________________
Re: Irrevocable Installment Payment Guarantee No. __ (the "Guarantee")
The undersigned, acting as Administrator _____________________, the
"Buyer" hereby certifies to The Korea Development Bank with reference to
Guarantee No. ______ that:
1.The undersigned is duly authorized to execute and deliver this
certificate on behalf of the Buyer.
2. The Buyer hereby makes a claim against the Guarantee for
payment of US$ _________, plus simple interest thereon
calculated at the rate of _______ percent per annum on the
basis of a 360 day year from __________ to the date payment
is effected by The Korea Development Bank to the Buyer in
accordance with the payment instructions provided below.
3. The amount claimed represents a demand for refund of amounts
refundable to the Buyer and such demand for refund has been
made in conformity with the Shipbuilding Contract dated the
_____________ day of __________________, made by and among
the Buyer and Samsung Heavy Industries Co., Ltd., the
"Builder", for the construction of one (1) single screw
diesel driven Crude Oil Double Hull Tank Vessel having
Builder's Hull No. ___, as amended, supplemented or otherwise
modified from time to time (hereinafter called the
"Contract") and that the Builder has failed to make the
refund within fifteen (15) business days of our demand to the
Builder.
4. You are hereby directed to make payment of the stated amount
to ________________________ [INSERT PAYMENT INSTRUCTIONS]
_______________
By:____________
Attorney-in-Fact
Date:__________
APPENDIX B
PROTOCOL OF DELIVERY AND ACCEPTANCE
KNOW ALL MEN BY THESE PRESENTS:
That the undersigned, Samsung Heavy Industries Co., Ltd., Seoul, Korea
(the "Builder") does hereby deliver at ________ hours (local time) on
__________________, to ____________ (the "Buyer"), the vessel described
hereunder in accordance with the provisions of the Shipbuilding Contract dated
______________, as amended, made by and between Samsung Heavy Industries Co.,
Ltd., Samsung Corporation and the Buyer.
Name of Vessel: ____________________
Builder's Hull No. ___
Type of Vessel: Double Hull Oil Tank Vessel
That the undersigned,______________________ [the Buyer] does hereby
accept delivery of the aforesaid vessel and certify that the same is delivered
in accordance with the provisions of the said Shipbuilding Contract, and that
this PROTOCOL OF DELIVERY AND ACCEPTANCE does not release Samsung Heavy
Industries Co., Ltd. from its responsibilities under the Builder's Guarantee
Clause of the said Shipbuilding Contract.
SAMSUNG HEAVY INDUSTRIES
CO., LTD. [Name of Buyer]
-------------------
By:__________________ By:__________________
Attorney-in-Fact Attorney-in-Fact
Date:________________ Date:________________
As Agent for Buyer:
CHEVRON SHIPPING COMPANY
By:_______________________________
Attorney-in-Fact
Date:_____________________________
APPENDIX C
PROMISSORY NOTE
---------------
No. 1 Issued at: New York, New York
US$4,044,060 Date: December 27, 1996
FOR VALUE RECEIVED, Golden State Petro (IOM I-A) PLC, a corporation
duly organized and existing under the laws of the Isle of Man having its
principal place of business at 00-00 Xxxxx Xxxxxx, Xxxxxxx, Xxxx of Man (the
"Buyer"), hereby unconditionally and irrevocably promises to pay, on the 1st day
of February, 1999, to Samsung Heavy Industries Co., Ltd., a corporation duly
organized and existing under the laws of the Republic of Korea, having its
principal office at 000-00, Xxxxxx-Xxxx, Xxxxxxx-Xx, Xxxxx, Xxxxxxxx of Korea
(the "Contractor"), or order, the principal sum of United States Dollars
(US$4,044,060) and, if not paid on the above due date, to pay interest on said
principal sum from and including the due date at the default rate of Ten percent
(10.0%) per annum, until the principal sum and interest thereon are fully paid,
plus all expenses, including reasonable legal fees incurred by the holder in
enforcing its rights hereunder. Interest shall be calculated on the basis of the
actual days elapsed and a year of 360 days.
