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                                                                   EXHIBIT 10.43


                                    CONTRACT

                                     FOR THE

                              CONSTRUCTION AND SALE

                                      OF A

                              JACK-UP DRILLING UNIT

                                 (HULL NO. 2002)

                                      DATED

                                 1 FEBRUARY 2001

<PAGE>   2
                                      INDEX

<TABLE>
<CAPTION>
ARTICLE         SUBJECT                                    PAGE
-------         -------                                    ----

<S>                                                        <C>
I               DESCRIPTION AND CLASSIFICATION              1

II              CONTRACT PRICE AND TERMS OF PAYMENT         3

III             DELAYS IN PERFORMANCE                       8

IV              APPROVAL OF PLANS AND DRAWINGS AND
                INSPECTION DURING CONSTRUCTION              10

V               MODIFICATIONS                               13

VI              TESTS AND TRIALS                            16

VII             DELIVERY DATE AND DELIVERY                  19

VIII            FORCE MAJEURE DELAYS                        24

IX              OWNER FURNISHED EQUIPMENT DELAYS            25

X               WARRANTY OF QUALITY                         26

XI              CANCELLATION BY BUYER                       28

XII             SUSPENSION BY BUYER                         30

XIII            BUYER'S DEFAULT                             32

XIV             BUILDER'S DEFAULT                           34

XV              LIABILITIES AND INDEMNITIES                 37

XVI             INSURANCE                                   39

XVII            DISPUTE AND ARBITRATION                     42

XVIII           RIGHTS OF ASSIGNMENT AND VESSEL RECIPIENT
                DESIGNATION                                 43

XIX             TAXES AND DUTIES                            44

XX              PATENTS, TRADEMARKS, COPYRIGHTS, ETC.       44
</TABLE>

<PAGE>   3
                                     INDEX

<TABLE>
<CAPTION>
ARTICLE         SUBJECT                                    PAGE
-------         -------                                    ----

<S>                                                        <C>
XXI             ADDRESSES                                   45

XXII            NOTICES AND LANGUAGE                        46

XXIII           EFFECTIVE DATE OF CONTRACT                  46

XXIV            INTERPRETATION                              46

XXV             CONFLICT AND AUDIT                          47

XXVI            PUBLICITY RELEASES                          49

EXHIBIT "A"     SCHEDULE OF LABOR AND MATERIAL RATES

EXHIBIT "B"     PROTOCOL OF DELIVERY AND ACCEPTANCE

EXHIBIT "C-1"   IRREVOCABLE STAND-BY LETTER OF CREDIT

EXHIBIT "C-2"   ON DEMAND PERFORMANCE BOND

EXHIBIT "D"     CONTRACT SPECIFICATIONS

EXHIBIT "E"     CONTRACT DRAWINGS LIST
</TABLE>

<PAGE>   4

                    CONTRACT FOR THE CONSTRUCTION AND SALE OF
                             A JACK-UP DRILLING UNIT
                                 (HULL NO. 2002)

THIS CONTRACT, made effective this 1st day of February, 2001 by and between PPL
Shipyard Pte. Ltd., a company organized and existing under the laws of
Singapore, having its principal place of business located at 21 Pandan Road,
Singapore 609273 (hereinafter called the "BUILDER") and Santa Fe International
Corporation, a corporation organized and existing under the laws of the Cayman
Islands, with an office at 5420 LBJ Freeway, Suite 1100, Dallas, Texas 75240,
U.S.A. (hereinafter called the "BUYER" or "OWNER").

                                   WITNESSETH:

     WHEREAS, the BUILDER agrees to furnish all necessary labor and materials to
design, construct, equip, complete and test, at its shipyard located at 21
Pandan Road, Singapore 609273 (hereinafter called the "Shipyard") and sell and
deliver afloat at the Shipyard to the BUYER one (1) Freide and Goldman JU2000
jack-up drilling unit more fully described in Article I hereof (hereinafter
called the "VESSEL); and

     WHEREAS, the BUYER agrees to purchase and accept delivery of the VESSEL at
the Shipyard from the BUILDER and to pay for the same, all upon the terms and
conditions hereinafter set forth.

     NOW, THEREFORE, undertaking to perform each party's responsibilities and to
exercise each party's rights with good faith in interpreting this Contract and
the Specifications, the parties hereby agree, in consideration of the mutual
promises and covenants hereinafter contained, as follows:

                   ARTICLE I - DESCRIPTION AND CLASSIFICATION

1.   Description:

     The VESSEL shall have the BUILDER's Hull No. 2002 and shall be designed,
constructed, equipped and completed in accordance with the provisions of (i)
this Contract, and (ii) the Contract Specifications attached to this Contract as
Exhibit "D" and the Contract Drawings attached to this Contract as listed in
Exhibit "E" (herein collectively called the "Specifications") signed by each of
the parties hereto for identification on even date herewith and incorporated by
reference and made an integral part hereof.

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2.   Dimensions and Characteristics:

     The VESSEL is a Freide and Goldman JU2000 jack-up drilling unit which will
bear BUILDER's Hull No. 2002 of approximate dimensions 231 feet long, 250 feet
wide and 31 feet deep at the side. The details of the above particulars as well
as the definitions and method of measurements and calculations are as indicated
in the Specifications.

3.   Classification, Rules and Regulations:

     The VESSEL (including its machinery, equipment and outfitting) shall be
constructed in accordance with good shipbuilding practices and with the American
Bureau of Shipping's, (herein called the "Classification Society") Rules for
Building and Classing Mobile Offshore Drilling Units (the edition and amendments
thereto being in force as of the date of this Contract), the IMO MODU Code 1989,
and other such specific requirements as are set out in this Contract and the
Specifications, and the BUYER's satisfaction. Decisions of the Classification
Society as to compliance or non-compliance with the Classification shall be
final and binding upon both parties hereto.

     The VESSEL shall also meet all requirements of the rules, regulations and
requirements of the International Loadline Convention and other regulatory
bodies as described in the Specifications in effect as of the date of this
Contract. All fees and charges incidental to the classification and with respect
to meeting the requirements of the above-referenced rules, regulations and
requirements, as well as design fees and/or royalties shall be for the account
of BUILDER.

4.   Registration:

     The VESSEL shall be registered by the BUYER at its own cost and expense
under the laws of the Republic of Vanuatu with its home port at Port Vila, or
such other place as the BUYER shall designate at the time of its delivery and
acceptance hereunder. In addition, the BUYER reserves the right, at its sole
discretion, to register the VESSEL under construction at its own cost and
expense under the Laws of the Republic of Vanuatu or such other place as the
BUYER may deem appropriate, at any time following payment of the first
installment of the Contract Price.

5.   Subcontracting:

     The BUILDER may, with BUYER's written approval, which shall not be
unreasonably withheld, at its sole discretion and responsibility subcontract any
portion of the construction work of the VESSEL which is to be performed within
the Republic of Singapore. Subject to BUYER's written approval, the BUILDER may,
at its sole discretion and responsibility, subcontract any portion of the
construction work of the VESSEL which is to be performed outside the Republic of
Singapore. In any event, BUILDER shall retain full responsibility and liability

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<PAGE>   6

as if it did the work itself for any subcontracted work, including warranties,
guarantees and schedule.

6.   Permits and Observance of Applicable Laws:

     BUILDER warrants that it is duly authorized with all applicable licenses
(including but not limited to those required in respect of the Freide and
Goldman JU2000 design) to construct, equip, complete, sell and perform the
entirety of the work covered hereby and to deliver the VESSEL as provided for
herein and that it will obtain in a timely manner all necessary permits,
licenses, and authorizations required for performing such work and making such
delivery. BUILDER further warrants that it and all of its subcontractors will
observe all applicable laws, orders, decrees, ordinances, rules and regulations
of the country of construction and of its subdivisions and all duly constituted
government agencies having jurisdiction.

7.   Design Responsibilities

     It is expressly agreed and understood that the BUILDER shall be exclusively
responsible for all aspects of the design and engineering required in respect of
the construction, equipment and completion of the VESSEL in accordance with the
provisions of this Contract and the Specifications. The BUILDER shall
accordingly be responsible for any additional costs and expenses of
construction, equipment and completion of the VESSEL beyond those originally
envisaged at the time of signature hereof which result from any deficiency or
shortcoming in the Freide and Goldman JU2000 design or any design or engineering
undertaken to develop the same for the purposes of performance of this Contract.

     However, the environmental ratings contained in Section 1.5 of the
Specifications may be amended by official letter from ABS following their
detailed review of the design. Such amendments, if any, will be deemed to be
retroactively incorporated into Section 1.5 of the Specifications. The BUILDER
shall be responsible for not exceeding the weights and heights of the vertical
centers of gravity contained in Section 1.5.8 of the Specifications.

8.   Notwithstanding any other provision of this Contract, specifically
including but not limited to the Effective Date as defined in Article XXIII,
BUILDER shall not commence construction of the VESSEL under this Contract prior
to 1 February 2002 (the "Construction Commencement Date").

                ARTICLE II - CONTRACT PRICE AND TERMS OF PAYMENT

1.   Contract Price:

     The contract price of the VESSEL is Seventy Million Eight Hundred
Ninety-Seven Thousand United States Dollars (U.S. $70,897,000), receivable by

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the BUILDER (herein called the "Contract Price"), subject to upward or downward
adjustment, if any, as set forth in this Contract. Provided, however, that the
Contract Price shall be reduced by One Million Four Hundred Fifty-Two Thousand
United States Dollars (U.S.$1,452,000) if the BUYER elects to reduce the
VESSEL's leg length by fifty-six (56) feet should BUYER give notice of such
election to BUILDER no later than ninety-one (91) calendar days after the
Construction Commencement Date. Should BUYER give BUILDER later notice at any
time up until the last fifty-six (56) feet of the leg sections begin to be
installed on the VESSEL, then the Contract Price shall be reduced by Seven
Hundred Two Thousand United States Dollars (U.S.$702,000) and BUYER shall have
ownership of the leg chord material with BUILDER having ownership of the leg
bracing material.

2.   Currency:

     Any and all payments required to be made by either party under this
Contract shall be made in United States Dollars. Payments required to be made by
BUYER to BUILDER shall be made as follows:

                           Citibank N.A., New York
                           For Account Citibank N.A., Singapore
                           Favoring:  PPL Shipyard Pte. Ltd.
                           USD Account Number: 0-812872-028

3.   Terms of Payment:

     The Contract Price shall be paid by the BUYER to the BUILDER in
installments as follows:

(a)  1st Installment:

     The sum of Seven Million Eighty-Nine Thousand Seven Hundred United States
     Dollars (U.S.$7,089,700), equivalent to ten percent (10%) of the Contract
     Price shall be paid upon the second banking day next following the
     Construction Commencement Date or BUILDER's delivery of both the
     irrevocable standby letter of credit and the on demand performance bond to
     the BUYER as required under Article XI, Paragraph 2, whichever occurs
     later.

(b)  2nd Installment:

     The sum of Fourteen Million One Hundred Seventy-Nine Thousand Four Hundred
     United States Dollars (U.S.$14,179,400), equivalent to twenty percent (20%)
     of the Contract Price shall be paid upon the second banking day next
     following laying the keel of the VESSEL, which shall be deemed to require
     completion of the following tasks:

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<PAGE>   8

     o    Erection of completed inner bottom blocks 1C1 and 1C2 and associated
          piping, 100% complete including successful NDT, and:

          o    Complete procurement of all main hull structure steel.

          o    Completion of fabrication / assembly of bulkheads for blocks 1C1
               and 1C2, 100% complete including successful NDT.

          o    Completion of fabrication / assembly of inner bottom block panels
               1C3, 100% complete including successful NDT.

          o    Completion fabrication / assembly of bulkheads for block 1C3,
               100% complete including successful NDT.

(c)  3rd Installment

     The sum of Fourteen Million One Hundred Seventy-Nine Thousand Four Hundred
     United States Dollars (U.S.$14,179,400), equivalent to twenty percent (20%)
     of the Contract Price shall be paid upon the second banking day next
     following completion of the three leg well modules, which shall be deemed
     to require completion of the following tasks:

     o    Completion of fabrication / assembly of the three leg well blocks 5, 6
          and 7, 100% complete including successful NDT, including:

          o    Completion of fabrication / assembly of the three spud cans, 100%
               complete including successful NDT.

          o    Completion of fabrication / assembly of inner bottom blocks 1FS,
               1AS, 1FP and 1AP, 100% complete including successful NDT.

          o    Completion fabrication / assembly of bulkheads for blocks 1FS,
               1AS, 1FP and 1AP, 100% complete including successful NDT.

          o    Completion of erection of center block 1C1/1C2, 1C3, 100%
               complete including successful NDT.

          o    Completion of fabrication / assembly of inner bottom blocks 8, 9,
               11 and 12, 100% complete including successful NDT.

          o    Completion fabrication / assembly of bulkheads for blocks 8, 9,
               11 and 12, 100% complete including successful NDT.

          o    100% completion of detailed engineering drawings for
               architectural outfitting and 60% of completion of mechanical
               drawings.

(d)  4th Installment

     The sum of Ten Million Six Hundred Thirty-Four Thousand Five Hundred Fifty
     United States Dollars (U.S.$10,634,550), equivalent to fifteen percent
     (15%) of the Contract Price shall be paid upon the second banking day next
     following installation of the first section of all three (3) legs on the

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     VESSEL, which shall be deemed to require completion of the following tasks:

     o    Completion of erection and weld out of all three 1st leg rounds to the
          completed spud cans, 100% complete including successful NDT sign off
          of the connection Work, and:

          o    Completion fabrication / assembly /machine / erection jack
               foundations and bracing all three leg wells, 100% complete
               including successful NDT.

          o    Completion fabrication / assembly / erection accommodation
               blocks, 100% complete including successful NDT.

          o    Completion fabrication / assembly helicopter deck and support
               structure, 100% complete including successful NDT.

          o    Completion fabrication / paint / installation steel outfitting
               below main deck, 100% complete including successful NDT.

          o    Complete blast and paint quarters.

          o    Completion erection of all remaining inner bottoms and bulkheads,
               100% complete including successful NDT.

          o    100% completion of detailed engineering drawings for structural,
               70% completion for steel outfitting, piping and electrical.

          o    Complete installation electrical cable ways hull, quarters.

(e)  5th Installment

     The sum of Ten Million Six Hundred Thirty-Four Thousand Five Hundred Fifty
     United States Dollars (U.S.$10,634,550), equivalent to fifteen percent
     (15%) of the Contract Price shall be paid upon the second banking day next
     following launching of the VESSEL which shall be deemed to require
     completion of undocking and jackup the VESSEL along side of wharf,
     including:

          o    Complete consolidation of vesseL hull, proven integrity of hull
               compartments.

          o    Complete installation quarters equipment.

          o    Completion fabrication / assembly cantilever structure, 100%
               complete including successful NDT.

          o    Completion fabrication / assembly / erection drill floor /
               substructure, drawworks shelter / windwall and lower derrick.

          o    Complete fabrication / assembly 2nd and 3rd round of legs.

          o    Complete fabrication / paint / installation of steel outfitting
               and piping helideck, quarters.

          o    Complete installation machinery deck, intermediate deck and
               jacking equipment.

          o    Complete fabrication / installation of HVAC ducting in hull.

          o    Complete fabrication / paint / installation piping systems above
               / below main deck, quarters.

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          o    Complete hydro test / flushing hull and quarters piping systems.

          o    Complete fabrication / installation HVAC ducting in accommodation
               blocks.

(f)  6th Installment

     The sum of Seven Million Eighty-Nine Thousand Seven Hundred United States
     Dollars (U.S.$7,089,700), equivalent to ten percent (10%) of the Contract
     Price shall be paid upon the second banking day next following installation
     of the legs on the VESSEL which shall be deemed to require completion of
     the following tasks:

     o    Complete fabrication / assembly and erection of 2nd, 3rd, 4th, 5th and
          6th leg rounds for all 3 legs, 100% complete including successful NDT
          sign off of the connection Work, including:

          o    Complete erection derrick.

          o    Complete erection helideck, cantilever, drill floor on main hull.

          o    Complete installation helideck, drill floor and cantilever
               equipment.

          o    Complete hydro test deep tanks.

          o    Complete installation maindeck equipment.

          o    Complete blast and paint cantilever, drill floor.

          o    Complete hull installation hull and accommodation architectural
               outfitting.

          o    Complete mechanical completion, test and commissioning Marine
               systems.

          o    Complete fabrication / paint / installation piping systems
               cantilever and drill floor piping systems.

          o    Complete installation electrical cable ways helideck, cantilever
               and drill floor.

          o    Complete blast and paint drill floor, helideck and cantilever.

          o    Complete fabrication / paint / installation steel outfitting at
               maindeck and drill floor.

          o    Complete fabrication / installation / hydro test piping systems
               in spud cans, legs.

          o    Complete hydro test flushing helideck, cantilever and drill floor
               piping systems.

(g)  7th Installment

     The sum of Seven Million Eighty-Nine Thousand Seven Hundred United States
     Dollars (U.S.$7,089,700), equivalent to ten percent (10%) of the Contract
     Price, plus any increase or minus any decrease due to adjustments of the
     Contract Price hereunder, shall be paid upon the second banking day next
     following completion of the following tasks:

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     o    Complete install / terminate entire vessel electrical cables.

     o    Complete test and commissioning drilling systems, jacking trials and
          incline experiment.

     o    Completion of compartment closeout and all the VESSEL works.

     o    Completion of all commissioning, tests and trials.

     o    Completion of all discrepancy punch lists.

     o    Completion of all certification and documentation.

     o    Complete VESSEL preparations necessary for load out.

     o    Complete loading of all VESSEL materials and warehouse.

     o    Completion and delivery of all Delivery Documentation.

     and execution by the parties of the PROTOCOL OF DELIVERY AND ACCEPTANCE
     pursuant to Article VII(2) hereof.

