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TBS International - Shipbuilding Contract And Addendum Between Dorchester Maritime Corp.
1.
ARTICLE
I - DESCRIPTION AND CLASS
1.1
DESCRIPTION
The
vessel (hereinafter called the "VESSEL")
is a
multi-purpose vessel, with a scantling draft (moulded) of 10.90 meters and
with
the dimensions stated in Article I paragraph 3, of the class described below.
The VESSEL shall have the BUILDER's Hull No.NYHS200722 and shall be designed,
constructed, equipped and completed in accordance with the following
Specifications:
(1) Specification
for TBS International Multi-Purpose Vessel(Drawing No.SC4461-01-02SM Rev. 1
December 24, 2006) (the “Technical
Specification”)
(2) General
Arrangement (Drawing No.SC4461-010-03 Rev. 1)
(3) Midship
Section (Drawing No. SC4461-011-01 Rev. 1)
(4) Makers
List for Equipment (Drawing No. SC4461-010-MX Rev.2)
each
initialled by each of the parties to this Contract on 24 December 2006
(hereinafter collectively called the "Specifications"),
and
forming an integral part hereof.
1.2
CLASS
AND RULES: GENERAL QUALITY
STANDARDS
The
VESSEL, including its machinery and equipment, shall be designed and constructed
in accordance with the rules, regulations and requirements of Lloyd’s Register
of Shipping (hereinafter called the "Classification Society")
so as
to achieve on delivery the following Class notation:-
LR
+100A1, STRENGTHENED FOR HEAVY CARGOES, CONTAINER CARGOES ON TWEEN DECK AND
ON
UPPER DECK AND ALL HATCH COVERS, +LMC, SCM, *IWS, UMS
The
VESSEL shall also comply with the rules, regulations and requirements of the
other regulatory bodies and authorities as fully described in the
Specifications.
The
requirements of such regulatory bodies and authorities as fully described in
the
Specifications, including those of the Classification Society, are to include
any rules, regulations and requirements announced but not in effect as at the
date of this Contract provided they are scheduled to come into effect as
compulsorily applicable for the VESSEL prior to the Delivery Date specified
in
Article 7 hereof.
The
VESSEL’s Classification status and certificates are to be clean and free of
conditions and/or recommendations of Class, without any references in the
memoranda, other than as permitted in the Specifications.
The
SELLER shall arrange with the Classification Society to assign a representative
or representatives (hereinafter called the "Classification Surveyor")
to the
BUILDER's Shipyard for supervision of the construction of the
VESSEL.
All
fees
and charges incidental to the Classification Society and to comply with the
rules, regulations and requirements defined in this Contract as well as
royalties, if any, payable on account of the construction of the VESSEL shall
be
for the account of the SELLER, except as otherwise provided and agreed herein.
The key plans, materials and workmanship entering into the construction of
the
VESSEL shall at all times be subject to inspections and tests in accordance
with
the rules and regulations of the Classification Society.
Decisions
of the Classification Society as to compliance or non-compliance of the VESSEL
with the Classification rules and regulations shall be final and binding upon
the parties hereto.
To
the
extent (i) not specified by the Classification Society or other regulatory
authorities and (ii) not otherwise expressly stated in this Contract or the
Specifications, all of the works envisaged by this Contract shall be undertaken
by the SELLER in a good, sound and workmanlike manner in accordance with the
first-class Chinese shipbuilding and marine engineering standards and practice
for vessels of the present type, including without limitation such standards
and
practice in relation to quality assurance. The VESSEL shall be delivered safely
afloat at the Shipyard following successful completion of trials and fully
ready
to serve its intended purpose.
1.3
PRINCIPAL
PARTICULARS AND DIMENSIONS OF THE
VESSEL
(a)
Hull:
Length
overallNot
to
exceed [***] m
Length
between perpendiculars [***]
m
Breadth
moulded [***]
m
Breadth,
extreme at any point
Not to
exceed [***] m
Depth
moulded [***]
m
Scantling
draft moulded [***]
m
Design
draft moulded [***]
m
The
above
principal particulars can be changed by mutual agreement between the parties
according to the final design.