Both principal and interest, if any, shall be payable in United States
Dollars in immediately available funds to the account of Banker's Trust Company,
for account of The Korea Commercial Bank, head office, Seoul, Korea, New York,
N.Y., United States of America (Account No.: 04-022-936) in favor of Samsung
Heavy Industries Co., Ltd. or to such other account with such other bank as may
be designated by the holder of this Note by a 5 days' prior written notice
without set-off or counterclaim, free and clear of and without deduction for any
present or future taxes, charges, restrictions or conditions of any kind.
This note is made pursuant to a Shipbuilding Contract dated December
24, 1996 by and between the Contractor, Samsung Corporation and the Buyer (the
"Contract"). Pursuant to the Contract, Contractor is required to construct and
deliver a single-screw diesel-driven Crude Oil Double Hull Tank Vessel bearing
Contractor's Hull No. 1228 (the "Vessel").
Notwithstanding any provision contained in this Note, the Buyer shall
not be obligated to make any payment of principal or interest on this Note if
the Vessel subject to the Contract is not delivered to and accepted by the Buyer
under the Contract.
The Contractor shall not assign or transfer this Note without prior
written consent from the Buyer except that this Note may be sold to banks and
other financial institutions from Korea,
Hong Kong, Singapore and OECD countries, in which case only prior notice to the
Buyer shall be required.
In the event default shall be made in the payment of principal or
interest on this note, as and when the same shall become due and payable, the
holder hereof shall have the remedies as set forth herein and such other
remedies as may be provided by law.
The maker and endorsers of this note hereby waive the right to
interpose any defense, set-off or counterclaim of any nature or description in
any action or proceeding arising out of or in connection with this note.
Amounts payable on this Note shall be paid to the holder upon
presentment of the Note to the Buyer or its Assignee of the Contract. Upon
payment, the note shall be marked "Paid."
This Note shall be governed by and construed and interpreted in
accordance with the laws of England (without giving effect to the conflict of
law principles thereof). The maker and the endorser hereby consent to any legal
action or proceeding in relation to this note being brought in the State of New
York, U.S.A. or in London, England and hereby irrevocably waive any immunity
from suit, attachment (before or after judgement) or execution on a judgement to
which they or their property may be entitled.
The maker and the endorsers hereby irrevocably submit to the
nonexclusive jurisdiction of the courts of the State of New York and the Federal
court of the United States of America located in the City and State of New York,
United States of America, or the courts of England, as any holder of this note
may elect, and irrevocably consent to the service of process out of said courts
by registered airmail, postage prepaid to the maker or endorsers as the case may
be or in any other manner provided by law.
The maker hereby certifies and declares that all acts, conditions and
things required to be done and performed and to have happened precedent to the
creation and issuance of this note, and to constitute this note the legal, valid
and binding obligation of the maker, in accordance with its terms, have been
done and performed and have happened in due and strict compliance with all
applicable laws and regulations.
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IN WITNESS WHEREOF, the undersigned has caused this note to be signed
in its corporate name by its duly authorized representative this 27th day of
December, 1996.
GOLDEN STATE PETRO (IOM I-A) PLC
By:__________________________________________
Name:
Title:
STATE OF NEW YORK )
COUNTY OF NEW YORK )ss.:
UNITED STATES OF AMERICA )
I, _________________, Notary Public, duly authorized, admitted and
sworn, practicing at New York State, do hereby certify that:
1. GOLDEN STATE PETRO (IOM I-A), who has executed this power of
attorney on behalf of Golden State Petro (IOM I-A), (hereinafter the "Buyer") is
personally known to me and I acknowledge that his signature is authentic;
2. Sufficient evidence has been presented to me to the effect that
__________________, was duly authorized by the Buyer to execute this Promissory
Note on behalf of the Buyer.
IN WITNESS WHEREOF, I have hereunto subscribed my name and affixed my
seal of office this ____, day of December, 1996.
