Document:

Exhibit 10.18

 

SHIP
BUILDING CONTRACT

 

between

RAMONA
MARINE COMPANY LIMITED

and

SAMSUNG HEAVY INDUSTRIES CO., LTD.

 

 

(HULL NO. 1561)

 

i

 

TABLE OF CONTENTS

 

	
  ARTICLE I
  - DESCRIPTION AND CLASS

  	
   

  	
  2

  
	
  1.

  	
   

  	
  Description:

  	
   

  	
  2

  
	
  2.

  	
   

  	
  Principal Dimensions and Characteristics:

  	
   

  	
  3

  
	
  3.

  	
   

  	
  Classification, Rules and Regulations:

  	
   

  	
  4

  
	
  4.

  	
   

  	
  Registration:

  	
   

  	
  4

  
	
  5.

  	
   

  	
  Contract Specifications and Approved Drawings:

  	
   

  	
  5

  
	
  6.

  	
   

  	
  Subcontracting:

  	
   

  	
  5

  
	
  ARTICLE
  II - CONTRACT PRICE AND TERMS OF PAYMENT

  	
   

  	
  6

  
	
  1.

  	
   

  	
  Contract Price:

  	
   

  	
  6

  
	
  2.

  	
   

  	
  Adjustment of Contract Price:

  	
   

  	
  6

  
	
  3.

  	
   

  	
  Currency:

  	
   

  	
  6

  
	
  4.

  	
   

  	
  Terms of Payment:

  	
   

  	
  6

  
	
  5.

  	
   

  	
  Method of Payment:

  	
   

  	
  7

  
	
  6.

  	
   

  	
  Notice of Payment on or before Delivery:

  	
   

  	
  9

  
	
  7.

  	
   

  	
  Expenses:

  	
   

  	
  9

  
	
  8.

  	
   

  	
  Advance Payment:

  	
   

  	
  9

  
	
  9.

  	
   

  	
  Refundment Guarantee:

  	
   

  	
  9

  
	
  ARTICLE
  III - ADJUSTMENT OF CONTRACT PRICE

  	
   

  	
  10

  
	
  1.

  	
   

  	
  Delivery:

  	
   

  	
  10

  
	
  2.

  	
   

  	
  Speed:

  	
   

  	
  11

  
	
  3.

  	
   

  	
  Fuel Consumption:

  	
   

  	
  11

  
	
  4.

  	
   

  	
  Deadweight:

  	
   

  	
  12

  
	
  5.

  	
   

  	
  Container capacity:

  	
   

  	
  12

  
	
  6.

  	
   

  	
  Reductions to be Independent of Each Other:

  	
   

  	
  13

  
	
  7.

  	
   

  	
  Effect of Rescission:

  	
   

  	
  13

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

  	
   

  	
  14

  
	
  1.

  	
   

  	
  Approval of Plans and Drawings:

  	
   

  	
  14

  
	
  2.

  	
   

  	
  Appointment of BUYER’s Representatives:

  	
   

  	
  15

  
	
  3.

  	
   

  	
  Inspection by BUYER’s Representatives:

  	
   

  	
  15

  
	
  4.

  	
   

  	
  Rights of the Representatives:

  	
   

  	
  15

  
	
  5.

  	
   

  	
  Facilities:

  	
   

  	
  18

  
	
  6.

  	
   

  	
  Liability of BUILDER:

  	
   

  	
  18

  
	
  7.

  	
   

  	
  Responsibility of BUYER:

  	
   

  	
  19

  
	
  8.

  	
   

  	
  Information to Representatives:

  	
   

  	
  19

  
	
  ARTICLE V
  - MODIFICATIONS, CHANGES AND EXTRAS

  	
   

  	
  20

  
	
  1.

  	
   

  	
  How Effected:

  	
   

  	
  20

  
	
  2.

  	
   

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

  	
   

  	
  20

  
	
  3.

  	
   

  	
  Substitution of Materials:

  	
   

  	
  21

  
	
  ARTICLE
  VI - TRIALS AND ACCEPTANCE

  	
   

  	
  22

  
	
  1.

  	
   

  	
  Notice:

  	
   

  	
  22

  
	
  2.

  	
   

  	
  Weather Condition:

  	
   

  	
  22

  
	
  3.

  	
   

  	
  How Conducted:

  	
   

  	
  23

  
	
  4.

  	
   

  	
  Method of Acceptance or Rejection:

  	
   

  	
  23

  
	
  5.

  	
   

  	
  Effect of Acceptance:

  	
   

  	
  24

  
	
  6.

  	
   

  	
  Disposition of Surplus Consumable Stores:

  	
   

  	
  24

  
	
  ARTICLE
  VII - DELIVERY

  	
   

  	
  26

  
	
  1.

  	
   

  	
  Time and Place:

  	
   

  	
  26

  
	
  2.

  	
   

  	
  When and How Effected:

  	
   

  	
  26

  
	
  3.

  	
   

  	
  Documents to be delivered to BUYER:

  	
   

  	
  26

  
	
  4.

  	
   

  	
  Tender of VESSEL:

  	
   

  	
  28

  
	
  5.

  	
   

  	
  Title and Risk:

  	
   

  	
  28

  

 

i

 

	
  6.

  	
   

  	
  Removal of VESSEL:

  	
   

  	
  28

  
	
  7.

  	
   

  	
  Notices:

  	
   

  	
  28

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

  	
   

  	
  30

  
	
  1.

  	
   

  	
  Causes of Delay (Force Majeure):

  	
   

  	
  30

  
	
  2.

  	
   

  	
  Notice of Delay:

  	
   

  	
  31

  
	
  3.

  	
   

  	
  Definition of Permissible Delay:

  	
   

  	
  31

  
	
  4.

  	
   

  	
  Right to Rescind for Excessive Delay:

  	
   

  	
  32

  
	
  ARTICLE
  IX - WARRANTY OF QUALITY

  	
   

  	
  33

  
	
  ARTICLE X
  - BUILDER’s DEFAULT - RESCISSION BY BUYER

  	
   

  	
  38

  
	
  1.

  	
   

  	
  BUILDER’s Default:

  	
   

  	
  38

  
	
  2.

  	
   

  	
  Effect of BUILDER’s Default:

  	
   

  	
  38

  
	
  3.

  	
   

  	
  Notice:

  	
   

  	
  38

  
	
  4.

  	
   

  	
  Refundment by BUILDER:

  	
   

  	
  39

  
	
  5.

  	
   

  	
  Discharge of Obligations:

  	
   

  	
  39

  
	
  ARTICLE
  XI - DEFAULT BY THE BUYER

  	
   

  	
  40

  
	
  1.

  	
   

  	
  Definition of BUYER’s Default:

  	
   

  	
  40

  
	
  2.

  	
   

  	
  Effect of BUYER’s Default on or before Delivery of VESSEL:

  	
   

  	
  40

  
	
  3.

  	
   

  	
  Disposal of VESSEL:

  	
   

  	
  41

  
	
  ARTICLE
  XII - ARBITRATION

  	
   

  	
  43

  
	
  1.

  	
   

  	
  Decisions by the Classification Society:

  	
   

  	
  43

  
	
  2.

  	
   

  	
  Proceedings of Arbitration:

  	
   

  	
  43

  
	
  3.

  	
   

  	
  Notice of Award:

  	
   

  	
  44

  
	
  4.

  	
   

  	
  Expenses:

  	
   

  	
  44

  
	
  5.

  	
   

  	
  Entry in Court:

  	
   

  	
  44

  
	
  6.

  	
   

  	
  Alteration of Delivery Date:

  	
   

  	
  44

  
	
  ARTICLE
  XIII - ASSIGNMENT - SUCCESSOR AND ASSIGNS

  	
   

  	
  45

  
	
  ARTICLE
  XIV - TAXES AND DUTIES

  	
   

  	
  46

  
	
  1.

  	
   

  	
  Taxes and Duties Incurred in Korea:

  	
   

  	
  46

  
	
  2.

  	
   

  	
  Taxes and Duties Incurred outside Korea:

  	
   

  	
  46

  
	
  ARTICLE
  XV - PATENTS, TRADEMARKS, COPYRIGHTS, ETC.

  	
   

  	
  47

  
	
  1.

  	
   

  	
  Patents, Trademarks and Copyrights:

  	
   

  	
  47

  
	
  2.

  	
   

  	
  General Plans, Specifications and Working Drawings:

  	
   

  	
  47

  
	
  ARTICLE
  XVI - BUYER’s SUPPLIES

  	
   

  	
  48

  
	
  1.

  	
   

  	
  Responsibility of BUYER:

  	
   

  	
  48

  
	
  2.

  	
   

  	
  Responsibility of BUILDER:

  	
   

  	
  49

  
	
  ARTICLE
  XVII - INSURANCE

  	
   

  	
  50

  
	
  1.

  	
   

  	
  Extent of Insurance Coverage:

  	
   

  	
  50

  
	
  2.

  	
   

  	
  Application of the Recovered Amounts:

  	
   

  	
  50

  
	
  3.

  	
   

  	
  Termination of BUILDER’s Obligation to Insure:

  	
   

  	
  51

  
	
  ARTICLE
  XVIII - NOTICES

  	
   

  	
  52

  
	
  1.

  	
   

  	
  Address:

  	
   

  	
  52

  
	
  2.

  	
   

  	
  Language:

  	
   

  	
  52

  
	
  3.

  	
   

  	
  Effective Date of Notice:

  	
   

  	
  53

  
	
  4.

  	
   

  	
  Change of Address:

  	
   

  	
  53

  
	
  ARTICLE
  XIX - EFFECTIVE DATE OF CONTRACT

  	
   

  	
  54

  
	
  ARTICLE
  XX - INTERPRETATION

  	
   

  	
  55

  
	
  1.

  	
   

  	
  Laws Applicable:

  	
   

  	
  55

  
	
  2.

  	
   

  	
  Entire Agreement:

  	
   

  	
  55

  
	
  3.

  	
   

  	
  Amendments and Supplements:

  	
   

  	
  55

  
	
  4.

  	
   

  	
  Banking Day:

  	
   

  	
  55

  
	
  5.

  	
   

  	
  No Set Off, Deduction or Counter-claim:

  	
   

  	
  55

  
	
  6.

  	
   

  	
  Deemed Benefit for Servants, etc.:

  	
   

  	
  56

  

 

ii

 

	
  7

  	
   

  	
  Responsibility:

  	
   

  	
  56

  
	
  8.

  	
   

  	
  Time of the Essence:

  	
   

  	
  56

  
	
  9.

  	
   

  	
  Headings:

  	
   

  	
  57

  
	
   

  	
   

  	
  Annex A. LETTER OF REFUNDMENT GUARANTEE NO.

  	
   

  	
   

  
	
   

  	
   

  	
  Annex B. PERFORMANCE GUARANTEE

  	
   

  	
   

  

 

iii

 

THIS CONTRACT, made and entered into on this 18th day of November, 2003, by and between Ramona
Marine Company Limited a corporation incorporated and existing under the
laws of Cyprus, having its registered office at Diagoras House, 16 P.
Catelaris Street, P.O. Box 25001, 1306 Nicosia, Cyprus (hereinafter
referred to as the “BUYER”), of the one part and SAMSUNG HEAVY INDUSTRIES CO.
LTD., a corporation incorporated and existing under the laws of the Republic of
Korea, having its registered office at 647-9, Yoksam-Dong, Kangnam-Ku, Seoul,
Korea 135-080 (hereinafter referred to as the “BUILDER”), of the other part.

 

W I T N E S S E T H:

 

In consideration of the mutual covenants herein contained, the BUILDER
agrees and undertakes to design, build, launch, equip and complete in
accordance with highest shipbuilding practice in Korea, this Contract, the
Specifications, the Approved Drawings and the Classification Society Rules (and
wherever the term “Classification Society Rules” is used in this Contract, it
means the rules of the Classification Society as stipulated in the Contract and
the Specifications), in all respects, one (1) Ocean Going Single Screw diesel
engine driven fully Cellular Container Vessel as described herein and in the
Specifications referred to herein (hereinafter called the “VESSEL” which term
shall, where it appears, include its design, drawings, plans, machinery,
engines, equipment, fittings, outfittings, appurtenances, furniture, materials,
parts, spares, articles and things whatsoever specified or required by the
Specifications and/or otherwise under this Contract), at the BUILDER’s shipyard
located in Koje Island, Korea (hereinafter called the “Shipyard”) and to
deliver and sell the same to the BUYER free and clear of all liens, charges,
mortgages and encumbrances, and the BUYER hereby agrees to purchase and accept
delivery of the VESSEL from the BUILDER and to pay for the same upon the terms
and conditions hereinafter set forth.

 

1

 

ARTICLE I - DESCRIPTION AND CLASS

 

1.             Description:

 

The VESSEL shall be a Single Screw Cellular Container
VESSEL having the BUILDER’s Hull No. 1561 and shall be designed, constructed, equipped, inspected, tested
and ready for sea and suitable in all respects for its intended use for
carrying dry cargo containers in accordance with the provisions of this
Contract, and the full specifications reference No. CN03086.FS01 October 22, 2003, General Arrangement Drawing reference
DWG. No. CN03086.GA01, Maker’s List
reference No. CN03086.ML01 and Midship Section Plan reference DWG. No. CN03086.MS01
(hereinafter collectively called the “Specifications”) signed by each of
the parties for identification and constituting an integral part hereof. The
Approved Drawings, and the Classification Society Rules shall constitute an
integral part hereof. A reference hereafter in this Contract to Specifications
shall be deemed to include the Approved Drawings and the Classification Society
Rules. The BUILDER undertakes that the quality of the design, construction,
testing and trials of the VESSEL and the quality of the VESSEL and of her
workmanship shall be in accordance with the highest shipbuilding practice in
Korea and the warranty provided in Article IX 1. (a) shall be effective to this
standard.

 

 BUYER and the BUILDER hereby undertake the
VESSEL shall be the just repeat and series vessel of the BUILDER’s Hull No.
1558 (as a series project). Thus all construction procedure including model
test and sea trial etc. shall be done on the basis of the just repeat and
series vessel of Hull No. 1558.

 

The BUYER and BUILDER hereby
further undertake that the Specifications, all plans, Manufacturer List and all
drawings, made, used and approved in accordance with the Shipbuilding Contracts
for BUILDER’s Hull No. 1558, shall be used for the VESSEL without any further approval
and modification from the BUYER unless otherwise mutually agreed by both
parties.

 

The BUYER further acknowledge
that any change or modification or request therefor to be made by the
BUYER during the construction phase of the VESSEL will reduce
the series/repeat effects of the relevant vessel as originally
contemplated by the parties hereto upon execution of the Shipbuilding Contract and thus, may be acceptable and incorporated at the BUILDER’s sole discretion only upon payment of the costs incurred by the BUILDER due to such change or modification.

 

2

 

2.             Principal Dimensions and Characteristics:

 

(a)           The BUILDER guarantees
that the VESSEL will have the following:

 

	
  Length, overall

  	
   

  	
  app.

  	
  336.7 m

  
	
  Length, between perpendiculars

  	
   

  	
   

  	
  321.0 m

  
	
  Breath, moulded

  	
   

  	
   

  	
  45.60 m

  
	
  Depth, moulded

  	
   

  	
   

  	
  27.2 m

  
	
  Designed draught, moulded

  	
   

  	
   

  	
  13.0 m

  
	
  Scantling draught, moulded

  	
   

  	
   

  	
  15.0 m

  
	
  Main Engine

  	
   

  	
  MAN B&W 12K98MC-C

  
	
  MCR x RPM

  	
   

  	
  93,120 BHP x 104 RPM

  
	
  NCR
  (90% MCR)

  	
   

  	
  83,810 BHP

  

 

(b)        The BUILDER guarantees that the VESSEL
shall have the following Capacity of ISO standard 20’ x 8’ x 8’ 6” Containers
(the “Guaranteed Container Capacity”), namely:

 

	
  Under deck -

  	
  4,678 TEU

  
	
  On deck -

  	
  4,902 TEU (in eight tiers + castle stow)

  
	
  Total

  	
  9,580 TEU

  

 

(c)           The
BUILDER guarantees that the VESSEL shall have a deadweight of not less than 108,330 metric tons on scantling draught
as calculated in accordance with the provisions of the Specifications
(hereinafter called the “Guaranteed Deadweight”). The actual deadweight of the
VESSEL expressed in tonnes of 1,000 kilograms shall be determined in the
presence of the Representatives of the BUYER, the Classification Society and
the BUILDER on the basis of the actual measurement of the lightweight of the
completed VESSEL, and thereafter a certificate of deadweight shall be issued by
the BUILDER. The cost, if any, shall be for the account of the BUILDER.

 

(d)            The BUILDER guarantees
that the speed of the VESSEL on sea trial as stipulated and on the conditions
prescribed in the Specifications shall be 25.2 knots at 14.5
metres draught at main engine output of
72,880 HP (hereinafter called the “Guaranteed Speed”).

 

(e)            The BUILDER guarantees that fuel
consumption for the main engine, the figure of which shall be calculated by
applying I.S.O. reference condition to the result obtained at the shop trial,
shall not exceed 126.0 grams/bhp/hour
at MCR as stipulated and on the
conditions prescribed in the Specifications (hereinafter called the “Guaranteed
Fuel Consumption”).

 

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

 

3

 

3.             Classification, Rules and Regulations:

 

The VESSEL shall be designed, constructed, equipped,
inspected, tested and completed in accordance with the rules and regulations
(the edition and amendments thereto being in force and effect as of the date of this Contract) of
and under special survey of Lloyds Register of Shipping (hereinafter called the
“Classification Society”) and shall be distinguished in the register by the
symbol of X100A1 Containership, Shipright (SDA, FDA, CM)
*IWS,  XLMC, UMS, SCM, EP, CAC, NAV1 Details of Class notation shall be in accordance with
the Specifications.

 

Decisions of the Classification Society as to
compliance or non-compliance with the classification rules and regulations
shall be final and binding upon both parties hereto, except where this Contract
provides for Arbitration.

 

The VESSEL shall comply with rules, regulations,
recommendations and requirements of the Authorities in force as of the date of
the Contract signing as described and listed in the Specifications, together
with all mandatory rules and regulations with amendment, which have already been ratified up to the contract signing
date and to come into effect prior to the scheduled delivery date of the
VESSEL.

 

The BUILDER shall arrange with the Classification
Society for the assignment by the Classification Society of a representative
(hereinafter referred to as the “Classification Surveyor”) to the VESSEL during
all stages of construction. All materials, workmanship and major plans used in
the construction of the VESSEL shall be subject to inspection and test by the
Classification Society in accordance with the rules and regulations of the
Classification Society. All fees and charges in connection with or incidental
to the classification of the VESSEL, to all certificates required under this
Contract and the Specifications, and to compliance with the above specified
rules, regulations and requirements, shall be for the account of the BUILDER.

 

No act or omission of the Classification Society
and/or Classification Surveyor shall, in any way, diminish or impair the
obligations and liabilities of the BUILDER under the terms of this Contract.

 

4.             Registration:

 

The VESSEL, at the time of her delivery and
acceptance, shall be registered at the port of registry by the BUYER under the Cypriot or Hong Kong flag at the BUYER’s
expense. The BUILDER shall obtain and deliver to the BUYER at delivery and
acceptance the Certificates required pursuant to the Specifications.

 

4

 

5.             Contract Specifications and Approved
Drawings:

 

(a)           Subject
to provisions of sub-clause (b) hereunder, the Specifications and the Approved
Drawings are intended to complement this Contract as well as one another and
everything contained in the Specifications and/or the Approved Drawings shall
have full force and effect as if incorporated within the body of this Contract.

 

(b)           (i)            Should there be any inconsistency or
discrepancy between this Contract and the Specifications or between this
Contract and the Approved Drawings, this Contract shall prevail.

 

(ii)           Should
there be any inconsistency or discrepancy between the Specifications and the
Approved Drawings, the Specifications shall prevail.

 

6.             Subcontracting:

 

The BUILDER may, at its sole discretion and
responsibility, and upon written notice to BUYER subcontract any portion but
not the whole, of the construction work of the VESSEL outside the Shipyard but
in any event major hull structure parts will be built by the BUILDER provided,
however, that the BUILDER shall remain responsible for the performance of this
Contract with regard to the work done or materials supplied or used by such
subcontractors in accordance with this Contract. Subcontractors shall apply
same standard as the BUILDER.

 

(end of Article)

 

5

 

ARTICLE II - CONTRACT PRICE AND TERMS
OF PAYMENT

 

1.             Contract Price:

 

The purchase price of the VESSEL is Eighty Three Million Nine Hundred Thousand
Million United States Dollars (US$ 83,900,000.) including extra
costs of US$ 266,600 agreed on October 21, 2003 (hereinafter called the
“Contract Price”).

 

The Contract Price is fixed and not subject to any
escalation under any circumstances whatsoever unless otherwise provided in this
Contract and includes payment for services in the design, inspection, tests,
trials, survey and classification of the VESSEL which shall be rendered by the
Classification Society but shall not include the cost of items to be supplied
by the BUYER as stipulated in Clause 1 of Article XVI of this Contract.

 

The Contract Price also includes all costs and
expenses for supplying all drawings and plans (except those to be furnished by
the BUYER in respect of the BUYER’s Supplies) and designs, machinery, engines,
equipment, fittings, outfittings, appurtenances, furniture, materials, parts,
spares, articles and things whatsoever and specified or required by the
Specifications and/or otherwise under this Contract for the VESSEL, and all
other items and acts necessary for the due and punctual performance of
BUILDER’s obligations under or pursuant to this Contract.

 

2.             Adjustment of Contract Price:

 

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

 

3.             Currency:

 

Any and all payments which are due under this Contract
or to be refunded under the terms thereof shall be made in United States
Dollars.

 

4.             Terms of Payment:

 

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

 

6

 

(a)           First
Installment:

 

The first installment amounting to US$ 4,195,000 shall be payable as set out in
clause 5(a) of this Article.