The
Parties hereby expressly agree that (i) it shall be a condition precedent to
her
delivery and acceptance by the BUYER that the VESSEL shall not exceed the
dimensions for length overall and extreme breadth stated in paragraph (a) of
this Article and that (ii) the BUYER be entitled in such circumstances to reject
the VESSEL pursuant to Article 6.3 without prejudice to any of its rights under
this Agreement.
(b)
Propelling
Machinery:
The
VESSEL shall be equipped, in accordance with the Specifications, with
[***].
(c)
Lines
Plan:
It
is
understood and agreed that the lines plan of the VESSEL’s hull will be developed
following the date of this Agreement. Such development shall be undertaken
by
the BUYER at its own cost, including model tests and calculations. The model
will be made available to the SELLER for final model tests of the propeller
design. The final model test with design propeller to be SELLER’s
cost.
1.4
GUARANTEED
SPEED
The
SELLER guarantees that the trial speed at the trial draft after any correction
undertaken in accordance with paragraph 3.5 of the Technical Specification
is to
be not less than the speed as determined by model basin testing in a Chinese
ship model test facility, at a draft/trim condition corresponding to ballast
loading condition, at a main engine output of Maximum Continuous Rating (MCR)
9,480 kW as stipulated in the Specifications, (hereinafter called the
"GUARANTEED SPEED").
1.5
GUARANTEED
FUEL CONSUMPTION
The
SELLER guarantees that the fuel oil consumption of the Main Engine as determined
by the shop test is not to exceed the consumption as stipulated in Paragraph
3.6
of Part I of the Specifications (hereinafter called the "GUARANTEED FUEL CONSUMPTION").
1.6
GUARANTEED
DEADWEIGHT
The
SELLER guarantees that the VESSEL is to have a deadweight of not less than
30,000 metric tons at the design draft moulded of 10.00 meters in sea water
of
1.025 specific gravity as defined in the Specifications (hereinafter called
the
"Guaranteed
Deadweight").
The
actual deadweight of the VESSEL expressed in metric tons shall be based on
calculations made by the SELLER and checked by the BUYER, and all measurements
necessary for such calculations shall be performed in the presence of the
Supervisor or the party authorized by the BUYER.
Should
there be any dispute between the SELLER and the BUYER in such calculations
and/or measurements, the decision of the Classification Society shall be
final.
1.7
SUBCONTRACTING
The
SELLER may, at its sole discretion and responsibility, subcontract any portion
of the construction work of the VESSEL not exceeding in value United States
Dollars five hundred thousand (US$500,000.00), but delivery and final assembly
into the VESSEL of any such work subcontracted shall be at the BUILDER's
Shipyard. Save in respect of the VESSEL’s block fabrication which may be carried
out at the BUILDER’s Nikka facility at Nantong’s industrial area for marine
equipment, the SELLER shall not otherwise be entitled to subcontract any portion
of the contract work exceeding in value United States Dollars five hundred
thousand (US$500,000.00) without the written consent of the BUYER, the same
not
to be unreasonably withheld. The SELLER shall remain fully responsible for
such
subcontracted work under this Contract as if it had undertaken the same.
1.8
MAKERS’
LIST
In
respect of each of the items of materials and equipment to be supplied by the
subcontractors and suppliers specifically defined in the Makers’ List, the
SELLER shall be obliged to select one of the subcontractors and suppliers
therein listed as pre-qualified in respect of such item of materials and
equipment to supply the same.
The
SELLER shall notify the BUYER of its selection of each “Major Supplier” (as
defined below) and the relevant equipment or system to be provided by the same
within one hundred and twenty (120) days of the Effective Date of this Contract
(as such term is hereinafter defined). In addition, the SELLER shall notify
the
BUYER of its selection of all the remaining subcontractors and suppliers as
set
out in the Makers’ List once such selection has been made. However,
should the BUYER wish the SELLER to contract with another subcontractor or
supplier (other than those subcontractors or suppliers notified to the BUYER
in
accordance with the aforementioned provisions of this Article), the BUYER shall
advise the SELLER of its preference within five (5) New York business days
of
receipt of such notification from the SELLER. In the event that the BUYER's
preference involves an increase or decrease in the costs of such item of
materials and equipment from the costs applicable to the SELLER’s selection, the
SELLER shall within five (5) New York business days of being so notified by
the
BUYER, quote the amount of such cost change to the BUYER who shall have the
option to notify the SELLER within five (5) New York business days thereafter
that it insists on its preference, and in such case the amount of the cost
change shall be added to or subtracted from, as the case may be, the Contract
Price.
