d927958_ex10-3.htm


    EXHIBIT
10.3

     

    
      

    


    CONTRACT

     

     

    FOR

     

     

    CONSTRUCTION
AND SALE

     

    OF

     

    A
DRILLSHIP

     

    (HULL
NO. 1838)

     

     

    BETWEEN

     

     

    DRILLSHIP
PAROS 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:

                    	
                      11

                    
	 
      	
                      7.  Expenses:

                    	
                      11

                    
	 
      	
                      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:

                    	
                      18

                    
	 
      	
                      4.  Facilities:

                    	
                      19

                    
	 
      	
                      5.  Liability
      of BUILDER:

                    	
                      19

                    
	 
      	
                      6.  Responsibility
      of BUYER:

                    	
                      20

                    
	 
      	
                      7.  Delivery
      and Construction Schedule:

                    	
                      21

                    
	
                      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

                	
                  44

                
	
                  ARTICLE
      XIV - TAXES AND DUTIES

                	
                  45

                
	 
      	
                  1.  Taxes
      and Duties Incurred in Korea:

                	
                  45

                
	 
      	
                  2.  Taxes
      and Duties Incurred Outside Korea:

                	
                  45

                
	
                  ARTICLE
      XV - PATENTS, TRADEMARKS, COPYRIGHTS, ETC

                	
                  46

                
	 
      	
                  1.  Patents:

                	
                  46

                
	 
      	
                  2.  General
      Plans, Specifications and Working Drawings:

                	
                  46

                
	
                  ARTICLE
      XVI - BUYER'S SUPPLIES

                	
                  47

                
	 
      	
                  1.  Responsibility
      of BUYER:

                	
                  47

                
	 
      	
                  2.  Responsibility
      of BUILDER:

                	
                  48

                
	 
      	
                  3.  Title:

                	
                  48

                
	
                  ARTICLE
      XVII – INSURANCE

                	
                  49

                
	 
      	
                  1.  Extent
      of Insurance Coverage:

                	
                  49

                
	 
      	
                  2.  Application
      of the Recovered Amounts:

                	
                  49

                
	 
      	
                  3.  Termination
      of BUILDER'S Obligation to Insure:

                	
                  50

                
	
                  ARTICLE
      XVIII – NOTICE

                	
                  51

                
	 
      	
                  1.  Address:

                	
                  51

                
	 
      	
                  2.  Language:

                	
                  51

                
	 
      	
                  3.  Effective
      Date of Notice:

                	
                  52

                
	
                  ARTICLE
      XIX - EFFECTIVE DATE OF CONTRACT

                	
                  53

                
	
                  ARTICLE
      XX – INTERPRETATION

                	
                  54

                
	 
      	
                  1.  Laws
      Applicable:

                	
                  54

                
	 
      	
                  2.  Discrepancies:

                	
                  54

                
	 
      	
                  3.  Entire
      Agreement:

                	
                  54

                
	 
      	
                  4.  Amendments
      and Supplements:

                	
                  54

                
	
                  ARTICLE
      XXI – CONFIDENTIALITY

                	
                  55

                
	
                  EXHIBIT
      "1"   VESSEL SPECIFICATION

                	
                  57

                
	
                  EXHIBIT
      "2"   TOPSIDE SPECIFICATION

                	
                  58

                
	
                  EXHIBIT
      "3"   DELIVERY AND CONSTRUCTION SCHEDULE

                	
                  59

                
	
                  EXHIBIT
      "4"   LETTER OF REFUNDMENT GUARANTEE NO

                	
                  60

                
	
                  EXHIBIT
      "5"   PERFORMANCE GUARANTEE

                	
                  63

                
	
                  EXHIBIT
      "6"   OPTIONAL ITEMS

                	
                  64

                


        

      

    


    
      
         


      

      
        4

        
          

        

      

      
         


      

    


    This
Contract, made and entered into on this 17 day of September 2007 by and between
DRILLSHIP PAROS 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 this Contract) 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. 1838, shall be designed, constructed,
built, launched, equipped, tested, completed and delivered in accordance with
the provisions of this Contract, and the Specifications. 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
DRILLSHIP, 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 this
Contract 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 (D, "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

            


    

    


    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.


