d927958_ex10-5.htm


    
      EXHIBIT
10.5

       

      
        

      


      
        CONTRACT

      

      
         

      

      
         

        FOR

      

      
         

      

      
         

        CONSTRUCTION
AND SALE

      

      
         

      

      
        OF

      

      
         

      

      
        A
DRILLSHIP

         

      

      
        (HULL
N0.1866)

      

      
         

      

      
         

      

      
         

        BETWEEN

         

         

      

      
        DRILLSHIP
SKOPELOS OWNERS INC.

      

      
         

      

      
         

        AND

         

         

         SAMSUNG
HEAVY INDUSTRIES CO., LTD.

      


      
        
           


        

        
           


          
            

          

        

        
           


        

      


      INDEX

       

      
        
          
            
              	 
      	 
      	 
      	
                      PAGE

                    
	 	 
	
                      ARTICLE
      I - DESCRIPTION AND CLASS

                    	
                      6

                    
	 
      	
                      1.

                    	
                      Description:

                    	
                      6

                    
	 
      	
                      2.

                    	
                      Dimensions
      and Characteristics:

                    	
                      6

                    
	 
      	
                      3.

                    	
                      The
      Classification, Rules and Regulations:

                    	
                      7

                    
	 
      	
                      4.

                    	
                      HSE
      Analysis, studies and assessments

                    	
                      7

                    
	 
      	
                      5.

                    	
                      Subcontracting

                    	
                      8

                    
	 
      	
                      6.

                    	
                      Registration:

                    	
                      8

                    
	
                      ARTICLE
      II - CONTRACT PRICE AND TERMS OF PAYMENT

                    	
                      9

                    
	 
      	
                      1.

                    	
                      Contract
      Price:

                    	
                      9

                    
	 
      	
                      2.

                    	
                      Adjustment
      of Contract Price:

                    	
                      9

                    
	 
      	
                      3.

                    	
                      Currency:

                    	
                      9

                    
	 
      	
                      4.

                    	
                      Terms
      of Payment:

                    	
                      9

                    
	 
      	
                      5.

                    	
                      Method
      of Payment:

                    	
                      11

                    
	 
      	
                      6.

                    	
                      Notice
      of Payment before Delivery:

                    	
                      12

                    
	 
      	
                      7.

                    	
                      Expenses:

                    	
                      12

                    
	 
      	
                      8.

                    	
                      Prepayment:

                    	
                      12

                    
	
                      ARTICLE
      III - ADJUSTMENT OF CONTRACT PRICE

                    	
                      13

                    
	 
      	
                      1.

                    	
                      Delivery:

                    	
                      13

                    
	 
      	
                      2.

                    	
                      Speed:

                    	
                      14

                    
	 
      	
                      3.

                    	
                      Fuel
      Consumption for the Diesel Generator Prime Drivers:

                    	
                      15

                    
	 
      	
                      4.

                    	
                      Variable
      Load Capacity:

                    	
                      15

                    
	 
      	
                      5.

                    	
                      Effect
      of Rescission:

                    	
                      16

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

                    	
                      17

                    
	 
      	
                      1.

                    	
                      Approval
      of Plans and Drawings:

                    	
                      17

                    
	 
      	
                      2.

                    	
                      Appointment
      of BUYER'S Supervisor:

                    	
                      17

                    
	 
      	
                      3.

                    	
                      Inspection
      by the Supervisor:

                    	
                      17

                    
	 
      	
                      4.

                    	
                      Facilities:

                    	
                      19

                    
	 
      	
                      5.

                    	
                      Liability
      of BUILDER:

                    	
                      19

                    
	 
      	
                      6.

                    	
                      Responsibility
      of BUYER:

                    	
                      20

                    
	 
      	
                      7.

                    	
                      Delivery
      and Construction Schedule:

                    	
                      20

                    
	
                      ARTICLE
      V - MODIFICATIONS, CHANGES AND EXTRAS

                    	
                      22

                    
	 
      	
                      1.

                    	
                      How
      Effected:

                    	
                      22

                    
	 
      	
                      2.

                    	
                      Changes
      in Rules of Classification Society, Regulations, etc.:

                    	
                      23

                    
	 
      	
                      3.

                    	
                      Substitution
      of Materials:

                    	
                      24

                    
	
                      ARTICLE
      VI - TRIALS AND ACCEPTANCE

                    	
                      25

                    


            

          

        

      


      
        
           


        

        
          2

          
            

          

        

        
           


        

      

      
        


      

      
        
          
            	 
      	
                    1.

                  	
                    Notice:

                  	
                    25

                  
	 
      	
                    2.

                  	
                    Weather
      Condition:

                  	
                    25

                  
	 
      	
                    3.

                  	
                    How
      Conducted:

                  	
                    26

                  
	 
      	
                    4.

                  	
                    Method
      of Acceptance or Rejection

                  	
                    26

                  
	 
      	
                    5.

                  	
                    Effect
      of Acceptance:

                  	
                    27

                  
	 
      	
                    6.

                  	
                    Disposition
      of Surplus Consumable Stores:

                  	
                    28

                  
	
                    ARTICLE
      VII - DELIVERY

                  	
                    29

                  
	 
      	
                    1.

                  	
                    Time
      and Place:

                  	
                    29

                  
	 
      	
                    2.

                  	
                    When
      and How Effected:

                  	
                    29

                  
	 
      	
                    3.

                  	
                    Documents
      to be delivered to BUYER:

                  	
                    29

                  
	 
      	
                    4.

                  	
                    Tender
      of DRILLSHIP:

                  	
                    30

                  
	 
      	
                    5.

                  	
                    Title
      and Risk:

                  	
                    31

                  
	 
      	
                    6.

                  	
                    Removal
      of DRILLSHIP:

                  	
                    31

                  
	
                    ARTICLE
      VIII - DELAYS AND EXTENSION OF TIME FOR DELIVERY (FORCE
      MAJEURE)

                  	
                    32

                  
	 
      	
                    1.

                  	
                    Causes
      of Delay (Force Majeure):

                  	
                    32

                  
	 
      	
                    2.

                  	
                    Notice
      of Delay:

                  	
                    33

                  
	 
      	
                    3.

                  	
                    Definition
      of Permissible Delay:

                  	
                    33

                  
	 
      	
                    4.

                  	
                    Right
      to Rescind for Excessive Delay:

                  	
                    33

                  
	
                    ARTICLE
      IX - WARRANTY OF QUALITY

                  	
                    35

                  
	 
      	
                    1.

                  	
                    Guarantee:

                  	
                    35

                  
	 
      	
                    2.

                  	
                    Notice
      of Defects:

                  	
                    35

                  
	 
      	
                    3.

                  	
                    Remedy
      of Defects:

                  	
                    35

                  
	 
      	
                    4.

                  	
                    Extent
      of BUILDER'S Responsibility

                  	
                    37

                  
	
                    ARTICLE
      X - RESCISSION BY BUYER

                  	
                    38

                  
	 
      	
                    1.

                  	
                    Notice:

                  	
                    38

                  
	 
      	
                    2.

                  	
                    Refundment
      by BUILDER:

                  	
                    38

                  
	 
      	
                    3.

                  	
                    Discharge
      of Obligations:

                  	
                    39

                  
	
                    ARTICLE
      XI - BUYER'S DEFAULT

                  	
                    40

                  
	 
      	
                    1.

                  	
                    Definition
      of Default:

                  	
                    40

                  
	 
      	
                    2.

                  	
                    Effect
      of Default on or before Delivery of DRILLSHIP:

                  	
                    40

                  
	 
      	
                    3.

                  	
                    Disposal
      of DRILLSHIP:

                  	
                    41

                  
	
                    ARTICLE
      XII - ARBITRATION

                  	
                    42

                  
	 
      	
                    1.

                  	
                    Decision
      by the Classification Society:

                  	
                    42

                  
	 
      	
                    2.

                  	
                    Proceedings
      of Arbitration in London UK.:

                  	
                    42

                  
	 
      	
                    3.

                  	
                    Notice
      of Award:

                  	
                    43

                  
	 
      	
                    4.

                  	
                    Expenses:

                  	
                    43

                  
	 
      	
                    5.

                  	
                    Entry
      in Court:

                  	
                    43

                  
	 
      	
                    6.

                  	
                    Alteration
      of Delivery Date:

                  	
                    43

                  


          

        

      


      
        
           


        

        
          3

          
            

          

        

        
           


        

      

      
        


      

      
        
          
            	
                    ARTICLE
      XIII - SUCCESSOR AND ASSIGNS

                  	
                    45

                  
	
                    ARTICLE
      XIV - TAXES AND DUTIES

                  	
                    46

                  
	 
      	
                    1.

                  	
                    Taxes
      and Duties Incurred in Korea and/or China:

                  	
                    46

                  
	 
      	
                    2.

                  	
                    Taxes
      and Duties Incurred Outside Korea and/or China:

                  	
                    46

                  
	
                    ARTICLE
      XV -PATENTS, TRADEMARKS, COPYRIGHTS, ETC

                  	
                    47

                  
	 
      	
                    1.

                  	
                    Patents:

                  	
                    47

                  
	 
      	
                    2.

                  	
                    General
      Plans, Specifications and Working Drawings:

                  	
                    47

                  
	
                    ARTICLE
      XVI - BUYER'S SUPPLIES

                  	
                    48

                  
	 
      	
                    1.

                  	
                    Responsibility
      of BUYER:

                  	
                    48

                  
	 
      	
                    2.

                  	
                    Responsibility
      of BUILDER:

                  	
                    49

                  
	 
      	
                    3.

                  	
                    Title:

                  	
                    49

                  
	
                    ARTICLE
      XVII - INSURANCE

                  	
                    50

                  
	 
      	
                    1.

                  	
                    Extent
      of Insurance Coverage:

                  	
                    50

                  
	 
      	
                    2.

                  	
                    Application
      of the Recovered Amounts:

                  	
                    50

                  
	 
      	
                    3.

                  	
                    Termination
      of BUILDER'S Obligation to Insure:

                  	
                    51

                  
	
                    ARTICLE
      XVIII - NOTICE

                  	
                    52

                  
	 
      	
                    1.

                  	
                    Address:

                  	
                    52

                  
	 
      	
                    2.

                  	
                    Language:

                  	
                    52

                  
	 
      	
                    3.

                  	
                    Effective
      Date of Notice:

                  	
                    53

                  
	
                    ARTICLE
      XIX - EFFECTIVE DATE OF CONTRACT

                  	
                    54

                  
	
                    ARTICLE
      XX - INTERPRETATION

                  	
                    55

                  
	 
      	
                    1.

                  	
                    Laws
      Applicable:

                  	
                    55

                  
	 
      	
                    2.

                  	
                    Discrepancies:

                  	
                    55

                  
	 
      	
                    3.

                  	
                    Entire
      Agreement:

                  	
                    55

                  
	 
      	
                    4.

                  	
                    Amendments
      and Supplements:

                  	
                    55

                  
	
                    ARTICLE
      XXI - CONFIDENTIALITY

                  	
                    56

                  


          

        

        
           

          
            	
                    EXHIBIT
      "1"

                  	
                    VESSEL
      SPECIFICATION

                  	
                    58

                  
	
                    EXHIBIT
      "2"

                  	
                    TOPSIDE
      SPECIFICATION

                  	
                    59

                  
	
                    EXHIBIT
      "3"

                  	
                    DELIVERY
      AND CONSTRUCTION SCHEDULE

                  	
                    60

                  
	
                    EXHIBIT
      "4"

                  	
                    LETTER
      OF REFUNDMENT GUARANTEE NO

                  	
                    61

                  
	
                    EXHIBIT
      "5"

                  	
                    PERFORMANCE
      GUARANTEE

                  	
                    64

                  
	
                    EXHIBIT
      "6"

                  	
                    OPTIONAL
      ITEMS

                  	
                    65

                  
	
                    EXHIBIT
      "7"

                  	
                    FORM
      OF DEMAND

                  	
                    65

                  


          

        

      

       

      
        
           


        

        
          4

          
            

          

        

        
           


        

      


      
        This
Contract, made and entered into on this 24th day of
January 2008 by and between DRILLSHIP SKOPELOS OWNERS INC., a corporation
incorporated and existing under the laws of Marshall Islands having its
registered office at Trust Company Complex, Ajeltake Road, Ajeltake Island,
Majuro, Marshall Islands MH 96960 (hereinafter called the "BUYER"), on the one
part and SAMSUNG HEAVY INDUSTRIES CO., LTD., a corporation incorporated and
existing under the laws of the Republic of Korea and having its registered
office at 34th Floor,
Samsung Life Insurance Seocho Tower 1321-15, Seocho-Dong, Seocho-Gu, Seoul,
Korea 137-857 (hereinafter called the "BUILDER"), on the other
part.

      

      
        


      

      
        WITNESSETH:

      

      
        


      

      
        In
consideration of the mutual covenants herein contained, the BUILDER acknowledges
that the Contract is a turn key contract for the construction and sale of a
drillship constructed and tested out to be fully ready to drill and fully
functioning in accordance with and subject to the terms and conditions of this
Contract and Specifications and the BUILDER agrees as described in the
Specifications to design, construct, build, launch, equip, test and complete One
(1) Drillship composed of a hull part as described in the specification attached
hereto as Exhibit "1" of this Contract (hereinafter referred to as the "VESSEL")
and topside part as described in the specification attached hereto as Exhibit
"2" of this Contract (hereinafter referred to as "TOPSIDE") (the VESSEL and
TOPSIDE being hereinafter collectively referred to as the "DRILLSHIP") and in
accordance with the Delivery and Construction Schedule attached hereto as
Exhibit "3" (said Exhibits 1 through 3 (including all amendments, additions,
deletions and variations incorporated into the Specifications for HN. 1674 up to
the Effective Date of the Contract of HN.1837) being hereinafter collectively
called the "Specifications") which Specifications have been initialed by
representatives of the parties hereto for identification and which
Specifications hereby are each incorporated herein by reference hereto and made
an integral part of this Contract, at the BUILDER'S shipyard located in Geoje
Island, Korea (hereinafter referred to as the "Shipyard") and to deliver and
sell the same to the BUYER, and the BUYER hereby agrees to purchase and accept
delivery of the DRILLSHIP from the BUILDER, upon the terms and conditions
hereinafter set forth.

      


      
        
           


        

        
          5

          
            

          

        

        
           


        

      


      
        ARTICLE I
- DESCRIPTION AND CLASS

      

      
        


      

      
        
          	
                  1.

                	
                  Description:

                


        

      

      
        


      

      
        The
DRILLSHIP, having the BUILDER'S Hull No. 1866, shall be designed, constructed,
built, launched, equipped, tested, completed and delivered in accordance with
the provisions of this Contract, and the Specifications as a subsequent
Drillship of HN. 1837. To the extent not defined in the Specifications, the
DRILLSHIP's construction is to meet the first-class international shipbuilding
and construction standards and practices, including without limitation such
standards and practices relating to BUILDER'S Quality Assurance
Programs.

      

      
        


      

      
        
          	
                  2.

