Exhibit 10.3


 


FORM OF SHIPBUILDING CONTRACT FOR

CONSTRUCTION OF ONE 3,500 DWT PRODUCT OIL 

TANKER WITH FUJIAN SOUTHEAST SHIPYARD, AS

AMENDED


 
















 


FORM OF


 


Contract
No.


 


SHIPBUILDING CONTRACT


 


FOR


 


CONSTRUCTION OF ONE 3500 DWT PRODUCT OIL TANKER


 


(HULL NO. DN-3500-   )


 


BETWEEN


 


 


as BUYER


 


and


 


FUJIAN SOUTHEAST SHIPYARD


 


With


 


FUJIAN SHIPBUILDING INDUSTRY


GROUP CORPORATION


 


Collectively as SELLER


 













CONTENTS


 


	
  ARTICLE 1
  - DESCRIPTION AND CLASS

  	
   

  
	
   

  	
   

  
	
  ARTICLE 2 - CONTRACT PRICE & TERMS OF PAYMENT

  	
   

  
	
   

  	
   

  
	
  ARTICLE 3 - ADJUSTMENT OF THE CONTRACT PRICE

  	
   

  
	
   

  	
   

  
	
  ARTICLE 4 - APPROVAL OF PLANS AND DRAWINGS -
  SUPERVISION AND INSPECTION

  	
   

  
	
   

  	
   

  
	
  ARTICLE 5 - MODIFICATION, CHANGES AND EXTRAS

  	
   

  
	
   

  	
   

  
	
  ARTICLE 6
  - TRIALS

  	
   

  
	
   

  	
   

  
	
  ARTICLE 7
  - DELIVERY

  	
   

  
	
   

  	
   

  
	
  ARTICLE 8. - DELAYS & EXTENSION OF TIME
  FOR DELIVERY

  	
   

  
	
   

  	
   

  
	
  ARTICLE 9
  - WARRANTY OF QUALITY

  	
   

  
	
   

  	
   

  
	
  ARTICLE 10 - CANCELLATION, REJECTION AND
  RESCISSION BY THE BUYER

  	
   

  
	
   

  	
   

  
	
  ARTICLE 11
  - BUYER’S DEFAULT

  	
   

  
	
   

  	
   

  
	
  ARTICLE 12
  - INSURANCE

  	
   

  
	
   

  	
   

  
	
  ARTICLE 13 - DISPUTES AND ARBITRATION

  	
   

  
	
   

  	
   

  
	
  ARTICLE 14
  - ASSIGNMENT

  	
   

  
	
   

  	
   

  
	
  ARTICLE 15
  -TAXES AND DUTIES

  	
   

  
	
   

  	
   

  
	
  ARTICLE 16 - PATENTS, TRADEMARKS AND COPYRIGHT

  	
   

  
	
   

  	
   

  
	
  ARTICLE 17
  - NOTICES

  	
   

  
	
   

  	
   

  
	
  ARTICLE 18 - EFFECTIVE DATE OF CONTRACT

  	
   

  
	
   

  	
   

  
	
  ARTICLE 19
  - INTERPRETATION

  	
   

  



 


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SHIPBUILDING CONTRACT


 


FOR


 


CONSTRUCTION OF ONE 3500DWT PRODUCT OIL TANKER


 


(HULL NO. DN-3500-    )


 


This CONTRACT, entered
into this 6th of February 2005, by and between
                                   ,
a corporation organized 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 or its nominee, (hereinafter called the
“BUYER”) on one part; and Fujian Southeast Shipyard, a corporation organized
and existing under the Laws of the People’s Republic of China, having its
registered office at 7# Jianshe Road, Economic Technical Development Zone of
Fuzhou, Fujian Province, the People’s Republic of China (hereinafter called the
“BUILDER”), and Fujian Shipbuilding Industry Group Corporation (abbreviated as
“FSIGC”) a corporation organized and existing under the Laws of the People’s
Republic of China, having its registered office at 27 Qunzhong Road Fuzhou
Fujian, the People’s Republic of China on the other part. FSIGC and the BUILDER
are hereinafter collectively called the “SELLER”.


 


WITNESSETH


 


In
consideration of the mutual covenants contained herein, the SELLER agrees to
design, build, launch, equip and complete at the BUILDER’s Shipyard and to sell
and deliver to the BUYER after completion and successful trial specified in
this Contract one (1) 3500DWT product tanker as more fully described in
Article 1 hereof (hereinafter called the “VESSEL”), to be registered at
the option of the BUYER under the Panamanian (or equivalent convenient) flag or
any other flag which may be chosen by the BUYER and agreed by the SELLER and
the BUYER agrees to purchase and take delivery of the aforesaid VESSEL from the
SELLER


 


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and to pay for the
same in accordance with the terms and conditions hereinafter set forth.


 


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ARTICLE 1
- DESCRIPTION AND CLASS


 


1.     DESCRIPTION


 


The VESSEL shall
be 3,500 metric tons deadweight oil product tanker, at design summer draught of
5.5 meters of the class described below. The VESSEL shall have the BUILDER’S
Hull No. DN-3500-10 and shall be constructed, equipped and completed as
described in and in accordance with the terms of this Contract and the
following documentation:


 


	
  (1) Technical
  Specification

  	
   

  	
  (Drawing No. B1-0001)

  
	
  (2) General
  Arrangement

  	
   

  	
  (Drawing No. B1-0102)

  
	
  (3) Makers list

  	
   

  	
  (Drawing No. B1-0002)

  
	
  (4) Midship
  Section

  	
   

  	
  (Drawing No. H1-1101)

  



 


Attached hereto
and signed by each of the parties to this Contract (hereinafter collectively
called the “Specifications”), making an integral part hereof.


 


2.     CLASS AND
RULES


 


The VESSEL including
its machinery, equipment and out fittings, shall be constructed in accordance
with and shall comply with the rules and regulations of and under the
supervision of American Bureau of Shipping (ABS) (hereinafter called the “Classification
Society”) and distinguished in record by the symbols: +A1
OIL CARRIER (E) ESP, FP.<60°C, +ACC, +AMS.


 


The requirements of the
authorities and other regulatory bodies as fully described in the
Specifications including that of the Classification Society are to include any rules or
circulars thereof which have been issued and become effective by the date of
signing this Contract.


 


The SELLER shall arrange
with the Classification Society to assign a representative or representatives (hereinafter
called the “Classification Surveyor”) to the BUILDER's Shipyard for supervision of the construction of
the VESSEL.


 


All fees and
charges incidental to classification and to compliance with all the rules,
regulations and requirements of this Contract and as described in the Specifications
issued and become effective up to the date of signing this Contract as well as
royalties, if any, payable on account of the construction of


 


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the VESSEL shall be for
the account of the SELLER, except as otherwise provided and agreed herein. The
key plans, materials and workmanship entering into the construction of the
VESSEL and the VESSEL itself shall at all times be subject to inspections and
tests in accordance with the rules and regulations of the Classification
Society and regulatory bodies, which rules and regulations as described in
detail in pages 14, 15 and 16 of the Specifications are all accepted by
the SELLER.


 


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


 


3.     PRINCIPAL
PARTICULARS AND DIMENSIONS OF THE VESSEL


 


	
  (a)

  	
  Hull

  	
   

  	
   

  	
   

  	 

	
   

  	
  Length overall

  	
  abt.

  	
  90.00m

  	
   

  	 

	
   

  	
  Length between
  perpendiculars

  	
  abt.

  	
  85.00m

  	
   

  	 

	
   

  	
  Breadth, moulded

  	
  abt.

  	
  15.60m

  	
   

  	 

	
   

  	
  Depth, moulded

  	
  abt.

  	
  7.80m

  	
   

  	 

	
   

  	
  Designed Summer
  Draught,

  	
  abt.

  	
  5.50m

  	
   

  	 

	
   

  	
  Scantling Draught

  	
  abt.

  	
  6.00m

  	
   

  	 

	
   

  	
   

  	
   

  	
   

  	
   

  	 

	
  (b)

  	
  Propelling Machinery

  	
   

  	
   

  	
   

  	 

	
   

  	
  The VESSEL shall be
  equipped, in accordance with the Specifications, with one (1) set of
  DAIHATSU CHINESE LICENSE 8DKM-28 (2500Kw, 750rpm) Main Engine.

  



 


4.     GUARANTEED SPEED


 


The SELLER
guarantees that the trial speed at the designed draft of 5.5m for fully load
condition at CSR (90% MCR) of main engine with 15% sea margin, is to be not
less than 12.5 nautical miles per hour.


 


The speed shall be
corrected for wind speed and shallow water effect. The correction method of the
speed shall be as specified in the Specifications.


 


5.     GUARANTEED
DEADWEIGHT


 


The SELLER
guarantees that the VESSEL is to have a deadweight of not less than 3500 metric
tons at the summer design draught moulded of 5.50 meters in sea water of 1.025
specific gravity.


 


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The term, “Deadweight”,
as used in this Contract, shall be as defined in the Specifications.


 


The actual deadweight of
the VESSEL expressed in metric tons shall be based on calculations made by the
BUILDER and checked by the BUYER, and all measurements necessary for such
calculations shall be performed in the presence of the BUYER’S supervisor(s) or
the party authorized by the BUYER and the Classification Society Surveyor.


 


Should there be any
dispute between the BUILDER and the BUYER in such calculations and/or
measurements, the decision of the Classification Society agreed by both parties
shall be final.


 


6.     SUBCONTRACTING


 


The SELLER may, at its
sole discretion and responsibility, subcontract any portion of the construction
work of the VESSEL to experienced subcontractors, any subcontracting of main
hull structure or superstructures shall require the prior written approval of
the BUYER and the Classification Society before work commences. However
delivery and final assembly into the VESSEL of any such work subcontracted
shall be at the BUILDER’s Shipyard. The SELLER shall always fully remain
responsible for such subcontracted work. The SELLER shall remain responsible
for compliance with the obligations of this Contract as if there had been no
sub-contracting.


 


In its contracts with its
subcontractors and suppliers, the SELLER shall always ensure reasonable time
margins so as to avoid delays in the progress of the construction of the VESSEL.
Hull blocks to be excluded from subcontracting.


 


7.     REGISTRATION


 


The VESSEL shall be
registered by the BUYER at its own cost and expenses under the laws of Panama
(or equivalent convenient) the time of delivery and acceptance thereof flying
Panamanian (or equivalent convenient) flag. The cost and expenses and other
relative cost involving applying and inspection for statutory surveys will be
borne by the Buyer.


 


The SELLER warrants that
the VESSEL shall upon delivery in construction and performance aspect be
acceptable for registration under the laws of Panama in force at the time of
signing the Contract.


 


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ARTICLE 2
- CONTRACT PRICE & TERMS OF
PAYMENT


 


1.     CONTRACT PRICE


 


The agreed
purchase price of the VESSEL is United States Dollars 6,200,000.00 (in words:
United States Dollars six million two hundred thousand Only), (hereinafter
called the “Contract Price”) net receivable by the SELLER, which is exclusive
of the cost for the BUYER’s Supplies as provided in Article 5 hereof.
Therefore the Contract Price is a fixed price and shall not be subject to any
upward or downward adjustment except only in accordance with the provisions of
Articles 3, 5 and 6 of this contract.


 


2.     CURRENCY


 


Any and all
payments by the BUYER to the SELLER under this Contract shall be made in United
States Dollars.


 


3.     TERMS OF PAYMENT


 


The Contract Price
shall be paid by the BUYER to the SELLER in instalments as follows:


 


(a)   1st Instalment


 


The sum of United
States Dollars 310,000.00 (United States Dollars three hundred ten thousand
only), shall become due and payable and be paid by the BUYER within five (5) New
York banking days after this Contract has been signed and the Refund Guarantee
referred to in paragraph 7 of this Article has been issued and delivered
to the BUYER.


 


The sum of United
States Dollars 310,000.00 (United States Dollars three hundred ten thousand
only), shall become due and payable and be paid by the BUYER within five (5) New
York banking days after the sixth month of this Contract has been come into
force.


 


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(b)   2nd
Installment:


 


The sum of United
States Dollars 930,000.00 (United States Dollars nine hundred thirty thousand
only), shall become due and payable and shall become due and payable and shall
be paid within five (5) New York banking days after the cutting of the
first steel plate of the VESSEL in the SELLER’s workshop has occurred
accompanied by a copy of the written confirmation issued by the Classification
Society to the effect that the cutting of the first steel plate has been
carried out.


 


The SELLER shall
give a telex, telefax or letter notice to the BUYER stating that the 1st steel
plate has been cut in its workshop and demand for payment of this instalment.


 


(c)   3rd
Installment:


 


The sum of United
States Dollars 930,000.00 (United States Dollars nine hundred thirty thousand
only), shall become due and payable and shall be paid within five (5) New York
banking days after keel-laying of the first section of the VESSEL. The
keel-laying shall be notified by the SELLER with a telex, telefax or letter
notice to the BUYER stating that the said keel-laying has been carried out
accompanied by a copy of the written confirmation issued by Classification
Society to the effect that the keel-laying has been carried out. The SELLER
shall send to the BUYER a telex or telefax demand for payment of this instalment.


 


(d)   4th
Installment:


 


The sum of United
States Dollars 930,00.000 (United States Dollars nine hundred thirty thousand
only), shall become due and payable and shall be paid within five (5) New
York banking days after successful launching of the VESSEL.  The launching of the VESSEL shall be notified
by the SELLER with a telex, telefax or letter notice to the BUYER stating that
the launching of the VESSEL has been successfully carried out. The SELLER shall
send to the BUYER a telex or telefax demand for payment of this instalment.


 


(e)   5th
Installment (payment upon Delivery to and Acceptance by the BUYER of the
VESSEL):


 


The sum of United
States Dollars 2,790,000.00 (United States Dollars two million seven hundred
ninety thousand Only), plus any increase or minus any decrease due to the
modifications of the Specification and/or the adjustments of the Contract Price
hereunder in accordance with the provisions of the relevant Articles hereof,
shall become due and payable


 


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and be paid by the
BUYER to the SELLER concurrently with delivery to and acceptance by the BUYER
of the VESSEL and upon the signing of the Protocol of Delivery and Acceptance
by both parties. The SELLER shall send to the BUYER a telex or telefax demand
for this instalment ten (10) days prior to the scheduled date of delivery
of the VESSEL.


 


4.     METHOD OF
PAYMENT


 


(a)   1st Instalment


 


The BUYER shall
remit the amount of this instalment in accordance with Article 2,
Paragraph 3 (a) by telegraphic transfer to xxxxxxxxxxx Bank, xxxxx Branch,
the People’s Republic of China as receiving bank nominated by the SELLER, for
credit to the account of xxxxxxxxxxxxxxxxxx, Account No xxxxxxxxxxxxxx with
direct SWIFT advice from the remitting bank to xxxxxxxxxxxxxxx Bank, xxxx
Branch.