 

(b)           Second
Installment:

 

The second installment amounting to US$ 4,195,000 shall be due and payable as
set out in Clause 5 (b) of this Article.

 

(c)           Third Installment:

 

The third installment amounting to US$ 67,120,000 shall be due and payable as set out in Clause 5 (c) of this Article.

 

(d)           Delivery
Installment:

 

The Delivery Installment amounting to US$ 8,390,000 plus any increase or minus any
decrease due to adjustment of the Contract Price under the provisions of this
Contract shall be due and payable simultaneously with the delivery to and
acceptance of the VESSEL by the BUYER as set out in Clause 5 (d) of this Article.

 

5.             Method of Payment:

 

(a)           First
Installment:

 

By November 25, 2003, the BUYER shall remit by telegraphic transfer
the first installment after the BUYER’S receipt from the BUILDER of the signed copy of Letter of Refundment Guarantee by fax as set forth in clause 9 of this Article to the Export-Import Bank of Korea, Head office
Seoul (account No. 04-029-695) with Deutsche Bank Trust Company Americas, 60
Wall Street, Mail Stop NYC 60-1310, New York, NY10005, U.S.A. in favor
of Samsung Heavy Industries Co., Ltd., or to the account of such other bank in
New York which the BUILDER may designate in writing (herein referred to as the
“BUILDER’s Bank”) in favor of Samsung Heavy Industries Co., Ltd.

 

(b)           Second
Installment:

 

By December 1, 2003, the
BUYER shall remit by telegraphic transfer the second installment to the account
mentioned in clause 5 (a) above.

 

(c)           Third Installment:

 

By January 31, 2004, the
BUYER shall remit by telegraphic transfer the third installment to the
account mentioned in clause 5 (a) above.

 

In the event the BUYER
does not expect to obtain the financing by December 31, 2003, the BUYER may request a month extension of the Due Date so as to
defer the BUYER’s payment of the Third

 

7

 

Instalment up until February 28, 2004. The BUYER must
request the extension in writing and with reasons. The BUILDER shall have a
right to grant, in its sole discretion, a month extension provided, which not to be unreasonably withhold. In such event of extension and
deferment, the interest rate applying to interest which shall accrue on the Third Instalment at the rate of 5% per annum and be computed starting from
January 31, 2004 through (including) to the earlier of the actual date of payment and February 28, 2004. The accrued default
interest (the “Default Interest”) shall be paid to the BUILDER, together with
the Third Instalment.

 

(d)           Delivery
Installment:

 

The BUYER shall pay the installment due on delivery of
the VESSEL (the “Delivery Installment”) in the following way: At least one (1)
Banking Day prior to the scheduled Delivery Date of the VESSEL, the BUYER shall
procure that a first class bank (the “Remitting Bank”) issue a tested key telex
to the BUILDER’s Bank containing an irrevocable undertaking by the Remitting
Bank that funds shall be transferred to the BUILDER’s Bank for value on the
scheduled delivery date and held to the order of the Remitting Bank for release
to Samsung Heavy Industries Co., Ltd. against presentation by the BUILDER to
the BUILDER’s Bank of a duplicate original copy of the Protocol of Delivery and
Acceptance of the VESSEL duly executed by the BUYER and the BUILDER, evidencing
the delivery of the VESSEL to and her acceptance by the BUYER.

 

No later than five (5) Banking Days prior to the
scheduled date for the acceptance of delivery of the VESSEL, the parties hereto
shall execute an agreement on all adjustments of the Contract Price, if any.
Notwithstanding the foregoing, adjustment in connection with the delay in
delivery of the VESSEL shall be made on delivery. If the parties cannot agree
on the said adjustments, delivery of the VESSEL shall take place as provided
herein and the adjustments shall be determined by arbitration pursuant to
Article XII herein.

 

If any of the above payment dates is not a Banking Day
then the payment(s) so due on such non-Banking Day shall be understood to be
payable on the next Banking Day after the date on which payment should have
been made in accordance with this Clause.

 

(e)           Default
Interest and Others

 

In the event of default in the payment of any
installment in sub-clause (a) through (d) of this Clause 5, the BUYER shall pay default interest, charges
and expenses in accordance with Clause 2 (a) of Article XI hereof.

 

8

 

6.             Notice of Payment on or before Delivery:

 

With the exception of the first installment, the
BUILDER shall give the BUYER at least fourteen (14) Banking Days prior notice
in writing by telex or facsimile confirmed in writing by registered air mail
confirming the due date and amount of each installment payable on or before
delivery of the VESSEL.

 

7.             Expenses:

 

All charges, expenses and bank charges outside of
Korea for remitting payments and any taxes, duties, expenses and fees outside
of Korea connected with such payment shall be for the account of the BUYER except for the BUILDER’s receiving bank.
All charges, expenses and bank charges and any taxes, duties, expenses and fees
arising inside Korea for remitting payment shall be for the account of BUILDER.

 

8.             Advance Payment:

 

The payment of the Contract Price by way of the
installments set out in Clause 4 of this Article shall be in the nature of
advance(s) and shall be subject to refund to the BUYER in accordance with the
provisions of this Contract.

 

9.             Refundment Guarantee:

 

As security for refund of installments including
interest prior to delivery of the VESSEL, the BUILDER shall, as provided in
Clause 5(a) of this
Article, furnish the BUYER with an Irrevocable Letter of Refundment Guarantee
in favour of the BUYER issued by
Export-Import Bank of Korea, acceptable to the Buyer (hereinafter called
the “Refundment Guarantee”) covering the amount of all of the first, second and third installments from the BUYER. The receipt of such
Refundment Guarantee is a pre-condition to payment of the first, second and third installments. The Refundment Guarantee shall be in the
form of Exhibit “A” attached hereto.

 

(end
of Article)

 

9

 

ARTICLE III - ADJUSTMENT OF CONTRACT
PRICE

 

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

 

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 VII hereof (ending as of twelve o’clock midnight in
Korea of the thirtieth (30th) day of delay).

 

(b)           If
the delivery of the VESSEL is delayed by more than thirty (30) days after the
Delivery Date, then, in such event, beginning at twelve o’clock midnight in
Korea of the thirtieth (30th) day after the Delivery Date, the Contract Price
shall be reduced by deduction therefrom as follows: from the 31st day to 90th
day - US$ 40,000.- per day and pro
rata for part of a day; from the 91st day to the 150th day - US$ 45,000.- per day and pro rata for part
of a day. However, the total reduction in the Contract Price shall not exceed
the amount due to cover the delay of 120 days after the first 30 days
hereinabove referred to for the delay in delivery of the VESSEL at the rate of
reduction as specified above.

 

(c)           However,
if the delay in delivery of the VESSEL should continue for a period of one
hundred and fifty (150) days from the Delivery Date, then in such event, and
after such period has expired, the BUYER may, at its option, rescind this
Contract in accordance with the provisions of Article X hereof and reject the
VESSEL.

 

The BUILDER may, at any time after the expiration of
the aforementioned one hundred and fifty (150) days of delay in delivery, if
the BUYER has not served notice of rescission as provided in Article X hereof,
demand in writing that the BUYER shall make an election, in which case the
BUYER shall within twenty (20) days after such demand is received by it notify
the BUILDER of its intention either to rescind this Contract or to consent to
the acceptance of the VESSEL at an agreed future date. If the BUYER shall not
make an election within twenty (20) days as provided herein above, the BUYER
shall be deemed to have accepted such extension of the delivery date to the
future delivery date indicated by the BUILDER and it being understood by the

 

10

 

parties hereto that if the VESSEL is not delivered by
such future date, the BUYER shall have the same right of rescission upon the
same terms and conditions as herein above provided. The reduction in the
Contract Price shall apply in case of agreed future date of delivery.

 

(d)           For
the purpose of this Article, the delivery of the VESSEL shall be deemed to be
delayed when and if the VESSEL, after taking into account all postponements of
the Delivery Date by reason of Permissible Delay as defined in Article VIII, is
not delivered by the date upon which delivery is required under the terms of
this Contract.

 

2.             Speed:

 

(a)           The
Contract Price shall not be affected or changed by reason of the actual trial
speed (as determined according to the Specifications) being less than the
Guaranteed Speed, if such deficiency is not more than four-tenths (4/10) of one
(1) knot below the Guaranteed Speed.

 

(b)           However,
if such deficiency is more than four-tenths (4/10) of one (1) knot, then the
Contract Price shall be reduced by EightyFour Thousand United States
Dollars (US$ 84,000) for each
successive whole one-tenth (1/10) of a knot and pro rata for any fraction
thereof in excess of a deficiency of four-tenths (4/10) of a knot.

 

(c)           If
the deficiency in the actual trial speed upon final sea trial is seven-tenths
(7/10) of a knot or more below the Guaranteed Speed of the VESSEL, then the
BUYER may, at its option, reject the VESSEL and rescind this Contract in
accordance with the provisions of Article X hereof, or may accept the VESSEL at
a reduction in the Contract Price as above provided that the total reduction
does not exceed Two Hundred and Fifty Two
Thousand United States Dollars (US$ 252,000.).

 

3.             Fuel Consumption:

 

(a)           The
Contract Price shall not be affected or changed in case the actual fuel
consumption, as determined by the engine manufacturer’s shop trial as specified
in the Specifications, is not more than tolerance margin of five percent (5%)
in excess of the Guaranteed Fuel Consumption.

 

(b)           However,
in the event that the actual fuel consumption at the shop

 

11

 

trial is in excess of five percent (5%) of the
Guaranteed Fuel Consumption, the Contract Price shall be reduced by the sum of
Sixty Thousand United States Dollars (US$60,000) for each full one percent (1%)
increase in fuel consumption and pro rata for any fraction of one percent (1%)
of the Guaranteed Fuel Consumption in excess of the said five percent (5%) up
to maximum of eight percent (8%) over the Guaranteed Fuel Consumption.

 

(c)           If
the fuel consumption of the main engine exceeds the Guaranteed Fuel Consumption
by more than eight percent (8%), then the BUYER may, at its option, reject the
VESSEL and rescind this Contract in accordance with the provisions of Article X
hereof, or may accept the VESSEL at a reduction in the Contract Price as above
provided for eight percent (8%) only, that is, at a total reduction of One
Hundred and Eighty Thousand United Stated Dollars (US$180,000).

 

4.             Deadweight:

 

(a)           In
the event that the actual deadweight of the VESSEL as determined in accordance
with the Specifications is less than the Guaranteed Deadweight, the Contract
Price shall be reduced by the sum of Six Hundred United States Dollars (US$600)
for each full metric ton of such deficiency being more than One Thousand Five Hundred (1,500) metric tons.

 

(b)           In
the event of such deficiency in the actual deadweight of the VESSEL being Three Thousand Nine Hundred (3,900) metric tons or more, then the BUYER may, at its option,
reject the VESSEL and rescind this Contract in accordance with the provisions
of Article X hereof or accept the VESSEL at a reduction in the Contract Price
as above provided for Three Thousand Nine Hundred (3,900) metric tons only, that is, at a
total reduction of One Million Four
Hundred Forty Thousand United
States Dollars (US$ 1,440,000).

 

5.             Container capacity:

 

(a)           In
the event that the actual container capacity of the VESSEL as determined in
accordance with the Specifications is less than the Guaranteed Container
Capacity by more than 35 TEUs, the
Contract Price shall be reduced by the sum of Thirty Five Thousand United
States Dollars (US$35,000) for each container TEU of deficiency in excess of 35 TEUs.

 

12

 

(b)           In the event
of such deficiency being 90 TEU
containers or more the BUYER may, at its option reject the VESSEL and rescind
this Contract in accordance with the provisions of Article X hereof or may
accept the VESSEL at a total reduction in the Contract Price as above provided
of One Million Nine Hundred Twenty Five Thousand United States
Dollars (US$1,925,000).

 

6.             Reductions to be Independent of Each
Other:

 

Reductions permitted herein are independent of each
other and in the event of there being contingencies which necessitate the
application of two or more paragraphs, there shall be separate reductions in
the Contract Price in respect of each contingency.

 

7.             Effect of Rescission:

 

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

 

(end
of Article)

 

13

 

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

 

1.             Approval of Plans and Drawings:

 

(a)           The
BUILDER shall submit to the BUYER three (3) copies of the plans and drawings to
be submitted thereto for its approval at its address as set forth in Article
XVIII hereof. The BUYER shall, within twenty four (24) days after
receipt thereof, return to the BUILDER one (1) copy of such plans and drawings
with the BUYER’s approval or comments written thereon, if any. A list of the
plans and drawings to be so submitted to the BUYER shall be mutually agreed
upon between the parties hereto.

 

(b)           When
and if the Representatives shall have been sent by the BUYER to the Shipyard in
accordance with Clause 2 of this Article, the BUILDER may submit the remainder,
if any, of the plans and drawings in the agreed list, to the Representatives
for his approval, unless otherwise advised by the BUYER.

 

The Representatives shall, within eighteen (18) days after receipt thereof, return to the BUILDER one (1) copy
of such plans and drawings with his approval or comments written thereon, if
any.

 

Approval by the Representatives of the plans and
drawings duly submitted to him shall be deemed to be the approval by the BUYER
for all purposes of this Contract (the “Approved Drawings”).

 

(c)           In the event
that the BUYER or Representatives shall fail to return the plans and drawings
to the BUILDER by fax or otherwise within the time limit as hereinabove
provided, such plans and drawings shall be deemed to have been automatically
approved without any comment.

 

Notwithstanding
this Article IV. 1. (Approval of Plans and Drawings) above, the BUYER and the
BUILDER hereby agree and undertake that the Specifications, all plans,
Manufacture List and all drawings, made, used and approved in accordance with
the Shipbuilding Contracts for BUILDER’s Hull No. 1558, shall be used for the
VESSEL without any further approval and modification from the BUYER unless
otherwise mutually agreed by both parties.

 

The
BUYER further acknowledge that any change or modification or request
therefor to be made by the BUYER during the construction

 

14

 

phase of the VESSEL will reduce the series/repeat effects of the relevant
vessel as originally contemplated by the parties hereto upon execution of the Shipbuilding Contract and thus, may be acceptable and incorporated at the BUILDER’s sole discretion only upon payment of the costs incurred by the BUILDER due to such change or modification.

 

2.             Appointment of BUYER’s Representatives:

 

The Buyer may send to and maintain at the Shipyard, at
the BUYER’s own cost and expense, one or more Representatives who shall be duly
authorized in writing by the BUYER (herein called the “Representatives”) to
supervise the construction by the BUILDER of the VESSEL and to act on behalf of
the BUYER in connection with the modifications of the Specifications, approval
of the plans and drawings, attendance to the tests, inspections and trials
relating to the VESSEL, and any other matters for which he is specifically
authorized by the BUYER. The Representatives may appoint assistant(s) to attend
at the Shipyard for the purposes as aforesaid.

 

Upon appointment of the Representatives, the BUYER
shall notify the BUILDER in writing of the name and the scope of authority of
the Representatives to be
dispatched as a single unified team to the BUILDER’s yard for supervision of
the construction of the VESSEL.
Further, the BUYER understands and agrees that regardless of any Technical
Agreement, any and all communications and correspondences relating to the
construction of the VESSEL shall be made through the BUYER only. Before
the commencement of any item of work under this Contract, the BUILDER shall,
whenever reasonably required previously exhibit, furnish to, and within the
limits of the Representative’s authority, secure the approval from the
Representatives of any plans and drawings prepared in connection therewith.

 

3.             Inspection by BUYER’s Representatives:

 

The necessary inspections and testing of the VESSEL
shall be carried out by the Classification Society, other regulatory bodies and
an inspection team of the BUYER, including the Representatives, throughout the
entire period of construction, in order to ensure that the construction of the
VESSEL is duly performed in accordance with this Contract and the
Specifications.

 

4.             Rights of the Representatives:

 

(a)           The
Representatives shall, at all times during the construction until

 

15

 

delivery and acceptance of the VESSEL, have the
reasonable right to inspect the VESSEL and all work in progress, materials
utilized and quality of work in connection with the construction thereof
wherever such work is being done within the Shipyard’s premises or wherever
such materials and equipment are stored, for the purpose of determining that
the VESSEL is being constructed in accordance with the terms of this Contract
and the Specifications.

 

(b)           The
Representatives shall have the unrestricted right to visit the VESSEL and all
work in progress. The Representatives shall also have the reasonable right to
visit, with the BUILDER’s attendance or introduction as necessary, all property
and premises utilized in connection with the construction of the VESSEL,
wherever and whenever such premises is being utilized or such property is
stored.

 

(c)           The
construction of the VESSEL shall be subjected, throughout the entire period of
construction, to quality control by a quality control department of the
BUILDER. The necessary tests and inspection by the Classification Society and
other regulatory bodies concerned shall also be carried out and recorded and
all results of quality control and tests and inspections shall be communicated
in the form documented, or in the absence of documentation, orally, to the
Representatives.

 

(d)           The
Representatives may attend during construction of the VESSEL, tests and
inspection of the VESSEL, its machinery and equipment. The BUILDER shall give
the Representatives at least one (1) week advance notice for tests and
inspections within the Shipyard stating particulars of any tests or inspections
which may be attended by the Representatives provided that in exceptional
circumstances the manner in which such notice is given may be modified by
mutual agreement. Notice of tests and inspections to be conducted shall also be
given to the Representatives latest up to 5:00 p.m. of the day prior to the day
on which any tests or inspections shall occur.

 

For test or inspections outside the Shipyard,
including manufacturer’s shop tests, sufficient advance notice to allow for the
Representatives to arrange transportation shall be given. This advance notice
should not be less than seven (7) days for tests or inspections that require
air travel for attendance.

 

Inspection schedule must be reasonable at all times in
order to allow the BUYER’s Representatives to carry out their duties properly
and inspections must be spread over a reasonable time, but to follow building
schedule at the same rate. In principle, inspections will not take place on
Saturdays, Sundays and Holidays, unless mutually agreed upon and necessary in
order to meet the BUILDER’s schedule.

 

Failure of the Representatives to be present at the
tests and inspections

 

16

 

after due notice shall be deemed to be a waiver of the
BUYER’s right to be present. In such case the BUYER shall be obliged to accept
the result of such test on the basis of the BUILDER’s certificate, signed by
the Classification Society, that the said result is conforming to the
provisions of this Contract and the Specifications.

 

(e)           The
Representatives shall notify the BUILDER promptly, in writing, if, in his
opinion, the VESSEL is not being constructed in accordance with this Contract
or the Specifications. The BUYER may at its election send a copy of such
notification to the Classification Society.

 

(f)            No act or
omission of the Representatives or his assistants shall, in any way, diminish
or impair the liability of the BUILDER under this Contract and/or the
Specifications.

 

(g)           The
Representatives shall advise and consult the BUILDER on all matters pertaining
to the construction of the VESSEL, as may be required by the BUILDER, or as he
may deem necessary.

 

(h)           The
inspection thus exercised on behalf of the BUYER shall not alter or diminish
the responsibility of the BUILDER to construct the VESSEL in accordance with
the Contract and the Specifications.

 

(i)            In the
events that the Representatives shall advise the BUILDER that he has discovered
and believes the VESSEL is not being constructed in accordance with this
Contract or the Specifications, and the BUILDER shall not agree with the views
of the Representatives in such respect, as provided in Clause (e) of this
Article, either the BUYER or the BUILDER shall seek a decision of the
Classification Society in accordance with clause 1 of Article XII of this
Contract.

 

The Classification Society shall determine whether or
not a non-conformity with the provisions of this Contract or the Specifications
exists. If the Classification Society enters a determination in favour of the
BUYER, then in such case the BUILDER shall make the necessary alterations or changes,
or if such alterations or changes cannot be made in time to meet the
construction schedule for the VESSEL and the BUYER so agrees, which shall not
be unreasonably withheld, but without prejudice to BUYER’s other rights under
this Contract, the Contract Price shall be fairly and reasonably reduced (as
agreed between the Parties hereto and failing which by Arbitration as
hereinafter provided) in lieu of such alterations and changes.

 

If the Classification Society enters a determination
in favour of the BUILDER, then the time for delivery of the VESSEL shall be
extended for the period of delay in construction, if any, occasioned by such
proceedings, and the BUYER shall compensate the BUILDER for the

 

17

 

proven loss and damages incurred by the BUILDER as a
result of the dispute herein referred to.

 

The BUILDER undertakes to inform the Classification
Society in writing within thirty (30) days of the date of this Contract that
the BUILDER has no objection to the BUYER making an arrangement with the
Classification Society for receiving copies of any technical correspondence
exchanged between the BUILDER and the Classification Society in the course of
design, testing, approval, inspection, survey, supervision, certification and
construction of the VESSEL.

 

5.             Facilities:

 

The BUILDER shall, at no cost to the BUYER, furnish
suitably lighted, and air conditioned office space, for a team of not less than
six (6) Representatives all along, including changing room, toilet and shower
space, office furniture, drawing table and filing cabinets. Separate telephone
lines and facsimile receiver to be provided in Representatives office and
international communication service shall be paid by the BUYER at normal rate
of charges of Korean telecommunication company. However, the changing room,
toilet and shower space shall be supplied as public facilities.

 

During the last forty five (45) days of the period of
construction of the VESSEL, office space shall be provided to accommodate the
VESSEL’s senior officers as far as practicable in the Representatives’ office
space.

 

With an ample prior notice by the BUYER, the BUILDER
shall arrange for the Representatives suitable and convenient living quarters
nearest possible to the Shipyard and are to provide for the purpose thereof
apartments/houses fully furnished and equipped in Western style with minimum
two (2) bedrooms and one (1) living room for each Representatives, all at the
BUYER’s expenses.

 

If accommodation is not arranged before arrival of
Representatives the BUILDER shall provide hotel accommodation (of minimum four
(4) star class) until accommodation is arranged in all respects. Transportation
to and from the Shipyard for Representatives and transportation for
Representatives to and from the BUILDER’s sub-contractors for inspections shall
be arranged by the BUILDER during the whole building period in accordance with
BUILDER’s practice.