                	
                  Dimensions
      and Characteristics:

                


        

      

      
        


      

      
        
          
            
              	
                      Length,
      overall

                    	 
      	
                      Max.
      228 meters

                    
	
                      Length,
      between perpendiculars

                    	 
      	
                      abt.
      219.4 meters

                    
	
                      Breadth,
      moulded

                    	 
      	
                      abt.
      42 meters

                    
	
                      Depth,
      moulded

                    	 
      	
                      abt.
      19 meters

                    
	
                      Scantling
      draft, moulded

                    	 
      	
                      abt,  13
      meters

                    


            

          

        

      

      
        


      

      
        Speed,
guaranteed: The trial speed shall not be less than 12.0 knots on the transit
draught of 8.5 meters and at total thruster motor output of 28,700
KW.

      

      
        


      

      
        Guaranteed
Fuel Consumption, Diesel Generator Prime Drivers (in relation to each engine):
The fuel consumption shall be not more than the engine manufacturers' nominal
fuel consumption plus five percent (5) % with engine driven pumps at
manufacturer's shop trial, burning marine diesel having the lower calorific
value of 10,200 kCal/kg, at 85% MCR under the environment condition of ISO
3046/1-1986 specified in the Specifications.

      

      
        


      

      
        Guaranteed
Variable Load Capacity: The variable load capacity of the DRILLSHIP will be not
less than 20,000 metric tons for drilling and survival conditions without
extended well test oil on board as specified in the
Specifications.

      

      
        


      

      
        The
details of the aforementioned particulars, as well as the definitions and the
methods of measurements and calculations shall be as indicated in the
Specifications.

      


      
        
           


        

        
          6

          
            

          

        

        
           


        

      


      
        
          	
                  3.

                	
                  The
      Classification, Rules and
Regulations:

                


        

      

      
        


      

      
        The
DRILLS HIP, including its machinery, equipment and outfittings shall be
constructed and classified in accordance with the rules and regulations (the
editions and amendments thereto being in force) as of the signing date of the
Contract of HN. 183 7 and under special survey of American Bureau of Shipping
(hereinafter called the "Classification Society"), and shall be distinguished in
the register by the symbol of *A1 ©, "Drilling Unit", *AMS, *ACCU, *DPS-3,
NBLES, SH-DLA, *CDS.

      

      
        


      

      
        Decisions
of the Classification Society as to compliance or non-compliance with the
classification rules and regulations shall be final and binding upon both
parties hereto. Details of its notation shall be in accordance with the
Specifications.

      

      
        


      

      
        The
DRILLSHIP shall also comply with the rules, regulations and requirements of the
regulatory bodies as described and listed in the
Specifications.

      

      
        


      

      
        The
DRILLSHIP will be built and delivered (i) in accordance with the terms of this
Contract and the Specifications, (ii) in full compliance and certification to
and with the IMO MODU code with amendments, (iii) in full compliance with the
regulations, provisions, and requirements included in the Specifications, (iv)
in full compliance with the requirements of the Classification Society so as to
be classed with the Classification Society as a MODU, and (v) so that the
DRILLSHIP will be approved to operate in the United States Gulf of Mexico/the
Outer Continental Shelf of the United States, the waters outside West Africa,
Central Africa, South Africa, South America, South East Asia, UK, Australia,
South Atlantic and in the Mediterranean. The BUILDER will take all action
necessary, and remedy at its cost and expense, any deficiency that constitutes a
failure to comply with the above requirements.

         

      

      
        All fees
and charges incidental to the Classification Society and in respect to
compliance with the above referred rules, regulations and requirements, as well
as all DRILLSHIP design fees and/or royalties (except any royalties for the
BUYER'S Supplies), shall be for account of the BUILDER.

      

      
        


      

      
        
          	
                  4.

                	
                  HSE
      Analysis, studies and
assessments

                


        

      


      
        
           


        

        
          7

          
            

          

        

        
           


        

      


      The BUYER
shall perform HSE Analysis, studies and assessments such as HAZID's, Risk
Analysis, HAZOP's, Readability and Vulnerability analysis, Working Environment
assessment of the DRILLSHIP.

      


      
        If the
finding of such HSE Analysis, studies and assessments demand changes to the
design, layout and construction of the DRILLSHIP to make the DRILLSHIP meet the
requirements of the Contract, then the BUILDER shall implement such changes in
accordance with the findings,

      

      
        


      

      
        Should
the findings lead the BUYER to request changes to the Contract then a Variation
Order shall be in accordance with Article V.

      

      
        


      

      
        The
BUILDER shall be responsible for obtaining the Classification Society's approval
of all required plans and drawings of the DRILLSHIP.

      

      
        


      

      
        
          	
                  5.

                	
                  Subcontracting

                


        

      

      
        


      

      
        The
BUILDER may, at its sole discretion and responsibility, subcontract any portion
of the construction work of the DRILLSHIP, provided that the work is carried out
at a reputable yard in Korea or at the BUILDER'S wholly owned subsidiaries at
Ningbo and Rongcheng in China, where the aggregate value of the works or
services to be subcontracted equals or is below Five million five hundred
thousand United States Dollars (US$ 5,500,000) but if exceeding such value the
BUILDER shall obtain in writing the prior approval of the BUYER (whose approval
shall not be unreasonably withheld), but any subcontracting shall always be
subject to the condition that the BUILDER shall ensure that the rights of the
BUYER and the requirements in the Contract are satisfied and provided for in
such work. The BUILDER shall not be relieved from any of its obligations and
liabilities under the Contract and shall be responsible for all work, acts,
omissions and defaults of any subcontractors as fully as if they were the work,
acts, omissions or defaults of the BUILDER.

      

      
        


      

      
        
          	
                  6.

                	
                  Registration:

                


        

      

      
        


      

      
        The
DRILLSHIP, at the time of its delivery and acceptance, shall be registered at
the port of registry by the BUYER under the Malta flag at the BUYER'S
expenses.

      

      
        


      

      
        (End of
Article)

      


      
        
           


        

        
          8

          
            

          

        

        
           


        

      


      
        ARTICLE
II - CONTRACT PRICE AND TERMS OF PAYMENT

      

      
        


      

      
        
          	
                  1.

                	
                  Contract
      Price:

                


        

      

      
        


      

      
        The
Contract price of the DRILLSHIP, net receivable by the BUILDER and exclusive of
the BUYER'S Supplies (as defined in Paragraph 1 of Article XVI hereof) is Six
Hundred Sixty One Million United States Dollars (US$ 661,000,000) (hereinafter
referred to as the "Contract Price"). The Contract Price shall be subject to
upward or downward adjustment, if any, as hereinafter set forth in this
Contract.

      

      
        


      

      
        
          	
                  2.

                	
                  Adjustment
      of Contract Price:

                


        

      

      
        


      

      
        Increase
or decrease of the Contract Price, if any, due to adjustments thereof made in
accordance with the provisions of this Contract shall be adjusted by way of
addition to or subtraction from the Contract Price upon delivery of the
DRILLSHIP in the manner as hereinafter provided at article
III.

      

      
        


      

      
        The BUYER
has the right to exercise the purchase the option as per Exhibit "6" within 3
months after the date of the signing contract. Should the BUYER exercise one of
the options, the payment terms of the exercised option items shall be same with
that of the Contract, provided that the amount of the first installment shall be
paid at the same time of the second installment is due, and the BUILDER will
reissue a Refundment Guarantee covering full amount of the adjusted Contract
Price to replace the old Refundment Guarantee.

      

      
        


      

      
        
          	
                  3.

                	
                  Currency:

                


        

      

      
        


      

      
        Any and
all payments by the BUYER to the BUILDER, or vice versa if any, which are due
under this Contract shall be made in United States Dollars,

      

      
        


      

      
        
          	
                  4,

                	
                  Terms
      of Payment:

                


        

      

      
        


      

      
        The
Contract Price shall be due and payable by the BUYER to the BUILDER in the
installments as follows:

      

      
        


      

      
        
          	
                	
                  (a)

                	
                  First
      Installment:

                


        

      

      
        The First
Installment shall be paid as follows:

      


      
        
           


        

        
          9

          
            

          

        

        
           


        

      


      
        (i) Ten
Million United States Dollars (US$ 10,000,000) shall be due and payable to the
BUILDER by the BUYER following signing of this Contract, within five (5) banking
days after the receipt of the original Refund Guarantee as provided for in
clause 5(a) below of this Article II.

      

      
        


      

      
        (ii) The
BUYER and the BUILDER agree that Thirty Nine Million Five Hundred Seventy Five
Thousand United States Dollars (7.5% less US$ 10,000,000, US$39,575,000), shall
be due and payable to the BUILDER by the BUYER on March 24,
3008.

      

      
        


      

      
        (iii) The
BUYER and the BUILDER agree that Forty Nine Million Five Hundred Seventy Five
Thousand United States Dollars (7.5%, US$ 49,575,000) shall be paid on April 24,
2008

      

      
        


      

      
        
          	
                	
                  (b)

                	
                  Second
      Installment:

                


        

      

      
        The
Second Installment amounting to Ninety Nine Million One Hundred Fifty Thousand
United States Dollars (15%, US$ 99,150,000) shall be due and payable on
September 24, 2008.

      

      
        


      

      
        
          	
                	
                  (c)

                	
                  Third
      Installment:

                


        

      

      
        The Third
Installment amounting to Ninety Nine Million One Hundred Fifty Thousand United
States Dollars (15%, US$ 99,150,000) shall be due and payable within three (3)
banking days from the receipt of the BUILDER'S invoice and a telefax notice from
the BUILDER, countersigned by the classification surveyor, certifying that steel
cutting for the Drillship has commence but not earlier than 16 months after the
second installment.

      

      
        


      

      
        
          	
                	
                  (d)

                	
                  Fourth
      Installment:

                


        

      

      
        The
Fourth Installment amounting to Ninety Nine Million One Hundred Fifty Thousand
United States Dollars (15%, US$ 99,150,000) shall be due and payable within
three (3) banking days from the the receipt of the BUILDER'S invoice and a
telefax notice from the Builder, countersigned by the classification surveyor,
certifying that keel laying for the DRILLSHIP has commenced but not earlier than
4 months after the third installment.

      

      
        


      

      
        
          	
                	
                  (e)

                	
                  Fifth
      Installment:

                


        

      


      
        
           


        

        
          10

          
            

          

        

        
           


        

      


      
        The Fifth
Installment amounting to Two Hundred Sixty Four Million Four Hundred Thousand
United States Dollars (40%, US$ 264,400,000) plus or minus any adjustment of the
Contract Price under and pursuant to the provisions of this Contract, shall be
due and payable upon delivery of the DRILLSHIP or upon tender for delivery of
the DRILLSHIP referred to in Paragraph 4 of Article VII of this
Contract,

      

      
        


      

      
        The BUYER
and the BUILDER agree that if the Contract is terminated by the BUYER prior to
March 24, 2008, the BUILDER shall have the right to take part of the First
Installment amounting to Ten Million United States Dollars (US$ 10,000,000) but
shall have no other rights whatsoever under this Contract. If the Contract is
terminated by the BUYER after March 24, 2008 the rights of the BUILDER shall
remain as referred to in Articles X and XI of this Contract.

      

      
        


      

      
        
          	
                  5.

                	
                  Method
      of Payment:

                


        

      

      
        


      

      
        
          	
                	
                  (a)

                	
                  First
      Installment:

                


        

      

      
        Within
the due date and provided that the BUYER has received the Refundment Guarantee
five (5) banking days in advance, the BUYER shall remit by telegraphic transfer
the first installment to the account to be specified in advance in writing by
the BUILDER.

      

      
        


      

      
        
          	
                	
                  (b)

                	
                  Second,
      Third and Fourth
Installments:

                


        

      

      
        Upon the
due date of the second, third and fourth installments, in accordance with
Article II, 4 (b), (c) and (d) as appropriate, the BUYER shall remit by
telegraphic transfer each of the respective installments to the account to be
specified in advance in writing by the BUILDER.

      

      
        


      

      
        
          	
                	
                  (c)

                	
                  Fifth
      Installment:

                


        

      

      
        At least
three (3) banking days prior to the anticipated delivery date of the DRILLSHIP,
the BUYER shall remit by telegraphic transfer the fifth installment to the bank
specified in advance in writing by the BUILDER in the name of the BUYER'S bank
with instructions of the amount so remitted to be payable to the BUILDER against
a copy of PROTOCOL OF DELIVERY and ACCEPTANCE OF THE DRILLSHIP signed by the
BUYER and the BUILDER.

      


      
        
           


        

        
          11

          
            

          

        

        
           


        

      


      
        Simultaneously
with each of all such payment, the BUYER shall cause the BUYER'S BANK to advise
the BUILDER's BANK of the details of such payments by authenticated bank cable
or telefax.

      

      
        


      

      
        No
payment due under this Contract shall be delayed, suspended or withheld by the
BUYER on account of any dispute or disagreement between the parties hereto. Any
claim that the BUYER may have against the BUILDER hereunder shall be settled and
liquidated separately from any payment by the BUYER to the BUILDER
hereunder.

      

      
        


      

      
        
          	
                  6.

                	
                  Notice
      of Payment before Delivery:

                


        

      

      
        


      

      
        With the
exception of the first installment, the BUILDER shall give the BUYER Ten (10)
banking days prior notice in writing or telefax or telex of the anticipated due
date and amount of each installment payable on or before delivery of the
DRILLSHIP.

      

      
        


      

      
        
          	
                  7.

                	
                  Expenses:

                


        

      

      
        


      

      
        Expenses
and bank charges for remitting payments and any taxes, duties, expenses and fees
referred to in paragraph 2 of Article XIV of this Contract connected with such
payment shall be for account of the BUYER.

      

      
        


      

      
        
          	
                  8.

                	
                  Prepayment:

                


        

      

      
        


      

      
        Prepayment
of any installment due on or before delivery of the DRILLSHIP shall be subject
to mutual agreement between the parties hereto.

      

      
        


      

      
        (End of
Article)

      


      
        
           


        

        
          12

          
            

          

        

        
           


        

      


      
        ARTICLE
III - ADJUSTMENT OF CONTRACT PRICE

      

      
        


      

      
        The
Contract Price shall be subject to adjustment, as hereinafter set forth, in the
event of the following contingencies (it being understood by both parties that
any reduction of the Contract Price is by way of liquidated damages and not by
way of penalty):

      

      
        


      

      
        
          	
                  1.

                	
                  Delivery:

                


        

      

      
        


      

      
        
          	
                	
                  (a)

                	
                  No
      adjustment shall be made and the Contract Price shall remain unchanged for
      the first 30 days of delay in delivery of the DRILLSHIP beyond the
      Delivery Date as defined in Article VII hereof (ending as of twelve
      o'clock midnight of the 31st
      day of delay).

                


        

      

      
        


      

      
        
          	
                	
                  (b)

                	
                  If
      the delivery of the DRILLSHIP is delayed more than 30 days after the
      Delivery Date, then, in such event, beginning at twelve o'clock midnight
      of the 31st
      day after the Delivery Date, the Contract Price shall be reduced by the
      sum of Hundred and twenty thousand United States Dollars (US$ 120,000) for
      each full day for which thereafter delivery is
  delayed,

                


        

      

      
        


      

      
        However,
the total reduction in the Contract Price pursuant to this Paragraph (b) shall
not be more than as would be the case for a delay of 180 days counting from
midnight of the 31st day
after the Delivery Date at the above specified rate of
reduction.

