exhibit1012.htm


    


     

    
      The
        portion of this Exhibit 10.11 marked “******” has been omitted and
        confidentially filed with the Securities and Exchange Commission pursuant
        to
        Rule 24b-2 promulgated under the Securities Exchange Act of 1934, as
        amended.

    

     

    


     

     

    


     

     

    


     

     

    
      	
               

            	
              SHIPSALES  CONTRACT

            


    

     

     

    FOR

     

     

    PURE
      CAR
      TRUCK CARRIER VESSEL

     

     

    (HULL
      NO.
      2253)

     

     

    


     

     

    


     

     

    


     

     

    


     

     

    


     

     

    MADE
      BY
      AND BETWEEN

     

     

    CLIO
      MARINE INC.

     

     

    AND

     

     

    EAST
      GULF
      SHIPHOLDING, INC.

     


    
      
              

                   
    

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    


     

    CONTENTS

     

     

    


     

    ARTICLE
      I                            -    DESCRIPTION
      AND CHARACTERISTICS

    


    ARTICLE
      II                            -    CONTRACT
      PRICE AND PAYMENT

    


    ARTICLE
      III                            -    ADJUSTMENT
      OF CONTRACT PRICE

    


    ARTICLE
      IV                            -    SUPERVISION
      AND INSPECTION

    


    ARTICLE
      V                            -    MODIFICATIONS,
      CHANGES AND SUBSTITUTION

    


    ARTICLE
      VI                            -    BUYER’S
      SUPPLIES

    


    ARTICLE
      VII                            -    TRIALS

    


    ARTICLE
      VIII                          -    DELIVERY

    


    ARTICLE
      IX                            -    FORCE
      MAJEURE

    


    ARTICLE
      X                            -    WARRANTY
      OF QUALITY

    


    ARTICLE
      XI                            -    INSURANCE

    


    ARTICLE
      XII                            -    BUYER’S
      DEFAULT

    


    ARTICLE
      XIII                          -    SELLER’S
      DEFAULT

    


    ARTICLE
      XIV                          -    ARBITRATION

    


    ARTICLE
      XV                           -    ASSIGNMENT
      OF CONTRACT

    


    ARTICLE
      XVI                          -    TAXES
      AND DUTIES

    


    ARTICLE
      XVII                         -    PATENTS,
      TRADE MARKS, COPYRIGHTS

    


    ARTICLE
      XVIII                        -    INTERPRETATION

    


    ARTICLE
      XIX                           -    NOTICE

    


    ARTICLE
      XX                           
-    EFFECTIVE DATE

     

    


     

     

    


     

     

    


     

     

    


     

     

    


     

     

    2

     

     

    


     

     

    SHIPSALES
      CONTRACT

     

     

    


     

     

    This
      CONTRACT, made and entered into
      this __ 21st day of  September, 2007, by and between
      CLIO MARINE INC., a corporation organized and existing under the laws of Liberia
      (hereinafter called the "Seller") and EAST GULF SHIPHOLDING, INC., a corporation
      organized and existing under the laws of Marshall Islands (hereinafter called
      the "Buyer").

     

     

    


     

     

    


     

     

    


     

     

    


     

     

    Witnesseth:

     

     

    


     

     

    In
      consideration of the mutual covenants contained herein, the Seller agrees to
      cause ******, a corporation organized and existing under the laws of ******,
      (hereinafter called the "Builder"), to construct, launch, equip and complete
      one
      (1) Pure Car Truck Carrier Vessel identified in Article I.(hereinafter called
      the "Vessel") hereof at its ****** (hereinafter referred to as the "Shipyard"),
      and to sell and deliver the same to the Buyer at the Shipyard and the Buyer
      agrees to purchase from the Seller and to take delivery of the Vessel, upon
      the
      terms and conditions hereinafter set forth. It is agreed and understood that
      the
      Seller may at its discretion construct and deliver the Vessel at Builder's
      shipyard in Japan other than the Shipyard mentioned above, provided that the
      provisions of this Contract shall not be altered thereby in any other
      respects.

     

     

    


     

     

    


     

     

    3

     



    


     

    ARTICLE                         I
      - DESCRIPTION AND CHARACTERISTICS

     

     

    I)        DESCRIPTION

     

     

    Subject
      to the provisions hereof the Vessel shall be of the following description:
      Pure
      Car Truck Carrier Vessel of about 6,400 cars, which shall have the Builder's
      Hull
Number
      2253, shall be documented under the Panamanian flag to be
      registered at Republic of Panama at the Buyer's expense, and shall be
      constructed, launched, equipped and completed in accordance with the provisions
      of this Contract and the Specifications and the accompanying plans to the
      Specifications identified by D.No.23-7109A (hereinafter collectively referred
      to
      as the "Specifications" or the "Specifications and Plans") signed by both
      parties for identification purpose and attached to this Contract as an integral
      part hereof.

     

     

    


     

     

    2)        CHARACTERISTICS
      AND DIMENSIONS

     

    The
      Vessel shall have the following characteristics and dimensions:

    Length,
      over
      all                                                                           less
      than 200.00 m

    Length,
      between
      perpendiculars                                                              192.00
      m

    Breadth,
      moulded                                                                                         32.26
      m

    Depth,
      moulded (to Strength Dk: Garage
      Deck)                                       34.52
      m

    Depth,moulded
      (to Freeboard Dk:No,7 Car
      Deck)                                   14.70
      m

    Designed
      draught,
      moulded                                                                          8.80
      m

    Scantling
      draught,
      moulded                                                                          9.70
      m

    


    Machinery                                                                Mitsubishi-UE
      Type Diesel Engine,Model “7UEC60LSII (P/U)”—1 setMaximum rating
      (BHP)

    14,315kW
      (19,460PS) x 105.0
      min-1Normal rating (BHP)

    12,170kw
      (16,540PS) x 99.5
      min-1

    


    Trial
      speed,
      guaranteed                                                                                     21.45
      knots at Normal rating (BHP)12,170kw (16,540PS) at99.5 min-1of main engine
      on
      about 20,000 metricton displacement

    


     

    


     

     

    


     

     

    


     

     

    4

     

    


     

    Fuel
      Consumption,
      guaranteed                                                                                       166.6gr/kW/hr
      at 12,170kW (16,540PS) of main engine only onthe basis of fuel oil of 42,700
      kJ/kg (10,200 kcal/kg) in
      lower       calorific value with 3%
      tolerancemargin at I.S.O. condition.

     

     

    
      	
              Number
                of loadable cars guaranteed

            	
              5,200
                cars of standard
                car             determined
                on the “CAR LOADING PLAN”

            


    

     

     

    


     

     

    The
      details of the above particulars as well as the definitions and method of
      calculations and measurements are as stated in the Specifications.

     

     

    


     

     

    


     

     

    3)        CLASSIFICATION.
      RULES AND REGULATIONS

     

    The
      Vessel, including its machinery,
      equipment and outfittings shall be constructed in accordance with the rules
      and
      regulations (the edition and amendments thereto being current as of the date
      of
      execution of this Contract) and under special survey of Nippon Kaiji Kyokai
      (hereinafter called "Classification Society"), and shall be distinguished in
      the
      register by the symbol ofNS*(RORO EQ C V), MNS* (MO).

    Decisions
      of the Classification Society as to compliance or non-compliance with the
      Classification shall be final and binding upon both parties hereto.

    The
      Vessel shall also comply with the rules and regulations as described in the
      Specifications.

    All
      fees
      and charges incidental to the Classification and with respect to compliance
      with
      the above referred rules and regulations shall be for the account of the
      Builder.

    


    


    


    


     

    5

     



    


     

    ARTICLE                     II
      - CONTRACT PRICE AND PAYMENT

     

     

    
      	
              1)  

            	
              CONTRACT
                PRICE

            


    

     

     

    The
      purchase price of the Vessel shall be ****** (hereinafter referred to as the
      "Contract Price") as the technical services required to be rendered to the
      Buyer
      under the terms of this Contract. The Contract Price shall be net receivable
      by
      the Seller in Tokyo and exclusive of articles to be supplied by the Buyer as
      provided in Article VI hereof, and shall be subject to adjustment as hereinafter
      provided in this Contract.