---------------------------------------------
Notary Public
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APPENDIX D
LETTER OF UNDERTAKING
Samsung Heavy Industries Co., Ltd. 24th December, 1996
000-00, Xxxxxx-xxxx, Xxxxxxx-xx,
Xxxxx, Xxxxxxxx of Korea
Gentlemen:
Samsung Heavy Industries Co., Ltd. Hull Number 1228 - Letter of Undertaking
---------------------------------------------------------------------------
We refer to one (1) promissory note dated December 24, 1996 (hereinafter called
the "Note") made by GOLDEN STATE PETRO (IOM-IA) PLC (the "Maker") in connection
with its obligation to pay the price for the Builder's Hull No. 1228.
We hereby undertake and agree with you that:
We will keep the Note in our custody and return to the Maker
immediately upon our receipt of the payment of the amounts of the Note.
This Letter of Undertaking is also given to the benefit of the Maker.
This Letter of Undertaking shall be governed by, and construed in accordance
with the laws of England.
Yours very truly,
For and on behalf of
_______________________________Bank
Name:
Title:
TABLE OF CONTENTS
Page
----
ARTICLE I
VESSEL'S DESIGN AND DELIVERY....................... 1
1. THE VESSEL............................................................. 1
ARTICLE II
DIMENSIONS, DEADWEIGHT, SPEED, FUEL CONSUMPTION
............................................................................. 3
ARTICLE III
CLASS AND REGULATIONS
............................................................................. 4
ARTICLE IV
DELIVERY
............................................................................. 4
ARTICLE V
DISCHARGE OF LIENS
............................................................................. 6
ARTICLE VI
PRICE, PAYMENT, TERMS, REFUND, BANK GUARANTEE
............................................................................. 7
ARTICLE VII
ADJUSTMENTS TO CONTRACT PRICE
............................................................................. 11
ARTICLE VIII
DEFAULT IN PAYMENT
............................................................................. 14
ARTICLE IX
BUILDER'S PAYMENT AND REPAYMENT AND INTEREST THEREON
............................................................................. 15
ARTICLE X
BANK GUARANTEE
............................................................................. 15
ARTICLE XI
TERMS DURING DESIGN, CONSTRUCTION, AND GUARANTEE PERIODS
............................................................................. 16
ARTICLE XII
INSURANCE
............................................................................. 16
ARTICLE XIII
BUILDER'S GUARANTEE........................... 17
ARTICLE XIV
ALTERATIONS and APPROVALS
............................................................................. 20
ARTICLE XV
INSPECTION
............................................................................. 21
ARTICLE XVI
TRIALS
............................................................................. 23
ARTICLE XVII
RESPONSIBILITIES OF THE BUILDER
............................................................................. 24
ARTICLE XVIII
TAXES AND DUTIES
............................................................................. 25
ARTICLE XIX
GOVERNMENTAL PERMITS, LICENSES, LAWS, AND PATENTS
............................................................................. 25
ARTICLE XX
LAWS AND PERMITS
............................................................................. 26
ARTICLE XXI
PATENTS, TRADEMARKS, AND TRADE NAMES
............................................................................. 26
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ARTICLE XXII
CONTRACTUAL RESPONSIBILITIES AND PROCEDURES
............................................................................. 27
ARTICLE XXIII
CONTRACT AND AMENDMENTS......................... 27
ARTICLE XXIV
ARBITRATION
............................................................................. 28
ARTICLE XXV
INDEMNITY................................ 29
ARTICLE XXVI
NOTICES
............................................................................. 29
ARTICLE XXVII
EFFECTIVE DATE
............................................................................. 31
Schedule 1
Schedule 2
APPENDIX A IRREVOCABLE INSTALLMENT PAYMENT LETTER OF
GUARANTEE
APPENDIX B PROTOCOL OF DELIVERY AND ACCEPTANCE
APPENDIX C PROMISSORY NOTE
APPENDIX D LETTER OF UNDERTAKING
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