      

      
        


      

      
        
          	
                	
                  (c)

                	
                  However,
      if the delay in delivery of the DRILLSHIP should continue for a period of
      210 days from the Delivery Date in Paragraph 1 of Article VII, then in
      such event, and after such period has expired, the BUYER may, at its
      option, rescind this Contract in accordance with the provisions of Article
      X hereof.

                


        

      

      
        


      

      
        The
BUILDER may, at any time after the expiration of the aforementioned 210 days of
delay in delivery, if the BUYER has not served notice of rescission as provided
in Article X hereof, demand in writing that the BUYER shall make an election, in
which case the BUYER shall, within Twenty (20) days after such demand is
received by the BUYER, notify the BUILDER of its intention either to rescind
this Contract or to consent to the acceptance of the DRILLSHIP at a specified
future date which date BUILDER represents to BUYER is the earliest date BUILDER
can deliver the DRILLSHIP to BUYER under this Contract, based on the
circumstances then known. If the BUYER shall not make an election within Twenty
(20) days as

      


      
        
           


        

        
          13

          
            

          

        

        
           


        

      


      
        provided
hereinabove, the BUYER shall be deemed to have accepted such extension of the
delivery date to the future delivery date indicated by the BUILDER and it being
understood by the parties hereto that if the DRILLSHIP is not delivered by such
specified date, the BUYER shall have the same right of rescission upon the same
terms and conditions as hereinabove provided.

      

      
        


      

      
        
          	
                	
                  (d)

                	
                  If,
      at the time of actual delivery the BUYER has entered into an unconditional
      charter contract providing for the immediate deployment of the DRILLSHIP
      to provide services in return for the payment of cash consideration upon
      delivery of the DRILLSHIP (the "Delivery Contract"), and, should Delivery
      occur before twelve o'clock midnight on the Delivery Date and the third
      party accepts to take such early delivery under the Delivery Contract,
      then in such event, the final installment of the Contract Price shall be
      increased by the sum of Seventy five thousand United States Dollars (US$
      75,000) for each full day of early delivery, beginning at the time of
      actual delivery of the DRILLSHIP until twelve o'clock midnight on
      September 30, 2011, provided that the aggregate increases to the Contract
      Price for early delivery of the DRILLSHIP shall not exceed Three million
      United States Dollars (US$ 3,000,000) (the
  "Bonus").

                


        

      

      
        


      

      
        
          	
                	
                  (e)

                	
                  For
      the purpose of this Article, the delivery of the DRILLSHIP shall be deemed
      to be delayed when and if the DRILLSHIP, after taking into account all
      postponements of the Delivery Date by reason of permissible delay as
      defined in Article VIII and/or any other reason under this Contract, is
      not delivered by the date upon which delivery is required under the terms
      of this Contract.

                


        

      

      
        


      

      
        
          	
                  2.

                	
                  Speed:

                


        

      

      
        


      

      
        
          	
                	
                  (a)

                	
                  The
      Contract Price shall not be affected or changed by reason of the trial
      speed (as determined according to the Specifications) being less than the
      guaranteed speed, if such variation is not more than 0.5
      knots.

                


        

      

      
        


      

      
        
          	
                	
                  (b)

                	
                  However,
      commencing with and including such deficiency of 0,5 knots in trial speed
      below the guaranteed speed of the DRILLSHIP, the Contract Price shall be
      reduced by Eighty thousand United States Dollars (US$ 80,000) for each 0.1
      knot below the guaranteed
speed.

                


        

      

      
        


      

      
        
          	
                	
                  (c)

                	
                  If
      the deficiency in the speed upon final sea trial is more than one (1) knot
      below the guaranteed speed of the DRILLSHIP, then the BUYER may, at its
      option, reject the

                


        

      


      
        
           


        

        
          14

          
            

          

        

        
           


        

      


      
        DRILLSHIP
and rescind this Contract in accordance with the provisions of Article X hereof,
or may accept the DRILLSHIP at a reduction in the Contract Price at a rate of
One Hundred Thousand United States Dollars (U$ 100,000) for each 0.1 knot below
11.5 knots.

      

      
        


      

      
        
          	
                  3.

                	
                  Fuel
      Consumption for the Diesel Generator Prime
  Drivers:

                


        

      

      
        


      

      
        
          	
                	
                  (a)

                	
                  The
      Contract Price shall not be affected or changed in case the actual fuel
      consumption for each engine, as determined by the shop trial as specified
      in the Specifications, is not more than one percent (1%) in excess of the
      Guaranteed Fuel Consumption specified in Paragraph 2 of Article
      I.

                


        

      

      
        


      

      
        
          	
                	
                  (b)

                	
                  However,
      in the event that the actual fuel consumption of any engine at the shop
      trial is in excess of one percent (1%) of the Guaranteed Fuel Consumption,
      the Contract Price shall be reduced by the sum of Forty thousand United
      States Dollars (US$ 40,000) for each one percent (1%) per engine by which
      the actual fuel consumption of any engine exceeds the Guaranteed Fuel
      Consumption plus One percent
(1%).

                


        

      

      
        


      

      
        
          	
                	
                  (c)

                	
                  The
      BUYER has an option to reject the DRILLSHIP and rescind the Contract in
      accordance with the provisions of Paragraphs 1, 2 and 3 of Article X -
      RESCISSION BY BUYER hereof in the event the actual fuel consumption of any
      engine is more than five percent (5%) in excess of the Guaranteed Fuel
      Consumption.

                


        

      

      
        


      

      
        
          	
                  4.

                	
                  Variable
      Load Capacity:

                


        

      

      
        


      

      
        
          	
                	
                  (a)

                	
                  In
      the event that the actual Variable Load Capacity of the DRILLSHIP is more
      than 500 metric tons below the Guaranteed Variable Deck Load Capacity of
      the DRILLSHIP, then the Contract Price shall be reduced by Four thousand
      United States Dollars (US$ 4,000) per each metric ton of the shortfall
      below 19,500 metric tons.

                


        

      

      
        


      

      
        
          	
                	
                  (b)

                	
                  In
      the event that the actual Variable Load Capacity of the DRILLSHIP is more
      than 1,500 metric tons below the Guaranteed Variable Load Capacity of the
      DRILLSHIP, then the BUYER may at its option reject the DRILLSHIP and
      rescind the Contract in accordance with the provisions of Paragraphs 1, 2
      and 3 of Article 2C

                


        

      


      
        
           


        

        
          15

          
            

          

        

        
           


        

      


      
        -
RESCISSION BY BUYER hereof or accept the DRILLSHIP at a reduction in the
Contract Price of Four million United States Dollars (US$
4,000,000).

      

      
        


      

      
        
          	
                  5.

                	
                  Effect
      of Rescission:

                


        

      

      
        


      

      
        It is
expressly understood and agreed by the parties that in any case, if the BUYER
rescinds this Contract under this Article, the BUYER shall not be entitled to
any liquidated damages, or any other recourse unless by means of the provisions
of Article X hereof.

      

      
        


      

      
        (End of
Article)

      


      
        
           


        

        
          16

          
            

          

        

        
           


        

      


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

           

        

      

      
        
          	
                  1.

                	
                  Approval
      of Plans and Drawings:

                


        

      

      
        


      

      
        All plans
and drawings of HN. 1837 shall be deemed to be approved and applicable to the
Drillship without any distinct approval procedure.

      

      
        


      

      
        
          	
                  2.

                	
                  Appointment
      of BUYER'S Supervisor:

                


        

      

      
        


      

      
        The BUYER
may send to and maintain at the Shipyard, at the BUYER'S own cost and expense,
one supervisor (herein called the "Supervisor") who shall be duly authorized in
writing by the BUYER, which authorization shall be described in a separate
letter to be sent to the BUILDER prior to the Supervisor's arrival, to act on
behalf of the BUYER in connection with the modifications of the Specifications,
adjustments of the Contract Price and Delivery Date in writing, approval of the
plans and drawings, attendance to the tests and inspections relating to the
DRILLSHIP,  its machinery,  equipment and outfittings, and
any other matters for which he is specifically authorized by the BUYER. The
Supervisor may appoint assistant(s) to attend at the Shipyard for the purposes
as aforesaid. In the event that assignment, novation or resale occurs under the
Article XIII and as a result, BUYER'S Supervisor is changed during the
construction of the DRILLSHIP, any and all matters determined by mutual
agreement between the BUYER'S Supervisor and the BUILDER prior to the dispatch
of a new Supervisor shall be accepted and complied by the new Supervisor. In
case two or more Supervisors are dispatched to the Shipyard and authorized to
perform the supervision, each of them will form uniform opinions between them to
keep the design and specifications so as not to adversely affect the Contract
Price and Delivery of the DRILLSHIP. In the event of any additional costs
attributable to dispatch of two or more Supervisors due to resale, novation,
charter or any other occurrence otherwise resulting from the BUYER side, such
costs shall be solely borne by the BUYER and the BUYER shall reimburse and hold
harmless the BUILDER from any such costs and expenses.

      

      
        


      

      
        
          	
                  3.

                	
                  Inspection
      by the Supervisor:

                


        

      

      
        


      

      
        The
necessary inspections of the DRILLSHIP, its machinery, equipment and outfittings
shall be carried out by the Classification Society, other regulatory bodies
and/or the Supervisor throughout the entire period of construction in order to
ensure that the design,

      


      
        
           


        

        
          17

          
            

          

        

        
           


        

      


      
        construction,
building, launching, equipping, testing and completion of the DRILLS HIP is duly
performed in accordance with the Contract and the
Specifications.

      

      
        


      

      
        The
BUILDER shall give a written notice to the Supervisors reasonably in advance of
the date and place of tests and inspections for the convenience of their
attendance. Failure of the Supervisors to be present at such tests and
inspections after due notice to them as above provided, shall be deemed to be a
waiver of their right to be present. In such cases, the BUYER shall be obliged
to accept the results of such tests and inspections on the basis of the
BUILDER'S certificate subject to acceptance by the Classification
Society.

      

      
        


      

      
        Whether
or not the Supervisors have been present, the BUILDER shall promptly deliver to
the BUYER or the Supervisors a copy of the results of all tests and
inspections.

      

      
        


      

      
        For tests
or inspections outside the Shipyard sufficient advance notice to allow for the
Supervisor to arrange transportation shall be given. This advance notice should
not be less than three (3) days for tests or inspection that require air travel
for attendance.

      

      
        


      

      
        The
inspection schedule must be reasonable at all times in order to allow the
Supervisor to carry out their duties properly and inspections must be spread
over reasonable time, but in follow building schedule at the same
rate.

      

      
        


      

      
        BUILDER
may request BUYER'S Supervisor to attend the inspection and tests during public
holidays and weekends and/or Company holidays in order to keep BUILDER'S
construction schedule. BUYER'S Supervisor shall fully cooperate with BUILDER and
promptly attend such inspection/tests including those for surface preparation
and painting work, which are especially vulnerable to weather condition and time
interval. However, BUILDER shall keep such inspection and tests to a minimum and
only when the inspection and tests affect BUILDER'S construction schedule. The
BUILDER'S prior notice of such inspection/test schedule shall be informed to the
BUYER'S Supervisor one (1) day in advance as a minimum.

      

      
        


      

      
        If any of
the BUYER'S Supervisors discover any construction, material or workmanship which
is not deemed to conform to the requirements of this Contract and/or the
Specifications, the BUYER'S Supervisors shall promptly give the BUILDER a notice
in writing that such alleged non-conformity exists. Upon receipt of such notice
from the BUYER'S Supervisor, the BUILDER shall correct such non-conformity, if
the BUILDER agrees to his view. Any disagreement shall be resolved in accordance
with Paragraph 1

      


      
        
           


        

        
          18

          
            

          

        

        
           


        

      


      
        of
Article XII and shall to the extent possible not prevent the progress of the
construction and the timely delivery of the DRILLSHIP.

      

      
        


      

      
        If,
following such disagreement, the Classification Society or the arbitrator enters
a determination in favor of the BUYER, then in such case the BUILDER shall
immediately correct such non-conformity subject to Article VI 4. (b). If the
Classification Society or the arbitrator enters a determination in favor of the
BUILDER, then the time for delivery of the DRILLSHIP shall be extended for the
period of any actual delay in construction, if any, occasioned by such
proceedings (but not by any time by which the period is extended owing to the
BUILDER's own default), and the BUYER shall pay the BUILDER interest at the rate
of five percent (5%) per annum on the outstanding Instalments of the Contract
Price for the said period of delay.

      

      
        


      

      
        In
working hours during construction of the DRILLSHIP until delivery thereof, the
BUYER's Supervisors shall, subject to the reasonable requirements of the
Shipyard's work program and safety control, be permitted free and ready access
to the DRILLSHIP, her machinery and equipment, and to any other place where work
on the DRILLSHIP is being done, or materials are being processed or stored in
connection with the construction of the DRILLSHIP, 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
DRILLSHIP's construction.

      

      
        


      

      
        
          	
                   
      

                	
                  4.

                	
                  Facilities:

                


        

      

      
        


      

      
        The
BUILDER shall furnish the Supervisor and his assistant(s) with adequate office
space and such other reasonable facilities according to the BUILDER'S practice
at or in the immediate vicinity of the Shipyard as may be necessary to enable
them to effectively carry out their duties. The BUYER shall pay for all such
facilities other than office space at the BUILDER'S normal rate of
charge.

      

      
        


      

      
        
          	
                   
      

                	
                  5.

                	
                  Liability
      of BUILDER:

                


        

      

      
        


      

      
        The
BUILDER agrees to fully protect, defend, indemnify and hold BUYER harmless from
and against all liabilities, obligations, claims or actions for personal injury
or death arising out of performance by BUILDER or BUYER of their obligations
hereunder prior to the acceptance by BUYER of the DRILLSHIP, and asserted by or
on behalf of,

      

      
        


      

      
        
          (i)  any
employee, agent, contractor, or subcontractor of
BUILDER,or

        

      


      
        
           


        

        
          19

          
            

          

        

        
           


        

      


      
        (ii)  any
employee of any agent, contractor, or subcontractor of BUILDER, regardless of
the basis of such claims and even if such claims should arise out of the sole or
concurrent fault or negligence of BUYER, or any employee, agent, contractor or
subcontractor of BUYER.

      

      
        


      

      
        Similarly,
the BUYER agrees to fully protect, defend, indemnify and hold BUILDER harmless
from and against all liabilities, obligations, claims or actions for personal
injury or death arising out of performance by BUILDER or BUYER of their
obligations hereunder prior to the acceptance by BUYER of the DRILLSHIP, and
asserted by or on behalf of,

      

      
        


      

      
        
          	
                	
                  (i)

                	
                  any
      employee, agent, contractor, or subcontractor of
  BUYER,

                


        

      

      
        or

      

      
        
          	
                	
                  (ii)

                	
                  any
      employee of any agent, contractor, or subcontractor of BUYER, regardless
      of the basis of such claims and even if such claims should arise out of
      the sole or concurrent fault or negligence of BUILDER, or any employee,
      agent or subcontractor of
BUILDER.

                


        

      

      
        


      

      
        
          	
                  6.