     

     

    
      	
              2)  

            	
              DEFINITION
                OF DUE DATE AND CURRENCY

            


    

     

     

    All
      payments by the Buyer under this Contract shall be received by the Seller on
      the
      day each payment becomes due in Tokyo. All payments to the Seller under this
      Contract shall be made in Japanese Yen.

     

     

    
      	
              3)  

            	
              TERMS
                OF PAYMENT

            


    

     

     

    The
      Buyer
      shall pay the Contract Price to the Seller in accordance with the following
      terms and conditions:

     

     

    (a)
      First Installment

     

     

    ******
      percent (******%) of the Contract Price, amounting to ****** shall be paid
      to
      the Seller upon ******.

     

     

    (b)
      Second Installment

     

     

    ******
      percent (******%) of the Contract Price, amounting to ****** shall be paid
      to
      the Seller upon ******.

     

     

    


     

     

    6

     



    


     

    (c)
      Third Installment

     

     

    ******
      percent (******%) of the Contract Price, amounting to ****** shall be paid
      to
      the Seller upon ******.

     

     

    (d)
      Fourth Installment

     

     

    The
      sum
      of ****** percent (******%) of the Contract Price, amounting to ******, plus
      ****** or minus ****** and/or ******, if any, plus the price of ******, shall
      be
      paid to the Seller upon ******.

     

     

    


     

     

    4)        METHOD
      OF PAYMENT

     

     

    (
      a) 1st
      Installment:

     

     

    Within
      two (2) Business Days (Business Day means a day, other than Saturday, Sunday
      and
      national holiday, on which the Builder, Seller and the Buyer are working and
      on
      which leading banks in Japan and New York are open for business of foreign
      exchange, remittance and lending of money) after signing of this Contract,
      the
      Buyer shall pay the amount of this Installment by telegraphic transfer to a
      bank
      in Tokyo, Japan nominated by the Seller (hereinafter called the "BANK") for
      the
      account of the Seller.

     

     

    (b)
      2nd
      Installment:

     

     

    Within
      two (2) Business Days after receipt by the Buyer of either fax or e-mail from
      the Seller confirming the keel-laying of the Vessel, the Buyer shall pay the
      amount of this Installment by telegraphic transfer to the BANK for the account
      of the Seller.

     

     

    


     

     

    7

     



    


     

    (c)
      3rd
      Installment:

     

     

    Within
      two (2) Business Days after receipt by the Buyer of either fax or e-mail from
      the Seller confirming the completion of the launching of the Vessel, the Buyer
      shall pay the amount of this Installment by telegraphic transfer to the BANK
      for
      the account of the Seller.

     

     

    (d)
      4th
      Installment:

     

     

    The
      Buyer
      shall, at least three (3) Business Days prior to the scheduled delivery date
      of
      the Vessel subject of any changes to the delivery date in accordance with this
      Contract, make a cash deposit with the BANK, covering the amount of this
      Installment (as adjusted in accordance with the provisions of this Contract),
      with an irrevocable instruction that the said amount shall be released to the
      Seller's favour and account against presentation to the BANK by facsimile of
      a
      duly signed copy of the PROTOCOL OF DELIVERY AND ACCEPTANCE of the Vessel as
      set
      forth in Paragraph 3 of Article VII hereof. Any cost and expense related to
      such
      remittance and deposit shall be bourne by the Buyer.

     

     

    No
      payment under this Contract shall be delayed or withheld by the Buyer on account
      of any dispute or disagreement of whatever nature arising between the parties
      hereto.

     

     

    


     

     

    8

     



    


     

    ARTICLE                     III
      - ADJUSTMENT OF CONTRACT PRICE

     

     

    The
      Contract Price shall be subject to adjustment as hereinafter set
      forth:

     

     

    
      	
              1)  

            	
              DELAYED
                DELIVERY

            


    

     

     

    No
      adjustment shall be made, and the Contract Price shall remain unchanged, for
      the
      first thirty (30) days of delay in delivery of the Vessel beyond the date
      on which delivery is required under the terms of this Contract.

     

     

    If
      the
      delivery of the Vessel is delayed more than thirty (30) days beyond the said
      delivery date, the Contract Price shall be reduced by deducting there from
      the
      sum of ******, as liquidated damages, for each day of such delay beyond the
      above said thirtieth (30th) day.

     

     

    However,
      unless the parties agree otherwise, the total reduction in the Contract Price
      shall not exceed the amount due to cover the delay of one hundred and twenty
      (120) days after the above thirtieth (30th) day as computed at the rate of
      reduction specified in the above.

     

     

    But,
      if
      the delay in delivery of the Vessel continues for a period of more than one
      hundred twenty (120) days from the thirtieth (30th) day after the date on which
      delivery is required under the terms of this Contract, the Buyer may, at its
      option, rescind this Contract by serving upon the Seller a written notice of
      rescission of this Contract.

     

     

    Such
      rescission shall be effective as of the date the notice thereof is received
      by
      the Seller, and the Seller, after receipt of such notice, shall refund to the
      Buyer all installments paid by the Buyer, together with interest at two point
      five percent (2.5%) over the long-term prime rate in Japan per annum from the
      date of each payment. Such refund by the Seller to the Buyer of all installments
      paid by the Buyer on account of the Vessel shall forthwith discharge all
      obligations, duties and liabilities of each of the parties hereto to the other
      under this Contract.

     

     

    In
      case
      the Buyer has not served notice of rescission, the Seller shall immediately
      after the expiration of such period of delay in delivery, propose a future
      delivery date and demand

     

     

    


     

     

    9

     



    


     

    that
      the
      Buyer shall make an election. The Buyer shall, within fourteen (14) days after
      such demand is received by the Buyer, notify the Seller by facsimile confirmed
      in writing of its intention to rescind the Contract or of its consent to accept
      the Vessel at an agreed future date, it being understood by the parties that
      if
      the Vessel is not delivered by such future date, the Buyer shall have the same
      right of rescission upon the same terms as hereinbefore provided. If the Buyer
      fails to notify the Seller of its intention to rescind the Contract as above
      specified, within the aforementioned fourteen (14) days, the Buyer shall be
      deemed to have consented to the delivery of the Vessel at the later date
      proposed by the Seller.

     

     

    For
      the
      purpose of this Paragraph, the delivery of the Vessel shall be deemed to be
      delayed when and if the Vessel, after taking into full account extension of
      the
      delivery date by reason of permissible delays as herein provided, is not
      delivered by the date upon which delivery is required under the terms of this
      Contract.

     

     

    
      	
              2)  

            	
              INSUFFICIENT
                SPEED

            


    

     

     

    The
      Contract Price of the Vessel shall not be affected or changed if the speed
      of
      the Vessel on trials, as determined in accordance with the Specifications,
      is
      less than the guaranteed speed of the Vessel, provided such deficiency is not
      more than one-fifth (1/5) of one (I) knot below the guaranteed
      speed.

     

     

    In
      the
      event, however, that the deficiency in the speed exceeds one-fifth (1/5) of
      one
      (I) knot below the guaranteed speed, the Contract Price shall be reduced, as
      liquidated damages, by ****** for such deficiency of each 0.1 knots (any
      fractions to be pro-rated but disregarding fractions of one­-hundredth
      (11100) of one (I) knot).

     

     

    If
      the
      deficiency of the Vessel's speed on trials exceeds one (1) full knot below
      the
      guaranteed speed, the Buyer at its option may accept the Vessel at a reduction
      in the Contract Price as above specified for an insufficient speed of one (1)
      full knot, that is at a total reduction of ******, or, subject to the provisions
      of Paragraph 4) of Article VII, may reject the Vessel and rescind
      this

     

     

     

    


     

     

    10

     


    


     

    Contract,
      in which case the provisions in Paragraph 1) of this Article regarding the
      Buyer's rescission of the Contract shall be applied.

     

     

    3)         EXCESSIVE
      FUEL CONSUMPTION

     

     

    The
      Contract Price of the Vessel shall not be affected or changed if the fuel
      consumption of the main engine at the normal output during the shop trial,
      as
      determined in accordance with the Specifications, does not exceed three (3)
      percent above one hundred and sixty six point six grams per kilo watt per hour
      (166.6gr/kW/hr) at 42,700kW of main engine only on the basis of fuel oil of
      42,700 kJ/kg in lower calorific value at 1.S.0. condition.