If the
BUYER does not make such election within such five (5) New York business day
period, the BUYER shall be deemed to have accepted the amount of the cost
increase or decrease, as the case may be, so advised by the SELLER.
Machinery
and equipment defined in the Makers’ List may be built in the People’s Republic
of China according to license agreement of Maker, provided that the machinery
and equipment is fully guaranteed by the licensor and that the function and
design is equivalent to the licensor’s product. The technical specification of
all equipment/materials shall comply with the requirements set forth in the
Specifications of the VESSEL. If the SELLER or Maker proposes alternative
equipment specifications, this shall be specifically called to the attention
of
the BUYER by the SELLER in writing, including a complete technical specification
of the alternate equipment to be submitted to the BUYER for approval. Failure
by
the SELLER to call BUYER’s attention to proposed alternative equipment
specifications shall nullify BUYER’s acceptance of the equipment/Maker and shall
not relieve the SELLER from meeting the equipment requirements given in the
Specifications.
For
the
purposes of this Article 1.8, “Major Supplier” means each subcontractor or
supplier identified as such in the Makers’ List.
1.9
REGISTRATION
The
VESSEL shall be registered by the BUYER at its own cost and expenses under
the
laws of registered nationality at the time of delivery and acceptance thereof.
1.10
DESIGN
OBLIGATIONS
It
is
expressly agreed and understood that the SELLER shall be solely responsible
for
all aspects of the design of the VESSEL, whether or not such design has been
approved by the BUYER and/or the Classification Society, and whether or not
such
design derives from drawings, plans calculations or other data supplied by
the
BUYER and/or any modification requests from the BUYER.
The
BUYER
shall be entitled to unrestricted use of the design documents of the VESSEL
as
listed in the Contract Specifications PART I - GENERAL, SECTION 9 PLANS, ETC.,
for any purpose.
1.11
SPARE
PARTS
The
SELLER shall furnish on board the VESSEL at the time of delivery of the VESSEL,
the spare parts and maintenance tools of the type, and in at least the specified
quantities, recommended by the makers of the machinery and equipment to which
they relate and/or required by the Classification Society or other regulatory
authorities. In the event that the quantity of spare parts and tools
specifically referred to in the Technical Specification are greater than the
specified quantities recommended by the makers and/or required by the
Classification Society, the Seller shall furnish the quantity of spare parts
and
tools referred to in the Technical Specification. The cost of the spare parts
and maintenance tools is included in the Contract Price.
The
SELLER shall be responsible at its own cost for receiving, indoor storage,
handling, bringing on board and storage on the VESSEL of all such spare parts
and maintenance tools under instruction and supervision of the Supervisor.
The
spare parts and maintenance tools furnished by the SELLER shall be properly
protected against physical decay, corrosion and mechanical damage and shall
be
properly listed so that replacements may be readily ordered.
During
the guarantee period as more specifically described in Article 9.1, the SELLER
may, with the prior written approval of the BUYER, use such of the spare parts
furnished to the VESSEL as the SELLER may require in order to remedy any defects
against which the VESSEL is guaranteed under Article 9. However, any such spare
parts so used by the SELLER during this period, shall at the SELLER’s sole cost
and expense be promptly replaced on board the VESSEL or be paid at BUYER’s
purchase cost for the same, including any freight costs.
2.
ARTICLE
II - CONTRACT PRICE & TERMS OF
PAYMENT
2.1
CONTRACT
PRICE
The
purchase price of the VESSEL is United States Dollars thirty-five million four
hundred and twenty thousand (US$ 35,420,000) only, net receivable by the SELLER
(hereinafter called the "Contract Price"),
which
is exclusive of the cost for the BUYER's supplies as provided in Article V
hereof, and shall be subject to upward or downward adjustment, if any, as
hereinafter set forth in this Contract.
2.2
CURRENCY
Any
and
all payments by the BUYER to the SELLER and vice-versa under this Contract
shall
be made in United States Dollars.