     For avoidance of doubt and for purposes of satisfying the intent of each of
the above-described payment milestone events, they shall not be deemed to have
been fulfilled until such time as all prerequisite tasks and activities
associated with such milestone as described on the BUILDER's Construction
Schedule have been fully completed.

     As used herein, the term "banking day" shall mean any day in which
commercial banks are open for business in Texas or New York and Singapore.

     At least two (2) banking days in advance of the due date of each
installment payment, BUILDER shall give both the BUYER and the BUYER's
Representative written notice by facsimile or registered mail. Each installment
notice shall state: (i) the stage of work achieved as defined by the BUILDER's
Construction Schedule as defined in Article IV, Paragraph 1(c); (ii) that the
work completed complies with the Plans, Specifications and this Contract; (iii)
that there are no liens or claims upon the VESSEL. Each installment notice shall
be executed by an officer of the BUILDER. If BUILDER has any outstanding liens
on the VESSEL, BUYER shall not be obligated to make such payments until the
liens are resolved.

                       ARTICLE III - DELAYS IN PERFORMANCE

1.   Delivery:

(a)  If any delay in construction of the VESSEL, excepting only Permissible
     Delays, should continue for a period of one hundred eighty (180) calendar
     days during construction (as determined by reference to the BUILDER's
     Construction Schedule defined in Article IV, Paragraph 1 (c)), then in such

                                       8
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     event, the BUYER may at its option cancel this Contract at any time
     thereafter in accordance with the provisions of Article XI hereof. The
     BUILDER may, at any time after the expiration of the aforementioned one
     hundred eighty (180) calendar days of delay during construction, if the
     BUYER has not served notice of cancellation as provided in Article XI
     hereof, demand in writing that the BUYER shall make an election, in which
     case the BUYER shall, within thirty (30) calendar days after such demand is
     delivered to the BUYER, notify the BUILDER of its intention either to
     cancel this Contract or to consent to the acceptance of the VESSEL at an
     agreed future date; it being understood by the parties hereto that, if the
     VESSEL is not delivered by such future date or if construction is again
     delayed for one hundred eighty (180) calendar days or more (as determined
     by reference to the BUILDER's Construction Schedule defined at Article IV,
     Paragraph 1(c)), the BUYER shall have the same right of cancellation upon
     the same terms and conditions as hereinabove provided.

(b)  If the VESSEL is not delivered by the thirty-first (31st) calendar day
     after the Delivery Date (as such term is defined in Article VII, Paragraph
     1(a)) for any reason, excepting only force majeure delays (as defined in
     Article VIII) and Permissible Delays as defined in Paragraph 2, below, then
     in such event, the BUYER may at its option cancel this Contract at any time
     thereafter in accordance with the provisions of Article XI hereof.

(c)  If delivery of the VESSEL is delayed more than thirty-one (31) calendar
     days after the Delivery Date as defined in Article VII below, then, in such
     event, beginning at twelve o'clock midnight of the thirty-first (31st)
     calendar day after the Delivery Date, the amount otherwise due as the final
     installment shall be reduced by deducting therefrom the sum of Thirty
     Thousand United States Dollars (U.S.$30,000) per calendar day, provided
     that the amount of such reduction shall not exceed One Million Eight
     Hundred Thousand United States Dollars (U.S.$1,800,000). In the event the
     amount of reduction as aforesaid exceeds the sum due as the final
     installment, the excess portion shall be paid to BUYER by BUILDER on the
     actual delivery date of the VESSEL by BUILDER to BUYER (it being understood
     by both parties that any such reduction of payment by BUYER is by way of
     liquidated damages and not by way of penalty).

2.   Definition of Permissible Delay:

     Only such delays as are specifically defined in Article V, Paragraphs 1, 2
and 3, Article VI, Paragraph 2, Article IX, Article XII, Paragraph 2, and
Article XIII, Paragraph 1 of this Contract shall be "Permissible Delays".
Notwithstanding any provision to the contrary in this Contract, if any
Permissible Delay would not have come about but for the prolongation of the work
of construction due to any previous unauthorized delays (or accumulation
thereof), then the latter delay shall not be deemed to be a Permissible Delay.

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3.   Effect of Cancellation:

     It is expressly understood and agreed by the parties hereto that in any
case, if the BUYER cancels this Contract under this Article, the BUYER shall not
be entitled to any liquidated damages.

                   ARTICLE IV - APPROVAL OF PLANS AND DRAWINGS
                       AND INSPECTION DURING CONSTRUCTION

1.   Approval of Plans, Drawings and BUILDER's Construction Schedule:

(a)  The BUILDER shall submit to either the BUYER or its Representative (as
     defined in Article IV, Paragraph 2) four (4) copies each of the plans and
     drawings for BUYER's approval. The BUILDER shall simultaneously submit to
     the Classification Society and other applicable agencies the plans and
     drawings which require their approval. The BUYER or its Representative
     shall, within ten (10) working days after receipt thereof, return to the
     BUILDER one (1) copy of such plans and drawings with the BUYER's approval
     or comments, if any, written thereon. If comments are received the BUILDER
     shall modify the plans and drawings in accordance with the BUYER's comments
     and resubmit same to the BUYER. Final approval or additional comments for
     such revised plans or drawings must be given within ten (10) working days
     after receipt by the BUYER or its Representative of the BUILDER's revised
     plans and drawings. A list of the plans and drawings to be submitted to the
     BUYER or its Representative by BUILDER, as aforesaid, and a schedule for
     submission of plans and drawings to BUYER for approval shall be mutually
     agreed upon between the parties hereto within thirty (30) calendar days of
     the Construction Commencement Date.

(b)  When and if the BUYER's Representative shall have arrived at the Shipyard
     in accordance with Paragraph 2 of this Article, the BUILDER may submit the
     remainder, if any, of the plans and drawings in the agreed list in
     accordance with the agreed schedule, to the Representative for his approval
     upon mutual written agreement between the parties hereto. The
     Representative shall, within ten (10) working days after receipt thereof,
     return to the BUILDER one (1) copy of such plans and drawings with his
     approval or comments, if any, written thereon. Approval by the
     Representative of the plans and drawings duly submitted to him shall be
     deemed to be approved by the BUYER for all purposes of this Contract.

(c)  The BUILDER shall, within thirty (30) calendar days after the Construction
     Commencement Date, furnish the BUYER or the Representative a detailed key
     event construction schedule showing planned construction progress of the
     VESSEL. After approval of the construction schedule by

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<PAGE>   14

     the BUYER or the Representative within ten (10) working days after receipt
     thereof, the construction schedule (herein called either the "BUILDER's
     Construction Schedule" or the "Production Construction Schedule") shall be
     the basis of interpretation of actual construction progress of the VESSEL.

(d)  BUYER's approval as aforesaid shall not serve to eliminate or reduce the
     obligations of the BUILDER elsewhere contained in this Contract.

2.   Appointment of BUYER's Representative:

     The BUYER may send to and maintain at the Shipyard, at the BUYER's own cost
and expense, a representative (herein called the "Representative") who shall be
duly authorized in writing by the BUYER to act on behalf of the BUYER in
connection with modifications of the Specifications, adjustments of the Contract
Price and the Delivery Date, approval of certain plans and drawings,
confirmation of the BUILDER's Construction Schedule, and attendance at the tests
and inspections relating to the VESSEL, for which he is specifically authorized
by the BUYER. The Representative and his assistant(s) shall at all times be
deemed to be employees of the BUYER and not of the BUILDER.

3.   Inspection by Representative:

     The necessary inspection of the VESSEL shall be carried out by the BUYER's
Representative, the Classification Society, other regulatory bodies and the
inspection team of the BUILDER throughout the entire period of construction, in
order to ensure that construction of the VESSEL is duly performed in accordance
with this Contract and the Specifications. During construction of the VESSEL the
Representative shall have the right to inspect all work in process, wherever in
the BUILDER's facilities, or any of BUILDER's subcontractors' facilities, and to
attend all tests and inspections of the VESSEL. The BUILDER's inspection
organization shall not report directly to BUILDER's engineering or production
organizations, and shall have a direct line of responsibility to BUILDER's
executive management.

     The BUILDER shall give notice to the Representative at least one working
day (24 hours) in advance of the date and place of such tests and inspections to
be attended by him. Failure of the Representative to be present at such tests
and inspections, without justifiable reason, after due notice to him as above
provided shall be deemed to be a waiver of his right to be present. In such
case, the BUYER shall be obligated to accept the results of such tests or
inspections on the basis of the BUILDER's certificate, subject to any required
approval of the Classification Society. Notwithstanding any provision to the
contrary in this Contract, the presence or absence of BUYER's Representative
from any such tests or inspections shall not serve to eliminate or reduce the
obligations of the BUILDER elsewhere contained in this Contract.

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     In the event that the Representative discovers any construction or material
or workmanship which is not deemed to conform to the requirements of this
Contract and/or the Specifications, the Representative shall promptly give the
BUILDER notice in accordance with Article XXII as to such nonconformity. Upon
receipt of such notice from the Representative, the BUILDER shall promptly
correct such nonconformity. In all working hours during the construction of the
VESSEL until delivery thereof, the Representative and his assistants shall be
given free and ready access to the VESSEL, its equipment and accessories, and to
any other place where work is being done or materials are being processed or
stored in connection with the construction of the VESSEL, including the yards,
workshops, stores and offices of the BUILDER, and the premises of subcontractors
of the BUILDER who are doing work or storing materials in connection with the
VESSEL's construction.

     If the BUILDER's Quality Assurance and Quality Control is found to miss a
number of major discrepancies during the construction, the BUYER may as it may
deem appropriate supplement the Quality Control coverage by contracting for an
independent service. BUILDER shall be obligated to pay for all costs for the
third party services and shall make necessary corrections or repairs to the
construction for discrepancies discovered by the independent third party as if
the discrepancies were found by BUILDER's own Quality Assurance and Quality
Control organization.

4.   Facilities:

     The BUILDER shall furnish, at BUILDER's expense and free of charge to
BUYER, the Representative and his assistant(s) with adequate office space and
such other reasonable facilities according to the Specifications in the Shipyard
as may be necessary to enable them to effectively carry out their duties.

5.   Responsibility of BUYER:

     The BUYER's Representative shall carry out his duties hereunder in
accordance with good shipbuilding practice and in such a way as to avoid any
unnecessary increase in building cost or delay in the BUILDER's Construction
Schedule.

     The BUYER has the right to request that BUILDER replace any employee or
subcontractor who is deemed unsuitable and unsatisfactory for the proper
progress of the VESSEL's construction. The BUILDER shall promptly effect such
replacement.

6.   Key Personnel:

     All Key Personnel of BUILDER who are assigned to the design, procurement
and construction of the VESSEL shall have experience on BUILDER'S prior new
build drilling units, or they shall have prior construction

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<PAGE>   16

experience on similar drilling units. In addition BUILDER agrees not to replace
previously accepted Key Personnel without the prior written consent of BUYER,
which will not be unreasonably withheld. Key Personnel shall be defined as
engineering and supervisory personnel of the level of foreman and above.

                            ARTICLE V - MODIFICATIONS

1.   Modification of Specifications:

     Within thirty-four (34) calendar days of the Construction Commencement
Date, the Specifications may be modified and/or changed by BUYER as respects
machinery arrangements and/or systems installations without altering the
Contract Price or the Delivery Date if such modifications or changes do not
necessitate structural changes.

     The Specifications may also be otherwise modified and/or changed at any
time by written agreement of the parties hereto, provided, that the BUYER and
the BUILDER shall first agree to alterations in the Contract Price and the
Delivery Date, if any, occasioned by or resulting from such modifications and/or
changes. Any such alterations in the Delivery Date as may be mutually agreed in
writing shall be understood to be Permissible Delays as contemplated by Article
III, Paragraph 2. In the event the parties are unable to agree upon such
alteration, if any, to the Contract Price or the Delivery Date, BUILDER shall
proceed with such modification or change and any area of disagreement that
cannot subsequently be resolved between BUILDER and BUYER shall be resolved in
accordance with Paragraph 4 of this Article. Within fifteen (15) calendar days
of BUYER's notification to BUILDER to proceed with modifications or changes to
the Specifications, BUILDER shall notify BUYER in writing of any such
modifications or changes that will have an impact on the Contract Price and/or
the Delivery Date or which otherwise would require issuance of a Change Order to
this Contract, including complete details of the nature of such impact. Failure
of BUILDER to so notify BUYER shall be deemed a waiver of BUILDER's right to
subsequently claim for any change in the Contract Price or the Delivery Date or
issuance of any Change Order associated with such modifications or changes.

     Such agreement shall be effected by exchange of letters signed by the
authorized representatives of the parties hereto, which shall constitute
amendments to this Contract and/or Specifications.

     The BUILDER may make minor changes to the Specifications, if found
necessary for introduction of improved production methods or otherwise, provided
that the BUILDER shall first obtain the BUYER's written approval thereof.

2.   Change in Class, etc.:

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<PAGE>   17

     In the event that, after the Construction Commencement Date of the first
JU2000 jack-up drilling unit to be constructed by BUILDER for BUYER, any
requirements as to Class, or as to rules and regulations to which the
construction of the VESSEL is required to conform are altered or changed by the
Classification Society or other regulatory bodies authorized to make such
alterations or changes, then either of the parties hereto, upon receipt of such
information from the Classification Society or such other regulatory bodies,
shall promptly transmit the same to the other in writing, and the BUILDER shall
thereupon incorporate such alterations or changes into the construction of the
VESSEL. Any alterations in the Delivery Date as may be mutually agreed in
writing as a result of such changes shall be understood to be Permissible Delays
as contemplated by Article III, Paragraph 2. However, in the event the parties
are unable to agree upon any adjustment to the Contract Price or the Delivery
Date, BUILDER shall proceed with such alterations and/or changes, as aforesaid,
and any area of disagreement that cannot subsequently be resolved between BUYER
and BUILDER shall be resolved in accordance with Paragraph 4 of this Article.

3.   Changes and/or Modifications on a Time and Material Basis:

     In the event the parties agree in writing that any changes, modifications
or alterations are to result in an adjustment of the Contract Price on a time
and materials basis, the labor and material rates applicable thereto shall be as
specified in Exhibit "A" and any change in schedule as may be agreed in writing
shall be understood to constitute Permissible Delays as contemplated in Article
III, Paragraph 2.

     Documentation of Reimbursable Costs:

     The following documentation for reimbursable costs is required to be
     submitted with all invoices:

     1.   All labor charges must be supported by original time sheets submitted
          with BUILDER's invoice.

     2.   The time sheet shall include at a minimum the following information:
          date Work was performed; name of employee; hours worked; pay
          classification of worker; and work order number or other reference to
          the specific work performed on BUYER's behalf.

     3.   Original time sheet shall be signed by a field representative of
          BUYER. Time sheets without field approval shall be subject to
          non-reimbursement by BUYER, at BUYER's discretion.

     4.   Materials purchased from third parties shall be supported by the
          original third party invoice.

                                       14
<PAGE>   18

     5.   Invoice shall have a copy of the check on which the payment was made,
          or a reference to the check number or other identifying reference if
          paid by another method, such as wire transfer.

     6.   Amounts reimbursed shall be net of any discounts or rebates received
          by BUILDER.

     7.   Invoices for items purchased from companies affiliated with BUILDER
          shall be so identified.

     8.   Unit prices shall be supported by quantity reports signed by BUYER's
          representative indicating the units (quantity) or Work
          performed/provided to which the unit prices apply.

4.   Disputes Concerning Changes or Modifications:

     In the event BUYER desires to implement any modifications, changes or
alterations as contemplated under Paragraphs 1, 2 or 3 of this Article and the
parties are unable to agree upon the adjustment in the Contract Price and/or
Delivery Date, if any, BUYER may elect to instruct BUILDER in writing to proceed
with such modifications, changes or alterations and the BUILDER shall promptly
comply with such instruction. In connection with change orders as to which the
parties are unable to agree, BUYER shall have the right to audit at its expense,
either by representative confirmation or original documents, such as time and
material records, or by independent public accountant (or both) all of BUILDER's
records in connection with charges and process of construction. The
determination of the adjustment in the Contract Price and/or Delivery Date
associated with any such alterations and changes which are performed shall, as
respects the areas of disagreement between the parties, be submitted for final
arbitration in accordance with Article XVII hereof. Without prejudice to
Paragraph 1, above, in the event BUILDER and BUYER have not reached agreement by
the Delivery Date upon the adjustment in the Contract Price then any disputed
amount(s) shall be deposited by BUYER in a mutually agreed joint interest
bearing account for BUYER and BUILDER until resolution of such disputed
amount(s). Interest on the principal amount shall be distributed between the
parties in proportion to the amount of principal received upon resolution of the
dispute(s).

5.   Substitution of Materials:

     In the event that any of the materials required by the Specifications or
otherwise under this Contract for the construction of the VESSEL cannot be
procured in time to maintain the Delivery Date of the VESSEL, the BUILDER may,
provided that the BUYER so agrees in writing, supply other materials capable of
meeting the requirements of the Classification Society and of the rules,
regulations and requirements with which the construction of the VESSEL

                                       15
<PAGE>   19

must comply. Any agreement as to such substitution of materials shall be
effected in the manner provided in Paragraph 1 of this Article, and may,
likewise, include alterations in the Contract Price and other terms and
conditions of this Contract occasioned by or resulting from such substitution.