    
      
         


      

      
        7

        
          

        

      

      
         


      

    


    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 Seven Million Three Hundred Seventy Thousand United States Dollars (US$
607,370,000) (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:

            


    


    
      
         


      

      
        9

        
          

        

      

      
         


      

    


    The First
Installment amounting to Ninety One Million One Hundred Five Thousand Five
Hundred United States Dollars (15%, US$ 91,105,500), less the amount of Five
Million United States Dollars (US$ 5,000,000) already paid by the BUYER to the
BUILDER as Commitment Fee, making the net sum for this first installment Eighty
Six Million One Hundred Five Thousand Five Hundred United States Dollars (US$
86,105,500) shall be due and payable within five (5) banking days after the
receipt of the original Refundment Guarantee.

    


    
      	
            	
              (b)

            	
              Second
      Installment:

            


    

    The
Second Installment amounting to Ninety One Million One Hundred Five Thousand
Five Hundred United States Dollars (15%, US$ 91,105,500) shall be due and
payable within three (3) banking days six months after the Effective Date of the
Contract upon receipt of the BUILDER'S invoice therefore.

    


    
      	
            	
              (c)

            	
              Third
      Installment:

            


    

    The Third
Installment amounting to Ninety One Million One Hundred Five Thousand Five
Hundred United States Dollars (15%, US$ 91,105,500) 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 19 months after the second installment.

    


    
      	
            	
              (d)

            	
              Fourth
      Installment:

            


    

    The
Fourth Installment amounting to Ninety One Million One Hundred Five Thousand
Five Hundred United States Dollars (15%, US$ 91,105,500) 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:

            


    

    The Fifth
Installment amounting to Two Hundred and Forty Two Million Nine Hundred Forty
Eight Thousand United States Dollars (40%, US$ 242,948,000) 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.


    
      
         


      

      
        10

        
          

        

      

      
         


      

    


    
      	
              5.

            	
              Method
      of Payment:

            


    

    


    
      	
            	
              (a)

            	
              First
      Installment:

            


    

    Within
five (5) banking days after the receipt of the original Refundment Guarantee,
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.

    


    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:

              


      

    


    
      
         


      

      
        11

        
          

        

      

      
         


      

    


    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 March
      31, 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 3 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 2, 3 and 4 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 2, 3
      and 4 of Article X -

            


    


    
      
         


      

      
        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:

            


    

    


    Approved
plans and drawings of the BUILDER's UN. 1674 (including all amendments,
additions, deletions and variations incorporated into the Specification up to
the date of this Contract signing) shall be deemed to be approved by the BUYER
and shall be applied to the Drillship. The BUILDER shall be exempted from the
approval of the BUYER for the plans and drawings in accordance with the
Specifications. All plans and drawings, which are modified by the BUILDER shall,
however, be subject to approval by the BUYER in accordance with Article
V.

    


    
      	
              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.


    
      
         


      

      
        17

        
          

        

      

      
         


      

    


    
      	
              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, construction, building, launching, equipping, testing
and completion of the DRILLSHIP 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.


    
      
         


      

      
        18

        
          

        

      

      
         


      

    


    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 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 assistants) 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:

            


    


    
      
         


      

      
        19

        
          

        

      

      
         


      

    


    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

            


    

    
      	
            	
              (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.


    
      
         


      

      
        20

        
          

        

      

      
         


      

    


    
      	
              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 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 this Contract, 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 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 assistants) 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
DRILLSHIP on the basis of the tests and trials already made before such
discontinuance has occurred.


    
      
         


      

      
        25

        
          

        

      

      
         


      

    


    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
      Drillship.

            


    

    


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

            


    


    
      
         


      

      
        26

        
          

        

      

      
         


      

    


    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 DRILLSHIP.

    


    
      	
            	
              (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
      nonconformity 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 nonconformity 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:

            


    

    


    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


    
      
         


      

      
        27

        
          

        

      

      
         


      

    


    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 March 31, 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 furnish 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 Five (5)
      banking days in New York after the signing of the Contract and 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 being in force.


      
        
           


        

        
          42

          
            

          

        

        
           


        

      


      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.