2.3
TERMS
OF PAYMENT
The
Contract Price shall be paid by the BUYER to the SELLER in instalments for
each
unit as follows:
(a)
1st
Instalment:
The
sum
of United States Dollars seven million (US$ 7,000,000) only, shall become due
and payable and be paid by the BUYER within five (5) New York business days
of
the later of:
1)
the date
on which the BUYER shall have received (A) the Refund Guarantee in respect
of
the 1st
instalment to be issued by one of (i) Bank
of
Communications (Beijing Branch) or (ii) Industrial and Commercial Bank of China
(Beijing Branch) in the SELLER’s option (hereafter the ”SELLER’s
Bank”) together with (B) documentary evidence from the SELLER’s Bank that this
has been duly registered with the State Administration for Foreign Exchange
(“SAFE”) as provided in Paragraph 7 of this Article; and
2) the
date
on which the BUYER shall have delivered to SELLER an original of the Letter
of
Guarantee issued by The Royal Bank of Scotland or other international bank
acceptable to the SELLER in accordance with Article II, Paragraph 6 hereof.
(b)
2nd
Instalment:
The
sum
of United States Dollars seven million (US$ 7,000,000) only, shall become due
and payable and be paid within five (5) New York business days of the later
of
(i)
the
date specified in Clause 3 of the Overall Agreement between the BUYER’s
parent company, TBS International Limited, and the SELLER concluded
on the
same date as this Contract (the “Overall Agreement”); and
(ii) the
date
of receipt by the BUYER of the Refund Guarantee to be issued by the SELLER’s
Bank in respect of the 2nd,
3rd
and
4th
instalments, together with documentary evidence from the SELLER’s Bank that this
has been duly registered with SAFE as provided in Paragraph 7 of this Article.
(c)
3rd
Instalment:
The
sum
of United States Dollars seven million (US$ 7,000,000),
shall
become due and payable and be paid within five (5) New York business days of
the
receipt by the BUYER of a telefax notice from the SELLER attaching a Stage
Certificate in the form of the draft attached as Exhibit “D”, countersigned by
the Classification Surveyor, certifying that the VESSEL’s keel has been laid
within the meaning of this Article 2.3.
“Keel
laying” shall
for the purposes of this Article be deemed to have taken place when the first
pre-fabricated hull block has been completed, surveyed, accepted by the
Classification Society and located in its final position in the building dock
or
slipway at the Shipyard.
(d)
4th
Instalment:
The
sum
of United States Dollars seven million (US$ 7,000,000) only, shall become due
and payable and be paid within five (5) New York business days of the receipt
by
the BUYER of a telefax notice from the SELLER attaching a Stage Certificate
in
the form of the draft attached as Exhibit “D”, countersigned by the
Classification Surveyor, certifying that the VESSEL has been successfully
launched.
(e)
5th
Instalment (Payment upon Delivery of the VESSEL):
The
sum
of United States Dollars seven million four hundred and twenty thousand (US$
7,420,000) only,
plus
any
increase or minus any decrease due to modifications and/or adjustments of the
Contract Price in accordance with the provisions of the relevant articles
hereof, shall become due and payable and be paid by the BUYER to the SELLER
concurrently with the delivery of the VESSEL.
(f)
The
SELLER shall notify the BUYER in writing fourteen (14) New York business days
in
advance of the expected due date of payment of the Second, Third, Fourth and
Fifth Instalments of the Contract Price referred to in Article 2.3.
2.4
METHOD
OF PAYMENT
(a)
1st
Instalment:
The
BUYER
shall remit the amount of this instalment in accordance with Article II,
Paragraph 3(a) by telegraphic transfer to the account of the SELLER’s bank (the
account number to be nominated by the SELLER).
(b)
2nd
Instalment:
The
BUYER
shall remit the amount of this instalment in accordance with Article II,
Paragraph 3(b) by telegraphic transfer to the account of the SELLER’s bank (the
account number to be nominated by the SELLER) or
through other receiving bank to be nominated by the SELLER from time to time
and
such nomination shall be notified to the BUYER at least ten (10) New York
business days prior to the due date for the payment.
(c)
3rd
Instalment:
The
BUYER
shall remit the amount of this instalment in accordance with the Article II,
Paragraph 3(c) by telegraphic transfer to the account of the SELLER’s bank (the
account number to be nominated by the SELLER) or
through other receiving bank to be nominated by the SELLER from time to time
and
such nomination shall be notified to the BUYER at least ten (10) New York
business days prior to the due date for the payment.