 

6.             Liability of BUILDER:

 

The Representatives and his assistant(s) shall at all
times be deemed to be the employees of the BUYER and not of the BUILDER.

 

18

 

The BUILDER shall be under no liability whatsoever to
the BUYER, the Representatives or his assistant(s) for personal injuries,
including death, suffered during the time when he or they are on the VESSEL, or
within the premises of either the BUILDER or its subcontractors, or are
otherwise engaged in and about the construction of the VESSEL, unless, however,
such personal injuries, including death, was caused by negligence or willful
misconduct of the BUILDER, or of any of its employees or agents or
subcontractors.

 

Nor shall the BUILDER be under any liability
whatsoever to the BUYER, the Representatives or his assistant(s) for damage to,
or loss or destruction of property of the BUYER or of the BUYER’s
Representatives or his assistant(s), unless such damage, loss or destruction
was caused by negligence or willful misconduct of the BUILDER or of any of its
employees or agents or subcontractors.

 

7.             Responsibility of BUYER:

 

The BUYER shall undertake and assure that the
Representatives and his assistant(s) shall carry out their duties hereunder in
accordance with the normal shipbuilding practice and in such a way so as to
avoid any unreasonable disturbance in the construction schedule of the BUILDER
in respect of the VESSEL.

 

The Representatives and his assistant(s) shall observe
the work rules and regulations prevailing at the BUILDER’s and its
subcontractors’ and suppliers’ premises.

 

8.             Information to Representatives:

 

The BUILDER shall promptly provide all required
information to the Representatives and his assistant(s) and shall secure that
its subcontractors and suppliers shall promptly provide all such information as
he or they may reasonably request in connection with the construction of the
VESSEL.

 

(end
of Article)

 

19

 

ARTICLE V - MODIFICATIONS, CHANGES AND
EXTRAS

 

1.             How Effected:

 

Any modifications and/or changes in the Specifications
under which the VESSEL is to be constructed shall be made by written agreement
of the parties hereto provided, however, that any modifications and/or changes
will not adversely affect the BUILDER’s planning or programme in relation to
the BUILDER’s other commitments and if the BUYER and BUILDER shall agree to
adjustment of the Contract Price, time for delivery of the VESSEL and other
terms and conditions of this Contract as hereinafter provided. The BUILDER
hereby agrees to exert its best efforts to accommodate such reasonable request
by the BUYER so that the said changes and/or modifications may be made at a
reasonable cost and within the shortest period of time which is reasonably
possible. Any such agreement for modifications and/or changes shall include an
agreement as to the increase or decrease, if any, in the Contract Price of the
VESSEL together with an agreement as to any extension or reduction in the time
of delivery, or any other alterations in this Contract, or the Specifications
or the Approved Drawings occasioned by such modifications and/or changes.

 

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

 

The BUILDER may make minor changes to the
Specifications, if found necessary for introduction of improved production
methods or otherwise, provided that the BUILDER shall first obtain the BUYER’s
written approval which shall not be unreasonably withheld.

 

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

 

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

 

(a)           If
such alterations or changes are compulsory for the VESSEL,

 

20

 

either of the parties hereto, upon receipt of such
information from the Classification Society or such other regulatory bodies,
shall promptly transmit the same to the other in writing, and the BUILDER shall
thereupon incorporate such alterations or changes into the construction of the
VESSEL, provided that the BUYER shall first agree to reasonable adjustments
required by the BUILDER in the Contract Price, the Delivery Date and other
terms and conditions of this Contract and the Specifications occasioned by or
resulting from such alternations or changes.

 

(b)           If
such alterations or changes are not compulsory for the VESSEL, but the BUYER
desires to incorporate such alterations or changes into the construction of the
VESSEL, then the BUYER shall notify the BUILDER of such intention. The BUILDER
shall accept such alterations or changes, provided that such alterations or
changes will not, in the judgment of the BUILDER, adversely affect the
BUILDER’s planning or program in relation to the BUILDER’s other commitments,
and provided, further, that the BUYER shall first agree to reasonable
adjustments required by the BUILDER in the Contract Price, the Delivery Date and
other terms and conditions of this Contract and the Specifications occasioned
by or resulting from such alternations or changes. Agreements as to such
alterations or changes under this Paragraph 2 shall be made in the same manner
as provided in Paragraph 1 of this Article for modifications or changes to the
Specifications.

 

3.             Substitution of Materials:

 

In the event that any of the materials and equipment
more specifically described in the definition of VESSEL and required by the
Specifications or otherwise under this Contract for the construction of the
VESSEL can not be procured in time to effect delivery of the VESSEL, or are in
short supply to maintain the delivery date of the VESSEL, the BUILDER may,
provided the BUYER so agrees in writing, supply other materials and equipment
of the best available and like quality, meeting the requirements of the
Classification Society and of the rules, regulations, requirements and
recommendations with which the construction of the VESSEL must comply. Any
agreement as to such substitution of materials and equipment shall be effected
in the manner as provided in Clause 1 of this Article, and shall, likewise, be
in accordance with the terms and conditions of this Contract affected by such
substitution.

 

(end of Article)

 

21

 

ARTICLE VI - TRIALS AND ACCEPTANCE

 

The sea trial shall be done on the basis that
the VESSEL is the repeat and series vessel of BUILDER’s Hull No. 1558.

 

1.             Notice:

 

The sea trial shall start when the VESSEL is ready for
the sea trial according to the Specifications.

 

The BUILDER shall give the BUYER at least Thirty (30)
days estimated prior notice and Seven (7) days confirming prior notice by
telefax or facsimile confirmed in writing of the time and place of any trial
run of the VESSEL, and the BUYER shall promptly acknowledge receipt of such
notice. The BUYER shall have its Representatives on board the VESSEL to witness
such trial run.

 

Should such Representatives fail to be present after
the BUILDER’s due notice to the BUYER as provided above, the BUILDER shall be
entitled to conduct such trial run with the presence of the Classification
Surveyor only without the Representatives of the BUYER being present and in
such case the BUYER shall be obligated to accept the VESSEL on the basis of a
certificate of the Classification Society and certificate of the BUILDER
stating that the VESSEL, upon trial run, is found to conform to this Contract
and Specifications.

 

2.             Weather Condition:

 

The trial run shall be carried out under the weather
condition which is deemed favorable enough by the judgment of the BUILDER. 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
condition permits. It is agreed that, if during the trial run of the VESSEL,
the weather should suddenly become so unfavourable (i.e. at least sea and wind
state of Beaufort 3) that orderly conduct of the trial run can no longer be
continued, the trial run shall be discontinued and postponed until the first
favorable day next following, unless the BUYER shall assent in writing to
acceptance of the VESSEL on the basis of the trial run already made before such
discontinuance has occurred.

 

Any delay of trial run caused by such unfavourable
weather condition shall operate to postpone the Delivery Date by the period of
the delay involved and such delay shall be deemed as Permissible Delay in the
delivery of the VESSEL.

 

22

 

3.             How Conducted:

 

(a)           The
VESSEL shall run the official sea trial in the manner as specified in the
Specifications and shall prove fulfillment of the performance requirements for
the trial run as set forth in the Specification.

 

(b)           All
expenses in connection with the trial run (including bunkers, diesel oil,
lubricating oil and greases) including proper insurance are to be for account
of the BUILDER and the BUILDER shall provide, at its own expense, the necessary
crew to comply with conditions of safe navigation.

 

4.             Method of Acceptance or Rejection:

 

(a)           Upon
completion of the trial run, the BUILDER shall give the BUYER a notice by telex
or facsimile confirmed in writing of completion of the trial run and promptly
provide the BUYER with all protocols and records of tests and trials, as and if
the BUILDER considers that the results of the trial run prove conformity of the
VESSEL to this Contract and Specifications.

 

The BUYER shall, within Six (6) working days after
receipt of the aforementioned records of tests and trials from the BUILDER,
notify the BUILDER by telex or facsimile confirmed in writing of its acceptance
or rejection of the VESSEL’s conformity to this Contract and the
Specifications.

 

(b)           Should
the records of tests and trials indicate that the VESSEL does not conform to
the requirements of this Contract or the Specifications and if the BUILDER
agrees with the BUYER’s notice of non-conformity, then the BUILDER shall
promptly take the necessary steps to correct such non-conformity and notify the
BUYER promptly in writing or by telex or facsimile confirmed in writing
advising the BUYER of the estimated additional time required for the necessary
alterations to correct such non-conformity.

 

Upon completion of correction of such non-conformity,
new trial run or runs as necessary will be made to prove conformity of the
VESSEL to this Contract and Specifications if so found necessary by the
BUILDER, the Classification Society and the Representatives. The BUILDER shall
notify the BUYER of the time and place of any new trial run no less than five
(5) working days beforehand, unless otherwise mutually agreed to. All
provisions of the trial run shall apply to such new trial run.

 

23

 

Notwithstanding the aforesaid, the BUYER may accept
the VESSEL qualifying its acceptance by reservations regarding works or parts
which have not been completed or properly installed prior to such acceptance.
In the event that BUYER makes such qualified acceptance the parties will reach
an agreement in writing, prior to the delivery of the VESSEL, as to how and
when to remedy the items being the subject of the qualified acceptance, at the
BUILDER’s cost and expense, either before or after the delivery, as quickly as
possible, without delaying the date of delivery and without causing the BUYER
inconvenience in the operation of the VESSEL.

 

(c)           In
the event that the BUILDER fails to correct any non-conformity of which it has
been given notice by the BUYER, which non-conformity has been confirmed by the
Classification Society, the BUYER shall indicate what aspect of the VESSEL does
not conform to this Contract and/or the Specifications and the BUILDER shall
promptly correct those non-conformities.

 

(d)           In
the event that the BUYER fails to give notice to the BUILDER by fax and/or
telex confirmed in writing of the VESSEL within the period as provided in the
above sub-paragraph (a) or (b), the BUYER shall be deemed to have accepted the
VESSEL.

 

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

 

5.             Effect of Acceptance:

 

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

 

6.      Disposition of Surplus Consumable Stores:

 

(a)     Any fuel oil,
lubricating oil and greases furnished and paid for by the BUILDER for trial
runs remaining on the VESSEL, at the time of acceptance of the VESSEL by the
BUYER, shall be bought by the

 

24

 

BUYER from the BUILDER at
the BUILDER’s net purchase price for such supply in Korea and the payment by
the BUYER thereof shall be made at the time of delivery of the VESSEL.

 

(b)    If
any of the consumables under (a) above are furnished by the BUYER, BUILDER shall pay at time of delivery
for quantities consumed until delivery at BUYERS net purchase price.

 

(end
of Article)

 

25

 

ARTICLE VII - DELIVERY

 

1.             Time and Place:

 

The VESSEL, duly completed in accordance with this
Contract and the Specifications, shall be delivered by the BUILDER to the BUYER
at the BUILDER’s wharf at the Shipyard safely afloat on or before January 31, 2007 (hereinafter
called the “Delivery Date”) after completion of satisfactory tests and trials
and acceptance in accordance with Article VI hereof, except that, in the event
of delays in the construction of the VESSEL or any performance required under
this Contract due to causes which under the terms of this Contract permit
postponement of the date for delivery, the aforementioned Delivery Date of the
VESSEL shall be postponed accordingly.

 

Earlier Delivery Date is subject to BUYER’s prior
written consent, such consent not to be unreasonably withheld.

 

2.             When and How Effected:

 

Provided that the BUILDER and the BUYER shall have
fulfilled all of their obligations stipulated under this Contract, the delivery
of the VESSEL shall be effected forthwith upon acceptance thereof by the BUYER,
by concurrent delivery by each of the parties hereto to the other of the
PROTOCOL OF DELIVERY AND ACCEPTANCE, acknowledging delivery of the VESSEL by
the BUILDER and acceptance thereof by the BUYER, which Protocol of Delivery and
Acceptance shall be prepared in duplicate and signed by each of the parties
hereto with additional copies as required by the BUYER or the BUILDER.

 

3.             Documents to be delivered to BUYER:

 

Acceptance of the VESSEL by the BUYER shall be
conditional upon receipt by the BUYER from the BUILDER of the following duly
authenticated documents (all in the English language), which shall accompany
the aforementioned PROTOCOL OF DELIVERY AND ACCEPTANCE:

 

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

 

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

 

26

 

Specifications.

 

(c)           PROTOCOL
OF STORES OF CONSUMABLE NATURE covering items referred to under Clause 6 of
Article VI hereof.

 

(d)           ALL
CERTIFICATES required to be furnished upon delivery of the VESSEL pursuant to
this Contract and the Specifications and for the customary shipbuilding
practice.

 

It is agreed that if, through no fault on the part of
the BUILDER, the Classifications certificates and/or other certificates are not
available at the time of delivery of the VESSEL, provisional certificates valid
for at least five (5) months shall be accepted by the BUYER, provided that the
BUILDER shall furnish the BUYER with the formal certificates as promptly as
possible after such certificates have been issued, but in any event timely
before the expiry of the provisional certificates.

 

All certificates to be delivered to the BUYER
hereunder pursuant hereto shall be clean and valid in every respect and without
any recommendation or notation.

 

(e)           DECLARATION
OF WARRANTY of the BUILDER that the VESSEL is delivered to the BUYER free and
clear of any liens, charges, claims, mortgages, or other encumbrances upon the
BUYER’s title thereto, and in particular that the VESSEL is absolutely free of
all burdens in the nature of imposts, taxes or charges imposed by the Korean
governmental authorities whether national or local as well as of all
liabilities of the BUILDER to its subcontractors, suppliers, employees and
crew(s), and of all the liabilities arising from the operation of the VESSEL in
trial runs, or otherwise, prior to delivery.

 

(f)            DRAWINGS
AND PLANS in quadruplicate pertaining to the VESSEL, including List of Finished
Plans and As Built Specs and the trim and stability booklet, technical
descriptions, test results and other data, information and documents in the
possession of the BUILDER concerning the design and construction of the VESSEL
which shall be forwarded to the BUYER at no additional cost as stipulated in
the Specifications.

 

(g)           COMMERCIAL
INVOICE

 

(h)           BILL OF
SALE

 

(i)            BUILDER’s
CERTIFICATE

 

27

 

If required by the BUYER, the BUILDER shall arrange
for the notarization and legalization in Korea by a consulate of the VESSEL’s
country of registration of any of the listed documents/certificates which may
be required to be notarized/legalized for the purposes of the BUYER’s
registration.

 

4.             Tender of VESSEL:

 

If the BUYER fails to take delivery of the VESSEL
after completion thereof according to this Contract and Specifications without
any justifiable reason, the BUILDER shall have the right to tender delivery of
the VESSEL after fulfillment of all BUILDER’s obligations as provided herein.

 

5.             Title and Risk:

 

Title to and risk of loss of or damage to 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 and risk of loss of or damage to the VESSEL and
her equipment and risk of items and materials supplied by the BUYER or its
suppliers shall be with the BUILDER.

 

Notwithstanding the provisions of this Article, the
title to the material and equipment supplied by the BUYER shall remain with the
BUYER.

 

6.             Removal of VESSEL:

 

The BUYER shall take possession of the VESSEL
immediately upon delivery and acceptance thereof and, if so requested by the
BUILDER shall remove the VESSEL from the premises of the Shipyard within five
(5) days after delivery and acceptance thereof is effected.

 

If the BUYER shall not remove the VESSEL from the
premises of the Shipyard within the aforesaid five (5) days, in such event, the
BUYER shall pay to the BUILDER the reasonable mooring charges of the VESSEL.

 

7.             Notices:

 

Prior to the delivery of the VESSEL, the BUILDER shall
give notice to the BUYER with the following schedule:

 

28

 

90 DAYS PRIOR TO DELIVERY - 30 DAYS ESTIMATED DELIVERY
DATE;

 

60 DAYS PRIOR TO DELIVERY - 10 DAYS ESTIMATED DELIVERY
DATE;

 

30 DAYS PRIOR TO DELIVERY - 7 DAYS ESTIMATED DELIVERY
DATE;

 

15 DAYS PRIOR TO DELIVERY - 1 DAY DEFINITE DELIVERY
DATE

 

(end
of Article)

 

29

 

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

 

1.             Causes of Delay (Force Majeure):

 

If, at any time before the actual delivery, either the
construction of the VESSEL or any performance required as a prerequisite of
delivery of the VESSEL is delayed due to Acts of God; acts of princes or
rulers; compulsory requirements of government authorities; war, blockade,
revolution, insurrections, mobilization, civil war; vandalism; sabotages,
strikes in the shipbuilding industry in Korea, lockouts or other labor
disturbances; plague or other epidemic quarantines; flood, typhoon, hurricanes,
or other unusual severe weather conditions not included in normal planning;
earthquakes; tidal waves; landslides; fires, explosions; embargoes; import
restrictions; inability to obtain delivery or delays in delivery of machinery
or equipment, provided that at the time of timely ordering the same could
reasonably be expected by the BUILDER to be delivered in time; prolonged
failure of electric current, oil or gas; defects in materials, machinery or
equipment which could not have been detected by the BUILDER using reasonable
care; casting or forging rejects or the like; delays caused by the
Classification Society or other bodies whose documents are required;
destruction of or severe damage to the Shipyard or works of the BUILDER, its
relevant subcontractors or suppliers, or of or to the VESSEL or any part
thereof, by any causes herein described; other causes or accidents beyond the
reasonable control of the BUILDER, its relevant subcontractors or suppliers of
a parallel nature whether or not indicated by the foregoing words; provided all
the foregoing events where not existing and known to the BUILDER at the date of
this Contract or the effect of which could not have been avoided or reduced by
the exercise of due diligence by the BUILDER or his relevant subcontractors, as
the case may be, and provided further that the events and/or delays were not
caused or contributed by the negligence or misconduct of the BUILDER or his
relevant sub-contractors, as the case may be; and provided further that any of
the above events directly affect the construction schedule of the VESSEL; then
and in any such case, the date of delivery shall be postponed for a period of
one day for every one working day actually lost by any of the aforesaid events.

 

The BUILDER shall take immediate steps to overcome and
mitigate the delay and to recover time lost, if any. Delays resulting from
contingencies occurring simultaneously shall count as one delay only.

 

Any cause of delay for which the BUILDER claims that
it is entitled to a postponement of the Delivery Date under this Contract
resulting from the BUILDER’s subcontractors shall be subject to any of the
aforementioned

 

30

 

contingencies being applicable to the subcontractors.

 

2.             Notice of Delay:

 

As soon as possible after and in any event within
seven (7) days after the date of the commencement of any cause of delay, on
account of which the BUILDER claims that it is entitled under this Contract to
a postponement of the Delivery Date excluding days due to arbitration, the
BUILDER shall notify the BUYER in writing or by telex or facsimile confirmed in
writing of the date when such cause of delay commenced and the reasons thereof,
and the estimated duration of the probable delay in delivery of the VESSEL, and
shall provide the BUYER, if available, evidence to justify the delay claimed.
Likewise, within seven (7) days after the date of ending of such cause of
delay, the BUILDER shall notify the BUYER in writing or by telex or facsimile
confirmed in writing of the date when such cause of delay ended.

 

In any event the BUILDER shall also notify the BUYER
of the period of time by which the BUILDER claims the Delivery Date should be
postponed by reason of such cause of delay within the same seven (7) days
period as aforesaid. Failure of the BUILDER to notify the BUYER of its claim
for postponement of the Delivery Date within a period of seven (7) days from
the date of cessation of the event causing the delay shall be deemed a waiver
of its claim.

 

Failure of the BUYER to object to the BUILDER’s claim
for postponement of the Delivery Date within Fourteen (14) days after receipt
by the BUYER of such notice of claim shall be deemed to be a waiver by the
BUYER of its right to object to such postponement of the Delivery Date.

 

The burden of proof shall always be on the BUILDER to
establish the facts entitling it to rely on this clause and that due notices
were given and that it has taken all reasonable steps to avoid or mitigate the
delay.

 

3.             Definition of Permissible Delay:

 

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

 

31

 

4.             Right to Rescind for Excessive Delay:

 

If the total accumulated time of all delays claimed by
the BUILDER on account of the causes specified in Clause 1 of this Article, excluding
other delays of the nature which under the terms of this Contract permit
postponement of the Delivery Date, amounts to one hundred and fifty (150) days
or more, then, in such event, the BUYER may rescind this Contract in accordance
with the provisions of Article X hereof.

 

The BUILDER may, at any time after the accumulated
time of the aforementioned delays justifying the rescission by the BUYER,
demand in writing that the BUYER shall make an election, in which case the
BUYER shall, within twenty one (21) days after such demand is received by the
BUYER, either notify the BUILDER of its intention to rescind this Contract, or
consent to a postponement of the Delivery Date to an agreed specific future
date. If the BUYER elects to consent to the postponement of the Delivery Date
at such agreed specific future date, then such date shall become the
contractual delivery date, for the purpose of this Contract and if the VESSEL
is not delivered by such revised delivery date, the BUYER shall have the same
right of rescission upon the same terms as herein provided.

 

(end
of Article)

 

32

 

ARTICLE IX - WARRANTY OF QUALITY

 

1.             Guarantee:

 

(a)           The
BUILDER guarantees the VESSEL in her entirety and each and every part thereof
and in particular but without prejudice to the generality of the foregoing, her
design, drawing, plans, the hull and all machinery, engines, engine room
auxiliaries, equipment, fittings, outfittings, appurtenances, furniture, parts,
spares, and materials manufactured, furnished, installed or incorporated in the
VESSEL by the BUILDER and/or its subcontractors under this Contract against all
defects, omissions, shortages and non-conformity, defective or unsuitable
materials or equipment, faulty design and/or performance or poor workmanship,
(hereinafter collectively referred to as “Defect(s)”), whether or not such
Defect(s) affect seaworthiness or class, provided such Defect(s) have arisen
within a period of twelve (12) calendar months as from the date when the VESSEL
was delivered to and accepted by the BUYER, (hereinafter referred to as the
“Guarantee Period”), provided that such Defect(s) are not the result of an
accident, ordinary wear and tear, misuse, negligence or willful neglect or
omissions on the part of the BUYER, its employees or agents.