     

     

    In
      the
      event, however, that the fuel consumption exceeds three (3) percent, on the
      above specified conditions, the Contract Price shall be reduced, as liquidated
      damages by the sum of ****** for each full one (1) percent in excess of the
      above said three (3) percent.

     

     

    If
      the
      fuel consumption as above stated exceeds by seven (7) percent or more in excess
      of the above said three (3) percent, the Buyer at its option may accept the
      Vessel at a reduction in the Contract Price as above specified for a fuel
      consumption in excess of seven(7) percent above said three (3) percent, that
      is,
      at a total reduction of ******, or, subject to the provisions of Paragraph
      4) of
      Article VII, may reject the Vessel and rescind this Contract, in which case
      the
      provisions in Paragraph 1) of this Article regarding the Buyer's rescission
      of
      the Contract shall be applied.

     

     

    
      	
              4)  

            	
              CAR
                CAPACITY

            


    

     

     

    If
      the
      car capacity of the Vessel, as determined in accordance with the Specifications,
      is below the guaranteed car capacity of the Vessel, the Contract Price of the
      Vessel shall be reduced by ****** as liquidated damages for the deficiency
      of
      each car unit.

     

     

    If
      the
      deficiency in the car capacity exceeds one hundred (100) units below the
      guaranteed car capacity, the Buyer at its option may accept the Vessel at a
      reduction in the Contract Price

     

     

    


     

     

    11

     



    


     

    of
      ******, or subject to the provisions of Paragraph 4) of Article VIT, may reject
      the Vessel and rescind this Contract, in which case the provisions in Paragraph
      I) of this Article regarding the Buyer's rescission of the Contract shall be
      applied.

     

     

    


     

    12

     


    


     

    ARTICLE

     

     

    IV
      -
      SUPERVISION AND INSPECTION

     

    


     

    


     

     

    1)
      SUPERVISION BY SELLER:

     

     

    Scope
      of
      Works : The Seller shall carry out the supervision on the construction of the
      Vessel by the Builder, including, without limitation, (i) approval of the plans
      and drawings, (ii) inspections on the Vessel, its machinery, equipment and
      outfitting, (iii) attendance of trials and tests and (iv) making comments as
      to
      conformity with the Specifications.

     

     

    Seller's
      Appointment: The Seller appoints ****** or similar quality entities as
      supervising company.

     

     

    Seller's
      Technical Decision: Any decision regarding the approval of plans and drawings,
      supervision of construction and acceptance of the Vessel under the Shipbuilding
      Contract between the Seller and the Builder dated 25th July, 2007
      shall
      be made by the Seller in its absolute discretion and that such decision shall
      not require any prior consultation with or approval of the Buyer or its
      representatives. During the construction of the Vessel, the Seller shall give
      to
      the Buyer, upon their request, an technical information which they are holding,
      and shall make best endeavors to obtain information and documents which the
      Buyer might need. The Seller shall undertake that the supervision of
      construction of the Vessel shall be carried out as if the Vessel was for their
      internal account and management.

     

     

    2)
NO
      SUPERVISION BY BUYER:

     

     

    The
      Buyer
      shall not have the right of supervision but shall have the right to send its
      representatives in the capacity of observers pursuant to Clause 3)
      hereof.

     

     

    3)
      BUYER'S OBSERVANCE:

     

     

    
      	
               

            	
              Buyer's
                Observance: The Buyer may send one (1) observer to the Shipyard
                periodically as follows to review progress of construction of the
                Vessel
                at the Buyer's risk and expenses
                without

            


    

     

     

    


     

     

    13

     



    


     

    interfering
      with the construction of the Vessel.:

     

     

                  (a)At
      the time of keel-laying of the
      Vessel.

     

     

                  (b)At
      the time of launching of the
      Vessel.

     

     

    
      	
               

            	
              (c)

            	 	
              At
                the time of significant test/trials for main engine during shipbuilding
                period of the Vessel

            


    

     

     

    
      	
               

            	
              (d)

            	
              At
                the time of significant test/trials for diesel generator sets during
                shipbuilding period of the Vessel.

            


    

     

     

    
      	
               

            	
              (e)

            	 	
              Maximum
                duration per one observation mentioned above shall be four (4) calendar
                days.

            


    

     

     

    
      	
               

            	
              (f)

            	 	
              At
                any time during the entire duration of Sea Trials in which case the
                Buyer's observer as well as three (3) Buyer's crew including Master
                and/or
                Chief Engineer and/or (I) Technical Manager to be joined by the Buyer's
                observer. Such Buyer's crew shall be permitted to be in attendance
                on the
                Vessel at the sea trial of the Vessel at Buyer's risk and expenses
                and for
                familiarization purpose only.

            


    

     

     

    
      	
               

            	
              (g)

            	
              The
                Buyer' Observer shall not attend and not be stationed at the Shipyard
                and/or any other Builder's shipyard without the attendance of the
                Seller's
                supervisor.

            


    

     

     

    
      	
               

            	
              (h)

            	
              At
                any other time requested by Buyer but maximum three (3) times and
                subject
                to Seller's approval and
                acceptance.

            


    

     

     

    Seller's
      Liability: The Seller shall be under no liabilities in respect of any loss,
      damage or injury suffered by such representatives, and the Buyer shall indemnify
      the Seller against any loss, damage or liability sustained or incurred by the
      Seller howsoever caused as a consequence of or arising out of or in connection
      with the attendance of such representatives on board the Vessel during its
      acceptance trials.

     

     

    Restriction
      on Observance: The representatives referred to in this Clause shall not
      interfere with or obstruct in any way the Seller's supervision on board the
      Vessel during its acceptance sea trials and/or sea trials schedule of the
      Builder.

     

     

    Buyer's
      Comment: The Buyer's comment(s), if any, during sea trials of the Vessel
      shall not be unreasonably withheld by the Seller and the Seller shall take
      action if necessary, provided that such comment( s) shall not affect the price,
      cost of the Vessel and the sea trials schedule of the Builder.

     

     

    14

     


    


     

    ARTICLE                      V
      - MODIFICATIONS, CHANGES AND SUBSTITUTION

     

     

    1)
      VOLUNTARY MODIFICATIONS BY MUTUAL AGREEMENT

     

     

    The
      Specifications may be modified and/or changed by written agreement of the
      parties hereto, provided that such modifications and/or changes or an
      accumulation thereof will not, in the Seller's judgment, adversely affect
      Builder's planning or program in relation to the Seller's other commitments,
      and
      provided, further, that the Buyer shall first agree, before such modifications
      and/or changes are carried out, to alterations in the Purchase Price, the
      Delivery Date and other terms and conditions of this Contract and Specifications
      occasioned by or resulting from such modifications and/or changes. Such
      agreement may be effected by exchange of letters signed by the authorized
      representatives of the parties hereto or by email or facsimile confirmed by
      such
      letters manifesting agreements of the parties hereto which shall constitute
      amendments to this Contract and/or the Specifications.

     

     

    
      	
              2)  

            	
              COMPULSORY
                MODIFICATION

            


    

     

     

    
      	
               

            	
              (I)
                Change in Class: In the event that, after the date of this
                Contract, any requirements as to class, or as to rules and regulations
                to
                which the construction of the Vessel is required to conform are altered
                or
                changed by the Classification Society or the other regulatory bodies
                authorized to make such alterations or changes, the following provisions
                shall apply:

            


    

     

     

    
      	
               

            	
              (a)
                If such alterations or changes are compulsory for the Vessel, either
                of
                the parties hereto, upon receipt of such information from the
                Classification Society or such other regulatory bodies, shall promptly
                transmit the same to the other in writing, and the Seller shall thereupon
                cause the Builder to incorporate such alterations or changes into
                the
                construction of the Vessel, provided that the Buyer shall first agree
                to
                adjustments required by the Seller in the Purchase Price, the Delivery
                Date and other terms and conditions of this Contract and the
                Specifications occasioned by or resulting from such alterations or
                change.