(d)
4th
Instalment:
The
BUYER
shall remit the amount of this instalment in accordance with Article II,
Paragraph 3(d) by telegraphic transfer to the account of the SELLER’s bank (the
account number to be nominated by the SELLER) or
through other receiving bank to be nominated by the SELLER from time to time
and
such nomination shall be notified to the BUYER at least ten (10) New York
business days prior to the due date for payment.
(e)
5th
Instalment (Payable upon Delivery of the VESSEL):
The
BUYER
shall, at least three (3) New York business days prior to the scheduled date
of
delivery of the VESSEL notified by the SELLER, make a cash deposit in the name
of the BUYER with the SELLER’s Bank for a period of thirty (30) days and
covering the amount of this instalment (as adjusted in accordance with the
provisions of this Contract), with instruction that the said amount shall be
released to the SELLER against presentation by the SELLER to the said bank,
of a
duplicate of the Protocol of Delivery and Acceptance signed by the BUYER's
authorized representative and the SELLER. Such deposit shall be on terms that
if
the duly executed Protocol of Delivery and Acceptance of the VESSEL has not
been
submitted to the SELLER’s bank within Twenty (20) New York business Days, the
deposit shall be returned to the BUYER together with any interest accrued
thereon.
2.5
PREPAYMENT
The
BUYER
shall have the right to make prepayment of any and all instalments before
delivery of the VESSEL, by giving to the SELLER at least thirty (30) days prior
written notice, without any price adjustment of the VESSEL for such
prepayment.
2.6
SECURITY
FOR PAYMENT OF INSTALMENTS BEFORE
DELIVERY
The
BUYER
shall, on or before 31st
March
2007, deliver to the SELLER an irrevocable and unconditional Letter of Guarantee
in a form annexed hereto as Exhibit "C" in favour of the SELLER issued by the
Royal Bank of Scotland or other first class international bank acceptable to
the
SELLER. This guarantee shall secure the Buyer's obligation for the payment
of
2nd,
3rd
and 4th
instalments of the Contract Price.
2.7
REFUNDS
All
payments made by the BUYER prior to the delivery of the VESSEL shall be in
the
nature of advance to the SELLER, and in the event this Contract is rescinded
by
the BUYER, all in accordance with the specific terms of this Contract permitting
such rescission, the SELLER shall refund to the BUYER in United States Dollars
the full amount of all sums already paid by the BUYER to the SELLER under this
Contract, together with interest (at the rate set out in respective provision
thereof) from the respective payment date(s) to the date of remittance by
telegraphic transfer of such refund to the account specified by the BUYER.
If
the SELLER is required to refund to the BUYER the instalments paid by the BUYER
to the SELLER as provided in this Article, the SELLER shall return to the BUYER
all of the BUYER's supplies as stipulated in Article V which were not
incorporated in the VESSEL and pay to the BUYER an amount equal to the cost
to
the BUYER of those supplies that were incorporated into the VESSEL. As security
to the BUYER and as a condition precedent to the payment of the 1st
pre-delivery instalment payable by the BUYER after the date of this Contract
in
accordance with Paragraphs 3 and 4 of this Article, the SELLER shall (i) deliver
to the BUYER a Refund Guarantee for the 1st
instalment to be issued by the SELLER’s Bank in the form annexed hereto as
Exhibit "A” and (ii) procure that the SELLER’s Bank shall provide to the BUYER
satisfactory evidence of registration of the relevant Refund Guarantee with
SAFE, the BUYER having no obligation to pay the 1st
pre-delivery instalment until such evidence has been received by the BUYER.
Further, as security to the BUYER and as a condition precedent to the payment
of
the 2nd
pre-delivery instalment payable by the BUYER in accordance with Paragraphs
3 and
4 of this Article, the SELLER shall (i) deliver to the BUYER a Refund Guarantee
for the 2nd,
3rd
and
4th
instalments to be issued by the SELLER’s Bank in the form annexed hereto as
Exhibit "B” and (ii) procure that the SELLER’s Bank shall provide to the BUYER
satisfactory evidence of registration of the relevant Refund Guarantee with
SAFE, the BUYER having no obligation to pay the 2nd
pre-delivery instalment until such evidence has been received by the
BUYER.