 

The BUILDER shall pass to the BUYER information about
any claims that the BUILDER may have against subcontractors for Defect(s) in
deliveries to the VESSEL, without in any way, diminishing the BUILDER’s guarantee
as aforesaid.

 

(b)           In
the event that the normal guarantee period stipulated by manufacturers or
suppliers or various components of machinery, materials of equipment,
appurtenances and outfit furnished to the BUILDER and embodied in the VESSEL
exceeds the aforesaid twelve (12) calendar months Guarantee Period, the
benefits of such extended guarantee rights shall be made available to the BUYER
by the BUILDER without any additional cost to the BUYER.

 

(c)           Notwithstanding
the foregoing, the BUILDER shall be responsible to arrange that the paint
manufacturer shall guarantee defects in paint and/or application on under water
parts of the VESSEL for additional 12 calendar months commencing from the end
of the Guarantee Period.

 

2.             Notice of Defects:

 

The BUYER or its duly authorized Representatives shall
notify the BUILDER in writing, or by telex or facsimile confirmed in writing of
any

 

33

 

Defect for which claim is made under this guarantee,
as promptly as possible after discovery thereof. The BUYER’s written notice
shall describe in reasonable detail the nature and extent of the Defect(s).

 

The BUILDER shall have no obligation for any Defect
discovered prior to the expiry date of the Guarantee Period unless notice of
such Defect is received by the BUILDER not later than thirty (30) days after
such expiry date. Telex or facsimile advice within twenty (20) days that a
claim is forthcoming will be sufficient compliance with the requirement as to
time, provided that full description of such Defect(s) in written form shall be
received by the BUILDER not later than thirty (30) days after such expiry date.

 

3.             Remedy of Defects:

 

(a)           The
BUILDER shall remedy, at its cost and expense, any Defect(s) against which the
VESSEL is guaranteed under this Article, by making all necessary repairs or
replacements as well as dismantling, removal, reassembling and incidental works
at the Shipyard or elsewhere as provided in Sub-clause (b) of this Clause, at
the BUYER’s convenience.

 

If the cause of the Defect(s) is not known or if the
Defect(s) is of a recurring nature the BUILDER shall, at its expense, explore
the reason for such Defect(s) and take all necessary steps and measures to
remedy same in such a way as to eliminate the reoccurrence thereof.

 

(b)           However,
if, in the BUYER’s sole discretion, it is impracticable to bring the VESSEL to
the Shipyard, the BUYER may cause the necessary repairs or replacements to be
made elsewhere which is deemed suitable by the BUYER for the purpose (including
by the VESSEL’s crew), provided that, in such event, the BUILDER may forward or
supply replacement parts or materials to the VESSEL, unless forwarding or
supplying to the VESSEL would impair or delay the operation or working schedule
of the VESSEL. In the event that the BUYER proposes to cause the necessary
repairs or replacements for the VESSEL to be made at any other shipyard or
works than the Shipyard, the BUYER shall first, but in all events as soon as
possible, give the BUILDER notice in writing by telex or facsimile confirmed in
writing of the time and place when and where such repairs will be made, and if
the VESSEL is not thereby delayed, or her operation or working schedule is not
thereby impaired, the BUILDER shall have the right at its own cost and expense
to verify by its own representatives the nature, cause and extent of the
Defect(s) complained of. It is understood that defects to underwater parts of
the VESSEL, which were found and

 

34

 

detected during the Guarantee Period, may be made good
at the time of the first dry-docking of the VESSEL following the expiration of
the Guarantee Period.

 

The BUILDER shall, in such case, promptly advise the
BUYER by telex or facsimile confirmed in writing, after such examination has
been completed, of its acceptance or rejection of the Defect(s) as ones that
are covered by the guarantee herein provided. Upon the BUILDER’s acceptance of
the Defect(s) as justifying remedy under this Article, or upon award of the
arbitration so determining, the BUILDER shall pay to the BUYER for such repairs
or replacements a sum equal to the reasonable cost of making the same repairs
or replacements in a first class Korean shipyard, at the prices prevailing at
the time of such repairs or replacements are made. Payment for the work done to
remedy the Defect(s) shall be settled regularly during the Guarantee Period and
the actual reimbursement for the guarantee shall be made in a lump sum at the
expiry of the Guarantee Period for minor items (up to US$50,000) and promptly
by the BUILDER after settlement of the same for major items.

 

(c)           In
any case, the VESSEL shall be taken, at the BUYER’s cost and responsibility, to
the place elected, ready in all respects for such repairs or replacement. In
case of breakdown at sea due to Defects the cost of bringing the VESSEL to a
repair yard shall be for BUILDER’s account.

 

(d)           Notwithstanding
anything contained in Clause 3 of this Article, the BUYER shall be entitled to
require the BUILDER to forward to the VESSEL, wherever it may be,
replacement(s) for defective part(s) to which the BUILDER’s guarantee under
this Article applies, and in such case the BUILDER shall forward the same by
such means as to reach the VESSEL as expeditiously as possible.

 

In emergency cases when the VESSEL will be prevented
from sailing or from completing its voyage, forwarding of replacement(s) as
aforesaid will be effected by the BUILDER by air cargo. The BUILDER shall bear
and pay all C.I.F. costs of the replacement(s) until they arrive on board the
VESSEL.

 

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

 

4.             Extent of BUILDER’s
Responsibility:

 

(a)           The
BUILDER shall have no responsibility or liability for any other defect(s)
whatsoever in the VESSEL than the Defect(s) specified in Clause 1 of this
Article.

 

35

 

The BUILDER shall not in any circumstances be
responsible or liable for any consequential loss, damage or expense including
but not limited to loss of time, loss of profit of earning or demurrage
directly or indirectly occasioned to the BUYER by reason of the Defect(s) in
Clause 1 of this Article.

 

(b)           The
BUILDER shall not be responsible for any defect in any part of the VESSEL which
may, subsequently to delivery of the VESSEL, have been replaced or repaired in
any way by any other contractor, unless approved by the BUILDER, or for any
defect which has been caused or aggravated by omission or negligent use and
maintenance of the VESSEL on the part of the BUYER, its servants or agents or
by ordinary wear and tear or by any other occurrence beyond control of the
BUILDER as specified in this Contract.

 

5.             The
Guarantee Period shall be extended in, inter alia, the following cases and to
the following extent:

 

(a)           If,
during the Guarantee Period, the VESSEL shall not be capable of performing
services for periods consisting of at least twenty four (24) hours each and
aggregating to eight (8) days or more and such non-capability shall be as a
result of any Defect(s) covered by the BUILDER’s guarantee under Clause 1 of
this Article, the Guarantee Period shall be extended by such period(s) of time
lost in remedying of the defect(s) for which the BUILDER is responsible
according to this Contract or in awaiting part(s) required for the purpose to
remedying such defect(s).

 

(b)           The
Guarantee Period shall further, in relation to reservations made by the BUYER
pursuant to Clause 4(b) of Article VI hereof, be extended up to the expiration
of twelve (12) calendar months following the time when such reservations are
respectively made good by the BUILDER after the delivery of the VESSEL to the
BUYER as herein provided.

 

6.             Wherever
any Defect(s) covered by the BUILDER’s Guarantee under this Article has been
remedied, in whole or in part, the BUILDER’s Guarantee under this Article and
the provisions of this Article shall apply anew in respect of the part(s) to
which such remedying relates and the aforesaid Guarantee Period shall apply in
respect thereof, save that the said Guarantee Period shall commence as from the
time of such remedying in lieu of as from the time of the delivery of the
VESSEL to the BUYER.

 

7.             If
attempts at remedying any Defect(s) covered by the BUILDER’s Guarantee under
this Article, carried out by or on behalf of the BUILDER

 

36

 

as aforesaid, are unsuccessful, the BUILDER shall
remain liable to remedy such Defect(s) until same be satisfactorily remedied.

 

8.             The
BUILDER shall be liable under its Guarantee under this Article also for damage
to any part of the VESSEL occasioned directly by any Defect(s) to which the
BUILDER’s Guarantee under this Article extends in any other part of the VESSEL.

 

9.             Guarantee Engineer:

 

The BUILDER shall at the request of the BUYER appoint
an English speaking Guarantee Engineer to serve on the VESSEL as its
Representatives for a period of three (3) months from the date the VESSEL is
delivered. However, if the BUYER and the BUILDER shall deem it necessary to
keep the Guarantee Engineer on the VESSEL for a longer period, then he shall
remain on board the VESSEL after the said three (3) months but not longer than
nine (9) months from the delivery of the VESSEL.

 

The BUYER, and its employees shall give such Guarantee
Engineer full cooperation in carrying out his duties as the representatives of
the BUILDER on board the VESSEL.

 

The BUYER shall accord the Guarantee Engineer
treatment comparable to the VESSEL’s Chief Engineer as far as possible, and
shall provide board and lodging at no cost to the BUILDER and/or the Guarantee
Engineer. The BUILDER and the BUYER shall, prior to delivery of the VESSEL,
execute a separate agreement regarding the Guarantee Engineer.

 

While the Guarantee Engineer is on board the VESSEL,
the BUYER shall pay to the BUILDER the sum of US$ 6,000.- per month and the expenses of
his repatriation to Seoul, Korea by air (economy class) upon termination of his
service. The expenses of his communication with the BUILDER incurred in
performing his duties shall be for BUILDER’s account and expenses, if any, of
his medical and hospital care in the VESSEL’s hospital shall be for BUYER’s
account. Notwithstanding the above, the Guarantee Engineer shall remain at all
times an employee of the BUILDER.

 

(end
of Article)

 

37

 

ARTICLE X - BUILDER’s DEFAULT -
RESCISSION BY BUYER

 

1.             BUILDER’s Default:

 

The BUYER shall be entitled, but not bound, to declare
the BUILDER in default and to rescind this Contract, all as stipulated in this
Contract and Specifications, in any of the following cases:

 

(i)            any
breach of or default by the BUILDER
in any Fundamental Term. “Fundamental Term” means any of the following:

 

(a)           an event described in a
provision of this Contract specifically permitting the BUYER to rescind this Contract including and without restricting the
generality of the foregoing, those contained in Article III and Articles XVII
2(b);

 

(b)           failure to deliver the
VESSEL on or before the Delivery Date as may be extended by a Permissible
Delay;

 

(c)           failure to deliver the
VESSEL free and clear of all liens, charges, mortgages and encumbrances on the
Delivery Date;

 

(d)           any other failure, not
specifically referred to above, to build in accordance with this Contract or
the Specifications;

 

(ii)           the
court declares bankruptcy proceedings against the BUILDER under the Bankruptcy
Act of Korea; or

 

(iii)          insolvency
proceedings which prevents the BUILDER from building and completing the VESSEL.

 

2.             Effect of BUILDER’s Default:

 

If the BUILDER shall be in any default as provided for
in Clause 1 of this Article hereinabove, the BUYER may, at its option, rescind
this Contract in accordance with provisions of this Article X.

 

3.             Notice:

 

In the event that the BUYER shall exercise its right
of rescission of this Contract under and pursuant to any of the provisions of
this Contract specifically permitting the BUYER to do so, then the BUYER shall
notify the BUILDER in writing or by fax and/or telex confirmed in writing, and
such rescission shall be effective as of the date notice thereof is received

 

38

 

by the BUILDER.

 

4.             Refundment by BUILDER:

 

In case the BUILDER receives the notice stipulated in
Clause 3 of this Article, the BUILDER shall promptly refund to the BUYER the
full amount of all sums paid by the BUYER to the BUILDER on account of the
VESSEL together with the interest thereon, and reimburse the BUYER for all
expenses incurred by the BUYER as a result of the BUILDER’s default.

 

In case of refundment, the BUILDER shall pay the BUYER
interest at the rate of five
percent (5%) per annum on
the amount required herein to be refunded to the BUYER, computed from the
respective dates on which such sums were paid by the BUYER to the BUILDER to
the date of receipt (remittance by wire transfer) of such refund by the BUYER
from the BUILDER.

 

If pursuant to the provisions of this Contract the
BUILDER is required to refund to the BUYER the installments paid by the BUYER
to the BUILDER, the BUILDER shall return to the BUYER all of the BUYER’s
supplies not incorporated into the VESSEL and pay to the BUYER an amount equal
to the purchased price by the BUYER of those supplies incorporated into the VESSEL,
together with interest as aforesaid, in which case title to such supplies
incorporated into the VESSEL shall transfer to the BUILDER.

 

Any and all refunds or payments due to the BUYER under
this Contract shall be effected by telegraphic transfer to the account and bank
specified by the BUYER free of bank charges, remittance fees, taxes and other
applicable withholdings.

 

5.             Discharge of Obligations:

 

Upon such refund by the BUILDER to the BUYER, and upon
compliance with the provisions of Clause 4 of this Article, all obligations,
duties and liabilities of each of the parties hereto to the other under this
Contract shall be forthwith completely discharged.

 

(end
of Article)

 

39

 

ARTICLE XI - DEFAULT BY THE BUYER

 

1.             Definition of BUYER’s Default:

 

The BUYER shall be deemed to be in default of its
performance of obligations under this Contract in the following cases
(hereinafter called “BUYER’s Default”):

 

(a)           If
the first, second, third and
Delivery installments are not paid by the BUYER to the BUILDER’s Bank as
provided in Article II hereof;  or

 

(b)           If
the delivery installment is not deposited to the BUILDER’s Bank by the BUYER to
the BUILDER for the delivery of the VESSEL as provided in Article II hereof;  or

 

(c)           If
the increased amount, if any, in the Contract Price as adjusted pursuant to
Article V due and payable upon delivery of the VESSEL is not paid by the BUYER
concurrently with the delivery of the VESSEL as provided in Article II hereof;  or

 

(d)           If
the BUYER, when the VESSEL is duly completed and in full conformity with the
terms of this Contract and the Specifications and is tendered for delivery by
the BUILDER in accordance with the provisions of this Contract, fails to take
delivery of the VESSEL within Five (5) days from the tendered date without any
specific and valid ground therefor under this Contract.

 

2.             Effect of BUYER’s Default on or before
Delivery of VESSEL:

 

(a)           Should
the BUYER make default in payment of any installment of the Contract Price on
or before delivery of the VESSEL, the BUYER shall pay the installment(s) in
default plus accrued interest thereon at the rate of five percent (5%) per
annum computed from the due date for payment of such installment to the date
when the BUILDER receives the payment, and, for the purpose of Clause 1 of
Article VII hereof the Delivery Date of the VESSEL shall be automatically
extended by the period of continuance of such default by the BUYER.

 

(b)           If
any BUYER’s Default continues for a period of Twenty One (21) days, the BUILDER
may, at its option, rescind this Contract by giving notice to such effect to
the BUYER by telex or facsimile confirmed in writing.

 

40

 

Upon receipt by the BUYER of such notice of
rescission, this Contract shall be forthwith rescinded and terminated. In the
event of such rescission of this Contract, the BUILDER shall, subject to Clause
3 below, be entitled to retain any installment or installments already paid by
the BUYER to the BUILDER on account of this Contract and the BUYER’s Supplies,
if any.

 

3.             Disposal of VESSEL:

 

(a)           In
the event that this Contract is rescinded by the BUILDER under the provisions
of Clause 2(b) of this Article, the BUILDER may, at its sole discretion, either
complete the VESSEL and sell the same, or sell the VESSEL in its incomplete
state, free of any right or claim of the BUYER. Such sale of the VESSEL by the
BUILDER shall be either by public auction or private contract at the BUILDER’s
sole discretion and on such terms and conditions as the BUILDER shall deem fit,
provided that the BUILDER shall use reasonable endeavors to obtain the best
price obtainable. The BUILDER shall send to BUYER invitation to participate in
any tender for the sale of the VESSEL. Such invitation shall be sent by telex
or facsimile at least fifteen (15) days in advance before the closing date of
the tender.

 

(b)           In
the event of such sale of the VESSEL in its completed state, the proceeds of
the sale received by the BUILDER shall be applied firstly to payment of all
expenses attending such sale and otherwise incurred by the BUILDER as a result
of the BUYER’s default, and then to payment of all unpaid Installments of the
Contract Price and interest on such Installments at the rate of five percent (5%) per annum from the respective due dated thereof to the date of
application.

 

(c)           In
the event of sale of the VESSEL in its incompleted state, the proceeds of sale
received by the BUILDER shall be applied firstly to all expenses attending such
sale and otherwise incurred by the BUILDER as a result of the BUYER’s default
as provided hereinbefore, and then to payment of all costs of construction of
the VESSEL less BUYER’s Supplies as defined in Article XVI hereof and less the
Installments so retained by the BUILDER and compensation to the BUILDER for a
reasonable loss of profit - if any - due to the rescission of this Contract.

 

(d)           In
either of the above events of sale, if the proceeds of sale exceeds the total
amounts to which such proceeds are to be applied as aforesaid, the BUILDER
shall promptly pay the excess to the

 

41

 

BUYER.

 

(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 BUILDER upon
request.

 

(end
of Article)

 

42

 

ARTICLE XII - ARBITRATION

 

1.             Decisions by the Classification Society:

 

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

 

2.             Proceedings of Arbitration:

 

In the event that the parties hereto do not agree to
settle a dispute according to Clause 1 of this Article and/or in the event of
any other dispute of any kind whatsoever between the parties and relating to
this Contract or its rescission or any stipulation herein, such dispute shall
be submitted to and settled by arbitration in London, England in accordance
with the London Maritime Arbitrators Association (LMAA) Terms current at the
time when the arbitration proceedings are commenced. Each party shall appoint
an arbitrator and in the event that they cannot agree, the two arbitrators so
appointed shall appoint a third arbitrator.

 

If the two arbitrators are unable to agree upon a
third arbitrator within Twenty (20) days, either of the said two arbitrators
may apply to the President for the time being of the London Maritime
Arbitrators Association to appoint the third arbitrator, and the three
arbitrators shall constitute the board of arbitration.

 

Such arbitration shall be in accordance with and
subject to the provisions of the relevant English Arbitration Act for the time
being in force at the time of the action. Either party may demand arbitration
of any such dispute by giving notice to the other party.

 

Any demand for arbitration by either of the parties
hereto shall state the name of the arbitrator appointed by such party and shall
also state specifically the question or questions as to which such party is
demanding arbitration. Within Fourteen (14) days after receipt of notice of
such demand for arbitration, the other party shall in turn appoint a second
arbitrator and give notice in writing of such appointment to the party
demanding arbitration. If a party fails to appoint an arbitrator as

 

43

 

aforementioned within Fourteen (14) days following
receipt of notice of demand for arbitration by the other party, the party
failing to appoint an arbitrator shall be deemed to have accepted and
appointed, as its own arbitrator, the arbitrator appointed by the party
demanding arbitration and the arbitration shall proceed before this sole
arbitrator who alone in all such events shall constitute the Arbitration Board.

 

The award of the sole arbitrator and/or of the
majority of the three arbitrators, as the case may be, shall be final and
binding on both parties. If the majority of the three arbitrators is not
obtained, then the decision of the third arbitrator shall be final and binding
upon the parties hereto.

 

3.             Notice of Award:

 

The award shall immediately be given to the BUYER and
the BUILDER by telex or facsimile confirmed in writing.

 

4.             Expenses:

 

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

 

5.             Entry in Court:

 

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

 

6.             Alteration of Delivery Date:

 

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

 

(end
of Article)

 

44

 

ARTICLE XIII - ASSIGNMENT - SUCCESSOR
AND ASSIGNS

 

(a)           The
BUILDER agrees that prior to delivery of the VESSEL, this Contract may, with
the prior approval of the BUILDER, which the BUILDER shall not unreasonably
withhold, be transferred by the BUYER to and title be taken by another company.
In the event of any assignment pursuant to the terms of this Contract, the
assignee, its successors and assigns shall succeed to all of the rights and
obligations of the BUYER hereunder. However, the BUYER shall remain responsible
for performance by the assignee, its successors, and assigns of all the BUYER’s
obligations, liabilities and responsibilities under this Contract. It is
understood that any expenses or charges incurred by the transfer of this
Contract shall be for the account of the BUYER.

 

Notwithstanding the above, the BUYER has the right to
assign this Contract to a bank or syndicate of banks or financial institution
or any commercial corporation assisting in the finance of the VESSEL prior to
delivery of the VESSEL provided that the BUYER has given the BUILDER a notice
of assignment in form and content acceptable to the BUILDER AND BUYER, acting
reasonably. The BUILDER shall, at the BUYER’s request, acknowledge and consent
to such assignment by signing an acknowledgement and consent acceptable to the
BUILDER and BUYER, acting reasonably.

 

(b)            Subject to Article I
6, the BUILDER shall have the right to assign this Contract at any time after the
Effective Date hereof, provided that prior written agreement is obtained from
the BUYER, provided always that BUILDER shall remain responsible for the due
and punctual performance if this Contract by the Assignee.

 

(c)            The BUYER and the BUILDER understand and
acknowledge that the VESSEL shall be built and constructed as a repeat and
series vessel of the BUILDER’s Hull No. 1558 as stipulated in this Contract.
Thus, in the event that the BUYER assigns or novates this Contract to any third
party after execution of this Contract and the supervision of the construction
of the VESSEL will be conducted by other than the BUYER (who signed this
Contract), the BUILDER shall be entitled to readjust the Contract Price of this
Contract to compensate the BUILDER’s additional cost resulting from and due to
any loss of the repeat and series effect. In such case, the original BUYER
shall be responsible to pay such additional cost to the BUILDER. This, however,
shall not preclude nor limit the right of the BUYER to hire or appoint third
party subcontractors to assist him in the supervision work.