 


(b)   2nd Instalment


 


The BUYER shall
remit the amount of this instalment in accordance with Article 2,
Paragraph 3(b) by telegraphic transfer to xxxxxxxx Bank, xxxx Branch, the
People's Republic of China as receiving bank nominated by the SELLER, for
credit to the account of xxxxxxxxxxxxxxxxxxxx, Account No xxxxxxxxxxxx with
direct SWIFT advice from the remitting bank to xxxxxxx Bank, xxxx Branch.


 


(c)   3rd Instalment


 


The BUYER shall
remit the amount of this instalment in accordance with Article 2,
Paragraph 3(c) by telegraphic transfer to xxxxxxxx Bank, xxxx Branch, the
People’s Republic of China as receiving bank nominated by the SELLER, for
credit to the account of xxxxxxxxxxxxxxxxxxx, Account No xxxxxxxxxx with direct
SWIFT advice from the remitting bank to xxxxxxx Bank, xxxx Branch.


 


(d)   4th Instalment


 


The BUYER shall
remit the amount of this instalment in accordance with Article 2, Paragraph
3(d) by telegraphic transfer to xxxxxxxx Bank, xxxx Branch, the People’s
Republic of China as receiving bank


 


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nominated by the
SELLER, for credit to the account of xxxxxxxxxxxxxxxxxxx, Account No xxxxxxxxxx
with direct SWIFT advice from the remitting bank to xxxxxxx Bank, xxxx Branch.


 


(e)   5th Instalment
(Payable upon delivery of the VESSEL)


 


The BUYER shall,
at least for (5) working days prior to the scheduled date of delivery of
the VESSEL, remit to xxxxx Bank, xxxxx Branch, the People’s Republic of China
for credit to a suspense account in the name of the BUYER or, at the option of
the BUYER, in the name of the bank which shall finance the payment by the BUYER
of the fifth instalment with xxxxx Bank, xxxx Branch, the People’s Republic of
China the amount of the fifth instalment (as adjusted in accordance with the
provisions of this Contract), with an irrevocable instruction that the said
amount shall only be released to the SELLER against presentation by the SELLER
to the said xxxxx Bank, xxxxx Branch, the People’s Republic of China, of one of
the originals of the Protocol of Delivery and Acceptance signed by the BUYER’S
authorised representative and the SELLER. Interest, if any, accrued from such
deposit, shall be for the benefit of the BUYER.


 


If the delivery of
the VESSEL is not effected on or before the expiry of a period of 20 days
commencing from the date on which the fifth instalment is transferred to the
xxxxx Bank, xxxxx Branch, the People’s Republic of China in accordance with
this paragraph 4(e) of Article 2, the BUYER shall have the right to
withdraw the said deposit plus accrued interest upon the expiry of such 20 days
period. If, following the withdrawal by the BUYER of the fifth instalment of
the Contract Price in accordance with this paragraph 4(e) of
Article 2, a new scheduled delivery date is notified to the BUYER by the
SELLER pursuant to, and in accordance with, this Contract, the BUYER shall
remit the fifth instalment in accordance with the terms and conditions set out
above.


 


(f)    Each of the
second, third and fourth instalments of the Contract Price shall be due and
payable on the date falling five (5) banking days after receipt by the
BUYER of:


 


(i)            the
originals of the invoices referred to in paragraph (g) below which shall
be accompanied by stage certificates issued by the Classification Society, and


 


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(ii)           An
original Letter of Refund Guarantee in respect of the relevant instalment of
the Contract price in the form attached to this Contract as Exhibit “B”.


 


The SELLER shall
be entitled, in respect of amounts due on fixed dates, to present invoices in
advance of the due date for payment on the due date.


 


(g)   Upon completion of
each event entitling the SELLER to an instalment of the Contract Price pursuant
to paragraph 3 above, the SELLER shall send by telefax to the BUYER on or after
the relevant date, an invoice specifying the amount of the instalment then due
and shall send originals of such invoice in duplicate by air courier to the
BUYER. The BUYER shall be deemed to have received such invoices five
(5) banking days after delivery to the air courier.


 


5.     PREPAYMENT


 


The BUYER shall
have the right to make prepayment of any and all instalments before delivery of
the VESSEL, by giving to the SELLER at least thirty (30) days prior written
notice, without any price adjustment of the VESSEL for such prepayment.


 


6.     SECURITY FOR
PAYMENT OF INSTALMENTS BEFORE DELIVERY


 


The BUYER shall,
upon effectiveness of this Contract, deliver to the SELLER a Performance
Guarantee in the form annexed hereto as Exhibit “A” in favour of the
SELLER issued by AEGEAN SHIPPING MANAGEMENT S.A. (hereinafter called the
“Guarantor”). This guarantee shall secure all the Buyer’s obligations under the
Contract.


 


7.     REFUNDS


 


All payments made
by the BUYER prior to delivery of the VESSEL shall be in the nature of advance
to the SELLER, and in the event the VESSEL is rejected by the BUYER after the
sea trials or this Contract is rescinded or cancelled by the BUYER in
accordance with the specific terms of this Contract permitting such rescission
or cancellation, the SELLER shall refund to the BUYER in United States Dollars
the full amount of all sums already paid by the BUYER to the SELLER under this
Contract, together with interest thereon (at the applicable rate specified in
this Contract) from the respective dates such sums were received by the SELLER
to the date of remittance by telegraphic transfer of such refund to the BUYER.


 


As security to the
BUYER, the SELLER shall deliver to the BUYER, on or before receipt by the
SELLER of each installment of the Contract Price, an original Refund Guarantee
securing the repayment of the relevant installment of


 


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the Contract Price
to be issued by EXIM BANK, Shanghai Branch the People’s Republic of China in
respect of the relevant installment of the Contract Price in the form annexed
hereto as Exhibit “B”.


 


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ARTICLE 3
- ADJUSTMENT OF THE CONTRACT PRICE


 


The Contract Price
of the VESSEL shall be subject to adjustments as hereinafter set forth. It is
hereby understood by both parties that any reduction of the Contract Price 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 thirty (30) days of delay
in delivery of the VESSEL beyond the Delivery Date (as defined in
Article 7 hereof and all references hereafter in this Contract to the
“Delivery Date” shall be construed as references to that term as defined in
Article 7 hereof) ending as of twelve o’clock midnight of the thirtieth
(30th) day of delay.


 


(b)         If the delivery of the VESSEL is delayed
more than thirty (30) days after the Delivery Date, then, in such event:


 


(i)                                     beginning at twelve o’clock midnight of
the thirty- first (31st) to twelve o’clock midnight of the sixtieth
(60th) day after the Delivery Date, the Contract Price of the VESSEL shall be
reduced by deducting therefrom the sum of United States Dollars one thousand
only (USD 1000.00 ) per day;


 


(ii)                                  beginning at twelve o’clock midnight of
the sixty-first (61st) to twelve o’clock midnight of the one hundred
and one hundred-twenty (120th) day after the Delivery Date, the
Contract Price of the VESSEL shall be reduced by deducting therefrom the sum of
United States Dollars one thousand three hundred only (USD 1300.00) per day,


 


(iii)                               beginning at twelve o’clock midnight of
the one hundred -twenty-first (121st) to twelve o’clock midnight of
the one hundred and one hundred-eighty (180th) day after the
Delivery Date, the Contract Price of the VESSEL shall be reduced by deducting
therefrom the sum of United States Dollars one thousand seven hundred fifty
only (USD 1,750.00) per day.


 


Unless the parties
hereto agree otherwise, the total reduction in the Contract Price shall be
deducted from the fifth instalment of the Contract Price and in


 


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any event (including the
event that the BUYER consents to take delivery of the VESSEL after the
expiration of the one hundred and eighty (180) day period of delay as described
in Paragraph l(c) of this Article) the total reduction in the Contract
Price shall not be more than would be the case for a delay of one hundred and
fifty (150) days counting from midnight of the thirty-first (31st)
day after the Delivery Date at the above specified rates of reduction that is
United States Dollars Two Hundred and Thirteen Thousand only (USD 213,000.00).


 


(c)          If the delay in the delivery of the
VESSEL exceeds a period of one hundred and eighty (180) days after the Delivery
Date, as defined in Article 7, then in such event, and after such 180 days
period has expired, the BUYER may, at any time thereafter at its option,
rescind or cancel this Contract in accordance with the provisions of
Article 10 of this Contract. The SELLER may at any time after the
expiration of the aforementioned one hundred and eighty (180) day period, if the
BUYER has not served notice of cancellation or rescission pursuant to
Article 10, demand in writing that the BUYER make an election (and in such
notice the SELLER shall specify a future delivery date for the VESSEL), in
which case the BUYER shall, within thirty (30) days after such demand is
received by the BUYER, either notify the SELLER of its decision to cancel this
Contract, or consent to take delivery of the VESSEL at an agreed future date,
it being under stood and agreed by the parties hereto that, if the VESSEL is
not delivered by such future date, the BUYER shall have the same right of
rescission and cancellation upon the same terms, as hereinabove provided.


 


(d)         The Contract Price shall not be adjusted
or reduced if the delivery of the VESSEL is delayed by reason of permissible
delays as defined in Article 8 hereof.


 


(e)          If the SELLER notifies the BUYER by
telefax that the delivery of the VESSEL shall be made earlier than the Delivery
Date and such notification is given not less than one (1) month prior to
the newly planned delivery date, a certain amount of bonus shall be given by
the BUYER to the SELLER.


 


Subject to the
above and in the event that the delivery shall be made within thirty (30) days
earlier than the Delivery Date, the Contract Price shall remain unchanged. In
the event that the delivery shall be made more than thirty (30) days earlier
than the specified Delivery Date, then a bonus shall be added to the Contract
Price at a rate of United States Dollars One Thousand Only (USD 1000.00) per
day for each full day earlier than the thirtieth (30th) day to
sixtieth (60 th) day prior to the Delivery Date. And if the delivery
will be made between Sixty (60) and One Hundred and twenty (120) days prior to
the Delivery Date, a bonus shall be added to the Contract Price at a rate of
United States Dollars one Thousand Three hundred Only (USD 1,300.00) per day
for each full day.


 


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And if the
delivery will be made between One Hundred and twenty (120) days and One Hundred
and eighty (180) days earlier than the Delivery Date, a bonus shall be added to
the Contract price at a rate of United States Dollars One Thousand Seven
hundred fifty only (USD 1,750.00) per day for each full day.


 


The total increase
of the Contract Price for the earlier delivery shall be added to the fifth
instalment of the Contract Price, but shall not be more in any case than an
amount of United States Dollars Two Hundred Thirteen Thousand only (USD
213,000.00).


 


(f)            In the event that the SELLER is unable to
deliver the Vessel on the newly planned delivery date as declared, the VESSEL
can, nevertheless, be delivered by the SELLER at a date after such declared
newly planned date.


 


In such
circumstances, and for the purpose of determining the liquidated damages to the
BUYER (according to the provisions of Paragraph 1 (b) of this Article) and
the BUYER’s right to cancel or rescind this Contract (according to the
provisions of Paragraph 1 (c) of this Article), the newly planned delivery
date declared by the SELLER shall not be in any way be treated or be taken as
having substituted the original Delivery Date as defined in Article 7. The
BUYER’s aforesaid right for liquidated damages and to cancel or rescind this
Contract shall be accrued, operated or exercised only to the extent as
described in Paragraph 1 (a), 1 (b) and/or 1 (c) of Article 3.
In whatever circumstances, the Delivery Date as defined in Article 7 (not
the newly planned delivery date as declared by the SELLER) shall be used to
regulate, as so described in Paragraph 1 (a), 1 (b) and/or 1 (c) of
Article 3, the BUYER’s right for liquidated damages and to rescind this
Contract and the SELLER’s liability to pay the aforesaid liquidated damages
resulting from the delay in delivery of the VESSEL.


 


2.               INSUFFICIENT SPEED


 


(a)          The Contract Price of the VESSEL shall
not be affected nor changed by reason of the actual speed (as described in
detail in the Specifications and as determined by the Trial Run according to
the Specifications) being equal to or less than three-tenths (3/10) of one knot
below the guaranteed speed as specified in Paragraph 4 of Article 1 of
this Contract.


 


(b)         However, commencing with and including a
deficiency of more than three-tenths (3/10) of one knot in actual speed (as
determined by the Trial Run according to the Specifications) below the
guaranteed speed as specified in Paragraph 4 of Article 1 of this
Contract, the Contract Price shall be reduced as follows:


 


In case of
deficiency


 


	
  Above 0.30 but below or
  at 0.40 knot 

  	
  USD 5,000 (Total)

  
	
  Above 0.40 but below or
  at 0.50 knot 

  	
  USD 10,000 (Total)

  
	
  Above 0.50 but below or
  at 0.60 knot 

  	
  USD 15,000 (Total)

  
	
  Above 0.60 but below or
  at 0.70 knot

  	
  USD 20,000 (Total)

  
	
  Above 0.70 but below or
  at 0.80 knot 

  	
  USD 25,000 (Total)

  
	
  Above 0.80 but below or
  at 0.90 knot

  	
  USD 40,000 (Total)

  



 


16





















 


(c)          If the deficiency in actual speed (as
determined by the Trial Run after correction according to the Specifications)
of the VESSEL upon the Trial Run, is more than nine tenths (9/10) of one knot
below the guaranteed speed of 12.5 knots, then the BUYER may at its option
reject the VESSEL and rescind this Contract in accordance with provisions of
Article 10 of this Contract, or may accept the VESSEL at a reduction in
the Contract Price as above provided for nine tenths (9/10) of one knot, that
is United States Dollars forty thousand only (USD 40,000) being the maximum.


 


3.               DEADWEIGHT


 


(a)          In the event that there is a deficiency
in the actual deadweight of the VESSEL determined as provided in the
Specifications, the Contract Price shall not be decreased if such deficiency is
Fifty (50) metric tons or less below the guaranteed deadweight of 3500 metric
tons at assigned design summer draught 5.50m.


 


(b)         However, the Contract Price shall be
decreased by the sum of United States Dollars Five Hundred only (USD 500.00)
for each metric ton of such deficiency in excess of a deficiency of Fifty (50)
metric tons.


 


(c)          In the event that there should be a deficiency
in the VESSEL’s actual deadweight which exceeds two hundred (200) metric tons
below the guaranteed deadweight, the BUYER may, at its option, reject the
VESSEL and rescind this Contract in accordance with the provisions of
Article 10 of this Contract, or may accept the VESSEL with reduction in
the Contract Price in the maximum amount of United States Dollars Seventy Five
thousand only (USD 75,000.00).