                	
                  Responsibility
      of BUYER:

                


        

      

      
        


      

      
        The BUYER
shall undertake and assure that the Supervisor shall carry out his duties
hereunder in accordance with the normal shipbuilding practice of the BUILDER,
which BUILDER represents and confirms is in all material respects in accordance
with normal shipbuilding practice and in such a way so as to avoid any
unnecessary increase in building cost, delay in the construction of the
DRILLSHIP, and/or any disturbance in the construction schedule of the
BUILDER,

      

      
        


      

      
        The
BUILDER has the right to request the BUYER to replace the Supervisor who is
deemed unsuitable and unsatisfactory for the proper progress of the DRILLSHIP's
design, construction, building, launching, equipping, and completion. The BUYER
shall investigate the situation by sending its representative(s) to the Shipyard
if necessary, and if the BUYER considers that such BUILDER's request is
justified, the BUYER shall effect such replacement as soon as conveniently
possible.

      

      
        


      

      
        
          	
                  7.

                	
                  Delivery
      and Construction Schedule:

                


        

      

      
        


      

      
        Attached
hereto as Exhibit "3" is a tentative Delivery and Construction Schedule, and
within one hundred and eighty (180) days after the date of this Contract,
BUILDER shall deliver or cause to be delivered to BUYER a final Delivery and
Construction

      


      
        
           


        

        
          20

          
            

          

        

        
           


        

      


      
        Schedule
(herein, as from time to time amended with notice to the BUYER, referred to as
the "Schedule"), prepared in reasonable detailed schedule and setting forth the
estimated time table for the design, construction, building, launching,
equipping, testing and completion of the DRILLSHIP, it being understood that the
Schedule may be used by BUYER for purposes of verifying and measuring the
progress being made under the terms of this Contract. In the event the actual
progress of the construction of the DRILLSHIP is lagging behind the Schedule,
the BUILDER shall issue a recovery plan to overcome such lagging so that the
planned Delivery Date shall not be affected.

      

      
        


      

      
        During
the course of performance of this Contract the BUILDER shall submit to the BUYER
on a monthly basis;

      

      
        


      

      
        
          	
                  a)

                	
                  a
      status report on the DRILLSHIP's construction as compared with the
      Schedule;

                


        

      

      
        


      

      
        
          	
                  b)

                	
                  a
      report setting out the actual progress in performance of this Contract
      during the previous month as compared with the Schedule, including monthly
      progress photographs illustrating the progress of the
      construction;

                


        

      

      
        


      

      
        
          	
                  c)

                	
                  a
      list of modifications or changes (if any) agreed during the previous
      month;

                


        

      

      
        


      

      
        
          	
                  d)

                	
                  a
      document register showing the status of document preparation and planned
      and actual completion of
documents.

                


        

      

      
        


      

      
        (End of
Article)

      


      
        
           


        

        
          21

          
            

          

        

        
           


        

      


      
        ARTICLE V
- MODIFICATIONS, CHANGES AND EXTRAS

      

      
        


      

      
        
          	
                  1.

                	
                  How
      Effected:

                


        

      

      
        


      

      
        The
Specifications may be modified and/or changed by written agreement of the
parties, however, that any modifications and/or changes requested by the BUYER
or an accumulation of such modifications and/or changes will not adversely
affect the BUILDER'S planning or program in relation to the BUILDER'S other
commitments and if the BUYER shall assent to adjustment of the Contract Price,
time for delivery of the DRILLSHIP, other terms and conditions of this Contract
and the Specifications occasioned by or resulting from such modifications and/or
changes. The BUILDER hereby agrees to exert its best efforts to accommodate such
reasonable request by the BUYER so that the said changes and/or modifications
may be made at a reasonable cost and within the shortest period of time that is
reasonably possible.

      

      
        


      

      
        Any such
agreement for modifications and/or changes shall include an agreement as to the
increase or decrease, if any, in the Contract Price of the DRILLSHIP together
with an agreement as to any extension or reduction in the time of delivery, or
any other alterations in this Contract or the Specifications occasioned by such
modifications and/or changes.

      

      
        


      

      
        The
aforementioned agreement to modify and/or change the Specifications may be
effected by an exchange of letters signed by the authorized representatives of
the parties hereto, or telefax confirmed in writing, manifesting such agreement.
Such letters and confirmed message exchanged by the parties hereto pursuant to
the foregoing shall constitute an amendment of the Specifications, and such
letters and message shall be incorporated into this Contract and made a part
hereof.

      

      
        


      

      
        The
failure of the parties to agree on the increase or decrease in the Contract
Price, or extension or reduction in the time of delivery, if any, for any
modifications or changes requested by the BUYER shall not prevent the BUILDER
from performing any agreed work so as not to prevent the proper progress of the
DRILLSHIP's design, construction, building, launching, equipping, testing and
completion, but shall be dealt with in accordance with Article
XII.

      


      
        
           


        

        
          22

          
            

          

        

        
           


        

      


      
        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 approval that shall not be unreasonably
withheld.

      

      
        


      

      
        
          	
                  2.

                	
                  Changes
      in Rules of Classification Society, Regulations,
  etc.:

                


        

      

      
        


      

      
        If, after
the Effective Date of the Contract of HN.1837, any requirements as to
Classification Society, or as to the rules and regulations to which the
construction of the DRILLSHIP is required to conform, are altered or changed by
the Classification Society or regulatory bodies authorized to make such
alterations or changes, either of the parties hereto, upon receipt of
information thereof, shall transmit such information in full to the other party
in writing within fourteen (14) days after receipt of the said information and
thereafter the BUYER shall instruct the BUILDER in writing if such alterations
or changes shall be made in the DRILLSHIP or not, in the BUYER'S sole
discretion.

      

      
        


      

      
        
          	
                	
                  (a)

                	
                  However,
      if such alterations or changes are compulsory for the construction of
      DRILLSHIP, the BUILDER shall incorporate such alterations or changes into
      the construction of the DRILLSHIP, provided that the parties shall agree
      on any increase or decrease in the Contract Price, extension or reduction
      in time of delivery of the DRILLSHIP and other terms and conditions of
      this Contract and the Specifications occasioned by or resulting from such
      alterations or changes.

                


        

      

      
        


      

      
        
          	
                	
                  (b)

                	
                  If
      such alterations or changes are not compulsory for the construction of the
      DRILLSHIP, but the BUYER desires to incorporate such alterations or
      changes into the construction of the DRILLSHIP, then the BUYER shall
      notify the BUILDER in writing of such intention within fourteen (14) days
      after receipt of the said information. The BUILDER shall accept such
      alterations or changes, provided that the parties shall agree on any
      increase or decrease in the Contract Price, extension or reduction in time
      of delivery of the DRILLSHIP and other terms and conditions of this
      Contract and the Specifications occasioned by or resulting from such
      alterations or changes.

                


        

      

      
        


      

      
        Such
agreement of the BUYER shall be effected in the same manner as provided in
Paragraph 1 of this Article for modifications and/or changes of the
Specifications. The failure of the parties to agree on the increase or decrease
in the Contract Price, or extension or reduction in the time of delivery, if
any, for any modifications or changes requested by the BUYER shall not prevent
the BUILDER from performing any agreed work so as not to prevent the proper
progress of the DRILLSHIP's design, construction,

      


      
        
           


        

        
          23

          
            

          

        

        
           


        

      


      
        building,
launching, equipping, testing and completion, but shall be dealt with in
accordance with Article XII.

      

      
        


      

      
        
          	
                  3.

                	
                  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 DRILLSHIP can not be procured in
time to effect timely delivery of the DRILLSHIP, or are in short supply, (other
than as the result of any neglect or omission on the part of the BUILDER) the
BUILDER may, provided the BUYER so agrees in writing, supply other materials and
equipment of the best available and like quality, capable of meeting the
requirements of the Classification Society and of the rules, regulations,
requirements and recommendations with which the construction of the DRILLSHIP
must comply. Any agreement as to such substitution of materials shall be
effected in the manner as provided in Paragraph 1 of this Article, and shall,
likewise, include decrease or increase in the Contract Price and other terms and
conditions of this Contract affected by such substitution.

      

      
        


      

      
        (End of
Article)

      


      
        
           


        

        
          24

          
            

          

        

        
           


        

      


      
        ARTICLE
VI - TRIALS AND ACCEPTANCE

      

      
        


      

      
        
          	
                  1.

                	
                  Notice:

                


        

      

      
        


      

      
        The sea
trial shall start when the DRILLSHIP is reasonably completed in all material
respects according to the Specifications, and otherwise any and all tests or
trials shall be performed and notified as per the scope of the subsequent
Drillship of HN.1837 in accordance with the Specifications.

      

      
        


      

      
        The
BUILDER shall give the BUYER at least Thirty (30) days estimated prior notice
and seven (7) days confirming prior notice in writing or by telefax confirmed in
writing of the time and place of the sea trial of the DRILLSHIP, and the BUYER
shall promptly acknowledge receipt of such notice. The BUYER shall have its
representative and his assistant(s) on board the DRILLSHIP to witness such sea
trial.

      

      
        


      

      
        Failure
in attendance of the BUYER's representative at the sea trial of the DRILLSHIP
for any reason whatsoever after due notice to the BUYER as above provided shall
be deemed to be a waiver by the BUYER of its right to have its representative on
board the DRILLSHIP at the sea trial, and the BUILDER may conduct the sea trial
without attendance of the BUYER'S representative, and in such case the BUYER
shall be obligated to accept the DRILLSHIP on the basis of certificates of the
Classification Society and a certificate of the BUILDER stating that the
DRILLSHIP, upon sea trial, is found to conform to this Contract and the
Specifications.

      

      
        


      

      
        
          	
                  2.

                	
                  Weather
      Condition:

                


        

      

      
        


      

      
        The sea
trial and any other tests and trials of the DRILLSHIP as per the Specifications
shall be carried out under the weather condition that is deemed favorable enough
by the judgment of both the BUYER and the BUILDER and as per the Specifications.
In the event of unfavorable weather on the date specified for the sea trial or
other tests and trials as per the Specifications, the same shall take place on
the first available day thereafter that the weather condition permits. It is
agreed that, if during the sea trial or other tests and trials of the DRILLSHIP
as per the Specifications, the weather should suddenly become so unfavorable
that orderly conduct of the test or trial can no longer be continued, the test
or trial shall be discontinued and postponed until the first favorable day next
following, unless the BUYER shall assent in writing to acceptance of
the

      


      
        
           


        

        
          25

          
            

          

        

        
           


        

      


      
        DRILL
SHIP on the basis of the tests and trials already made before such
discontinuance has occurred.

      

      
        


      

      
        Any delay
of sea trial caused by such unfavorable weather condition shall operate to
postpone the Delivery Date by the period of the delay involved and such delay
shall be deemed as permissible delay in the delivery of the
DRILLSHIP.

      

      
        


      

      
        
          	
                  3.

                	
                  How
      Conducted:

                


        

      

      
        


      

      
        
          	
                	
                  (a)

                	
                  The
      sea trial and any other tests and trials as per the Specifications shall
      be conducted in the manner prescribed in the Specifications, and shall
      prove full fulfillment of the performance requirements for the trial run
      as set forth in the
Specifications.

                


        

      

      
        


      

      
        
          	
                	
                  (b)

                	
                  All
      risk and expenses in connection with the sea trial and any other tests and
      trials are to be for account of the BUILDER and the BUILDER shall provide,
      at its own expense, fuel oil, lubes, stores and the necessary crew to
      comply with conditions of safe
navigation.

                


        

      

      
        


      

      
        
          	
                	
                  (c)

                	
                  Notwithstanding
      above (b), the BUYER shall provide drilling crews at it's own expense
      during tests and trials for drilling system. The crews shall perform the
      tests and trials under the BUILDER'S responsibility and risk and
      familiarized themselves with the system for the final take over of the
      Drill ship.

                


        

      

      
        


      

      
        
          	
                  4.

                	
                  Method
      of Acceptance or Rejection.

                


        

      

      
        


      

      
        
          	
                	
                  (a)

                	
                  Upon
      completion of the sea trial, the BUILDER shall give the BUYER a notice by
      telefax of completion of the trial run, as and if the BUILDER considers
      that the results of trial run indicate conformity of the DRILLSHIP to this
      Contract and the Specifications. The BUYER shall, within Five (5) days
      after receipt of such notice from the BUILDER, notify the BUILDER by
      telefax of its acceptance or rejection of the DRILLSHIP's conformity to
      this Contract and
Specifications.

                


        

      

      
        


      

      
        
          	
                	
                  (b)

                	
                  However,
      if the result of the sea trial is unacceptable, or if the DRILLSHIP, or
      any part or equipment thereof, (except a defect in the BUYER'S supplies
      not being the responsibility of the BUILDER) does not conform to the
      requirements of this Contract and/or the Specifications, or if the BUILDER
      is in agreement to non-

                


        

      


      
        
           


        

        
          26

          
            

          

        

        
           


        

      


      
        conformity
as specified in the BUYER's notice of rejection, then, the BUILDER shall take
necessary steps to correct such non-conformity.

      

      
        


      

      
        Upon
completion of correction of such non-conformity, and re-test or trial if
necessary, the BUILDER shall give the BUYER notice thereof by telefax confirmed
in writing.

      

      
        


      

      
        The BUYER
shall, within Five (5) days after receipt of such notice from the BUILDER,
notify the BUILDER of its acceptance or rejection of the
DRJLLSHIP.

      

      
        


      

      
        
          	
                	
                  (c)

                	
                  In
      the event that the BUYER rejects the DRILLSHIP, the BUYER shall indicate
      in detail in its notice of rejection in what respect the DRILLSHIP, or any
      part or equipment thereof (except a defect in the BUYER'S supplies not the
      responsibility of the BUILDER) does not conform to this Contract and/or
      the Specifications,

                


        

      

      
        


      

      
        
          	
                	
                  (d)

                	
                  In
      the event that the BUYER fails to notify the BUILDER by telefax confirmed
      in writing of the acceptance of or the rejection together with the reason
      therefore of the DRILLSHIP within the period as provided in the above
      Sub-paragraph (a) or (b), the BUYER shall be deemed to have accepted the
      trial results and/or the DRILLSHIP, as
  appropriate.

                


        

      

      
        


      

      
        
          	
                	
                  (e)

                	
                  Any
      dispute between the BUILDER and the BUYER as to the conformity or non­
      conformity of the DRILLSHIP to the requirements of this Contract and/or
      the Specifications shall be submitted for final decision in accordance
      with Article XII hereof

                


        

      

      
        


      

      
        
          	
                	
                  (f)

                	
                  The
      BUYER shall not be entitled to refuse acceptance of the DRILLSHIP by
      reason of
      any   minor  or  insubstantial  non-conformity  with  this   Contract   and  the
      Specifications. For the purpose of this Sub-paragraph, a minor or
      insubstantial non­ conformity shall mean a non-conformity that does
      not impair the safe or efficient operation of the DRILLSHIP and shall
      exclude any non-conformities affecting compliance with the rules and
      regulations of the Classification Society and other relevant Regulatory
      Bodies of the DRILLSHIP as defined in the Specifications. The BUILDER
      shall remain obliged to correct and/or remedy such minor or insubstantial
      non-conformities  as   soon  as  reasonably  possible   following  delivery  of
      the DRILLSHIP.