                          ARTICLE VI - TESTS AND TRIALS

1.   Notices:

     The BUILDER shall provide the BUYER at least thirty (30) days prior notice
in accordance with Article XXII of the time and place of each of the jacking
trials, equipment trials, and other specified commissioning which is to be
performed at BUILDER's Shipyard (collectively herein referred to as the "Tests
and Trials") of the VESSEL, and the BUYER shall promptly acknowledge receipt of
such notice(s). The BUYER shall have its Representative on board the VESSEL to
witness such Tests and Trials. Failure by the Representative of the BUYER to
attend any portion of the Tests and Trials of the VESSEL after due notice to the
BUYER as provided above shall be deemed to be a waiver by the BUYER of its right
to have its Representative on board the VESSEL at such portion of the Tests and
Trials, and the BUILDER may conduct such portion of the Tests and Trials without
the Representative of the BUYER being present, and in such case the BUYER shall
be obligated to accept the VESSEL on the basis of certificates of the BUILDER
and the Classification Society Surveyor that the VESSEL, upon completion of such
portion of the Tests and Trials, is found to conform to this Contract and the
Specifications with respect to such portion of the Tests and Trials.

2.   Weather Conditions:

     The Tests and Trials shall be carried out under weather conditions deemed
favorable enough in the judgment of the Classification Society Surveyor. In the
event of unfavorable weather on the date(s) specified for the Tests and Trials,
the same shall take place on the first available day thereafter that weather
conditions permit. It is agreed that if during the Tests and Trials of the
VESSEL, the weather should suddenly become so unfavorable that orderly conduct
of the Tests and Trials can no longer be continued in the opinion of the
Classification Society Surveyor, the Tests and Trials shall be discontinued and
postponed until the first favorable weather condition day next following, unless
the BUYER agrees in writing to accept the VESSEL on the basis of the Tests and
Trials already made before such discontinuance occurred.

     Any delay of the Tests and Trials caused by such unfavorable weather
conditions shall operate to postpone the Delivery Date by the period of delay
involved and such delay shall be understood to constitute Permissible Delays as
contemplated in Article III, Paragraph 2.

                                       16
<PAGE>   20

3.   How Conducted:

     All expenses in connection with the Tests and Trials, including, but not
limited to fuel oil, lubricating oils and greases (the quality and quantity of
which shall be in accordance with applicable engine specifications) shall be for
the account of the BUILDER, and the BUILDER shall provide at its own expense the
necessary crew to comply with conditions of safe navigation. The Tests and
Trials shall be conducted in the manner prescribed in the Specifications, and
shall prove fulfillment of the performance requirements for the Tests and Trials
as set forth in the Specifications. The course of Tests and Trials shall be
determined by the BUILDER.

4.   Method of Acceptance or Rejection:

(a)  Upon completion of the Tests and Trials, the BUILDER shall give the BUYER
     notice in accordance with Article XXII of completion of the Tests and
     Trials, as and if the BUILDER considers that the results of the Tests and
     Trials indicate conformity of the VESSEL to this Contract and the
     Specifications in all respects. The BUYER shall, within three (3) business
     days after receipt of such notice from the BUILDER, notify the BUILDER in
     accordance with Article XXII of its acceptance or rejection of the VESSEL.

(b)  However, should the results of the Tests and Trials indicate that the
     VESSEL, or any part or equipment thereof, does not fully conform to the
     requirements of this Contract and/or the Specifications, then the BUILDER
     shall promptly take the necessary steps to correct such nonconformity. Upon
     completion of correction of such nonconformity, the BUYER may request a
     second round of Tests and Trials to test the nonconformity correction, and
     in such event the BUILDER shall give the BUYER not less than three (3)
     business days prior notice in accordance with Article XXII of the second
     round of Tests and Trials of the VESSEL. Upon successful completion of the
     second round of Tests and Trials, the BUYER shall within three (3) business
     days after receipt of such notice from the BUILDER, notify the BUILDER in
     accordance with Article XXII of its acceptance or rejection of the VESSEL.
     Any additional cost for fuel, oils and greases required for the second, or
     subsequent, round of Tests and Trials shall be for BUILDER's account.

(c)  In the event that the BUYER rejects the VESSEL, the BUYER shall indicate in
     its notice of rejection in what respect the VESSEL, or any part or
     equipment thereof, does not conform to this Contract and/or the
     Specifications.

(d)  The BUILDER may dispute the rejection of the VESSEL by the BUYER under this
     Paragraph, in which case the matter shall be submitted for final decision
     by arbitration in accordance with Article XVII hereof.

                                       17
<PAGE>   21

5.   Effect of Acceptance:

     Acceptance of the VESSEL as provided above shall be final and binding and
shall preclude the BUYER from refusing tender of delivery of the VESSEL as
hereinafter provided, if the BUILDER complies with all procedural requirements
for delivery as provided in Article VII hereof.

6.   Disposition of Surplus Consumable Stores:

     Should any consumable stores furnished by the BUILDER for the Tests and
Trials remain on board the VESSEL at the time of acceptance thereof by the
BUYER, the BUYER agrees to buy the same from the BUILDER at the original
documented purchase price thereof, and payment by the BUYER shall be effected
within thirty (30) days of receipt from BUILDER of an invoice and supporting
documentation therefore.

7.   Installation and Commissioning of OWNER Furnished Equipment:

     The BUILDER is required to deliver to the BUYER a complete fully
functioning drilling unit that meets all of the provisions of this Contract and
the Specifications. All equipment shall be installed in the VESSEL and fully
commissioned and tested by the BUILDER according to the requirements of this
Contract, the Specifications and the manufacturers of all of the OFE and the
BUILDER Furnished Equipment ("BFE"). The OFE and BFE shall be installed by the
BUILDER no later than the times called for in the Construction Schedule. The
Construction Schedule shall be agreed between the BUILDER and the BUYER as
called for in the Contract and shall be structured such that there is sufficient
time after installation of all equipment for hook up, commissioning and testing.
The BUILDER shall be responsible for arranging and conducting all hook up,
commissioning and testing activities. Notwithstanding the provisions of this
Paragraph, it is recognized that the BUYER has specific responsibility for the
following:

o    To arrange for and pay for the attendance during hook up, commissioning and
     testing activities of the appropriate manufacturers representatives.

o    To work with the BUILDER during the development of the commissioning and
     testing plan and schedule.

o    To provide on site resources during hook up, testing and commissioning
     activities to assist the BUILDER particularly with equipment with which he
     is not familiar.

     It is also specifically recognized that non-performance of OFE after it has
been properly installed and tested according to the manufacturers

                                       18
<PAGE>   22

recommendations and the agreed Construction Schedule shall not be grounds for
the assertion by the BUYER of default by the BUILDER.

                    ARTICLE VII - DELIVERY DATE AND DELIVERY

1.   Time and Place:

(a)  Delivery Date and Place:

     The VESSEL shall be delivered by the BUILDER to the BUYER jacked down and
     safely afloat secured alongside the wharf at BUILDER's Shipyard or another
     mutually agreed location ready for ocean tow or loadout for dry tow as
     approved by the BUYER's underwriters' surveyors following completion of the
     procedures addressing Tests and Trials in Article VI on or before 1
     February 2004 provided, however, that in the event of Permissible Delays as
     contemplated by Article III, Paragraph 2, or delays due to force majeure
     (as defined in Article VIII), the aforementioned date for delivery of the
     VESSEL shall be postponed accordingly. The aforementioned date, or such
     later date to which the requirement of delivery is postponed pursuant to
     such terms, is herein called the "Delivery Date". Notwithstanding the
     foregoing, BUYER shall not be obligated to accept delivery of the VESSEL
     more than fifteen (15) calendar days prior to the Delivery Date unless
     otherwise mutually agreed in writing.

     At the BUYER's option, the VESSEL shall be delivered in a jacked-up
     position at the BUILDER's Shipyard ready for ocean tow or loadout for dry
     tow as approved by the BUYER's underwriters' surveyors.

(b)  Actual Delivery Date:

     The actual delivery date shall mean the date on which the BUILDER shall
     have actually delivered the VESSEL to the BUYER. However, the date on which
     the BUILDER shall have duly tendered the VESSEL for delivery in case of the
     BUYER's default as provided in Paragraph 1 (c) of Article XIII, shall be
     substituted for the actual delivery date, if applicable.

2.   When and How Effected:

     Provided that the BUYER shall have fulfilled all of its obligations
stipulated under this Contract, delivery of the VESSEL shall be effected
forthwith by the concurrent execution by each of the parties hereto of the
PROTOCOL OF DELIVERY AND ACCEPTANCE in the form attached hereto as Exhibit "B",
acknowledging delivery of the VESSEL by the BUILDER and acceptance thereof by
the BUYER. Notwithstanding any provision in this Contract, it is agreed and
understood that the VESSEL shall be delivered to BUYER when completed and

                                       19
<PAGE>   23

accepted by BUYER regardless of the existence of any pending disagreement,
dispute or arbitration proceeding, provided that BUYER shall have paid to
BUILDER all undisputed installments due prior to or upon delivery and BUYER
shall deposit any disputed portion of the Contract Price into a joint account as
contemplated in Article V, Paragraph 4, prior to or upon delivery.

3.   Documents to be Delivered to BUYER:

     Upon delivery and acceptance of the VESSEL, the BUILDER shall deliver to
the BUYER all necessary documents, including but not limited to those listed
below, which shall accompany the PROTOCOL OF DELIVERY AND ACCEPTANCE:

(a)  PROTOCOL OF TESTS AND TRIALS of the VESSEL made pursuant to the
     Specifications.

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

(c)  PROTOCOL OF STORES OF CONSUMABLE NATURE referred to under Paragraph 6 of
     Article VI hereof, including the original purchase price thereof.

(d)  ALL CERTIFICATES, including the BUILDER's CERTIFICATE, required to be
     furnished upon delivery of the VESSEL pursuant to this Contract and the
     Specifications. It is agreed that if, through no fault on the part of the
     BUILDER, the classification certificate and/or other certificates are not
     available at the time of delivery of the VESSEL, provisional certificates
     shall be accepted by the BUYER, provided that the BUILDER shall furnish the
     BUYER with the formal certificates as promptly as possible after such
     formal certificates have been issued.

(e)  DOCUMENTS OF ASSIGNMENT, accompanied by original documents of all
     guarantees and warranties from contractors, subcontractors, vendors,
     suppliers, manufacturers and dealers for all equipment, material and
     appurtenances supplied and installed by the BUILDER.

(f)  DECLARATION OF WARRANTY of the BUILDER that the VESSEL is delivered to the
     BUYER free and clear of any liens, charges, rights in rem, claims,
     mortgages, or other encumbrances upon the BUYER's title thereto, and in
     particular, that the VESSEL is absolutely free of all liabilities and
     burdens of any nature, including those which may be related to imposts,
     taxes or charges imposed by governmental authorities of the country of
     construction, as well as of all liabilities of the BUILDER to its
     contractors, subcontractors, employees and crew, and of all liabilities
     arising from the operation of the VESSEL in Sea Trials, or otherwise, prior
     to delivery.

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<PAGE>   24

(g)  DRAWINGS AND PLANS pertaining to the VESSEL as stipulated in the
     Specifications, including all plans, specifications, working drawings,
     technical descriptions, calculations, test results and other data, and all
     other such information and documents concerning the design, engineering and
     construction of the VESSEL.

(h)  COMMERCIAL INVOICE AND BILL OF SALE.

4.   Tender of VESSEL:

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

5.   Title, Retention of Title and Risk:

(a)  Following payment of the first installment of the Contract Price:

     (i)  the VESSEL and all parts thereof as it is from time to time
          constructed; including

     (ii) all appurtenances and components and any other materials and articles,
          including but not limited to machinery, equipment, gear, engines and
          outfit (hereinafter collectively referred to as "Appurtenances and
          Components") whether wholly or partially finished or unfinished from
          time to time appropriated or used or intended to be appropriated or
          used in the construction of the VESSEL or ready to be so appropriated
          whether within the premises of the BUILDER or any subcontractor or
          elsewhere and whether or not marked and set aside pursuant to
          Sub-paragraph (b), below

     shall forthwith become and remain the absolute property of the BUYER and
     shall not be removed from the Shipyard without the written consent of the
     Buyer or its Representative which consent shall not unreasonably be
     withheld. Provided, however, that except as specifically set forth in
     Article XI, Paragraph 3, Owner Furnished Equipment shall at all times be
     and remain the absolute property of the BUYER.

(b)  The intention of the BUILDER to transfer the property in the VESSEL
     including any Appurtenances and Components to the BUYER in accordance with
     this Sub-paragraph shall be evidenced by the BUILDER taking or causing the
     supplier of the goods or materials to take any of the following actions:

                                       21
<PAGE>   25

     (i)   Upon such Appurtenances and Components being substantially ready for
           delivery to the Shipyard, suitably marking with the VESSEL's yard
           number or otherwise plainly identifying or permitting the BUYER or
           its Representative to suitably so mark or plainly identify such
           Appurtenances and Components so as to show that (A) their destination
           is the Shipyard, and (B) that they are the property of the BUYER and
           (C) (where they are not stored at the Shipyard or premises of the
           BUILDER) to whose order they are held; or

     (ii)  setting aside and storing such Appurtenances and Components so marked
           or identified to the satisfaction of the BUYER; or

     (iii) sending the BUYER or its representative a schedule listing and giving
           the value of every item of the Appurtenances and Components so set
           aside and stored; or

     (iv)  inviting the Buyer to inspect the Appurtenances and Components.

(c)  The BUILDER hereby represents and warrants that there shall not be any
     retention of title clauses in force and applying to any Appurtenances and
     Components provided by the BUILDER and shall use its best efforts to ensure
     the same for any Appurtenances and Components provided by any subcontractor
     or any other person for incorporation into the VESSEL. The BUILDER shall
     promptly (but in any event within two (2) calendar days) notify the BUYER's
     Representative in writing in the event that more than Two Hundred Fifty
     Thousand United States Dollars (U.S.$250,000) of Appurtenances and
     Components under this Contract are subject to retention of title clauses at
     any point in time prior to the Delivery Date.

(d)  Neither the BUILDER nor any subcontractor nor any other person shall have a
     lien on any part of the VESSEL, including its Appurtenances and Components,
     which have vested in the BUYER under Article VII, Paragraph 5, or otherwise
     under this Contract, or on OWNER Furnished Equipment, for any sum due to
     the BUILDER, subcontractor or any other person and the BUILDER shall take
     all such steps as may be necessary to ensure that the title of the BUYER
     and the exclusion of any such lien are brought to the notice of all
     subcontractors and other persons dealing with or transporting any such
     Appurtenances and Components, or OWNER Furnished Equipment, which shall
     include but not be limited to such notification being contained in all
     purchase orders and other documents emanating from the BUILDER.

(e)  No mortgages, charges, liens or encumbrances of whatsoever nature shall be
     created or registered against the VESSEL or any part thereof including its
     Appurtenances and Components without the prior written consent of the
     BUYER.

                                       22
<PAGE>   26

(f)  The BUILDER shall fully indemnify, defend and hold the BUYER, its parent,
     holding and affiliated companies harmless against all and any consequences
     including all costs, claims, causes of action, liabilities, damages and
     expenses whatsoever arising from such breach of warranty.

(g)  Notwithstanding the foregoing, the BUYER shall not be liable at any time
     for the loss of or damage to the VESSEL or any part thereof or any of the
     Appurtenances and Components or any OWNER Furnished Equipment and the
     BUILDER shall be responsible for any loss of or damage to the same and for
     the cost of storing, handling and transporting the same and shall effect
     such additional insurance as may be necessary to cover the risk of such
     loss or damage from any cause whatsoever.

(h)  The risk of loss of or damage to the VESSEL, including all Appurtenances
     and Components (as defined in this Paragraph 5) and all OWNER Furnished
     Equipment shall pass to the BUYER only upon delivery and acceptance thereof
     having been completed as stated above; it being expressly understood that,
     until such delivery by BUILDER and acceptance by BUYER is effected, any and
     all risk of loss of or damage to the VESSEL, including all Appurtenances
     and Components (as defined in this Paragraph 5) and all OWNER Furnished
     Equipment shall be in the BUILDER.

6.   Removal of VESSEL:

     The BUYER shall take possession of the VESSEL immediately upon delivery and
acceptance thereof and shall remove the VESSEL from the premises of the Shipyard
within thirty (30) calendar days after delivery and acceptance thereof is
effected. If the BUYER shall not remove the VESSEL from the premises of the
Shipyard within the aforesaid thirty (30) calendar days, then, in such event
commencing on the thirty-first (31st) calendar day the BUYER shall pay to the
BUILDER the reasonable mooring charges of the VESSEL.

7.   Export License:

     If required, the BUILDER shall be obligated to secure export license(s) for
the VESSEL and shall exercise its best efforts to secure prompt issuance of any
such export license(s) as well as any other required governmental approvals or
authorizations required for removal of the VESSEL from the country of
construction, including the territorial waters thereof. In the event BUILDER has
not secured any required export license(s) for the VESSEL within thirty (30)
calendar days of the Effective Date of this Contract, as defined in Article
XXIII,

                                       23
<PAGE>   27

then BUILDER shall be deemed to be in default under Article XIV and BUYER may
elect, at any time thereafter, to cancel this Contract as provided in Article
XI.