 


The total
reduction in the Contract Price as the result of the operation of the
provisions of this paragraph 4 of Article 3 shall be applied in reducing
the fifth instalment of the Contract Price.


 


17





















 


4.               EFFECT OF RESCISSION


 


It is expressly
understood and agreed by the parties hereto that in any case as stated herein,
if the BUYER rescinds this Contract pursuant to any provision under this
Article, the BUYER, save its rights and remedy set out in Article 10
hereof, shall not be entitled to any liquidated damage but shall be entitled to
a refund of payments made prior to delivery and interest thereon.


 


18





















 


ARTICLE 4
- APPROVAL OF PLANS AND DRAWINGS - SUPERVISION AND INSPECTION


 


1.               APPOINTMENT OF THE BUYER’S SUPERVISOR


 


The BUYER shall
send in good time to and maintain at the BUILDER’s Shipyard, at the BUYER’s own
cost and expense, one or more representative(s) who shall be duly accredited in
writing by the BUYER (such representative(s) being hereinafter collectively and
individually called the “Supervisor”) to attend, inspect supervise and survey
the construction of the VESSEL, her engines and accessories.


 


The SELLER shall
make all necessary arrangements to assist BUYER’s Supervisor to obtain all
necessary visas, permits, license, work permits etc. so as to enable him/them
to attend the Construction of the VESSEL in good time.


 


The SELLER hereby
undertakes to assist in order to get the necessary visa for the Supervisor to
enter China will be issued upon demand and without delay provided that the
Supervisor meets with the rules, regulations and laws of the People’s Republic
of China. The BUYER undertakes to give the SELLER adequate notice for the
application of visa.


 


2.               APPROVAL OF PLANS AND DRAWINGS


 


The parties hereto
shall, within thirty (30) days after signing of this Contract, mutually agree a
list of all the plans and drawings, which are to be sent to the BUYER for
approval (hereinbelow called “the LIST”), Before arrival of the Supervisor at
the BUILDER’s Shipyard, the plans and drawings specified in the LIST shall be
sent to the BUYER, and the BUYER shall, within ten (10) days after receipt
thereof (excluding mailing time), return such plans and drawings submitted by
the SELLER with approval or remarks, if any.


 


Concurrently with
the arrival of the Supervisor at the BUILDER’s Shipyard, the BUYER shall notify
the BUILDER in writing, stating the authority which the said Supervisor shall
have and stating whether the Supervisor can, on behalf of the BUYER, approve or
disapprove, as the case may be, those plans and drawings specified in the LIST
which have not yet been sent to the BUYER. Should the Supervisor be so
authorised by the BUYER, the Supervisor shall, within ten (10) days after
receipt thereof, return those plans and drawings with approval or remarks, if
any.


 


19





















 


Unless
notification is given to the BUILDER by the Supervisor or the BUYER of approval
or disapproval of any plans and drawings within the above-designated period of
time for each case, the said plans and drawings shall be deemed to have been
automatically approved.


 


The plans and
drawings approved by the BUYER or the Supervisor shall be final, and any
alteration thereof shall be regarded as modification specified in
Article 5 of this Contract.


 


3.               SUPERVISION AND INSPECTION BY THE
SUPERVISOR


 


The Supervisor
shall have, at all times until delivery of the VESSEL, the right to attend
tests according to the mutually agreed test list and inspect the VESSEL, her
engines, accessories and materials at the BUILDER’s Shipyard, the premises of
its subcontractors or any other place where work is done or materials stored in
connection with the VESSEL. In the event that the Supervisor discovers any
construction or material or workmanship which does not or will not conform to
the requirements of this Contract and the Specifications, the Supervisor shall
promptly give the BUILDER a notice in writing as to
such nonconformity, upon receipt of which the BUILDER shall correct such
nonconformity if the BUILDER agrees with the BUYER. However the BUYER
undertakes and assures the SELLER that the Supervisor shall carry out his
inspections in accordance with the agreed inspection procedure and
schedule and usual shipbuilding practice and in a way as to minimize any
increase in building costs and delays in the construction of the VESSEL.


 


The BUILDER agrees
to furnish free of charge the Supervisor with office space, and other
reasonable facilities according to BUILDER’s practice at, or in the immediate
vicinity of the BUILDER’s Shipyard as may be necessary to enable the Supervisor
to effectively carry out his duties. All international communication charges
(such as telephone and telefax charges) shall be borne by the BUYER. At all
times, during the construction of the VESSEL until delivery thereof, the
Supervisor shall be given free and ready access to the VESSEL, her engines and
accessories, and to any other place where the work is being done, or the
materials are being processed or stored, in connection with the construction of
the VESSEL, including the yards, workshops, stores of the BUILDER, and the
premises of subcontractors of the BUILDER, who are doing work, or storing
materials in connection with the VESSEL’s construction. The travel expenses for
the said access to SELLER’s subcontractors outside of Fuzhou city shall be at
BUYER’s account, The transportation within Fuzhou city shall be provided to the
Supervisor by the SELLER.


 


20





















 


4.               LIABILITY OF THE SELLER


 


The Supervisor
engaged by the BUYER under this Contract shall at all times be deemed to be in
the employment of the BUYER. The SELLER shall be no liability whatsoever to the
BUYER, or to the Supervisor or the BUYER’s employees or agents for personal
injuries, including death, during the time when they, or any of them, are on
the VESSEL, or within the premises of either the SELLER or its subcontractors,
or are otherwise engaged in and about the construction of the VESSEL, unless,
however, such personal injuries, including death, were caused by the negligence
or wilful misconduct of the SELLER, or of any of the SELLER’s employees or
agents or subcontractors of the SELLER. Nor shall the SELLER have any liability
whatsoever to the BUYER for damage to, or loss or destruction of property in
China of the BUYER or of the Supervisor, or of the BUYER’s employees or agents,
unless such damage, loss or destruction is caused by the negligence or wilful
misconduct of the SELLER, or of any of the employees, or agents or
subcontractors of the SELLER.


 


5.               SALARIES AND EXPENSES


 


All salaries and
expenses of the Supervisor, or any other employees employed by the BUYER under
this Article, shall be for the BUYER’s account.


 


6.               REPLACEMENT OF SUPERVISOR


 


The SELLER has the
right to request the BUYER in writing to replace any of the Supervisors who is
proved to be unsuitable and unsatisfactory for the proper progress of the
VESSEL’s construction together with reasons. The BUYER shall investigate the
situation by sending its representative to the Builder’s yard, if necessary,
and if the BUYER considers that such SELLER’s request is justified, the BUYER
shall effect the replacement as soon as conveniently arrangeable.


 


7.               The supervisors or employees will be
informed by the BUYER to follow the Laws of P.R. of China when they work in
China.


 


21


















 


ARTICLE 5
- MODIFICATION, CHANGES AND EXTRAS


 


1.               HOW EFFECTED


 


The Specifications
and Plans in accordance with which the VESSEL shall be constructed, may be
modified and/or changed at any time hereafter by written agreement of the
parties hereto, provided that such modifications and/or changes or an
accumulation thereof will not, in the SELLER’s reasonable judgement, adversely
affect the BUILDER’s other commitments and provided further that the BUYER
shall consent, if necessary, to affair and reasonable adjustment of the
Contract Price, time of delivery of the VESSEL and other terms of this
Contract, and/or the Specifications occasioned by such modification and/or
changes, if any, as hereinafter provided. Subject to the above, the SELLER
hereby agrees to exert its best efforts to accommodate such reasonable requests
by the BUYER so that the said changes and/or modifications may be made at a
reasonable cost and within the shortest practicable time. 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 VESSEL together with an
agreement as to any extension or reduction in the date of delivery, the
provision to the SELLER of any additional securities necessary to the SELLER,
or any other alterations in this Contract, or the Specifications occasioned by
such modifications and/or changes. The aforementioned agreement to modify
and/or to change the Specifications may be effected by an exchange of letter,
or telefaxes signed in each case by an authorised representative of the
relevant party, manifesting such agreement. The letters as well as telefaxes
exchanged by the parties hereto pursuant to the foregoing shall constitute an
amendment to the Specifications under which the VESSEL shall be built, and such
letters and telefaxes shall be deemed to be incorporated into this Contract and
the Specifications by reference and made a part hereof. Upon consummation of
the agreement to modify and/or to change the Specifications, the SELLER shall
without delay alter the construction of the VESSEL in accordance therewith,
including any additions to, or deductions from, the work to be performed in
connection with such construction. If due to whatever reasons, the parties
hereto shall fail to agree on the adjustment of the Contract Price or extension
of time of delivery or the provision of additional security to the SELLER or
modification of any terms of this Contract which are necessitated by such
modifications and/or changes, then the SELLER shall have no obligation to
comply with the BUYER’s request for any modification and/or changes.


 


2.               CHANGES IN RULES OF CLASSIFICATION
SOCIETY, REGULATIONS, ETC.


 


 


22





















 


(1)          If, after the date of signing this
Contract, any requirements as to classification or as to the rules and
regulations as specified in this Contract and the Specifications to which the
construction of the VESSEL is required to conform, are altered or changed by
the Classification Society or any regulatory bodies authorized to make such
alterations or changes, the SELLER and/or the BUYER, upon receipt of
information thereof, shall transmit such information in full to each other in
writing, whereupon within twenty-one (21) days after receipt of the said notice
by the BUYER from the SELLER or vice versa, the BUYER shall instruct the SELLER
in writing as to the alterations or changes, if any, to be made in the VESSEL
which the BUYER, in its sole discretion, shall decide. The SELLER shall promptly
comply with such alterations or changes, if any in the construction of the
VESSEL, provided that the BUYER shall first agree:


 


(a)          As to any fair increase or decrease in
the Contract Price of the VESSEL that is fairly and reasonably occasioned by
the cost for such compliance; and/or


 


(b)         As to any extension in the time of
delivery of the VESSEL that is necessary due to such compliance; and/or


 


(c)          As to any increase or decrease in the
guaranteed deadweight and/or speed of the VESSEL, if such compliance results in
increased or reduced deadweight and/or speed; and/or


 


(d)         As to any other alterations in the terms
of this Contract or of the Specifications or both, if such compliance makes
such alterations of the terms necessary; and/or


 


(e)          If the Contract Price is to be increased,
then, in addition or as an alternative to any of the provisions above, as to
the provision of additional security by the BUYER to the SELLER if deemed
necessary by the SELLER.


 


Agreement as to
such alterations or changes under this Paragraph shall be made in the same
manner as provided in Paragraph 1 of this Article for modifications and/or
changes of the Specifications, and/or Plans.


 


(2)          If, due to whatever reasons, the parties
shall fail to agree on the adjustment of the Contract Price or extension of the
time for delivery or increase or decrease of the guaranteed speed and
deadweight or the


 


23





















 


provision of
additional security to the SELLER or any alteration of the terms of this Contract,
if any, then the SELLER shall be entitled to proceed with the construction of
the VESSEL in accordance with, and the BUYER shall continue to be bound by, the
terms of this Contract and the Specifications without making any such
alterations or changes.


 


3.               SUBSTITUTION OF MATERIALS AND/OR
EQUIPMENT


 


In the event that
any of the materials and/or equipment required by the Specifications or
otherwise under this Contract for the construction of the VESSEL cannot be
procured in time to maintain the Delivery Date of the VESSEL, the SELLER may,
provided that the BUYER shall so agree first in writing, supply other materials
and/or equipment of the same standard and quality in accordance with the
requirements of the Classification Society and of the rules, regulations and
with which the construction of the VESSEL must comply in accordance with the
terms of this Contract and the Specifications.


 


4.               BUYER’S SUPPLIED ITEMS


 


The BUYER shall
deliver to the SELLER at its shipyard the items as specified in the Specifications
which the BUYER shall supply on its account by the time mutually agreed by the
SELLER and the BUYER.


 


Should the BUYER
fail to deliver to the BUILDER such items within the time, agreed, the delivery
of the VESSEL shall automatically be extended for a period of such delay,
provided always that such delay in delivery of the BUYER’s supplied items shall
actually have affected the delivery of the VESSEL.  In such event, the BUYER shall pay to the
SELLER all losses and damages sustained by the SELLER due to such delay in the
delivery of the BUYER’s supplied items and such payment shall be made upon
delivery of the VESSEL, but only provided that the construction program is
actually affected.


 


Furthermore, if
the delay in delivery of the BUYER’s supplied items should exceed twenty (20)
days, the SELLER shall be entitled to proceed with the construction of the
VESSEL without installation of such items in or onto the VESSEL, without
prejudice to the SELLER’s right hereinabove provided, and the BUYER shall accept
the VESSEL so completed.


 


24





















 


The SELLER shall
be responsible for safely storing and handling of the BUYER’s supplies as
specified in the Specifications after delivery to the BUILDER and shall install
and secure them on board the VESSEL at the SELLER’s expenses.


 


Upon arrival of
such shipment of the Buyer’s supplied items, both parties shall undertake a
joint unpacking inspection. If any damages are found to be not suitable for
installation, the SELLER shall be entitled to refuse to accept the BUYER’s
supplied items.


 


25





















 


ARTICLE 6
- TRIALS


 


1.               NOTICE


 


The Sea Trials
will start when the VESSEL is completed according to the relevant provisions of
the Specifications.


 


The BUYER and the
Supervisor shall receive from the SELLER at least thirty (30) days notice in
advance and seven (7) days definite notice in advance in writing or by
telefax, of the time and place of the VESSEL’s sea trial as described in the
Specifications (hereinafter referred to as “the Trial Run”) and the BUYER and
the Supervisor shall promptly acknowledge receipt of such notice. The BUYER’s
representatives and/or the Supervisor shall be on board the VESSEL to witness
such Trial Run, and to check upon the performance of the VESSEL during the
same. The BUYER’S officers and crew may also attend onboard the VESSEL to
witness the Sea Trials. Failure of the BUYER’s representatives to be present at
the Trial Run of the VESSEL, after due notice to the BUYER and the Supervisor
as provided above, shall have the effect to extend the date for delivery of the
VESSEL by the period of delay caused by such failure to be present. However, if
the Trial Run is delayed more than seven (7) days by reason of the failure
of the BUYER’s representatives to be present after receipt of due notice as
provided above, then in such event, the BUYER shall be deemed to have waived
its right to have its representatives on board the VESSEL during the Trial Run,
and the SELLER may conduct such Trial Run without the BUYER’s representatives
being present but with the Classification Society Surveyor(s) always in
attendance, and in such case the BUYER shall be obliged to accept the VESSEL on
the basis of a certificate jointly signed by the SELLER and the Classification
Society certifying that the VESSEL, after Trial Run, subject to completion of
minor alterations and corrections as provided in this Article, if any, is found
to conform to the Contract and Specifications and is satisfactory in all
respects.