            


    

     

     

    (b)
      If
      such alterations or changes are not compulsory for the Vessel, but the Buyer
      

     

    15

     


     

    desires
      to incorporate such alterations or changes into the construction of the Vessel,
      then, the Buyer shall notify the Seller of such intentions. The Seller may
      accept such alterations or changes if they will not, in the judgment of the
      Seller, adversely affect the Builder's planning or program in relation to the
      Seller's other commitments, and provided, further, that the Buyer shall first
      agree to adjustments required by the Seller in the Purchase Price, the Delivery
      Date and other terms and conditions of this Contract and the Specifications
      occasioned by or resulting from such alterations or changes.

     

     

    
      	
               

            	
              (2)
                Change in Class: Agreement as to such alterations or changes under
                (1) above shall be made in the same manner as provided in Sub-Clause
VI)
                here offor modifications or changes to the
                Specifications.

            


    

     

     

    
      	
              3)  

            	
              SUBSTITUTION
                OF MATERIALS

            


    

     

     

    In
      the
      event that any of the materials required in the construction of the Vessel
      under
      this Contract and the Specifications and Plans cannot be procured in time to
      effect delivery, or are in short supply to maintain the Delivery Date of the
      Vessel, the Seller may, provided that the Seller shall so notify the Buyer,
      cause the Builder to supply other available materials which are capable of
      meeting the requirements of class and of the rules and regulations with which
      the construction of the Vessel must comply. Any agreement as to the substitution
      of materials may be effected in the manner provided in Sub-Clause VI)
      of this Article, and shall likewise, include reasonable alterations
      in the Contract Price and other terms and conditions of this Contract, if any,
      occasioned by or resulting from the substitution.

     

     

    


     

     

    


     

     

    


     

     

    


     

     

    


     

     

    


     

     

    


     

     

    16

     



    


     

    ARTICLE                             VI
      - BUYER'S SUPPLIES

     

     

    
      	
              1)  

            	
              RESPONSIBILITY
                OF THE BUYER

            


    

     

     

    The
      Buyer
      shall, at its cost and expense, supply all articles to be supplied by the Buyer,
      as specifically listed in the Specifications (hereinafter referred to as the
      "Buyer's Supplies"), to the Seller at the Shipyard in perfect condition ready
      for installation and by the date designated by the Seller and/or the Builder
      to
      meet the building schedule of the Vessel.

     

     

    In
      order
      to facilitate the installation of the Buyer's Supplies by the Builder, the
      Buyer
      shall furnish the Seller with the necessary plans, instruction books, test
      reports and certificates required by rules or regulations, and if so requested
      by the Seller and/or the Builder, shall cause the representative(s) of the
      manufacturers of these articles to assist the Builder in installation and/or
      make necessary adjustment thereof at the Shipyard, for the Buyer's
      account.

     

     

    The
      Buyer
      shall be liable for any expenses incurred by the Seller and/or the Builder
      for
      repair of the Buyer's Supplies due to defective material or poor workmanship
      or
      performance or due to damage under transportation.

     

     

    Should
      the Buyer fail to deliver to the Seller any item of the Buyer's Supplies
      including the necessary plans, instruction books, test reports and certificates
      mentioned above by the time designated by the Seller and/or the Builder, the
      delivery of the Vessel shall automatically be extended for a period of such
      delay, provided such delay in delivery shall affect delivery of the Vessel.
      In
      such event the Buyer shall pay to the Seller all losses and damages (except
      for
      the consequential loss or damage) sustained by the Seller and/or the Builder
      due
      to such delay in delivery of the Buyer's Supplies, and such payment shall be
      made upon delivery of the Vessel. In case that the delay in delivery of such
      Buyer's Supplies should exceed thirty (30) days beyond the date specified for
      delivery thereof, the Seller shall be entitled to cause the Builder to proceed
      with construction of the Vessel without installation of such item(s) in or
      onto
      the Vessel, without prejudice to the Seller's right hereinabove provided, and
      the Buyer shall accept the Vessel so completed.

     

     

    


     

     

    17

     



    


     

    
      	
              2)  

            	
              RESPONSIBILITY
                OF THE BUILDER

            


    

     

     

    The
      Buyer
      and the Seller hereby confirm that the Builder shall be responsible for storing
      and handling of the Buyer's Supplies after delivery to the Shipyard, and shall
      install them on board the Vessel at the Builder's expense; it being agreed,
      however, the Seller and the Builder are not responsible for quality, performance
      and/or efficiency of any equipment of the Buyer's Supplies and is under no
      obligation with respect to guarantee of such equipment against any defects
      caused by poor quality, performance and/or efficiency of the Buyer's Supplies
      themselves.

     

     

    This
      provision does not apply to, and the Seller and the Builder shall not be
      responsible for, the items such as ship stores which the Seller and the Builder
      are not required to install on board the Vessel under the
      Specifications.

     

     

    
 

     

     

    18

     



    


     

    ARTICLE
      VII -
TRIALS

     

     

    
      	
              I)  

            	
              NOTICE

            


    

     

     

    The
      Seller shall notify the Buyer, at least fourteen (14) days in advance, of the
      time and place of the trial of the Vessel, and the Buyer shall promptly
      acknowledge receipt of such notice. Buyer's observance of the sea trials of
      the
      Vessel shall be carried out pursuant to Aritic1e N. 3) hereof. Failure
      in attendance of the observer at the trial run of the Vessel 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 the Buyer's observer on board the
      Vessel at the trial run.

     

     

    2)             WEATHER
      CONDITIONS

     

     

    The
      trial
      shall be carried out under the weather condition which is deemed favorable
      enough by the judgment of the Seller. In the event of unfavorable weather on
      the
      date specified for the trial, same shall take place on the first available
      day
      thereafter that the weather conditions permit. The parties hereto recognize
      that
      the weather conditions in Japanese waters in which the trial runs are to take
      place are such that great changes in weather may arise momentarily and without
      warning, and therefore, it is agreed that, if, during the trial run, such change
      in the weather should occur as precludes the continuance of the trial, the
      trial
      run shall be discontinued and postponed until the first day next following
      which
      is deemed favorable enough by the judgment of the Seller; unless the Buyer
      shall
      assent to acceptance of the Vessel on the basis of trials made prior to such
      change in weather conditions. Any delay of the trial run caused by such
      unfavorable weather conditions shall operate to extend the date for delivery
      of
      the Vessel by the period of delay involved, and such delay shall be deemed
      as
      permissible delay in the delivery of the Vessel.

     

     

    3)        HOW
      CONDUCTED

     

     

    


     

     

     

    19

     



     

    All
      expenses in connection with the trial of the Vessel are to be for the account
      of
      the Seller, and the Seller shall cause the Builder to provide at its own expense
      the necessary materials and the necessary crew to comply with conditions of
      safe
      navigation. The trial shall be conducted in the manner prescribed in the
      Specifications, and shall prove fulfillment of the performance requirements
      for
      the trials as set forth in the Specifications. All trials of the Vessel shall
      be
      conducted on the trial course determined by the Seller.

     

     

    
      	
              4)  

            	
              METHOD
                OF ACCEPTANCE OR REJECTION

            


    

     

     

    Upon
      completion of the trial run, the Builder shall give the Seller a notice by
      email
      or facsimile confirmed in writing of completion of the trial run, as and if
      the
      Builder considers that the results of the trial run indicate conformity of
      the
      Vessel to this Contract and the Specifications. The Seller shall, within three
      (3) Business Days after receipt of such notice from the Builder, notify the
      Builder by email or facsimile confirmed in writing of its acceptance or
      rejection of the Vessel. Such acceptance of the Vessel shall be made provided
      that the Vessel is deemed to satisfy the requirements of this Contract and
      the
      Specifications. The Buyer shall be deemed to have accepted the Seller's such
      decision.

     

     

    However,
      should the result of the trial run indicate that the Vessel or any part or
      equipment thereof does not conform to the requirements of this Contract and/or
      the Specifications, and if the Builder is in agreement to non-conformity as
      specified in the Seller's notice of rejection to the Builder, then the Seller
      shall cause the Builder to correct such non-conformity and perform such further
      test as may be deemed necessary until the Builder are able to prove satisfaction
      of the same with requirements of this Contract and/or the
      Specifications.