                


        

      

      
        


      

      
        
          	
                  5.

                	
                  Effect
      of Acceptance:

                


        

      


      
        
           


        

        
          27

          
            

          

        

        
           


        

      


      
        Acceptance
of the DRILLSHIP as above provided shall be final and binding so far as
conformity of the DRILLSHIP to this Contract and the Specifications is concerned
and shall preclude the BUYER from refusing formal delivery of the DRILLSHIP as
hereinafter provided, if the BUILDER complies with all other procedural
requirements for delivery as provided in Article VII hereof. However, the
BUYER'S acceptance of the DRILLSHIP shall not affect the BUYER's rights under
Article IX hereof.

      

      
        


      

      
        
          	
                  6.

                	
                  Disposition
      of Surplus Consumable Stores:

                


        

      

      
        


      

      
        Any fuel
oil furnished and paid for by the BUILDER for sea trial remaining on board
including in systems and pipes of the DRILLSHIP, at the time of acceptance of
the DRILLSHIP by the BUYER, shall be bought by the BUYER from the BUILDER at the
BUILDER's purchase price for such supply in Korea and payment by the BUYER
thereof shall be made at the time of delivery of the
DRILLSHIP.

      

      
        


      

      
        The
BUILDER shall pay the BUYER at the time of delivery of the DRILLSHIP an amount
for the consumed quantity during sea trial of any lubricating oil and greases
which were furnished and paid for by the BUYER, if any, at the BUYER's purchase
price thereof.

      

      
        


      

      
        (End of
Article)

      


      
        
           


        

        
          28

          
            

          

        

        
           


        

      


      
        ARTICLE
VII - DELIVERY.

      

      
        


      

      
        
          	
                  1

                	
                  Time
      and Place:

                


        

      

      
        


      

      
        The
DRILLSHIP shall be delivered by the BUILDER to the BUYER at the Shipyard on or
before September 30, 2011 (unless delays occur in the construction of the
DRILLSHIP or in any performance required under this Contract due to causes which
under the terms of this Contract permit postponement of the date of delivery, in
which event, the aforementioned date for delivery of the DRILLSHIP shall be
changed accordingly) or, such earlier date after completion of the DRILLSHIP
according to this Contract and the Specifications.

      

      
        


      

      
        The
aforementioned date, or such earlier or later date to which the requirement of
delivery is advanced or postponed pursuant to this Contract, is herein called
the "Delivery Date".

      

      
        


      

      
        
          	
                  2.

                	
                  When
      and How Effected:

                


        

      

      
        


      

      
        Provided
that the BUILDER and the BUYER shall have fulfilled all of their obligations
stipulated under this Contract, the delivery of the DRILLSHIP shall be effected
forthwith by the concurrent delivery by each of the parties hereto to the other
of the PROTOCOL OF DELIVERY AND ACCEPTANCE, acknowledging delivery of the
DRILLSHIP by the BUILDER and acceptance thereof by the BUYER.

      

      
        


      

      
        
          	
                  3.

                	
                  Documents
      to be delivered to BUYER:

                


        

      

      
        


      

      
        Upon
delivery and acceptance of the DRILLSHIP, the BUILDER shall deliver to the BUYER
the following documents, which shall accompany the PROTOCOL OF DELIVERY AND
ACCEPTANCE.

      

      
        


      

      
        
          	
                	
                  (a)

                	
                  PROTOCOL
      OF TRIALS of the DRILLSHIP made pursuant to the
      Specifications.

                


        

      

      
        


      

      
        
          	
                	
                  (b)

                	
                  PROTOCOL
      OF INVENTORY of the equipment of the DRILLSHIP, including spare parts and
      the like, as specified in the
Specifications.

                


        

      

      
        


      

      
        
          	
                	
                  (c)

                	
                  PROTOCOL
      OF STORES OF CONSUMABLE NATURE referred to under paragraph 6 of Article VI
      hereof.

                


        

      


      
        
           


        

        
          29

          
            

          

        

        
           


        

      


      
        
          	
                	
                  (d)

                	
                  ALL
      CERTIFICATES including the BUILDER'S CERTIFICATE required to be furnished
      upon delivery of the DRILLSHIP pursuant to this Contract and the
      Specifications.

                


        

      

      
        


      

      
        It is
agreed that if, through no fault on the part of the BUILDER, the Classification
certificates and/or other certificates are not available at the time of delivery
of the DRILLSHIP, 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 certificates have been
issued.

      

      
        


      

      
        Application
and certificate for statutory inspections for the registry of the DRILLSHIP
shall be arranged by the BUYER at its expense.

      

      
        


      

      
        
          	
                	
                  (e)

                	
                  DECLARATION
      OF WARRANTY of the BUILDER that the DRILLSHIP is delivered to the BUYER
      free and clear of any liens, charges, claims, mortgages, or other
      encumbrances upon the BUYER'S title thereto, and in particular that the
      DRILLSHIP is absolutely free of all burdens in the nature of imposts,
      taxes or charges imposed by Korean Governmental Authorities or any other
      Authorities, as well as all liabilities of the BUILDER to its
      subcontractors, employees and crew, and of all the liabilities arising
      from the operation of the DRILLSHIP in trial runs, or otherwise, prior to
      delivery.

                


        

      

      
        


      

      
        
          	
                	
                  (f)

                	
                  DRAWINGS
      AND PLANS and any other technical documentation pertaining to the DRILLSHIP
      as stipulated in the
Specifications

                


        

      

      
        
          
          

        

      

      
        


      

      
        
          	
                	
                  (g)

                	
                  COMMERCIAL
      INVOICE.

                


        

      

      
        
          	
                	
                  (h)

                	
                  Bill
      of Sale to be notarized and
apostiled

                


        

      

      
        
          	
                	
                  (i)

                	
                  Builder's
      Resolution of Board of Directors to be notarized and
    apostiled

                


        

      

      
        
          	
                	
                  (j)

                	
                  Power
      of Attorney to be notarized and
apostiled

                


        

      

      
        
          	
                	
                  (k)

                	
                  Goodstanding
      Certificate

                


        

      

      
        
          	
                	
                  (1)

                	
                  Confirmation
      by ABS to Malta Maritime
Authority

                


        

      

      
        
          	
                	
                  (m)

                	
                  Builder's
      Certificate

                


        

      

      
        


      

      
        
          	
                  4. 

                	
                  Tender
      of DRILLSHIP:

                


        

      

      
        


      

      
        If the
BUYER fails to take delivery of the DRILLSHIP after completion thereof according
to this Contract and the Specifications without any justifiable reason,
the

      


      
        
           


        

        
          30

          
            

          

        

        
           


        

      

      
         

        BUILDER
shall have the right to tender delivery of the DRILLSHIP after accomplishment of
all BUILDER'S
obligations as provided herein.

        


        
          	
                  5.

                	
                  Title
      and Risk:

                


        

        


        Title to
and risk of loss of the DRILLSHIP shall pass to the BUYER only upon the delivery
and acceptance thereof having been completed as stated above; it being expressly
understood that, until such delivery is effected, title to and risk of damage to
or loss of the DRILLSHIP and her equipment shall be in the BUILDER.

        


        
          	
                  6.

                	
                  Removal
      of DRILLSHIP:

                


        

        


        The BUYER
shall take possession of the DRILLSHIP immediately upon delivery and acceptance
thereof and shall remove the DRILLSHIP from the premises of the Shipyard within
Three (3) days after delivery and acceptance thereof is effected.

        


        If the
BUYER shall not remove the DRILLSHIP from the premises of the Shipyard within
the aforesaid Three (3) days, in such event, the BUYER shall pay to the BUILDER
the reasonable mooring charges of the DRILLSHIP.

         

         

        (End of
Article)

        


        
          
            
               


            

            
              31

              
                

              

            

            
               


            

          

        

         

        ARTICLE
VIII - DELAYS AND EXTENSION OF TIME FOR DELIVERY (FORCE MAJEURE)

        
 

        
          	
                  1. 

                	
                  Causes
      of Delay (Force Majeure):

                


        

        


        If, at
any time either the construction or delivery of the DRILLSHIP or any performance
required hereunder as a prerequisite to the delivery thereof is delayed by any
of the following events; namely war, acts of state or government, blockade,
revolution, insurrections, mobilization, civil commotion, riots, strikes,
sabotage, lockouts, Acts of God or the public enemy, plague or other epidemics,
quarantines, prolonged failure of electric current, freight embargoes, or
defects in major forgings or castings, if any, or shortage of materials,
machinery or equipment in inability to obtain delivery or delays in delivery of
materials, machinery or equipment other than resulting from any act, omission or
improvidence of the BUILDER or its agents, employees or Subcontractors, provided
that at the time of ordering the same could reasonably be expected by the
BUILDER to be delivered in time, or defects in materials, machinery or equipment
which could not have been detected by the BUILDER using reasonable care, or
earthquakes, tidal waves, typhoons, hurricanes, prolonged or unusually severe
weather conditions or delay in the construction of the BUILDER’s other new-building
projects in the same dry-dock due to any such causes as described in this
Article which in turn delay the keel laying and eventual delivery of the
DRILLSHIP in view of the Shipyard's overall building program or the BUILDER’s
performance under this Contract, or by destruction of the premises or works of
the BUILDER or its sub-contractors, or of the DRILLSHIP, or any part thereof, by
fire, landslides, flood, lightning, explosion, or other causes beyond the
control of the BUILDER, or its sub-contractors, as the case may be, or for any
other causes which, under terms of this Contract, authorize and permit extension
of the time for delivery of the DRILLSHIP, then, in the event of delays due to
the happening of any of the aforementioned contingencies, the Delivery Date of
the DRILLSHIP under this Contract shall be extended for a period of time which
shall not exceed the total accumulated time of all such delays.

        


        The
BUILDER’s entitlement to extension of the Delivery Date due to any of the
aforesaid events shall, however, always be subject to the delay, or any part of
the delay, not being caused by the BUILDER’s error,
neglect, act or omission or that of its agents, employees or Subcontactors, and
that the BUILDER having taken all reasonable steps to mitigate the effect of the
event upon the Delivery Date.

        


        
          
            
               


            

            
              32

              
                

              

            

            
               


            

          

        

         

        
          	
                  2.

                	
                  Notice
      of Delay:

                


        

        


        Within
Ten (10) days after the date of occurrence of any cause of delay, on account of
which the BUILDER claims that it is entitled under this Contract to a
postponement of the Delivery Date, the BUILDER shall notify the BUYER in writing
or by telefax confirmed in writing of the date when such cause of delay
occurred. Likewise, within Ten (10) days after the date of ending of such cause
of delay, the BUILDER shall notify the BUYER in writing or by telefax confirmed
in writing of the date when such cause of delay ended.

        


        The
BUILDER shall also notify promptly the BUYER of the period, by which in their
opinion the Delivery Date is postponed by reason of such cause of delay. If the
BUILDER does not give the timely advice as above, the BUILDER shall lose the
right to claim such delays as permissible delay.

        


        Failure
of the BUYER to acknowledge to the BUILDER'S claim for
postponement of the Delivery Date within Ten (10) days after receipt by the
BUYER of such notice of claim shall be deemed to be a waiver by the BUYER of its
right to object to such postponement of the Delivery Date.

        


        
          	
                  3.

                	
                  Definition
      of Permissible Delay:

                


        

        


        Delays on
account of such causes as specified in Paragraph 1 of this Article and any other
delay of a nature which under the terms of this Contract permits postponement of
the Delivery Date shall be understood to be permissible delays and are to be
distinguished from unauthorized delays on account of which the Contract Price is
subject to adjustment as provided for in Article III hereof.

        


        
          	
                  4.

                	
                  Right
      to Rescind for Excessive Delay:

                


        

        


        If the
total accumulated time of all delays claimed by the BUILDER on account of the
causes specified in Paragraph 1 of this Article, excluding other delays of the
nature which under the terms of this Contract permit postponement of the
Delivery Date, amounts to Two Hundred and Ten (210) days or more, then, in such
event, the BUYER may rescind this Contract in accordance with the provisions of
Article X hereof.

        


        The
BUILDER may, at any time after the accumulated time of the aforementioned delays
justifying rescission by the BUYER, demand in writing that the BUYER
shall

        


        
          
            
               


            

            
              33

              
                

              

            

            
               


            

          

        

        


        make an
election, in which case the BUYER shall, within Fourteen (14) working days after
such demand is received by the BUYER either notify the BUILDER of its intention
to rescind this Contract, or consent to a postponement of the Delivery Date to
an agreed specific future date, which date BUILDER represents to BUYER is the
earliest date BUILDER can deliver the DRILLSHIP to BUYER, based on the
circumstances then known, it being understood by the parties hereto that if the
DRILLSHIP is not delivered by such future date, the BUYER shall have the same
right of rescission upon the same terms and conditions as hereinabove
provided.

        


        


        (End of
Article)

         

        
          
            
               


            

            
              34

              
                

              

            

            
               


            

          

        

        


        ARTICLE
IX – WARRANTY OF QUALITY

        


        


        
          	
                  1.

                	
                  Guarantee:

                


        

        


        The
BUILDER, for the period of Twelve (12) months after delivery of the DRILLSHIP
(hereinafter called "Guarantee Period"), guarantees the DRILLSHIP and her
engines, including all parts and equipment manufactured, furnished or installed
by the BUILDER or its subcontractors under this Contract, and including the
machinery, equipment and appurtenances thereof (including the installation work
performed or required to be performed by BUILDER under this Contract for the
BUYER supplied or furnished equipment), under the Contract but excluding any
item which is supplied or designated by the BUYER or by any other bodies on
behalf of the BUYER, against all defects discovered within the Guarantee Period
which are due to defective material, design and/or poor workmanship or negligent
or other improper acts or omissions on the part of the BUILDER or its
subcontractors (hereinafter called the "Defect" or "Defects") and are not a
result of accident, ordinary wear and tear, misuse, mismanagement, negligent or
other improper acts or omissions or neglect on the part of the BUYER, its
employee or agents.

        


        
          	
                  2.

                	
                  Notice
      of Defects:

                


        

        


        The BUYER
shall notify the BUILDER in writing, or by telefax confirmed in writing, of any
Defect for which claim is made under this guarantee, as promptly as possible
after discovery thereof. The BUYER’s written
notice shall describe the nature, cause and extent of the Defects.

        


        The
BUILDER shall have no obligation for any Defect discovered prior to the expiry
date of the Guarantee Period, unless notice of such Defect is received by the
BUILDER not later than Fourteen (14) working days after the expiry of the
Guarantee Period.

        


        
          	
                  3.

                	
                  Remedy
      of Defects:

                


        

        


        
          	
                   
      

                	
                  (a)

                	
                  The
      BUILDER shall remedy, at its expense, any Defect against which the
      DRILLSHIP is guaranteed under this Article, by making all necessary
      repairs or replacements at the
Shipyard.