                       ARTICLE VIII - FORCE MAJEURE DELAYS

1.   Causes of Delay:

     If, at any time before actual delivery of the VESSEL, either the
construction of the VESSEL or any performance required as a prerequisite to
delivery of the VESSEL is delayed due to Acts of God; acts of princes or rulers;
requirements of government authorities; war or other hostilities or preparations
therefor; revolution, sabotages, general strikes, general lockouts or other
general labor disturbances; floods, typhoons, hurricanes, tornadoes, windstorms,
lightning or other abnormal weather conditions which prevent work for at least
three (3) consecutive days; earthquakes, tidal waves, explosions, collisions or
strandings, embargoes, import restrictions, defects in materials, machinery or
equipment which could not have been detected by the BUILDER using reasonable
care (provided same did not result from the BUILDER's failure to take the
reasonably necessary measures to avoid any such delay); casting or forging
rejects or the like not due to negligence; unusual delays caused by the
Classification Society or other bodies whose documents are required (provided
same did not result from BUILDER's failure to take the reasonably necessary
measures to avoid any such delay); destruction of or damage to the Shipyard or
works of the BUILDER, its contractors, subcontractors or suppliers, or of or to
the VESSEL or any part thereof, by any causes herein described which in turn
necessarily and actually delay the construction of the VESSEL or the BUILDER's
performance under this Contract, and which could not have been prevented by the
exercise of reasonable diligence on the part of BUILDER, its contractors,
subcontractors or suppliers; then and in any such case, subject to the
provisions of Paragraph 2 below, the date by which the BUYER may either cancel
this Contract under Article III, Paragraph (1)(b) or impose liquidated damages
under Article III, Paragraph 1(c), shall be postponed for a period of time which
shall not exceed the total accumulated time of all such delay, provided in no
event shall local strikes or labor disturbances involving BUILDER's or its
contractors' or subcontractors' employees, acts or defaults of BUILDER's
contractors, subcontractors or suppliers or breach of BUILDER's, its
contractors', subcontractors', or suppliers' warranties or guarantees be
considered as an allowable delay.

2.   Notice of Delay:

     As soon as possible and in no event more than five (5) working days after
the date of discovery by the BUILDER of an occurrence of any cause of delay, on
account of which the BUILDER claims that it is entitled under this Contract to
delay, the BUILDER shall notify the BUYER in accordance with Article XXII of the
date such causes of delay occurred and the nature thereof. As soon as the

                                       24
<PAGE>   28

ending of such cause of delay is known, the BUILDER shall notify the BUYER in
accordance with Article XXII of the date such cause of delay ended. The BUILDER
shall also notify the BUYER in accordance with Article XXII of the period by
which the BUILDER claims an allowable delay by reason of such cause of delay
with all reasonable dispatch after it has been determined. Failure by BUILDER to
give the required notice shall preclude BUILDER's right in such case to claim
allowable delay under this Article.

                  ARTICLE IX - OWNER FURNISHED EQUIPMENT DELAYS

     OWNER shall furnish or cause to be furnished to BUILDER at BUILDER's
Shipyard those items of machinery, material and equipment as set forth in the
Specifications to be furnished by OWNER (herein referred to as "OWNER Furnished
Equipment" or "OFE") on or before the time specified for such delivery in the
Contract Specifications (Exhibit "D"). However, BUILDER shall not require OWNER
Furnished Equipment to be delivered to BUILDER's Shipyard prior to the time that
said OWNER Furnished Equipment is required, in BUILDER's reasonable opinion, to
meet the BUILDER's Construction Schedule, as defined herein.

     If OWNER's failure to timely deliver OWNER Furnished Equipment to BUILDER's
Shipyard directly causes any delays in the BUILDER's Construction Schedule, then
such delays shall be understood to be Permissible Delays as contemplated by
Article III, Paragraph 2, and the Delivery Date shall be extended by the
equivalent number of days of delay in delivery of such OWNER Furnished Equipment
to BUILDER's Shipyard. (BUILDER agrees, however, to use its best efforts to
proceed with its work on the VESSEL so as to minimize the delay that may be
incurred by reason of late delivery of OWNER Furnished Equipment). In order to
enable BUILDER to efficiently and economically proceed with its work on the
VESSEL, OWNER shall give BUILDER notice of any actual or anticipated delay in
the delivery of OWNER Furnished Equipment to BUILDER's Shipyard.

     Should OWNER fail to timely deliver OWNER Furnished Equipment to BUILDER at
BUILDER's Shipyard due to causes other than force majeure (which shall in this
context have the same general meaning as the causes specified in Paragraph 1 of
this Article) and such delay directly results in increased costs to BUILDER
attributable to additional unavoidable physical work on the VESSEL, OWNER shall
reimburse BUILDER for its actual documented cost of such additional work.
BUILDER's entitlement to such reimbursement shall be applicable only in the
event that BUILDER has submitted prior written notice to OWNER that the delay in
delivery of OWNER Furnished Equipment will or may require additional physical
work to be performed on the VESSEL.

                                       25
<PAGE>   29

                         ARTICLE X - WARRANTY OF QUALITY

1.   Warranty:

     Subject to the provisions hereinafter set forth, the BUILDER warrants the
VESSEL and all components thereof fabricated and/or furnished by the BUILDER
and/or its contractors and/or subcontractors to be free of defects in
workmanship and materials, and the BUILDER undertakes to remedy, free of charge
to the BUYER, any defects in the VESSEL (which term shall include her hull,
legs, machinery, equipment and gear) which are due to defective material and/or
improper workmanship on the part of the BUILDER and/or its contractors and/or
subcontractors as well as any error and/or inadequacy in BUILDER's design work,
if any, and any defects or discrepancies resulting from the failure of the
VESSEL to either function properly in accordance with the standards set forth in
the Specifications or to meet the Specifications, provided that the defects,
errors or inadequacies are discovered within a period of twelve (12) months
commencing upon the actual delivery date of the VESSEL.

     However, the BUILDER's warranty under and pursuant to this Article shall
not include any defects of or due to machinery and equipment supplied by BUYER,
and installed on the VESSEL, except as respects the consequences of the
BUILDER's and/or its contractors' and/or subcontractors' defective material,
improper workmanship and/or failure to install or incorporate any such equipment
into the VESSEL in a good and workmanlike manner so as to function properly and
in accordance with the Specifications. The BUILDER agrees to deliver and assign
to the BUYER all guarantees and warranties received by it in the purchase of
said machinery and equipment.

2.   Notice of Defects:

     The BUYER shall promptly notify the BUILDER in accordance with Article XXII
of any defects for which claim is made under this warranty after the discovery
thereof. The BUYER's notice shall describe the nature and extent of the defects
to the extent known to BUYER. The BUILDER shall promptly acknowledge receipt of
any such notice from BUYER. The BUILDER shall have no obligation for any defects
discovered prior to the expiry date of the said Warranty Period, unless notice
of such defects is received by the BUILDER not later than thirty (30) days after
expiry thereof.

3.   Remedy of Defects:

(a)  The BUILDER shall remedy, at its expense, any defects against which the
     VESSEL is warranted under this Article by making all necessary repairs or
     replacements at the Shipyard.

(b)  However, if it is impractical to bring the VESSEL to the Shipyard, the
     BUYER may cause the necessary repairs or replacements to be made elsewhere
     which is deemed by BUYER to be suitable for the purpose, provided that, in
     such event, the BUILDER may, at its own expense,

                                       26
<PAGE>   30

     forward or supply replacement parts or materials to the VESSEL, unless
     forwarding or supplying thereof to the VESSEL would impair or delay the
     operation or working schedule of the VESSEL. In the event that the BUYER
     proposes to cause the necessary repairs or replacements to be made to the
     VESSEL at any other shipyard or location than the Shipyard, the BUYER shall
     first, but in all events as soon as possible, give the BUILDER notice in
     accordance with Article XXII of the time and place such repairs will be
     made, and if the VESSEL is not thereby delayed, or her operation or working
     schedule is not thereby impaired, the BUILDER shall have the right to
     verify at its own cost and by its own representative(s) the nature and
     extent of the defects complained of. The BUILDER shall, in such case,
     promptly notify the BUYER in accordance with Article XXII after such
     examination has been completed of its acceptance or rejection of the
     defects as ones that are covered by the warranty herein provided. Upon the
     BUILDER's acceptance of the defects as justifying remedy under this
     Article, or upon award of the arbitration so determining, the BUILDER shall
     immediately pay to the BUYER all documented costs incurred for such repairs
     or replacements. Provided, that the costs chargeable to BUILDER for repairs
     or replacements under this Article shall not exceed three (3) times the
     amount that such repairs and replacements would have cost if they had been
     carried out by BUILDER at its Shipyard based on BUILDER's normal rates as
     published at the time of repairs and/or replacement. Interest on any unpaid
     balance due hereunder shall be paid at the rate of ten percent (10%) per
     annum, commencing thirty (30) calendar days after BUILDER's receipt of
     BUYER's invoice for any amounts due under this Article and continuing until
     payment has been remitted to BUYER.

(c)  In any case, the VESSEL shall be taken at the BUYER's cost and
     responsibility to the place elected, ready in all respects for such repairs
     or replacements.

(d)  Any work performed or any material supplied by BUILDER under this Article
     shall be further warranted for the balance of the warranty period specified
     in Paragraph 1 of this Article or six (6) months after completion of such
     work or supply, whichever is later.

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

4.   Extent of BUILDER's Responsibility:

(a)  The BUILDER shall have no responsibility or liability for any defects
     whatsoever in the VESSEL other than the defects specified in this Article.
     Nor shall the BUILDER in any circumstances be responsible or liable for any
     consequential or special losses, damages or expenses including, but not
     limited to, loss of time, loss of profit or earnings directly or indirectly

                                       27
<PAGE>   31

     occasioned to the BUYER due to the defects specified in this Article or due
     to repairs or other works done to the VESSEL to remedy such defects.

(b)  The BUILDER shall not be responsible for any defects in any part of the
     VESSEL which have been caused subsequent to delivery of the VESSEL by any
     replacement or repair work performed by any other contractor, or for any
     defects to the extent the same have been caused by use in excess of
     specified design limitations or improper maintenance of the VESSEL on the
     part of the BUYER, its servants or agents or by ordinary wear and tear.

(c)  Subject always to the terms of Article XV, the warranty contained
     hereinabove in this Article replaces and excludes any other liability,
     guarantee, warranty and/or condition imposed or implied by the law,
     customary, statutory or otherwise, by reason of the construction and sale
     of the VESSEL by the BUILDER for and to the BUYER.

5.   Guarantee Engineer:

     The BUILDER shall have the right to appoint a Guarantee Engineer to serve
on the VESSEL as its representative for such portion of the warranty period as
the BUILDER may decide at BUILDER's cost and risk. The BUYER and its employees
shall give the Guarantee Engineer full cooperation in carrying out his duties as
the representative of the BUILDER on board the VESSEL. The BUYER shall accord
the Guarantee Engineer the treatment reasonably comparable to the VESSEL's Chief
Engineer and shall provide him with suitable accommodations and subsistence at
no cost to the BUILDER and/or the Guarantee Engineer.

                       ARTICLE XI - CANCELLATION BY BUYER

1.   Notice:

     The installments and other payments made by the BUYER prior to the delivery
of the VESSEL shall be in the nature of advances to the BUILDER. In the event
that the BUYER shall exercise its right of cancellation of this Contract under
and pursuant to any of the provisions of this Contract specifically permitting
the BUYER to do so, then the BUYER shall notify the BUILDER in accordance with
Article XXII and such cancellation shall be effective as of the date when notice
thereof is received by the BUILDER.

2.   Refund by BUILDER:

     Within five (5) business days of receipt of BUYER's notice of cancellation
of this Contract the BUILDER shall refund to the BUYER in U.S. Dollars the sum

                                       28
<PAGE>   32

of: (a) the full amount of all sums paid by the BUYER to the BUILDER on account
of the VESSEL; and (b) the cost delivered at BUILDER'S Shipyard of all OWNER
Furnished Equipment which has been delivered to BUILDER's Shipyard for
installation in the Vessel unless the BUILDER proceeds to arbitration under the
provisions of Article XVII hereof.

     In such event, the BUILDER shall pay the BUYER interest at the rate of ten
percent (10%) per annum on the amount required herein to be refunded to the
BUYER, computed from the respective dates on which either such sums were paid by
the BUYER to the BUILDER or the respective items of OWNER Furnished Equipment
were delivered to BUILDER's Shipyard, to the date of remittance by wire transfer
of such refund to the BUYER by the BUILDER.

     For purposes of the provisions addressing the BUYER's rights under this
Contract, on or before the Construction Commencement Date the BUILDER shall
provide to the BUYER as partial security for BUILDER's obligations under this
Contract both (i) an irrevocable stand-by letter of credit confirmed by a bank
in the United States acceptable to BUYER, in an amount equivalent to ten percent
(10%) of the Contract Price as defined in Article II, Paragraph 1, and in the
form annexed as Exhibit "C-1", and (ii) an on demand performance bond issued by
underwriters of recognized responsibility and which are subject to written
approval by BUYER, which approval shall not be unreasonably withheld, in an
amount equivalent to ten percent (10%) of the Contract Price as defined in
Article II, Paragraph 1, and in the form annexed as Exhibit "C-2", both of which
are to be provided in order to partially assure refund to the BUYER of such sums
as are contemplated in this Contract due to any event of BUILDER's default
hereunder including warranties pursuant to Article X.

3.   Discharge of Obligations:

     Upon such refund by the BUILDER to the BUYER, and the BUYER's receipt
thereof, title to the VESSEL and all OWNER Furnished Equipment which has been
delivered to the BUILDER's shipyard for installation in the VESSEL shall be
transferred from the BUYER to the BUILDER and the BUYER shall at that time
release the stand-by letter of credit and the performance bond and thereafter
all obligations, duties and liabilities of each of the parties hereto to the
other under this Contract (excluding only the provisions of Articles X, XI, XV,
XVII and XX) shall be forthwith completely discharged.

4.   Termination for BUYER's Convenience:

     Notwithstanding any other provision of this Contract, in addition to any
other right that the BUYER may have under the Contract to cancel the Contract,
the BUYER shall have the right to terminate the Contract, at its sole option,
upon notifying the BUILDER in accordance with Article XXII, which notice may be
given at any time prior to actual delivery of the VESSEL by the BUILDER to the
BUYER and acceptance of the VESSEL by the BUYER. In the event the

                                       29
<PAGE>   33

BUYER exercises such right of termination at any time after the Construction
Commencement Date, the BUYER shall pay the BUILDER within thirty (30) calendar
days of the BUILDER's receipt of such notice BUILDER's documented costs
(including overhead costs and project closure costs) up to the date of
termination, less any installment payments received by BUILDER, plus a lump sum
termination fee calculated as twenty percent (20%) of any remaining installment
payments which are not yet due and payable under the terms of this Contract as
of the date of termination. Provided, however, that the total amount payable by
the BUYER to the BUILDER shall never exceed the Contract Price. Provided,
further, that excepting only BUILDER's documented costs paid to third parties to
cancel BUILDER's commitments to third parties arising from BUILDER's obligations
under this Contract, no fee or cost shall be payable by the BUYER to the BUILDER
in respect of BUYER's termination of either this Contract or any other contracts
for construction of a vessel between the BUILDER and the BUYER in respect of
which, at the time of BUYER's notice of termination, the Construction
Commencement Date for such contract has not occurred.

     The termination fee as described in the preceding paragraph shall be the
BUYER's sole financial obligation to the BUILDER and the BUILDER's exclusive
remedy in the event of such termination of the Contract. Upon payment by the
BUYER of the applicable termination fee to the BUILDER (or refund by the BUILDER
to the BUYER, as the case may be), the BUILDER shall release the BUYER from any
liability or obligation to reimburse the BUILDER for any costs or damages,
including without limitation, loss of profits or revenues that the BUILDER may
suffer or incur from such termination and the BUYER shall at that time release
the stand-by letter of credit and the performance bond.

                        ARTICLE XII - SUSPENSION BY BUYER

1.   Suspension of performance for BUYER's convenience:

     At the BUYER's sole discretion, the BUYER shall have the recurring right,
exercisable at any time, subject to giving forty-five (45) calendar days written
notice to the BUILDER, to suspend performance under this Contract in which case
the BUILDER shall promptly forward to the BUYER all completed or uncompleted
drawings, reports and other documents related to the BUILDER's performance under
this Contract and the following provisions shall apply:

     -    The BUYER shall pay the BUILDER the sum of (i) progress payments due
          under the terms of the Contract prior to the date of suspension (to
          the extent not already paid), (ii) the BUILDER's audited additional
          costs, including overhead, directly related to this Contract up to the
          date of suspension; (iii) the BUILDER's audited direct costs,
          including overhead, to mothball the VESSEL in preparation for the
          suspension period; (iv) a fee of Twenty

                                       30
<PAGE>   34

          Thousand United States Dollars (U.S.$20,000) per day during the period
          of suspension; and (v) (the BUILDER's audited direct costs, including
          overhead, to reactivate the construction of the VESSEL.

     -    The BUILDER shall immediately and in consultation with the BUYER
          revise its work schedule or program so as to reduce as much as
          possible the consequences to the BUYER flowing or which may flow from
          such suspension.

     -    The BUILDER shall use its best endeavors to maintain, redeploy,
          transfer or retain its personnel and equipment in any part of the work
          not suspended at the same time or in any other work for the BUYER or
          its affiliates under other contracts.

     -    However, no fee or cost shall be payable by the BUYER to the BUILDER
          in respect of either this VESSEL or any other vessels that the BUILDER
          may have contracted to build for the BUYER in respect of which at the
          time of BUYER's notice of suspension the Construction Commencement
          Date for such vessel has not occurred.

     -    The BUILDER shall notify the BUYER in writing immediately upon the
          BUILDER's performance hereunder being suspended, of the date and time
          on which the services were suspended and forward to the BUYER all
          other particulars which the BUILDER may rely on in making any claim
          under this Article.

     -    The BUYER's right to suspend the Contract as provided herein shall be
          without prejudice to its right to terminate this Contract at any time
          in accordance with the provisions of Article XI, Paragraph 4.