     

     

    The
      Buyer
      shall follow the decision of the Seller, and shall give notice of acceptance
      to
      the Seller as long as the Seller make a decision of acceptance of the Vessel,
      except in the case that the Buyer proves to the Seller's satisfaction that
      the
      Vessel is not materially and substantially in conformity with the Specifications
      with evidences, in which case the Seller shall review the opinion and evidences
      submitted by the Buyer and discuss in good faith. Except where the Seller
      reasonably judges that the Buyer's opinion of substantial non-

     

     

    20

     



    


     

    conformity
      is obviously wrong or abuse of the right, then a matter shall first referred
      to
      judgment of the Classification Society, but if the Classification Society fails
      to make a judgment or cannot do so, the matter shall be referred to an
      arbitration.

     

     

    
      	
              5)  

            	
              EFFECT
                OF ACCEPTANCE

            


    

     

     

    Acceptance
      of the Vessel as above provided shall be final and binding so far as conformity
      of the Vessel to this Contract and the Specifications is concerned and shall
      preclude the Buyer from refusing formal delivery of the Vessel as hereinafter
      provided, if the Seller complies with all other procedural requirements for
      delivery as provided for in Article VlII hereof. The Seller will exercise good
      faith in determining acceptance or rejection of the Vessel.

     

     

    
      	
              6)  

            	
              DISPOSITION
                OF SURPLUS CONSUMABLE STORES

            


    

     

     

    Should
      any fuel oil, fresh water (except fresh water used as ballast) and other
      consumable stores, furnished by the Seller for trial runs remain on board the
      Vessel after acceptance of the Vessel by the Buyer, the Buyer agrees to buy
      the
      same from the Seller at the price the Seller paid to the local supplier through
      the Builder evidenced by voucher, and payment shall be effected at the time
      of
      delivery of the Vessel.

     

     

    Lubricating
      oils and greases necessary for the operation of the Vessel shall be supplied
      by
      the Buyer prior to the trial runs, and the Seller shall pay upon delivery of
      the
      Vessel the cost of the quantities of lubricating oils and greases consumed
      during the trial runs at original purchase price by the Buyer evidenced by
      voucher.

     

     

    


     

     

    21

     


    


     

    ARTICLE
      VIII  -
      DELIVERY

     

     

    
      	
              1)  

            	
              TIME
                AND PLACE

            


    

     

     

    The
      Vessel shall be delivered by the Seller to the Buyer at the Shipyard, not
      earlier than ******, but not later than ******, subject, however, to the
      provisions relating to permissible delays, and extension of the time of delivery
      of the Vessel under this Contract.

     

     

    It
      is
      understood and agreed by both parties hereto that the Seller shall use due
      diligence to cause the Builder to construct, complete and deliver the Vessel
      at
      the earliest possible time and the Buyer shall promptly accept the Vessel if
      and
      when the Seller shall tender earlier delivery of the Vessel, provided that
      the
      Seller shall have performed all its obligations under this
      Contract.

     

     

    
      	
              2)  

            	
              WHEN
                AND HOW EFFECTED

            


    

     

     

    Provided
      that the Buyer shall concurrently pay to the Seller all sums due and payable
      upon delivery of the Vessel, the delivery of the Vessel shall be forthwith
      effected upon acceptance thereof by the Buyer, as herein provided, by the
      concurrent delivery by each of the parties hereto to the other of a PROTOCOL
      OF
      DELIVERY AND ACCEPTANCE acknowledging delivery of the Vessel by the Seller
      and
      acceptance thereof by the Buyer, which PROTOCOL shall be prepared in duplicate
      and executed by each of the parties hereto.

     

     

    
      	
              3)  

            	
              DOCUMENTS
                TO BE DELIVERED TO THE BUYER

            


    

     

     

    Acceptance
      of the Vessel by the Buyer shall be conditioned upon receipt by the Buyer of
      the
      following duly authenticated documents to be provided by the Seller and/or
      the
      Builder, which shall accompany the aforementioned PROTOCOL OF DELIVERY AND
      ACCEPTANCE:

     

     

    (a)
      COMMERCIAL INVOICE.

     

     

    


     

     

    22

     


    


     

    
      	
               

            	
              (b)

            	
              DECLARATION
                OF WARRANTY of the Seller that the Vessel is delivered to the Buyer
                free
                and clear of any and all liens, claims or other encumbrances upon
                the
                Vessel and Buyer's title thereof, and in particular, that the Vessel
                is
                absolutely free of all burdens in the nature of imposts, taxes or
                charges
                imposed by the city, state or country of the port of delivery, as
                well as
                of all liabilities arising from the construction or operation of
                the
                Vessel in trial runs or otherwise, prior to delivery and
                acceptance.

            


    

     

     

    (c)            PROTOCOL
      OF TRIALS of the VESSEL made pursuant to the Specifications.

     

     

    
      	
               

            	
              (d)

            	
              PROTOCOL
                OF INVENTORY of the equipment of the VESSEL, including spare parts
                and the
                like, all as specified in the
                specifications.

            


    

     

     

    
      	
               

            	
              (e)

            	
              PROTOCOL
                OF STORES OF CONSUMABLE NATURE referred to under paragraph 6) of
                Article
                VII hereof, including the original purchase price thereof. (f)
                FINISHED DRAWINGS AND PLANS and instruction books pertaining
                to the
                Vessel as stipulated in the
                Specifications.

            


    

     

     

    
      	
               

            	
              (f)

            	
              FINISHED
                DRAWINGS AND PLANS and instruction books pertaining to the Vessel
                as
                stipulated in the Specifications.

            


    

     

     

    (g)            BILL
      OF SALE (being Notarized & Legalized
      or Apostil led)

     

     

    
      	
               

            	
              (h)

            	
              BUILDER'S
                CERTIFICATE (being Notarized &
                Legalized or Apostil 1 ed) and all other CERTIFICATE(S) required
                to
                be furnished upon delivery of the Vessel pursuant to the
                Specifications.

            


    

     

     

    
      	
              4)  

            	
              TITLE
                AND RISK

            


    

     

     

    Title
      to
      and risk of the Vessel shall pass to the Buyer upon acceptance thereof by the
      Buyer as stated above; it being expressly understood that, until such acceptance
      is effected, the Vessel and its equipment are at the title and risk of the
      Seller.

     

     

    
      	
              5)  

            	
              REMOVAL
                OF THE VESSEL

            


    

     

     

    The
      Buyer
      shall take possession of the Vessel immediately upon acceptance thereof, and
      if
      so requested by the Seller, shall remove the Vessel from the Shipyard within
      three (3) days after acceptance of the Vessel.

     

     

    23

     



    


     

    ARTICLE

     

     

    IX
      -
      FORCE MAJEURE

     

    


     

    
      	
              1)  

            	
              CAUSES
                OF DELAY

            


    

     

     

    If,
      at
      any time before the actual delivery, either the construction of the Vessel
      or
      any performance required as a prerequisite of delivery of the Vessel is delayed
      due to Acts of God; acts of princes or rulers; requirements of government
      authorities; war or other hostilities or preparations there for; blockade;
      revolution, insurrections, mobilization, civil war, civil commotion or riots;
      vandalism; sabotages, strikes, lockouts or other labor disturbances; labor
      shortage, plague or other epidemics; quarantine; flood, typhoons, hurricanes,
      storms or other weather conditions not included in normal planning; earthquakes;
      tidal waves; landslides; fires, explosions, collisions or strandings; embargoes;
      delays or failure in transportation; shortage of materials, machinery or
      equipment; import restrictions; inability to obtain delivery or delays in
      delivery of materials, machinery or equipment, provided that at the time of
      ordering the same could reasonably be expected by the Seller and/or the Builder
      to be delivered in time; prolonged failure, shortage or restriction of electric
      current, oil or gas; defects in materials, machinery or equipment which could
      not have been detected by the Seller and/or the Builder using reasonable care;
      casting or forging rejects or the like not due to negligence; delays caused
      by
      the Classification Society or other bodies whose documents are required;
      destruction of or damage to the Shipyard or works of the Builder, its
      subcontractors or suppliers, or of or to the Vessel or any part thereof, by
      any
      causes herein described; delays in the Builder's other commitments resulting
      from any causes herein described which in turn delay the construction of the
      Vessel or the Seller's and/or the Builder's performance under this Contract;
      other causes or accidents beyond control of the Seller and/or the Builder,
      its
      subcontractors or suppliers of the nature whether or not indicated by the
      foregoing words; all the foregoing provided that these events could not be
      foreseen at the day of signing this Contract; then and in any such case, the
      delivery date shall be postponed for a period of time which shall not exceed
      the
      total accumulated time of all such delays.