 

(end
of Article)

 

45

 

ARTICLE XIV - TAXES AND DUTIES

 

1.             Taxes and Duties Incurred in Korea:

 

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

 

2.             Taxes and Duties Incurred outside Korea:

 

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

 

(end
of Article)

 

46

 

ARTICLE XV - PATENTS, TRADEMARKS,
COPYRIGHTS, ETC.

 

1.             Patents, Trademarks and Copyrights:

 

Machinery and equipment of the VESSEL may bear the
patent number, trademarks or trade names of the manufacturers. The BUILDER
shall defend and hold harmless the BUYER from patent liability or claims for or
on account of any patents, copyrights or design or for infringement thereof of
any nature and 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 costs and expenses of litigation, if any, in
connection therewith.

 

Nothing contained herein shall be construed as
transferring any patent or trademark rights or copyrights in equipment covered
by this Contract, and all such rights are hereby expressly reserved to the true
and lawful owners thereof.

 

The BUILDER’s warranty hereunder does not extend to
the BUYER’s Supplies.

 

The BUILDER’s obligation shall not be terminated by
the passage of any period of time.

 

2.             General Plans, Specifications and Working
Drawings:

 

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

 

(end
of Article)

 

47

 

ARTICLE XVI - BUYER’s SUPPLIES

 

1.             Responsibility of BUYER:

 

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

 

(b)           In
order to facilitate installation by the BUILDER of the BUYER’s Supplies in or
on the VESSEL, the BUYER shall furnish the BUILDER with necessary
specifications, plans, drawings, instruction books, manuals, test reports and
certificates required by the rules and regulations of the Specifications. If so
requested by the BUILDER, the BUYER shall, without any charge to the BUILDER,
cause the representatives of the manufacturers of the BUYER’s Supplies to
assist the BUILDER in installation thereof in or on the VESSEL and/or to carry
out installation thereof by themselves or to make necessary adjustments at the
Shipyard.

 

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

 

However, if so requested by the BUYER, the BUILDER may
repair or adjust the BUYER’s Supplies without prejudice to the BUILDER’s other
rights hereunder and without being responsible for any consequences arising
therefrom.

 

(d)           Should
the BUYER fail to deliver any of the BUYER’s Supplies within the time
designated by three (3) months prior notice to the BUYER, the Delivery Date
shall be extended for a period which actually caused the delay in the delivery
of the VESSEL.

 

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

 

(f)            The
BUILDER shall not be liable under Article IX for any defects

 

48

 

in the BUYER’s Supplies  (if any) but the BUILDER shall be liable
under Article IX for any Defect(s) in respect of installation of the BUYER’s
Supplies and their adaptation to the VESSEL.

 

2.             Responsibility of BUILDER:

 

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

 

However, if any BUYER’s Supplies are lost or damaged
after acceptance by the BUILDER without rejection while in the custody of the
BUILDER, the BUILDER shall be responsible for such loss or damage and shall
either replace the items or reimburse the BUYER accordingly. The BUILDER shall
further be responsible for wrongful or negligent installation of the BUYER’s
Supplies in the course of their installation by the BUILDER.

 

(end
of Article)

 

49

 

ARTICLE XVII - INSURANCE

 

1.             Extent of Insurance Coverage:

 

From the time of launching until delivery of the
VESSEL, the BUILDER shall, at its own cost and expense, insure the VESSEL and
all machinery and equipment, appurtenances and outfits delivered to the
Shipyard or other building facility utilized by the BUILDER, including the
BUYER’s Supplies when at a warehouse or other storage facility of the BUILDER
or built into or installed in or upon the VESSEL, against all risks under the
Builder’s Risks Insurance Clause on terms and conditions not less than the
current British Institute Time Clauses and British War Clauses Builders Risks,
with first class insurance company or underwriters in Korea recognized in the
international insurance market. The amount of such insurance coverage shall not
be less than the aggregate amount of all installments paid by the BUYER to the
BUILDER.

 

2.             Application of the Recovered Amounts:

 

In the event that the VESSEL shall be damaged from any
cause at any time before delivery of the VESSEL, and in the further event that
such damage shall not constitute an actual or constructive total loss of the
VESSEL, the amount received in respect of the insurance plus amounts received
from the general insurance of the BUILDER shall be applied by the BUILDER in
repair of such damage, satisfactory to the Classification Society requirements
and in conformity with the terms of this Contract and the Specifications, and
the BUYER shall accept the VESSEL under this Contract if completed in
accordance with this Contract and the Specifications and so certified by the
Classification Surveyor.

 

Should the VESSEL from any cause become an actual or
constructive total loss:

 

(a)           the
BUILDER and the BUYER may mutually agree to build another VESSEL in place of
the VESSEL so lost or reconstruct the VESSEL’s damage and proceed in accordance
with the terms of this Contract, in which case the amount received in respect
of the insurance plus amounts received from the BUILDER’s general insurance
shall be applied to the construction of a new VESSEL or reconstruction of the
VESSEL, provided the parties hereto shall have first agreed thereto in writing
and to such reasonable extension of delivery time as may be necessary for the
completion of such construction or reconstruction.

 

50

 

If the parties fail to reach agreement pursuant to
sub-paragraph 2(a) above within 45 days after the VESSEL is determined to be an
actual or constructive total loss, the provisions of sub-paragraph 2(b) shall
apply.

 

(b)           The
BUILDER shall refund promptly to the BUYER the full amount of all sums paid by
the BUYER to the BUILDER as installments in advance of delivery of the VESSEL
together with interest thereon at the rate of five percent (5%) per
annum, and promptly deliver to the BUYER all BUYER’s Supplies (or the insurance
proceeds paid with respect thereto), in which case this Contract shall be
deemed to be automatically rescinded and all rights, duties, liabilities and
obligations of each of the parties to the other shall forthwith cease and
terminate.

 

If the BUILDER fails to refund within 15 Banking Days, the full amount of
all sums paid by the BUYER to the BUILDER as installments in advance of
delivery of the VESSEL together with interest thereon as the rate of five (5%) per annum, and promptly deliver to the BUYER all BUYER’s
Supplies (or the insurance proceeds paid with respect thereto), the BUYER shall
be entitled to rescind this Contract.

 

Payment of refunds pursuant to this clause shall be
effected by telegraphic transfer to the account and bank specified by the BUYER
free of bank charges, remittance fees, taxes and other applicable withholdings.

 

3.             Termination of BUILDER’s Obligation to
Insure:

 

The BUILDER shall be under no obligation to insure the
VESSEL hereunder after her delivery to, and her acceptance by, the BUYER.

 

(end
of Article)

 

51

 

ARTICLE XVIII - NOTICES

 

1.             Address:

 

Any and all notices, invoices, requests, demands,
instructions, advices, and communications (collectively “Notices”) in
connection with this Contract shall be addressed as follows:

 

To the BUYER:

 

	
  For the commercial:

  
	
  Seaspan Container Lines Limited

  
	
  c/o 2600 - 200
  Granville Street

  
	
  Vancouver, B.C.
  CANADA

  
	
  V6C 1S4

  
	
  Facsimile No:

  	
  (604) 331-0925 (Mr. Gerry Wang)

  
	
   

  	
  (604) 682-5644 (Mr. Graham
  Porter)

  
	
   

  
	
  For the technical:

  
	
  Seaspan Ship Management

  
	
  50 Pemberton Avenue

  
	
  North Vancouver, B.C. CANADA

  
	
  V7P 2R2

  
	
  Facsimile No:

  	
  (604) 990-3203

  

 

To the BUILDER:

 

	
  Samsung Heavy
  Industries Co., Ltd.

  
	
  KIPS Building, 647-9

  
	
  Yoksam-Dong,
  Kangnam-Ku,

  
	
  Seoul, Korea,
  135-080

  
	
  Telefax No.:

  	
  (82-2) 3458-7349 (Ship Sales Department)

  

 

or to its Koje Yard:

 

	
  P.O. Box Gohyun
  9

  
	
  530
  Jangpyung-ri, Sinhyun-up,

  
	
  Koje-City,
  Kyungnam, Korea

  
	
  Telex No.:

  	
  SSCYARD K52213

  
	
  Telefax No.:

  	
  (82-558) 630-4947/8 (Design Department)

  
	
   

  	
  (82-558) 636-2560 (C/S Department)

  

 

52

 

2.             Language:

 

All Notices shall be written in the English language.

 

3.             Effective Date of Notice:

 

Any Notice shall become
effective from the date when such Notice is received by the BUYER or by the
BUILDER except as otherwise described in the Contract.

 

Notices shall be deemed to be received by the
addressee when delivered (in case of personal delivery), within 7 (seven) days
of dispatch (if sent by registered airmail postage prepaid) and when dispatched
(in case of telex or telefax) as proven by answer back call sign or
transmission report. Any such Notice received on a non-working day or after
business hours in the place of receipt shall be deemed to be received on the
next following working day in such place.

 

4.             Change of Address:

 

Each of the parties hereto shall be entitled to give
the other party notice, in writing, of any change in any of the addresses
relating to the party giving such notice and Clause 1 of this Article shall be
deemed modified by and in accordance with every such notice of change.

 

(end
of Article)

 

53

 

ARTICLE XIX - EFFECTIVE DATE OF
CONTRACT

 

This Contract shall become effective on November 18, 2003.

 

The obligations of the BUYER under this Contract are subject in all
respects to the following
conditions which are for the exclusive benefit of the BUYER.

 

The BUYER arranges financing satisfactory to it
for payment of the Contract Price or any installment hereof. If the
BUYER has not satisfied or waived this condition by notice in accordance with
Article XVIII to the BUILDER on or before January 31, 2004 then the BUYER will forfeit the first installment and the second installment to the
BUILDER and this Contract will be of no further force and effect.

 

(end
of Article)

 

54

 

ARTICLE XX - INTERPRETATION

 

1.             Laws Applicable:

 

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

 

2.             Entire Agreement:

 

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

 

This Contract and the subject matter thereof shall not
be subject to any general Terms and Conditions of the BUILDER or any other
terms and conditions normally or at any time put forward by the BUILDER with
reference to any order from or work undertaken by the BUILDER and all such
General Terms and Conditions and other terms and conditions are hereby
explicitly and expressly excluded from this Contract, shall form no part
thereof and shall have no force and effect.

 

3.             Amendments and Supplements:

 

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

 

4.             Banking Day:

 

A Banking Day under this Contract is defined as a day
on which the banks are open in Cyprus, Korea and New York.

 

5.             No Set Off, Deduction or Counter-claim:

 

All moneys refundable or payable to the BUYER under or
pursuant to this Contract shall be paid to the BUYER without set-off or
deduction or counter-claim and all moneys payable to the BUILDER pursuant to
this Contract shall be paid to the BUILDER without set off or deduction or

 

55

 

counter-claim.

 

6.             Deemed Benefit for Servants, etc.:

 

Any exemptions from liability and any undertaking to
hold harmless which have been stipulated in this Contract to the benefit of
either of the parties hereto shall be deemed to have been stipulated also to
the benefit of the servants, sub-contractors, vendors and suppliers of such
party and of the servants of the said sub-contractors, vendors and suppliers.

 

7              Responsibility:

 

Notwithstanding any other term of this Contract or the
Specifications, the BUILDER shall be fully responsible for the due, proper,
accurate, diligent and punctual designing, building, equipping, launching,
outfitting and completing of the VESSEL and for the quality of the materials
employed and work done and for the delivery in due time of the VESSEL to the
BUYER as herein provided, and the BUYER shall have and bear no responsibility
whatsoever in respect thereof or in connection therewith as stipulated in the
Contract and the Specifications.

 

8.             Time of the Essence:

 

Time shall be of the essence hereof.

 

56

 

9.             Headings:

 

The descriptive headings of Articles and Clauses herein
are for the convenience of reference only and are not to be used in construing
or interpreting this Contract.

 

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

 

 

	
  BUYER

  	
  BUILDER

  
	
   

  	
   

  
	
  RAMONA MARINE COMPANY

  LIMITED

  	
  SAMSUNG HEAVY INDUSTRIES

  CO., LTD.

  
	
   

  	
   

  
	
  Signature:

  	
  Signature:

  
	
   

  	
   

  
	
   

  	
   

  
	
  /s/ Gerry Wang

  	
   

  	
  /s/ J. W. Kim

  	
   

  
	
  Name:

  	
  Gerry Wang

  	
  Name:

  	
  J. W. Kim

  
	
   

  	
   

  
	
  Title:

  	
  Director

  	
  Title:

  	
  President

  
						

 

57

 

Annex A

 

LETTER OF REFUNDMENT GUARANTEE NO.

 

Date :

 

Gentlemen:

 

We, the                                                     (hereinafter
called the “Bank”), hereby issue our irrevocable letter of guarantee No.                                          
in favor of                       a
company organized and existing under the laws of       ,
having its office at (hereinafter called the “BUYER”) for account of Samsung Heavy
Industry Co., Ltd. Of Korea (hereinafter called the “BUILDER”) in consideration
of the BUYER making advance payments to the Builder under the Shipbuilding
Contract dated            
2003 (hereinafter called the “Contract”) made by and between the BUYER
and the BUILDER for the design, construction and sale of one (1) single screw
cellular container vessel having the BUILDER’S Hull No. (hereinafter called the
“VESSEL”).

 

Whereas in Article II of the Contract, the BUYER is required to make
three (3) advance payments of the Contract price, in the following amounts :
First Installment amounting to      United States Dollars,
Second Installment amounting to           
United States Dollars and Third Installment amounting to            
United States Dollars.

 

If in connection with or under the terms and conditions of the
Contract, the BUYER shall become entitled to refund of the advance payment(s)
made to the BUILDER prior to the delivery of the VESSEL, we hereby irrevocably
and unconditionally guarantee as a primary obliger and not as a surety that we
will pay to the BUYER on demand the sum of           
United States Dollars together with interest thereon at the rate of 5 % (five
percent) per annum from the date respective dates of receipt by the BUILDER of
any advance payment to the date of our payment to the BUYER hereunder.

 

The amount of this letter of guarantee will be automatically increased,
not more than two (2) times upon the BUILDER’s receipt of the Second and Third
Installments as set forth above payable under the Contract by the respective
amount of the Second and Third Installments plus interest thereon as provided
by the Contract, but in any eventually the amount of this guarantee shall not
exceed the total principal sum of           
United States Dollars plus interest thereon at the rate of 5% (five percent)
per annum from the respective dates of the BUILDER’s receipt of each
installment to the date of receipt by the BUYER of the guaranteed amount plus
interest as aforesaid.

 

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

 

58

 

This letter of guarantee is available against the BUYER’s simple signed
statement certifying that the BUYER’s demand for refund has been made in
conformity with Article X of the Contract and the BUILDER has failed to make
the refund within twenty (20) days after the BUYER’s demand to the BUILDER.
Refund shall be made to the BUYER by telegraphic transfer in freely
transferable United States Dollars free of bank charges, remittance fees,
taxes, and other applicable withholdings.

 

This letter of guarantee shall expire and become null and void upon
receipt by the BUYER of the full sum guaranteed hereby or upon acceptance by
the BUYER of the delivery of the VESSEL in accordance with the terms of the
Contract as evidenced by the Protocol of Delivery and Acceptance duly signed by
the BUILDER and the BUYER and, in either case, this letter of guarantee shall
be returned to us. This guarantee is valid from the date of this letter of
guarantee until the VESSEL is delivered by the BUILDER to and accepted by the
BUYER in accordance with the terms of the Contract.

 

Notwithstanding the provisions hereinabove, in case where we receive
notification from the BUYER or the BUILDER, confirmed by the Arbitrators
appointed for this purpose stating that the BUYER’s claim to rescind the
Contract or the BUYER’s claim for refundment thereunder has been disputed and
referred to Arbitration in accordance with the provisions of the Contract, the
period of validity of this guarantee shall be extended until Forty-five (45)
days after the award shall be rendered in the Arbitration and we shall pay to
the BUYER the sum of adjudged to the due to the BUYER by the BUILDER pursuant to
the award made under such Arbitration, immediately upon receipt from the BUYER
of a simple demand accompanied by a copy of the award certified by an English
Solicitor or by the Arbitrator or Arbitrators, as the case may be.

 

We hereby agree that this letter of guarantee shall be construed as a
continuing and unconditional guarantee of payment and without regard to the
validity or unenforceability of any other agreement or instrument and without
regard to defence, set-off or counterclaim or any other circumstance whatsoever
which might constitute an equitable or legal discharge of our obligation
hereunder. No action or failure to act on the BUYER’s part shall relieve us of
any our obligations hereunder.

 

This letter of guarantee shall continue to be effective or reinstated,
as the case may be, if at any time, payment of any of payments guaranteed
hereunder is rescinded or must otherwise be returned by the BUYER upon the
insolvency, bankruptcy or reorganization of the BUILDER or otherwise, all as
though any such payment had not been made.

 

This letter of guarantee shall be assignable to the BUYER’s financier,
whether it is a bank, financial institution or a commercial corporation, by
giving written notice to us.

 

59

 

All demands and notices in connection with this letter of guarantee
shall be validly given if sent to us by post fax or telex to our office as
follows ;

 

This guarantee shall be governed by and be construed and interpreted in
accordance with the law of England and we hereby submit to the exclusive
jurisdiction of the English Courts.

 

Very truly yours,

 

For and on behalf of the                                                          .

 

 

	
  By

  	
  :

  	
  By

  	
  :

  
	
  Name

  	
  :

  	
  Name

  	
  :

  
	
  Title

  	
   :

  	
   Title

  	
   :

  

 

60

 

Annex B

 

PERFORMANCE GUARANTEE

 

In consideration of the assignment of a certain
shipbuilding contract dated                          
2003 (hereinafter called the “Contract”) by us to (hereinafter called the
“BUYER”), for the construction of one(1) single screw diesel engine driven
fully Cellular Container Vessel having your Hull No. (hereinafter called the
“VESSEL”) providing among other things for payment of the Contract Price
amounting to United States              
Dollars (US$                    );

 

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

 

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

 

	
  GUARANTOR :

  	
   

  
	
  BY :

  	
   

  
	
  TITLE :

  	
   

  
	
  WITNESS :

  	
   

  

 

61Exhibit 10.19

 

 

 

FOR

 

CONSTRUCTION AND SALE

 

OF

 

A 4,250 TEU CONTAINER VESSEL

(HULL NO. 1639)

 

 

 

BETWEEN

 

 

Seacarriers Services Inc.

As BUYER

 

AND

 

 

Samsung Heavy Industries Co., Ltd.

As BUILDER

 

 

I N D E X

 

	
   

  	
  PAGE

  
	
   

  	
   

  
	
  PREAMBLE

  	
  7

  
	
   

  	
   

  
	
  ARTICLE I - DESCRIPTION AND CLASS

  	
   

  
	
   

  	
   

  
	
  1. Description

  	
  8

  
	
  2. Dimensions and
  Characteristics 

  	
  8

  
	
  3. Classification, Rules
  and Regulations 

  	
  10

  
	
  4. Subcontracting 

  	
  11

  
	
  5. Registration. 

  	
  11

  
	
   

  	
   

  
	
  ARTICLE II - CONTRACT PRICE AND TERMS OF PAYMENT

  	
   

  
	
   

  	
   

  
	
  1. Contract Price 

  	
  12

  
	
  2. Adjustment of Contract
  price 

  	
  12

  
	
  3. Currency

  	
  12

  
	
  4. Terms of Payment 

  	
  12

  
	
  5. Method of Payment 

  	
  13

  
	
  6. Notice of Payment on or
  before Delivery 

  	
  15

  
	
  7. Expenses

  	
  15

  
	
  8. Prepayment

  	
  15

  
	
  9. Performance Guarantee

  	
  15

  
	
   

  	
   

  
	
  ARTICLE III - ADJUSTMENT OF CONTRACT PRICE

  	
   

  
	
   

  	
   

  
	
  1. Delivery 

  	
  16

  
	
  2. Speed 

  	
  17

  
	
  3. Fuel Consumption 

  	
  18

  
	
  4. Deadweight

  	
  18

  
	
  5. Early Delivery

  	
  19

  
	
  6. Effect of Rescission 

  	
  19

  

 

2

 

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

  	
   

  
	
   

  	
   

  
	
  1. Approval of Plans and
  Drawings 

  	
  20

  
	
  2. Appointment of BUYER’s
  Supervisor 

  	
  20

  
	
  3. Inspection by the
  Supervisor 

  	
  21

  
	
  4. Facilities

  	
  22

  
	
  5. Liability of BUILDER 

  	
  22

  
	
  6. Responsibility of BUYER
  

  	
  23

  
	
   

  	
   

  
	
  ARTICLE V - MODIFICATIONS, CHANGES AND EXTRAS

  	
   

  
	
   

  	
   

  
	
  1. How Effected

  	
  24

  
	
  2. Change in Rules of
  Classification Society, Regulations etc. 

  	
  25

  
	
  3. Substitution of
  Materials

  	
  26

  
	
   

  	
   

  
	
  ARTICLE VI - TRIALS AND ACCEPTANCE

  	
   

  
	
   

  	
   

  
	
  1. Notice

  	
  27

  
	
  2. Weather Condition 

  	
  27

  
	
  3. How Conducted 

  	
  28

  
	
  4. Method of Acceptance of
  Rejection 

  	
  28

  
	
  5. Effect of Acceptance 

  	
  29

  
	
  6. Disposition of Surplus
  Consumable Stores 

  	
  30

  
	
   

  	
   

  
	
  ARTICLE VII - DELIVERY

  	
   

  
	
   

  	
   

  
	
  1. Time and Place

  	
  31

  
	
  2. When and How Effected 

  	
  31

  
	
  3. Documents to be
  delivered to BUYER 

  	
  31

  
	
  4. Tender of VESSEL

  	
  32

  
	
  5. Title and Risk

  	
  33

  
	
  6. Removal of VESSEL 

  	
  33

  

 

3

 

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

  	
   

  
	
   

  	
   

  
	
  1. Causes of Delay 

  	
  34

  
	
  2. Notice of Delay

  	
  35

  
	
  3. Definition of
  Permissible Delay 

  	
  35

  
	
  4. Right to Rescind for
  Excessive Delay 

  	
  35

  
	
   

  	
   

  
	
  ARTICLE IX - WARRANTY OF QUALITY

  	
   

  
	
   

  	
   

  
	
  1. Guarantee

  	
  37

  
	
  2. Notice of Defects 

  	
  37

  
	
  3. Remedy of Defects 

  	
  37

  
	
  4. Extent of the BUILDER’s
  Responsibility 

  	
  39

  
	
  5. Guarantee Engineer 

  	
  39

  
	
   

  	
   

  
	
  ARTICLE X - RESCISSION BY BUYER

  	
   

  
	
   

  	
   

  
	
  1. Notice

  	
  41

  
	
  2. Refundment by BUILDER 

  	
  41

  
	
  3. Discharge of
  Obligations 

  	
  42

  
	
   

  	
   

  
	
  ARTICLE XI - BUYER’S DEFAULT

  	
   

  
	
   

  	
   

  
	
  1. Definition of Default 

  	
  43

  
	
  2. Effect of Default on or
  before Delivery of VESSEL 

  	
  43

  
	
  3. Disposal of VESSEL 

  	
  44

  
	
   

  	
   

  
	
  ARTICLE XII - ARBITRATION

  	
   

  
	
   

  	
   

  
	
  1. Decision by
  Classification Society 

  	
  45

  
	
  2. Proceedings of
  Arbitration 

  	
  45

  
	
  3. Notice of Award 

  	
  46

  
	
  4. Expenses

  	
  46

  
	
  5. Entry in Court.

  	
  46

  
	
  6. Alteration of Delivery
  Date 

  	
  46

  
	
   

  	
   

  
	
  ARTICLE XIII - SUCCESSOR AND ASSIGNS

  	
  47

  

 

4

 

	
  ARTICLE XIV - TAXES AND DUTIES

  	
   

  
	
   

  	
   

  
	
  1. Taxes and duties
  Incurred in Korea 

  	
  48

  
	
  2. Taxes and Duties
  Incurred outside Korea 

  	
  48

  
	
   

  	
   

  
	
  ARTICLE XV - PATENTS, TRADEMARKS, COPYRIGHTS, ETC.