 


The SELLER hereby
undertakes to assist the buyer to get the necessary visas and permits for the
BUYER’s representatives to enter
China will be issued in order to enable them attend the Trial Run, on demand
and without delay.


 


In the event of
unfavourable weather on the date specified for the Trial Run, the same shall
take place on the first available day thereafter that the weather conditions
permit. The parties hereto recognize that the weather conditions in Chinese
waters in which the Trial Run is 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 of the VESSEL, the weather should


 


26





















 


suddenly become
unfavourable, as would have precluded the continuance of the Trial Run, the
Trial Run of the VESSEL shall be discontinued and postponed until the first
favourable day next following, unless the BUYER shall assent in writing, or by
telefax of its acceptance of the VESSEL on the basis of the Trial Run made
prior to such sudden change in weather conditions.


 


In the event that
the Trial Run is postponed because of unfavourable weather conditions, such
delay shall be regarded as a permissible delay, as specified in Article 8
hereof.


 


2.               HOW CONDUCTED


 


(a)          All expenses in connection with Trial Run
of the VESSEL or any re-Trial or re-Trials are to be for the account of the
SELLER, who, during the Trial Run and when subjecting the VESSEL to Trial Run,
is to provide, at its own expense, the necessary crew to comply with conditions
of safe navigation. The Trial Run shall be conducted in the manner prescribed
in the Specifications and shall prove fulfilment of the performance required
for the Trial Run as set forth in the Specifications.


 


The course of
Trial Run shall be determined by the BUILDER and shall be conducted within the
trial water equipped with speed measuring facilities.


 


(b)         The SELLER shall provide the VESSEL with
the required quantities of water and fuel oil lubrication oil, hydraulic oil
greases and other stores necessary for the conduct of the Trial Run or Trial
Runs which shall be supplied by the SELLER, as prescribed in the
Specifications. The fuel oil lubricating oil, hydraulic oil and greases
supplied by the BUYER shall be in accordance with the applicable engine
specifications, and the cost of the quantities of water, fuel oil, lubricating
oil, hydraulic oil and greases consumed during the Trial Run or Trial Runs
shall be for the account of the SELLER.


 


3.               TRIAL LOAD DRAFT


 


In addition to the
supplies provided by the SELLER in accordance with sub-paragraph (b) of
the preceding Paragraph 2 hereof, the SELLER shall provide the VESSEL with the
required quantity of fresh water and other stores necessary for the conduct of
the Trial Run. The necessary ballast (fresh water, sea water or any other
ballast as may be required) to bring the VESSEL to the trial load draft as
specified in the Specifications shall be for the SELLER’s account.


 


27





















 


4.               METHOD OF ACCEPTANCE OR REJECTION OF
TRIAL RUN RESULT


 


(a)          Upon notification of the SELLER of the
completion of the Trial Run of the VESSEL, the BUYER or the BUYER’s Supervisor
shall within ten (10) days thereafter, notify the BUILDER in writing or by
telefax of its acceptance of the VESSEL TRIAL RUN RESULT or of its rejection of
the VESSEL TRIAL RUN RESULT together with the reasons therefor.


 


(b)         However, should the result of the Trial
Run indicate that the VESSEL or any part thereof including its equipment does
not conform to the requirements of this Contract and/or the Specifications,
then the SELLER and the BUYER shall investigate with the BUYER’s Supervisor the
cause of failure and the proper steps shall be taken to remedy the same and
shall make whatever corrections and alterations and/or re-Trial Run or Runs as
may be necessary without extra cost to the BUYER, and upon notification by the
SELLER of completion of such alterations or corrections and/or re-trial or
re-trials, the BUYER shall, within ten (10) days thereafter, notify the
SELLER in writing or by telefax of its acceptance or rejection of the TRIAL RUN
RESULT together with the reason therefor on the basis of the alterations and
corrections and/or re-trial or re-trials by the SELLER.


 


(c)          In the event that the BUYER fails to
notify the SELLER in writing or by telefax of its acceptance or rejection of
the VESSEL TRIAL RUN RESULT together with the reason therefor within the ten
(10) day period provided for in sub-paragraphs (a) and
(b) above, the BUYER shall be deemed to have accepted the VESSEL TRIAL RUN
RESULT.


 


(d)         Any dispute arising among the parties
hereto as to the result of any Trial Run or further tests or trials, as the
case may be, of the VESSEL shall be solved by reference to Arbitration as
provided in Article 13, of this Contract.


 


(e)          Nothing herein shall preclude the BUYER
from accepting the VESSEL with its qualifications and/or remarks following the
Trial Run and/or further tests or trials as aforesaid and the SELLER shall be
obliged to comply with and/or remove such qualifications and/or remarks at the
time before effecting delivery of the VESSEL to the BUYER under this Contract.


 


28





















 


5.               DISPOSITION OF SURPLUS CONSUMABLE STORES


 


Should any amount
of fuel oil, fresh water, or other unbroached consumable stores furnished by
the SELLER for the Trial Run or Trial Runs remain on board the VESSEL at the
time of acceptance thereof by the BUYER, the BUYER agrees to buy the same from
the SELLER at the purchasing price at the port of delivery thereof, and payment
by the BUYER shall be effected as provided in paragraphs 3 (e) and 4
(e) of Article 2 of this Contract.


 


6                  EFFECT OF ACCEPTANCE


 


The BUYER’s acceptance
of the VESSEL in writing or by telefax notification sent to the SELLER, in
accordance with the provisions set out above, 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 by the
SELLER of the VESSEL, as hereinafter provided, if the SELLER complies with all
other procedures and requirements for delivery as hereinafter set forth.


 


29


















ARTICLE 7
- DELIVERY


 


1.     TIME AND PLACE


 


The VESSEL shall
be delivered safely afloat by the SELLER to the BUYER at the BUILDER’s
Shipyard, in accordance with the Specifications, and with all Classification
and Statutory Certificates and all other applicable terms and conditions of
this Contract and after completion of Trial Run (or, as the case may be,
re-Trial or re-Trials) and acceptance by the BUYER in accordance with the
provisions of Article 6 hereof            after
Contract effectiveness (if the Contract will be effected in the
day           , the
vessel will be delivered in the
day           , provided
that in the event of delays in the construction of the VESSEL due to causes
which, under the terms of the Contract, permit the postponement of the date of
delivery, the aforementioned time for delivery of the VESSEL shall be extended
accordingly.


 


The aforementioned
date or such later date to which delivery is extended or agreed to be extended
pursuant to the terms of this Contract is hereinafter called the “Delivery
Date”.


 


2.     WHEN AND
HOW EFFECTED


 


After the VESSEL
is accepted following the sea trials and once the VESSEL is ready for delivery,
the SELLER shall give the BUYER three (3) business days definite
notice of the anticipated delivery date by letter, telefax or telex to the
BUYER.


 


Provided that the
BUYER and the SELLER shall each have fulfilled all of their respective
obligations as stipulated in this Contract, and the VESSEL is ready for
delivery, the delivery of the VESSEL shall be effected forthwith by the
concurrent delivery by each of the parties hereto, one to the other, of the
Protocol of Delivery and Acceptance, duly signed by the parties, acknowledging
delivery of the VESSEL by the SELLER and acceptance thereof by the BUYER.


 


3.     DOCUMENTS
TO BE DELIVERED TO THE BUYER


 


Concurrently with
the delivery and acceptance of the VESSEL by the BUYER, the SELLER shall
deliver to the BUYER the following duly authenticated documents, which shall
accompany the Protocol of Delivery and Acceptance (which shall be prepared in
three originals and executed by each of the parties hereto):


 


30





















 


(a)   PROTOCOL OF
TRIALS of the VESSEL made by the BUILDER pursuant to the Specifications.


 


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


 


(c)   PROTOCOL OF
STORES OF CONSUMABLE NATURE made by the BUILDER referred to under Paragraph 5
of Article 6 hereof.


 


(d)   FINISHED
DRAWINGS AND PLANS pertaining to the VESSEL as stipulated in the
Specifications, made by the BUILDER.


 


(e)   PROTOCOL OF
DEADWEIGHT AND INCLINING EXPERIMENT, as per the Specification made by the
BUILDER.


 


(f)    ALL
CLASSIFICATION AND OTHER CERTIFICATES required to be furnished upon
delivery of the VESSEL pursuant to this Contract and the Specifications so as
to enable the BUYER to immediately register the VESSEL.


 


It is agreed that
if through no fault on the part of the SELLER the full terms Classification certificate
and/or any other certificates referred to in this sub-paragraph (f) cannot
be issued at the time of delivery of the VESSEL, then provisional certificates
as issued by the Classification Society or any third party shall be accepted by
the BUYER, provided that the BUILDER shall furnish the BUYER with the full term
forma (certificates as promptly as possible (but in any event before the expiry
of the provisional certificates).


 


(g)   the
BUILDER’S CERTIFICATE issued by the SELLER in three (3) originals, each
duly notarised and apostilled.


 


(h)   DECLARATION
OF WARRANTY issued by the SELLER that the VESSEL is delivered to the BUYER free
and clear of any liens, charges, claims, mortgages, or other encumbrances
whatsoever upon the BUYER’s title thereto, and in particular, that the VESSEL
is absolutely free of all burdens in the nature of imposts, taxes levies, dues
or charges imposed by the relevant authorities of the province or country of
the port of delivery, as well as of all
liabilities of the SELLER to its sub-contractors, employees and crews
and/or of all liabilities arising from the operation of the VESSEL in Trial Run
or Trial Runs, or otherwise, prior to delivery


 


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and any other
liabilities, debits or obligations whatsoever ensuing from any cause or reason
whatsoever.


 


(i)    COMMERCIAL
INVOICE made by the SELLER.


 


(j)    BILL OF
SALE made by the SELLER in 3 originals, each duly notarised and apostilled.


 


4.     TITLE AND
RISK


 


Title to and risk
of the VESSEL 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 the VESSEL, and her equipment,
shall remain with the SELLER and be at the entire risk of the SELLER.


 


5.     REMOVAL OF
VESSEL


 


The BUYER shall
take possession of the VESSEL immediately upon delivery and acceptance thereof
by the BUYER and shall remove the VESSEL from the premises of the BUILDER
within seven (7) days after delivery and acceptance thereof is effected.
Following delivery of the VESSEL, the SELLER shall not charge the BUYER for the
costs of mooring the VESSEL at the SELLER’s premises within these seven
(7) days. If the BUYER shall not remove the VESSEL from the premises of
the BUILDER within the aforesaid seven (7) days, in such event, after the
lapse of this seven (7) days period for reasons other than Chinese
Authorities’ restrictions or reasons entirely beyond the control of the BUYER
the BUYER shall pay to the SELLER United States Dollars Two Thousand only
(USD2000) per day as reasonable mooring charge of the VESSEL.


 


In case of early
delivery the BUYER shall have the option to keep the VESSEL at least two
(2) weeks at the SELLER’s premises. If the BUYER shall not remove the
VESSEL from the premises of the BUILDER within the aforesaid two
(2) weeks, in such event, the BUYER shall pay to the SELLER thereafter
United States Dollars Two Thousand only (USD2000) per day as reasonable mooring
charge of the VESSEL.


 


6.     TENDER OF
THE VESSEL


 


If the BUYER fails
to take delivery of the VESSEL within one (1) month after completion
thereof according to this Contract and the Specifications without


 


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justified reason, the SELLER shall have the right to tender the VESSEL
for delivery after compliance with all procedural requirements as above
provided.


 


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ARTICLE
8 – DELAYS & EXTENSION OF TIME FOR DELIVERY


 


1.     CAUSE OF DELAY


 


If, at any time before
the agreed delivery date, either the construction of the VESSEL, or any
performance required hereunder as a prerequisite of delivery of the VESSEL is
actually prevented or delayed due to any of the following supervening events
beyond the SELLER’s reasonable foresight and control, namely, war, blockade,
revolution, political upheavals insurrection, mobilization, civil continuos,
riots, strikes, sabotage, lockouts, Acts of God or the public enemy, plague or
other epidemics, guaranties, prolonged failure of electric current from an
outside source, freight embargoes, if any, extremely hot temperature (above
39degrees C in accordance with official data of the national meteorological
institute), earthquakes, tidal waves typhoons, hurricanes, storms or other
similar causes beyond the reasonable control of the SELLER, or of its
subcontractors, as the case may be, which were not existing and known to the
SELLER and could not reasonably have been foreseen or prevented by the SELLER
at the date of signing of this Contract, or by destruction of the premises of
the SELLER or its subcontractors, or of the VESSEL or any part thereof, by fire
or flood which could not have been prevented by the SELLER, or due to the
Bankruptcy of the equipment suppliers and/or material suppliers, the SELLER
having exercised due diligence in selecting the Suppliers and having done their
utmost to arrange a substitute, or due to the delay caused by Acts of God in
supply of parts essential to the construction of the VESSEL, then, in the event
of delay actually due to the happening of any of the aforementioned
contingencies, the SELLER shall not be liable for such delay and the time for
delivery of the VESSEL under this Contract shall be extended without any
reduction in the Contract Price for a period of time which shall not exceed the
total accumulated time of all such delays during which the construction of the
VESSEL was actually delayed beyond the reasonable control of the SELLER as a
direct result of such event. All the above are subject nevertheless to the
BUYER’s right of cancellation under Paragraph 3 of this Article and subject to
all relevant provisions of this Contract which authorize and permit extension
of the time of delivery of the VESSEL.


 


It is specifically agreed
that for a delay, which is caused by the late delivery to the SELLER of
machinery, equipment and supplies to be incorporated in the VESSEL, to be
considered as caused by an event described in the previous paragraph, it should be determined that the
SELLER when contracting for such machinery, equipment and supplies was
expeditious and prudent, that he has


 


34





















 


exercised due diligence
in the performance of any acts required of its part, and that he has exercised
due diligence in expediting deliveries under the SELLER’s Purchase Contract or
in seeking equivalent convenient substitute performance and in ease of late
performance or default of a sub-contractor or supplier, it should be also
determined that the SELLER’s choice of the sub-contractor was reasonable and
responsible and that the SELLER has exerted all reasonable efforts to expedite performance, avoid default or
procure reasonable substitute performance.


 


It is also specifically
agreed that if any of the above events is to occur, the SELLER shall use due
diligence and shall as soon as possible take all necessary and reasonable steps
in order to avoid and/or reduce and/or prevent and/or mitigate any possible
ensuing delay.