     

     

    24

     

    


     

    
      	
              2)  

            	
              NOTICE
                OF DELAY

            


    

     

     

    Within
      twelve (12) days after the date of occurrence of any cause of delay, on account
      of which the Seller claims that it is entitled under this Contract to a
      postponement of the delivery date, the Seller shall notify the Buyer in writing
      or by email or facsimile confirmed in writing of the date such cause of delay
      occurred. Likewise, within twelve (12) days after the date of ending of such
      cause of delay, the Seller shall notify the Buyer in writing or by facsimile
      confirmed in writing of the date such cause of delay ended. The Seller shall
      also notify the Buyer of the period by which the delivery date is postponed
      by
      reason of such cause of delay, with all reasonable dispatch after it has been
      determined. Failure of the Buyer to object to the Seller's claim for
      postponement of the delivery date within five (5) 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 I) of this Article and any
      other delays 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 on account of the causes specified in
      Paragraph 1) of this Article, excluding delays of a nature which under the
      terms
      of this Contract permit postponement of the delivery date, amounts to one
      hundred and fifty (150) days or more, then in such event, the Buyer may rescind
      this Contract by serving upon the Seller a written notice of cancellation.
      Such
      cancellation shall be effective as of the date the first arriving notice thereof
      is received by the Seller, and the Seller, after receipt of such notice, shall
      refund to the Buyer the full amount of all sums paid to the Seller on account
      of

     

     

    25

     



    


     

    the
      Vessel. Such refund shall forthwith discharge all obligations, duties and
      liabilities of each of the parties hereto to the other under this Contract.
      The
      Seller may, at any time, after the aggregate of the aforementioned delays shall
      exceed one hundred and fifty (150) days, as aforesaid, demand in writing that
      the Buyer shall make an election, in which case the Buyer shall, within ten
      (10)
      days after such demand is received, either notify the Seller of its intention
      to
      rescind, or agree to an extension of the time for delivery to a future date
      specified by the Seller.

     

     

    It
      being
      understood and agreed by the parties that if further delay occurs on account
      of
      the causes specified in this Article beyond such extended delivery date, the
      Buyer immediately shall again have the same right of rescission.

     

     

     

    26

     



     

    ARTICLE                        X
      - WARRANTY OF OUALITY

     

     

    1)         GUARANTEE
      OF MATERIALS AND WORKMANSHIP

     

     

    The
      Seller shall cause the Builder, for the period of twelve (12) months from the
      date of delivery of the Vessel, to guarantee the Vessel, her hull, her engines,
      her machineries, outfittings and accessories and all parts and equipments,
      excluding Buyer's Supplies stipulated in Article VI hereof, against all defects
      which are due to defective material and/or poor workmanship of the Builder
      and/or its subcontractors and are neither the result of incompetence,
      mismanagement, negligence, accident or willful neglect of the Buyer, its
      employees or agents or of any persons other than employees or agents of the
      Seller and/or the Builder, nor the effect of perils of the seas or river or
      normal wear and tear. The Seller and/or the Builder shall have no obligation
      under this guarantee for any defects discovered prior to the expiry date of
      the
      guarantee unless notice of such defects is received by the Seller not later
      than
      thirty (30) days after such expiry date.

     

     

    However,
      in case that the Buyer is unable to enter the Vessel in the dry-dock within
      the
      guarantee period as provided above, the Builder's guarantee for the underwater
      part of the Vessel which cannot be discovered unless the Vessel is dry-docked,
      may be extended until the time of the first dry-docking after the delivery
      of
      the Vessel, subject to the mutual agreement of the parties hereto.

     

     

    
      	
              2)  

            	
              NOTICE
                OF DEFECTS:

            


    

     

     

    The
      Buyer
      shall notify the Seller in writing, or by email or facsile confirmed in
      writing,

     

     

    of
      any
      defects for which claim is made under this guarantee as promptly as possible
      after discovery thereof. The Buyer's written notice shall describe the nature
      and extent of the defects.

     

     

    3)        EXTENT
      OF THE SELLER'S AND THE BUILDER'S LIABILITY

     

     

    


     

     

     

    27

     



    


     

    The
      Seller and/or the Builder shall be under no obligation with respect to defects
      discovered after the expiration of the period of guarantee specified above.
      The
      Seller and/or the Builder shall not be responsible for any consequential damages
      occasioned by any defects or for any loss of time in operating or repairing
      the
      Vessel, or both, caused by any defects. Nor shall there be any liability of
      the
      Seller and/or the Builder hereunder for defects in the Vessel or any part or
      equipment thereof, caused by fire or accident at sea or elsewhere or by
      mismanagement, accidents, negligence or willful neglect on the part of the
      Buyer, its employees or agents, or of any persons other than employees or agents
      of the Seller and/or the Builder. Likewise, the Seller and/or the Builder shall
      not be liable for defects in the Vessel, or any part or equipment thereof,
      that
      are due to repairs which were made by other than the Builder at the direction
      of
      the Buyer, as hereinafter provided.

     

     

    The
      provisions of this Article X exclude and negate any other or further
      responsibility or liability imposed on the Seller and/or the Builder by statute
      or otherwise.

     

     

    
      	
              4)  

            	
              REMEDY
                OF DEFECTS

            


    

     

     

    The
      Seller shall cause the Builder to remedy any defects against which the Vessel,
      or any part or equipment thereof is guaranteed under this Article, by repairing
      or replacing the defective parts at the Builder's shipyard, unless the Vessel
      can not be conveniently brought to such shipyard for such repairs.

     

     

    In
      case
      the Vessel can not be conveniently brought to the shipyard of the Builder,
      the
      Buyer may cause necessary repairs or replacements to be made elsewhere at the
      direction of the Buyer. In such case the Buyer shall first give the Seller
      the
      notice thereof, and the Seller shall have the right to verify by its own or
      the
      Builder's representative the nature and extent of the defects complained of,
      and
      shall, after such verification, promptly advise the Buyer of its acceptance
      or
      rejection of the defects as one/those that is/are subject to the guarantee
      herein provided. Any dispute shall be referred to arbitration in accordance
      with
      the provisions of Article XIII hereof. If the Seller accepts the defects as
      one/those justifying remedy under this Article, the Seller shall pay to the
      Buyer, unless otherwise agreed upon between the parties hereto, actual cost
      incurred for such repairs and replacements.

     

     

    


     

     

    28

     



    


     

    Upon
      reasonable requests from the Buyer, duly endorsed by the Builder's engineer
      ifhe
      is then on board, the Seller shall cause the Builder to forward to the Vessel
      necessary parts and/or equipment, by sea freight at Seller's expense, to replace
      those which have been found defective in accordance with provisions hereof.
      If
      the Buyer should reasonably require same to be forwarded by air freight, the
      Seller shall do so at Seller's expense, provided that, such parts and/or
      equipment are essential to and urgently required for the seaworthiness of the
      Vessel.

     

     

    The
      guarantee contained in this Article shall not be assigned to any party in any
      case including but not limited to the case that the Vessel is sold by the Buyer
      to the third party, unless prior consent of the Seller is given in
      writing.

     

     

     

    


     

     

    29

     



    


     

    ARTICLE

     

     

    XI
      -
      INSURANCE

     

    


     

    
      	
              1)  

            	
              EXTENT
                OF INSURANCE COVERAGE

            


    

     

     

    The
      Seller shall cause the Builder, at the Builder's own cost and expense, to insure
      the Vessel and all machinery, equipment, appurtenances and outfits, including
      the Buyer's Supplies, built into or installed in or upon the Vessel, with first
      class insurance company or underwriters in Japan. The amount of such insurance
      coverage shall not be less than the aggregate amount of all installments paid
      by
      the Buyer to the Seller, plus the value of the Buyer's Supplies in the custody
      of the Shipyard.