                


        

        


        
          
            
               


            

            
              35

              
                

              

            

            
               


            

          

        

         

        
          	
                   
      

                	
                  (b)

                	
                  However,
      if it is impracticable to bring the DRILLSHIP to the Shipyard, the BUYER
      may cause the necessary repairs or replacements to be made elsewhere which
      is deemed suitable for the purpose, provided that, in such event, the
      BUILDER may forward or supply replacement parts or materials to the
      nearest airport or port from the DRILLSHIP, unless forwarding or supplying
      thereof would impair or delay the operation or working schedule of the
      DRILLSHIP. In the event that the BUYER proposes to cause the necessary
      repairs or replacements for the DRILLSHIP to be made at any other shipyard
      or works than the Shipyard, the BUYER shall first, but in all events as
      soon as possible, give the BUILDER notice in writing or by telefax
      confirmed in writing of the time and place when and where such repairs
      will be made, and if the DRILLSHIP is not thereby delayed, or her
      operation or working schedule is not thereby impaired, the BUILDER shall
      have the right to verify by its own representative(s) the nature, cause
      and extent of the Defects complained of. The BUILDER shall, in such case,
      promptly advise the BUYER by telefax or telex after such examination has
      been completed, of its acceptance or rejection of the Defects as ones that
      are covered by the guarantee herein provided. Upon the BUILDER’s
      acceptance of the Defects as justifying remedy under this Article, or upon
      award of the arbitration so determining, the BUILDER shall compensate the
      BUYER for such repairs or replacements a sum equal to the necessary and
      reasonable cost of making the same repairs or replacements in a competent
      shipyard at a reasonable location, at the prices prevailing at the time of
      such repairs or replacements are made. The reimbursement of the cost
      incurred in relation to guarantee works shall be paid after the repairs or
      replacements are made but if not made or the costs incurred for each such
      repair or replacement is below US$ 100,000, such costs shall be paid at
      the expiration of the guarantee
period.

                


        

        


        
          	
                   
      

                	
                  (c)

                	
                  The
      BUILDER guarantees repairs or replacements to the DRILLSHIP made under the
      guarantee in paragraph 1 of this Article for a further period of Twelve
      (12) months from the date of completion of such repair or replacement. In
      any case, the maximum guarantee period shall not exceed Eighteen (18)
      months.

                


        

        


        
          	
                   
      

                	
                  (d)

                	
                  In
      any case, the DRILLSHIP shall be taken, at the BUYER'S cost and
      responsibility, to the place elected, ready in all respects for such
      repairs or replacement.

                


        

        


        
          	
                   
      

                	
                  (e)

                	
                  Any
      dispute under this Article shall be referred to arbitration in accordance
      with the provisions of Article XII
hereof.

                


        

        


        
          
            
               


            

            
              36

              
                

              

            

            
               


            

          

        

        


        


        
          
            	
                    4.

                  	
                    Extent
      of BUILDER’s Responsibility

                  


          

        

        


        
          	
                   
      

                	
                  (a)

                	
                  The
      BUILDER shall have no responsibility or liability for any other defect
      whatsoever in the DRILLSHIP than the Defects specified in Paragraph 1 of
      this Article. Nor the BUILDER shall in any circumstance be responsible or
      liable for any consequential or special loss, damage or expense including
      but not limited to loss of time, loss of profit of earning or demurrage
      directly or indirectly occasioned to the BUYER by reason of the Defects
      specified in Paragraph 1 of this Article or due to repairs or other works
      done to the DRILLSHIP to remedy such
Defects.

                


        

        


        
          	
                   
      

                	
                  (b)

                	
                  The
      BUILDER shall not be responsible for any defect in any part of the
      DRILLSHIP which may, subsequently to delivery of the DRILLSHIP, have been
      replaced or repaired in any way by any other contractor, or for any defect
      which have been caused or aggravated by omission or improper use and
      maintenance of the DRILLSHIP on the part of the BUYER, its servants or
      agents or by ordinary wear and tear or by any other reason beyond control
      of the BUILDER.

                


        

        


        
          	
                   
      

                	
                  (c)

                	
                  The
      guarantee contained as 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 DRILLSHIP by the BUILDER for and to the
      BUYER.

                


        

        


        


        (End of
Article)

         

        
          
            
               


            

            
              37

              
                

              

            

            
               


            

          

        

        


        
          ARTICLE X
- RESCISSION BY BUYER

        

        
          


        

        
          
            	
                    1.

                  	
                    Notice:

                  


          

        

        
          


        

        
          The
payments made by the BUYER prior to delivery of the DRILLSHIP shall be in the
nature of advances to the BUILDER, and in the event that the DRILLSHIP is
rejected by the BUYER or the Contract is rescinded by the BUYER in accordance
with the terms 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 writing or by telefax confirmed in writing, and such
rescission shall be effective as of the date when notice thereof is received by
the BUILDER.

        

        
          


        

        
          
            	
                    2.

                  	
                    Refundment
      by BUILDER:

                  


          

        

        
          


        

        
          In case
the BUILDER receives the notice stipulated in Paragraph 1 of this Article, the
BUILDER shall promptly refund to the BUYER the full amount of all sums paid by
the BUYER to the BUILDER on account of the DRILLSHIP, together with the interest
thereon, unless the BUILDER proceeds to the arbitration under the provisions of
Article XII hereof. The BUILDER shall also return any BUYER'S Supplies, or if
such cannot be returned, the BUILDER shall pay to the BUYER an amount equal to
the BUYER'S costs for such equipment.

        

        
          


        

        
          In the
event of such rescission by the BUYER, the BUILDER shall pay the BUYER interest
at the rate of six percent (6%) per annum on the amount required herein to be
refunded to the BUYER, computed from the respective dates on which such sums
were paid by the BUYER to the BUILDER to the date of remittance by transfer of
such refund to the BUYER by the BUILDER, provided, however, that if the said
rescission by the BUYER is made under the provisions of Paragraph 4 of Article
VIII hereof, then in such event the BUILDER shall pay the BUYER interest at the
rate of four and a half percent (4.5%) per annum on the sums
refundable.

        

        


        As
security for refund of installments prior to delivery of the DRILLSHIP, the
BUILDER shall famish to BUYER, prior to the due date of the first installment,
with an irrevocable letter of guarantee covering the amount of such pre-delivery
installments and issued by KEXIM, KDB, or a bank acceptable to the BUYER in
favour of the BUYER. Such letter of guarantee shall have substantially the same
form and substance as Exhibit "4" annexed hereto.

        


        
          
            
               


            

            
              38

              
                

              

            

            
               


            

          

        

        


        
          
            	
                    3.

                  	
                    Discharge
      of Obligations:

                  


          

        

        
          


        

        
          Upon such
refund by the BUILDER to the BUYER, all obligations, duties and liabilities of
each of the parties hereto to the other under this Contract shall be forthwith
completely discharged, without prejudice, however, to any claims either party
may have resulting from the other party's breach of any of its obligations under
this Contract.

        

        
           

           

        

        (End of
Article)

        


        
          
            
               


            

            
              39

              
                

              

            

            
               


            

          

        

        


        
          ARTICLE
XI - BUYER'S DEFAULT

        

        
          


        

        
          
            	
                    1.

                  	
                    Definition
      of Default:

                  


          

        

        
          


        

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

        

        
          


        

        
          
            	
                    
                    

                  	
                    (a)

                  	
                    If
      the first installment is not paid in full by the BUYER within the due date
      specified in Article II. 4 (a) after the receipt of original Refundment
      Guarantee or if any of the second, third or fourth installment is not paid
      in full by the BUYER to the BUILDER within Three (3) banking days in New
      York after such installment becomes due and payable as provided in Article
      II hereof; or

                  


          

        

        
          


        

        
          
            
              	
                    	
                      (b)

                    	
                      If
      a performance guarantee by Cardiff Marine Inc. is not presented to the
      BUILDER within 5
      banking
      days from the Effective Date of this
Contract.

                    


            

          

        

        
          


        

        
          
            	
                    
                    

                  	
                    (c)

                  	
                    If
      the fifth installment, after adjustment pursuant to the relevant
      provisions of this Contract, is not paid in full by the BUYER to the
      BUILDER concurrently with the delivery of the DRILLSHIP as provided in
      Article II hereof; or

                  


          

        

        
          


        

        
          
            	
                    
                    

                  	
                    (d)

                  	
                    If
      the BUYER, when the DRILLSHIP is duly tendered for delivery by the BUILDER
      in accordance with the provisions of this Contract, fails to accept the
      DRILLSHIP within Five (5) days from the tendered date without any specific
      and valid ground thereof under this
Contract.

                  


          

        

        
          


        

        
          
            	
                    2.

                  	
                    Effect
      of Default on or before Delivery of
DRILLSHIP:

                  


          

        

        
          


        

        
          
            	
                    
                    

                  	
                    (a)

                  	
                    Should
      the BUYER make default in payment of any installment of the Contract Price
      on or before delivery of the DRILLSHIP, the BUYER shall pay the
      installment(s) in default plus accrued interest thereon at the rate of six
      percent (6%) per annum computed from the due date of such installment
      provided in Paragraph 4 of Article II hereof up to the date when the
      BUILDER receives the payment, and, for the purpose of Paragraph 1 of
      Article VII hereof, the Delivery Date of the DRILLSHIP shall be
      automatically extended by a period of continuance of such default by the
      BUYER.

                  


          

        

        


        In any
event of default by the BUYER, the BUYER shall also pay all charges
and

        


        
          
            
               


            

            
              40

              
                

              

            

            
               


            

          

        

        


        
          expenses
incurred to the BUILDER in direct consequence of such
default.

        

        
          


        

        
          
            	
                    
                    

                  	
                    (b)

                  	
                    If
      any default by the BUYER continues for a period of Fifteen (15) days, the
      BUILDER may, at its option, rescind this Contract by giving notice of such
      effect to the BUYER by telefax confirmed in
  writing.

                  


          

        

        
          


        

        
          Upon
dispatch by the BUILDER of such notice of rescission, this Contract shall be
forthwith rescinded and terminated. In the event of such rescission of this
Contract, the BUILDER shall be entitled to retain any installment or
installments already paid by the BUYER to the BUILDER on account of this
Contract and the BUYER'S Supplies already delivered to the Shipyard, if
any.

        

        
          


        

        
          
            	
                    3. 

                  	
                    Disposal
      of DRILLSHIP:

                  


          

        

        
          


        

        
          
            	
                    
                    

                  	
                    (a)

                  	
                    In
      the event that this Contract is rescinded by the BUILDER under the
      provisions of Paragraph 2(b) of this Article, the BUILDER may, at its sole
      discretion, either complete the DRILLSHIP and sell the same, or sell the
      DRILLSHIP in its incomplete state, free of any right or claim of the
      BUYER. Such sale of the DRILLSHIP by the BUILDER shall be either by public
      auction or private contract at the BUILDER'S sole discretion and on such
      terms and conditions as the BUILDER shall deem
  fit.

                  


          

        

        
          


        

        
          
            	
                    
                    

                  	
                    (b)

                  	
                    In
      the event of such sale of the DRILLSHIP, the amount of the sale received
      by the BUILDER shall be applied firstly to all expenses attending such
      sale or otherwise incurred to the BUILDER as a result of the BUYER'S
      default, secondly to the payment of all costs and expenses of construction
      of the DRILLSHIP incurred to the BUILDER less BUYER'S Supplies and the
      installments already paid by the BUYER, and then to the compensation to
      the BUILDER for a reasonable cost due to rescission of this Contract, and
      finally to the repayment to the BUYER if any balance is
      obtained.

                  


          

        

        


        
          	
                   
      

                	
                  (c)

                	
                  If
      the proceeds of sale are insufficient to pay such total costs and loss of
      profit as aforesaid, the BUYER shall promptly pay the deficiency to the
      BUILDER upon request.

                


        

         

        (End of
Article)

        

          
            
               


            

            
              41

              
                

              

            

            
               


            

          

ARTICLE
XII – ARBITRATION

        


        
          	
                  1.

                	
                  Decision
      by the Classification Society:

                


        

        


        If any
dispute arises between the parties hereto in regard to the design and/or
construction of the DRILLSHIP, its machinery and equipment, and/or in respect of
the materials and/or workmanship thereof and/or thereon, and/or in respect of
interpretations of this Contract or the Specifications, the parties may by
mutual agreement refer the dispute to the Classification Society or to such
other expert as may be mutually agreed between the parties hereto, and whose
decision shall be final, conclusive and binding upon the parties
hereto.

        


        
          	
                  2.

                	
                  Proceedings
      of Arbitration in London UK.:

                


        

        


        In the
event that the parties hereto do not agree to settle a dispute according to
Paragraph 1 of this Article and/or in the event of any other dispute of any kind
whatsoever between the parties and relating to this Contract, including any
dispute regarding its validity and existence, or its rescission or any
stipulation herein, such dispute shall be submitted to arbitration in
London.

        


        If the
dispute or difference does not exceed the sum of Five Hundred Thousand United
States Dollars (US$ 500,000) the arbitration shall be conducted in accordance
with the London Maritime Arbitrators Association's Small Claims Procedure
current at the time when the arbitration proceedings are commenced.

        


        For
disputes of value above Five Hundred Thousand United States Dollars (US$
500,000) each party shall appoint an arbitrator and in the event that they
cannot agree, the two arbitrators so appointed shall appoint an
Umpire.

        


        If the
two arbitrators are unable to agree upon an Umpire within Twenty (20) days after
appointment of the second arbitrator, either of the said two arbitrators may
apply to the President for the time being of the London Maritime Arbitrators
Association to appoint the Umpire, and the two arbitrators and the Umpire shall
constitute the Arbitration Board.

        


        Such
arbitration shall be in accordance with and subject to the provisions of the
British Arbitration Act 1996, or any statutory modification or re-enactment
thereof for the time

        


        
          
            
               


            

            
              42

              
                

              

            

            
               


            

          

        

         

        being in
force.

         

        Either
party may demand arbitration of any such dispute by giving notice to the other
party. Any demand for arbitration by either of the parties hereto shall state
the name of the arbitrator appointed by such party and shall also state
specifically the question or questions as to which such party is demanding
arbitration.

        


        Within
Fourteen (14) days after receipt of notice of such demand for arbitration, the
other party shall in turn appoint a second arbitrator and give notice in writing
of such appointment to the party demanding arbitration. If a party fails to
appoint an arbitrator as aforementioned within Fourteen (14) days following
receipt of notice of demand for arbitration by the other party, the party
failing to appoint an arbitrator shall be deemed to have accepted and appointed,
as its own arbitrator, the arbitrator appointed by the party demanding
arbitration and the arbitration shall proceed before this sole arbitrator who
alone in such event shall constitute the Arbitration Board

        


        The award
of the Arbitration Board shall be final and binding on both
parties.

        


        
          
            	
                    3.

                  	
                    Notice
      of Award:

                  


          

        

        


        The award
decision shall immediately be communicated to the BUYER and the BUILDER by
facsimile and confirmed in writing.

        


        
          
            	
                    4.

                  	
                    Expenses:

                  


          

        

        


        The
Arbitration Board shall determine which party shall bear the expenses of the
arbitration or the portion of such expenses that each party shall
bear.

        


        
          
            	
                    5.

                  	
                    Entry
      in Court:

                  


          

        

        


        In case
of failure by either party to respect the award of the arbitration, the judgment
may be entered in any proper court having jurisdiction thereof.

        


        
          
            	
                    6.