 


The SELLER shall not be
entitled to any extension of the Contract Delivery Date and any of the types of
delay listed below which may occur, shall be regarded as non-permissible
delays:


 


i.             Any delay resulting from the
SELLER’s own breach of contract, or fault, or negligence or that of any of its
employees or breach of Contract or fault of its agents, subcontractors or other
suppliers.


ii.           Any delay resulting from a cause of
delay already in existence at the time of signing of this Contract.


 


2.     NOTICE OF DELAY.


 


Within seven (7) days
from the date of commencement of any of the above-mentioned causes of delay on
account of which the SELLER claims that it is entitled under this Contract to
an extension of the time for delivery of the VESSEL, the SELLER shall advise
the BUYER by letter, telefax or telex, of the date on which such delay
commenced and describing in all its details the nature of the event which
caused the delays.


 


In the event of the delay
continuing for more than fourteen (14) days, further notice, by letter, telex
or telefax shall be given to the BUYER every seven (7) days thereafter setting
out the same particulars, as aforesaid, until the causes of the delay have
ended.


 


Likewise within seven (7)
days after such cause of delay ends, the SELLER shall advise the BUYER by
letter, telefax or telex, of the date such cause of delay ended, and also shall
specify the maximum period of the time by which in the SELLER’s opinion the
date for delivery of the VESSEL should be


 


35





















 


extended by reason of such cause of delay. Failure of
the BUYER to object to the SELLER’s notification of any claim for extension of
the Delivery Date within thirty (30) days after receipt by the BUYER of such
notification, shall be deemed to be a waiver by the BUYER of its right to
object to such extension.


 


The SELLER shall also
immediately take steps to mitigate the effects of the delay and to accurately
determine the period by which the Delivery Date is going to be postponed by
reason of the aforementioned events and shall immediately notify the BUYER in
writing accordingly.


 


If the SELLER does not
give the aforementioned advice forthwith the SELLER shall lose the right to
claim such delay as permissible delay and any right of postponement of delivery
date.


 


3.     RIGHT TO CANCEL FOR EXCESSIVE DELAY.


 


If the total accumulated
time of all delays on account of the causes specified in Paragraph 1 of this
Article aggregate to One Hundred and Eighty (180) days or more, excluding
delays awarded by an arbitration as specifically provided for in Article 13
hereof, and excluding delays which are caused due to default in performance by
the BUYER, or due to delays in delivery of the BUYER’s supplied items or due to
causes which, under Article 4,5,6,11 and 12 hereof, permit extension or
postponement of the time for delivery of the VESSEL, then in such event, the
BUYER may in accordance with the provisions set out herein rescind/ cancel this
Contract.


 


The SELLER may, at any
time, after the accumulated time of the aforementioned delays justifying
cancellation by the BUYER as above, demand in writing that the BUYER shall make
an election, in which case the BUYER shall, within fifteen (15) days after such
demand is received by the BUYER either notify the SELLER of its intention to
cancel, or consent to an extension of the Delivery Date to an agreed future
date. If any further delay occurs on account of causes justifying cancellation
as specified in this Contract, the BUYER shall have the same right of
cancellation upon the same terms as hereinabove provided.


 


4.     DEFINITION OF PERMISSIBLE DELAY.


 


Delays on account of such
causes as provided for in Paragraph 1 of this Article, but excluding any other
extensions of a nature which under the terms of this Contract permits
postponement of the Delivery Date, shall be understood to be (and are herein
referred to as) permissible delays, and are to be distinguished from
non-permissible delays on account of which the Contract Price is subject to
adjustment as provided for in Article 3 hereof.


 


36


















 


ARTICLE 9 - WARRANTY OF QUALITY


 


1.     GUARANTEE
OF MATERIAL AND WORKMANSHIP


 


The SELLER, for a period
of twelve (12) months following delivery to the BUYER of the VESSEL, guarantees
the VESSEL, her hull (including
paints and coats, where applicable) engine machinery gear and all parts and
equipment thereof that are manufactured or furnished or supplied or installed
or applied by the SELLER and/or its sub-contractors under this Contract
including material, equipment (however excluding any parts for the Vessel which
have been supplied by or on behalf of the BUYER other than if any defects in
respect of such parts arise as a result of their incorrect or faulty
installation or inadequate storage by the SELLER, the BUILDER and/or any
sub-contractors appointed under this Contract) against all defects which are
due to faulty design excluding the defects accepted by both of Parties prior to
delivery or defective materials or defective construction and/or poor
workmanship.


 


If the guarantees given
by suppliers and/or subcontractors have a validity in excess of twelve (12)
months, the SELLER will transfer any residual rights in the guarantees given by
any supplier and/or subcontractor to the BUYER at the of end of the Guarantee
period under this Article 9.


 


2.     NOTICE
OF DEFECTS


 


The BUYER shall notify
the SELLER in writing, or by telefax, as promptly as possible, after discovery
of any defect or deviations for which a claim is made under this guarantee. The
BUYER’s written notice shall describe the nature and the extent of the
defect.  The SELLER shall have no
obligation under this guarantee for any defects discovered after the expiry
date of the guarantee, unless notice of such defects, is received by the SELLER
not later than ten (10) days after such expiry date. Telefaxed advice with
brief details explaining the nature of such defect and extent of such defect
within thirty (30) days after such expiry date and a statement that a claim is
forthcoming will be sufficient compliance with the requirements as to time.


 


3.     REMEDY
OF DEFECTS


 


The SEELER shall remedy
at its expense free of charge to the BUYER any defects, against which the
VESSEL or any part of the equipment thereof is


 


37





















 


guaranteed under this
Article by making all necessary repairs and/or replacement. Such repairs and/or
replacement will be made by the SELLER.


 


The Seller will provide
another 12 months guarantee for the replaced parts, however the maximum
guarantee period will not exceed 18 months after the delivery of the vessel.


 


However, if it is
impractical to make the repair by the SELLER, and if forwarding by the SELLER
of replacement parts, and materials cannot be accomplished without impairing or
delaying the operation or working of the VESSEL, then, in any such event, the
BUYER may subject to the SELLER’s consent in writing, not to be unreasonably
withheld, cause the necessary repairs or replacements to be made elsewhere at
the discretion of the BUYER, provided that the BUYER shall first give the
SELLER notice in writing by letter, telefax, or telex of the time and place
such repairs will be made and, if the VESSEL or her operation or working is not
thereby delayed or impaired, the SELLER shall have the right to verify by its
own representative(s) or that of Classification Society the nature and extent
of the defects complained of. The SELLER shall, in such cases, promptly advise
the BUYER, by telex, after such examination has been completed, of its
acceptance or rejection of the defects as ones that are subject to the
guarantee herein provided. In all minor cases, the Guarantee Engineer(s), as
hereinafter provide for, will act for and on behalf of the SELLER.


 


Upon the SELLER’s
acceptance of the defects as justifying remedy under this Article, or upon
award of the arbitration so determining, the SELLER shall pay to the BUYER in
freely transferable United States Dollars, whatever actual costs for such
repairs or replacements, including forwarding charges, as either agreed or
awarded by the arbitration tribunal to the BUYER, same not to exceed the costs
of effecting such repairs in a average shipyard in China. Any dispute under
this Article shall be referred to arbitration in accordance with the provisions
of Article 13 hereof.


 


Any liabilities
outstanding at the end of the guarantee period, shall be settled within thirty
(30) days after the amounts have been agreed between the parties or in case of
disagreement, upon publication of the Arbitration Award.


 


4.     EXTENT
OF THE SELLER’S LIABILITY


 


The SELLER shall have no
obligation and/or liabilities with respect to defects discovered after the
expiration of the period of guarantee specified above.


 


38





















 


The SELLER shall be liable to the
BUYER for defects and damages caused by any of the defects specified in
Paragraph 1 of this Article provided that such liability of the SELLER shall be
limited to damage occasioned within the guarantee period specified in Paragraph
1 above.


 


The SELLER shall not be
obligated to repair, and/or be liable for, damages to the VESSEL, or to any part of the equipment thereof, due to
ordinary wear and tear or caused by the defects other than those specified in
Paragraph 1 above, nor shall there be any SELLER’s liability hereunder for
defects in the VESSEL, or any part of the equipment thereof, caused by fire or
accidents or mismanagement, negligence, on the part of the BUYER, its employees
or agents including the VESSEL’s officers, crew and passengers, or any persons
on or doing work on the VESSEL other than the SELLER, its employees, agents or
subcontractors. Likewise, the SELLER shall not be liable for defects in the
VESSEL, or the equipment or any part thereof, due to repairs or replacement
which were made by persons other than the SELLER and/or their subcontractors
and/or their agents and/or their servants.


 


The SELLER shall have no
responsibility or liability for any defects in the VESSEL other than the
defects specified in Paragraph 1, against which the guarantee is given by the
SELLER under this Article. The SELLER shall not be responsible or liable for
any consequential damages, loss of time, loss of profit or earning or demurrage
occasioned to the BUYER by reason of the defects specified in Paragraph 1
hereof or due to repairs or other works done to the VESSEL to remedy such
defects.


 


The SELLER shall not be
responsible for remedying defects in any part of the VESSEL which may,
subsequent to the delivery of the VESSEL, have been replaced or in any way
repaired by any other contractor (excluding SELLER’s subcontractors, agents or
servants), or for remedying any defects which have developed, or have been
aggravated by acts, omissions or neglect on the part of the BUYER, its servants
or agents or by ordinary wear and tear or by any other circumstances beyond the
control of the SELLER.


 


The Guarantee provided in
this Article and the obligations and the liabilities of the SELLER hereunder
are exclusive and in lieu of and the BUYER hereby waives all other remedies,
warranties, guarantees or liabilities, express or implied, arising by law or
otherwise (including without limitation any obligations of the SELLER with
respect to fitness, merchantability and consequential damages) or whether or
not occasioned by the SELLER’s negligence. This Guarantee shall not be
extended, altered or varied except by a written instrument signed by the duly
authorized representatives of the SELLER and the BUYER.


 


39





















 


The full benefit of any
additional guarantees or warranties given by the SELLERS subcontractors
suppliers or manufacturers if any shall, if requested by the BUYER, be duly
transferred to the BUYER by the SELLER.


 


In case of the sale of
the VESSEL from the BUYERS to a new OWNER during the above stipulated guarantee
period, the SELLER agrees to transfer the remaining guarantee period to the new
owner which shall in no circumstances exceed twelve (12) months from the date
of delivery of the VESSEL to the BUYER provided that this shall not impose any
more obligations and/or liabilities to the SELLER than those contained in the
original guarantee as set out herein.


 


5.     GUARANTEE
ENGINEER(S)


 


The SELLER shall help to
arrange one Guarantee Engineer to serve on the VESSEL as the SELLER’s
representative(s) for a period of twelve (12) months, at SELLER’s option, from
the date of delivery of the VESSEL. The BUYER and its employees shall give such
Guarantee Engineer full cooperation in carrying out his duties as the
representative(s) of the SELLER onboard the VESSEL. The BUYER shall accord the
Guarantee Engineer(s) the treatment comparable to the VESSEL’s Chief Engineer,
and shall provide him with accommodations and subsistence at no cost to the
SELLER and/or the Guarantee Engineer.


 


The BUYER may at its
option terminate the stay of the Guarantee Engineer before the completion of
one (1) year but in no event earlier than three (3) months after delivery of
the VESSEL, with SELLER’s prior approval which not to be unreasonably withheld.


 


The BUYER shall pay to
each Guarantee Engineer the sum of United States Dollars two thousand only (USD
2,000.00) per month to cover his/their miscellaneous expenses and the BUYER
shall pay expense of repatriation of one person to Fuzhou, the People’s
Republic of China by air upon termination of his service, and also shall pay
the expense of his communications with the SELLER when made in performance of
his duties as the Guarantee Engineer and the expenses, if any, of his medical
and hospital care. The BUYER shall indemnify the Guarantee Engineer for personal
injuries, including death and damages to, or loss or destruction of property of
the Guarantee Engineer, if such death injuries, damages, loss and/or
destruction were caused by gross negligence or wilful misconduct of the BUYER,
its successor(s) and/or assign(s) or its employees and/or agents.


 


40





















 


In case the BUYER
considers that the Guarantee Engineer is unsuitable for the job or is
uncooperative with the VESSEL’s Chief Engineer, then the BUYER shall notify
accordingly the SELLER and the SELLER shall assist to arrange replacement
provided that such replacement is approved by the SELLER’s superior
organization and the crews certificates and passports of the replacing
engineer(s) can be procured. Until the replacement in the way set out in the
foregoing, no replacement of the guarantee engineer on aboard should be
effected.


 


Pertaining to the
detailed particulars of this paragraph, a detailed Employment Contract will be
executed between the parties hereto upon delivery of the VESSEL.


 


41





















 


ARTICLE
10 - CANCELLATION, REJECTION AND RESCISSION BY THE BUYER


 


1.     NOTICE


 


All payments made by the
BUYER prior to the delivery of the VESSEL shall be in the nature of advance to
the SELLER. In the event the BUYER shall exercise its right of rescission
and/or cancellation of this Contract under and pursuant to any of the
provisions of this Contract specifically permitting the BUYER to do so, then
the BUYER shall notify the SELLER by letter, telefax, or telex and such
rescission and/or cancellation shall be effective as of the date the notice
thereof is and/or is deemed to be received by the SELLER.


 


2.     REFUND
BY THE SELLER


 


Upon rescission and/or
cancelling of this Contract by the BUYER pursuant to the provisions hereof, the
SELLER shall refund in United States Dollars immediately to the BUYER the full
amount of all sums paid by the BUYER and received by the SELLER on account of
the VESSEL together with interest thereon at the rate of five percent (5%) p.a.
on the amounts required to be refunded to the BUYER, computed from the
respective dates on which the relevant sums were paid by the BUYER to the
SELLER to the date of remittance by transfer of such refund net to the BUYER by
the SELLER, unless the SELLER disputes the BUYER’s cancellation and/or
rescission by instituting arbitration within fifteen (15) New York banking days
in accordance with Article 13. However, in the event of total loss as described
in Article 12 of this Contract, then, no interest will be refunded on the
amount required herein.


 


If the BUYER’s
cancellation or rescission of this Contract is disputed by the SELLER by
instituting arbitration as aforesaid, then no refund shall be made by the
SELLER, and the BUYER shall not be
entitled to demand repayment from Guarantee Bank under the Refund Guarantee
until the arbitration award between the BUYER and the SELLER or, in case of
appeal or appeals, the final court order, which shall be in favor of the BUYER,
declaring the BUYER’s cancellation and/or rescission justified, is made and
delivered to the SELLER by the arbitration tribunal or final competent English
Court having jurisdiction on the dispute.