     -    The period of suspension shall not be greater than six (6) months
          unless otherwise mutually agreed in writing.

2.   Recommencement of performance at BUYER's convenience:

     -    At the BUYER's sole discretion, the BUYER shall have the recurring
          right, exercisable at any time, subject to giving forty-five (45)
          calendar days written notice to the BUILDER, to require the BUILDER to
          recommence performance which has been suspended under this Contract in
          which case the BUILDER shall promptly recommence all or such part of
          the performance as specified by BUYER in said notice.

                                       31
<PAGE>   35

     -    The BUILDER shall notify the BUYER in writing immediately upon the
          BUILDER's performance hereunder recommencing following suspension, of
          the date and time on which the services were recommenced and forward
          to the BUYER all other particulars which the BUILDER may rely on in
          making a claim under the Article.

     -    The Delivery Date, as defined in Article VII, Paragraph 1(a), shall be
          extended for a period corresponding to the period of the suspension
          caused or requested by the BUYER, which shall be understood to
          constitute Permissible Delays as contemplated by Article III,
          Paragraph 2.

                         ARTICLE XIII - BUYER'S DEFAULT

1.   Definition of Default:

     The BUYER shall be deemed to be in default of performance of its
obligations under this Contract in the following cases:

(a)  If the BUYER fails to pay any installments to the BUILDER within five (5)
     business days after receipt of notice in accordance with Article XXII that
     any such installment became due and payable under the provisions of Article
     II hereof; or

(b)  If the BUYER fails to pay the final installment to the BUILDER concurrently
     with the delivery of the VESSEL by the BUILDER and acceptance thereof by
     the BUYER as provided in Article VII hereof; or

(c)  If the BUYER fails to take delivery of the VESSEL, when the VESSEL is duly
     tendered for delivery by the BUILDER under the provisions of Article VII
     hereof; or

(d)  If the BUYER goes into liquidation, whether voluntary or compulsory, or
     enters into a scheme of arrangement, or makes a general assignment of its
     assets for the benefit of its creditors, or appoints a receiver or
     receivers of any kind whatsoever, whether temporary or permanent, for the
     property of the BUYER, or if the BUYER institutes proceedings for its
     reorganization or such proceedings are instituted by creditors and approved
     by the court, whether proposed by a creditor, a stockholder or any other
     person whomsoever, or if BUYER suffers any execution against a major
     portion of its assets which is not satisfied within seven (7) days.

     If any default by BUYER under Paragraphs (a), (b) or (c) above necessarily
and actually causes delays in either the construction of the VESSEL or any
performance required as a prerequisite to delivery of the VESSEL, such

                                       32
<PAGE>   36

delays shall be understood to be Permissible Delays as contemplated by Article
III, Paragraph 2.

2.   Interest and Charges:

     If the BUYER has not made payment as to any installment as provided in
Paragraph 1 (a) and (b) of this Article on its due date, the BUYER shall pay
interest on such installment at the rate of ten percent (10%) per annum from the
due date thereof to the date of payment to the BUILDER of the full amount of
such installments, including interest. In case the BUYER shall fail to take
delivery of the VESSEL as provided in Paragraph 1(c) of this Article, the BUYER
shall pay interest upon the final installment at the same rate as aforesaid from
and including the day upon which the VESSEL is duly tendered for delivery by the
BUILDER. In the event a due date falls on a non-business day of either BUILDER
or BUYER, the payment with respect thereto shall be due on the next succeeding
business day of both BUILDER and BUYER.

3.   Effect of BUYER's Default:

(a)  If any default by the BUYER occurs as defined in Paragraph 1 (a), (b) and
     (c) of this Article, the Delivery Date shall be automatically postponed for
     the period of continuance of such default by the BUYER.

(b)  If any such default by the BUYER continues for a period of five (5)
     business days, the BUILDER may, at its option, notify BUYER in accordance
     with Article XXII of BUILDER's intention to cancel the Contract, and if
     BUYER does not remedy the default within thirty (30) business days after
     receipt of such notice, BUILDER may cancel this Contract by giving notice
     to such effect to the BUYER in accordance with Article XXII.

     In the event of such cancellation of this Contract, the BUILDER shall be
     entitled to retain any installment or installments previously paid by the
     BUYER to the BUILDER on account of this Contract (it being understood by
     both parties that retention of any such installments by BUILDER is by way
     of liquidated damages and not by way of penalty).

(c)  BUYER shall not under any circumstances be responsible or liable to
     BUILDER, its contractors or subcontractors, for any consequential or
     special losses, damages or expenses including, but not limited to, loss of
     time, loss of profit or earnings whether directly or indirectly arising out
     of this Contract.

4.   Sale of VESSEL:

(a)  In the event of default by the BUYER pursuant to this Contract as set forth
     above, the BUILDER shall have the right either to complete or not to

                                       33
<PAGE>   37

     complete the VESSEL as it deems fit, and to sell the VESSEL at a public or
     private sale, upon ten (10) business days prior written notice to the BUYER
     in accordance with Article XXII, on such terms and conditions as the
     BUILDER deems fit, without being answerable for any loss or damage.

(b)  In the event of the sale of the VESSEL in a completed state, the proceeds
     of sale received by the BUILDER shall be applied first to payment of all
     documented expenses attending such sale and otherwise incurred by the
     BUILDER as a result of the BUYER's default, and then to payment of all
     unpaid installments of the Contract Price and interest on such installments
     at the rate of ten percent (10%) per annum from the respective due dates
     thereof to the date of application.

(c)  In the event of sale of the VESSEL in an incompleted state, the proceeds of
     sale received by the BUILDER shall be applied first to all documented
     expenses attending such sale and otherwise incurred by the BUILDER as a
     result of the BUYER's default, and then to payment of all costs of
     construction of the VESSEL less the installments so retained by the
     BUILDER.

(d)  If the proceeds of sale are insufficient to pay such total amounts payable
     as aforesaid, the BUYER shall promptly pay the deficiency to the BUILDER
     upon written request with interest at the rate of ten percent (10%) per
     annum from the date of BUILDER's written request for payment to the date of
     BUYER's payment to BUILDER.

(e)  In either of the above events of sale, if the proceeds of sale exceed the
     total of amounts to which such proceeds are to be applied as aforesaid, the
     BUILDER shall promptly pay the excess to the BUYER with interest at the
     rate of ten percent (10%) per annum from the date of sale to the date of
     payment to BUYER.

     The rights conferred upon the BUILDER under the terms of this Article XIII
     shall be in lieu of any rights which the BUILDER would have either at law
     or in equity upon the happening of the events of default specified herein,
     or upon any failure on the part of the BUYER to perform the undertakings,
     agreements, and covenants on its part to be performed hereunder. The
     failure of the BUILDER to exercise the rights conferred upon it hereunder
     in any one or more instances of the occurrence of an event of default, as
     hereinabove defined, shall not constitute a waiver of BUILDER's right
     subsequently to exercise such rights under this Contract.

                         ARTICLE XIV - BUILDER'S DEFAULT

1.   Definition of Default:

                                       34
<PAGE>   38

     The BUILDER shall be deemed to be in default of its obligations under this
Contract if, after BUYER gives five (5) calendar days written notice in
accordance with Article XXII to correct the same, the BUILDER fails in any
respect to observe the provisions of this Contract.

     Subject always to the provisions of Article III, so long as BUILDER takes
prompt and reasonable action toward the cure or correction of the condition
complained of, and continues diligently to pursue the said cure or correction,
BUILDER shall not be considered to be in default on account thereof if it is not
possible to correct the breach or defect within said five day period.

     The following shall also be considered to be events of default:

(a)  (i)    insolvency or inability of the BUILDER to pay its debts as and when
            they fall due; or

     (ii)   presentation of a winding-up petition (except for the purpose of
            amalgamation or reconstruction when solvent); or

     (iii)  issuance of a notice of meeting of members or shareholders for the
            passing of a resolution for winding-up or reconstruction (except for
            the purpose of amalgamation or reconstruction when solvent); or

     (iv)   making of a statutory declaration by the directors or similar
            officers of the BUILDER that the BUILDER cannot by reason of its
            liabilities continue its business; or

     (v)    presentation of a petition for judicial management; or

     (vi)   making of a proposal to the BUILDER's creditors for a composition in
            satisfaction of its debts or a scheme of arrangement of its affairs;
            or

     (vii)  making a general assignment of the BUILDER's assets for the benefit
            of its creditors; or

     (viii) the appointment of a receiver, receiver or manager, or provisional
            liquidator; or

     (ix)   execution or other process issued on a judgment, direction, decree
            or order of any court in favour of a creditor of the BUILDER is
            returned unsatisfied in whole or in part; or

     (x)    taking of steps to enter into a standstill or similar arrangement
            whereby creditors of the BUILDER agree to give the BUILDER

                                       35
<PAGE>   39

            more time to pay its debts or restructure its debts either by making
            installment payments or otherwise; or

     (xi)   additionally similar or analogous processes or events under any
            applicable law affecting the BUILDER, its assets or its liabilities;
            or

(b)  The BUILDER having met or exceeded the allowable delay periods as provided
     in Article III, Paragraphs 1(a) or 1(b); or

(c)  Any event of default under any other contracts for the construction of a
     vessel between BUILDER, or any of its affiliates, and BUYER, its parent,
     holding or affiliated companies or a joint venture in which BUYER or any
     one or more of such related companies of BUYER owns at least a fifty
     percent (50%) equity interest, which entitles the BUYER or such other
     parent, holding, affiliated or joint venture companies of BUYER to
     terminate in accordance with the terms thereof; or

(d)  Notwithstanding that the BUILDER hereby represents and warrants that no
     circumstances exist that will cause the Singapore governmental authorities
     to terminate the BUILDER's lease(s) for its Singapore shipyard premises
     while one or more vessels are under construction, if the BUILDER's rights
     under such lease(s) are lost or impaired for any reason other than
     compulsory acquisition of such property by Singapore governmental
     authorities, which loss or impairment prevents or interferes with BUILDER's
     performance under this Contract, then the BUILDER shall pay the BUYER
     Fifteen Million United States Dollars (U.S.$15,000,000). It is understood
     by both parties that such payment by the BUILDER is by way of liquidated
     damages and not by way of penalty. However, the BUILDER shall not be
     required to pay such sum if BUILDER meets all of its obligations under this
     Contract without loss of quality at an alternative shipyard facility and at
     no additional cost to the BUYER. The foregoing liquidated damages shall be
     in addition to and without prejudice to the BUYER's rights and remedies
     elsewhere set forth in this Contract, specifically including but not
     limited to BUYER's rights under Paragraph 2, below.

2.   Effect of BUILDER's Default:

(a)  If any default by the BUILDER occurs as defined in Paragraph 1 of this
     Article, BUYER may, at its election, either cancel this Contract as
     provided in Article XI, or require BUILDER to deliver possession of the
     VESSEL and all of its Appurtenances and Components (as defined in Article
     VII, Paragraph 5) to BUYER (and title thereto, to the extent that title to
     any such items is not already vested in the BUYER), in whatever state of
     completion the same may be at the date of such election. If BUYER elects

                                       36
<PAGE>   40

     to take possession of the VESSEL (and title thereto, to the extent that
     title to any such items is not already vested in the BUYER), as aforesaid,
     then BUYER may bring such workers to the Shipyard as BUYER chooses and
     perform such work as may be necessary to prepare the VESSEL for removal,
     and may so remove the VESSEL from BUILDER's Shipyard to another location
     for completion or disposal.

     BUYER may thereafter proceed to contract with or employ any other person or
     persons to complete the work or any part thereof and provide any equipment,
     materials and labor as may be necessary for such completion.

     Upon completion of the work by the BUYER, the BUYER shall document the cost
     to the BUYER of completing the work including all expenses, charges, losses
     and damages incurred by the BUYER in consequence of and incidental to the
     default of the BUILDER.

     Once BUYER has documented BUYER's cost to complete, BUILDER shall be
     entitled to receive, (or shall be required to repay to BUYER, as the case
     may be) a sum arrived at in the following manner:

     The sum of (a) all progress payments paid by BUYER to BUILDER, plus (b)
     BUYER's documented cost of completion, as aforesaid, subtracted from the
     Contract Price set forth in Article II, including interest on the amount
     receivable (or payable, as the case may be) hereunder at the rate of ten
     percent (10%) per annum computed from the time BUYER has documented its
     cost to complete the VESSEL to BUILDER until remittance of the amounts
     receivable or payable.

     The rights conferred upon the BUYER under the terms of this Article XIV
     shall be in addition to, and not in substitution for, any rights which the
     BUYER would have in either law or equity upon the happening of the events
     of default specified herein, or upon any failure on the part of the BUILDER
     to perform the undertakings, agreements, and covenants on its part to be
     performed hereunder. The failure of the BUYER to exercise the rights
     conferred upon it hereunder in any one or more instances of the occurrence
     of an event of default, as hereinabove defined, shall not constitute a
     waiver of BUYER's right subsequently to exercise such rights under this
     Contract.

                    ARTICLE XV - LIABILITIES AND INDEMNITIES

1.   Liability of BUILDER:

     BUILDER hereby agrees to defend, indemnify and hold harmless BUYER, its
parent, holding and affiliated companies, the owner and operator of the

                                       37
<PAGE>   41

VESSEL, their employees, directors, officers and agents, including the VESSEL
and all other vessels in the same or associated ownership, against all claims,
demands or causes of action, by all parties or persons whomsoever and whatsoever
including, without limitation, BUILDER and its employees, directors, officers,
agents, contractors and subcontractors and all third persons based on personal
injury, disease or death or property damage or destruction occurring prior to
the delivery to and acceptance by BUYER of the VESSEL arising out of or in any
way related to the performance by BUILDER or any of its contractors or
subcontractors of the work hereunder, regardless of cause, including the sole or
concurrent negligence or fault of BUYER, its employees, directors, officers,
agents or subcontractors, or of a third party, or an event of force majeure.
Notwithstanding the foregoing, the BUILDER shall be under no liability
whatsoever to the BUYER, the Representative, his assistant(s) or BUYER's
contractors (other than BUILDER) or invitees for personal injuries, including
disease and death, suffered by the Representative, his assistant(s) or BUYER's
contractors (other than BUILDER) or invitees during the time when he or they are
on the VESSEL, or within the premises of either the BUILDER or its contractors
or subcontractors, or are otherwise engaged in and about the construction of the
VESSEL, unless such personal injuries, including disease and death, were caused
by the gross negligence or willful misconduct of the BUILDER, any of its
employees, agents, contractors or subcontractors. BUYER hereby agrees to defend,
indemnify and hold harmless BUILDER, its employees, directors, officers and
agents against all claims, demands or causes of action for personal injuries,
including disease and death, suffered by BUYER's employees during the time when
they are on the VESSEL, or within the premises of either the BUILDER or its
contractors or subcontractors, or are otherwise engaged in and about the
construction of the VESSEL, unless such personal injuries, including disease and
death, were caused by the gross negligence or willful misconduct of the BUILDER,
any of its employees, agents, contractors or subcontractors. The BUILDER shall
assume liability to the BUYER, the Representative and his assistant(s), BUYER's
contractors (other than BUILDER) and BUYER's invitees for damage to, loss or
destruction of property of the BUYER's Representative, his assistant(s), BUYER's
contractors (other than BUILDER) or BUYER's invitees if such damage, loss or
destruction was caused by the gross negligence or willful misconduct of the
BUILDER, or of any of its employees, agents, contractors or subcontractors. For
purposes of this Contract, the terms "gross negligence" and "willful misconduct"
are defined as "an intentional act or omission in disregard of harmful avoidable
consequences, or a reckless act or omission in disregard of harmful avoidable
consequences".

2.   Scope of Indemnities:

     In all circumstances where responsibility is allocated herein, the
indemnifying party shall be obligated to bear the expense of the investigations
and expenses of all claims or demands or causes of action arising therefrom and
to pay the full amount of any judgment rendered against the indemnified parties,
it being stipulated that all obligations of indemnity assumed herein shall
survive

                                       38
<PAGE>   42

the termination of this Contract, regardless of how such termination is
effected. The indemnifying party shall have the control of the defense and
settlement of all such claims and lawsuits including the selection of attorneys,
the expense of all which shall be borne by it. The indemnified parties shall
provide reasonable assistance to the indemnifying party in relation to the
defense of claims which are subject to indemnity hereunder. Nothing herein
contained shall prevent the indemnified parties from participating at their own
expense with counsel of their own choosing in any such defense or settlement.

                             ARTICLE XVI - INSURANCE

1.   Extent of Insurance Coverage:

     From the time of Contract signing until the VESSEL is completed, delivered
to and accepted by the BUYER, the BUILDER shall, at its own cost and expense,
keep the VESSEL and all machinery, materials and equipment either delivered to
the Shipyard or being handled by BUILDER for the VESSEL or built into, or
installed in or upon the VESSEL (including all Appurtenances and Components and
all OWNER Furnished Equipment as defined in Article IX), fully insured under
coverage satisfactory to BUYER and corresponding to the American Institute
Clauses for Builder's Risks.

     Said Builder's Risks insurance shall include supplemental coverage for war
risks, strikes and earthquakes but BUILDER may elect to self insure such
supplemental coverage for the mutual benefit of BUILDER and BUYER unless it
appears that a circumstance of political instability is imminent, at which time
BUILDER shall cause the standard Builder's Risks policy required hereunder to be
augmented with coverage for war risks, strikes, locked-out workmen, labor
disturbances, riots, civil commotion without deletions of protection and
indemnity and collision clauses, and earthquakes.