     

     

    
      	
              2)  

            	
              APPLICATION
                OF RECOVERED AMOUNTS

            


    

     

     

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

     

     

    Should
      the Vessel from any cause become an actual or constructive total loss, the
      Seller shall either:

     

     

    
      	
               

            	
              (
                a)

            	
              cause
                the Builder to 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 reconstruction and repair of the damage of the Vessel,
                provided the parties hereto shall have first agreed thereto in writing
                and
                to such reasonable extension of delivery time as may be necessary
                for the
                completion of such reconstruction and repair, delays due to such
                extension
                being deemed to be permissible delays;
                or

            


    

     

     

    


     

     

    


     

     

    30

     



    


     

    
      	
               

            	
              (b)

            	
              Refund
                promptly to the Buyer the full amount of all sums paid by the Buyer
                to the
                Seller as installments in advance of delivery of the Vessel and deliver
                to
                the Buyer all Buyer's Supplies (or the insurance proceeds paid with
                respect thereto), in which case this Contract shall be deemed to
                be
                automatically terminated and all rights, duties, liabilities and
                obligations of each of the parties to the other shall forthwith cease
                and
                terminate.

            


    

     

     

    3)  TERMINATION
      OF SELLER'S AND/OR BUILDER'S OBLIGATION TO INSURE

     

     

    The
      Seller and/or the Builder shall be under no obligation to insure the Vessel
      hereunder after delivery of the Vessel to the Buyer.

     

     

    


     

     

    31

     



    


     

    ARTICLE                      XII
      - BUYER'S DEFAULT

     

     

    
      	
              1)  

            	
              DEFINITION
                OF DEFAULT

            


    

     

     

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

     

     

    
      	
              (a)

            	
              If
                the Buyer fails to pay the 1st Installment to the Seller within three
                (3)
                Business Days after the day and year first above written under the
                provisions of Article II hereof; or

            


    

     

     

    
      	
              (b)

            	
              If
                the Buyer fails to pay the 2nd and 3rd Installments to the Seller
                within
                three (3) Business Days after such Installment becomes due and payable
                under the provisions of Article II hereof;
                or

            


    

     

     

    
      	
              (c)

            	
              If
                the Buyer fails to pay the 4th Installment to the Seller concurrently
                with
                the delivery of the Vessel by the Seller to the Buyer as provided
                in
                Article II hereof; or (d) If the Buyer fails to take delivery of
                the
                Vessel, when the Vessel is duly tendered for delivery by the Seller
                under
                the provisions of Article VIII hereof;
                or

            


    

     

     

    
      	
              (
                e)

            	
              If
                the Buyer cancels or terminates or purports to cancel or terminate
                or
                issues a notice of cancellation or termination in respect of this
                Contract
                (save and except as the result of the proper exercise of its rights
                under
                this Contract); or

            


    

     

     

    
      	
              (f)

            	
              If
                any court order or other order having a legally binding effect on
                the
                Buyer is requesting the Buyer to cease purchase of the Vessel;
                or

            


    

     

     

    
      	
              (g)

            	
              If,
                after the date of this Contract, a petition is filed or an order
                is made
                or and effective resolution is passed for the winding up of the Buyer;
                or

            


    

     

     

    
      	
              (h)

            	
              If
                the Buyer ceases to carry on its business or declares its intention
                to
                cease to carry on its business or generally is subjected to any applicable
                insolvency procedure; or (i) If a receiver, trustee, liquidator or
                sequestrator of, or for, the Buyer or any substantial part of their
                property is appointed.

            


    

     

     

    
      	
              (i)

            	
              If
                a receiver, trustee, liquidator or sequestrator of, or for, the Buyer
                or
                any substantial part of their property is
                appointed.

            


    

     

     

    


     

     

    


     

    32

     



    


     

    
      	
              2)  

            	
              INTEREST
                CHARGE

            


    

     

     

    If
      the
      Buyer is in default of payment as to any installment mentioned above, the Buyer
      shall, commencing with and including the due date, pay interest on such unpaid
      installment at the rate of two point five percent (2.5%) over the Long-term
      prime rate in Japan per annum until such installment including interest thereon
      is fully paid.

     

     

    It
      is
      expressly understood that the rate of interest specified in this Contract shall
      be the net rate to be received by the party entitled thereto.

     

     

    
      	
              3)  

            	
              RESCISSION
                BY SELLER

            


    

     

     

    If
      such
      default continues for a period of ten (10) days thereafter, the Seller may,
      at
      its option, rescind this Contract by giving notice to the Buyer by email or
      facsimile confirmed in writing. Upon receipt of such notice of rescission by
      the
      Buyer, this Contract shall forthwith be rescinded and cancelled, and any lien,
      interest or property right that the Buyer may have in and to the Vessel or
      to
      any part or equipment thereof and to any material or part acquired for
      construction of the Vessel but not yet utilized for such purpose, shall
      forthwith cease, and the Vessel and all parts and equipment thereof shall become
      the sole property of the Seller, and any installment or installments theretofore
      paid by the Buyer to the Seller on account of this Contract shall be retained
      by
      the Seller, however, the retainment of installments shall not preclude the
      Seller from claiming proven loss or damages (except for the consequential loss
      or damages), if any, which are suffered by the Seller consequent on rescission
      of this Contract.

     

     

    
      	
              4)  

            	
              SALE
                OF VESSEL

            


    

     

     

    In
      the
      event of rescission of this Contract as provided above, the Seller shall have
      full right and power either to complete or not to complete the Vessel as it
      deems fit, and to sell the Vessel at a public or private sale on such terms
      and
      conditions as the Seller thinks fit without being answerable for any loss or
      damage. When the sale of the Vessel is made, the proceeds shall be received
      by
      the Seller and shall be applied by the Seller as follows:

     

     

    33

     


     

    (a)
In
      case of sale of the Vessel in incomplete state:

     

     

    Firstly
      to payment of (1) all costs and expenses attending the sale and otherwise
      incurred by the Seller and the Builder as a result of the Buyer's default and
      then to (2) compensation to the Seller and the Builder for all costs and
      expenses relating to the construction of the Vessel and interest thereon at
      the
      rate of two point five percent (2.5%) over the Long-term prime rate in Japan
      per
      annum and for reasonable loss of profit consequent on the rescission of this
      Contract.

     

     

    If
      the
      proceeds of sale plus the installment or installments paid by the Buyer is
      sufficient to pay all of the above (1) and (2), the balance shall be paid to
      the
      Buyer, however, if the proceeds of sale is deficient to pay the same, such
      deficiency shall forthwith be paid by the Buyer upon demand of the
      Seller.

     

     

    (b)
In
      case of sale of the Vessel after completion:

     

     

    Firstly
      to payment of (1) all costs and expenses attending the sale and otherwise
      incurred by the Seller and/or the Builder as a result of the Buyer's default
      and
      then to (2) all unpaid installments of the Contract Price and interest of such
      installments at the rate of two point five percent (2.5%) over the Long-term
      prime rate in Japan per annum from the respective due dates thereof to the
      date
      of application.

     

     

    If
      there
      is any balance left of the proceeds of sale after full payment of all above
      (1)
      and (2), the balance shall be paid to the Buyer, however, if the proceeds of
      sale are deficient to pay all of the above (I) and (2), such deficiency shall
      forthwith be paid by the Buyer upon demand of the Seller.

     

     

    


     

     

    


     

     

    34

     

     

     

     

     

     

    ARTICLE
      XIII - SELLER'S DEFAULT

     

     

    
      	
              I)  

            	
              DEFINITION
                OF DEFAULT

            


    

     

     

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

     

     

    
      	
              (a)

            	
              If
                the Seller cancels or terminates or purports to cancel or terminate
                or
                issues a notice of cancellation or termination in respect of this
                Contract
                (save and except as the result of the proper exercise of its rights
                under
                this Contract); or

            


    

     

     

    
      	
              (b)

            	
              If
                any court order or other order having a legally binding effect on
                the
                Seller is requesting the Seller to cease sale of the Vessel;
                or

            


    

     

     

    
      	
              (
                c)

            	
              If,
                after the date of this Contract, a petition is filed or an order
                is made
                or and effective resolution is passed for the winding up of the Seller;
                or

            


    

     

     

    
      	
              (d)

            	
              If
                the Seller ceases to carry on its business or declares its intention
                to
                cease to carry on its business or generally is subjected to any applicable
                insolvency procedure; or ( e) If a receiver, trustee, liquidator
                or
                sequestrator of, or for, the Seller or any substantial part of their
                property is appointed.