 


All sums so refunded
shall be paid in freely transferable United States Dollars and the SELLER
undertakes to obtain any necessary exchange control or fiscal consents or
licenses necessary to effect such payment.


 


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For the purpose of this
Article, the SELLER shall have delivered to the BUYER, the irrevocable Refund
Guarantee specified in Exhibit ‘B’.


 


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


 


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ARTICLE 11 – BUYER’S DEFAULT


 


1.     DEFINITION
OF DEFAULT


 


The BUYER shall be deemed
in default of its obligation under the Contract if any of the following events
occurs:


 


(a)   The
BUYER fails to pay the Second or Third or Fourth instalment to the SELLER
within five (5) New York banking days after any such instalment become due and
payable under the provisions of Article 2 hereof and provided the BUYER shall
have received the SELLER’s demand for payment and the respective Refund
Guarantee in accordance with Article 2 hereof; or


 


(b)   The
BUYER fails to pay the fifth instalment to the SELLER in accordance with
Paragraph 3(e) and 4(e) of Article 2 hereof; or


 


(c)   The
BUYER fails to accept and take delivery of the VESSEL, when the VESSEL is duly
tendered for delivery by the SELLER under the provisions of Article 7 hereof
within seven (7) days from the tendered date and without any justifiable reason
thereof under this Contract;


 


2.     NOTICE
OF DEFAULT


 


If the BUYER is in
default of any instalment of the Contract Price, or in performance if its
obligations as provided hereinabove, the SELLER shall notify the BUYER to that
effect by telex, confirmed in writing, after the date of occurrence of the
default as per Paragraph 1 of this Article and the BUYER shall forthwith
acknowledge by telex, confirmed in writing, to the SELLER that such
notification has been received. In case the BUYER does not give the aforesaid
telex acknowledgment to the SELLER within five (5)New York banking days, it
shall be deemed that such notification has been duly received by the BUYER.


 


3.     INTEREST
AND CHARGE


 


If the BUYER is in
default of payment as to any instalment as provided in Paragraph 1 (a) and/or 1
(b) of this Article, the BUYER shall pay interest on such instalment at the
rate of five percent (5 %) per annum from the due date thereof to the date of
payment to the SELLER of the full amount including all


 


44





















 


aforesaid interest. In
case the BUYER shall unjustifiably fail to take delivery of the VESSEL when
required to as provided in Paragraph 1 (c) of this Article, the BUYER shall be
deemed in default of payment of the fifth instalment and shall pay interest
thereon at the same rate as aforesaid from and including the day on which the
VESSEL is tendered for delivery by the SELLER to the date on which payment of
the fifth instalment is received by the SELLER. 


 


In any event of default
by the BUYER under 1(a) or 1(b) or 1(c) or l(d) or l(e) of this Article, the
BUYER shall also pay all charges and expenses incurred by the SELLER in
consequence of such default.


 


4.     DEFAULT
BEFORE DELIVERY OF THE VESSEL


 


(a)   If
any default by the BUYER occurs as defined in Paragraph 1 (a) or 1 (b) or 1 (c)
of this Article, the Delivery Date shall, at the SELLER’s option, be postponed
for a period of continuance of such default by the BUYER.


 


(b)   If
any such default as defined in Paragraph 1 of this Article committed by the
BUYER continues for a period of fifteen (15) days after receiving the notice
provided in Paragraph 2 of this Article, then, the SELLER shall have all
following rights and remedies:


 


(i)            The
SELLER may, at its option, cancel or rescind this Contract, by giving notice of
such effect to the BUYER by letter or telefax or telex. Upon receipt by the
BUYER of such notice of cancellation or rescission, all of the BUYER’s supplies
and all its equipment and machinery shall be kept as a security for the
SELLER’s claim; and


 


(ii)           In
the event of such cancellation or rescission of this Contract, the SELLER shall
also be entitled to retain any instalment or instalments of the Contract Price
paid by the BUYER to the SELLER as a security for SELLER’s claim; and


 


(iii)          In
addition to the above and in the event of such rescission or cancellation, the
SELLER shall be entitled (but not bound) to exercise and enforce any or all of
its rights, powers and remedies under this Contract (including but not limited
to the sale of the VESSEL and application of the proceeds thereof pursuant to
Paragraph 5 herebelow) and/or under any or all of the securities provided to
the SELLER by way of security for the BUYER’s obligations hereunder.


 


45





















 


5.     SALE
OF THE VESSEL


 


(a)   In
the event of cancellation or rescission of this Contract by the SELLER as above
provided, the SELLER shall have full right and power either to complete or
private sale on such terms and conditions as the SELLER thinks fit without
being answerable for any loss or damage occasioned to the BUYER thereby. In any
case the SELLER will use due diligence in obtaining the best possible sale
price of the VESSEL, which should not be inferior to the actual market value of
the VESSEL at the time of the sale.


 


In the case of sale of
the VESSEL, the SELLER shall give reasonable early written notice by letter,
telefax or telex, to the BUYER and the BUYER shall be entitled to bid for the
VESSEL at a public auction or to make an offer to buy the VESSEL if it receives
notice from the SELLER of its intention to sell it privately.


 


(b)   In
the event of the sale of the VESSEL in its completed state, the proceeds of
sale received by the SELLER shall be applied firstly to payment of all expenses
attending such sale and otherwise incurred by the SELLER as a result of the
BUYER’s default, and then to payment of all unpaid instalments and/or unpaid
balance of the Contract Price (less the value of the BUYER’s Supplies) and
interest on such instalments at the interest rate as specified in the relevant
provisions set out above from the respective due dates thereof to the date of
application.


 


(c)   In
the event of the sale of the VESSEL in its incomplete state, the proceeds of
sale received by the SELLER shall be applied firstly to all expenses attending
such sale and otherwise incurred by the SELLER as a result of the BUYER’s
default, and then payment of all costs of construction of the VESSEL (such
costs of construction, as herein mentioned, shall include but are not limited
to all costs of labour and/or prices paid or to be paid by the SELLER for the
equipment and/or technical design and/or materials purchased or to be
purchased, installed and/or to be installed on the VESSEL) less the instalments
so retained by the SELLER, and compensation to the SELLER for a reasonable sum
of loss of profit due to the cancellation or rescission of this Contract.


 


(d)   In
either of the above events or rescission of this Contract, if the proceeds of
sale exceeds the total of the amounts to which such proceeds are to be applied
as aforesaid, the SELLER shall promptly pay the excess to the BUYER without
interest, provided, however that the amount of such payment to the BUYER shall
in no event exceed the total amount of


 


46





















 


instalments already paid
by the BUYER and the cost of the BUYER’s supplies, if any.


 


(e)   If
the proceeds of sale are insufficient to pay such total amounts payable as
aforesaid, the BUYER shall promptly pay the deficiency to the SELLER upon
request.


 


47


















 


ARTICLE 12 – INSURANCE


 


1.               EXTENT OF INSURANCE COVERAGE


 


From the time of keel-laying of the first section or block of the
VESSEL until the VESSEL is completed, the SELLER shall, at its own cost and
expense, keep the VESSEL and all machinery, materials, equipment, appurtenances
and outfit, delivered by SELLER for the VESSEL or built into, or installed in
or upon the VESSEL, fully insured with first class Chinese insurance company
for SELLER’s/BUILDER’s risk (Institute Clauses for Builder’s Risks).


 


The insurance coverage shall be carried up to the date of delivery of
the VESSEL, and shall be in an amount at least equal to the aggregate amount of
all payments made by the BUYER to the SELLER plus the value of the BUYER’s
supplies in the custody of the SELLER. The policy referred to hereinabove shall
be taken out in the name of the SELLER and all losses under such policy shall
be payable to the SELLER.


 


2.               APPLICATION OF RECOVERED AMOUNT.


 


(a)   Partial Loss:


In the event the VESSEL shall be damaged by any insured cause
whatsoever prior to acceptance and delivery thereof by the BUYER and in the
further event that such damage shall not constitute an actual or a constructive
total loss of the VESSEL, the SELLER shall apply the amount recovered under the
insurance policy referred to in Paragraph 1 of this Article to the repair of
such damage to the full and complete satisfaction of the Classification
Society, of the regulatory bodies and other institutions or authorities as
described in the Specifications without additional expenses to the BUYER and
without any notations, recommendations or remarks whatsoever and the BUYER
shall accept the VESSEL under this Contract if fully repaired and completed in
accordance with this Contract and Specifications.


 


(b)   Total Loss :


However, in the event that the VESSEL is determined to be an actual or
constructive total loss, the SELLER shall either :


(i)                                     By the mutual
agreement between the parties hereto, proceed in accordance with terms of this
Contract, in which case the amount recovered under said insurance policy shall
be applied to the reconstruction and/or repair of the VESSEL’s damages and/or
reinstallation of BUYER’s supplies without additional expenses to the BUYER,
provided the parties hereto shall have first agreed


 


	
   

  	
   

  



 


48





















 


in writing as to such reasonable extension of the Delivery Date and
adjustment of other terms of this Contract including the Contract Price as may
be necessary or the completion of such reconstruction and/or repair ; or


 


(ii)                                  If due to whatever
reasons the parties fail to agree on the above, then refund immediately to the
BUYER the amount of all installments paid to the SELLER under this Contract
without interests plus the value of the BUYER’s supplies (if totally lost)
whereupon this Contract shall be deemed to be rescinded, cancelled and
automatically terminated, all rights, duties, liabilities and other obligations
of each of the parties to the other shall terminate forthwith, and the SELLER
shall forthwith redeliver to the BUYER any of the BUYER’s supplies which shall
not have become a total loss.


 


Within thirty (30) days after receiving notice of any damage to the
VESSEL constituting an actual or a constructive total loss, the BUYER shall
notify the SELLER in writing by letter or telefax, or by telex of its agreement
or disagreement under this sub-paragraph. In the event that BUYER fails to so
notify the SELLER, then such failure shall be construed as a disagreement on
the part of the BUYER. This Contract shall be deemed as rescinded and cancelled
and the BUYER shall receive the refund as hereinabove provided and the
provisions hereof shall apply.


 


3.               TERMINATION OF THE SELLER’S OBLIGATION
TO INSURE.


 


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


 


	
   

  	
   

  



 


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ARTICLE 13 – DISPUTES AND ARBITRATION


 


1.               PROCEEDINGS


 


In the event of any dispute between the parties hereto as to any matter
arising out of or relating to this Contract or any stipulation herein or with
respect thereto which cannot be settled by the parties them selves forthwith,
such dispute shall be resolved by arbitration in London in accordance with the
Laws of England and the LMAA procedure current at the time. Either party may
demand arbitration of any such disputes by giving written notice by letter,
telefax or telex to the other party. Any demand for arbitration by either party
hereto shall state the name of the arbitrator appointed by such party and shall
also state briefly the question or questions as to which such party is
demanding arbitration. Within twenty (20) days after receipt of notice of such
demand for arbitration, the other party shall in turn appoint a second
arbitrator. The two arbitrators thus appointed shall have the power, in case of
disagreement to appoint an Umpire. The Arbitrators and the Umpire shall be
members of the London Marine Arbitrators’ Association (“LMAA”).


 


In the event however, that said other party should fail to appoint a
second arbitrator as aforesaid within twenty (20) days following receipt of
notice of demand of arbitration, it is agreed that such party shall thereby be
deemed to have accepted and appointed as its own arbitrator the one already
appointed by the party demanding arbitration, and the arbitration shall proceed
forthwith before this sole arbitrator. And in the further event that the two
arbitrators appointed respectively by the parties hereto as aforesaid should be
unable to reach agreement on the appointment of the Umpire within twenty (20)
days from the date on which the second arbitrator is appointed, either party of
the said two arbitrators may apply to the High Court of Justice in London, or
to the President, for the time being, of the LMAA. The Arbitration Award issued
by the sole Arbitrator or by the two Arbitrators, or by the Umpire as the case
may be, shall be final, conclusive and binding upon both parties hereto unless
appealed by either party in accordance with the English Laws.


 


The
arbitration will be conducted in London, in accordance with and subject to the
provisions of the Arbitration Act 1996, or any statutory modifications or
re-enactment thereof, for the time being in force, and in accordance with
English law currently in force.


 


	
   

  	
   

  



 


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2.               ALTERNATIVE
ARBITRATION BY AGREEMENT


 


Notwithstanding the preceding provisions of this Article, it is
recognized that in the event of any dispute or difference of opinion arising in
regard to the construction of the VESSEL, her machinery and equipment, or
concerning the quality of materials or workmanship thereof or thereon, such
dispute may be referred (by mutual agreement of the parties hereto) to the Classification
Society, in such case, the opinion of the Classification Society shall be final
and binding on the parties hereto.


 


3.               NOTICE OF AWARD


 


Notice of any award being issued shall immediately by given in writing
or by telex confirmed in writing to the SELLER and the BUYER.


 


4.               EXPENSES


 


The arbitrator(s) shall determine which party shall bear the expenses
of the arbitration or the proportion of such expenses which each party shall
bear.


 


5.               AWARD OF ARBITRATION – ENTRY INTO COURT


 


In case of failure by either party to honour the Arbitration Award(s)
promptly, a judgment may be entered in any proper court having jurisdiction
thereof.


 


6.               ALTERATION OF DELIVERY TIME


 


In the event of reference to arbitration of any dispute arising out of
matters occurring prior to delivery of the VESSEL, the BUYER shall not be
entitled to extend the Delivery Date as defined in Article 7 hereof. The
Arbitration Tribunal however, shall be empowered to decide as to what extent if
any the Delivery Date is altered as a result of the arbitration proceedings, if
at all.


 


7.               SERVICE AGENTS IN London


 


All notices in connection with the above Arbitration and any Appeals
thereof shall be given by letter or telefax in accordance with Article 17
hereunder. In addition, the BUYER hereby irrevocably appoints Messrs. Mr.
Riches Consulting. Address: Old Jarretts Farmhouse, Brantridge Lane, Balcombe,
West Sussex, RH17 6JR, United Kingdom.


 


	
   

  	
   

  



 


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ARTICLE 14 - RIGHT OF ASSIGNMENT


 


1.               The Buyer shall not be entitled to
assign its rights under this Contract without the prior written consent of the
Seller(such consent not to be unreasonably witheld). However the Buyer shall be
entitled without the prior written consent of the sellers but with prior
written notice to the Sellers, to assign it rights under this contract in
favour of a bank or financial Institution which will finance part or all of the
pre-delivery instalments payable under this Contract as security for such
financing(it being understood for the avoidance of doubt that:


(i)Such assignement shall be an assignement by way of security in
favour of a financier of the Buyer and not an assignement by way of transfer in
favour of a third party purchaser, 


(ii)The Seller shall not by virtue of such assignement have any
additional obligation and/or risk other than those existing prior the date of
such assignement and


(iii)The Buyer shall remain responsible for the Performance of all
obligations under this contract, including but not limited to paying all
instalments of the Contract price, which shall be approved by this bank or
Financial Institution.