     The amount of such insurance coverage shall, up to and including the date
and time of delivery of the VESSEL, be in an amount at least equal to, but not
limited to, the aggregate of the payments made by the BUYER to the BUILDER and
the value of any OWNER Furnished Equipment (as defined in Article IX) delivered
to the Shipyard, which OWNER Furnished Equipment (as defined in Article IX)
shall not exceed a delivered value of Forty Million United States Dollars (U.S.
$40,000,000).

     The policy referred to hereinabove shall be taken out in the joint names of
the BUILDER and the BUYER and all losses under such policy shall be payable to
the BUILDER and/or the BUYER in accordance with their respective interests. Any
deductible under this insurance policy shall be for the account of BUILDER.

     Notwithstanding the above, the BUYER shall compensate the BUILDER for the
increased insurance cost and expense under or pursuant to any part of

                                       39
<PAGE>   43

this Article, if any, incurred by the BUILDER due to the BUYER's Default as
specified in Article XIII hereof.

2.   Application of Recovered Amount:

(a)  Partial Loss:

     In the event the VESSEL shall be damaged by any insured cause whatsoever
     prior to acceptance thereof by the BUYER and in the further event that such
     damage shall not constitute an actual or a constructive total loss of the
     VESSEL, the BUILDER and/or BUYER shall apply the amount recovered under the
     insurance policy referred to in Paragraph 1 of this Article to the repair
     of such damage satisfactory to the BUYER and the Classification Society and
     the regulatory bodies, and the BUYER shall accept the VESSEL under this
     Contract if completed in accordance with this Contract and Specifications.

(b)  Total Loss:

     However, in the event that the VESSEL is determined to be an actual or
     constructive total loss, the BUILDER shall by the mutual agreement between
     the parties hereto, either:

     (i)  Proceed in accordance with the terms of this Contract, in which case
          the amount recovered under said insurance policy shall be applied to
          the reconstruction of the VESSEL's damage, provided the parties hereto
          shall have first agreed in writing as to such reasonable postponement
          of the Delivery Date and adjustment of other terms of this Contract
          including the Contract Price as may be necessary for the completion of
          such reconstruction; or

     (ii) Refund to the BUYER the amount of all installments paid to the BUILDER
          under this Contract plus the value of all OWNER Furnished Equipment
          (as defined in Article IX) delivered to the Shipyard with interest at
          the rate of ten percent (10%) per annum computed from the date of loss
          of the VESSEL until paid to BUYER, whereupon this Contract shall be
          deemed to be terminated and all rights, duties, liabilities and
          obligations of each of the parties to the other except as contemplated
          under Articles XI, XV, XVII and XX shall terminate forthwith.

     If the parties hereto fail to reach agreement as contemplated under
     Sub-paragraph (b)(i), above, within two (2) months after the VESSEL is
     determined to be an actual or constructive total loss, the provisions of
     Sub-paragraph (b) (ii), above, shall apply.

3.   Termination of BUILDER's Obligation to Insure:

                                       40
<PAGE>   44

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

4.   Supplemental Insurance:

     In addition, from the time of Contract signing until the completion,
delivery and acceptance of the VESSEL, BUILDER and its contractors and
subcontractors shall, at their own cost, maintain the following insurances:

(a)  Worker's Compensation and Employer's Liability Insurance affording benefits
     as provided by applicable Worker's Compensation Statutes in the
     jurisdiction where work is performed, and providing indemnity with respect
     to Employer's Liability with limits as required by local laws, but in no
     event less than Two Million Five Hundred Thousand United States Dollars
     (U.S.$2,500,000) any one claim arising from any one event.

(b)  Third Party Liability Insurance covering all of BUILDER's operations and
     including Automotive, Contractual Liability and Contractor's Protective
     Liability with a combined single limit of not less than Five Million United
     States Dollars (U.S.$5,000,000) per occurrence of bodily injury and/or
     property damage.

(c)  All of the insurances specified in this Article, excepting only Statutory
     Worker's Compensation Insurance, shall name BUYER as an additional assured.

(d)  The underwriters shall be of recognized responsibility and the policies,
     the terms of the policies, the insurance companies and underwriters shall
     be subject to written approval by BUYER, which approval shall not be
     unreasonably withheld. Upon BUYER's request at any time, BUYER shall be
     furnished copies of such policies or other evidence of insurance
     satisfactory to BUYER when obtained by BUILDER from the underwriters and
     the receipt for the payment of the current year's premium.

(e)  Each policy specified in this Article shall include an endorsement under
     which the underwriters waive rights of subrogation against the BUYER, its
     parent, holding and affiliated companies.

(f)  If the BUILDER shall fail to keep itself insured to the satisfaction of the
     BUYER or to produce any such policy or receipt as aforesaid, the BUYER
     shall be entitled at the expense of the BUILDER to take up such insurance
     or insurances as the BUYER in its absolute discretion deems necessary to
     protect its interest and the BUILDER shall be liable to pay, indemnify
     and/or reimburse the BUYER forthwith on demand any sums expended and/or
     incurred by the BUYER for such purpose.

                                       41
<PAGE>   45

(g)  The BUILDER shall not do or allow to be done any act or thing which might
     invalidate any insurance taken out pursuant to this Agreement.

                     ARTICLE XVII - DISPUTE AND ARBITRATION

1.   Proceedings:

     In the event of any dispute between the parties hereto as to any matter
arising out of or relating to this Contract or any stipulations herein or with
respect hereto which cannot be settled by the parties themselves, such dispute
shall be finally settled by arbitration in London, England, pursuant to the
rules of arbitration of the English Arbitration Acts of 1950 to 1979 and any
statutory provisions amending the same. Either party may demand arbitration of
any such dispute by giving notice to the other party in accordance with Article
XXII. Any demand for arbitration by either of the parties hereto shall state
specifically the question(s) as to which such party is demanding arbitration. On
any question properly submitted to arbitration, either party may submit any
evidence and may be represented by counsel or other authorized representative if
desired.

     The arbitrators shall be entitled, but not bound, to consider all
documents, papers or other evidence which the parties may submit, even though
not presented so as to be admissible as evidence in a court of law. The award of
a majority of the arbitrators on any questions so submitted to it shall be
final, binding and conclusive upon the parties hereto and their respective
successors and assigns, and each agrees to abide by such decision.

2.   Notice of Award:

     Notice of any award shall immediately be given in writing, or by telefax
confirmed in writing, to the BUYER and the BUILDER.

3.   Expenses of Arbitration:

     The arbitrators shall determine in the award which party shall bear the
expenses of the arbitration, or the proportion of such expenses which each party
shall bear. Notwithstanding the foregoing, each party shall bear the expenses of
presenting its own witnesses and evidence to the arbitrators, including counsel
fees.

4.   Entry in Court:

     Judgment on an award by the arbitrators may be entered in any court of
competent jurisdiction for enforcement thereof.

                                       42
<PAGE>   46

5.   Alteration of Delivery of the VESSEL:

     In the event of the arbitration of any dispute or disputes arising or
occurring prior to delivery to or acceptance by the BUYER of the VESSEL, the
award by the arbitrators of said dispute or disputes shall include a finding as
to whether or not the Delivery Date of the VESSEL should as a result of such
dispute be in any way altered.

6.   During the arbitration of any dispute or issue under this Contract prior to
delivery to and acceptance by the BUYER of the VESSEL, it is understood and
agreed that the BUILDER shall diligently continue the construction of the
VESSEL.

7.   For the purposes of any proceedings pursuant to this Article, the parties
hereby irrevocably appoint the following as their agents within England for the
service of process:

     SFIC
     Simon Curtis
     Curtis Davis Garrard
     Bedfont Cross, Stanwell Road
     Heathrow Airport, Feltham TW14 8NY U.K.

     The Builder
     HFW Nominees Ltd.
     Marlow House
     Lloyds Avenue
     London
     EC3N 3AL U.K.

                    ARTICLE XVIII - RIGHTS OF ASSIGNMENT AND
                          VESSEL RECIPIENT DESIGNATION

1.   Assignment of the Contract:

     BUILDER shall not assign this Contract unless prior consent of the BUYER is
given in writing. BUYER may, without BUILDER's consent, assign this Contract to
any of its parent, holding, affiliated or successor companies, or to any third
party.

     This Contract shall inure to the benefit of and shall be binding upon the
lawful successors or the legitimate assigns of either of the parties hereto.

                                       43
<PAGE>   47

2.   BUYER's Right to Designate Recipient of VESSEL:

     BUYER shall have the right to designate a party other than BUYER as the
recipient of the BUYER's rights in respect of delivery and acceptance of the
VESSEL by submission of notice to BUILDER in accordance with Article XXII at any
time prior to the actual date of VESSEL delivery and acceptance. In the event of
submission of such notice by BUYER, BUILDER shall (i) issue the Bill of Sale in
the name of the party which has been so designated by BUYER , (ii) if requested
by BUYER arrange for the stand-by letter of credit and the on demand performance
bond contemplated by Article XI, Paragraph 2, to be amended so as to be for the
benefit of such designee; and (iii) exert its best efforts to issue the other
documents to be furnished by it upon delivery and acceptance of the VESSEL in
the name of said party, which party shall be entitled to all rights, privileges
and benefits which would otherwise accrue to BUYER hereunder upon and following
delivery and acceptance of the VESSEL including, without limitation, those
contained in Article X (Warranty of Quality). The delivery of such notice to
BUILDER shall not relieve BUYER of any of its obligations under this Contract
whatsoever including, without limitation, obligations which may relate to or
arise either upon or subsequent to delivery and acceptance of the VESSEL.

                         ARTICLE XIX - TAXES AND DUTIES

     BUILDER agrees to bear and pay all taxes, licenses, duties and fees of
whatsoever nature, including withholding taxes, levied or assessed on BUILDER in
connection with or incident to the performance of this Contract by any
governmental agency including, but not limited to, taxes or levies related to
unemployment compensation insurance, old age benefits, social security, or any
other taxes upon the income or wages of BUILDER, its agents, employees, and
representatives and any ad valorem or sales/VAT tax levied on the work or
BUILDER's invoices. BUILDER agrees to stipulate the aforesaid conditions in its
agreements with its subcontractors and representatives and BUILDER agrees to be
liable for any breach of such agreements. BUILDER shall indemnify, defend and
hold BUYER and its affiliates harmless in respect of liability for such taxes,
licenses, duties and fees.

               ARTICLE XX - PATENTS, TRADEMARKS, COPYRIGHTS, ETC.

1.   Patents, Trademarks and Copyrights:

(a)  The BUILDER shall, without limitation of time, defend any claim, suit or
     proceeding brought against the BUYER, its parent, holding, affiliated
     companies, the owner or operator of the VESSEL and/or the VESSEL alleging
     that the design, process, device, apparatus, plans or specifications or the
     method of construction employed by the BUILDER hereunder or the tools or
     implements used by the BUILDER in the

                                       44
<PAGE>   48

     performance of this Contract constitutes infringement of any patent, and
     the BUILDER shall indemnify, defend and save the BUYER, its parent, holding
     and affiliated companies, the VESSEL, its owners and operators harmless
     from and against any such claim, suit or proceeding. The BUYER shall
     promptly notify the BUILDER in accordance with Article XXII of any such
     claim, suit or proceeding and shall permit the BUILDER to control the
     conduct and settlement of such claim, suit or proceeding; provided,
     however, no settlement which purports to acknowledge on the BUYER's behalf
     the validity of any patent shall be entered into without the BUYER's prior
     written consent. The BUYER shall provide information and assistance to the
     BUILDER, at the BUYER's expense, as may be reasonably necessary to aid in
     the conduct and settlement of the claim, suit or proceeding. The BUYER
     shall be entitled to participate, at its own expense, in the conduct and
     settlement of such claim, suit or proceeding through its selected
     representatives and attorneys.

(b)  The BUYER shall, without limitation of time, defend any claim, suit or
     proceeding brought against the BUILDER alleging that the construction or
     use by the BUILDER, pursuant to this Contract, of any design, process,
     device or apparatus specified or furnished by the BUYER and mounted upon or
     used in connection with the VESSEL constitutes infringement of any patent
     and the BUYER shall indemnify, defend and save the BUILDER harmless from
     and against any such claim, suit or proceeding. The BUILDER shall promptly
     notify the BUYER in accordance with Article XXII of any such claim, suit or
     proceeding and shall permit the BUYER to control the conduct and settlement
     of such claim, suit or proceeding; provided, however, no settlement which
     purports to acknowledge on the BUILDER's behalf the validity of any patent
     shall be entered into without the BUILDER's prior written consent. The
     BUILDER shall provide information and assistance to the BUYER, at the
     BUILDER's expense, as may be reasonably necessary to aid in the conduct and
     settlement of the claim, suit or proceeding. The BUILDER shall be entitled
     to participate, at its own expense, in the conduct and settlement of such
     claim, suit or proceeding through its selected representatives and
     attorneys.

                             ARTICLE XXI - ADDRESSES

     The BUYER's address designated for the purpose of notices under this
Contract shall be Santa Fe International Corporation, 5420 LBJ Freeway, Suite
1100, Dallas, Texas, 75240, U.S.A., Attention: Mr. N. Pharr Smith, telefax
(972)701-7390, unless and until the BUYER notifies the BUILDER to the contrary
in writing. An additional copy of all such notices shall be sent to BUYER's
Representative as designated under this Contract, in accordance with Article
XXII.

                                       45
<PAGE>   49

     The BUILDER's address designated for the purpose of notices under this
Contract shall be PPL Shipyard Pte. Ltd., 21 Pandan Road, Singapore 609273,
Attention: Mr. Ong Tian Khiam, telefax (65) 264-4130, unless and until the
BUILDER notifies the BUYER to the contrary in writing.

     No later than the Construction Commencement Date, each of the parties shall
furnish to the other in writing the name of its representatives who shall be
authorized to approve and execute all change orders.

                       ARTICLE XXII - NOTICES AND LANGUAGE

1.   Notice:

     Notices required or permitted to be given hereunder shall be in writing and
shall be deemed given when delivered personally, by registered or certified mail
or by facsimile to the address of the party receiving such notice, as specified
in Article XXI.

2.   Language:

     Any and all notices and communications in connection with this Contract
shall be written in the English language.

                   ARTICLE XXIII - EFFECTIVE DATE OF CONTRACT

     This Contract shall become effective upon the date first written above
(herein called the "Effective Date").

                          ARTICLE XXIV - INTERPRETATION

1.   Laws Applicable:

     The parties hereto agree that the validity and interpretation of this
Contract and of each Article and part thereof shall be governed by English law
excluding, however, any of its conflicts of law rules or other provisions which
may refer to the laws of another jurisdiction.

2.   Discrepancies:

     All general language or requirements embodied in the attachments to this
Contract are intended to amplify, explain and implement the requirements of this
Contract. However, in the event that any language or requirements so embodied
permit an interpretation inconsistent with any provisions of this Contract,
then, in

                                       46
<PAGE>   50

each and every such event, the applicable provisions of this Contract shall
prevail and govern. In the event that the specifications conflict with the
drawings, the specifications shall prevail and govern.

3.   Independent Contractor:

     The BUILDER agrees that it is an independent contractor in sole charge of
and in exclusive control of the work. The exercise by the BUYER or its
Representative of any right to review, approve and inspect the work shall not
relieve the BUILDER of its total responsibility for its work and schedule and
that of its contractors and subcontractors.

4.   Headings:

     The headings in this Contract shall not be deemed to be a part of this
Contract and are not intended to be used in the interpretation or construction
of this Contract.

5.   Entire Agreement:

     This Contract, along with the Overall Agreement dated on or about 1
February, 2001, between the parties, contains the entire agreement and
understanding between the parties hereto with respect to the subject matter
hereof and supersedes all prior negotiations, representations, undertakings and
agreements on the subject matter of this Contract between the parties for the
construction of this Vessel. In the event of any conflict between the provisions
of this Contract and the Overall Agreement, the provisions of the Overall
Agreement shall prevail.

                        ARTICLE XXV - CONFLICT AND AUDIT

1.   Conflict of Interest:

     BUILDER shall exercise reasonable care and diligence to prevent any actions
or conditions which could result in a conflict with the best interests of BUYER,
its parent, holding or affiliated companies. This obligation shall apply to the
activities of BUILDER'S employees and agents arising from this Contract, in
their relations with BUYER's employees and representatives and their respective
families, and with vendors, contractors, subcontractors and third parties
hereunder. BUILDER's efforts shall include, but not be limited to establishing
precautions to prevent its and its contractors' and subcontractors'
representatives, employees and agents from making, receiving, providing or
offering any payments, loans or other considerations or gifts or entertainment
of a material value. Material value shall be defined as anything having a value
of Two Hundred United States Dollars (U.S. $200) or more. BUILDER further

                                       47
<PAGE>   51

agrees that if it should be approached by anyone representing BUYER, its parent,
holding or affiliated companies who requests an item or gift of value, the
BUILDER will immediately notify BUYER. Breach of this provision shall be
considered a material breach of contract entitling BUYER to terminate the
Contract immediately upon written notice. In addition, BUILDER shall:

     (a)  1.   take no action on behalf of BUYER in the performance of work or
               rendition of services under this Contract where the conduct of
               operations hereunder would subject either party hereto to
               liability or penalty under any and all laws, rules, regulations
               or decrees of any governmental authorities;

          2.   ensure that all invoices, final settlements, reports and billings
               by BUILDER to BUYER reflect properly the facts about all
               activities and transactions handled for its accounts; and

          3.   notify BUYER promptly upon discovery of any instance where
               BUILDER has not complied with the requirements of this Paragraph
               1(a).