      


      


      (End of
Article)


      
        
           


        

        
          43

          
            

          

        

        
           


        

      


      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)


      
        
           


        

        
          44

          
            

          

        

        
           


        

      


      ARTICLE
XIV - TAXES AND DUTIES

      


      
        	
                1.

              	
                Taxes
      and Duties Incurred in Korea:

              


      

      


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

      


      
        	
                2.

              	
                Taxes
      and Duties Incurred Outside Korea:

              


      

      


      The BUYER
shall bear and pay all taxes, duties, stamps and fees incurred outside Korea 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)


      
        
           


        

        
          45

          
            

          

        

        
           


        

      


      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)


      
        
           


        

        
          46

          
            

          

        

        
           


        

      


      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 fifty (150) 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 l(d) of this Article shall
      apply.

              


      


      
        
           


        

        
          47

          
            

          

        

        
           


        

      


      
        	
                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 l(a) of this Article
until delivery of the DRILLSHIP.

      


      


      (End of
Article)


      
        
           


        

        
          48

          
            

          

        

        
           


        

      


      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

              


      


      
        
           


        

        
          49

          
            

          

        

        
           


        

      


      
        	
                 
      

              	
                (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)


      
        
           


        

        
          50

          
            

          

        

        
           


        

      


      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
Paros 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

      Telphone
No.: (+82) 2 3458 73137

      E-mail:
harris.lee@samsung.com

      


      or
preferably to its Geoje Yard:

      


      Samsung
Heavy Industries Co., Ltd.

      P.O. Box
Gohyun 9

      530,
Jangpyung-ri, Sinhyun-up,

      Geoje-city,
Gyungnam, 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.


      
        
           


        

        
          51

          
            

          

        

        
           


        

      


      
        	
                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)


      
        
           


        

        
          52

          
            

          

        

        
           


        

      


      ARTICLE
XIX - EFFECTIVE DATE OF CONTRACT

      


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

      


      


      (End of
Article)


      
        
           


        

        
          53

          
            

          

        

        
           


        

      


      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)


      
        
           


        

        
          54

          
            

          

        

        
           


        

      


      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)


      
        
           


        

        
          55

          
            

          

        

        
           


        

      


      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
      PAROS 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

                        


                

              

            

          

        

      


      
        
           


        

        
          56

          
            

          

        

        
           


        

      


      EXHIBIT
"1"   VESSEL SPECIFICATION

      


      The
Vessel Specification of this Contract for HN.1838 shall be based on AFC(Approved
For Construction) Drawings and Specifications of HN.1674 as of the date of this
Contract signing including all amendments, additions, deletions and variations
(identified by italic boldic characters which shall prevail the Specification of
HN.1674) incorporated into the Specification (Doc. No. SP07146.FS02 of September
14th, 2007)
and Manufacturer List (Doc. No. SPO7146.ML02 of September 14th
2007)


      
        
           


        

        
          57

          
            

          

        

        
           


        

      


      EXHIBIT
"2"   TOPSIDE SPECIFICATION

      


      The
Topside Specification of this Contract for HN.1838 shall be based on AFC
(Approved for Construction) Drawings and Specifications of HN.1674 as of the
date of this Contract signing including all amendments, additions, deletions and
variations incorporated into the Specification (Doc. No. SP07146.FS01 of
September 14th,
2007).


      
        
           


        

        
          58

          
            

          

        

        
           


        

      


      EXHIBIT
"3"   DELIVERY AND CONSTRUCTION SCHEDULE

      


      


      INSERT
CHART SKNYC1-928731



      


      


      Drillng
Package Delivery (DES Geoje)

      
        	
                 
      

              	
                2009-11-01

              	
                Bufk
      tanks. Pumps for reserve &
waste

              


      

      
        	
                 
      

              	
                2009-12-01

              	
                Equipment
      in the Mud Process, Subsea Control & Mud
  Module

              


      

      
        	
                 
      

              	
                2009-12-01

              	
                BOP
      & Diverter Control System

              


      

      
        	
                 
      

              	
                2010-01-01

              	
                Equipment
      on Drillfloor. Catwalks, Utility
winches

              