 


2.               ASSIGNMENT WITH EFFECT FROM DELIVERY.


 


Provided that the BUYER shall remain responsible for the performance of
all obligation under this Contract (including but not limited to paying all
installments and execution of the Protocol of the Delivery and Acceptance) and
further that the SELLER’s right to receive all installments (including the
delivery installment) from the BUYER and all rights and benefits hereunder are
not in any way prejudiced and the SELLER’s prior consent in writing, the BUYER
shall be entitled to sell its interest in this Contract to a third party with
effect from delivery of the VESSEL and the SELLER will upon request of the BUYER
issue delivery documents in favor of such third party and deliver the VESSEL to
such third party. In such event and upon delivery of the VESSEL, all rights of
the BUYER shall be transferred to such third party and the BUYER shall cease to
have any right in and under this Contract.


 


	
   

  	
   

  



 


52





















 


ARTICLE 15 - TAXES AND DUTIES


 


1.               TAXES AND DUTIES INCURRED IN CHINA.


 


The SELLER shall bear and pay all taxes, duties, stamps, dues levies
and fees of whatsoever nature incurred or imposed in China in connection with
the execution and/or performance of this Contract by the SELLER and its
sub-contractors, and any payments to be made hereunder by the BUYER. The SELLER
warrants that BUYER’s supplies maybe imported into China without taxes, duties
or restrictions, however, The Buyer’s supplies list shall be approved by the
Seller before steel cutting, the amount for Buyer’s supplies to be less than
10% of contract price and in compliance with the laws of the People’s Republic of
China.


 


2.               TAXES AND DUTIES INCURRED OUTSIDE CHINA.


 


The BUYER shall bear and pay all taxes, duties, stamps and fees
incurred outside China in connection with execution and/or performance of this
Contract by the BUYER, except for taxes, duties, stamps, dues, levies and fees
imposed upon those items which are to be procured by the SELLER for the
construction of the VESSEL in accordance with the terms of this Contract and
the Specifications.


 


	
   

  	
   

  



 


53





















 


ARTICLE 16 - PATENTS, TRADEMARKS AND
COPYRIGHT.


 


The machinery
and equipment of the VESSEL may bear the patent number, trademarks or trade
names of the manufacturers. The SELLER shall defend and save harmless the BUYER
from patent liability or claims of patent infringement of any nature of kind,
including costs and expenses for, or on account of any patented or patentable
invention made or used in the performance of this Contract and also including
cost and expense of litigation, if any.


 


The SELLER’s indemnity hereunder does not extend to equipment or parts
supplied by the BUYER to the SELLER if any.


 


	
   

  	
   

  



 


54





















 


ARTICLE 17 - NOTICES


 


Any and all notices and communications by letter, telefax or telex, in
connection with this Contract shall be addressed as follows:


 


	
  To the BUYER 

  	
  : Aegean Bunkering Services Inc.

  
	
  Address 

  	
  : 42, Hadjikyriakou Avenue, Piraeus 185 38-Greece

  
	
  Telephone No. 

  	
  : +30210 4586000

  
	
  Telefax 

  	
  : +30210 4586242

  
	
   

  	
   

  
	
  To the SELLER 

  	
  : Fujian Shipbuilding Industry Group Corporation 

  
	
  Address 

  	
  : 27 Qunzhong Road, Fuzhou, Fujian, China 

  
	
  Telephone No.

  	
  : +86 591 83332665 

  
	
  Telefax

  	
  : +86 591 83321470

  
	
   

  	
   

  
	
  To the BUILDER

  	
  : Fujian Southeast Shipyard

  
	
  Address 

  	
  : 7# Jianshe Road, Economic Technical Development Zone of Fuzhou,
  Fujian Province, China

  
	
  Telephone No. 

  	
  : +86 591 83985091

  
	
  Telefax 

  	
  : +86 591 83985070

  
	
   

  	
   

  



 


Any change of address shall be communicated in writing by registered
mail by the party making such change to the other party and in the event of
failure to give such notice of change, communications addressed to the party at
their last known address shall be deemed sufficient.


 


Any and all notices, requests, demands,
instructions, advice and communications in connection with this Contract shall
be deemed to be given at, and shall become effective from, the time when the
same is delivered to the address of the party to be served, provided, however,
that registered airmail shall be deemed to be delivered ten (10) days
after the date of dispatch, express courier service shall be deemed to be
delivered five (5) days after the date of dispatch, and telex acknowledged
by the answer backs shall be deemed to be delivered upon dispatch.


 


Any and all notices, communications,
Specifications and drawing in connection with this Contract shall be written in
the English language and each party hereto shall have no obligation to
translate them into any other language.


 


	
   

  	
   

  



 


55





















 


ARTICLE 18 - EFFECTIVE DATE OF CONTRACT.


 


This Contract shall become effective upon
fulfilment of all the following conditions:


 


1.            Due execution of this
Contract and the Specifications and maker list; and


 


2.            Receipt by the SELLER
of a Performance Guarantee in the form annexed hereto as Exhibit “A”
issued by AEGEAN SHIPPING MANAGEMENT S.A.; and


 


3.            Receipt by the BUYER
of the Refund Guarantee in the form annexed hereto as Exhibit “B” issued
by the Guarantee Bank in accordance with Article 2 Paragraph 7 hereof; and


 


4.            Receipt by the SELLER
of the first instalment in accordance with Paragraph 3(a) and 4(a) of
Article 2 of this Contract; and


 


5               Receipt by the
SELLER of an assurance letter which agree to provide the finance or loan to the
owner from Euro AAA bank.


 


If, due to whatever reason, any of the above conditions fails to be
fulfilled by the 30th of April, 2005 unless an extension of time
limit is mutually agreed, then this Contract shall be null and void having no
effect whatsoever.


 


	
   

  	
   

  



 


56





















 


ARTICLE 19 - INTERPRETATION


 


1.               LAW APPLICABLE


 


The parties hereto agree that validity and
interpretation of this Contract and of each Article and part hereof be
governed by and interpreted in accordance with 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 in the Specifications permit an interpretation
inconsistent with, any provision of this Contract, then in each and every such
event the applicable provisions of this Contract shall govern. The
Specifications and plans are also intended to explain each other, anything
shown on the plans and not stipulated in the Specifications or stipulated in
the Specifications and not shown on the plans, shall be deemed and considered
as if embodied in both. In the event of conflict between the Specifications and
plans, the Specifications shall govern.


 


However, with regard to such inconsistency or
contradiction between this Contract and the Specifications as may later occur
by any change or changes in the Specifications agreed upon by and among the
parties hereto after execution of this Contract, then such change or changes
shall govern.


 


3.               DEFINITION


 


(a)   In
absence of stipulation of “banking day(s)” or “business day(s)”, the “day” or
“days” shall be taken as “calendar day” or “calendar days”.


 


(b)   “BUILDER”
and “BUYER” used in the Specifications shall correspond to “SELLER” and “BUYER”
respectively used in this Contract.


 


4.               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.


 


5.               AMENDMENTS AND
SUPPLEMENTS


 


Any Supplement, Memorandum of Understanding
or Amendment executed after the date hereof in whatsoever form it may be,
relating to this Contract, shall be made in writing and signed by both parties.
Such Supplement,


 


	
   

  	
   

  



 


57





















 


Memorandum or Understanding or Amendment shall be an integral part of
this Contract and shall be predominant over the respective corresponding
article/or paragraph of this Contract


 


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


 


	
  THE BUYER

  	
  :

  	
   

  
	
  Representative 

  	
  :

  	
   

  
	
   

  	
   

  	
   

  
	
  Signature

  	
  :

  	
   

  
	
   

  	
   

  	
   

  
	
  Date

  	
  :

  	
   

  
	
   

  	
   

  	
   

  
	
  Witness

  	
  :

  	
   

  
	
   

  	
   

  	
   

  
	
  THE SELLER

  	
   

  	
  THE BUILDER :

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Representative 

  	
   

  	
  Representative 

  
	
   

  	
   

  	
   

  
	
  Signature

  	
   

  	
  Signature

  
	
   

  	
   

  	
   

  
	
  Date

  	
   

  	
  Date

  
	
   

  	
   

  	
   

  
	
  Witness

  	
   

  	
  Witness

  



 


	
   

  	
   

  



 


58


















 


FORM OF


ADDENDUM
No.l


DATED                


 


TO THE
SHIPBUILDING CONTRACT
No.                      


DATED 6TH
FEBRUARY 2005 AND ENTERED INTO BETWEEN


 


FUJIAN SOUTHEAST SHIPYARD
AND FUJIAN SHIPBUILDING INDUSTRY GROUP CORPORATION (hereinafter collectively called
the “SELLER”)


 


AND


 


(hereinafter
called the « BUYER »)


 


IN RESPECT OF HULL
No.DN-3500-10 (the “VESSEL”)


 


With reference to
the headlined Shipbuilding Contract (hereinafter called the “Contract”) for the
construction of the Vessel it is this mutually agreed between Seller and Buyer
the following:


 


1.
Notwithstanding anything to the contrary contained in the Contract and/or the
Specifications the Vessel is to have a guaranteed deadweight of not less than
3800 metric tons at the summer design draught moulded of 5.50 meters in
seawater of 1.025 specific gravity (with all documents/class certificates and
approvals for the VESSEL to be issued on the basis of such deadweight) and
shall be equipped with one (1) complete set of WARTSILA main engine, made in
Finland, type 8126 at about 2480 KW MCR.


 


In consideration
of the abovementioned changes the Contract Price is hereby amended to be United
States Dollars Six Million and Eight Hundred Thousand (US$ 6,800,000).


 


The payment
installments of the Contract Price are hereby respectively adjusted on the
basis of the new Contract Price of US$ 6,800,000.


 


It is furthermore
mutually agreed that the Contract Price shall be decreased by the sum of United
States Dollars One Thousand only (USD 1,000.00) for each metric ton in case of
a deficiency of the actual deadweight of the VESSEL below the new guaranteed
deadweight of 3800 metric tons and up to a maximum deficiency of three hundred
(300) metric tons. In the event that there will be a deficiency in the VESSEL’S
actual deadweight which exceeds three hundred (300) metric tons below the new
guaranteed deadweight, the BUYER may, at its option, reject the VESSEL and
rescind the Contract in accordance with the provisions of Article 10
thereof, or may accept the VESSEL with a reduction in the Contract Price in the
maximum amount of United States Dollars Three Hundred Thousand only (USD
300,000,00), such reduction to be applied by reducing respectively the fifth
instalment of the Contract Price.


 
















 


Furthermore and in the
event that the actual deadweight of the VESSEL would exceed 3800 metric tons,
then a bonus shall be added to the Contract Price at a rate of United States
Dollars five hundred (USD 500.00) per each
metric ton in excess of 3800 metric tons but in any case up to a maximum
amount of United States Dollars Seventy Five Thousand (USD 75,000.00)


 


2.
Other Amendments on the Contract


 


1.     Page 3, WITNESSETH clause, line 6.


 


Delete “or any
other flag”


 


2.     Article 1, item 4, GUARANTEED SPEED,
paragraph 1, changed to:


 


“The
SELLER guarantees that the trial speed at design draft (5.50meter) at Max
Continuous Output of main engine (MCR), with clean bottom in calm and deep sea
under beaufort scale of 2 or around is to be not less than 12.5 knots.”


 


3.     Article 2, item 7,
paragraph 1, the first sentence changed to:


 


“All
payments made by the Buyer prior to delivery of the VESSEL shall be in the
nature of advance to the SELLER, and in the event that in accordance with the
specific terms of this Contract, the VESSEL is rejected by the BUYER after the
sea trial or this Contract is rescinded or cancelled by the BUYER, the
SELLER...”


 


4.               Article 2, item 7, paragraph 2,
insert after “Shanghai Branch” “or China Communication Bank, Fuzhou Branch”.
However if any additional evidence may be reasonably required by the BUYER’S
Bank in respect of the proper and valid approval/authorization of the head
office to the branch of the SELLER’s Bank issuing the Refund Guarantee same to
be provided by the SELLER or the SELLER’s Bank.


 


5.               Article 4, item 2, paragraph 1,
insert one sentence in the end “Such approval and remarks shall be in
accordance with the Contract and Specifications.”


 


6.               Article 4, item 2, paragraph 2, line
7, “ten (10) days” change to “five (5) days”.


 


7.               Article 5, item 2 (2), insert one sentence
in the end, “provided the survey of the Class and the issuance of the
Certificates by the Class and relevant authorities will not be affected.”


 


8.               Article 5, item 4, paragraph 4,
insert one sentence in the end “The extra cost for material, installation or
testing for Buyer’s supplied items, if any, will be borne by the BUYER”,
(agreed on the basis of Sellers clarification via e-mail on 4th of
March 2005)


 


9.               Article 6, item 1, paragraph 2, line
14. “seven (7) days” changed to “five (5)days.”


 


10.   Article 6, item 2 (b), change to:


 


“The SELLER shall
provide the VESSEL with the required quantities of water and fuel oil
lubrication oil, hydraulic oil greases and other stores necessary for the
conduct of the Trial Run or Trial Runs which shall be supplied by the SELLER,
as prescribed in the Specifications. The fuel oil,


 
















 


lubricating oil,
hydraulic oil and greases shall be in accordance with the applicable engine
specifications. And the cost of the quantities of water, fuel oil, lubricating
oil, hydraulic oil and greases consumed during the Trial Run or Trial Runs
shall be for the account of the SELLER”


 


11.         Article 6, item 4(e) insert one
sentence in the end “However in case there is any minor qualification and/or
remark which does not affect the ship’s performance and/or Ship’s class
rules and regulations and/or Ship’s Class or Statutory Certificates
the delivery of the VESSEL to the BUYER shall not be affected, provided that
the SELLER shall expressly undertake in writing to comply with and/or remove such
minor qualifications and/or remarks within the Guarantee period of the Vessel
which extends to one (1) year from the date of delivery of the VESSEL, to
the BUYER.”


 


12.         Article 7, item 1, paragraph 1, line
3, after “certificates” add “which are required to be provided by the Seller in
accordance with the relevant provisions of the Specifications”, as such list
has been clarified by virtue of ABS fax msg dated 28 March 2005 addressed
to the SELLER.