          If the violation of this Paragraph 1(a) occurred prior to the date of
          this Contract and resulted directly or indirectly in BUYER's consent
          to enter into this Contract with BUILDER, BUYER may, at BUYER's sole
          option, terminate this Contract at any time, and notwithstanding any
          other provision of this Contract pay no compensation or reimbursement
          to BUILDER whatsoever for any work done after the date of termination.

     (b)  observe the Foreign Corrupt Practices Act of the United States of
          America which prohibits directly or indirectly making any offer,
          payment, promise to pay or authorizing the payment of any money or
          anything of value to any government official, political party or any
          candidate for political office for the purpose of 1) influencing any
          act or decision of any such official or party in his, her or its
          official capacity, 2) inducing such person to do or omit to do any act
          in violation of the lawful duty of such official, 3) securing any
          improper advantage or 4) inducing such official or party to use his,
          her or its influence with any government to influence any act or
          decision of such government in order to assist BUYER in obtaining or
          retaining business.

2.   Audit:

     The BUYER shall have the right to audit BUILDER to verify it is in
compliance with the requirements of Article XXV. In addition, at all reasonable
times during the continuation of this Contract and for a period of two (2) years
thereafter, BUYER's duly authorized representatives, including any third party

                                       48
<PAGE>   52

designated consultant, shall have access to, and the right to question BUILDER's
and its contractors' and subcontractors' and agents' personnel and to examine
their respective books, records, correspondence, instructions, plans, drawings,
receipts, vouchers, computer records, bid files of contractors and
subcontractors (both successful and unsuccessful), original estimates, change
order files, general ledger entries, payment vouchers and documentation of
business entertainment expenses pertaining to the services hereunder for the
purposes of auditing and verifying that the charges or costs presented by
BUILDER to BUYER for payment are in accordance with this Contract, or for any
other reasonable purpose. However, in no event shall BUYER have the right to
audit the composition of any lump sum prices, percentage overlays or fixed sums.
BUYER's representatives shall have the right to reproduce any of the aforesaid
documents for a period of two (2) years after the completion and acceptance or
termination of the work, or the fulfillment of any warranty obligations arising
under this Contract, whichever is later.

     BUILDER shall ensure that any subcontract entered into in accordance with
the terms of this Contract confers upon the BUYER the same audit rights in
relation to such contractor or subcontractor as are conferred upon BUYER by this
provision.

                        ARTICLE XXVI - PUBLICITY RELEASES

     BUILDER and its suppliers and subcontractors if any, shall not reveal to
others, except as required by law, through literature, brochures, or other types
of publicity releases any information regarding the work or its activities or
participation hereunder, without prior written approval from BUYER. The content
of any releases shall be approved in writing in advance by BUYER.

     IN WITNESS WHEREOF, the parties hereto have caused this Contract to be duly
executed effective the day and year first above written.

SANTA FE INTERNATIONAL                 PPL SHIPYARD PTE. LTD.
     CORPORATION
     (BUYER)                                       (BUILDER)

By:                                    By:
    --------------------------             ---------------------------

Name: C. Stedman Garber, Jr.           Name: Ong Tian Khiam

Title: President                       Title: Managing Director

Witness:                               Witness:
         ---------------------                  ----------------------

Date Signed:                           Date Signed:
             -----------------                      ------------------

                                       49
<PAGE>   53

                                   EXHIBIT "A"

                      SCHEDULE OF LABOUR AND MATERIAL RATES

1.   GENERAL CONDITIONS & NOTES

     All of the rates and charges set forth in this Exhibit "A" shall be
     discounted by fifteen percent (15%) for the first two Vessels constructed
     by the Builder for the Buyer. Thereafter the rates and charges shall be as
     mutually agreed but shall in no event be greater than Builder's current
     standard rates and charges less a fifteen percent (15%) discount.

     SHIPYARD'S PERSONNEL - EXPLANATORY NOTES

     1.1  The daily rate shall only apply to personnel working in the Shipyard.
          In the event when the Buyer requires personnel to work outside of
          Singapore, the rate shall be discussed.

     1.2  All personnel's rates are based on the labour law of Singapore and are
          subject to changes which arise directly from changes stipulated in the
          labour law.

     1.3  The minimum hire period shall be 8 normal working hours per day for
          Skilled and Unskilled Labour.

          NORMAL WORKING DAY

          Monday to Friday

          0800 hr  -  1200 hr
          1200 hr  -  1300 hr (Lunch)
          1300 hr  -  1700 hr

          For any time spent working on instruction outside of the standard
          normal hours, the following rates shall be applied:

          a.   OVERTIME

               1700 hr  -  2100 hr              Charge at 1.5 times
               2100 hr  -  2400 hr              Charge at 2.0 times
               0000 hr  -  0800 hr (next day)   Charge at 3.0 times

                            EXHIBIT "A" - Page 1 of 6
<PAGE>   54

          b.   SATURDAY

               0800 hr  -  1200 hr            ) Charge at normal time

               1200 hr  -  1300 hr (Lunch)    ) Charge at 1.5 times of
               1300 hr  -  1700 hr            ) normal rate

               1700 hr  -  2100 hr            ) Charge at 2.0 times of
                                              ) normal rate

               2100 hr  -  0800 hr (next day) ) Charge at 3.0 times of
                                              ) normal rate

          c.   SUNDAY/PUBLIC HOLIDAYS

               0800 hr  -        1200 hr          ) Charge at 2.0 times of
               1200 hr  -        1300 hr (Lunch)  ) normal rate
               1300 hr  -        1700 hr          )

               1700 hr  -        And above (next day) ) Charge at 3.0
                                                      ) times of
                                                      ) normal rate

     1.4  The rates shall be applied from the time the personnel is committed to
          the work or service until released, including mobilization, standby or
          demobilisation.

     1.5  Where labour supply exceeds six (6) men, a supervisor shall be
          required. This supervisor shall take instructions from the Buyer and
          the Buyer shall be responsible for any work carried out by the labour
          supplied.

     1.6  A levy of S$30.00 per day per man will be imposed in the event the
          Buyer engages any services or hires any equipment from outside the
          shipyard which the Builder is able to provide.

                         SCHEDULE OF RATES FOR PERSONNEL

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------
              CATEGORY                                               HOURLY RATE (S$)
-------------------------------------------------------------------------------------

<S>                                                                  <C>
A)   MANAGEMENT:

     1.   Superintendent / Engineer                                       90.00

B)   SUPERVISORY:
     1.   Safety Officer / Fireman                                        45.00
     2.   Technician                                                      45.00
     3.   Draughtsman                                                     45.00
</TABLE>

                            EXHIBIT "A" - Page 2 of 6
<PAGE>   55

<TABLE>
<S>                                                                       <C>
     4.   Q.C. Technician                                                 45.00
     5.   Foreman (All Trades)                                            45.00
     6.   Assistant Engineer                                              60.00

C)   SKILLED LABOUR :
     1.   Welder                                                          30.00
     2.   Pipe Fitter / Steel Fitter                                      30.00
     3.   HVAC Fitter                                                     30.00
     4.   Mechanical Fitter                                               30.00
     5.   Electrician                                                     30.00
     6.   Machinist                                                       30.00
     7.   Crane Operator                                                  30.00
     8.   Fork-Lift Driver                                                30.00
     9.   Watchman                                                        30.00
     10.  Carpenter                                                       30.00
     11.  Painter                                                         30.00
     12.  Cutter                                                          30.00
     13.  Material Handler                                                30.00
     14.  Sandblaster                                                     30.00
     15.  Rigger / Stager                                                 30.00
     16.  Store-Keeper                                                    30.00
     17.  Store Assistant                                                 20.00

D)   UNSKILLED LABOUR :
     1.   General Worker / Helper                                         18.00
     2.   Cleaner                                                         18.00
     3.   Grinder                                                         18.00
     4.   Oiler                                                           18.00

--------------------------------------------------------------------------------------------------
NOTE: ANY TRADESMAN NOT SPECIFIED IN THIS SCHEDULE OF RATES SHALL BE QUOTED SEPARATELY ON REQUEST.
--------------------------------------------------------------------------------------------------
</TABLE>

1.   GENERAL CONDITIONS & NOTES

     EQUIPMENT - EXPLANATORY NOTES


     1.1  In the event of a necessity to hire any equipment from an outside
          source, all mobilisation and demobilisation costs shall be for the
          Buyer's account.

     1.2  Should any specialist or extra piece of equipment be required to be
          hired in for an operation on Rental Rate, such costs shall be
          recoverable from the Buyer at cost plus fifteen percent (15%) service.

                            EXHIBIT "A" - Page 3 of 6
<PAGE>   56

     1.3  The equipment's rates quoted are inclusive of all fuel and refueling,
          spare parts, maintenance, consumable, use of existing slings and
          shackles (if available).

     1.4  Except where otherwise specified, all rates exclude operators.

     1.5  Minimum hire period shall be four (4) hours unless specified.

     1.6  The Rates shall be applied from the time the equipment is committed to
          the work or service until released.

     1.7  All prices quoted are for work to be carried out within Builder's
          premises only.

     1.8  All cut-off/remnant/etc. of steel materials generated from all
          repair/modification/ conversion works shall be for Builder's property.
          Builder shall be responsible to clear off such steel materials.

     1.9  All prices quoted are based on Normal Working Hours:

          Monday to Friday      :       0800 - 1200 Hr
                                        1200 - 1300 Hr (Lunch)
                                        1300 - 1700 Hr

          Saturday              :       0800 - 1200 Hr

1.   SCHEDULE OF RATES FOR CRANES

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
       DESCRIPTION                  CAPACITY               HOURLY RATE (S$)
--------------------------------------------------------------------------------

<S>                                 <C>                    <C>
Type of Cranes:

Crawler / Truck Crane               20 - 50 Ton            200.00

Link Belt Crawler Crane             80 - 100 Ton           300.00

Link Belt Crawler Crane             150 Ton                600.00

Manitowoc Crawler Crane             200 Ton                1,000.00

Manitowoc Crawler Crane             350 Ton                1,250.00

Manitowoc Platform Ringer           600 Ton                On Application

--------------------------------------------------------------------------------
NOTE:  ALL OVERTIME ON CRANES WILL BE CHARGED AT FLAT HOURLY RATE.
--------------------------------------------------------------------------------
</TABLE>

                            EXHIBIT "A" - Page 4 of 6
<PAGE>   57

<TABLE>
<CAPTION>
================================================================================

                         SCHEDULE OF RATES FOR EQUIPMENT

-----------------------------------------------------------------------------------
              TYPE OF EQUIPMENT                                     DAILY RATE (S$)
-----------------------------------------------------------------------------------

<S>                                                                 <C>
Air Compressor (Portable) - Diesel Driven
     125 cfm                                                              70.00
     250 cfm                                                             225.00
     600 cfm                                                             360.00
     600 cfm (electric)                                                  300.00

Welding Set
     Welding Transformer / Rectifier                                      60.00

Fork-Lift
     Above 3.5 Ton                                                       260.00
     Up to 3.5 Ton                                                       195.00

Gensets:
     350 Kva (excluding supply of diesel)                                450.00

Low Loader:                                                              420.00

                                  YARD SERVICES

1.   Harbour Tug Services (between 200 to 350 HP):

     Per Call:             a. Mobilisation                  :          S$150.00
                           b. Demobilisation                :          S$150.00
                           c. In operation (per tug per hr) :          S$150.00
                           d. Minimum operating charge      :          S$450.00

2.   Wharfage Per Day:
</TABLE>

<TABLE>
<CAPTION>
                                               Wharf-Front           Shore-Line
                                               -----------           ----------

<S>                                            <C>                   <C>
     a. Jack-Up Rig / Accommodation Unit       S$1,000.00            S$350.00

     b. Semi-Submersible                                             S$1,350.00

     c. Ship/Tugboat                           S$5.00/m length of LOA per day
                                               (minimum charge of S$500/day)

     d. Barge                                  S$4.00/m length of LOA per day
                                               (minimum charge of S$400/day)
</TABLE>

                            EXHIBIT "A" - Page 5 of 6
<PAGE>   58

<TABLE>
<S>                                                <C>
3.   Loading and unloading of cargo/equipment/etc. : S$100/truck (within the yard)
     charges (alongside PPL's wharf or within        to a maximum of S$1,000/day
     the yard)

4.   Mooring and Unmooring
     a.     Jack-Up Rig                            : S$800.00/moor or unmoor
     b.     Semi-Submersible / Ship                : S$800.00/moor or unmoor
     c.     Barge                                  : S$400.00/moor or unmoor

5.   Water Supply :
     a.     Fireline                               : S$100.00/hose per day
     b.     Fresh Water (below 200 m.ton per month): S$7.50/m.ton
                        (above 200 m.ton per month): S$10.00/m.ton
     c.     Labour Charges for connection and      : S$300.00/operation
            disconnection of hose.

6.   Electricity Supply :
     a.     Shore power for 50 Hz only             : S$0.80/kwh
     b.     Labour Charges for connection/
            disconnection of cable                 : S$500/operation

                                  YARD SERVICES

7.   Gas Free :

     a.     Government Chemist                     : Cost + 15% service charge
     b.     Shipyard Safety Personnel              : S$200/day

8.   Garbage Disposal                              : S$200/day

9.   General Gate Security                         : S$50/man per day

10.  Spacer Barge (PPL's own spacer barge)         : S$150/day

11.  Gangway                                       : S$100/day

12.  Storage Per Month:

     a.     Ordinary open space                    : S$4.00/sq.m.
     b.     Open hard-core area                    : S$5.00/sq.m.
     c.     Open hard-core area c/w gantry crane   : S$6.00/sq.m.
     d.     Covered workshop                       : S$7.00/sq.m.
     e.     Warehouse                              : S$25.00/sq.m.
     f.     Office space                           : S$43.00/sq.m.
</TABLE>

                                ------ END ------

                            EXHIBIT "A" - Page 6 of 6
<PAGE>   59

                                   EXHIBIT "B"

                       PROTOCOL OF DELIVERY AND ACCEPTANCE
                               FOR HULL NO. (2001)


KNOW ALL MEN BY THESE PRESENTS:

     That PPL SHIPYARD PTE. LTD., ("BUILDER") has constructed and sold and by
these presents does grant, convey and deliver to _________________________
("BUYER") all right, title, and interest to the jack-up drilling vessel bearing
BUILDER'S HULL NO. 2002 (the "Vessel") pursuant to a Contract for the
Construction and Sale of One Jack-Up Drilling Unit, effective (MM DD YY), as
currently amended, and all schedules thereto (the "Contract") and that the
undersigned, as a duly authorized representative of BUYER, does hereby on its
behalf accept delivery of the Vessel as aforesaid, subject to the following.

     Nothing contained in this document shall in any way affect, diminish,
impair or prejudice any of the obligations, undertakings, guarantees, warranties
or liabilities of BUILDER pursuant to the provisions of the Contract, as
currently amended, which are applicable after delivery.

     Signed at _____________________________________________ at________________
hours on _____________________, 20__.

PPL SHIPYARD PTE. LTD.
      (BUILDER)                        -------------------------------
                                                   (BUYER)

By:                                    By:
    --------------------------             ---------------------------

Name:                                  Name:
      ------------------------               -------------------------

Title:                                 Title:
       -----------------------                ------------------------

Witness:                               Witness:
         ---------------------                  ----------------------

                            EXHIBIT "B" - Page 1 of 1

<PAGE>   60

                                  EXHIBIT "C-1"

                                   IRREVOCABLE
                            STAND-BY LETTER OF CREDIT

                      NO.
                          ---------------------------------

Santa Fe International Corporation
5420 LBJ Freeway
Suite 1100
Dallas, TX 75240-2648

Dear Sirs:

     We hereby establish this Irrevocable Stand-by Letter of Credit in your
favor in connection with the Contract for the Construction and Sale of One
Jack-Up Drilling Unit, Hull No. 2002, effective February 1, 2001, between PPL
Shipyard Pte. Ltd. and you for the account of PPL Shipyard Pte. Ltd. up to the
aggregate amount of Seven Million Eighty-Nine Thousand Seven Hundred United
States Dollars (U.S.$7,089,700) available for payment against your draft marked
with the above credit number accompanied by a certificate (the "Default
Certificate") signed by you reading as follows:

     "Pursuant to your Letter of Credit No. (#####) dated (MM DD YY), in favor
     of Santa Fe International Corporation ("Buyer"), we hereby certify that the
     amount of the attached draft ($$$$$) is due and payable to Buyer in
     connection with the Contract for the Construction and Sale of One Jack-Up
     Drilling Unit, Hull No. 2002, effective February 1, 2001."

     The expiry date ("Expiry Date") of this Letter of Credit shall be February
15, 2005, or the 380th day after the actual date of delivery and acceptance of
the Drilling Unit, whichever is the earlier, provided that if the 380th day
after the actual date of delivery and acceptance of the Drilling Unit does not
occur by January 15, 2005, and PPL Shipyard Pte. Ltd. has not obtained an
extension of this Stand-by Letter of Credit, you may consider the full amount of
this Stand-by Letter of Credit to be due and payable. The evidence of actual
date of delivery and acceptance of the Drilling Unit shall be by means of
presentation of the signed and dated PROTOCOL OF DELIVERY AND ACCEPTANCE as
attached hereto.

     We hereby agree with the drawers, endorsers and bonafide holders of all
drafts drawn under and in compliance with the terms of this Stand-by Letter of
Credit that such drafts will be duly honored upon presentation to drawee on or
before the Expiry Date at our offices located at _________________________,
U.S.A. Partial draws are allowed with total drawings not to exceed the aggregate
amount of this Letter of Credit.

                           EXHIBIT "C-1" - Page 1 of 2
<PAGE>   61

     Except as otherwise expressly stated herein, this Letter of Credit is
subject to the Uniform Customs and Practice for Documentary Credits (1993
Revision), International Chamber of Commerce Publication No. 500 (hereinafter
called the "UCPDC") and shall be supplementally governed by the laws of New
York, U.S.A. to the extent that they do not conflict with the UCPDC.