                  	
                    Alteration
      of Delivery Date:

                  


          

        

        


        In the
event of reference to arbitration of any dispute arising out of matters
occurring prior to delivery of the DRILLSHIP, the award may include any
adjustment of the Delivery Date that the Arbitration Board may deem
appropriate.

        


        
          
            
               


            

            
              43

              
                

              

            

            
               


            

          

        

        


        (End of
Article)

        


        
          
            
               


            

            
              44

              
                

              

            

            
               


            

          

        

        


        ARTICLE
XIII – SUCCESSOR AND ASSIGNS

        


        The
BUILDER agrees that, prior to delivery of the DRILLSHIP, this Contract may, with
the prior written approval of the BUILDER, which the BUILDER shall not
unreasonably withhold, be transferred to and the title thereof may be taken by
another company.

        


        In the
event of any assignment or novation pursuant to the terms of this Contract, the
assignee shall succeed to all of the rights and obligations of the assignor
under this Contract and the assignor shall remain responsible for the
fulfillment of this Contract.

        


        In the
event of the assignment or novation from the BUYER to any other individual or
company pursuant to this provision, the BUILDER shall be entitled to request
issuance of a Performance Guarantee from the BUYER having identical form and
contents as Exhibit "5" annexed hereto.

        


        In the
event of any resale, assignment or novation of the Contract, any and all matters
determined by mutual agreement between the BUYER and the BUILDER prior to the
resale, assignment or novation of the Contract shall be accepted and complied by
the New BUYER (i.e., assignee). If the New BUYER or its Supervisor makes
unreasonable requests that may have a significant impact on the delivery
schedule of the DRILLSHIP and/or costs of construction (including, without
limitation to, request for substantial change of ship type or excessive revision
of design specification, etc.), the BUILDER shall be entitled to withhold its
consent to the resale, assignment or novation of the Contract but in such
situation the BUILDER may grant at its option consent to such resale, assignment
or novation if the New BUYER will bear any and all direct and indirect costs
attributable to such requests and changes resulting therefrom.

        


        


        (End of
Article)

        


        
          
            
               


            

            
              45

              
                

              

            

            
               


            

          

        

        


        
          ARTICLE
XIV - TAXES AND DUTIES

        

        
          


        

        
          


        

        
          
            	
                    1.

                  	
                    Taxes
      and Duties Incurred in Korea and /or
China:

                  


          

        

        
          


        

        
          The
BUILDER shall bear and pay all taxes, duties, stamps and fees incurred in Korea
and/or China in connection with execution and/or performance of this Contract as
the BUILDER, except for any taxes and duties imposed in Korea and/or China upon
the BUYER'S Supplies.

        

        
          


        

        
          
            	
                    2.

                  	
                    Taxes
      and Duties Incurred Outside Korea and or
China:

                  


          

        

        
          


        

        
          The BUYER
shall bear and pay all taxes, duties, stamps and fees incurred outside Korea
and/or China in connection with execution and/or performance of this Contract as
the BUYER, except for taxes and duties imposed upon those items to be procured
by the BUILDER for construction.

        

        
          


        

        
          


        

        (End of
Article)

        


        
          
            
               


            

            
              46

              
                

              

            

            
               


            

          

        

         

        ARTICLE XV - PATENTS, TRADEMARKS,
COPYRIGHTS, ETC.

         

        
          	
                  1.

                	
                  Patents:

                


        

        


        BUILDER
agrees to defend, indemnify and hold BUYER harmless from any liability or claims
of infringement of patent rights, utility model rights, trade mark rights or
copyrights, or any other intellectual property rights of any third party
relating to the construction and supply of the DRILLSHIP.

        


        With
regard to the performance of the current Contract, notwithstanding anything to
the contrary herein, BUYER shall defend, indemnify and hold BUILDER harmless
from any liability or claims of infringement of patent rights, utility model
rights, trade mark rights or copyrights, or any other intellectual property
rights of any third party related to (i) process supplied by BUYER, (ii)
BUYER'S
Supplies and (iii) any construction, operation or use of the drilling
system.

        


        Except as
otherwise provided for in this Contract, nothing contained herein shall be
construed as transferring any rights in any patent, trademarks or copyrights
utilized in the performance of this Contract.

        


        
          	
                  2.

                	
                  General
      Plans, Specifications and Working
Drawings:

                


        

        


        The
BUILDER retains all rights with respect to the Specifications, and plans and
working drawings, technical descriptions, calculations, test results and other
data, information and documents concerning the design and construction of the
DRILLSHIP, and the BUYER undertakes therefore not to disclose the same or
divulge any information contained therein to any third parties, without the
prior written consent of the BUILDER, such consent not to be unreasonably
withheld, except where it is necessary for usual operation, repair and
maintenance of the DRILLSHIP.

        


        


        (End of
Article)

        


        
          
            
               


            

            
              47

              
                

              

            

            
               


            

          

        

        


        ARTICLE
XVI – BUYER’S SUPPLIES

        


        


        
          	
                  1.

                	
                  Responsibility
      of BUYER:

                


        

        


        
          	
                   
      

                	
                  (a)

                	
                  The
      BUYER shall, at its own risk, cost and expense, supply and deliver to the
      BUILDER all of the items to be furnished by the BUYER as specified in the
      Specifications (herein called the BUYER'S Supplies) at
      warehouse or other storage of the Shipyard in the complete, proper
      condition ready for installation in or on the DRILLSHIP, in accordance
      with the time schedule designated and advised by the BUILDER to the
      BUYER.

                


        

        


        
          	
                   
      

                	
                  (b)

                	
                  In
      order to facilitate installation by the BUILDER of the BUYER'S Supplies in
      or on the DRILLSHIP, the BUYER shall furnish the BUILDER with necessary
      specifications, plans, drawings, instruction books, manuals, test reports
      and certificates required by the rules and regulations of the
      Specifications. If so requested by the BUILDER, the BUYER, without any
      charge to the BUILDER, shall cause the representatives of the
      manufacturers of the BUYER'S Supplies to advise the BUILDER in
      installation thereof in or on the
DRILLSHIP.

                


        

        


        
          	
                   
      

                	
                  (c)

                	
                  Any
      and all of the BUYER'S Supplies shall be subject to the BUILDER'S
      reasonable right of rejection, as and if they are found to be unsuitable
      or in improper condition for
installation.

                


        

        


        
          	
                   
      

                	
                  (d)

                	
                  A
      delivery Schedule of the BUYER'S Supplies, if any of such have effect on
      the BUILDER'S construction of the DRILLSHIP, shall be finalized and
      settled within one hundred and eighty (180) calendar days from the date of
      the Contract signing. Should the BUYER fail to deliver any of the BUYER'S
      Supplies within the time designated, the Delivery Date shall be
      automatically extended for a period that actually caused the delay in the
      delivery of the DRILLSHIP.

                


        

        


        
          	
                   
      

                	
                  (e)

                	
                  If
      delay in delivery of any of the BUYER'S Supplies, having
      effect on the BUILDER'S
      construction of the DRILLSHIP, exceeds thirty (30) days, then, the
      BUILDER shall be entitled to proceed with construction of the DRILLSHIP
      without installation thereof in or on the DRILLSHIP as hereinabove
      provided, and the BUYER shall accept and take delivery of the DRILLSHIP so
      constructed, unless such delay is caused by Force Majeure in which case
      the provision Paragraph 1(d) of this Article shall
  apply.

                


        

        


        
          
            
               


            

            
              48

              
                

              

            

            
               


            

          

        

        


        


        
          	
                  2.

                	
                  Responsibility
      of BUILDER:

                


        

        


        The
BUILDER shall be responsible for storing and handling with reasonable care of
the BUYER’s Supplies after delivery thereof at the Shipyard, and shall, at its
own cost and expense, install them in or on the DRILLSHIP, unless otherwise
provided herein or agreed by the parties hereto, provided, always, that the
BUILDER shall not be responsible for quality, efficiency and/or performance of
any of the BUYER'S
Supplies.

        


        It will
be the BUILDER’s responsibility
to the BUYER to: (i) if applicable, assemble the BUYER’s Supplies; (ii) test the
BUYER’s Supplies as necessary or appropriate; (iii) install the BUYER’s Supplies
on the DRILLSHIP, in modules, as required, or otherwise as required, and to
integrate the BUYER’s Supplies into the overall designed system of the
DRILLSHIP. In no event will BUILDER charge any additional cost for any of the
above. The BUILDER will perform above works under guidance of BUYER and the
Vendors representative when required. Any rework involved due to no fault of the
BUILDER shall be to BUYER'S cost and
responsibility.

        


        
          	
                  3.

                	
                  Title:

                


        

        


        Title to
the BUYER'S Supplies
shall at all times remain with the BUYER during the Contract; however, the
BUILDER shall have the risk of loss of or damage to such BUYER'S Supplies
from the time set out in subparagraph 1(a) of this Article until delivery of the
DRILLSHIP.

        


        


        (End of
Article)

        


        
          
            
               


            

            
              49

              
                

              

            

            
               


            

          

        

        
           

          ARTICLE
XVII – INSURANCE

        

        


        


        
          
            	
                    1.

                  	
                    Extent
      of Insurance Coverage:

                  


          

        

        


        From the
time of the keel-laying until delivery of the DRILLSHIP, the BUILDER shall, at
its own cost and expense fully insure the DRILLSHIP and all machinery, materials
and equipment delivered to the Shipyard for the DRILLSHIP, including
BUYER’s Supplies,
built into or installed in or upon the DRILLSHIP against all risks under the
"Institute Clauses for Builder's Risks" with first class insurance company or
underwriters in Korea. From the time of the first arrival of the BUYER’s Supplies
in Korea until delivery of the DRILLSHIP, the BUILDER shall keep the
BUYER’s Supplies
fully insured with the aforementioned insurance companies or underwriters to
cover BUILDER’s Risk.

        


        The
BUILDER shall promptly furnish the BUILDER with certified copies in the English
language of the insurance policies taken out.

        


        
          
            	
                    2.

                  	
                    Application
      of the Recovered Amounts:

                  


          

        

        


        In the
event that the DRILLSHIP shall be damaged from any insured cause at any time
before delivery of the DRILLSHIP, and in the further event that such damage
shall not constitute an actual or constructive total loss of the DRILLSHIP, the
amount received in respect of the insurance shall be applied by the BUILDER in
repair of such damage, satisfactory to the Classification Society and its
requirements, and the BUYER shall accept the DRILLSHIP under this Contract if
completed in accordance with this Contract and the Specifications, however,
subject to the extension of delivery time under Article VIII hereof (except in
case of negligence of the BUILDER).

        


        Should
the DRILLSHIP from any cause become an actual or constructive total loss, the
BUILDER shall by the mutual agreement between the parties hereto,
either:

        


        
          	
                   
      

                	
                  (a)

                	
                  Proceed
      in accordance with the terms of this Contract, in which case the amount
      received in respect of the insurance shall be applied to the construction
      and repair of damage of the DRILLSHIP, provided the parties hereto shall
      have first agreed thereto in writing and to such reasonable extension of
      delivery time as may be necessary for the completion of such
      reconstruction and repair; or

                


        

        


        
          
            
               


            

            
              50

              
                

              

            

            
               


            

          

        

         

        
          	
                   
      

                	
                  (b)

                	
                  Refund
      promptly to the BUYER the full amount of all sums paid by the BUYER to the
      BUILDER as installments in advance of delivery of the DRILLSHIP, and
      deliver to the BUYER all BUYER'S Supplies (or the insurance proceeds paid
      with respect thereto), in which case this Contract shall be deemed to be
      automatically terminated and shall be deemed rescinded for purposes of
      Article X hereof and all rights, duties, liabilities and obligations of
      each of the parties to the other shall forthwith cease and
      terminate.

                


        

        


        If the
parties fail to reach such agreement within Sixty (60) days after the DRILLSHIP
is determined to be an actual or constructive total loss, the provisions of
sub-paragraph 2 (b) as above shall apply.

        


        
          	
                  3.

                	
                  Termination
      of BUILDER'S
      Obligation to Insure:

                


        

        


        The
BUILDER shall be under no obligation to insure the DRILLSHIP hereunder after
delivery thereof and acceptance by the BUYER.

        


        


        (End of
Article)

        


        
          
            
               


            

            
              51

              
                

              

            

            
               


            

          

        

        


        ARTICLE
XVIII - NOTICE

        


        
          	
                  1.

                	
                  Address:

                


        

        


        Any and
all notices and communications in connection with this Contract shall be
addressed as follows:

        


        To the
BUYER:

        Drillship
Skopelos Owners Inc. c/o Cardiff Marine Inc. 80 Kifissias Avenue, GR-151 25
Amaroussion, Greece

        Fax
no.(+30)210 8090205

        E-mail:
finance@cardiff.gr
for the attention of Mr. Aristidis Ioannidis

         newbuildings@cardiff.gr
for the attention of Mr. George Kourelis

        


        


        To the
BUILDER:

        Samsung
Heavy Industries Co., Ltd.

        34th Floor,
Samsung Life Insurance Seocho Tower 1321-15,

        Seocho-Dong,
Seocho-Gu, Seoul, Korea 137-857

        Seoul,
Korea 135-080

        Facsimile
No.: (+82)2 3458 7369

        TelphoneNo.:
(+82)2 3458 7313

        E-mail:
danielcd.cho@samsung.com

        


        or
preferably to its Geoje Yard:

        


        Samsung
Heavy Industries Co., Ltd. 530, Jangpyeong-ri, Sinhyun-up, Geoje,
Kyeongsangnam-do, 656-717, Korea

        Facsimile
No.: (+82 55 630 6070)

        


        
          	
                  2.

                	
                  Language:

                


        

        


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

        


        
          
            
               


            

            
              52

              
                

              

            

            
               


            

          

        

        


        
          	
                  3.

                	
                  Effective
      Date of Notice:

                


        

        


        The
notice in connection with this Contract shall become effective from the date
when such notice is received by the BUYER or by the BUILDER except otherwise
described in the Contract.

        


        


        (End of
Article)

        


        
          
            
               


            

            
              53

              
                

              

            

            
               


            

          

        

        


        ARTICLE
XIX – EFFECTIVE DATE OF CONTRACT

        


        


        This
Contract shall become effective upon signing by the parties hereto.

        


        


        (End of
Article)

        


        


        
          
            
               


            

            
              54

              
                

              

            

            
               


            

          

        

        


        ARTICLE
XX - INTERPRETATION

        


        


        
          
            	
                    1.

                  	
                    Laws
      Applicable:

                  


          

        

        


        The
parties hereto agree that the validity and the interpretation of this Contract
and of each Article and part thereof shall be governed by the laws of
England.

        


        
          	
                  2.

                	
                  Discrepancies:

                


        

        


        All
general language or requirements embodied in the Specifications are intended to
amplify, explain and implement the requirements of this Contract. However, in
the event that any language or requirements so embodied permit an interpretation
inconsistent with any provision of this Contract, then, in each and every such
event, the applicable provisions of this Contract shall prevail and govern. In
the event of conflict between the Specifications and Plans, the Specifications
shall prevail and govern.

        


        
          	
                  3.

                	
                  Entire
      Agreement:

                


        

        


        This
Contract contains the entire agreement and understanding between the parties
hereto and supersedes all prior negotiations, representations, undertakings and
agreements on any subject matter of this Contract.