3.
ARTICLE
III - ADJUSTMENT OF THE CONTRACT
PRICE
The
Contract Price of the VESSEL shall be subject to adjustments as hereinafter
set
forth. It is hereby understood by both parties that any reduction of the
Contract Price under this Article is by way of liquidated damages and not by
way
of penalty.
3.1
DELIVERY
DATE
(a)
No
adjustment shall be made, and the Contract Price shall remain unchanged for
the
first thirty (30) days of delay in delivery of the VESSEL beyond the Delivery
Date as defined in Article VII hereof ending at twelve o'clock midnight New
York
time on the thirtieth (30th)
day of
delay.
(b)
If
the delivery of the VESSEL is delayed more than thirty (30) days after the
date
as defined in Article VII hereof, then, in such event, beginning at twelve
o'clock midnight New York time on the thirtieth (30th)
day
after the date on which delivery is required under this Contract, the Contract
Price of the VESSEL shall be reduced by deducting there from the sum of United
States Dollars two thousand five hundred (US$ 2,500) per day. Unless the parties
hereto agree otherwise, the total reduction in the Contract Price shall be
deducted from the Fifth Instalment of the Contract Price and in any event
(including the event that the BUYER consents to take the VESSEL at the later
delivery date after the expiration of two hundred and thirty (230) days delay
of
delivery as described in Paragraph 1(c) of this Article) shall not be more
than
two hundred (200) days at the above specified rate of reduction after the thirty
(30)days allowance, that is United States Dollars five hundred thousand only
(US$ 500,000) being the maximum.
(c)
If
the delay in the delivery of the VESSEL continues for a period of Two hundred
and thirty (230) days (being the total of non-permissible delays) after the
Delivery Date as defined in Article VII, then in such event, the BUYER may,
at
its option, rescind this Contract in accordance with the provisions of Article
X
of this Contract. The SELLER may at any time after the expiration of the
aforementioned two hundred and thirty (230) days, if the BUYER has not served
notice of rescission pursuant to Article X of this Contract, notify the BUYER
of
the date upon which the SELLER estimates the VESSEL will be ready for delivery
and demand in writing that the BUYER makes an election, in which case the BUYER
shall, within thirty (30) days after such demand is received by the BUYER,
either notify the SELLER of its decision to rescind this Contract, or consent
to
take delivery of the VESSEL at an agreed future date, it being understood and
agreed by the parties hereto that, if the VESSEL is not delivered by such future
date, the BUYER shall have the same right of rescission upon the same terms,
as
hereinabove provided.
(d)
For
the purpose of this Article, the delivery of the VESSEL shall not be deemed
delayed and the Contract Price shall not be reduced when and if the Delivery
Date of the VESSEL is extended by reason of causes and provisions of Articles
V,
XI, XII and XIII hereof. The Contract Price shall not be adjusted or reduced
if
the delivery of the VESSEL is delayed by reason of permissible delays as defined
in Article VIII hereof.
3.2
SPEED
(a)
The
Contract Price of the VESSEL shall not be affected nor changed by reason of
the
actual speed (as determined by the Trial Run after correction according to
the
Specifications) being less than five tenths (5/10) of one knot below the
Guaranteed Speed.
(b)
However, commencing with and including a deficiency of five tenths (5/10) of
one
knot in actual speed (as determined by the Trial Run after correction according
to the Specifications) below the Guaranteed Speed as specified in Paragraph
4,
Article I of this Contract, the Contract Price shall be reduced as follows:
In
case
of deficiency:
at
or
above 0.50 but below 0.60 knot US$ 5,000
at
or
above 0.60 but below 0.70 knot US$ 10,000
at
or
above 0.70 but below 0.80 knot US$ 15,000
at
or
above 0.80 but below 0.90 knot US$ 20,000
at
or
above 0.90 but below 1.00 knot US$ 25,000
at
or
above 1.00 knot US$ 30,000
(c)
If
the deficiency in actual speed (as determined by the Trial Run after correction
according to the Specifications) of the VESSEL upon the Trial Run, is 1.00
knot
or more than 1.00 knot below the Guaranteed Speed, then the BUYER may at its
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