                           EXHIBIT "C-1" - Page 2 of 2
<PAGE>   62

                                  EXHIBIT "C-2"

                                    ON DEMAND
                                PERFORMANCE BOND

This AGREEMENT is made the    day of February, 2001 BETWEEN [_______ SURETY
________] having its registered office at [____________________________________]
(hereinafter called the "SURETY") of the one part and SANTA FE INTERNATIONAL
CORPORATION of Two Lincoln Centre, Suite 1100, 5420 LBJ Freeway, Dallas, TX
75240-2648, U.S.A., its assigns and successors in law (hereinafter called the
"BENEFICIARY") of the other part.

WHEREAS this Agreement is made pursuant to an agreement dated on or about
February 1, 2001 (hereinafter called "the Contract") made between PPL SHIPYARD
PTE LTD of 21 Pandan Road, Singapore 609273 (hereinafter called "the BUILDER")
of the one part and you of the other part whereby the BUILDER has agreed to
execute and complete the construction and sale of one Jack-up Drilling Unit
(Hull No. 2002) ("the Contract Works") for the sum of approximately Seventy
Million Eight Hundred Ninety-Seven Thousand United States Dollars
(U.S.$70,897,000).

AND WHEREAS we have agreed to guarantee the due performance of the Contract in
the manner specified herein.

NOW WE HEREBY AGREE with you as follows:

1.   In consideration of you not insisting on the BUILDER paying a security
     deposit for the Contract, we hereby irrevocably and unconditionally
     undertake, covenant and firmly bind ourselves to pay to you on first demand
     and without prior recourse to the BUILDER any sum or sums which from time
     to time may be demanded by you up to a maximum aggregate of Seven Million
     Eighty-Nine Thousand Seven Hundred United States Dollars (US$7,089,700)
     ("the Said Sum").

2.   Should you notify us in writing, at any time prior to the expiry of this
     Bond, by notice purporting to be signed for and on your behalf that you
     require payment to be made of the whole or any part of the Said Sum, we
     irrevocably and unconditionally agree to pay the same to you immediately on
     demand (and in any case not later than one hundred and twenty (120) hours
     after the receipt of any demand) without further reference to the BUILDER
     and notwithstanding any dispute or difference which may have arisen under
     the Contract or any instruction which may be given to us by the BUILDER not
     to pay the same.

                           EXHIBIT "C-2" - Page 1 of 4
<PAGE>   63

3.   We hereby confirm and agree that we shall be under no duty or
     responsibility to inquire into:

     3.1  the reason or circumstances of any demand hereunder, or

     3.2  the respective rights, obligations and/or liabilities of yourselves
          and the BUILDER under the Contract, or

     3.3  the authenticity of your notice or the authority or entitlement of
          persons signing such notice,

     but that we shall be entitled to and shall rely upon any written demand by
     you hereunder.

4.   Any payment to be made by us hereunder shall be made without any set-off,
     deduction or counterclaim whatsoever.

5.   We confirm and agree that except only in the clear case of established
     fraud, no party shall be entitled to enjoin or restrain you from making any
     call or demand on this Bond or receiving monies under this Bond or enjoin
     or restrain us from making payment under the Bond on any other ground.

6.   We agree that our liability hereunder shall not be discharged, affected or
     impaired in any way by reason of any modification, amendment or variation
     in or to any of the conditions or provisions of the Contract or the
     Contract Works (whether without our consent or otherwise) or by reason of
     any breach or breaches of the Contract by the BUILDER, whether the same are
     made with or without our knowledge or consent. We further agree that no
     invalidity in the Contract nor its avoidance, suspension or termination
     shall discharge, affect or impair our liability hereunder and that no
     waiver, compromise, indulgence or forbearance, whether as to time, payment,
     performance or any other matter afforded by you to the BUILDER under the
     Contract, shall discharge, affect or impair our liability hereunder.

7.   We confirm that this Bond is irrevocable, that our liability hereunder
     shall be a continuing liability notwithstanding any change in the
     constitution or organisation of the BUILDER and that this Bond shall remain
     in full force and effect until the first to happen of the following events:

     7.1  the original of this Bond is returned by you to us at our address
          aforesaid; or

     7.2  expiry of this Bond as hereinafter provided.

8.   This Bond shall expire as to any undrawn portion of the Said Sum at the
     close of banking business on the day which is fifteen (15) calendar days

                           EXHIBIT "C-2" - Page 2 of 4
<PAGE>   64

     after the expiry of the full warranty period specified under the Contract.
     Notification of demand for payment may be presented to us at any time prior
     to expiry of the Bond. "Undrawn Portion" shall mean the Said Sum less the
     aggregate amount which shall have been the subject of notification by you
     of your demand for payment as hereinbefore provided.

9.   The BENEFICIARY may, without the consent of either the SURETY or the
     BUILDER, assign this Bond to any of its parent, holding, affiliated or
     successor companies. The Beneficiary may, subject to the consent of the
     SURETY, not to be unreasonably withheld, assign this Bond to any third
     party to whom it assigns the Contract.

10.  Terms used herein shall, unless the context otherwise requires, have the
     meanings ascribed to them in the Contract.

11.  The costs and expense of procuring and stamping the Bond shall be borne by
     the BUILDER.

12.  This Bond shall be governed by and construed in accordance with the laws of
     Singapore and we hereby agree to submit to the jurisdiction of the Courts
     of Singapore.

13.  The SURETY hereby declares, confirms and warrants that under its
     constitution and the applicable laws and regulations of Singapore, it has
     the necessary power and authority and all necessary authorizations,
     approvals and consents thereunder including those of all governmental and
     regulatory authorities all of which have been obtained to enable the SURETY
     to enter into, execute, deliver and perform the obligations undertaken by
     the SURETY under this Bond and the signatory(ies) to this Bond is/are the
     SURETY's duly authorized officer(s) and the obligations on the SURETY's
     part contained in this Bond are valid and legally binding on and
     enforceable against the SURETY under the laws of Singapore.

14.  The SURETY further confirms it is not necessary or advisable under the laws
     of Singapore in order to ensure the legality, enforceability and priority
     of this Bond or of any part thereof, that this Bond be filed, registered or
     recorded in any public office or elsewhere or that any other instrument
     relating thereto be executed, delivered, filed, registered or recorded,
     that any tax or duty be paid or that other actions be taken.

                           EXHIBIT "C-2" - Page 3 of 4
<PAGE>   65

IN WITNESS WHEREOF we have executed this Bond and affixed our common seal
hereunto on the date and year first above written.

The Common Seal of [        ]               )
                                            )
was hereunto affixed  in the presence of:-  )



-----------------------------------
Director



-----------------------------------
Director/Secretary

                           EXHIBIT "C-2" - Page 4 of 4
<PAGE>   66

                                   EXHIBIT "D"

                             CONTRACT SPECIFICATIONS



                                  SEE ATTACHED.


                          EXHIBIT "D" - Page 1 of _____
<PAGE>   67

                                   EXHIBIT "E"

                             CONTRACT DRAWINGS LIST

The Contract Plans that form a part of these Specifications are as follows:

<TABLE>
<CAPTION>
DRAWING NO.                  ALT.                           TITLE
-----------                  ----                           -----

<S>                           <C>           <C>
7126-J-001-1                  0             General Arrangement - Outboard Profile

7126-J-010                    0             Inner Bottom Tank Arrangement

7126-J-011                    0             General Arrangement - Machinery Deck 6'-0"
                                            A.B.L.

7126-J-012                    0             General Arrangement - Machinery Deck 18'-6"
                                            A.B.L.

7126-J-013-1                  0             General Arrangement - Top Deck Plan

7126-J-013-2                  0             General Arrangement - Main Deck

7126-J-014                    0             General Arrangement - Drill Floor and
                                            Cantilever Beam Pipe Rack

7126-J-015                    0             General Arrangement - Cantilever Beam Cellar
                                            Deck and Mud Processing Area

7126-J-016                    P             Primary Structure Plan

7126-J-020                    0             General Arrangement Quarters - Sht 1 & 2

7126-J-030                    P             Lines Plan

7126-J-100-1                  P             Scantling Plan - Main Deck

7126-J-100-2                  P             Scantling Plan - 18'-6" Flat

7126-J-100-3                  P             Scantling Plan - Inner Bottom
</TABLE>

                            EXHIBIT "E" - Page 1 of 7

<PAGE>   68

<TABLE>
<CAPTION>
DRAWING NO.                  ALT.                     TITLE
-----------                  ----                     -----

<S>                          <C>            <C>
7126-J-100-4                  P             Scantling Plan - Bottom Plating

7126-J-101-1                  P             Scantling Plan - Transverse Sections - Frames
                                            2A to 10A

7126-J-101-2                  P             Scantling Plan - Transverse Sections - Frames
                                            11 to 22

7126-J-101-3                  P             Scantling Plan - Transverse Sections - Frames
                                            23 to 28, 30, 31, and Side Shell

7126-J-102                    P             Scantling Plan - Longitudinal Bulkheads

7126-J-103                    P             Scantling Plan - Longitudinal Girders

7126-J-104-1                  P             Scantling Plan -Leg Well Modules

7126-J-104-2                  P             Scantling Plan -Leg Well Modules

7126-J-106-1                  P             Dry Tow Strong Boxes

7126-J-106-2                  P             Dry Tow Strong Boxes

7126-J-120-1                 P1             Crane Foundations - Sea Trax 6032 - Crane
                                            No. 1 & Details

7126-J-120-2                 P1             Crane Foundations - Sea Trax 7232 - Crane
                                            No. 2 & Details

7126-J-120-3                 P1             Crane Foundations - Sea Trax 6032 - Crane
                                            No. 3 & Details

7126-J-130-1                 P2             Scantling Plan - Quarters

7126-J-130-2                 P2             Scantling Plan - Quarters

7126-J-130-3                 P2             Scantling Plan - Quarters

7126-J-130-4                 P2             Scantling Plan - Quarters

7126-J-131-1                  P             Structural Plan - Heliport
</TABLE>

                            EXHIBIT "E" - Page 2 of 7

<PAGE>   69

<TABLE>
<CAPTION>
DRAWING NO.                  ALT.                      TITLE
-----------                  ----                      -----

<S>                          <C>            <C>
7126-J-131-2                  P             Heliport - Details and Sections

7126-J-131-3                  P             Heliport - Details and Sections

7126-J-140-1                  P             Scantling Plan - Substructure and Cantilever
                                            Beams

7126-J-140-2                  P             Scantling Plan - Substructure and Cantilever
                                            Beams

7126-J-140-3                  P             Scantling Plan - Substructure and Cantilever
                                            Beams

7126-J-140-4                  P             Scantling Plan - Substructure and Cantilever
                                            Beams

7126-J-140-5                  P             Scantling Plan - Substructure and Cantilever
                                            Beams

7126-J-140-6                  P             Scantling Plan - Substructure and Cantilever
                                            Beams

7126-J-140-7                  P             Scantling Plan - Substructure and Cantilever
                                            Beams

7126-J-140-8                  P             Scantling Plan - Substructure and Cantilever
                                            Beams

7126-J-140-9                  P             Scantling Plan - Substructure and Cantilever
                                            Beams

7126-J-141-1                  P             Drill Floor Structure

7126-J-141-2                  P             Drill Floor Structure

7126-J-142-1                  P             Cantilever Support, Guides and Securing
                                            Arrangement

7126-J-142-2                  P             Cantilever Support, Guides and Securing
                                            Arrangement
</TABLE>

                            EXHIBIT "E" - Page 3 of 7

<PAGE>   70


<TABLE>
<CAPTION>
DRAWING NO.                 ALT.                      TITLE
-----------                 ----                      -----

<S>                         <C>             <C>
7126-J-142-3                  P             Cantilever Support, Guides and Securing
                                            Arrangement

7126-J-142-4                  P             Cantilever Support, Guides and Securing
                                            Arrangement

7126-J-142-5                  P             Cantilever Support, Guides and Securing
                                            Arrangement

7126-J-143                    P             Cantilever Bearing Plates

7126-J-144                    P             Cantilever Beam Drilling Clamp

7126-J-150                    P             Leg Structure

7126-J-151-1                  P             59'-0" Diameter Can

7126-J-151-2                  P             59'-0" Diameter Can

7126-J-151-3                  P             59'-0" Diameter Can

7126-J-160-1                  P             Framing Below Jack Foundation and Lower
                                            Guide

7126-J-160-2                  P             Framing Below Jack Foundation and Lower
                                            Guide

7126-J-161                    P             Jack Foundation Bracing

7126-J-162                    P             Pump Tower and Leg Jetting Piping

JU2-S312-03                   0             Innerbottom Tanks - Access Fiberglass
                                            Stairways

JU2-S327-01                   P             JU-2000 Conductor Tensioning Platform
                                            Structure and Details (Sheets 1-6)

JU2-S327-03                   P             JU-2000 Conductor Tensioner Access
                                            Removable Panel Walkways (Sheets 1-4)
</TABLE>

                            EXHIBIT "E" - Page 4 of 7
<PAGE>   71


<TABLE>
<CAPTION>
DRAWING NO.                  ALT.            TITLE
-----------                  ----            -----

<S>                          <C>            <C>
JU2-S327-04                   P             JU-2000 Upper Sliding Walkways Structure
                                            and Details

JU2-S327-05                   P             JU-2000 Aft Hinge Panels for Conductor
                                            Tension Unit

JU2-S327-06                   P             JU-2000 Wellhead Support Beams

JU2-01002-01                  0             Proposed Central Treated Water Cooling
                                            System Concept

JU2-P401-01                   0             Piping Diagram - Sea Water Piping Schematic

JU2-P401-02                   0             Burner Boom Water Curtain Piping Schematic

JU2-P402-01                   0             Potable water Piping Schematic

JU2-P402-02                   0             Potable Water (Quarters) Piping Schematic -
                                            Shts 1-4

JU2-P403-01                   0             Spud Can and Leg Jetting Piping Schematic

JU2-P404-01                   0             Piping Diagram - Quarters Sanitary Piping
                                            Schematic Shts 1&2

JU2-P405-01                   0             Fuel Oil Piping Schematic

JU2-P407-01                   0             Brake Cooling Unit Piping System Schematic

JU2-P408-01                   0             Brine Piping Schematic

JU2-P408-02                   0             Base Oil Piping Schematic

JU2-P409-01                   0             Preload Supply and Dump Piping Schematic

JU2-P410-01                   0             Bilge and Stripping Piping Schematic Shts 1&2

JU2-P411-01                   0             Piping Diagram - Drill Water Piping Schematic

JU2-P411-02                   0             Pressure Washdown Piping Schematic

JU2-P412-01                   0             Compressed Air Piping Schematic Shts 1&2
</TABLE>

                            EXHIBIT "E" - Page 5 of 7

<PAGE>   72

<TABLE>
<CAPTION>
DRAWING NO.                 ALT.                      TITLE
-----------                 ----                      -----

<S>                         <C>             <C>
JU2-P413-01                   0             Bulk Mud and Cement Piping Schematic

JU2-P414-01                   0             Chilled Water (Quarters) Piping System
                                            Schematic

JU2-P415-01                   0             Piping Diagram - H.P. Mud & Cement Piping
                                            Schematic Shts 1&2

JU2-P416-01                   0             Low Pressure Mud Piping Schematic Shts 1&2

JU2-P417-01                   0             Lube Oil and Dirty Oil Piping System
                                            Schematic

JU2-P418-01                   0             Piping Diagram - L.P. Mud Processing System
                                            Schematic

JU2-P419-01                   0             Vents and Sounding Tubes Piping Schematic

JU2-P420-01                   0             Firemain (Hull) System Piping Schematic Shts
                                            1-3

JU2-P420-02                   0             Firemain (Quarters) System Piping Schematic
                                            Shts 1&2

JU2-P423-01                   0             Breathing Air Piping Schematic Shts 1&2

JU2-P424-01                   0             Piping Diagram - Firefighting Foam Piping System
                                            Schematic

JU2-P430-01                   0             Quarters Sprinkler System Piping Schematic
                                            Shts 1-3

JU2-P431-01                   0             Hydraulic Piping System ( BOP and Diverter)

JU2-P432-01                   0             Well Test/ Flare Boom Piping Schematic

JU2-P436-01                   0             Discharge Drain Oil/Water (Hull Pollution
                                            Drains)

JU2-P439-01                   1             Piping Diagram - CAT 3516B Engine Piping System
                                            Schematic Shts 1&2
</TABLE>

                            EXHIBIT "E" - Page 6 of 7
<PAGE>   73

<TABLE>
<CAPTION>
DRAWING NO.                 ALT.                      TITLE
-----------                 ----                      -----

<S>                         <C>             <C>
JU2-P494-01                   0             Lift & Roll Hydraulic Piping Schematic

STD-01003-01                  0             Substructure Lift & Roll Guidance Layout

JU2-E601-01                   0             Over-all One Line Diagram

JU2-E601-02                   0             Schematic 480V, 3ph, 60Hz Main Switchboard
                                            Shts 1-6

JU2-E601-03                   0             Ventilation MCC, 480V, 3ph, 3W, 60Hz

JU2-E601-04                   0             Drilling MCC 480V, 3ph, 60Hz Shts 1&2

JU2-E601-05                   0             Schematic, Emergency Switchboard

JU2-E601-06                   0             208/120V, 3ph, 4W, 60Hz Main switchboard

JU2-E601-07                   0             Schematic & Arrgt, 600V Generator Power &
                                            Control
</TABLE>

                            EXHIBIT "E" - Page 7 of 7