 


13.         Article 7, item 1, paragraph 1, line
7, immediately after the parenthesis add “i.e.”


 


14.         Article 7, item 3 (e), “Deadweight”
change to “Lightship”.


 


15.         Article 7, item 3(f), paragraph 1,
cancel “so as to enable the BUYER to immediately register the VESSEL”.


 


16.         Article 7, item 3(g), (j), cancel “apostilled”.


 


17.         Article 9, item 2, “ten
(10) and thirty (30) days” all change to fifteen (15) days.


 


18.         Article 15, item 1, line 5, insert
after “Buyer’s suppliers” “for the construction or use of the VESSEL”.


 


3.
Amendments on the Specification


1.               Regarding the position indication of
manually controlled valves in CCR, it will be further discussed by both parties
according to the arrangement of the vessels.


 


2.               All the plans and drawings singed and dated the 6th
day of February 2005, incl. GA, Mid-Ship Section. Piping Diagram will be
subject to final confirmation of both parties as well as Class approval.


 


4. All other terms and conditions of the
above-mentioned Shipbuilding Contracts shall remain full in force and
unaltered.


 


5. In the event of any discrepancy between the Contract
and this Addendum, this Addendum will prevail.


 


IN WITNESS WHEREOF, the
Buyer and the SELLER have caused this Addendum to be duly executed in this 


 
















 


[SEAL]


 


For and on behalf of 


FUJIAN SOUTHEAST SHIPYARD


 


 


	
   

  	
   

  
	
  Name:

  
	
  Title :

  



 


 


For and on behalf of


FUJIAN SHIPBUILDING
INDUSTRY


 


 


	
   

  	
   

  
	
  Name:

  
	
  Title :  

  



 


 


[SEAL]


 


	
   

  	
   

  
	
   

  
	
  For and on behalf of

  



 


 


	
   

  	
   

  
	
  Name:

  
	
  Title :  

  



 


 


 













 


ADDENDUM
No.1

DATED 31 MARCH 2005


 


TO THE
SHIPBUILDING CONTRACT No.FSIGC-050l26-10ED

DATED 6TH FEBRUARY 2005 AND ENTERED INTO BETWEEN


 


FUJIAN SOUTHEAST SHIPYARD
AND FUJIAN SHIPBUILDING INDUSTRY GROUP CORPORATION (hereinafter collectively
called the “SELLER”)


 


AND


 


NAXOS MARITIME INC.
(hereinafter called the « BUYER »)


 


IN RESPECT OF HULL No.DN-3500-10
(the “VESSEL”)


 


With reference to the
headlined Shipbuilding Contract (hereinafter called the “Contract”) for the
construction of the Vessel it is this 31st day of March 2005
mutually agreed between Seller and Buyer the following:


 


1. Notwithstanding
anything to the contrary contained in the Contract and/or the Specifications
the Vessel is to have a guaranteed deadweight of not less than 3800 metric tons
at the summer design draught moulded of 5.50 meters in seawater of 1.025
specific gravity (with all documents/class certificates and approvals for the
VESSEL to be issued on the basis of such deadweight) and shall be equipped with
one (1) complete set of WARTSILA main engine, made in Finland, type 8126
at about 2480 KW MCR.


 


In consideration of the
above mentioned changes the Contract Price is hereby amended to be United States
Dollars Six Million and Eight Hundred Thousand (US$ 6,800,000).


 


The payment installments
of the Contract Price are hereby respectively adjusted on the basis of
the new Contract Price of US$ 6,800,000.


 


It is furthermore
mutually agreed that the Contract Price shall be decreased by the sum of United
States Dollars One Thousand only (USD 1,000.00) for each metric ton in case of
a deficiency of the actual
deadweight of the VESSEL below the new guaranteed deadweight of 3800 metric
tons and up to a maximum deficiency of three hundred (300) metric tons. In the
event that there will be a deficiency in the VESSEL’s actual deadweight which
exceeds three hundred (300) metric tons below the new guaranteed deadweight,
the BUYER may, at its option, reject the VESSEL and rescind the Contract in
accordance with the provisions of Article 10 thereof, or may accept the
VESSEL with a reduction in the
Contract Price in the maximum amount of United States Dollars Three Hundred
Thousand only (USD 300,000.00), such reduction to be applied by reducing respectively the fifth
instalment of the Contract Price.


 





















 


Furthermore and in the event that the actual deadweight of the VESSEL
would exceed 3800 metric tons, then a bonus shall be added to the Contract
Price at a rate of United States Dollars five hundred (USD 500.00) per each
metric ton in excess of 3800 metric tons but in any case up to a maximum amount
of United Stales Dollars Seventy Five Thousand (USD 75,000.00)


 


2.   Other Amendments on the Contract


1.     Page 3. WITNESSETH clause, line 6.


 


Delete
“or any other flag”


 


2.     Article 1, item 4. GUARANTEED
SPEED, paragraph 1, changed to:


 


“The SELLER guarantees that the trial speed at design
draft (5.50 meter) at Mas Continuous Output of main engine (MCR), with clean
bottom in calm and deep sea under beaufort scale of 2 or around is to be not
less than 12.5 knots.”


 


3.     Article 2, item 7. paragraph 1, the first sentence changed to:


 


“All payments made
by the Buyer prior to delivery of the VESSEL shall be in the nature of advance
to the SELLER, and in the event
that in accordance with the specific terms of this Contract, the VESSEL is
rejected by the BUYER after the sea trial or this Contract is rescinded or
cancelled by the BUYER, the SELLER...”


 


4.     Article 2, item 7. paragraph 2. insert after ‘‘Shanghai Branch” “or
China Communication Bank, Fuzhou Branch”. However if any additional evidence
may be reasonably required by the BUYER’s Bank in respect of the proper and
valid approval/authorization of the head office to the branch of the SELLER’s
Bank issuing the Refund Guarantee same to be provided by the SELLER or the
SELLER’s Bank.


 


5.     Article 4, item 2. paragraph
1. insert one sentence in the end “Such approval and remarks shall be in
accordance with the Contract and Specifications.”


 


6.     Article 4, item 2. paragraph 2. line 7, “ten (10) days” change
to “five (5) days”.


 


7.     Article 5, item 2 (2). insert
one sentence in the end, “provided the survey of the Class and line issuance of
the Certificates by the Class and relevant authorities will not be affected.”


 


8.     Article 5, item 4. paragraph 4, insert one sentence in the end “The
extra cost for material, installation or testing for Buyer’s supplied items, if
any, will be borne by the BUYER”.
(agreed on the basis of Sellers clarification via e-mail on 4th of
March 2005)


 


9.     Article 6, item 1, paragraph 2, line 14, “seven (7) days”
changed to “five (5) days.”


 


10.   Article 6, item 2 (b). change to:


 


“The SELLER shall provide the VESSEL with the required
quantities of water and fuel oil lubrication oil hydraulic oil greases and other stores necessary for the
conduct of the Trial Run or Trial Runs which shall be supplied by the SELLER as
prescribed in the Specifications. The fuel oil,


 





















 


lubricating
oil, hydraulic oil and greases shall be in accordance with the applicable
engine specifications. And the cost of the quantities of water, fuel oil,
lubricating oil, hydraulic oil and greases consumed during the Trial Run or
Trial Runs shall be for the account of the SELLER”


 


11.         Article 6,
item 4(c) insert one sentence in the end “However in case there is any
minor qualification and/or remark which does not affect the ship’s performance
and/or Ship’s class rules and regulations and/or Ship’s Class or Statutory
Certificates the delivery of the VESSEL to the BUYER shall not be affected,
provided that the SELLER shall expressly undertake in writing to comply with
and/or remove such minor qualifications and/or remarks within the Guarantee
period of the Vessel which extends to one (1) year from the date of delivery of
the VESSEL to the BUYER.”


 


12.         Article 7,
item 1, paragraph 1, line 3, after “certificates” add “which are required to be
provided by the Seller in accordance with 
the relevant provisions of the Specifications”, as such list has been
clarified by virtue of ABS fax msg dated 28 March 2005 addressed to the
SELLER.


 


13.         Article 7,
item 1, paragraph 1, line 7, immediately after the parenthesis add “i.e.”.


 


14.         Article 7,
item 3 (e), “Deadweight” change
to “Lightship”.


 


15.         Article 7,
item 3(f), paragraph 1, cancel “so as to enable the BUYER to immediately
register the VESSEL”.


 


16.         Article 7,
item 3(g), (j), cancel “apostilled”.


 


17.         Article 9, item 2, “ten (10) and thirty (30)
days” all change to fifteen (15) days.


 


18.         Article 15,
item 1, line 5, insert after “Buyer’s suppliers” “for the construction or use
of the VESSEL”.


 


3.  Amendments on the Specification


 


1.               Regarding the position indication of manually
controlled valves in CCR, it will be further discussed by both parties
according to the arrangement of the vessels.


 


2.               All the plans and drawings singed and dated
the 6th day of February 2005, incl. GA, Mid-Ship Section,
Piping Diagram will be subject to final confirmation of both parties as well as
Class approval.


 


4.  All
other terms and conditions of the above-mentioned Shipbuilding Contracts shall remain
full in force and unaltered.


 


5.  In the event of any discrepancy
between the Contract and this Addendum, this Addendum will prevail.


 


IN
WITNESS WHEREOF, the Buyer and the SELLER have caused this Addendum to be duly
executed in this 31st day of March 2005.


 





















 


 


	
  For and on behalf of

  
	
  FUJIAN SOUTHEAST
  SHIPYARD

  	
   

  
	
  [SEAL]

  
	
   

  
	
   

  
	
  /s/ [ILLEGIBLE]

  	
   

  
	
  Name:

  	
  [ILLEGIBLE]

  
	
  Title  :

  	
  Director

  
	
   

  
	
   

  
	
  For and on behalf of

  
	
  FUJIAN SHIPBUILDING
  INDUSTRY

  
	
  GROUP CORPORATION

  
	
   

  
	
   

  
	
  /s/ Lin Fen Fei

  	
   

  
	
  Name:

  	
  LIN FEN FEI

  
	
  Title :

  	
  Deputy General Manager

  
	
   

  
	
   

  
	
  For and on behalf of

  
	
  NAXOS MARITIME INC.

  	
   

  
	
  [SEAL]

  
	
   

  
	
   

  
	
  /s/ [ILLEGIBLE]

  	
   

  
	
  Name:

  	
  [ILLEGIBLE]

  
	
  Title  :

  	
  Managing Director

  
					



 





















 


Addendum
No.2 to Contract


 


No.
FSIGC-050126-10ED


 


[SEAL]


 


With reference to the Shipbuilding Contract No. FSIGC-050126-10ED dated
this 6th day of February 2005 and the Addendum No. 1 dated this 31st of March
2005 for one (1) 3,800 DWT Product Tanker, having the SELLER’s Hull No.
DN-3500-10 (hereinafter called the “VESSEL”) executed by and between Naxos
Maritime Inc. (hereinafter called the “BUYER”) and Fujian Southeast Shipyard
and Fujian Shipbuilding Industry Group Corporation (hereinafter collectively
called the “SELLER”), and also with reference to the Addendum No.1 and Option
Agreement dated 31st March 2005, the BUYER and the SELLER hereby
mutually agree the following:


 


1.               Because the seller
still needs time to issue the Refund Guarantee and also the period from 1st
of May to 7th of May is the National Holiday in China the
deadline of the contract becoming effective will be extended to 31st
of May.


2.               The delivery time of the Vessel will be 31st
of August, 3 2008.


3.               The delivery time
of the optional vessels will be one month later respectively than the date

stipulated in the option agreement.


 


All other terms and
conditions of the above-mentioned Shipbuilding Contracts shall remain full in
force and unaltered.


 


If there is any
discrepancy between the Contract and this Addendum, this Addendum will prevail.


 


IN WITNESS WHEREOF, the
Buyer and the SELLER have caused this Addendum No. 2 to be duly executed
in this 27th day of April 2005.


 


 


	
  For and on behalf of

  	
   

  	
  For and on behalf of

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  /s/ [ILLEGIBLE]

  	
   

  	
  /s/ [ILLEGIBLE]

  	
   

  
	
  Naxos Maritime Inc.

  	
   

  	
  Fujian Southeast Shipyard

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  [SEAL]

  	
   

  	
  [SEAL]

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  For and on behalf of

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  /s/ [ILLEGIBLE]

  	
   

  	
   

  	
   

  
	
  Fujian Shipbuilding Industry Group Corporation

  

  [SEAL]

  	
   

  	
   

  	
   

  



 





















 


Addendum No.3 to Contract


 


No. FSIGC-050126-10ED


 


With reference to the Shipbuilding Contract No. FSIGC-050126-10ED dated
this 6th day of February 2005 and the Addendum No. 1 dated this 31st
of March 2005 and the Addendum No.2 dated 27th of April 2005 for one
(1) 3,800 DWT Product Tanker, having the SELLER’s Hull No. DN-3500-10 (hereinafter
called the “VESSEL”) executed by and between Naxos Maritime Inc. (hereinafter
called the “BUYER”) and Fujian Southeast Shipyard and Fujian Shipbuilding Industry
Group Corporation (hereinafter collectively called the “SELLER”), the BUYER and
the SELLER hereby mutually agree the following:


 


1.               Because the seller
still needs time to issue the Refund Guarantee, the deadline of the contract
becoming effective will be extended to 30th of June 2005.


 


2.               The delivery time
of the Vessel will be 31st of August, 2008.


 


3.               In Article 8 of the
Contract a new paragraph 5 is hereby agreed to be inserted, which reads as
follows:


 


“5. ACCUMULATED TIME OF DELAY


 


In the event that the total accumulated time of all
delays of whatsoever nature, including non-permissible as well as permissible
delays, aggregates to One Hundred and Ninety (190) days or more, then the BUYER
may at any time thereafter rescind this Contract in accordance with the
provisions of Article 10 hereof.”


 


All other terms and conditions of the above-mentioned Shipbuilding
Contract shall remain full in force and unaltered.


 


If there is any discrepancy between the Contract and this Addendum,
this Addendum will prevail.


 


IN WITNESS WHEREOF, the Buyer and SELLER have caused this Addendum No.
3 to be duly executed in this 27th day of May 2005.


 


 


	
  For and on behalf of

  	
   

  	
   

  	
  For and on behalf of

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  /s/ [ILLEGIBLE]

  	
   

  	
   

  	
  /s/ [ILLEGIBLE]

  	
   

  
	
  Naxos Maritime Inc.

  	
   

  	
   

  	
  Fujian Southeast Shipyard

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [SEAL]

  	
   

  	
   

  	
  [SEAL]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  For and on behalf of

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  /s/ [ILLEGIBLE]

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Fujian Shipbuilding Industry Group Corporation

  

  [SEAL]