  	
   

  
	
   

  	
   

  
	
  1. Patents, Trademarks and
  Copyrights 

  	
  49

  
	
  2. General Plans,
  Specifications and Working Drawings 

  	
  49

  
	
   

  	
   

  
	
  ARTICLE XVI - BUYER’S SUPPLIES

  	
   

  
	
   

  	
   

  
	
  1. Responsibility of BUYER
  

  	
  50

  
	
  2.
  Responsibility of BUILDER 

  	
  51

  
	
   

  	
   

  
	
  ARTICLE XVII - INSURANCE

  	
   

  
	
   

  	
   

  
	
  1. Extent of Insurance
  Coverage 

  	
  52

  
	
  2. Application of the
  Recovered Amounts 

  	
  52

  
	
  3. Termination of
  BUILDER’s Obligation to Insure 

  	
  53

  
	
   

  	
   

  
	
  ARTICLE XVIII - NOTICE

  	
   

  
	
   

  	
   

  
	
  1. Address

  	
  54

  
	
  2. Language

  	
  54

  
	
  3. Effective Date of
  Notice

  	
  55

  
	
   

  	
   

  
	
  ARTICLE XIX - EFFECTIVE DATE OF CONTRACT

  	
  56

  
	
   

  	
   

  
	
  ARTICLE XX - INTERPRETATION

  	
   

  
	
   

  	
   

  
	
  1. Laws Applicable 

  	
  57

  
	
  2. Discrepancies

  	
  57

  
	
  3. Entire Agreement

  	
  57

  
	
  4. Amendments and
  supplements 

  	
  57

  

 

5

 

	
  END OF CONTRACT.

  	
  57

  
	
   

  	
   

  
	
  EXHIBIT “A” LETTER OF REFUNDMENT GUARANTEE

  	
  59

  
	
   

  	
   

  
	
  EXHIBIT “B” PERFORMANCE GUARANTEE

  	
  63

  
	
   

  	
   

  
	
  EXHIBIT “C” PERFORMANCE GUARANTEE

  	
  64

  

 

6

 

THIS
CONTRACT, made and entered into on this 30th day of June, 2005 by and between
Seacarriers Services Inc. a corporation incorporated and existing under the
laws of Liberian, having its registered office at 80 Broad Street, Monrovia,
Liberia (hereinafter called the “BUYER”),
on the one part and Samsung Heavy Industries Co.,Ltd., a corporation
incorporated and existing under the laws of the Republic of Korea of having its
registered office at 647-9, Yoksam-Dong, Kangnam-ku, Seoul, Korea (hereinafter
called the “BUILDER”), on the other part,

 

 

WITNESSETH:

 

In
consideration of the mutual covenants herein contained, the BUILDER agrees to
design, build, launch and complete in accordance with first class modern Korean
shipbuilding practice and standards one (1) Single Screw Diesel Engine driven
Container VESSEL as described in the Specifications attached herewith and any
addendum thereto (hereinafter called the “VESSEL”) at the BUILDER’s shipyard
located in Koje Island, Korea (hereinafter called the “Shipyard”) and to
deliver and sell the same to the BUYER, and the BUYER hereby agrees to purchase
and accept delivery of the VESSEL from the BUILDER and to pay for the same upon
the terms and conditions hereinafter set forth.

 

7

 

ARTICLE I - DESCRIPTION AND CLASS

 

1.                          Description
:

 

The
VESSEL shall be an ocean going single screw diesel engine driven fully cellular
container VESSEL suitable for carrying dry cargo containers having the BUILDER’s
Hull No.1639 and shall be constructed, equipped and completed in accordance
with the specifications, all plans and drawings, and manufacturer list made,
used, and duly approved for the construction of the BUILDER’s Hull No.
1455~1456 (hereinafter collectively called the “As-Built-Specifications”).

 

The
BUYER and the BUILDER hereby undertake that the VESSEL shall be the just repeat
and series VESSEL of the BUILDER’s Hull Nos. 1455 & 1456 (as a series
project). Thus all construction procedure including model test and sea trial
etc. shall be done on the basis of the just repeat and series VESSEL of Hull
Nos. 1455 & 1456.

 

The
BUYER and the BUILDER hereby further undertake that As-Built-Specifications
shall be used for the VESSEL without any further approval and modification from
the BUYER unless otherwise mutually agreed by both parties.

 

2.                          Dimensions and
Characteristics :

 

	
  Length,
  overall

  	
   

  	
  appx.

  	
   

  	
  259.8

  	
   

  	
  m

  
	
  Length,
  between perpendiculars

  	
   

  	
  appx.

  	
   

  	
  244.8

  	
   

  	
  m

  
	
  Breadth, moulded

  	
   

  	
  appx.

  	
   

  	
  32.25

  	
   

  	
  m

  
	
  Depth, moulded

  	
   

  	
  appx.

  	
   

  	
  19.3

  	
   

  	
  m

  
	
  Designed loaded draught, moulded

  	
   

  	
  appx.

  	
   

  	
  11.0

  	
   

  	
  m

  
	
  Scantling draught, moulded

  	
   

  	
  appx.

  	
   

  	
  12.6

  	
   

  	
  m

  
	
  Main Engine

  	
  :

  	
  MAN
  B&W 8K 90MC-C

  	
   

  	
   

  	
   

  	
  type
  License

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Made
  MCR 49,680 bhp at 104 r.p.m.

  	
   

  	
   

  	
   

  	
   

  

 

8

 

 

	
  Deadweight, guaranteed

  	
   

  	
  :

  	
   

  	
  50,500 metric tons at
  the moulded

  
	
   

  	
   

  	
   

  	
   

  	
  scantling draught of
  12.6 meters.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Speed, guaranteed

  	
   

  	
  :

  	
   

  	
  24.5
  knots at a draught of 11.0 meters

  
	
   

  	
   

  	
   

  	
   

  	
  and
  main engine developing power

  
	
   

  	
   

  	
   

  	
   

  	
  of
  38,880 bhp (metric).

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Fuel Consumption,
  guaranteed

  	
   

  	
  :

  	
   

  	
  124.3
  grams/bhp(metric)-hour using marine

  
	
   

  	
   

  	
   

  	
   

  	
  diesel
  oil having lower calorific value of

  
	
   

  	
   

  	
   

  	
   

  	
  10,200
  kcal/kg at normal continuous

  
	
   

  	
   

  	
   

  	
   

  	
  rating
  of 44,710 bhp(metric) measured

  
	
   

  	
   

  	
   

  	
   

  	
  at
  the shop trial.

  

 

9

 

The
details of the aforementioned particulars as well as the definitions and method
of measurements and calculations are as defined in the As-Built-Specifications.

 

3.                          Classification,
Rules and Regulations :

 

The
VESSEL, including its machinery, equipment and outfittings shall be constructed
in accordance with the rules and regulations in year 2004 July edition of the
Classification Society in accordance with the interpretation of Classification
Society (dated on 2005-06-29 Ref No. MKOKR120/MSSH/Gen-precontract/PUS-J-668)
and under special survey of Det Norske Veritas (hereinafter called the “Classification
Society”) and shall be distinguished in the register by the symbol of X1A1 “ Container Carrier”, NAUTICUS, EO,
and In water survey and TMON shall be applied according to the requirement of
the class rule.

 

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

 

The VESSEL shall also comply with the compulsory rules,
regulations and requirements of the regulatory bodies as described in the
As-Built-Specifications rectified and in effect as of the signing date of this
Contract. Non-compulsory rules, regulations and requirements of the regulatory
bodies shall be dealt with in accordance with Article V (2) of this Contract.

 

All the fees and charges incidental to the classification and
with respect to compliance with the above referred rules, regulations and
requirements shall be for account of the BUILDER except otherwise agreed.

 

10

 

4.                          Subcontracting :

 

The BUILDER may, at its sole discretion and responsibility,
subcontract any portion of the construction work of the VESSEL, provided that
the construction and assembly of the VESSEL shall be carried out as is normally
done according to the BUILDER’s building practice and provided further that the
BUILDER shall be responsible to the BUYER in respect of any construction work
carried out by such subcontractors.

 

5.                          Registration
:

 

The VESSEL, at the time of its delivery and acceptance, shall
be registered at the port of registry by the BUYER under Greek, Liberian,
Cyprus or Panama flag at the BUYER’s expenses. The BUYER shall decide the flag
within one(1) month after the date of signing of this Contract.

 

(End of
Article)

 

11

 

ARTICLE II - CONTRACT PRICE AND
TERMS OF PAYMENT

 

1.                          Contract
Price :

 

The
Contract price of the VESSEL and exclusive of the BUYER’s Supplies as provided
in Paragraph 1 of Article XVI hereof is Seventy Million United States Dollars
(US$ 70,000,000.-) (hereinafter called the “Contract Price”), which shall be
subject to upward or downward adjustment, if any, as hereinafter set forth in
this Contract.

 

2.                          Adjustment
of Contract Price:

 

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

 

3.                          Currency :

 

Any and all payments by the BUYER to the
BUILDER which are due under this Contract shall be made in United States
Dollars.

 

4.                          Terms of
Payment :

 

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

 

(a)  First Instalment :

 

The
First Instalment amounting to Seven Million United States Dollars (US$
7,000,000.-) shall be due and payable upon issuance and delivery to the BUYER
of the original of Refund Guarantee.

 

(b)                     Second Instalment :

 

The Second Instalment amounting to Seven Million United States Dollars
(US$ 7,000,000.-) shall be due and payable upon six(6) calendar months after
the date of singing of this Contract.

 

12

 

(c)                      Third Instalment :

 

The
Third Instalment amounting to Seven Million United States Dollars (US$
7,000,000.-) shall be due and payable upon steel cutting of the VESSEL.

 

(d)                     Fourth Instalment :

 

The
Foruth Instalment amounting to Seven Million United States Dollars (US$
7,000,000.-) shall be due and payable upon keel laying of the VESSEL.

 

(e)                      Fifth Instalment :

 

The
Delivery Instalment amounting to Forty Two Million United States Dollars (US$
42,000,000.-) plus any increase or minus any decrease due to adjustments of the
Contract Price under and pursuant to the provisions of this Contract, shall be
due and payable upon delivery and acceptance of the VESSEL or upon tender for
delivery of the VESSEL referred to in Paragraph 4 of Article VII of this
Contract.

 

It
is agreed that no payment shall be effected until the original Refund Guarantee
is delivered to the BUYER.

 

5.                          Method of Payment :

 

(a)                      First
Instalment :

 

Within Seven(7) banking days after 30th day of
June, 2005, the BUYER shall remit by telegraphic transfer the first instalment
to the account of The Export-Import Bank of Korea, Head Office, Seoul, Korea
with Deutsche Bank Trust Company Americas(BIC : BKTRUS33), 60 Wall Street, Mail
Stop NYC 60 1310, New York, NY 10005, USA, Account No.04 029 695, in favour of
Samsung Heavy Industries., Ltd, SWIFT code : EXIKKRSE or other bank as
designated by the Builder, in favor of Samsung Heavy Industrise Co,
Ltd.(hereinafter called the “BUILDER’s Bank”)

 

(b)                     Second, Third and Fourth Instalment :

 

Upon receipt of telefax notice from the BUILDER confirming that the
second, third, and fourth instalment on each event is due and payable, the
BUYER shall remit by telegraphic transfer the second, third, and fourth
instalment to the aforesaid account of the BUILDER’s Bank in favour of Samsung
Heavy Industries Co., Ltd.

 

13

 

(c)                      Fifth Instalment :

 

At
least One (1) banking days prior to delivery and acceptance of the VESSEL, the
BUYER shall remit by telegraphic transfer the fifth instalment to the name of
the BUYER at BUILDER’s BANK, with an irrevocable instruction that the amount so
remitted shall be payable to the BUILDER against a facsimile copy of PROTOCOL
OF DELIVERY and ACCEPTANCE OF THE VESSEL signed by the BUYER and the BUILDER or
returned to the BUYER if such PROTOCOL OF DELIVERY and ACCEPTANCE has not been
presented within 15 days.

 

Simultaneously
with each of all such payments, the BUYER shall cause the BUYER’s BANK to
advise the BUILDER’s BANK of the details of such payments by authenticated bank
cable.

 

Any
claim which the BUYER may have against the BUILDER hereunder shall be settled
and liquidated separately from any payment by the BUYER to the BUILDER
hereunder.

 

14

 

6.                          Notice of Payment on or before
Delivery :

 

With the exception of the first instalment, the BUILDER shall
give the BUYER Five(5) banking days prior notice by telefax of the anticipated
due date and amount of each instalment payable on or before delivery of the
VESSEL.

 

7.                          Expenses.

 

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

 

8.                          Prepayment :

 

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

 

9.                          Performance Guarantee

 

Upon
signing this Contract, the BUYER shall provide the BUILDER with a Performance
Guarantee in order to secure the due and faithful performance of this Contract
by the BUYER having same form and contents as Exhibit “B” annexed hereto.

 

(End
of Article)

 

15

 

ARTICLE III - ADJUSTMENT OF CONTRACT PRICE

 

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

 

1.                          Delivery :

 

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

 

(b)                     If the delivery of the VESSEL is delayed more than Thirty (30) days after the Delivery Date, the Contract
Price shall be reduced by the sum of Twenty Seven Thousand Five Hundred United
States Dollars (US$27,500.-) for each full day for which thereafter delivery is
delayed.

 

However,
the total reduction in the Contract Price shall not be more than as would be
the case for a delay of One Hundred Eighty (180) days counting from the midnight
of the Thirty (30) day after the
Delivery Date at the above specified rate of reduction.

 

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

 

The
BUILDER may, at any time after the expiration of the aforementioned Two Hundred
Ten (210) days of delay in delivery, if the BUYER has not served notice of
rescission as provided in Article X hereof, demand in writing that the BUYER
shall make an election, in which case the BUYER shall, within Twenty (20) days
after such demand is received by the BUYER, notify the BUILDER of its intention
either to rescind this Contract or to consent to the acceptance of the VESSEL
at the BUILDER’s specified future date. If the BUYER shall not make an election
within Twenty (20) days as provided hereinabove, the BUYER shall be deemed to
have accepted such extension of the delivery date to the future delivery date
indicated by the BUILDER and it being understood by the parties hereto that if
the VESSEL is not delivered by such future date, the BUYER shall 

 

16

 

have
the same right of rescission upon the same terms and conditions as hereinabove
provided.

 

It
is understood that accrued liquidated damages are preserved. Further delay
shall incur additional liquidated damages in accordance with existing terms and
conditions.

 

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

 

2.                          Speed :

 

(a)                      The Contract Price shall not be affected or changed by reason of the
trial speed (as determined according to the As-Built-Specifications) being less
than the guaranteed speed, if such variation is not more than Two-Tenths (2/10)
of One (1) knot.

 

(b)                     However, if such variation is more than Two-Tenths (2/10) of One (1)
knot, then, the Contract Price shall be decreased by One Hundred and Seventy
Five Thousand Five Hundred United States Dollars (US$ 175,000.-) for each
successive whole One-Tenth(1/10) of a knot in excess of a deficiency of
Two-Tenths (2/10) of a knot (in both cases smaller fractions being
disregarded).

 

(c)                      If the deficiency in the speed upon final sea trial is more than
Half(1/2) a knot below the guaranteed speed of the VESSEL, then the BUYER may,
at its option, reject the VESSEL and rescind this Contract in accordance with
the provisions of Article X hereof, or may accept the VESSEL at a reduction in
the Contract Price as above provided for Half(1/2) a knot only, that is, at a
total reduction of Five Hundred and Twenty Five Thousand Five Hundred United
States Dollars (US$ 525,000.-).

 

17

 

3.                          Fuel Consumption :

 

(a)                      The Contract
Price shall not be affected or changed in case the fuel consumption, as
determined by the shop trial as specified in the As-Built-Specifications, is
not more than Five percent (5%) in excess of the guaranteed fuel consumption
specified in Paragraph 2 of Article I.

 

(b)                     However, in the event that the actual fuel consumption at the shop
trial is in excess of Five percent (5%) of the guaranteed fuel consumption, the
Contract Price shall be reduced by the sum of One Hundred and Ten Thousand
United States Dollars (US$ 110,000.-) for each full one percent(1%) increase in
fuel consumption and pro rata for any fraction of one percent(1%) of the
Guaranteed Fuel Consumption in excess of the said five percent(5%) up to
maximum of eight percent(8%) over the Guaranteed Fuel Consumption.

 

(c)                      If the deficiency in fuel consumption is more than Eight percent (8%)
then the BUYER may at its option rescind this Contract in accordance with the
provision of Article X hereof.

 

4.                          Deadweight
:

 

(a)                      In the event that the deadweight of the VESSEL as determined in
accordance with the As-Built-Specifications is less than the guaranteed
deadweight as specified in Paragraph 2 of Article I, the Contract Price shall
be reduced by the sum of One Thousand One Hundred United States Dollars (US$
1,100.-) for each full metric ton of such deficiency being more than Seven
Hundred (700) metric tons, up to a maximum reduction of One Million Two Hundred
and Ten Thousand United States Dollars (US$ 1,210,000.-).

 

(b)                     In the event of such deficiency in the deadweight of the VESSEL being
One thousand eight hundred (1,800) metric tons or more, then, the BUYER may, at
its option, reject the VESSEL and rescind this Contract in accordance with the
provisions of Article X hereof or accept the VESSEL at a reduction in the
Contract Price as above provided for One thousand eight hundred (1,800) metric
tons only, that is, at a total reduction of One Million Two Hundred and Ten
Thousand United States Dollars (US$1,210,000.-).

 

18

 

5.                 Early Delivery

 

In the event that the BUILDER believes that
the VESSEL can be completed and ready for Delivery on a date earlier than the
Contractual Delivery Date, then the BUILDER may give a written notice to the
BUYER, no later than six (6) months before the revised date (the “Early
Delivery Date”) informing the approximate date on which the VESSEL can be ready
for the Delivery. The BUYER shall have the option, but not the obligation, to
accept Delivery of the VESSEL on the Early Delivery Date and upon the BUYER’s
acceptance thereof, the parties shall discuss the specific amount of the
additional payment due to the BUILDER for the accelerated Delivery of the
VESSEL on the Early Delivery Date at the delivery stage of the VESSEL and the compensation payment of the acceleration
bonus shall be settled and paid in full with the final delivery instalment
concurrently uponwith the actual Delivery and acceptance of the VESSEL by the
BUYER. If the Parties fail to reach a mutual agreement on the amount of the
Early Delivery bonus, the BUILDER shall be free to deliver the VESSEL on the
original Contractual Delivery Date or earlier at its option. The Parties hereto acknowledge that there
will be no liquidated damages or other penalty to be imposed on the BUILDER in
the event the VESSEL happens to be delivered on any date later than the Early
Delivery Date but earlier than the original Contractual Delivery Date.

 

6                             Effect of Rescission :

 

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

 

(End of Article)

 

19

 

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

 

1.                          Approval of Plans and
Drawings :

 

As-Built-Specifications for the BUILDER’s Hull No.
1455 & 1456 shall be used for the VESSEL without any further approval and
modification from the BUYER unless otherwise mutually agreed by both parties.
Should any changes are required by the BUYER’s request or the application of
new rules and regulations (of a mandatory nature) coming into effect after the
date of this Contract signing, the BUILDER shall submit such changes to the
BUYER for its approval. If approved by the BUYER, such changes shall be applied
to the VESSEL with cost adjustment in accordance with Article V of this
Contract.