        


        
          	
                  4.

                	
                  Amendments
      and Supplements:

                


        

        


        Any
supplement, memorandum of understanding or amendment, whatsoever form it may be
relating to this Contract, to be made and signed among parties hereof after
signing this Contract, shall be the integral part of this Contract and shall be
predominant over the respective corresponding Article and/or Paragraph of this
Contract.

        


        


        (End of
Article)

        


        
          
            
               


            

            
              55

              
                

              

            

            
               


            

          

        

         

        ARTICLE
XXI - CONFIDENTIALITY

        


        


        BUILDER
and BUYER agree that the terms and conditions of this Contract shall remain
confidential and neither party shall disclose any such terms and conditions of
this Contract to any third party without first obtaining the prior written
consent of the other, provided however, that either party shall be entitled to
disclose any or all of the terms and conditions of the Contract to the extent it
is necessary to do so to implement, effectuate and comply with the terms of the
Contract or to otherwise exercise any right or discharge any obligation that
party may have pursuant to this Contract or any laws, rules and
regulations.

         

        


        (End of
Article)

        


        
          
            
               


            

            
              56

              
                

              

            

            
               


            

          

        

         

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

         

        
          
            
              
                
                  
                    
                      	
                              BUYER:

                            	 
      	
                              BUILDER:

                            	 
	 
      	 
      	 
      	 
	
                              For
      and on behalf of the BUYER:

                            	 
      	
                              For
      and on behalf of the BUILDER:

                            	 
	
                              DRILLSHIP
      SKOPELOS OWNERS INC.

                            	 
      	
                              SAMSUNG
      HEAVY INDUSTRIES CO., LTD

                            	 
	 
      	 
      	 
      	 
	 
      	 
      	 
      	 
	
                              /s/
      George Economou

                            	 
      	
                              /s/
      J.W. Kim

                            	 
	
                              By:
      Mr. George Economou

                            	 
      	
                              By:
      Mr. J.W. Kim

                            	 
	
                              Title:
      Authorized Signatory

                            	 
      	
                              Title:
      President & CEO

                            	 
	 
      	 
      	 
      	 
	 
      	 
      	 
      	 
	
                              WITNESSED
      BY

                            	 
      	
                              WITNESSED
      BY

                            	 
	 
      	 
      	 
      	 
	 
      	 
      	 
      	 
	
                              /s/
      Aristidis Ioannidis

                            	 
      	
                              /s/
      H.Y. Lee

                            	 
	
                              By:
      Mr. Aristidis Ioannidis

                            	 
      	
                              By:
      H.Y. Lee

                            	 
	
                              Title:
      General Manager of Cardiff Marine Inc.

                            	 
      	
                              Title:
      Chief Marketing Officer

                            	 


                    

                  

                

              

            

          

           

        

        
          
            
               


            

            
              57

              
                

              

            

            
               


            

          

        

         

        EXHIBIT
"1" VESSEL SPECIFICATION

        


        The
Vessel Specification of this Contract for HN.1866 shall be identical to the
Vessel Specification (Doc. No. SP07146.FS02 of September 14th, 2007) and
Manufacturer List (Doc. No. SPO7146.ML02 of September 14th 2007) of the Contract
for HN.1837. Any modification of the Vessel Specification requested during the
design and/or construction of HN.1837, shall be applied.

        


        
          
            
               


            

            
              58

              
                

              

            

            
               


            

          

        

        


        EXHIBIT
"2" TOPSIDE SPECIFICATION

        
 

        The
Topside Specification of this Contract for HN.1866 shall be identical to the
Topside Specification (Doc. No. SP07146.FS01 of September 14th, 2007) of the
Contract for HN. 1837.

        


        
          
            
               


            

            
              59

              
                

              

            

            
               


            

          

        

         

        EXHIBIT
"3" DELIVERY AND CONSTRUCTION SCHEDULE

        


        
        

         

        
          	 


        

         

      

      

         

        
          
            
            

          

          
            60

            
              

            

          

          
            
            

          

        

         

        EXHIBIT
"4" LETTER OF REFUNDMENT GUARANTEE NO.

        
 

        Gentlemen:

        


        


        We hereby
open our irrevocable letter of guarantee No. in favor of Drillship Skopelos
Owners Inc. (hereinafter called the "BUYER") for account of Samsung Heavy
Industries, Seoul, Korea as follows in consideration of the Drillship contract
dated 24th January 2008 (hereinafter called the "Contract") made by and among
the BUYER and Samsung Heavy Industries Co., Ltd. (hereinafter called the
"BUILDER") for the construction of one (1) Drillship composed of hull part and
topside part, having BUILDER'S Hull No. 1866(hereinafter called the
"DRILLSHIP").

        


        If in
connection with the terms of the Contract the BUYER shall become entitled to a
refund of the advance payments) made to the BUILDER prior to the delivery of the
DRILLSHIP, we hereby irrevocably guarantee as primary obligor and not merely as
surety the repayment of the same to the BUYER immediately on demand USD
10,000,000 (United States Dollars Ten Million only) together with interest
thereon at the rate of six percent (6%) per annum from the date following the
date of receipt by the BUILDER to the date of remittance by telegraphic transfer
of such refund.

        


        The
amount of this guarantee will be automatically increased, not more than five (5)
times, upon BUILDER'S receipt of the respective installment: each time by the
amount of installment of USD39,575,000, USD 49,575,000, USD 99,150,000 and USD
99,150,000 and USD 99,150,000 respectively, plus interest thereon as provided in
the Contract, but in any eventuality the amount of this guarantee shall not
exceed the total sum of USD 396,600,000 (Say United States Dollars Three Hundred
Ninety Six Million Six Hundred Thousand only) plus interest thereon at the rate
of six per cent (6%) per annum from the date following the date of BUILDER'S
receipt of each installment to the date of remittance by telegraphic transfer of
the refund.

        


        In case
any refund is made to you by the BUILDER or by us under this guarantee, our
liability hereunder shall be automatically reduced by the amount of such
refund.

        


        In the
event of cancellation of the Contract being based on delays due to force majeure
or other causes beyond the control of the BUILDER, as required by Article X of
the Contract, interest

        


        
          
            
               


            

            
              61

              
                

              

            

            
               


            

          

        

         

        shall be
paid at the rate of Four and a half percent (4.5%) per annum from the date of
following the date of Builder's receipt of each installment to the date of
remittance by telegraphic transfer of the refund.

        


        This
letter of guarantee is available against our receipt of signed statement
certifying that BUYER'S demand for refund has been made in conformity with
Article X of the Contract and the BUILDER has failed to make the refund within
Thirty (30) days after your demand to the BUILDER. Refund shall be made to you
by telegraphic transfer in United States Dollars in freely transferable funds
and free and clear of and without deduction for and on account of any set off,
counterclaim or present or future tax, levy, impost, duty, charge, fee or other
withholding of any nature whatsoever imposed and by whomsoever on yourselves. In
the event we are required by law to make any deduction or withholding from any
payment to be made by it pursuant to this letter of guarantee, we will pay to
you whatever additional amount (after taking into account any additional taxes
on, or deductions or withholdings from, or restrictions or conditions on, that
additional amount) is necessary to ensure that, after making the deduction or
withholding, you receive a net sum equal to the sum which you would have
received had no deduction or withholding been made.

        


        This
letter of guarantee shall expire and become null and void upon receipt by the
BUYER of the sum guaranteed hereby or upon acceptance by the BUYER of delivery
of the DRILLSHIP in accordance with the terms of the Contract and, in either
case; this letter of guarantee shall be returned to us. This guarantee is valid
from the date of this letter of guarantee until delivery or in the event of
delayed delivery until such time as the DRILLSHIP is delivered by the BUILDER to
the BUYER in accordance with the terms of the Contract.

        


        Notwithstanding
the provisions hereinabove, in case we receive notification from you or the
BUILDER confirmed by the Arbitration Board stating that your claim to cancel the
Contract or your claim for refundment thereunder has been disputed and referred
to Arbitration in accordance with the provisions of the Contract, the period of
validity of this guarantee shall be extended until Sixty (60) days after the
final award shall be rendered in the Arbitration and a copy thereof acknowledged
by the Arbitration Board. In such case, this guarantee shall not be available
unless and until such acknowledged copy of the final award in the Arbitration
justifying your claim is presented to us.

        


        This
guarantee shall not be affected by any extension of time or concession granted
by the BUYER to the BUILDER or any delay or failure of the BUYER in enforcing
its rights under the Contract.

        


        
          
            
               


            

            
              62

              
                

              

            

            
               


            

          

        

         

        The BUYER
shall have the right to assign this guarantee and all of its benefits to any
assignee to whom the Contract is assigned.

        


        This
guarantee shall be governed by the laws of England and the undersigned hereby
submits to the non-exclusive jurisdiction of the courts of England. If we
receive written or telefaxed notice from you or the BUILDER that there exists an
arbitration between you and BUILDER or that you have made a formal demand of us
under this Letter of Guarantee we shall within thirty (30) days of receipt of
such notice irrevocably appoint an agent for service of process in respect of
any proceedings in England and notify you of such appointment and undertake
that, throughout the terms of this Letter of Guarantee, we will retain such
agent in England for such purposes. If we fail to make such appointment and/or
give such notification within thirty (30) day period we hereby appoint and be
deemed to have appointed the London branch of our bank currently at Broadwalk
House 5, Appold Street, EC2A 2DA London.

        


        Any
notice or demand under this Letter of Guarantee required to be given by
yourselves to us shall be addressed to us as follows:

        


        Address:
19F., Kyobo Bldg., 1. 1-lka, Chongro-ku, Seoul 110-714, Korea

        Tel: +82
2 3700 9624

        Fax: +82
2 722 7839

         

        
          
            
              
                
                  	 
      	
                          Very
      truly yours,

                        
	 
      	
                          Calyon

                        


                

              

            

          

        

        


        
          
            
               


            

            
              63

              
                

              

            

            
               


            

          

        

         

        EXHIBIT
"5" PERFORMANCE GUARANTEE

        


        


        Messrs.

        Samsung
Heavy Industries Co., Ltd.

        34th Floor,
Samsung Life Insurance Seocho Tower

        1324-15,
Seocho-Dong, Seocho-Gu,

        Seoul,
Republic of Korea 137-857

         

        


        In
consideration of the shipbuilding contract dated 24th January 2008 (hereinafter
called the "Contract") by us to (hereinafter called the "BUYER"), for the
construction of one (1) Drillship having your Hull No. 1866(hereinafter called
the "Drillship") providing among other things for payment of the Contract Price
amounting to United States Dollars Six Hundred Sixty One Million (US$
661,000,000);

        


        We, the
undersigned, hereby irrevocably and unconditionally guarantee to you, your
successors, and assigns the due and faithful performance by the BUYER of its all
liabilities and responsibilities under the Contract and any supplement,
amendment, change or modification hereafter made thereto, including but not
limited to, due and prompt payment of the Contract Price by the BUYER to you,
your successors, and assigns under the Contract and any supplement, amendment,
change or modification as aforesaid (hereby expressly waiving notice of any such
supplement, amendment, change or modification as may be agreed to by the BUYER
and confirming that this guarantee shall be fully applicable to the Contract as
so supplemented, amended, changed or modified).

        


        This
Performance Guarantee shall be governed by the laws of England.

        


        


        GUARANTOR:
CARDIFF MARINE INC.

        BY:

        TITLE:

        WITNESS:

         

        
          
            
               


            

            
              64

              
                

              

            

            
               


            

          

        

         

        EXHIBIT
"6"     OPTIONAL ITEMS

         

        
          
            
              
                
                  
                    
                      	
                              No

                            	
                              Items

                            	
                              Amount

                            
	
                              1.1

                            	
                              Dual
      Drilling (Aux Rig):

                              a)  Travelling
      block

                              b)  Retractable
      dolly

                              c)  Elevated
      backup tong

                              d)  Drawworks

                              e)  Drill
      line & Reel

                              f)  Deadline
      Anchor

                              g)  Top
      drive

                              h)  Mud
      standpipes manifold/Standpipes/Hoses

                              i)  Cement
      standpipe manifold/Standpipe/Hose

                            	
                              US$
      15,752,130

                               

                            
	
                              1.2

                            	
                              False
      rotary table in Aux well centre

                            	
                              US$
      865,740

                            
	
                              2

                            	
                              Personnel
      elevator in the Derrick

                            	
                              US$
      987,120

                            
	
                              3

                            	
                              Additional
      3,000 ft of Riser

                              [designed
      for 10,000 ft of water depth operation]

                            	
                              US$
      15,000,000

                            
	
                              4

                            	
                              Upgrade
      Drilling Equipment suitable for 12,000 ft of water depth
      operation:

                              Both
      parties agree that this Option shall be based on Hull No. 1837/1838 for
      Hull system and SAIPEM 12K for Topsides

                            	
                              US$
      37,400,000

                            
	
                              5

                            	
                              In
      addition to Option 4, further upgrade main rig with 1,250 Ton Hoisting
      capacity:

                            	
                              US$
      9,400,000

                            
	
                              6

                            	
                              Supply
      of additional 3,000 ft of riser [designed for 12,000 ft of water depth
      operation]:

                            	
                              US$
      19,500,000

                            
	
                              7

                            	
                              Supply
      of additional 2,000 ft of riser over 10,000 ft

                              [designed
      for 12,000 ft of water depth operation]:

                            	
                              To
      be
informed

                            


                    

                  

                

              

            

          

        

         

        1.   
Details for the above optional items (1.1, 1.2, 2 & 3) are included in the
Drillship Specification (Doc. No. SP07146. FS01 of September 14th
2007)

        


        2.   
Details for the above optional items (4 & 5) are included in the Drillship
Drilling System Specification (Section 9.3 of Doc. No. SP07146.FS01 of January
16th 2008) attached herewith.

        


        3.   
In case of the Buyer's declaration of Option No. 4 & 5, all tests or trials
shall be performed and notified as per the Specifications.

        


        
          
            
               


            

            
              65

              
                

              

            

            
               


            

          

        

         

        EXHIBIT
"7" FORM OF DEMAND

        


        To: [Insert name and
address of Refund Guarantor]

        


        Attention:
[•]

        


        


        Dear
Sirs

        


        ADVANCE
PAYMENT REFUND GUARANTEE

        


        REFUND
GUARANTEE no.

        


        We refer
to your Advance Payment Refund Guarantee number [•] dated [•] (the "Refund
Guarantee").

        


        Terms
defined in the Refund Guarantee shall have the same meanings when used
herein.

        


        The
BUILDER has failed to fulfill the terms and conditions of the Contract in the
following respects:

        


        [.....................................]

        


        As a
result of such failure, an amount of USD[•] (United States Dollars [•]),
together with interest
thereon at a rate of [...........] [...........] per annum calculated from [date] until the
date of payment by you, is due from you to us.

        


        Please
make payment of the above amount to us without any deduction or withholding and
promptly upon receipt by you of this written demand to the following
account:

        


        [Insert
account details]

        


        Yours
faithfully

        For and
on behalf of [Insert name of
BUYER]

        
 

        
          
            
              	 
      	 
      
	
                      Name:

                    	 
      
	
                      Designation:
      Authorized
Signatory

                    


            

          

        

      

       

       

      66