            


    

     

     

    2) RESCISSION
      BY
      BUYER

     

     

    The
      payments made by the Buyer prior to the delivery of the Vessel shall be in
      the
      nature of advances to the Seller. If such default continues for a period of
      ten
      (10) days thereafter. the Buyer may, at its option, rescind this Contract by
      giving notice to the Seller by email or facsimile confirmed in writing. Upon
      receipt of such notice of rescission by the Seller, this Contract shall
      forthwith be rescinded and cancelled.

     

     

    


     

     

    


     

     

     

    35

     



     

    3)
      REFUND BY SELLER

     

     

    Thereupon
      the Seller shall promptly refund to the Buyer the full amount
      of
      all sums paid by the Buyer to the Seller on account of the Vessel, unless the
      Seller proceeds to the arbitration under the provisions of Article XIV
      hereof.

     

     

    In
      such event, the Seller shall pay to the Buyers interest at the rate of two
      point
      five percent (2.5%)
per
      annum on the amount required to be refunded to the Buyer,
      computed from the respective dates on which such sums were paid by the Buyer
      to
      the Seller to the date of remittance by the Seller.

     

     

    4).
      DISCHARGE OF OBLIGATIONS:

     

     

    Upon
      such
      refund by the Seller 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.

     

     

    ARTICLE
      XIV - ARBITRATION

     

     

    1)        TECHNICAL
      DISPUTES

     

     

    Any
      dispute or any difference of opinion between the parties hereto relating to
      conformity of the construction of the Vessel or material used to the
      Classification requirements or relating to any other technical matters shall
      be
      referred to the Classification Society for settlement by and between the parties
      and the Classification Society.

     

     

    In
      the
      event that the settlement cannot be reached by the three parties
      above-mentioned, then such matter shall be referred to arbitration as
      hereinafter provided.

     

     

     

     

     

    36

     




    


     

    
      	
              2)  

            	
              ARBITRATION

            


    

     

     

    Except
      for the case in which the dispute is settled under Paragraph I) hereof, any
      dispute arising under or by virtue of this Contract or any difference of opinion
      between the parties hereto concerning their rights and obligations under this
      Contract, shall be referred to arbitration in Tokyo in accordance with the
      prevailing rules and regulations of Japan Shipping Exchange, Inc.

     

     

    
      	
              3)  

            	
              ALTERATION
                OF DELIVERY TIME

            


    

     

     

    In
      the
      event of arbitration of any dispute arising or occurring prior to delivery
      of
      the Vessel, an award of the arbitrators shall include a finding as to whether
      or
      not the delivery date of the Vessel is in any way altered thereby.

     

     

    


     

     

    37

     



    


     

    ARTICLE                               XV-

     

     

    ASSIGNMENT
      OF CONTRACT

     

    


     

    


     

     

    Neither
      party may assign this Contract in whole or in part to any other individual
      or
      company unless the prior consent of the other party is given in written
      agreement.

     

     

    In
      case
      of assignment by the Buyer, such assignment shall further be subject to approval
      of the Japanese Government, and the Buyer shall remain liable under this
      Contract.

     

     

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

     

    
 

     

     

    


     

     

    38

     



    


     

    ARTICLE                      XVI
      - TAXES AND DUTIES

     

     

    
      	
              1)  

            	
              TAXES

            


    

     

     

    All
      taxes
      and charges of any kind incurred in connection with this Contract in Japan
      except stamp duty in Japan which shall be shared by both parties, shall be
      borne
      by the Seller, and those incurred in countries other than Japan shall be borne
      by the Buyer.

     

     

    
      	
              2)  

            	
              DUTIES

            


    

     

     

    The
      Seller shall hold the Buyer harmless from any payment of a duty imposed in
      Japan
      upon materials or supplies which the Seller may acquire at its cost and by
      its
      own discretion from abroad for construction of the Vessel. However, the import
      duties, if any, on any materials or apparatus which, under the terms of this
      Contract and/or Specifications, may be supplied by the Buyer from abroad for
      construction of the Vessel, and or any other materials, stores, provisions
      or
      any other goods which the Buyer or its employees may take in from abroad shall
      be borne by the Buyer.

     

     

     

    


     

     

    39

     



    


     

    ARTICLE                             XVII
      - PATENTS, TRADE MARKS, COPYRIGHTS

     

     

    
      	
              1)  

            	
              PATENTS,
                TRADEMARKS AND COPYRIGHTS

            


    

     

     

    Machinery
      and equipment of the Vessel may bear the patent numbers, trade marks or trade
      names of the manufacturers, Nothing contained herein shall be construed as
      transferring any patent or trade mark rights or copyrights in equipment covered
      by this Contract, and all such rights are hereby expressly reserved to the
      true
      and lawful owners thereof.

     

     

    The
      Seller shall cause the Builder to defend the Buyer and hold it harmless from
      patent liability or claim of patent infringement of any nature or kind,
      including costs and expenses for, or on account of, any patented or unpatented
      invention made or used in the performance of the Contract and also including
      costs and expenses of litigation, if any, provided, however, that the Buyer
      shall defend the Seller and hold it harmless in respect of infringement of
      any
      patent rights on account of parts or equipment for the Vessel supplied by the
      Buyer.

     

     

    
      	
              2)  

            	
              GENERAL
                PLANS, SPECIFICATIONS AND WORKING
                DRAWINGS

            


    

     

     

    The
      Buyer
      hereby agrees with the Seller that the Builder retains all rights with respect
      to the Specifications, plans, working drawings, technical descriptions,
      calculations, test results and other data, information and documents concerning
      the design and construction of the Vessel and the Buyer undertakes therefore
      not
      to disclose the same or divulge any information contained therein to any third
      parties, without the prior written consent of the Builder, excepting where
      it is
      necessary for usual operation, repair and maintenance of the
      Vessel.

     

     

     

     

     

    40

     



    


     

    ARTICLE

     

     

    XVIII-
      INTERPRETATION

     

    


     

    In
      the
      event of a conflict or inconsistency between the terms of this Contract and
      any
      of the terms of the Specifications attached hereto, the Specifications shall
      prevail in all technical respects and the Contract shall prevail in all other
      respects. Should there be any inconsistency or contradiction between the Plans
      and the Specifications, the Specifications shall govern.

     

     

    This
      Contract shall be construed, take effect and be enforceable in accordance with
      and under the laws and regulations prevailing in Japan.

     

     

     

     

    41

     



    


     

    ARTICLE                         XIX
      - NOTICE

     

     

    All
      notices and communications in connection with this Contract, except as otherwise
      specifically provided, shall be addressed as follows:

     

     

    To
      the
      Buyer:

     

     

    Facsimile:

     

     

    To
      the
      Seller:                                       ******

     

     

    ******

     

     

    ******

     

     

    ******

     

     

    


     

     

    Facsimile:                                ******

     

     

    


     

     

    To
      the
      Builder:                                       ******

     

     

    ******

     

     

    ******

     

     

    ******

     

     

    


     

     

     Facsimile:                                ******

     

     

    


     

     

     

     

     

    42

     

     

    


     

     

    


     

     

    ARTICLE                      XX
      - EFFECTIVE DATE

     

     

    This
      Contract shall become effective upon execution thereof by the Buyer and the
      Seller.

     

     

    


     

     

     

     

    43

     



    


     

    IN
      WITNESS WHEREOF, the parties hereto have caused this Contract to be duly
      executed.

     

     

    


     

     

    For
      the
      Buyer:                                                                           For
      the Seller:

     

     

    


     

     

    


     

     

    


     

     

    By:                                                                    By:

     

     

    Title:                                                                           Title:

     

     

     

     

    


     

     

    


     

     

    44