 

2.                          Appointment of BUYER’s
Supervisor :

 

The
BUYER may send to and maintain at the Shipyard, at the BUYER’s own cost and
expense, one supervisor who shall be duly authorized in writing by the BUYER
(herein called the “Supervisor”) to act on behalf of the BUYER in connection
with the modifications of the As-Built-Specifications, adjustments of the
Contract Price and Delivery Date, approval of the plans and drawings, attendance
to the tests and inspections relating to the VESSEL, its machinery, equipment
and outfittings, and any other matters for which he is specifically authorized
by the BUYER. The Supervisor may appoint his assistant(s) to attend at the
Shipyard for the purposes as aforesaid.

 

In the event that assignment, novation or resale
occurs under the Article XIII and as a result, BUYER’s Supervisor is changed
during the construction of the VESSEL, any and all matters determined by mutual
agreement between the BUYER’s Supervisor and the BUILDER prior to the dispatch
of a new Supervisor shall be accepted and complied by the new Supervisor. In
case two or more Supervisors are dispatched to the Shipyard and authorized,
under the BUILDER’s prior consent, to perform the supervision, each of them
will form uniform opinions between them to keep the design and
As-Built-Specifications so as not to adversely affect the CONTRACT PRICE and
Delivery of the VESSEL, provided that such change in the Contract Price will be
reasonable and proven under the BUILDER’s normal practice.

 

20

 

3.                          Inspection by the Supervisor
:

 

The necessary inspections of the VESSEL, its machinery, equipment and
outfittings shall be carried out by the Classification Society, other
regulatory bodies and/or an inspection team of the BUILDER throughout the
entire period of construction in order to ensure that the construction of the
VESSEL is duly performed in accordance with this Contract and the
As-Built-Specifications. The Supervisor shall have, during construction of the
VESSEL, the right to attend such tests and inspections of the VESSEL, its
machinery and equipment within the premises of either the BUILDER or its
subcontractors. The BUILDER shall give notice to the Supervisor, in advance of
the date and place of such tests and inspections for the convenience of their
attendance. Detailed procedures of the inspection and the tests thereof shall
be in accordance with the As-Built-Specifications.

 

The BUILDER may request BUYER’s
supervisor to attend the inspection and tests during public holidays and
weekends and/or Company holidays in order to keep BUILDER’s construction
schedule. BUYER’s supervisor shall fully cooperate with BUILDER and promptly
attend such inspection/tests including those for surface preparation and
painting work, which are especially vulnerable to weather condition and time
interval. However, BUILDER shall keep such inspection and tests to a minimum
and only when the inspection and tests affect BUILDER’s construction schedule. The
BUILDER’s prior notice of such inspection/test schedule shall be informed to
the BUYER’s supervisor three(3) working days in advance as a minimum

 

The Supervisor shall be entitled to request copies of all test results
and trials as soon as required for the performance of his duties.

 

The Supervisor shall notify the BUILDER of deficiencies in the
construction of the VESSEL or materials. The BUILDER should examine the
deficiency and rectify.

 

If any of the BUYER’s supervisors discover
any construction, material or workmanship which is not deemed to conform to the
requirements of this Contract and/or the As-Built-Specifications, the BUYER’s
supervisors shall promptly give the BUILDER a notice in writing that such
alleged non-conformity exists. Upon 

 

21

 

receipt of such notice from the BUYER’s
supervisor, the BUILDER shall correct such non-conformity, if the BUILDER
agrees to his view. Any disagreement shall be resolved in accordance with
Paragraph 1 of Article XII.

 

4.                          Facilities :

 

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

 

5.                          Liability of BUILDER :

 

The Supervisor and his assistant(s) shall at all times be deemed to be
the employees of the BUYER and not of the BUILDER. The BUILDER shall be under
no liability whatsoever to the BUYER, the Supervisor or his assistant(s) for
personal injuries, including death, suffered during the time when he or they
are on the VESSEL, or within the premises of either the BUILDER 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 a gross negligence of the BUILDER, or of any of its employees or agents or
subcontractors.

 

Nor shall the BUILDER be under any liability
whatsoever to the BUYER, the Supervisor or his assistant(s) for damage to, or
loss or destruction of property in Korea of the BUYER or of the Supervisor or
his assistant(s), unless such damage, loss or destruction were caused by a
gross negligence of the BUILDER or of any of its employees or agents or
subcontractors.

 

22

 

6.                          Responsibility of BUYER :

 

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

 

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

 

(End of Article)

 

23

 

ARTICLE V - MODIFICATIONS, CHANGES AND EXTRAS

 

1.                          How Effected :

 

Any modifications and/or changes in the
As-Built-Specifications shall be made by written agreement of the parties
hereto provided, however, that any modifications and/or changes requested by
the BUYER or an accumulation of such modifications and/or changes will not
adversely affect the BUILDER’s planning or programme in relation to the BUILDER’s
other commitments and if the BUYER shall assent to adjustment of the Contract
Price, time for delivery of the VESSEL and other terms and conditions of this
Contract as hereinafter provided. The BUILDER hereby agrees to exert its best
efforts to accommodate such reasonable request by the BUYER so that the said
changes and/or modifications may be made at a reasonable cost and within the
shortest period of time which is reasonably possible.

 

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

 

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

 

The BUILDER may make minor changes to the
As-Built-Specifications, if found necessary for introduction of improved
production methods or otherwise, provided that the BUILDER shall first obtain
the BUYER’s approval which shall not be unreasonably withheld.

 

24

 

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

 

If,
after the date of signing this Contract, any requirements as to classification,
or as to the rules and regulations to which the construction of the VESSEL is
required to conform, are altered or changed by the Classification Society or
regulatory bodies authorized to make such alterations or changes, either of the
parties hereto upon receipt of information thereof, shall transmit such
information in full to the other party in writing, thereupon within
Twenty-one(21) days after receipt of the said notice from the other party, the
BUYER shall instruct the BUILDER in writing if such alterations or changes
shall be made in the VESSEL or not, in the BUYER’s sole discretion.

 

(a)          If such alterations or
changes are compulsory for the construction of VESSEL, either of the parties
hereto, upon receipt of such information from Classification Society or such
other regulatory bodies, shall promptly transmit the same to the other in
writing, and the BUILDER shall thereupon incorporate such alterations or
changes into the construction of the VESSEL, provided that the BUYER shall
first agree to reasonable and proven adjustments required by the BUILDER in the
Contract Price, the Delivery Date and other terms and conditions of this
Contract and the As-Built-Specifications occasioned by or resulting from such
alterations or changes.

 

(b)     If such alterations or changes are not compulsory for the
construction of the VESSEL, and the BUYER desires to incorporate such
alterations or changes into the construction of the VESSEL, then, the BUYER
shall notify the BUILDER of such intention. The BUILDER may accept such
alterations or changes, provided that such alterations or changes will not, in
the judgement of the BUILDER, adversely affect the BUILDER’s planning or
program in relation to the BUILDER’s other commitments, and provided, further,
that the BUYER shall first agree to reasonable and proven adjustments required
by the BUILDER in the Contract Price, the Delivery Date and other terms and
conditions of this Contract and the As-Built-Specifications occasioned by or
resulting from such alterations or changes.

 

In the event of a
disagreement on price and delivery, and in the event that such
alterations or changes are compulsory for the construction of VESSEL, then the BUILDER shall proceed
with the required alterations and the dispute related to the above shall be
resolved in accordance with the provisions of Article XII.

 

25

 

Such
agreement by the BUYER shall be effected in the same manner as provided in
Paragraph 1 of this Article for modifications and/or changes of the
As-Built-Specifications.

 

3.                          Substitution of Materials :

 

In the event that any of the materials
required by the As-Built-Specifications or otherwise under this Contract for
the construction of the VESSEL can not be procured in time to effect delivery
of the VESSEL, or are in short supply, the BUILDER may, provided the BUYER so
agrees in writing, supply other materials and equipment of the best available
and like quality, capable of meeting the requirements of the Classification
Society and of the rules, regulations, requirements and recommendations with
which the construction of the VESSEL must comply. Any agreement as to such
substitution of materials shall be effected in the manner as provided in
Paragraph 1 of this Article, and shall, likewise, include possible decrease in
the Contract Price and other terms and conditions of this Contract affected by
such substitution.

 

(End of Article)

 

26

 

ARTICLE VI - TRIALS AND ACCEPTANCE

 

Since the VESSEL is the
repeat of BUILDER’s Hull Nos. 1455 & 1456, some sea trial items may be
deleted subject to mutual agreement between the BUYER and the BUILDER

 

1.                          Notice :

 

The sea trial shall start when the VESSEL is
reasonably completed according to the As-Built-Specifications.

 

The
BUILDER shall give the BUYER at least Twenty (20) days estimated prior notice
and Seven(7) days confirming prior notice by telefax of the time and place of
the trial run of the VESSEL, and the BUYER shall promptly acknowledge receipt
of such notice. The BUYER shall have its representatives on board the VESSEL to
witness such trial run. Failure in attendance of the BUYER’s representative at
the trial run of the VESSEL for any reason whatsoever after due notice to the
BUYER as above provided shall be deemed to be a waiver by the BUYER of its right
to have its representative on board the VESSEL at the trial run, and the
BUILDER may conduct the trial run without attendance of the BUYER’s
representative, and in such case the BUYER shall be obligated to accept the
VESSEL on the basis of a certificate of the BUILDER that the VESSEL, upon trial
run, is found to conform to this Contract and the As-Built-Specifications.

 

2.                          Weather Condition :

 

The
trial run shall be carried out under the weather condition which is deemed
favourable enough by the judgement of the BUILDER. 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 condition permits. It is
agreed that, if during the trial run of the VESSEL, the weather should suddenly
become so unfavourable that orderly conduct of the trial run can no longer be
continued, the trial run shall be discontinued and postponed until the first
favourable day next following, unless the BUYER shall assent in writing to
acceptance of the VESSEL on the basis of the trial run already made before such
discontinuance has occurred.

 

27

 

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

 

3.                          How Conducted :

 

(a)                      The VESSEL shall run the official trial trip in the manner as specified
in the As-Built-Specifications.

 

(b)                     All expenses in connection
with the trial run are to be for account of the BUILDER and the BUILDER shall
provide, at its own expense, the necessary crew to comply with conditions of
safe navigation, fuel oil, fresh water and other consumable stores necessary,
the BUYER shall supply at its own expense lubricating oils and greases.

 

4.                          Method of Acceptance or
Rejection :

 

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

 

(b)                     However, should the result of the trial run show that the VESSEL, or
any part or equipment thereof, does not conform to the requirements of this
Contract and/or the As-Built-Specifications, or if the BUILDER is in agreement
to non-conformity as specified in the BUYER’s notice of rejection, then, the
BUILDER shall take necessary steps to correct such non-conformity.

 

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

 

The BUYER shall, within Three (3) days after receipt of such notice
from the BUILDER, notify the BUILDER of its acceptance or rejection of the
VESSEL.

 

(c)                      In any event that the BUYER rejects the VESSEL, the BUYER shall
indicate in detail in its notice of rejection in what respect the VESSEL, or
any part or 

 

28

 

equipment
thereof does not conform to this Contract and/or the As-Built-Specifications.

 

(d)                     In the event that the BUYER
fails to notify the BUILDER by telefax of the acceptance of or the rejection
together with the reason therefor of the VESSEL within the period as provided in
the above Sub-paragraph (a) or (b), the BUYER shall be deemed to have accepted
the VESSEL.

 

(e)                      Any dispute between the BUILDER and the BUYER as to the conformity or
non-conformity of the VESSEL to the requirements of this Contract and/or the
As-Built-Specifications shall be submitted for final decision in accordance
with Article XII hereof.

 

5.                          Effect of Acceptance :

 

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

 

The BUYER may accept the VESSEL under protest with
outstanding defects to be dealt under the guarantee provisions or made subject
of a claim for damages.

 

29

 

6.                          Disposition of Surplus
Consumable Stores

 

Any fuel oil or other furnished and paid for by the BUILDER
for trial runs remaining on board the VESSEL, at the time of acceptance of the
VESSEL by the BUYER, shall be bought by the BUYER from the BUILDER at the
BUILDER’s purchase price for such supply in Korea and the payment by the BUYER
thereof shall be made at the time of delivery of the VESSEL.

 

The BUILDER shall pay the BUYER at the time of delivery of
the VESSEL an amount for the consumed quantity until delivery of any
lubricating oil and greases which were furnished and paid for by the BUYER at
the BUYER’s purchase price thereof. For avoidance of doubt, the practice of
this Article VI. 6 shall follow the practice in construction of the BUILDER’s
Hull Nos. 1455 & 1456.

 

(End of Article)

 

30

 

ARTICLE VII - DELIVERY

 

1.                          Time and
Place :

 

The VESSEL shall be delivered by the BUILDER to the BUYER at
the Shipyard on or before September 30, 2007, except that, in the event of
delays in the construction of the VESSEL or any performance required under this
Contract due to causes which under the terms of this Contract permit
postponement of the date for delivery, the aforementioned date for delivery of
the VESSEL shall be postponed accordingly.

 

The aforementioned date, or such later date to which the
requirement of delivery is postponed pursuant to such terms, is herein called
the “Delivery Date”.

 

2.                          When and How Effected :

 

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

 

3.                          Documents to be delivered to
BUYER :

 

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

 

(a)                      PROTOCOL OF TRIALS of the VESSEL made pursuant to the
As-Built-Specifications.

 

(c)                      PROTOCOL OF INVENTORY of the equipment of the VESSEL, including spare
parts and the like, as specified in the As-Built-Specifications.

 

(d)                     PROTOCOL OF STORES OF CONSUMABLE NATURE referred to under Paragraph 6
of Article VI hereof.

 

31

 

(d)                     ALL CERTIFICATES including the BUILDERS’s CERTIFICATE required to be
furnished upon delivery of the VESSEL pursuant to this Contract and the
As-Built-Specifications, necessary for the registration of the VESSEL and BUYER’s
trading requirements.

 

It is agreed that if, through no fault on the part of the
BUILDER, the Classifications certificates and/or other certificates are not
available at the time of delivery of the VESSEL, provisional certificates shall
be accepted by the BUYER, provided that the BUILDER shall furnish the BUYER
with the formal certificates as promptly as possible after such certificates
have been issued.

 

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

 

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

 

(f)                        DRAWING AND PLANS pertaining to the VESSEL as stipulated in the As-Built-Specifications.

 

(g)                     COMMERCIAL INVOICE.

 

4.                          Tender of VESSEL :

 

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

 

32

 

5.                          Title and Risk :

 

Title to and risk of loss 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 and risk of loss of the VESSEL and her equipment shall be in
the BUILDER.

 

6.                          Removal of VESSEL :

 

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

 

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

 

(End of Article)

 

33

 

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

 

1.                          Causes of Delay (Force
Majeure) :

 

If, at any time either the construction or delivery of the
VESSEL or any performance required hereunder as a prerequisite to the delivery
thereof is delayed by any of the following events; namely war, acts of state or
government, blockade, revolution, insurrections, mobilization, civil commotion,
riots, national strikes, sabotage, Acts of God or the public enemy, plague or
other epidemics, quarantines, prolonged failure of electric current, freight
embargoes, or defects in major forgings or castings or delay in BUYER’s
supplied articles, if any, or defects in materials, machinery or equipment
which could not have been detected by the BUILDER using reasonable care, or
earthquakes, tidal waves, typhoons, hurricanes, prolonged or unusually severe
weather conditions or by destruction of the premises or works of the BUILDER or
its sub-contractors, or of the VESSEL, or any part thereof, by fire, landslides,
flood, lightning, explosion, or other causes beyond the control of the BUILDER,
or its sub-contractors, as the case may be, or for any other causes which,
under the terms of this Contract, authorize and permit extension of the time
for delivery of the VESSEL, then, in the event of delays due to the happening
of any of the aforementioned contingencies, the Delivery Date of the VESSEL
under this Contract shall be extended for a period of time which shall not
exceed the total accumulated time of all such delays.

 

The enumerated contingencies shall not give rise to an
extension of the delivery date unless :

 

i)                           The occurrence could not reasonably
have been foreseen by the BUILDER at the date of signing of the Contract.

 

ii)                        The BUILDER shall have exercised reasonable due diligence to avoid or
minimize the occurrence of such event.

 

iii)                     The
BUILDER shall have used reasonable efforts to mitigate the duration and effects
of such events of the construction schedule.

 

34

 

2.                          Notice of Delay :

 

Within Fourteen (14) days after the date of occurrence of any
cause of delay, on account of which the BUILDER claims that it is entitled
under this Contract to a postponement of the Delivery Date, the BUILDER shall
notify the BUYER in writing or by telefax confirmed in writing of the date when
such cause of delay occurred. Likewise, within Fourteen (14) days after the date of ending of such
cause of delay, the BUILDER shall notify the BUYER in writing or by telefax
confirmed in writing of the date when such cause of delay ended.

 

The
BUILDER shall also notify the BUYER of the period, by which the Delivery Date
is postponed by reason of such cause of delay, with all reasonable dispatch
after it has been determined. If the BUILDER does not give the timely advice as
above, the BUILDER shall lose the right to claim such delays as permissible
delay.

 

Failure
of the BUYER to acknowledge to the BUILDER’s claim for postponement of the
Delivery Date within Fourteen (14)  days after receipt by the BUYER of such notice of claim shall be deemed
to be a waiver by the BUYER of its right to object to such postponement of the
Delivery Date.

 

3.                          Definition of Permissible
Delay :

 

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

 

4.                          Right to Rescind for
Excessive Delay :

 

If the total accumulated time of all delays whether
permissible or not exceeds One Hundred and Eighty (180) days, then, in such
event, the BUYER may rescind this Contract in accordance with the provisions of
Article X hereof.

 

The accumulated time as
above shall be excluded by the time lost due to BUYER’s Default or delays in
the BUYER’s supplies. The BUILDER may, at any time after the accumulated time
of the aforementioned delays justifying rescission by the BUYER, demand in
writing that the BUYER shall make an election 

 

35

 

proposing a new delivery
date, in which case the BUYER shall, within Fourteen (14) days after such
demand is received by the BUYER, either notify the BUILDER of its intention to
rescind this Contract, or consent to a postponement of the Delivery Date to an
agreed specific future date; it being understood and agreed by the parties
hereto that, if any further delay occurs on account of causes justifying
rescission as specified in this Article, the BUYER shall have the same right of
rescission upon the same terms as herein above provided.

 

(End of Article) 

 

36

 

ARTICLE IX - WARRANTY OF QUALITY

 

1.                          Guarantee :

 

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

 

Upon rectification of an item claimed under this guarantee,
this item shall be covered for further Twelve (12) months under the same terms
and conditions. However, this is limited to a maximum of Twenty Four (24)
months from delivery date.

 

2.                          Notice of
Defects :

 

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

 

The BUILDER shall have no obligation for any Defect
discovered prior to the expiry date of the Guarantee Period, unless notice of
such Defect is received by the BUILDER not later than Twenty (20) days after
such expiry date.

 

3.                          Remedy of
Defects :

 

(a)                      The BUILDER shall remedy, at
its expense, any Defect against which the VESSEL is guaranteed under this
Article, by making all necessary repairs or

 

37

 

replacements at the
Shipyard.

 

(b)                     However, if the BUYER should
determine that it is commercially or operationally impracticable to bring the
VESSEL to the Shipyard, the BUYER may cause the necessary repairs or
replacements to be made elsewhere which is deemed suitable for the purpose,
provided that, in such event, the BUILDER may forward or supply replacement
parts or materials to the BUYER’s agent
to be designated by the BYUER in writting, unless forwarding or
supplying thereof the VESSEL would impair or delay the operation of working
schedule of the VESSEL. In the event that the BUYER proposes to cause the
necessary repairs or replacements for the VESSEL to be made at any other
shipyard or works than the Shipyard, the BUYER shall first, but in all events
as soon as possible, give the BUILDER a notice in writing or by telefax
confirmed in writing of the time and place when and where such repairs will be
made, and if the VESSEL is not thereby delayed, or her operation or working
schedule is not thereby impaired, the BUILDER shall have the right to verify by
its own representative(s) the nature, cause and extent of the Defects
complained of. The BUILDER shall, in such case, promptly advise the BUYER by
telefax, after such examination has been completed, of its acceptance or
rejection of the Defects as ones that are covered by the guarantee herein
provided. Upon the BUILDER’s acceptance of the Defects as justifying remedy
under this Article, or upon award of the arbitration so determining, the
BUILDER shall pay to the BUYER for such repairs or replacements justified
reasonable and proven actual cost of repairs or replacements.

 

(c)                The
reimbursement of the costs incurred in relation to guarantee works shall be
paid in a lumpsum after expiration of the guarantee period.

 

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

 

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

 

38

 

4.                          Extent of BUILDER’s
Responsibility :

 

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

 

(b)                     The BUILDER shall not be responsible for any defect in any part of the
VESSEL which may, subsequently to delivery of the VESSEL, have been replaced or
repaired in any way by any other contractor unless the BUILDER has not object
the contractor to perform guarantee repairs, or for any defect which have been
caused or aggravated by omission or improper use and maintenance of the VESSEL
on the part of the BUYER, its servants or agents or by ordinary wear and tear
or by any other cause beyond the control of the BUILDER.

 

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

 

5.                          Guarantee Engineer :

 

The BUILDER shall have the right to appoint a Guarantee
Engineer to serve on the VESSEL as its representative for a period of Three (3)
months from the date the VESSEL is delivered. However, if the BUYER and the
BUILDER shall deem it necessary to keep the Guarantee Engineer on the VESSEL
for a longer period, then he shall remain on board the VESSEL after the said
Three (3) months, but not longer than Six (6) months from the delivery of the
VESSEL.

 

The BUYER, and its employees, shall give such
Guarantee Engineer full cooperation in carrying out his duties as the
representative of the BUILDER on board the VESSEL.