      

      
        	
                 
      

              	
                2010-02-15

              	
                Derrick
      A Derrick Component, Hoists. Riser Tensioners, BOP
    Teststump

              


      

      
        	
                 
      

              	
                2010-04-15

              	
                BOP/X-tnas
      tree skidding system, Guidance system.
UR

              


      

      
        	
                 
      

              	
                2010-06-15

              	
                Knuckle
      boom Cranes. BOP Cranes, Loose
Equipment

              


      

      
        	
                 
      

              	
                2010-10-15

              	
                BOP

              


      

      
        	
                 
      

              	
                2010-11-15

              	
                Riser
      System

              


      


      
        
           


        

        
          59

          
            

          

        

        
           


        

      


      EXHIBIT
"4"   LETTER OF REFUNDMENT GUARANTEE NO. 

       

      Gentlemen:

      


      We hereby
open our irrevocable letter of guarantee No. in favor of Drillship Paros Owners
Inc. (hereinafter called the "BUYER") for account of Samsung Heavy Industries,
Seoul, Korea as follows in consideration of the Drillship contract dated 17th
September 2007 (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.1838 (hereinafter called the "DRILLSHIP").

      


      If in
connection with the terms of the Contract the BUYER shall become entitled to a
refund of the advance payment(s) 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
91,105,500 (Say United States Dollars Ninety One Million One Hundred Five
Thousand Five Hundred 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 three
(3) times, upon BUILDER'S receipt of the respective installment: each time by
the amount of instalment of USD 91,105,500, USD 91,105,500 and USD 91,105,500
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
364,422,000 (Say United States Dollars Three Hundred Sixty Four Million Four
Hundred Twenty Two 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 shall be paid at the rate of Four and a half percent
(4.5%) per annum from the date of following


      
        
           


        

        
          60

          
            

          

        

        
           


        

      


      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 BUYER'S simple receipt and 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.


      
        
           


        

        
          61

          
            

          

        

        
           


        

      


      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 1st Floor,
Boston House 63-64 New Broad Street, London EC2M 1JJ United
Kingdom.

      


      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:
16-1, Yoido-Dong, Yeongdeungpo-Gu, Seoul 150-996 Korea

      Tel:+82-2-3779-6318

      Fax:
+82-2-3779-6745

      


      
        
          	 
      	
                  Very
      truly yours,

                
	 
      	 
      
	 
      	
                  The
      Export-Import Bank of Korea

                


        

      

      



      
        
           


        

        
          62

          
            

          

        

        
           


        

      


      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 assignment of a certain shipbuilding contract dated
September 17th 2007
(hereinafter called the "Contract") by us to (hereinafter called the "BUYER"),
for the construction of one (1) Drillship having your Hull No. 1838 (hereinafter
called the "Drillship") providing among other things for payment of the Contract
Price amounting to United States Dollars Six Hundred Seven Million Three Hundred
Seventy Thousand (US$ 607,370,000);

      


      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
:


      
        
           


        

        
          63

          
            

          

        

        
           


        

      


      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

                                                          i)   
      Cement standpipe manifold

                                                        	
                                                          US$
      13,750,000

                                                        
	
                                                          1.2

                                                        	
                                                          False
      rotary table in Aux well centre

                                                        	
                                                          US$
      750,000

                                                        
	
                                                          2

                                                        	
                                                          Personnel
      elevator in the Derrick

                                                        	
                                                          US$
      952,000

                                                        
	
                                                          3

                                                        	
                                                          Additional
      3,000 ft of Riser

                                                        	
                                                          US$
      15,000,000

                                                        
	
                                                          4

                                                        	
                                                          7th
      Shale shaker

                                                        	
                                                          U$
      425,000

                                                        
	
                                                          5

                                                        	
                                                          Cutting
      dryer / Modification of conveyors

                                                        	
                                                          US$
      1,060,000

                                                        


                                                

                                              

                                            

                                          

                                        

                                      

                                    

                                  

                                

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

      


      Details
for the above optional items are included in the Drillship Specification (Doc.
No. SP07146.FS01 and Doc. No. SP07146.FS02 of September 14th
2007)

       

       

      64