 

The Guarantee Engineer shall sign BUYER’s
Indemnity Forms and shall at all times deemed to be an employee of the BUILDER.

 

The BUYER shall accord the Guarantee Engineer
treatment comparable to the 

 

39

 

VESSEL’s Chief Engineer, and shall provide
board and lodging at no cost to the BUILDER and/or the Guarantee Engineer.

 

While
the Guarantee Engineer is on board the VESSEL, the BUYER shall pay to the
BUILDER the sum of US$ 7,000.- per month as a compensation for a part of cost
and charges to be borne by the BUILDER in connection with Guarantee Engineer
and also shall pay the expenses of his repatriation to Seoul, Korea by air upon
termination of his service, the expenses of his communication with the BUILDER
incurred in performing his duties and expenses, if any, of his medical and
hospital care in the VESSEL’s hospital.

 

Pertaining
to the detailed particulars of this Paragraph, an agreement will be made
according to this effect between the parties hereto upon delivery of the
VESSEL.

 

(End of Article)

 

40

 

ARTICLE X - RESCISSION BY BUYER

 

1.                          Notice :

 

The payments made by the BUYER prior to delivery of the
VESSEL shall be in the nature of advances to the BUILDER, and in the event that
the VESSEL after sea trial is rejected by the BUYER or the VESSEL is cancelled
by the BUYER in accordance with the terms of this Contract under and pursuant
to any of the provisions of this Contract specifically permitting the BUYER to
do so and in the event that the Contract is rescinded by the BUYER under and
pursuant to any of the provisions of this Contract specially permitting the
BUYER, then the BUYER shall notify the BUILDER in writing or by telefax
confirmed in writing, and such rescission shall be effective as of the date
when notice thereof is received by the BUILDER.

 

2.                          Refundment by BUILDER :

 

In case the BUILDER receives the notice stipulated in
Paragraph 1 of this Article, the BUILDER shall promptly refund to the BUYER the
full amount of all sums paid by the BUYER to the BUILDER on account of the
VESSEL together with the interest thereon, unless the BUILDER proceeds to the
arbitration under the provisions of Article XII hereof.

 

In such event, the BUILDER shall pay the BUYER interest at
the rate of Six percent (6.0%)per annum on the amount required herein to be
refunded to the BUYER, computed from the dates following on which such sums
were paid by the BUYER to the BUILDER to the date of remittance by transfer of
such refund to the BUYER by the BUILDER.

 

As security for refund of
instalments prior to delivery of the VESSEL, the BUILDER shall furnish the
BUYER within Fourteen (14) calendar days after the Contract signing with a
letter of guarantee covering the amount of such pre-delivery instalments in
favour of the BUYER. Such letter of guarantee shall have substantially the same
form and substance as Exhibit “A” annexed hereto.

 

41

 

3.                          Discharge of Obligations :

 

Upon such refund by the BUILDER to the BUYER, all
obligations, duties and liabilities of each of the parties hereto to the other
under this Contract shall be forthwith completely discharged.

 

(End of Article)

 

42

 

ARTICLE XI
- BUYER’S DEFAULT

 

1.                          Definition of Default :

 

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

 

(a)                      If the first, second, third, fourth or fifth instalment are not paid by
the BUYER to the BUILDER within Five (5) banking days after such instalment
becomes due and payable as provided in Article II hereof;

 

or

 

(b)                     If the Delivery instalment is not paid by the BUYER to the BUILDER
concurrently with the delivery of the VESSEL as provided in Article II hereof;

 

or

 

(c)                      If the BUYER, when the VESSEL is duly tendered for delivery by the
BUILDER:

 

i)                           fails to take delivery of the VESSEL within
Five (5) banking days from tendered date

 

ii)                        having initiated the arbitration procedure the BUYER does not accept
delivery within Seven (7) days of an arbitration award which is not appealed.

 

2.                          Effect of Default on or
before Delivery of VESSEL :

 

(a)                      Should the BUYER make default in payment of any instalment of the
Contract Price on or before delivery of the VESSEL, the BUYER shall pay the
instalment(s) in default plus accrued interest thereon at the rate of Six
percent (6.0%) per annum computed from the due date of such instalment to the
date when the BUILDER receives the payment, and, for the purpose of Paragraph 1
of Article VII hereof the Delivery Date of the VESSEL shall be automatically
extended by the period of continuance of such default by the BUYER. In any
event of default by the BUYER, the BUYER shall also pay direct charges and
expenses incurred by the BUILDER in consequence of such default after mutual
agreement.

 

(b)                     If any default by the BUYER
continues for a period of Ten (10) days after the BUILDER’s notification, the
BUILDER may, at its option, rescind this Contract by giving notice of such
effect to the BUYER by telefax confirmed in writing.

 

43

 

Upon dispatch by the BUILDER of such notice
of rescission, this Contract shall be forthwith rescinded and terminated. In
the event of such rescission of this Contract, the BUILDER shall be entitled to
retain any instalment or instalments already paid by the BUYER to the BUILDER
on account of this Contract and the BUYER’s Supplies, if any.

 

3.                          Disposal of VESSEL :

 

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

 

(b)                     In the event of such sale of the VESSEL, the amount of the sale
received by the BUILDER shall be applied firstly to all expenses attending such
sale or otherwise incurred by the BUILDER as a result of the BUYER’s default,
secondly to the payment of all costs and expenses of construction of the VESSEL
incurred by the BUILDER less BUYER’s Supplies and the instalments already paid
by the BUYER and the compensation to the BUILDER for a reasonable loss of
profit due to rescission of this Contract, and finally to the repayment to the
BUYER without interest, if any balance is obtained.

 

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

 

(End of Article)

 

44

 

ARTICLE XII - ARBITRATION

 

1.                          Decision by the Classification Society :

 

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

 

2.                          Proceedings of Arbitration :

 

In
the event that the parties hereto do not agree to settle a dispute according to
Paragraph 1 of this Article and/or in the event of any other dispute of any
kind whatsoever between the parties and relating to this Contract or its
rescission or any stipulation herein, such dispute shall be submitted to
arbitration in London. Each party shall appoint an arbitrator and in the event
that they cannot agree, the two arbitrators so appointed shall appoint an
Umpire.

 

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

 

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

 

The
Arbitration shall be conducted in accordance with the rules in force of the
London Maritime Arbitrators Association.

 

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

 

45

 

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

 

The
award of the arbitrators and/or Umpire shall be final and binding on both
parties.

 

3.                          Notice of Award :

 

The award shall immediately be given to the BUYER and the
BUILDER by telefax.

 

4.                          Expenses :

 

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

 

5.                          Entry in
Court :

 

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

 

6.                          Alteration
of Delivery Date :

 

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

 

 (End of Article)

 

46

 

ARTICLE XIII - SUCCESSOR AND ASSIGNS

 

Neither of the parties
hereto shall assign this Contract to any other individual or company save as
provided hereto. unless prior consent of the other party is given in writing.
Should circumstances permit with or without alteration of the terms and
conditions of this Contract, such consent shall not be unreasonably withheld by
either party.

 

The BUYER is hereby allowed
to assign the Contract for the purposes of financing.

 

The
BUYER is further allowed to nominate a company controlled by the BUYER to take
over the Contract.

 

The
BUILDER shall fully cooperate in case the BUYER requests UK Tax lease financing
arrangements.

 

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

 

In the event of the
assignment from the BUYER to any other individual or company the BUILDER shall
be entitled to request a Performance Guarantee from the BUYER having same form
and contents as Exhibit “C” annexed hereto.

 

The BUYER and the BUILDER
understand and acknowledge that the VESSEL shall be built and constructed as a
repeat and series VESSEL of the BUILDER’s Hull Nos. 1455 & 1456 as stipulated
in this Contract. Thus, in the event of a resale of the VESSEL, any and all matters determined by mutual
agreement between the BUYER and the BUILDER prior to the resale of the VESSEL
shall be accepted and complied by the New BUYER (i.e., assignee). If the New BUYER or its supervisor makes
unreasonable requests that may have a significant impact on the delivery
schedule of the VESSEL and/or costs of construction (including, without
limitation to, request for fundamental change of ship type or excessive revision
of design specifications, etc.), the BUILDER shall be entitled to refuse these
requests. The BUYER shall notify the above to the New BUYER before assignment
or novation and the New BUYER will have to accept any additional cost related
to the new supervision.

 

 (End of Article)

 

47

 

ARTICLE XIV
- TAXES AND DUTIES

 

1.                          Taxes and Duties Incurred in
Korea :

 

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

 

2.                          Taxes and Duties Incurred
outside Korea :

 

The BUILDER shall bear and pay all taxes, duties, stamps and fees incurred
outside Korea in connection with execution and/or performance of this Contract
including guarantee matter, except for taxes and duties imposed upon the BUYER
or the BUYER supplies.

 

(End of Article)

 

48

 

ARTICLE XV - PATENTS, TRADEMARKS, COPYRIGHTS, ETC.

 

1.                          Patents, Trademarks and
Copyrights :

 

Machinery and equipment of the VESSEL may bear the patent
number trademarks or trade names of the manufacturers. The BUILDER shall defend
and hold harmless the BUYER from patent liability or claims of patent
infringement of any nature or 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 costs and expenses of litigation, if any.

 

Nothing contained herein shall be construed as transferring
any patent or trademark rights or copyrights in equipment covered by this
Contract, and all such rights are hereby expressly reserved to the true and
lawful owners thereof.

 

The
BUILDER’s warranty hereunder does not extend to the BUYER’s Supplies.

 

2.                          General Plans,
Specifications and Working Drawings :

 

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

 

(End of Article)

 

49

 

ARTICLE XVI - BUYER’S SUPPLIES

 

1.                          Responsibility of BUYER :

 

(a)                      The BUYER shall, at its own risk, cost and expense, supply and deliver
to the BUILDER all of the items to be furnished by the BUYER as specified in
the As-Built-Specifications (herein called the BUYER’s Supplies) at warehouse
or other storage of the Shipyard in the proper condition ready for installation
in or on the VESSEL, in accordance with the time schedule designated and
advised by the BUILDER to the BUYER within 60 days from signing this Contract.

 

(b)                     In order to facilitate installation by the BUILDER of the BUYER’s
Supplies in or on the VESSEL, the BUYER shall furnish the BUILDER with
necessary specifications, plans, drawings, instruction books, manuals, test
reports and certificates required by the rules and regulations of the
As-Built-Specifications.

 

If
so requested by the BUILDER, the BUYER shall, without any charge to the
BUILDER, cause the representatives of the manufacturers of the BUYER’s Supplies
to assist the BUILDER in installation thereof in or on the VESSEL and/or to
carry out installation thereof by themselves or to make necessary adjustments
at the Shipyard.

 

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

 

(d)                     Should the BUYER fail to deliver any of the BUYER’s Supplies within the
time designated, the Delivery Date shall be automatically extended for a period
which actually caused the delay in the delivery of the VESSEL.

 

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

 

50

 

2.                          Responsibility of BUILDER :

 

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

 

(End of Article)

 

51

 

ARTICLE XVII - INSURANCE

 

1.                          Extent of Insurance Coverage

 

From the time of launching until delivery of the VESSEL, the
BUILDER shall, at its own cost and expense, insure the VESSEL and all machinery
and equipment, appurtenances and outfits, including the BUYER’s Supplies, built
into or installed in or upon the VESSEL, against all risks under the “Institute
Causes for BUILDER’s Risk”, with first class insurance company or underwriters
in Korea.  The amount of such insurance
coverage shall, up to the date of delivery of the VESSEL, not be less than the
aggregate amount of all instalments paid by the BUYER to the BUILDER, plus the
value of the BUYER’s Supplies in the custody of the Shipyard.

 

2.                          Application of the Recovered
Amounts

 

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

 

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

 

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

 

52

 

(b)                     refund promptly
to the BUYER the full amount of all sums paid by the BUYER to the BUILDER as
instalments in advance of delivery of the VESSEL with Six percent (6.0%)
interest, and deliver to the BUYER all BUYER’s Supplies (or the insurance
proceeds paid with respect thereto), in which case this Contract shall be
deemed to be automatically terminated and all right, duties, liabilities and
obligations of each of the parties to the other shall forthwith cease and
terminate.

 

3.                          Termination of BUILDER’s
Obligation to Insure

 

The
BUILDER shall be under no obligation to insure the VESSEL hereunder after
delivery and acceptance of the VESSEL.

 

(End of Article)

 

53

 

ARTICLE XVIII – NOTICE

 

1.                          Address :

 

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

 

	
  To
  the BUYER :

  	
  Seacarriers
  Services Inc. c/o DANAOS SHIPPING

  
	
   

  	
  CO. LTD. Akti Kondyli 14, 185 45 Piraeus, Greece

  
	
   

  	
  Cable
  address : DECUSHIP PIRAEUS

  
	
   

  	
  Telefax
  No. : +30 210 422 0855

  
			

 

	
  To
  the BUILDER:

  
	
   

  
	
   

  	
  Samsung
  Heavy Industries Co., Ltd.

  
	
   

  	
  647-9,
  11th Floor, KIPS Building, Kangnam-Ku,

  
	
   

  	
  Seoul,
  Korea

  
	
   

  	
  Calbe
  address : SSYARD SEOUL

  
	
   

  	
  Telefax
  No. : (+82 2) 3458-7349, (+82 2) 3458-7319

  
	
   

  	
   

  
	
  or
  preferably to its Koje Yard :

  
	
   

  
	
   

  	
  Samsung
  Heavy Industries Co., Ltd.

  
	
   

  	
  P.O.BOX Gohyun 9

  
	
   

  	
  530,
  Jangpyung-Ri, Shinhyun-Up, Kyungnam,

  
	
   

  	
  Korea

  
	
   

  	
  Telefax
  No. :    (+82 55) 630-4947 (Design Department)

  
	
   

  	
  (+82
  55) 630-4978 (Customer Satisfaction Team.)

  
			

 

2.                          Language :

 

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

 

54

 

3.                          Effective
Date of Notice :

 

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

 

(End of Article)

 

55

 

ARTICLE XIX - EFFECTIVE DATE OF CONTRACT

 

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

 

(End of Article)

 

56

 

ARTICLE XX - INTERPRETATION

 

1.                          Laws Applicable :

 

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

 

2.                          Discrepancies
:

 

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

 

3.                          Entire
Agreement :

 

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

 

4.                          Amendments
and Supplements :

 

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

 

The Contract can only be amended in writing.

 

(End of Article)

 

57

 

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

 

	
  BUYER :

  	
  BUILDER :

  
	
  SEACARRIERS SERVICES INC.

  	
  SAMSUNG HEAVY IND., CO., LTD.

  
	
   

  	
   

  
	
   

  	
   

  
	
  /s/ John Coustas

  	
   

  	
  /s/ C.H. Park

  	
   

  
	
  By : John Coustas

  	
  By : C.H. Park

  
	
  Title : Director

  	
  Title :
  Attorney-in-fact

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Yeon Taek Chae

  	
   

  
	
   

  	
  Initialed
  by : Yeon Taek Chae

  
	
   

  	
  Title
  : Attorney-in-fact

  
					

 

	
  WITNESS
  :

  
	
   

  
	
  /s/ I. Prokopakis

  	
   

  
	
  By
  : I. Prokopakis

  
	
  Title
  : Deputy Managing Director

  

 

58

 

EXHIBIT “A”

 

LETTER OF REFUNDMENT GUARANTEE

 

Gentlemen :

 

We hereby issue our letter
of guarantee no.      in favour of Seacarriers
Services Inc., (hereinafter called the “BUYER”) for account of Samsung Heavy
Industries Co., Ltd.(hereinafter called the “BUILDER”) as follows in
consideration of the shipbuilding contract dated June 30, 2005 (hereinafter
called the “Contract”) made by and among the BUYER and the BUILDER for the
construction of one(1) single screw diesel engine driven Container VESSEL
having BUILDER’s Hull No. 1639 (hereinafter called the “VESSEL”).

 

If in connection with the
terms of the Contract the BUYER shall become entitled to a refund of the
advance payment(s) made to the BUILDER prior to the delivery of the VESSEL, we
hereby irrevocably guarantee the repayment of the same to the BUYER immediately
on demand being initially US$ 7,000,000.- (Say U.S. Dollars Seven Million only)
together with interest thereon at the rate of Six (6) percent per annum from
the respective dates on which such sums were paid by the BUILDER to the date of
remittance by telegraphic transfer of such refund.

 

The amount of this guarantee
will be automatically increased, not more than three times, upon BUILDER’s
receipt of the respective instalment: each time by the amount of instalment of
US$ 7,000,000.- (Say U.S. Dollars Seven Million only), US$ 7,000,000.- (Say
U.S. Dollars Seven Million only) and US$ 7,000,000.- (Say U.S. Dollars Seven
Million only)  respectively plus interest
thereon as provided in the Contract, but in any eventuality the amount of this
guarantee shall not exceed the total sum of US$ 28,000,000.- (Say U.S. Dollars
Twenty Eight Million only) plus interest thereon at the rate of Six (6) percent
per annum from the respective dates on which such sums were paid by the BUYER
to the BUILDER to the date of remittance by telegraphic transfer of the refund.

 

Our liability under this
letter of guarantee shall not be affected by any alteration to or variation of
the terms of the Contract you may hereafter agree with the BUILDER and by any
other matter of circumstances, including bankruptcy or insolvency of the
BUILDER, which might otherwise discharge our liability hereunder as guarantor
of the BUILDER’s obligations as aforesaid.

 

59

 

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

 

This letter of guarantee is
available against BUYER’s simple receipt and signed statement certifying that
BUYER’s demand for refund has been made in conformity with Article X of the
Contract and the BUILDER has failed to make the refund within Thirty One (31)
days after BUYER’s demand to the BUILDER.

 

Refund shall be made to BUYER
by telegraphic transfer in United States Dollars to an account designated by
you without deduction, withholding or set-off.

 

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

 

Notwithstanding the
provisions hereinabove, in case we receive notification from you or the BUILDER
confirmed by an Arbitrator stating that your claim to cancel the Contract or
your claim for refundment thereunder has been disputed and referred to
Arbitration in accordance with the provisions of the Contract, the period of
validity of this guarantee shall be extended until Thirty (30) days after the
final and non-appealable award shall be rendered in the Arbitration and a copy
thereof acknowledged by the Arbitrators. In such case, this guarantee shall not
be available unless and until such acknowledged copy of the final award in the
Arbitration justifying your claim is presented to us.

 

Your
rights in respect of this letter of guarantee are assignable from the date of
this letter of guarantee until such time as the VESSEL is delivered by the
BUILDER to the BUYER in accordance with the provisions of the Contract, on the
understanding that you will notify us of the identity of any assignee of your
rights under this letter of guarantee.

 

Any notice or demand under
this letter of guarantee shall be given by facsimile and sent to:

 

60

 

 

 

 

or to such other address as
we might notify to you in writing. A notice shall be deemed to be served and
shall take effect 2 hours after its transmission is completed, provided that if
a notice would be deemed to be served on a day which is not a business day, or
which is a business day but after 5:00 p.m. local time, in the place of
receipt, the notice shall be deemed to be served and shall take effect at 9:00
a.m. on the next day which is a business day.

 

This guarantee shall be
governed by and construed in accordance with the Laws of England. Any disputes
arising under this guarantee (but not any disputes arising under the Contract
which shall be determined by arbitration in accordance with the terms of the
Contract and as referenced in this letter of guarantee) shall be determined by
the High Court of Justice in London to whose exclusive jurisdiction we hereby
submit. We appoint
                                                                                                                                                  
                                                                                                                                                                                                                                                                                                                     
as our agents for service of process in connection with any proceedings in such
courts.

 

We each jointly and
severally hereby represent and guarantee that we have the corporate power and
authority to execute, deliver and perform the obligations under this letter of
guarantee, and that such execution and performance will not violate or conflict
with any provision of law, statute, rule, permit or regulation of any
government, regulatory body, agency or other authority in the jurisdictions
where we are subject to such laws and regulations.

 

61

 

IN WITNESS WHEREOF, we have
hereunder set our hands and seal by our duly authorized representatives this            
day of                  ,
2005.

 

	
   

  	
  Very
  truly yours,

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  For
  and on behalf of

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By
  

  	
   

  	
   

  
	
   

  	
  Name
  :

  
	
   

  	
  Title
  : Attorney-in-Fact

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  For
  and on behalf of

  
	
   

  	
   

  	
   

  
	
   

  	
  By
  

  	
   

  	
   

  
	
   

  	
  Name
  :

  
	
   

  	
  Title
  : Attorney-in-Fact

  
						

 

62

 

EXHIBIT “B”

 

Samsung Heavy Industries
Co., Ltd.

11th Floor, KIPS
Building

647-9, Yoksam-Dong,
Kangnam-Ku,

Seoul, Korea 135-080

 

Date :                   ,
2005

 

PERFORMANCE GUARANTEE

 

In consideration of the
performance of a certain shipbuilding contract dated        (hereinafter
called the “Contract”) by SEACARRIERS SERVICE INC. of 80 Broad street,
Monrovia, Liberia having your Hull No.1639(hereinafter called the “VESSEL”)
providing among other things for payment of the Contract Price amounting to
United States Dollars               
(US$         );

 

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

 

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

 

GUARANTOR :

BY :

TITLE
:

WITNESS :

 

63

 

EXHIBIT “C”

 

Samsung Heavy Industries
Co., Ltd.

11th Floor, KIPS
Building

647-9, Yoksam-Dong,
Kangnam-Ku,

Seoul, Korea 135-080

 

Date :                    ,
2005

 

PERFORMANCE GUARANTEE

 

In consideration of the
assignment of a certain shipbuilding contract dated        (hereinafter
called the “Contract”) by us to                 
having your Hull No.1639(hereinafter called the “VESSEL”) providing among other
things for payment of the Contract Price amounting to United States Dollars              
(US$            );

 

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

 

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

 

 

GUARANTOR :

BY :

TITLE
:

WITNESS :

 

64

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